Annual Report
Year Ended 30 June 2020
Contents
GENERAL
4
Chair’s Review
6
9
Chief Executive Officer’s Review
About this Annual Report
10
Year in Review
12 Creating Value
16 Performance
18 Diversity Snapshot
21 Group Strategy
29 About SkyCity
31
34
37
39
41
43
Auckland
Hamilton
Adelaide
Queenstown
International Business
Online
45 Risk Profile and Management
53 Our Board
56 Our Senior Leadership Team
SUSTAINABILITY
63 Sustainability
69
Our Customers
79
Our People
93
Our Communities
101
Our Suppliers
111
Our Environment
120 Independent Limited Assurance Statement
CORPORATE GOVERNANCE STATEMENT
AND OTHER DISCLOSURES
123 Corporate Governance Statement
134 Remuneration Report
145 Shareholder and Bondholder Information
148 Directors’ Disclosures
149 Company Disclosures
FINANCIAL STATEMENTS
156 Independent Auditor’s Report
164 Income Statement
165 Statement of Comprehensive Income
166 Balance Sheet
168 Statement of Changes in Equity
169 Statement of Cash Flows
170 Notes to the Financial Statements
224 RECONCILIATION OF NORMALISED RESULTS
TO REPORTED RESULTS
228 GRI CONTENT INDEX
232 GLOSSARY
233 DIRECTORY
ANNUAL MEETING
Due to the ongoing impacts of COVID-19, the 2020 SkyCity Annual Meeting will be held virtually via
an online platform on 16 October 2020 commencing at 1.00pm (New Zealand time). Instructions and
further details on how shareholders can participate in the virtual Annual Meeting will be included in
the Notice of Meeting.
3
Chair’s Review
The 2020 financial year was a tough one for SkyCity
and its stakeholders. The external events which
impacted the year are well known and the financial
performance of the company reflects those events.
It also reflects a great deal of skill, energy and
support from our stakeholders across the board
to react to those events. We have maintained a
strong asset, people, and capital base and barring
further negative external events SkyCity will recover
and grow.
The accounting and financial report on a year with
these shock events is inevitably complex. In this
report, and in our wider commentary on the
business, we endeavour to provide clear information
and guidance to enable investors and other
stakeholders to genuinely understand the past,
current and future of SkyCity.
The key events of the year, though well known to all
readers of this annual report, may be summarised
for the record as:
•
•
•
the ongoing delay to completion of the
New Zealand International Convention
Centre and Horizon Hotel project was deeply
exacerbated by the fire. The immediate impact
of the fire was effectively managed by our
people, as was the return to operations across
the Auckland site. The reestablishment of work
and a path to completion have also been difficult
tasks with effective progress made;
COVID-19 halted our business at every location.
Our people have effectively managed operations
during restrictive periods and with greater
operating freedom when pandemic regulations
allowed. But our operations and results across
the Group will continue to reflect a more difficult
environment for some time;
we have had no option, despite much
appreciated Government support for our people
during the COVID-19 crisis, but to substantively
restructure our business to meet this more
difficult environment;
4
•
•
•
in the course of this, we have prudently
restructured our funding, including raising new
equity to manage ongoing commitments and
operating risk;
the important SkyCity Adelaide expansion
project has moved towards substantive
completion effectively within the planned time
and budget. While this is an impressive facility, its
economic performance will not meet the original
expectations when it was launched in 2018.
Accordingly, we have been required to impair the
investment to reflect a realistic current value; and
we have successfully launched an online casino
business which is already a good contributor
to the Group financially and provides a good
base for participation in this growing part of the
casino business globally.
Obviously from such a momentous year there are
learnings. For the SkyCity Board, the important
immediate learnings are:
•
to recognise the resilience of the core gaming
business in each area where we hold a licence
and to ensure that we maintain our presence,
quality of service, financial control and host
responsibility/harm management processes
at the highest level;
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 L
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responding supportively. Finally, to those vital
people who make it all work – our customers in
the casinos in person or online, in our hotels and
meeting rooms, in our restaurants, bars, Sky Tower
and other facilities – our warm appreciation and
ongoing welcome.
Rob Campbell
Chair, SkyCity Entertainment Group
•
•
•
the importance of maintaining a strong balance
sheet and operating the business to provide
sustainable returns to investors;
to keep a strong focus on disciplined capital
allocation and not to make allocations which do
not fully reflect an appropriate return adjusted
for the risks involved; and
to conduct the business holistically within the
terms of the sustainability framework for SkyCity
which is detailed elsewhere in this annual report.
A few comments on the outlook for the current
financial year, comments which must reflect a high
degree of uncertainty given the global environment:
•
•
SkyCity can operate under current trading
conditions, but at present we do not have
an operating model which can optimise the
business to previous levels without a recovery
in the economy and international tourism,
including our International Business and
convention travel. So, while on our current
outlook we can expect continuity and some
growth, there is something of a holding position
across several aspects of our business; and
this means that, in this period, the SkyCity Board
and management are fully directed towards
efficient completion of committed projects,
improving the quality and efficiency of operating
our existing facilities, and being well prepared
equally to react to further adverse external events
and to take any genuine opportunities which
arise in the markets where we are present.
I wish to thank my fellow directors for their
assiduous attention to their duties over this difficult
time, our management team for their skill and
commitment in meeting some most unusual
challenges with aplomb, our people working in the
business (including those who have had to leave in
the restructuring) for what they have contributed
to keeping us all going and able to continue with
confidence, and to our external stakeholders for
Chair's Review
5
Chief Executive Officer’s Review
The year under review has been extremely complex
and challenging for SkyCity. It commenced with
good momentum with our operations trading at
record levels (at a revenue level) until October 2019,
when a significant fire broke out on the roof of
the New Zealand International Convention Centre
site. Fire and emergency crews battled over several
days to bring the fire under control with the fire
causing significant disruption to the Auckland
CBD, including an unprecedented three-day
closure of the entire SkyCity Auckland precinct.
The SkyCity Board and management team were
still focused on dealing with the impacts of the fire
when the COVID-19 pandemic emerged in early
2020, culminating in the mandated closure of
SkyCity’s properties in New Zealand and Adelaide
on 23 March 2020 following announcements by the
New Zealand and Australian Governments.
We were able to reopen our New Zealand properties
on 14 May 2020 (with the exception of Wharf Casino
in Queenstown which currently remains closed),
albeit initially with reduced operating hours and
subject to restrictions on mass gatherings and
physical distancing requirements. Our Adelaide
property was able to reopen on 29 June 2020
as part of the South Australian Government’s
three-stage approach to easing the COVID-19
restrictions. Then, from 12–30 August 2020,
our Auckland casino and entertainment facilities
were closed again and physical distancing and
hygiene requirements were reinstated at our
Hamilton and Queenstown properties when the
COVID-19 Alert Level increased to Alert Level 3
in Auckland and to Alert Level 2 for the rest of
New Zealand following a new outbreak in the
Auckland community.
An unprecedented number of significant strategic
decisions and actions have had to be taken to
mitigate the impacts of these events:
•
•
•
significant operational effort has gone into
closing and reopening our properties with
rigorous health and safety measures in place;
we rapidly restructured our New Zealand
workforce, downsizing it by around 25% to
ensure SkyCity is positioned to be sustainable as
a smaller domestically focused business; and
we executed a capital raising and debt
restructure to ensure that SkyCity has sufficient
liquidity and funding capacity.
These actions mean that SkyCity is well positioned
to deal with the foreseeable future. We have also
6
been aided by Government responses in the form
of wage subsidies and other assistance measures.
Our core domestic gaming business is resilient and
has returned to being cash positive and profitable.
The other aspects of our business that are more
reliant on international visitors (including VIP
gaming, hotels and restaurants) will clearly only fully
recover when country borders reopen. Our domestic
businesses have recovered more quickly than
anticipated when open and, if we can sustain this,
the business is not under threat and can wait it out
until the world recovers.
Fortunately, development work on the
SkyCity Adelaide expansion and hotel projects
and associated master planning projects was
able to continue over the period – these projects
continue to progress very well and remain
on-budget and on-time, with the SkyCity Adelaide
expansion and Eos by SkyCity, the new 120-room
luxury hotel, due to open before the end of 2020.
Work recommenced in late May 2020 on the
New Zealand International Convention Centre and
Horizon Hotel projects following the move to Alert
Level 3 of the COVID-19 Alert system in New Zealand
and we now expect Horizon Hotel to be delivered
during 2021 and the New Zealand International
Convention Centre to be completed during 2023.
The capital raising announced in June 2020 ensures
that our major construction projects remain fully
funded and that we are also able to continue with
smaller projects that will enhance operations.
The $230 million equity raising was well supported
and underpinned the restructure of our debt
facilities, enabling us to obtain covenant relief
through to 30 June 2021, securing extensions to
bank facilities due to mature in that period and
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 L
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additional debt facilities. We now have “buffer”
facilities of liquidity available to draw down should
the COVID-19 situation worsen, but at present this
is not required. Dividends are currently suspended,
but this will be reviewed against market and
trading conditions during the financial year ending
30 June 2021.
A positive feature of the year has been the launch of
SkyCity Online Casino, which operates out of Malta
but provides an attractive online entertainment
offering to New Zealanders. This business ramped
up significantly from March 2020 and has now
grown into a profitable operation despite the
very low key and conservative approach taken in
comparison to other offshore online businesses
targeting New Zealanders. We observed a slight
reduction in online gaming revenue following
the reopening of the New Zealand properties in
May 2020, but saw an increase in activity during
the recent closure in Auckland in August 2020
with customer registrations currently over 35,000.
We continue to prepare for a regulated online
industry in New Zealand and are supportive of
Government initiatives in this regard.
The result for the financial year ended 30 June 2020
is complicated by strategic actions taken in
2019 and 2020, the New Zealand International
Convention Centre fire and COVID-19 related
issues. Comparability between the FY19 and FY20
periods is impacted by COVID-19 related property
closures and the sale of the long term concession
over the SkyCity Auckland car parks (completed in
early FY20). In determining normalised earnings
relative to reported earnings, various adjustments
have been made, including the New Zealand
International Convention Centre fire impact,
a number of COVID-19 related adjustments and a
A$150 million impairment of the SkyCity Adelaide
casino licence.
Our domestic businesses have been performing
stronger than expectations when open in
New Zealand and South Australia, although the
outlook remains unpredictable as we adjust to
new social and economic settings. We reasonably
expect that, in the short to medium term, weaker
economies, lower personal disposable income
and changed entertainment habits, as well as
longer term travel restrictions, will result in SkyCity
being a smaller, domestically focused business.
International Business should recover once travel
restrictions are lifted, but the parts of our business
driven by corporate travel and by tourism, such
as our hotels and the Sky Tower, will take longer
to recover.
SkyCity’s strategic plan is focused on managing
the post COVID-19 recovery and completing
its major projects in Adelaide and Auckland,
which will underpin medium term earnings and
cash flow growth.
We are also able to continue with the many initiatives
that we have underway under our sustainability
pillars. Minimising harm to our customers remains
our core focus and we have made a number of
investments into technology over the past year,
significantly improving the tools that we have. We
will be investing further into digital technology to
improve our customer experience. We have the
challenge of rebuilding employee culture after the
significant restructure and we are very focused
on that as well as furthering initiatives relating to
workplace flexibility and diversity. We have made
good progress in refocusing our SkyCity Community
Trusts in New Zealand on initiatives that will enhance
the employability, wellbeing and advancement of
youth and we have upweighted strategies to ensure
our supply chain is ethical and supports local business.
We have followed through on our commitment to go
carbon neutral in Australia as planned (having gone
neutral in New Zealand last year) and we are well
advanced with solutions to reduce waste to landfill.
The COVID-19 crisis has reinforced how important
business profitability is as an underpin to any
sustainability initiatives – something that perhaps we
took for granted historically, but have now included
as a critical element of being sustainable in the short
and long term.
The past financial year has been incredibly
challenging and stressful for the entire SkyCity family.
We have had to make some significant, tough
decisions to ensure that our business survives and
continues to provide a great place to work and
precincts enjoyed by thousands of our customers.
The Board has been intimately involved with the
executive team in making these decisions, but we
would not be as well positioned were it not for the
enormous amount of hard work and effort made by
the wider teams at corporate and property levels.
The energy, selfless commitment and willingness
to keep stepping up the effort to deal with multiple
challenges is a humbling reflection of the company
culture and I would like to thank everyone for their
unwavering support in these unprecedented times.
Graeme Stephens
Chief Executive Officer
Chief Executive Officer's Review
7
SkyCity is investing A$330 million to transform SkyCity Adelaide into a world-class entertainment hub
– the new 12-storey building features a sweeping, curved golden façade, a luxury 120-room hotel, restaurants
and bars, conference and event facilities, a spa and wellness centre and expanded gaming experiences.
About this Annual Report
This annual report is a review of SkyCity
Entertainment Group Limited (SkyCity or the
company and, together with its subsidiaries,
the Group) and its subsidiary companies’
performance for the financial year ended
30 June 2020. Where appropriate, information
is also provided in relation to activities that
have occurred after 30 June 2020, but prior to
publication of this annual report.
This annual report has been prepared in accordance
with the Listing Rules and Corporate Governance
Code of NZX Limited, the New Zealand Companies
Act 1993 and the New Zealand Financial Markets
Conduct Act 2013 and (although SkyCity is not
required to comply with ASX Listing Rule 4.10,
which requires entities to include certain prescribed
information in their annual reports, as it has a
‘Foreign Exempt Listing’ status on ASX Limited)
substantially reflects the Listing Rules of ASX
Limited and the Corporate Governance Principles
and Recommendations (Fourth Edition) of the ASX
Corporate Governance Council.
This annual report has also been prepared with
due consideration of the International Integrated
Reporting Council’s International Integrated
Reporting Framework. Integrated reporting
applies principles and concepts that are focused
on bringing greater cohesion and efficiency to
the reporting process and adopting ‘integrated
thinking’ as a way of breaking down internal silos
and reducing duplication.
The non-financial information in this annual
report has been informed by the principles and
disclosures of the Global Reporting Initiative’s (GRI)
Sustainability Reporting Standards. Ernst & Young
has undertaken limited assurance (in accordance
with the International Standard on Assurance
Engagements (New Zealand)) over disclosures
associated with selected performance data
included in the Sustainability section included in
this annual report. A GRI reference index based
on the GRI Sustainability Reporting Standards is
included on pages 228–231 of this annual report.
Reporting Standards. This annual report
includes both reported and normalised financial
information. Our objective in providing normalised
financial information is to provide data that is useful
to the investment community in understanding
the underlying operations of the SkyCity Group
– the intention being to provide information
which is representative of SkyCity’s underlying
performance (as a potential indicator of future
performance), can be compared across years and
can assist with comparison between publicly listed
casino companies in New Zealand and Australia.
This objective is achieved by:
•
•
•
eliminating the inherent volatility (or 'luck' factor)
from International Business, which has variable
turnover and actual win percentage period
to period;
eliminating structural differences in the business
between periods; and
eliminating known different treatments with
other New Zealand and Australian publicly listed
casino companies.
Normalised numbers are a non-GAAP financial
measure. A reconciliation of reported and
normalised earnings and a description of the
differences are provided on pages 224–227 of this
annual report.
Certain totals, subtotals and percentages stated in
this annual report may not agree throughout due
to rounding.
Unless otherwise stated, all dollar amounts in this
annual report are expressed in New Zealand dollars.
An electronic copy of this annual report is available
in the Investor Centre section of the company’s
website at www.skycityentertainmentgroup.com.
This annual report is dated 3 September 2020 and
is signed on behalf of the SkyCity Board by:
The financial statements have been prepared
in accordance with the International Financial
Rob Campbell
Chair
Bruce Carter
Deputy Chair
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Year in Review
NOVEMBER
• Construction commenced
on the All Blacks Experience,
an exciting new venture
between New Zealand Rugby
and Ngāi Tahu Tourism, in
the Federal Street precinct at
SkyCity Auckland
• Six SkyCity Auckland restaurants
included in the prestigious
Cuisine Good Food Awards list
for 2019 in New Zealand. The Grill
was also awarded two hats and
Depot, Gusto at the Grand and
MASU by Nic Watt were each
awarded one hat
• SkyCity Entertainment
Group named a finalist in the
Most Improved Performance
category in the 2019 Deloitte
Top 200 Awards
JULY
• Rollout of a refreshed
SkyCity brand and logo
across the New Zealand
properties – with the new
logo reflecting the sum
of many parts of SkyCity’s
business and paying
homage to the stars of the
Southern Hemisphere
SEPTEMBER
• SkyCity announced as
the ‘Official Hotels and
Entertainment Partner’
for the Emirates Team
New Zealand defence of
the 36th America’s Cup
in March 2021
AUGUST
• SkyCity Online Casino
launched in partnership
with international
iGaming company Gaming
Innovation Group Inc
• Sale of long term concession
over SkyCity Auckland car
parks completed
• Launched new customer
websites, and new apps
for customers and SkyCity
Premier Rewards members,
in New Zealand
OCTOBER
• A significant fire broke
out on the roof of the
New Zealand International
Convention Centre (under
construction) resulting in
significant disruption to
the Auckland CBD,
a three-day closure of the
SkyCity Auckland precinct
and significant delay to the
completion dates for the
New Zealand International
Convention Centre and
adjacent Horizon Hotel
DECEMBER
• New external LED lightbulbs
installed on the Sky Tower,
supporting SkyCity’s climate
change commitment to
reduce carbon emissions
from lighting the Sky Tower
by 10%
• SkyCity joined the
New Zealand Government’s
Energy Efficiency and
Conservation Authority’s
Gen Less programme, which
empowers New Zealand
businesses and individuals
to live a climate-friendly
lifestyle by lowering energy
consumption
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JANUARY
• The Guardsman, a new
bar and restaurant,
opened at SkyCity
Adelaide following a
A$6 million restoration
of the Adelaide Railway
Station’s former Great
Dining Hall. The new
venue pays homage to
the Railway Station’s rich
heritage and features a
grand central bar, open
kitchen and a coffee front
MARCH
• Completed a $5.5 million
refurbishment of EIGHT, a
VIP table game area, and a
$6 million refurbishment of
our International Business
'Horizon' gaming suites
in Auckland
• All SkyCity properties closed
on 23 March 2020 following
announcements by the
Australian and New Zealand
Governments mandating
their immediate closure in
response to COVID-19
MAY
• The SkyCity Auckland,
Hamilton and Queenstown
properties (excluding
Wharf Casino) reopened on
14 May 2020 following the
New Zealand Government’s
decision to move to
Alert Level 2
• SkyCity moved forward
to further reduce its
New Zealand workforce and
commenced consultation
on a proposal to reduce its
rostered (waged) staff due
to the expected significant
impact of COVID-19 on its
operating environment and
financial outlook
0
2
0
2
FEBRUARY
• Fundraising activities
across the Auckland,
Adelaide and Hamilton
properties raised over
$55,000 for the South
Australia Country Fire
Service Foundation to
acknowledge and
support the devastating
Australian bushfires
APRIL
• Changes implemented
in response to COVID-19,
including significantly
reducing capital expenditure
and minimising operating
costs, including an
immediate restructure of
the management team and
salaried employee base in
New Zealand
• Eos by SkyCity announced
as the name of the new
120-room luxury hotel being
developed as part of the
A$330 million SkyCity Adelaide
expansion project, with the
first guests expected to be
welcomed in late 2020
JUNE
• Launched a $230 million equity raising
as part of a comprehensive funding
plan to strengthen SkyCity’s balance
sheet in response to uncertainty around
the impacts of COVID-19. In conjunction
with the equity raising, SkyCity also
secured the support of existing lenders by
way of covenant waivers/relief, extensions
to $170 million of upcoming debt
maturities and $160 million in
additional debt facilities
• S&P Global Ratings affirmed SkyCity
Entertainment Group Limited’s long term
issuer credit rating and its debt issue
ratings as BBB- (Negative Outlook)
• Restructure of the rostered (waged)
workforce in New Zealand completed
• Awarded a Silver Award in the 2020
Australasian Reporting Awards and a
Silver Award in the 2020 Australasian
Sustainability Reporting Awards for
SkyCity’s 2019 annual report
• SkyCity Adelaide reopened on
29 June 2020 as part of the South
Australian Government’s three-stage
approach to easing the COVID-19
restrictions
11
Creating Value
Our Business
As at 30 June 2020
3,817staff
5 properties across New Zealand and Australia
1 online casino
GAMING
5 land-based
casino licences
3,204
electronic gaming
machines
HOSPITALITY
19
restaurants
273table games
307automated table games
14
bars
HOTELS
SKY TOWER
635hotel rooms
328metres tall
FY20 REVENUE BY BUSINESS ACTIVITY
Reported
Normalised
%
71%
6%
7%
12%
4%
%
67%
10%
6%
10%
7%
Local Gaming
International Business
Hotel & Conventions
Food & Beverage
Other
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FY20 Outputs & Financial Results
FY20 revenue and annual visitation
GAMING
$496.0 million
including online
(reported)
$601.3 million*
including online
(normalised)
1.9million
visits from loyalty card members
to our land-based casinos**
HOSPITALITY
$76.8 million
3.5
million restaurant/bar covers
HOTELS
$34.6million
158,377
rooms occupied
SKY TOWER
$14.9 million
410,321
visits
$125.5 million
in taxes to Governments
(including GST, gaming tax and
income tax)
$295.8 million
in remuneration and benefits
to staff
$66.4 million
of dividends declared in relation
to FY20 period for shareholders
$204.5 million
to suppliers
$10.4 million
in community contributions,
levies and sponsorships
$347 million
of capital invested
$41.4 million
in interest paid to lenders
*Includes gaming GST.
** Calculated by reference to customers who used their SkyCity Premier Rewards cards to game, where one visit records
a customer's patronage on a day irrespective of how many times they used their card on that day.
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FY20 Outcomes & Impacts
Our sustainability vision recognises that, to be a sustainable business, we must
be a responsible business actively protecting and promoting the people we
serve and the places we share, whilst creating value for our shareholders.
SkyCity’s sustainability initiatives are therefore focused on doing good for our
customers, our employees, our communities, our suppliers, our environment
and our shareholders.
OUR CUSTOMERS
OUR PEOPLE
Significant investment in additional
Establishment of a $1 million SkyCity
host responsibility measures to improve
our ability to detect excluded persons
and continuous play, including the
introduction of facial recognition
technology across all SkyCity land-based
casinos, which has led to a significant
increase in the detection of excluded
persons returning to a SkyCity casino in
breach of their exclusion orders during
the period.
43 cameras
installed across SkyCity casinos for
facial recognition during FY20
1,757 customers
identified in breach of their exclusion
orders during FY20
FY19 – 874
As at 30 June 2020
21,327 customers
have downloaded the new SkyCity app
(launched in August 2019)
Employee Hardship Fund, from funds
contributed by the Senior Leadership Team
and other senior executives across the
business via voluntary salary reductions
and voluntary contributions by other staff
members, to assist employees impacted by
COVID-19.
Downsized our New Zealand workforce
by around
25%
in response to COVID-19
ZERO
fatalities or serious injuries
8% reduction
in Total Recordable Incident Frequency
Rate (TRIFR) from FY19 baseline
72% increase
in hazard identification reports from
FY19 baseline
SkyCity’s sustainability strategy is linked to seven of the 17 United Nations Sustainable Development Goals
(a set of goals to end poverty, protect the planet, and ensure prosperity for all as part of a new sustainable
development agenda) – Good Health and Well-being (Goal 3), Quality Education (Goal 4), Gender Equality
(Goal 5), Decent Work and Economic Growth (Goal 8), Responsible Consumption and Production (Goal 12),
Climate Action (Goal 13) and Partnerships to Achieve the Goal (Goal 17).
A full description of the Sustainable Development Goals is available at www.un.org/sustainabledevelopment.
SkyCity recognises that, for the Goals to be achieved, everyone needs to do their part and business and
industry play an important role. We are committed to playing our part in helping to achieve the Goals.
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2020
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OUR COMMUNITIES
OUR ENVIRONMENT
Contributed a total of $3.7 million to the
SkyCity was among the first major
four New Zealand SkyCity Community
Trusts for distribution to communities in
the Auckland, Waikato, and Queenstown
Lakes regions. In addition to company tax,
SkyCity paid over $33 million in gaming tax
and problem gaming levies derived from
SkyCity's gaming operations.
$3.7 million
paid to the SkyCity Community Trusts
FY19 – $4 million
$33.1 million
paid in gaming taxes and
problem gaming levies
FY19 – $43.1 million
OUR SUPPLIERS
SkyCity has approximately 800 key ongoing
significant suppliers across the SkyCity Group,
with a substantial number of these being in
the food and beverage sector.
Over
$530 million
paid to suppliers of goods and services
during FY20 (including capital expenditure)
FY19 – over $450 million
New Zealand companies to go carbon
neutral and was certified carbonzero
by Toitū Envirocare in New Zealand in
October 2019 having paid $86,000 to offset
the equivalent of 12,866 tonnes of carbon
(measured in FY19).
The carbon credits purchased through Toitū
Envirocare are generated by international
projects, which will fund 48,000 solar
household cookers for rural communities in
China and help build wind farm capacity in
India to replace fossil fuel alternatives.
Certified carbonzero in New Zealand by
offsetting in FY20 the equivalent of
12,866 tonnes CO2e
15,137 tonnes CO2e
total carbon footprint
FY19 – 19,093 tonnes CO2e
Sky Tower lighting upgraded
to LED resulting in a
10% energy saving
OUR SHAREHOLDERS
10 cents
total dividend per share (fully imputed)
FY19 – 20 cents per share
FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) has
confirmed that SkyCity Entertainment Group has been independently assessed according to
the FTSE4Good criteria, and has satisfied the requirements to become a constituent of the
FTSE4Good Index Series.
Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed
to measure the performance of companies demonstrating strong Environmental, Social and
Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market
participants to create and assess responsible investment funds and other products.
Creating Value
15
Performance
FY20 Highlights
SkyCity’s financial result for the financial year ended 30 June 2020 has been significantly impacted by the
New Zealand International Convention Centre fire and COVID-19 pandemic that emerged in New Zealand
and Australia in early 2020, with normalised EBITDA and NPAT for the Group for the period to 30 June 2020
negatively impacted but at the top-end of the guidance range provided at the time of our equity raising in
June 2020.
Our reported results were up significantly over the prior year however due to accounting for the
New Zealand International Convention Centre fire and the gain from the sale of the long term concession of
the SkyCity Auckland car park, partially offset by a A$150 million impairment of the Adelaide casino licence.
Pleasingly, our domestic business (which has historically accounted for over 85% of Group EBITDA) has
demonstrated its resilience and traded well ahead of expectations when open and fully operational
following the property closures in March 2020.
The key features of the FY20 result are:
EBITDA
Reported
Normalised
$348.3 million
$200.7 million
NPAT
Reported
Normalised
$235.4 million
$66.3 million
DIVIDEND
Interim dividend* (fully imputed) of
10 cents per share
EQUITY RAISING
$230 million
equity raising launched in June 2020 and successfully completed during June and July 2020
SKYCITY ONLINE CASINO
Over
35,000 customer registrations
SkyCity Online Casino has grown rapidly since its launch in August 2019 despite operational constraints,
with significant growth in its customer base over the period – with over 35,000 customer registrations as
at 31 August 2020 – and the business being profitable since April 2020
*AfinaldividendwasnotdeclaredforFY20duetorestrictionsinthecovenantwaivers/reliefsecuredaspartofthefundingplanannouncedby
thecompanyinJune2020.
16
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 Our Performance History
Group Revenue
L
A
R
E
N
E
G
n
o
i
l
l
i
m
$
1,200
1,000
800
600
400
200
0
1,008
867
1,084
919
1,029
878
1,101
1,119
1,125
*
816
822
780
FY15
FY16
FY17
FY18
FY19
FY20
Reported
Normalised
(IncludinggamingGST)
338
343
348
310
298
201
Group EBITDA
305 304
330 334
320
307
n
o
i
l
l
i
m
$
350
300
250
200
150
100
50
0.0
FY15
FY16
FY17
FY18
FY19
FY20
Earnings Per Share (EPS) and Dividend Per Share (DPS)
35.4
22.9
22.0
20.0
25.5
24.3
23.4
21.0
25.4 25.3
25.6
20.0
20.0
21.4
20.0
6.8
10.0
10.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
e
r
a
h
s
r
e
p
s
t
n
e
C
FY15
FY16
FY17
FY18
FY19
FY20
Enterprise Value
3,110
643
2,467
3,357
348
3,072
349
3,196
447
3,009
2,723
2,749
3,036
488
2,548
2,308
541
1,767
3,500
3,000
2,500
2,000
n
o
i
l
l
i
m
$
1,500
1,000
500
0.0
FY15
FY16
FY17
FY18
FY19
FY20
(1) Basedonthesharepriceandnumberofsharesonissueasat30Juneineachfinancialyear.
(2) Grosshedgeddebtlesscashatbankasat30Juneineachfinancialyear.
*This is a summation of the first six lines on the face of the Income Statement.
Note: FY19 and prior year results include the Darwin operations.
Reported
Normalised
ReportedEPS
NormalisedEPS
DeclaredDPS
EquityValue(1)
NetDebt(2)
Performance
17
Diversity Snapshot
SkyCity is a major employer with over 3,800 staff. We employ a diverse range of people
at all skill levels and aim to create an environment where people are at the centre,
are motivated to work hard, progress in their careers and are empowered to grow
and achieve.
The following graphic shows the diverse makeup of our workforce as at 30 June 2020 and, where relevant,
as a comparison against our workforce numbers as at 30 June 2019.
58%
ofourworkforce
are36yearsold
andunder
FY19 – 59%
36
YEARS
averageageof
ourworkforce
FY19 – 35 YEARS
79
YEARS
ageofouroldest
staffmember
FY19 – 83 YEARS
1%
identifyashaving
adisability
FY19 – 1%
Staffspeak/writein
57
different
languages
Top3
non-English
languages:
Mandarin
Tagalog
(Philippines)
Hindi
STAFF
3,817
(full-time,part-time
andcasual)
FY19 – 5,031
6%
identifyasbeinga
memberofthe
LGBTTI+community
FY19 – 6%
18
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020
L
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The gender composition of SkyCity’s directors, officers, senior executives and total workforce as at 30 June 2020
and, comparatively as at 30 June 2019, is set out below:
Female
Male
Female
Male
2020
Number % Number %
Total
2019
Number % Number %
Total
Directors
Officers
Senior Executives
2
3
4
40%
43%
40%
3
4
6
60%
57%
60%
5
7
10
Directors
Officers
Senior Executives
2
3
4
33%
38%
36%
4
5
7
67%
62%
64%
6
8
11
Total Workforce
1,832
48%
1,980
52% 3,812
Total Workforce
2,456
49%
2,569
51% 5,025
In the above tables:
•
•
•
‘officers’ are the Chief Executive Officer and those directly reporting to the Chief Executive Officer, other than the Executive Assistant;
‘senior executives’ are, with the exception of the Chief Executive Officer, those who hold a strategic position (as determined by the
People and Culture Committee from time to time) and are noted as a ’senior executive’ in the SkyCity Board Charter; and
the ‘total workforce’ number does not include those who identify as gender diverse and those who elected not to identify as being
female, male or gender diverse.
51%
men
FY19 – 51.1%
1%
genderdiverse
FY19 – 0.1%
39%
ofleadershiproles
heldbywomen
FY19 – 38%
48%
women
FY19 – 48.8%
AGE
GenerationZ(<23years)19.2%
Millennials(24–36years)38.4%
GenerationX(37–53years)31.4%
BabyBoomers(54–75years)10.9%
Veterans(76–93years)0.1%
FY19
18.8%
40.8%
28.8%
11.5%
0.1%
Top10ethnicities*
staffidentifywith:
Chinese
NewZealander
Indian
Australian
Māori
OtherAsian
Filipino
European
Samoan
Other
European
17%
15%
11%
11%
8%
7%
6%
6%
3%
2%
*Givenasapercentageofthosestaff
memberswhoprovideddetails
abouttheirethnicity.
Diversity Snapshot
19
Communities
need good
businesses
By creating value for others,
we create value for SkyCity.
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Group Strategy
In 2018, we announced a refreshed
Group medium term strategy which
has a clear focus on the creation of
both sustainable shareholder returns
and enhanced social and sustainability
initiatives critical to the long term
viability and success of SkyCity.
Key considerations when setting the strategy in
2018 were:
•
•
•
•
•
profitability of our business is roughly 80%
from New Zealand and 20% from Australia.
Shareholders are comfortable with the relatively
low country risk and regulatory environments
that these jurisdictions offer and we are likely
to remain focused on this region for the
foreseeable future;
our business is predominantly gaming-led,
with roughly 80% currently coming from the
casino component. The long term, exclusive
nature of our land-based casino licences
provides a solid underpin to the risk profile of
the business. We have strategically evaluated
our existing casino licences to ensure we are
maximising the potential within them and have
identified further opportunity for growth;
there are unlikely to be many (if any) new
land-based casino licence opportunities in our
jurisdictions of operation, so growth (other than
organic growth) will have to come from other
lines of business. The balance of our business
essentially derives from hotels and restaurants.
Our restaurants are relatively low margin and
exist primarily to service our gaming, hotel
and conventions customers and to ensure
that our destinations remain relevant in their
communities. Our hotels are higher margin
businesses and there is an opportunity to scale
up our portfolio and expertise;
we are cognisant of a strategic need to
remain abreast of developments in the online
and digital space and, where appropriate,
to ensure that we take up opportunities that
will ensure we continue to offer a relevant form
of entertainment;
a review of our existing precincts to ensure that
we are maximising opportunities has highlighted
areas of potential investment into premium
gaming spaces, hotels (as highlighted above) and
entertainment to ensure our destinations remain
relevant to customer demand. Where necessary,
we are prepared to acquire property to ensure
we are future-proofed;
•
we have two major projects in progress which
still require significant investment to complete
over the next few years. While we are very
comfortable with our ability to service and
repay the debt funding for these projects,
we currently have limited debt capacity for
other expansionary projects or initiatives in the
short term. Any funding requirements for new
initiatives will be raised through sale of non-core
assets and/or partnering using a “capital lighter”
approach; and
•
the relatively high dividend yield that SkyCity
offers is valued by shareholders and should be
preserved and recognised when looking at any
future funding requirements.
Despite the challenges presented by the COVID-19
global pandemic, SkyCity’s Group strategy
remains relevant today with an immediate focus
on managing the post COVID-19 recovery and
completing the major projects in Adelaide and
Auckland which will underpin medium term
earnings and cash flow growth. The investments
we make generate wide-ranging benefits for
our communities and through the New Zealand
International Convention Centre and Horizon Hotel
project in Auckland, plus the casino expansion and
‘Eos by SkyCity’ hotel development in Adelaide,
we will support the economic and tourism
recoveries in both communities.
Given the uncertainty still facing the business
however, it is unlikely that any large, new,
capital intensive developments will be advanced.
The balance sheet capacity and liquidity buffers will
be preserved to protect against possible trading
downside scenarios and potential future COVID-19
related closures. Consequently, hotel development
and property master planning and development
initiatives are currently on hold although still
continue to be refined.
SkyCity has historically delivered a relatively
high dividend yield for shareholders – however,
dividends are currently suspended due to covenant
waivers/relief secured as part of the funding plan
announced in June 2020. SkyCity will be reviewing
its dividend policy over the coming months with the
aim of resuming dividend payments later in 2021.
21
Our Vision
To be the leader in gaming, entertainment
and hospitality in our communities
Our Business Goals
Improve
our operating
performance
Optimise
our existing
portfolio
Grow and
diversify our
business
Our Character &
Culture Goals
Offer a great
and safe
place to work
Always put
customers
first
Be responsible
leaders in our
communities
22
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 L
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This section provides a summary of SkyCity’s
performance and strategic positioning to create
value during the financial year ended 30 June 2020
and our priorities for the year ahead.
FY20 Performance –
Our Business Goals
Improve our Operating Performance
During the year in review, SkyCity faced significant
challenges arising from the fire at the New Zealand
International Convention Centre and the impacts
of COVID-19. We were able to move quickly to right
size our operations for our expected future demand
environment and to stand up our operations
on reopening. Following implementation of the
labour restructure in New Zealand during the
period, SkyCity expects to deliver $50 million in
annualised cost savings and a more flexible and
resilient operating model going forward to be able
to effectively manage an uncertain domestic and
international environment.
The benefits of investment in new gaming
product, product management and changes
to floor layout continue to be realised across
the Group, particularly in Auckland, as is our
ongoing investment in premium/VIP gaming.
SkyCity continues to leverage complementary assets
to drive gaming visitation (ie. hotels, car parking and
casino food and beverage) and focus on targeted
and tactical marketing as a cost-effective tool for
driving profitable visitation. The strong performance
of our gaming machine business when open post
property closures has been particularly pleasing
given its importance to Group earnings and value.
We continue to make good progress on our ICT
investment and digital capability. We have delivered
significant change to critical ICT infrastructure and
are now at a point where we can focus on initiatives
to enhance the customer experience, centred
around web and mobile, customer relationship
management and data analytics.
Optimise our Existing Portfolio
We have progressed a number of key initiatives
to optimise our existing portfolio over the year
in review.
Excellent progress has been made on the
SkyCity Adelaide expansion project during
the year. The project is progressing well and is
due to open before the end of 2020. In addition,
the significant master planning works for the existing
SkyCity Adelaide business within the Railway Station
building remain on track to complete in time for
the expansion opening. We expect to open the
facilities in a staged manner, reflecting customer
demand, with a focus initially on local and interstate
customers (given expected ongoing international
border closures). Significant focus is being given to
preparing SkyCity Adelaide for operationalisation to
ensure a smooth handover and ensure we can hit
the ground running from opening. We are currently
in the process of hiring up to 700 new employees
who will be required when the expansion is fully
operational and expect to implement new regulatory
reforms (banknote acceptors, ticket-in ticket-out
(TITO) technology on the main gaming floor and a
multi-protocol gaming system) from October 2020,
following completion of the South Australian
Government’s regulatory review. Walker Corporation,
which is developing Festival Plaza and a 1,500-space
car park (adjacent to SkyCity Adelaide), is progressing
satisfactorily, but slightly behind schedule, and we
now expect the car park to be handed over towards
the end of FY21. SkyCity still expects to deliver the
project in-line with its A$330 million budget and
that the project will transform SkyCity Adelaide
into a world-class entertainment complex. As
previously flagged, SkyCity has booked a A$150
million impairment of SkyCity Adelaide’s carrying
value due to the revised timeframe to achieve long
term potential earnings post expansion, exacerbated
by the impact of COVID-19 – this is a non-cash item
which reduces intangible asset value (casino licence)
and does not impact debt covenant calculations.
The fire at the New Zealand International
Convention Centre (NZICC) site during
October 2019, coupled with disruptions to
construction activity as a consequence of COVID-19
restrictions, has resulted in further significant
delays to the project. At this stage, we expect
Horizon Hotel to be completed during 2021 and the
NZICC during 2023, with the possibility of hosting
conferences by late 2023 or early 2024. We expect
the 600 car parks damaged by the fire to be
returned by the end of FY21 and the balance of the
car parks (650 spaces) alongside completion of the
NZICC. Despite the impacts of the fire and COVID-19
on the project timetable and delivery, we remain
comfortable with our contractual position –
Fletcher Construction is required to complete
the project and, during May 2020, we secured
a two-year extension to the long stop date to
complete the NZICC (to 2 January 2025) with the
New Zealand Government.
Group Strategy
23
As previously reported, appropriate project
insurance is responding to the NZICC and
Horizon Hotel reinstatement, with the first tranche
of the insurance proceeds (totalling $105 million)
received. We expect the total cost to reinstate the
NZICC and Horizon Hotel to be fully covered by
insurance and, accordingly, there are no changes
to previous guidance for the total project costs to
SkyCity (of around $750 million). Whilst the further
delays on the project are regrettable, the long term
investment thesis for the project remains intact –
the NZICC will support long term growth in tourism
expenditure and be a significant demand driver
for our Auckland precinct, in addition to having
secured an exclusive casino licence for our key
property out to 2048.
Beyond the major projects, master planning
and development opportunities in Auckland,
Hamilton and Queenstown continue to be refined
– however, major decisions are currently paused
due to COVID-19, balance sheet constraints for the
foreseeable future and an uncertain outlook for
our tourism-related businesses. Significant long
term option value remains embedded in our
Auckland precinct (including 2,500sqm of land
able to be developed) and a potential hotel
opportunity in Hamilton, whilst currently 'on hold', is
a complementary asset which would support long
term growth of the property. We continue to evaluate
future options for our Queenstown properties given
their reliance on VIP gaming and international
tourists. A range of other smaller projects were
completed during the year in review – most notably,
the major refurbishment and expansion of premium
gaming facilities in Auckland and upgrades to
Marble Hall and associated facilities at SkyCity
Adelaide, which included the opening of The
Guardsman, a South Australian themed restaurant
and bar in the historic Railway Station building.
We are continuing to progress further opportunities
to release capital from property assets and
restructure over the medium term, which includes
exploring an internal restructuring of our operations
and property assets. A potential opportunity exists
to establish standalone funding structures and
unlock unrecognised value in property assets
(with an estimated fair value of $2 billion of land
and buildings owned as at 30 June 2020) – with
our intention to separately report our operations
and property assets once the internal restructure
is complete. We continue to evaluate the potential
sale of certain non-core assets, such as the
AA Centre (SkyCity HQ) in Auckland once current
building works and leasing are completed.
SkyCity remains focused on effective capital
discipline and, following announcement of our
funding plan which included a $230 million equity
raising successfully executed during June and
July 2020, our balance sheet is in a strong position
to deliver on our medium term strategic plan.
Following the equity raising, we have sufficient
liquidity to fund our major projects in Adelaide and
Auckland and to respond to a range of downside
scenarios, including a longer and more protracted
recovery in New Zealand and Australia and/or
further COVID-19 disruptions. Our balance sheet
capacity for future growth projects and/or capital
management will be reviewed when we are no
longer in reliance on covenant waivers/relief secured
as part of the funding plan and the domestic and
international environment becomes more certain.
We remain committed to our BBB- (negative
outlook) credit rating which S&P Global Ratings
re-affirmed following the equity raising and well
positioned to raise further debt capital if required
in the future.
Grow and Diversify our Business
We launched SkyCity Online Casino, an offshore
online casino, in August 2019 with Gaming
Innovation Group (GiG) via a Malta-based
subsidiary. The site, which offers high quality host
responsibility and a brand name New Zealanders
can trust, has seen strong growth during FY20 with
over 25,000 customer registrations by year-end
(over 35,000 as at the end of August 2020) and
the business trading profitably from April 2020.
GiG provides SkyCity with a full-suite online casino
solution, which includes a technical platform,
gaming content, managed services and front-end
development. SkyCity supports future regulation
of the New Zealand online casino market,
including introducing an appropriate licensing
24
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 L
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regime for operators and imposing taxes and
host responsibility requirements. Following a
public consultation commenced during 2019, the
Department of Internal Affairs (the New Zealand
gambling regulator) is developing a policy
framework for potential regulation. While ultimately
a regulated online gaming market in New Zealand
remains the preferred solution for SkyCity, the
launch of SkyCity Online Casino is an important
step on the journey of pursuing opportunities to
grow and diversify our earnings, addressing a fast
growing industry which is highly complementary to
our land-based activities and offering customers a
multi-channel gaming experience.
SkyCity’s strategy for growing its hotel business
remains focused on the successful delivery of
Eos by SkyCity and the Horizon Hotel in Auckland
over the next 12–18 months. Longer term hotel
development opportunities on existing precincts
continue to be refined, but major decisions are
currently paused due to COVID-19.
As an entertainment and hospitality provider,
SkyCity is challenged to stay relevant in relation
to new forms of entertainment. In addition to
our foray into online gaming, by late 2020, the
existing SkyCity Auckland Convention Centre will
become home to the All Blacks Experience and
Weta Workshop, both providing unique, interactive
customer experiences. Federal Street will become
Auckland’s leading entertainment zone ensuring
the long term relevance of our precinct and appeal
to a broad range of demographics.
SkyCity also continues to monitor and evaluate
regional merger and acquisition opportunities in its
industry, noting that inorganic growth opportunities
are likely to emerge as a consequence of the impact
of COVID-19 on the casino industry and both the
domestic and global economies.
FY20 Performance – Our
Character and Culture Goals
At SkyCity, we need to continually focus on
protecting and enhancing our social licence to
operate. Following good progress during FY18
and FY19, we have continued to invest in key
sustainability initiatives, particularly in the areas
of diversity and inclusion. We continue to actively
promote women into leadership positions and
are proud of the gender and cultural diversity we
have across the business. We are also committed to
providing safe, fun and progressive environments
for our customers, suppliers and staff. We continue
to deliver on our Group health and safety strategy,
which is centred around preventing harm and
building awareness, particularly in response to
the risks posed by COVID-19 in our communities.
We remain focused on youth development and
supporting our most vulnerable staff. We continue
to meaningfully reduce our gender pay gap
across the New Zealand businesses and the final
instalment of our ‘$20 by 2020’ wage initiative is
scheduled to be implemented in New Zealand by
the end of 2020.
Being a responsible member of our community
remains a key aspect of our sustainability
framework and Group strategic plan. In the year in
review, we achieved carbon neutral status across our
New Zealand operations, launched allocations for
our employee-led SkyCity Green Fund (which will
invest in projects globally to offset emissions) and
implemented initiatives to reduce waste to landfill
and water usage. We have refocused the SkyCity
Community Trusts to ensure targeted allocations
and contributions go to those causes most worthy
within our communities. The establishment of the
SkyCity Employee Hardship Fund in April 2020,
totalling $1 million, has assisted staff facing financial
difficulties as a consequence of the impacts of
COVID-19.
At SkyCity, we are proud of, and rely on, our
culture of compliance, which encourages people
to focus on doing the right thing by themselves,
their teammates, the company and stakeholders.
To ensure our future success across various financial,
social and human capitals, it is important to
continue conducting our business holistically within
the terms of our sustainability framework.
Group Strategy
25
Outlook for FY21
Assuming there is no adverse change to the
current COVID-19 outlook in New Zealand and
South Australia, we expect Group normalised
EBITDA to be above FY20, but still below
pre-COVID-19 and FY19 levels.
We expect the domestic businesses to continue to
perform well when open (although we remain well
prepared for the possibility of further closures), but
are planning for negligible International Business
and international tourism activity due to ongoing
international border closures. At a property/unit level:
•
•
Auckland performance is expected to return to
trends observed prior to the second property
closure in August 2020, driven by a resilient
domestic gaming performance and cost savings,
offset by weaker performance from non-gaming
businesses;
Hamilton is expected to deliver good
performance versus the prior comparable period
– predominantly domestic business underpinned
by positive gaming machine activity and
cost savings;
•
•
•
•
Queenstown is expected to be adversely
impacted by continuing international
border restrictions;
the Adelaide expansion is expected to open in
phases during FY21 (depending on the operating
environment due to COVID-19) and we expect
EBITDA to be broadly consistent with FY19 levels;
negligible International Business turnover
is expected, with fixed operating costs for
International Business of around $750,000 per
month; and
SkyCity Online Casino is expected to deliver a
more meaningful contribution.
SkyCity’s dividend policy is to be reviewed during
1H21. We are not currently able to pay an interim
dividend due to reliance on covenant waiver/relief
(for the December 2020 testing period) secured as
part of the funding plan announced in June 2020,
but are expecting to pay a final dividend for FY21
in September or October 2021 if there are no
significant adverse changes to the current COVID-19
status in New Zealand and South Australia.
Our Business Goals
FY21 Priorities
Improve our
operating
performance
•
Manage COVID-19 recovery following reopening of properties
• Maintain a flexible operating model to respond to COVID-19 restrictions
•
•
•
Increased focus on customer experience management (CXM) and data analytics
Continue growth in core Auckland gaming business
Implement new information and communications technology (ICT) systems,
including data management, Internet Protocol television (IPTV) and
facial recognition
•
Continue to pursue operating efficiencies and cost savings
•
•
•
•
Complete SkyCity Adelaide expansion project by the end of 2020 and
leverage benefits
Manage reinstatement of the New Zealand International Convention Centre and
Horizon Hotel project following the fire and impacts of COVID-19
Enhance Auckland main gaming floor customer experience, including new bar
and food court
Enhance Auckland VIP gaming experience, including launching BLACK – a new
gaming area for our VIP customers
• Refine development opportunities in Auckland, Hamilton and Queenstown
•
Explore potential sale of non-core assets, such as the AA Centre (SkyCity HQ)
in Auckland
Optimise our
existing portfolio
26
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 L
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Our Business Goals
FY21 Priorities
Grow and diversify
our business
•
•
•
Progress opportunity to address online casino market in New Zealand
Monitor and evaluate regional merger and acquisition opportunities in
our industry
Support opening of new entertainment attractions, All Blacks Experience and
Weta Workshop, in Auckland
Our Character and
Culture Goals
Offer a great and
safe place to work
FY21 Priorities
• Focus on maintaining staff resilience, morale and motivation
•
Maintain a cohesive management team focused on strengthening the
SkyCity culture
• Continuous improvement in health and safety performance
• Continue to promote awareness of mental health risks
•
•
Zero work-related fatalities on our sites and/or sites where SkyCity has primary
control or management responsibilities
Deliver employment opportunities for youth through our Project Nikau
programme
• Maintain labour practices commensurate with an employer of choice
•
Undertake safety engagement activities that promote active and visible
safety leadership
Always put
customers first
• Maintain best practice host responsibility standards across all properties
• Enhance our facial recognition systems
Be responsible
leaders in our
communities
•
•
•
•
•
•
Build foundations for a new customer data platform to provide more relevant
insights and communications
Continue to improve the performance of the SkyCity Premier Rewards loyalty
programme and customer experiences across each property
Maintain leading position on diversity and inclusion through active engagement
on issues and with stakeholder groups
Measure and reduce SkyCity’s carbon footprint and retain carbon neutral status
Successfully allocate funds from the SkyCity Employee Hardship Fund to support
staff impacted by COVID-19
Commence allocations to projects nominated by the employee-led SkyCity
Green Fund
•
Implement initiatives to reduce waste to landfill and water usage
Group Strategy
27
Delivering
memorable
entertainment
experiences
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About SkyCity
SkyCity is New Zealand’s largest tourism, leisure and entertainment company and is
dual listed on the New Zealand and Australian stock exchanges.
As one of three major publicly listed casino
operators in Australasia, SkyCity operates integrated
entertainment complexes in New Zealand
(in Auckland, Hamilton and Queenstown) and in
Adelaide, Australia – each featuring casino gaming
facilities and premium restaurants and bars,
which appeal to both domestic and international
visitors alike.
SkyCity also offers award-winning hotel
accommodation in Auckland at The Grand
by SkyCity and SkyCity Hotel. SkyCity’s hotel
offering will shortly be complemented by Eos by
SkyCity, a new 120-room luxury hotel due to open
in Adelaide, South Australia, before the end of 2020
and Horizon Hotel, a new 300-room 5-star hotel
now expected to be completed in Auckland during
2021 (having been impacted by the significant fire
that broke out at the New Zealand International
Convention Centre in October 2019 and the
COVID-19 pandemic).
In August 2019, SkyCity launched SkyCity Online
Casino, an offshore online gaming business for
New Zealanders, as a logical extension of its
land-based casino operations. Whilst the business is
still very much in its infancy, SkyCity is encouraged
by SkyCity Online Casino’s performance since
launch. As at 31 August 2020, there were over
35,000 registered SkyCity Online Casino customers.
SkyCity employs over 3,800 staff across its
operations in New Zealand and Australia across
more than 180 job types, with around 2,500 staff
based at its flagship property in Auckland.
SkyCity Online Casino
Malta
SkyCity Auckland &
Group Head Office
SkyCity Hamilton
SkyCity Queenstown
and SkyCity Wharf
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SkyCity Adelaide
OUR HISTORY AT A GLANCE
2020
• COVID-19 pandemic temporarily closes all SkyCity
properties in New Zealand and Adelaide, South Australia
2019
• SkyCity sells SkyCity Darwin
• SkyCity Online Casino launches offshore
• SkyCity sells long term concession (licence to operate) over
SkyCity Auckland car parks to Macquarie Principal Finance Group
• A significant fire broke out at the New Zealand International
Convention Centre (under construction)
2018
• Construction commences on the SkyCity Adelaide expansion project
2016
• The first sod was turned on the New Zealand
International Convention Centre/Horizon Hotel site
2013
• SkyCity acquires SkyCity Wharf in Queenstown
2012
• SkyCity acquires full ownership of SkyCity Queenstown
2005
• SkyCity acquires full ownership of SkyCity Hamilton
2004
• SkyCity acquires SkyCity Darwin
2002
• SkyCity Hamilton opens
2000
• SkyCity Queenstown opens
• SkyCity acquires SkyCity Adelaide
1999
• SkyCity lists on the Australian stock exchange
1998
• Harrah’s management contract ends and SkyCity becomes
a New Zealand-managed operation
1997
• Sky Tower opens in Auckland
1996
• SkyCity opens its flagship SkyCity Auckland complex with Harrah’s
Entertainment (now Caesars Entertainment), the largest casino
entertainment operator in the United States, as the operator
• SkyCity lists on the New Zealand stock exchange
1994
• Construction of the SkyCity Auckland complex commences
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Auckland
Property
General Manager
SkyCity Auckland, New Zealand
Opened
1996
Casino Venue Licence
Runs until 2048*
Michael Ahearne, Chief Operating Officer
Facilities
• Casino
• Hotels
• Food and beverage
• Entertainment
• Out-catering
• Car parking
• Sky Tower
• Theatre
• esports broadcasting studio
• Telecommunications and
broadcasting facilities
Licensed Gaming Product
• 1,877 electronic gaming machines
Workforce
FY20 Revenue
• 150 table games
• 240 automated table games
~2,500 staff
$451.0 million** (reported)
$497.3 million (normalised)
*The casino venue licence can be renewed for a further period of 15 years pursuant to sections 134–138 of the New Zealand Gambling Act 2003.
**Excludes New Zealand International Convention Centre fire income and the sale of the Auckland car park concession.
Located in the heart of Auckland’s CBD,
SkyCity Auckland is the flagship property of the
SkyCity Entertainment Group and features a casino,
two award-winning hotels – The Grand by SkyCity
and SkyCity Hotel, bars and restaurants, a 700-seat
theatre and the iconic Sky Tower.
Opened in 1997, the 328-metre tall Sky Tower
has been an icon of Auckland’s skyline for over
20 years and attracts over 500,000 visitors each
year. As the tallest free-standing structure in
the Southern Hemisphere, visitors can enjoy
breathtaking views right across Auckland from the
Sky Tower’s two observation decks or while dining in
one of three restaurants in the Sky Tower, including
Auckland’s only 360-degree revolving restaurant.
At the very top of the Sky Tower, a 93-metre
communications mast accommodating VHF, UHF,
AM and FM broadcasting and telecommunications
antennas provides telecommunications and
broadcasting facilities to the telecommunications
industry. The Sky Tower is also home to
New Zealand’s only esports broadcasting studio.
SkyCity is currently investing more than
$700 million within the SkyCity Auckland precinct
with the development of the New Zealand
International Convention Centre, an adjacent
laneway, over 1,250 additional car parking spaces
and the new 300-room, 5-star Horizon Hotel.
This development was originally expected to be
completed in 2019 – however, due to initial delays by
the contractor, the significant fire that broke out at
the New Zealand International Convention Centre
in October 2019 and the subsequent impacts of the
COVID-19 pandemic that emerged in early 2020,
About SkyCity
31
Horizon Hotel is now expected to be completed
during 2021 and the New Zealand International
Convention Centre and adjacent laneway are
expected to be completed during 2023.
The New Zealand International Convention Centre
will be New Zealand’s premier convention centre
enabling New Zealand to attract major international
conferences as well as having capability for
sporting events, theatre and musical performances.
The centre is designed to be a welcoming, open
building complemented by a fresh new streetscape
for local, national and international visitors alike to
enjoy. Two of the largest pieces of public art ever
created in New Zealand, commissioned by SkyCity
from New Zealand artists Sara Hughes and Peata
Larkin, will adorn the exterior of the New Zealand
International Convention Centre and span a total
of 5,760sqm.
The 5-star Horizon Hotel will bring 300 new
high-end rooms to the Auckland CBD and will
be uniquely connected via an air bridge over
Hobson Street to three city centre blocks across
the New Zealand International Convention Centre
and SkyCity Auckland’s entertainment precinct.
It will also be located directly above a new retail
and dining laneway that will connect Nelson and
Hobson Streets, and adjacent to Federal Street’s
award-winning restaurants and bars.
During the last financial year, SkyCity completed
a $5.5 million refurbishment of EIGHT, a VIP
table game area located on Level 8 of the
SkyCity Auckland main site. A new $22 million
BLACK and Ultra VIP gaming machine area on
Level 9 of the SkyCity Auckland main site was
scheduled to open in April 2020 but, due to
COVID-19 related delays, will now open later
this year. These new areas will provide an unrivalled
VIP offering and experience to our domestic
VIP customers.
Two new attractions are expected to open
at SkyCity Auckland before the end of 2020.
The All Blacks Experience is a joint venture between
New Zealand Rugby and Ngāi Tahu Tourism and will
provide visitors with a state-of-the-art, interactive
experience showcasing the All Blacks. Through the
use of innovation and technology, it will provide a
full sensory, interactive, and immersive experience
for all New Zealanders and visitors to celebrate
New Zealand’s rugby heritage, achievements and
culture – bringing together the stories of our rugby
legends, the drama and excitement of test match
rugby, and the mastery and legacy of the All Blacks.
Academy Award-winning design and effects
company Weta Workshop will open an immersive
attraction to complement its behind-the-scenes
tours at their Miramar headquarters in Wellington.
Over the last financial year, we have also continued
to evaluate our master plan for the SkyCity Auckland
complex with ongoing concept development and
feasibility analysis to explore opportunities for further
accommodation, food and beverage, new gaming
spaces and entertainment offerings. Our vision is
for SkyCity Auckland to be a customer-centred
destination with an ecosystem of mutually beneficial
places – buildings, experiences and public spaces.
As part of this broader master planning programme,
SkyCity has acquired over $100 million of property
around the SkyCity Auckland precinct over recent
years – with the SkyCity Auckland footprint now
spanning the majority of three blocks in the
Auckland CBD (~3.5 hectares) with ~295,000sqm of
gross floor area. In light of the COVID-19 pandemic, it
is unlikely that any significant commitments will be
made in the short term until there is greater certainty
of the domestic and international economic
environments.
FY20 PERFORMANCE
SkyCity Auckland delivered a robust performance in
FY20 despite significant external events impacting
the business. Good momentum was achieved
prior to the fire at the New Zealand International
Convention Centre and impact of COVID-19,
including record local gaming activity for the eight
months to 29 February 2020.
The property achieved positive performance from
reopening in mid-May 2020 until the further
mandated closure on 12 August 2020 (in response
to an isolated COVID-19 outbreak in the greater
Auckland area), particularly from gaming machines,
despite reduced capacity and limited marketing
and promotional activity. The non-gaming
businesses performed satisfactorily, particularly
the hotels. Local gaming activity during the
period from 1 June – 11 August 2020 returned to
pre-COVID-19 levels.
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The new BLACK gaming machine area at SkyCity Auckland will cater for our domestic VIP customers.
FY20 ACHIEVEMENTS
The Sugar Club and Huami were both named in Metro Magazine’s 2019 Top 50 Bars
(August 2019)
East Day Spa, located in The Grand by SkyCity, was named New Zealand’s Best Hotel
Spa at the 2019 World Spa Awards (October 2019)
Six SkyCity Auckland signature restaurants, The Grill, Gusto at the Grand, MASU by Nic Watt,
Depot, Federal Delicatessen and Huami, were named in the prestigious 2019 Cuisine Good
Food Awards list, with The Grill receiving two hats and each of Depot, Gusto at the Grand
and MASU by Nic Watt receiving one hat (November 2019)
The Sky Tower was named by TripAdvisor as #1 of 203 things to do in Auckland Central
About SkyCity
33
Hamilton
Property
General Manager
Opened
Casino Venue Licence
Facilities
SkyCity Hamilton, New Zealand
Michelle Baillie
2002
Increased ownership from 70% to 100% in 2005
Runs until 2027*
• Casino
• Food and beverage
• Conventions
• Car parking
• Entertainment
• Tenpin bowling
Licensed Gaming Product
• 339 electronic gaming machines
Workforce
FY20 Revenue
• 23 table games
~300 staff
$52.3 million (reported)
$58.8 million (normalised)
*The casino venue licence can be renewed for a further period of 15 years pursuant to sections 134–138 of the New Zealand Gambling Act 2003.
Situated within Hamilton’s historic Chief Post
Office, in a building designed to maximise a superb
riverside location on the banks of the Waikato
River, SkyCity Hamilton features a casino, bars and
restaurants, a conference centre and Hamilton’s
only tenpin bowling alley.
The SkyCity Hamilton business has been on a
transformational journey over recent years with the
opening of a new food and beverage development
in 2015, the addition of a modern tenpin bowling
alley, Bowl and Social, in 2016 and the addition
of X-Golf, a virtual golf simulator, and a new café
in 2019. A new Baccarat lounge was opened on the
casino floor in mid-July 2020.
Over the last financial year, we continued to
progress our master plan for the SkyCity Hamilton
complex to explore further opportunities to leverage
the property’s riverbank location, including a
potential hotel development and additional food
and beverage and entertainment offerings, and
to explore opportunities to optimise the product
mix at SkyCity Hamilton in response to customer
demand for electronic gaming machines (which are
capacity constrained over weekends) in preference
to tables, which are underutilised. The hotel
feasibility also relies on hosting out of town gaming
customers over the weekend, so the extra gaming
machine product is necessary to satisfy this
potential increase in demand.
In December 2018, SkyCity applied to the
New Zealand Gambling Commission to deploy
60 additional electronic gaming machines at
SkyCity Hamilton in substitution of three existing
Blackjack table games. The Commission received
242 separate submissions from the general
public as well as submissions from Hamilton City
Council, the Ministry of Health, Waikato District
Health Board, Problem Gambling Foundation,
Mapu Maia, Salvation Army Oasis, the Department
of Internal Affairs, Anglican Action Mission Trust
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SkyCity Hamilton
and Christchurch Casino Limited. A public hearing
took place in Hamilton from 19 – 26 November 2019
at which the Commission heard both factual and
expert evidence, and detailed legal submissions
from the seven parties authorised to appear and
be heard. In June 2020, the Commission released
its decision declining the application on the basis
that the proposed amendments to the licence
conditions involved an opportunities substitution
which was not proportionate in terms of the
provisions in the New Zealand Gambling Act 2003.
SkyCity is currently considering whether to make
another application to the Commission for a lesser
number of electronic gaming machines.
The hotel development and feasibility analysis
are currently on hold until there is greater
certainty of the domestic and international
economic environments.
FY20 PERFORMANCE
SkyCity Hamilton achieved a solid performance
during FY20 despite the impact of COVID-19 and
related property closure. EBITDA was only slightly
down on the prior year on a like-for-like basis and
record local gaming activity was achieved in the
eight months to 29 February 2020, underpinned
by strong activity from gaming machines, despite
being capacity constrained during peak periods.
The property has achieved strong performance
since reopening from mid-May 2020, with gaming
machine revenue above pre-COVID-19 levels and a
positive response from key customers to marketing
and promotional activity.
About SkyCity
35
The Guardsman at SkyCity Adelaide.
Eos by SkyCity will be Adelaide's most luxurious hotel when it opens.
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Adelaide
Property
General Manager
SkyCity Adelaide, Australia
Acquired
Licensing Agreement
Facilities
David Christian
2000
Runs until 2085*
• Casino
• Hotel (due to open before the end of 2020)
• Food and beverage
• Entertainment
Licensed Gaming Product
• 828 electronic gaming machines (allowance for 1,500)
• 82 table games (allowance for 200)
• 67 automated table games (allowance for 300)
Workforce
FY20 Revenue
~1,000 staff
A$112.3 million (reported)
A$121 million (normalised)
* The Approved Licensing Agreement between the Minister for Business Services and Consumers and SkyCity Adelaide Pty Limited provides
SkyCity Adelaide with exclusive rights to provide casino gaming (except for interactive gambling) in South Australia until 30 June 2035.
Located in the historic Railway Station building on
the banks of the Torrens River, SkyCity Adelaide is
South Australia’s only casino destination.
In January 2020, after being overlooked for more
than a decade, the former Overland Dining Hall in
the Railway Station building was transformed into a
new, all-hours bar and restaurant 'The Guardsman'
following a A$6 million restoration. The new venue
pays homage to the Railway Station’s rich heritage,
featuring a grand central bar, open kitchen and a
coffee front.
SkyCity is currently investing A$330 million to
transform SkyCity Adelaide into a world-class
integrated entertainment hub on the Festival Plaza
forecourt adjacent to the Adelaide Festival Centre
and Adelaide Convention Centre and near the
Adelaide Oval. Designed by The Buchan Group in
association with Hecker Guthrie Walter Brooke, and
built by Hansen Yuncken, the new development is
scheduled to open before the end of 2020 and will
include a 120-room luxury hotel – Eos by SkyCity,
wellness centre with a day spa, pool, sauna and
gym, VIP gaming facilities, function and conference
facility for up to 650 guests, two new bars (including
a rooftop bar) and four additional signature
restaurants.
Eos by SkyCity will be Adelaide’s most luxurious
hotel, with rooms ranging from 50sqm – 230sqm
and opulently appointed to meet the growing
demand for quality hotel rooms from both
domestic and international visitors.
As part of the transformation, the existing
SkyCity Adelaide business, housed in the iconic
Adelaide Railway Station building, is also being
revitalised and restored to improve the layout and
experience for customers, including:
•
5,000sqm of new carpet throughout
the building;
About SkyCity
37
SKYCITY ADELAIDE EXPANSION
Investment of
A$330 million
Up to an additional
700 new positions
required to operate the new development in full operation
•
•
•
•
•
•
repainting Marble Hall, the former grand domed
waiting room in the Railway Station building,
for the first time since SkyCity Adelaide opened
in 1985;
restoration of heritage features and installation
of lighting features in Marble Hall;
creation of The District at SkyCity – a new
live entertainment space on Level 1, which
will feature Australia’s first fully functional
microbrewery (operated by Pirate Life) within
a casino;
refurbishment and extension of the
Baccarat Pavilion;
a restoration of Chandelier Bar; and
construction of a new Central Café on the
Ground Floor.
A new three-storey glass atrium will connect the
heritage and new buildings.
Up to 700 additional ongoing roles, including front
and back of house roles, will be required to operate
the new development. Recruitment for some roles
has already commenced and will continue through
to mid-2021.
The South Australian Government’s broader
review of gambling regulation in South Australia
was completed over the last financial year and,
on 12 December 2019, State Parliament passed
legislation to significantly reform the regulation
of gambling in South Australia. As part of these
reforms, SkyCity Adelaide will be permitted to
introduce ticket-in ticket-out (TITO) technology on
the main gaming floor and banknote acceptors.
To implement the reforms, amendments will need
to be made to the regulations under each of the
gambling acts, changes made to the Advertising
and Responsible Gambling Codes of Practice,
and new gambling administration guidelines
and community impact assessment guidelines
developed. Consumer and Business Services will
also need to update its systems and operations
in support of these reforms and is aiming to
commence all of the reforms by the end of 2020.
SkyCity Adelaide can commence operating TITO
on the main gaming floor and banknote acceptors
from October 2020.
FY20 PERFORMANCE
SkyCity Adelaide achieved progressive improvement
in performance during FY20 prior to the disruption
from COVID-19, with stable local gaming activity to
29 February 2020, casino visitation up slightly from
the prior comparable period and a three-year high
in gaming machine market share (8%) achieved in
December 2019.
SkyCity Adelaide was closed for the duration of
4Q20 due to the South Australian Government’s
COVID-19 restrictions, with the majority of staff
being stood-down over the period. The property
experienced minimal International Business activity
during 2H20 due to international travel restrictions.
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Queenstown
Property
General Manager
SkyCity Queenstown and SkyCity Wharf, New Zealand
Jono Browne
Opened/Acquired
Opened Queenstown in 2000 and increased ownership
from 60% to 100% in 2012
Casino Venue Licence
Runs until 2025* for Queenstown
Acquired Wharf in 2013
Facilities
Runs until 2024* for Wharf
• Casino
• Food and beverage
• Entertainment
• Conventions
Licensed Gaming Product
• 86 electronic gaming machines (Queenstown)
Workforce
FY20 Revenue
• 12 table games (Queenstown)
• 74 electronic gaming machines (Wharf)
• 6 table games (Wharf)
~60 staff
$9.9 million (reported)
$11.1 million (normalised)
*The casino venue licence can be renewed for a further period of 15 years pursuant to sections 134–138 of the New Zealand Gambling Act 2003.
SkyCity’s two Queenstown casinos, SkyCity
Queenstown and SkyCity Wharf, are located in
central Queenstown, surrounded by the majestic
Southern Alps.
next 48 hours) as the ongoing border restrictions
continue to have a detrimental effect on the local
Queenstown economy in particular, which is largely
dependent on tourism.
Whilst the larger SkyCity Queenstown property
reopened on 14 May 2020 following the
announcement by the New Zealand Government
that New Zealand would move to COVID-19 Alert
Level 2 from 11.59pm on 13 May 2020, the smaller
SkyCity Wharf property has remained closed
since initially closing on 23 March 2020 (when the
New Zealand Government announced that the
COVID-19 Alert Level had increased to Alert Level 3
and its intention to move to Level 4 within the
As Queenstown is an attractive destination for
SkyCity’s International Business customers, SkyCity
continues to explore options to create an improved
VIP/premium facility in Queenstown. In June
2019, SkyCity purchased land on the shores of
Lake Wakatipu in Queenstown with the intention
of using that land to develop a 5-star hotel to
complement its existing entertainment facilities
in Queenstown and further attract international
visitors to Queenstown.
About SkyCity
39
SkyCity Queenstown
However, the COVID-19 pandemic and its impacts
on the Queenstown economy in particular have
caused the company to review its strategy in
Queenstown. SkyCity continues to explore its
options to create an improved VIP/premium facility,
including investigating the regulatory framework to
achieve any proposed development.
gaming performance in 1H20. The property
experienced minimal International Business activity
during 2H20 due to international travel restrictions.
As noted above, SkyCity Wharf closed on
23 March 2020 and remains closed pending review
and consideration of all available options.
FY20 PERFORMANCE
The impact of COVID-19 on international visitors
to Queenstown during 2H20 offset strong local
SkyCity Queenstown achieved positive gaming
machine performance post reopening in
mid-May 2020.
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International Business
General Manager
Facilities
FY20 Revenue
Stewart Neish
Group General Manager – International Business
Premium gaming facilities at SkyCity Auckland,
SkyCity Adelaide and SkyCity Queenstown
$38.0 million (reported)
$78.9 million (normalised)
SkyCity’s International Business division caters for
high-net worth international players and junkets
who visit casinos as part of their leisure activities.
The flagship SkyCity Auckland property features
several premium gaming spaces, including VIP
gaming salons in The Grand by SkyCity and
1,800sqm of luxury high-end gaming space above
the SkyCity Hotel.
Located above the SkyCity Hotel, the Horizon Suites
and salons were rebranded the ‘International
by SkyCity’ salons and upgraded as part of a
$6 million refurbishment in 2020 – featuring four
luxurious gaming salons for exclusive use and four
private accommodation suites. Each salon has
its own private dining facilities, bar and massage
chairs, as well as its own lounge area and outdoor
balcony. Gaming dealers are available on request
for customers, who enjoy the full range of gaming
options offered at SkyCity Auckland in their own
private salon.
The refurbished International by SkyCity salons in Auckland.
About SkyCity
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The refurbished International by SkyCity salons in Auckland.
As part of the A$330 million SkyCity Adelaide
expansion project due to open before the end of
2020, SkyCity is constructing additional VIP luxury
gaming facilities to complement the existing
premium gaming salon opened in Adelaide in 2015.
Given expected ongoing international border
restrictions as a result of the COVID-19 pandemic,
the new facilities will initially cater for local and
interstate customers.
Despite the impacts of COVID-19, there remains
potential for further growth in International
Business over the medium to long term due
primarily to the attractiveness of New Zealand as a
tourist destination, good connectivity and the new
VIP luxury gaming facilities at SkyCity Adelaide.
SkyCity remains committed to International
Business and expects it to recover once
international border restrictions are eased/lifted.
SkyCity intends to continue to invest prudently
in International Business to enhance sustainable
shareholder returns.
The bulk of SkyCity’s business is stable and low
risk, originating from local/domestic players.
The International Business provides incremental
growth, but due to its inherent volatility, is likely to
be maintained as a relatively small, but important,
contributor to overall Group profit over the
long term.
FY20 PERFORMANCE
International Business achieved significantly
weaker volumes and normalised earnings in FY20
versus a record prior comparable period due to the
impact of COVID-19 on visitation from Asia from
January 2020, and the closure of international
borders from late March 2020.
The ongoing fixed operating costs required
to support the business, despite no revenue
generation, in 4Q20 negatively impacted margins
in addition to lower volumes in 1H20. FY20 reported
EBITDA was slightly above the prior comparable
period due to a higher win rate (1.47% vs 1.00%)
offsetting lower turnover over the period.
Whilst SkyCity maintains a conservative approach
to credit, there was an increase in the provision for
bad and doubtful debts in International Business in
FY20 due to COVID-19 related payment issues.
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Online
General Manager
Facilities
FY20 Revenue
Steve Salmon, Online Director
Online casino
$4.5 million (reported)
$4.5 million (normalised)
around 15,000 new customer registrations over the
period. As at 30 June 2020, there were over 25,000
customer registrations and, as at 31 August 2020,
there were over 35,000 customer registrations.
SkyCity Online Casino has been profitable every
month from April 2020 with margins in-line with
expectations. There has been a slight reduction
in gaming revenue following the reopening of
the New Zealand properties, but an increase in
activity during the second closure in Auckland in
August 2020. Overall, we expect SkyCity Online
Casino to become a more meaningful part of Group
earnings from FY21.
Launched in August 2019, SkyCity Online Casino
provides New Zealanders with an offshore online
casino platform, featuring over 1,300 online games.
SkyCity Online Casino is operated out of Malta by
international iGaming company Gaming Innovation
Group Inc (GiG) on behalf of SkyCity Malta Limited,
an independently operated subsidiary of the
SkyCity Entertainment Group, and managed by an
Online Director based in Europe.
GiG provides a full-suite online casino solution,
including a technical platform, gaming content,
managed services and front-end development.
Whilst a regulated online gaming market remains
the preferred solution in New Zealand, the
launch of SkyCity Online Casino is another step
on SkyCity’s journey of pursuing opportunities to
grow and diversify its earnings, accessing a fast
growing industry that is highly complementary to
its land-based activities and offering customers a
multi-channel gaming experience. SkyCity remains
supportive of regulating the New Zealand online
casino market, including introducing an appropriate
licensing regime for operators and imposing taxes
and mandatory host responsibility requirements.
FY20 PERFORMANCE
SkyCity Online Casino experienced strong growth
in customer registrations, first-time depositors
and gaming revenue during the period, despite
operational constraints.
During the COVID-19 mandated closure of
SkyCity’s land-based New Zealand casinos from
23 March – 14 May 2020, SkyCity Online Casino
saw significant growth in its customer base with
About SkyCity
43
Protecting
the value of
our business
Delivering strong and sustainable
earnings across the SkyCity Group.
Risk Profile and Management
SkyCity operates in a dynamic and challenging environment with risks and
opportunities both locally and internationally.
The SkyCity Board is ultimately responsible for the
governance of the Group’s risk management, which
includes formulating the Group’s risk appetite and
setting and monitoring risk tolerance.
summary of how those risks are being mitigated
or prepared for, and is a critical input to strategic
planning, insurance renewal, investment and
resource prioritisation, and assurance planning.
The company maintains a risk management
framework for the identification, assessment,
monitoring and management of risk to the
company’s business. As part of this framework,
SkyCity maintains an independent, centrally
managed Group Risk function which evaluates
and reports on risks and controls across the Group.
The Group Risk team collates, assesses and monitors
the risks the Group faces by way of a Top Risk Profile,
which is updated regularly. The Top Risk Profile is
a current view of the most significant emerging
or potential risks facing the Group, as well as a
Management reports to the Audit and Risk
Committee and SkyCity Board on the effectiveness of
the company’s management of its material business
risks at least annually.
SkyCity’s ability to create and preserve value for its
shareholders requires the successful execution of
its business strategy. Risks influencing its ability to
do this, including SkyCity’s material exposure to
economic, environmental and social sustainability
risks, if any, and how it manages or intends to
manage those risks, are outlined below.
Material Exposure
Risk Management
Pandemic Preparedness and
Business Continuity
As with any large, distributed business,
SkyCity must be prepared for a wide range
of events that have the potential to cause
significant disruption and/or temporary
closure of one or more of its sites.
To mitigate this risk, SkyCity maintains a comprehensive
business continuity framework, which supports
preparedness and response to a wide range of critical
events, including a natural disaster, a fire, an emergency
incident and a pandemic.
The COVID-19 pandemic and related actions
taken in response by the New Zealand,
Australian and other Governments
(including national lockdowns and border
controls/travel restrictions) and the effects
of the pandemic on global and domestic
economies have had, and are likely to
continue to have, a material adverse effect
on SkyCity, its financial performance and
outlook, liquidity and/or share price.
The business continuity framework is subject to ongoing:
•
monitoring to ensure management readiness and
capability, including undertaking simulated crisis
response drills on a regular basis to test management
readiness and capability; and
•
improvement to enhance resilience.
Due to the strength of the business continuity framework,
the SkyCity Board and management worked well in
responding to and managing two significant challenges
over the past financial year which materially impacted
SkyCity’s business and operations – the fire that broke
out at the New Zealand International Convention Centre
in October 2019 and the impacts of the global COVID-19
pandemic that emerged in early 2020.
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Material Exposure
Risk Management
Highly Regulated Industry
SkyCity operates in the casino industry,
which is highly regulated. The regulatory
framework is subject to change from
time to time, which may impact the
environment in which SkyCity operates
and the costs of operating its business.
Potential examples of such changes include
unfavourable changes to gaming and/or
smoking legislation and regulations, licence
conditions and gaming taxes and levies.
There may also be increased focus on
regulatory oversight of land-based casino
operators and on SkyCity’s social licence
to operate following COVID-19 (including
in respect of host responsibility and
anti-money laundering obligations).
Any such additional focus may add
increased complexity to the business and
adversely impact SkyCity’s operations
and the costs of operating its business.
In addition, there is ongoing pressure to
keep improving SkyCity’s standards.
The risk of regulatory change is mitigated by maintaining
frequent engagement with the governments and regulators
in each jurisdiction in which SkyCity operates and with
industry stakeholders.
Targeted initiatives are undertaken as and when required
based on the likelihood of the risk occurring and the impact
it would have on SkyCity’s business.
SkyCity also maintains a robust compliance culture and
framework to ensure compliance with licence conditions
and applicable legislation and regulations.
The Audit and Risk Committee has responsibility for
ensuring compliance with anti-money laundering
requirements in New Zealand and Australia and discusses,
as a standing agenda item at each scheduled Audit and
Risk Committee meeting, matters relating to the Group’s
anti-money laundering obligations. The Group General
Manager Regulatory Affairs and Anti-Money Laundering
also attends each Audit and Risk Committee meeting
to report to the Audit and Risk Committee on matters
of interest. Within the business, a specialist Anti-Money
Laundering team oversees the Group’s ongoing compliance
with anti-money laundering requirements and, during
the past financial year, a management-led Anti-Money
Laundering Senior Management Group (chaired by the
General Counsel and Company Secretary) was established
to provide enhanced governance for anti-money laundering
related matters across the Group.
The Sustainability Committee is responsible for overseeing
and monitoring the company’s host responsibility and
responsible gambling programme and initiatives and
monitoring licensing and regulatory compliance in
respect of such matters. At each scheduled Sustainability
Committee meeting, progress against host responsibility
and responsible gambling measures and targets is reported
and discussed as a standing agenda item. Within the
business, a Host Responsibility Governance Group (chaired
by the Chief Operating Officer) meets monthly to discuss
and review host responsibility matters that have arisen or
may arise in the future across the SkyCity Group.
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Material Exposure
Risk Management
Liquidity and Solvency Risk
SkyCity’s ability to achieve its business
objectives is dependent on it being
able to effectively manage its liquidity
and solvency throughout a period of no
and/or significantly diminished revenue
and earnings.
There is significant complexity related to
managing those matters, including as
a consequence of a number of matters
being outside of SkyCity's control.
Such unexpected matters could result
in SkyCity's financial position and future
performance being adversely impacted.
SkyCity’s ability to demonstrate fiscal
resilience during these times is critical
to maintaining long term investor and
regulatory confidence.
Loss of Casino Licence
SkyCity’s Auckland property contributes
a significant portion of SkyCity’s EBITDA.
This concentration of earnings means
that the performance of SkyCity is heavily
dependent upon the Auckland property.
A significant disruption to SkyCity’s Auckland
operations, which may arise through the
suspension, cancellation or expiry of the
Auckland casino licence, would have a
significant negative impact on SkyCity.
The suspension, cancellation or expiry of any
of SkyCity’s other casino licences would also
have a negative impact on SkyCity.
SkyCity manages liquidity risk by continuously monitoring
forecast and actual cash flows and maintaining flexibility in
funding by keeping committed credit lines available with a
variety of counterparties and maturities.
SkyCity also maintains close and transparent relationships
with its lenders (including banks and United States private
placement noteholders).
In June 2020, SkyCity announced a comprehensive
funding plan to strengthen its balance sheet and secure
additional liquidity in response to the uncertainty around
the impacts of COVID-19. The funding plan was successfully
implemented in June and July 2020 and ensures SkyCity
has an appropriate level of equity capital for the medium
to long term and sufficient liquidity to fund its committed
investment in its two major projects in Auckland
and Adelaide.
Given the cautious economic outlook and that significant
risk and uncertainty still exists around COVID-19,
SkyCity continues to adopt a conservative approach to
capital management.
SkyCity has mitigated this risk by securing an extension
of the Auckland casino licence to 30 June 2048.
The SkyCity Adelaide casino licence currently runs
until 30 June 2085 and extensions to the Hamilton
and Queenstown casino licences are intended to be
sought in accordance with the renewal provisions of the
Gambling Act 2003 (New Zealand) in due course.
In addition, SkyCity mitigates the risk by maintaining
a robust compliance culture and framework to ensure
compliance with licence conditions and gaming legislation
and regulations, and maintaining engagement with the
governments and regulators, in each jurisdiction in which
SkyCity operates.
SkyCity has an excellent history of compliance over 20 years
and is committed to working cooperatively with its
regulators on matters of concern.
Risk Profile and Management
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Material Exposure
Risk Management
Economic and Business Volatility
The general economic conditions in
the markets that SkyCity operates in,
in addition to volatility in certain parts of
the business, can significantly influence the
financial performance of the company.
Customer and Innovation Risk
SkyCity recognises that it is important to
consider evolving customer demographics
and preferences in both its gaming and
non-gaming operations, including new
offerings, technologies and innovation.
To mitigate these risks, SkyCity continually monitors its
external environment, including the geo-political and
global economic landscape, and has a robust liquidity
management framework.
SkyCity also continually reviews the optimal mix for its
business activities to ensure it has a balanced portfolio
reflecting its risk appetite.
To ensure SkyCity remains relevant to its customers, key
strategic projects are currently being progressed, with a
focus on emerging industry trends and opportunities for
leveraging new technology and demographic changes.
In August 2019, SkyCity launched SkyCity Online Casino,
an offshore online gaming business, via a Maltese subsidiary
company as a logical extension of its land-based casino
operations. Whilst the business is still very much in its
infancy, SkyCity is encouraged by SkyCity Online Casino’s
performance over the past financial year.
In July 2019, SkyCity acquired full ownership of Let’s Play
Live Media Limited, New Zealand’s leading broadcaster and
operator of esports tournaments.
New forms of entertainment are also set to open at
SkyCity Auckland before the end of 2020, including:
•
•
the All Blacks Experience, a joint venture between
New Zealand Rugby and Ngāi Tahu Tourism, which
will provide visitors with a state-of-the-art, interactive
experience that will showcase the All Blacks; and
Academy Award-winning design and effects company
Weta Workshop is developing an immersive attraction
to complement its behind-the-scenes tours at their
Miramar headquarters in Wellington.
Master planning also continues to be progressed for each
of the SkyCity sites to explore opportunities for further
accommodation, food and beverage, new gaming spaces
and entertainment offerings. However, in light of the
COVID-19 pandemic, it is unlikely that any significant
funding commitments will be made in the short term until
there is greater certainty that the COVID-19 crisis no longer
poses a threat.
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Material Exposure
Risk Management
Technology Risk
Technology represents a critical platform
to SkyCity’s business – not only for
facilitating/enabling its operations,
but also mitigating cyber threats and
ensuring compliance with regulatory
and licence requirements.
SkyCity’s operations are dependent on
a number of key systems. There is a risk
that the security of critical systems may
be compromised and/or information is
accessed without authorisation, deleted or
corrupted, which could impact SkyCity’s
ability to operate critical systems and
result in costs to resolve or repair, potential
downtime of operations, potential breaches
of privacy and/or reputational impacts.
Development and Project Risk
(including Return from Major Projects)
With two significant growth projects
underway, the New Zealand International
Convention Centre and Horizon Hotel
development in Auckland and the
SkyCity Adelaide expansion project, as
well as master planning across the Group,
SkyCity recognises that robust project
management is critical to successful
delivery of these projects.
To mitigate technology risk, SkyCity has invested in a
significant programme over recent years to improve
technology systems, infrastructure, capability and
data management, and to improve cyber resilience.
SkyCity continues to invest in these areas as required.
In addition, there is also significant focus on technology
project governance, risk management and assurance.
A management-led Privacy and Cybersecurity Steering
Committee has been established to, amongst other things:
•
•
•
•
govern the development of SkyCity’s privacy and
cybersecurity strategy and programme;
prioritise mitigation initiatives against the cybersecurity
risk matrix;
prioritise the operational initiatives to lift SkyCity’s
security posture; and
review and respond to major cyber and privacy incidents
and oversee the proposed measures to prevent recurrence.
Penetration testing is undertaken regularly to test system
resilience and identify any security vulnerabilities that could
be exploited. Simulated phishing emails are also regularly
sent within the organisation to raise security awareness
amongst employees.
SkyCity has established strong governance and oversight
frameworks for both current and future major growth
projects, including the establishment of a dedicated Board
sub-committee to oversee the New Zealand International
Convention Centre and Horizon Hotel development and a
separate dedicated Board sub-committee to oversee the
SkyCity Adelaide expansion project.
SkyCity also ensures robust governance over capital
allocation and shareholder returns.
The COVID-19 pandemic has significant implications for
return on capital invested in major projects. For example,
the ongoing closure of international borders over the short
to medium term is expected to impact visitation and
occupancy for the SkyCity Adelaide expansion project.
Risk Profile and Management
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Material Exposure
Risk Management
Health and Safety Risk
SkyCity has Health and Safety Risk
Registers in place that classify risks into
two key categories – high consequence/low
frequency (being critical risks) and low
consequence/high frequency risks.
Due to the hospitality and retail focus of
SkyCity’s business, a high percentage of
the company’s health and safety risk falls
into the low consequence/high frequency
category, which includes risks such as
slips and trips, cuts and manual task
related injuries.
General
To mitigate critical risks (which include working at heights,
confined spaces, electrical, moving plant, fire and explosion),
SkyCity has in place extensive safe systems of work to
effectively control the potential for an incident. Ongoing
safety assurance activities seek to test these controls and,
where appropriate, strengthen critical risk controls ensuring
SkyCity keeps its people and visitors safe.
SkyCity has harm prevention programmes in place which are
aimed at reducing minor injuries and promoting wellness
amongst SkyCity’s employees and contractors.
SkyCity’s New Zealand properties are tertiary accredited
under the Accident Compensation Corporation (ACC)
Accredited Employers Programme and its Adelaide site is a
registered self-insured employer. The company undertakes
assurance activities to maintain certifications and continually
improve its health and safety performance.
Significant Emergencies
There were two significant emergencies during the financial
year ended 30 June 2020 which required a significant
health and safety response and tested SkyCity’s emergency
preparedness.
The fire at the New Zealand International Convention Centre
development in October 2019 caused significant disruption
to the Auckland CBD. Whilst the fire did not occur directly
within the SkyCity Auckland main site, the smoke emitted
from the fire entered SkyCity Auckland’s premises and
systems and necessitated an extensive clean-up operation
across the SkyCity Auckland precinct. The SkyCity Health
and Safety team partnered with occupational hygienists and
professional maintenance and cleaning services to facilitate a
safe reopening.
SkyCity is committed to delivering robust health and
safety standards to manage the ongoing risks associated
with COVID-19 and has developed and implemented a
COVID-19 Health Management Framework for its business
operations. The framework has been shared with Government
authorities across New Zealand and South Australia.
SkyCity’s New Zealand properties were amongst the first
casino operations in the world to reopen during the global
pandemic with robust health management strategies in place.
Both New Zealand and Australia have achieved relative
success in ensuring a low level of infection and mortality
compared to many other countries around the world.
However, the ongoing health and safety risks of COVID-19 have
significantly altered the commercial landscape for SkyCity's
land-based properties in both jurisdictions.
Given the nature of SkyCity’s operations, SkyCity does not have a material exposure to environmental risks
in its usual day-to-day operations. SkyCity nonetheless recognises the criticality of climate related risks to its
operations. Further details on these risks and SkyCity's approach to climate change risk management and
reporting are outlined on page 117 of this annual report.
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Our COVID-19 Health Management
Framework
The health of SkyCity’s employees, contractors, visitors and guests is paramount.
Our COVID-19 Health Management Framework outlines a comprehensive strategy for
managing risks associated with COVID-19.
Operational Control Standard
Our standard outlines our mandatory risk controls, which have been developed
based on guidance from the relevant health authorities in Australia and New Zealand:
Entry
requirements
Guest and employee
screening
Hand hygiene
Physical
distancing
Education and
information
Cleaning
Contact tracing
COVID-19 Risk Register
We have taken a risk based approach – analysing our business activities and putting in
place controls that are reasonably practicable. We will continue to review and seek
continuous improvement in our controls.
Operational
Control Procedures
Focused on the
workplace specific
requirements
for gaming
areas across our
precincts.
COVID-19 Safety
Plans
Focused on
re-entry risks to
ensure our people
are safe when
returning to work
after periods of
absence.
COVID-19
Resourcing
Ensuring we
have the right
levels of health
and safety advice
and equipment
supported by a
team of health
professionals.
COVID-19
Assurance
Focused on
reviewing the
implemented
mandatory controls
to ensure we have
the best levels of
implementation.
Risk Profile and Management
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Sound
governance
and strong
leadership
Our Board
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ROB CAMPBELL
Chair
BRUCE CARTER
Deputy Chair
Member of the Audit and Risk Committee
Member of the People and Culture Committee
Member of the Sustainability Committee
Chair of the Governance and
Nominations Committee
Appointed a director of SkyCity in June 2017
and Chair of the SkyCity Board in January 2018
Rob is currently the Chair of Summerset Group
Holdings Limited, Tourism Holdings Limited,
Ultrafast Fibre Limited, New Zealand Rural Land
Company Limited, Ara Ake Limited and WEL
Networks Limited and a director of Precinct
Properties New Zealand Limited. Rob has over
30 years’ experience in capital markets and is a
director of, or advisor to, a range of investment fund
and private equity groups in New Zealand, Australia,
Hong Kong and the United States of America.
Rob holds a Bachelor of Arts with First Class
Honours in Economic History and Political Science
and a Masters of Philosophy in Economics.
Chair of the Audit and Risk Committee
Member of the Sustainability Committee
Member of the Governance and
Nominations Committee
Appointed a director of SkyCity in October 2010
Based in Adelaide, Australia, Bruce is currently
Chair of ASC Pty Limited (Australian Submarine
Corporation), Aventus Capital Limited, the COVID-19
Business Advisory Committee and Scissor Holdings
Pty Ltd trading as One Rail Australia, and a director
of AIG Australia Limited, Bank of Queensland
Limited as well as a number of private companies
and government bodies.
Bruce was one of the founding partners of
Ferrier Hodgson in Adelaide. He was formerly
a partner at Ernst & Young and has more than
30 years’ experience in corporate restructuring
and insolvency.
Bruce is a Fellow of Chartered Accountants Australia
and New Zealand.
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SUE SUCKLING
Director
Chair of the Sustainability Committee
Member of the Governance and
Nominations Committee
Appointed a director of SkyCity in May 2011
Sue Suckling is an independent director and
consultant with over 25 years in commercial
corporate governance. She is recognised for her
leadership in the technology innovation space
and her deep governance experience.
Sue is currently the Chair of the Insurance
& Financial Services Ombudsman Scheme
Commission, Jacobsen Holdings Limited,
Brannigans Consulting Limited, Rubix Limited,
Soltians Limited, Jade Software Corporation Limited
and Zag Limited. Previous governance roles include
chairing NIWA, the New Zealand Qualifications
Authority and AgriQuality Limited, and as a director
of Restaurant Brands Limited, Westpac Investments
Limited and the New Zealand Dairy Board.
She was awarded an OBE for her contribution to
New Zealand business.
Sue is a Chartered Fellow of the New Zealand
Institute of Directors and a Companion of the
Royal Society of New Zealand.
JENNIFER OWEN
Director
Member of the Audit and Risk Committee
Member of the People and Culture Committee
Member of the Governance and
Nominations Committee
Appointed a director of SkyCity in December 2016
Jennifer Owen has more than 30 years’ experience
in the areas of accountancy, audit, finance, treasury
and equities research. She has specific specialist
knowledge of the New Zealand and Australian
gaming and entertainment sectors through her
previous roles as Director of Equities Research at
Citigroup Global Markets, with a specialist focus
on the Australasian gaming sector, and as Equities
Research Analyst at Macquarie Group focusing
on the tourism/leisure sector, and a wide network
within the gaming industry and has a strong
understanding of industry and investor issues.
Jennifer is currently a Principal of Owen Gaming
Research, an independent research firm specialising
in the gaming and wagering markets, and a director
of Aspire Child Care (Mascot) Pty Limited.
Jennifer holds a Bachelor of Business from the
Queensland Institute of Technology and a Masters
in Business Administration from the University of
Queensland, is a graduate of the Australian Institute
of Company Directors’ Diploma course and is a
member of Chartered Accountants Australia and
New Zealand.
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Our Board
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MURRAY JORDAN
Director
Chair of the People and Culture Committee
Member of the Governance and
Nominations Committee
Appointed a director of SkyCity in December 2016
Murray Jordan is currently a director of Chorus
Limited, Metcash Limited, Stevenson Group Limited,
Southern Cross Benefits Limited, Southern Cross
Hospitals Limited and the Southern Cross Medical
Care Society. He is also a trustee of Southern Cross
Health Trust, Starship Foundation, Foodstuffs’
Members Protection Trust and The Foodstuffs
Co-operative Perpetuation Trust.
Prior to embarking on a governance career in
2015, he held various senior management roles at
Foodstuffs Limited from 2004 to 2015, including
Managing Director of Foodstuffs North Island
and Managing Director and General Manager
Retail, Sales and Performance of Foodstuffs
Auckland Limited. In 2013, he led the merger of the
Auckland and Wellington businesses of Foodstuffs
to create what is now known as Foodstuffs
North Island and established and oversaw the
integration programme.
His early career was in the property sector, including
as General Manager of Telecom NZ’s property
business and General Manager of AMP Capital
Investors NZ Limited’s property portfolio. Murray has
a Masters degree in Property Administration from
the University of Auckland.
Our Senior Leadership Team
From left to right:
Simon Jamieson, Jo Wong, Rob Hamilton and Glen McLatchie
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From left to right:
Graeme Stephens, Liza McNally, Michael Ahearne and Claire Walker
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GRAEME STEPHENS
Chief Executive Officer
MICHAEL AHEARNE
Chief Operating Officer
Graeme joined SkyCity as Chief Executive Officer in
May 2017, bringing with him significant expertise in
the gaming, hospitality, and leisure industries.
Prior to joining SkyCity, Graeme was Chief
Executive Officer of Sun International, a casino,
resorts and entertainment company listed on
the Johannesburg Stock Exchange. Under his
leadership, the company rebalanced its portfolio,
diversified into growth areas in both South Africa
and Latin America, redeveloped its flagship resort in
Sun City and built a new casino resort near Pretoria.
An accountant by profession and with more than
10 years’ experience in banking and corporate
finance, Graeme was appointed Senior Vice
President of New Business Development at Kerzner
International in 2003 and was responsible for a
number of global hospitality projects before joining
Sun International in 2011.
ROB HAMILTON
Chief Financial Officer
Rob joined SkyCity as Chief Financial Officer in
October 2014 and is responsible for the financial
management of SkyCity, including reporting,
treasury, risk management and corporate
development. He also oversees SkyCity’s
International Business and Information and
Communications Technology function and helps to
drive the strategic direction of the SkyCity Group.
Rob is a respected member of the finance
community with more than 20 years’ experience
at First NZ Capital (now Jarden), where he led
the investment banking team. He is currently a
non-executive director of Tourism Holdings Limited,
on the Board of Trustees for Auckland Grammar
School and a trustee of the SkyCity Auckland
Community Trust.
Rob was a finalist in the Chief Financial Officer
of the Year category in the 2019 Deloitte Top 200
Awards in New Zealand.
Rob holds Bachelor degrees in Commerce
and Science.
Michael joined SkyCity in December 2017 as
Chief Operating Officer and is responsible for
overseeing the operations and driving value across
SkyCity’s five properties in New Zealand and
Australia. He is also responsible for SkyCity’s online
gaming strategy, including the establishment of
SkyCity Online Casino in 2019.
Michael has significant global experience in the
gaming industry across both land-based and online
casinos, as well as retail and online sports betting.
Prior to joining SkyCity, Michael held a number
of senior commercial, operational and product
leadership roles at Paddy Power Betfair, one of
the world’s leaders in sports betting and gaming.
Prior to this, Michael enjoyed a 13-year career
in the Australasian gaming and entertainment
sector – 10 years of which were spent at The Star
Casino, Sydney, where he held a variety of senior
management positions and, following that,
three years as Chief Operating Officer for Aristocrat
in the Australia and New Zealand regions.
Michael is a qualified accountant and holds an MBA
from the University of Technology, Sydney.
CLAIRE WALKER
Chief People and Culture Officer
Claire was appointed in August 2016, bringing
more than 20 years’ experience in human resource
management gained across a number of different
sectors, and holds the position of Chief People and
Culture Officer. She is responsible for leading the
development and implementation of best practice
people and culture strategy across the SkyCity Group
and has executive responsibility for sustainability
at SkyCity.
Prior to joining SkyCity in 2016, Claire was Chief
People Officer at Sanford Limited where she
established the human resources function and led
the sustainability and integrated reporting activities
for the organisation and, prior to that, Claire led the
human resources and employee relations function
for the SkyCity Auckland business. Claire has also
held senior human resource roles with Carter Holt
Harvey and Downer after several years working in the
education sector.
Claire holds a governance role on the advisory board
of the Sustainable Business Council in New Zealand.
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JO WONG
LIZA MCNALLY
General Counsel and Company Secretary
Chief Marketing Officer
Jo joined SkyCity as Senior Legal Counsel
in January 2009 and was appointed as
General Counsel and Company Secretary in
September 2016. She is responsible for SkyCity’s
legal, company secretarial, regulatory affairs and
anti-money laundering functions and is designated
as SkyCity’s Chief Privacy Officer.
Jo has more than 20 years’ experience in
both private practice and in-house legal roles.
Before joining SkyCity in 2009, she held General
Counsel and Group Corporate Counsel roles in the
New Zealand financial services industry and was
a Senior Solicitor at Russell McVeagh, one of the
leading law firms in New Zealand.
Jo was a finalist in the In-House Lawyer of the Year
category in the 2019 New Zealand Law Awards and
was recognised in New Zealand Lawyer’s inaugural
In-House Leaders 2019 list as one of 25 leading
lawyers across New Zealand.
Liza joined SkyCity in January 2018 as Chief
Marketing Officer and has 25 years of marketing
expertise working in Australia and New Zealand.
In addition to managing Group Communications,
Liza is responsible for championing the digital
customer experience across the SkyCity Group.
Liza’s background includes senior marketing
and sales positions within media, entertainment
and telecommunications organisations. Prior to
joining SkyCity, Liza was Chief Marketing Officer at
New Zealand Media & Entertainment (NZME).
Liza is currently a non-executive director of AFL
New Zealand and a trustee of the Auckland Farmers
Santa Parade. Liza holds a Bachelor of Commerce
(Hons Marketing) from Deakin University, Australia.
GLEN MCLATCHIE
Chief Information Officer
Jo is a graduate of the 2017 Global Women
Breakthrough Leaders Programme, is a member of
New Zealand Asian Leaders and holds a Bachelor
of Laws and a Bachelor of Arts (Criminology and
Japanese) from Victoria University of Wellington.
Glen joined SkyCity in 2016 as Chief Information
Officer and is responsible for lifting the digital
capability of the organisation to be able to
respond to future innovation initiatives and
growth strategies.
SIMON JAMIESON
General Manager NZICC
Since joining SkyCity in September 2007, Simon
has held a number of roles, including General
Manager SkyCity Adelaide, General Manager Hotels
SkyCity Auckland and Acting General Manager
SkyCity Auckland.
As General Manager NZICC, Simon oversees
the development of SkyCity’s New Zealand
International Convention Centre and Horizon Hotel
project in Auckland. He is also responsible for health
and safety at SkyCity.
With more than 30 years’ experience in large-scale
hospitality businesses, Simon brings a wealth of
commercial experience and tourism know-how to
the SkyCity business.
Prior to joining SkyCity, Glen was General Manager
ICT with Meridian Energy where he transformed
and modernised their aging technology footprint
and digital capability. He has 25 years of technology
experience from across several industries globally,
having worked in and out of the UK, France, USA,
Australia, Malaysia, India, China and the Middle East.
Glen is a board member of Auckland charity
Big Brothers Big Sisters and an advisory board
member of Cyber Research NZ. Glen holds a Master
of Information Systems from Swinburne University
of Technology, Australia, and a Bachelor of Business
Studies from Massey University, New Zealand.
Our Senior Leadership Team
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BOARD AND SENIOR LEADERSHIP TEAM ORGANISATIONAL CHART
SkyCity is committed to maintaining the highest standards of corporate behaviour and responsibility and
has adopted governance policies and procedures reflecting this. Our corporate governance framework
ensures Board accountability to shareholders and provides for an appropriate delegation of responsibilities
to the Chief Executive Officer and Senior Leadership Team.
The SkyCity Board has responsibility for the affairs and activities of the company, which in practice is
achieved through delegation to the Chief Executive Officer and Senior Leadership Team who are charged
with the day-to-day leadership and management of the company.
Further information on SkyCity’s corporate governance framework is set out on pages 123–133 of this annual
report. SkyCity’s constitution and relevant charters and policies are available in the Governance section of
the company’s website at www.skycityentertainmentgroup.com.
SKYCITY BOARD
STANDING BOARD COMMITTEES
AD-HOC BOARD SUB-COMMITTEES
(established to oversee SkyCity’s major projects)
Governance
and
Nominations
Committee
Audit and Risk
Committee
People and
Culture
Committee
Sustainability
Committee
New Zealand
International
Convention Centre
Sub-Committee
Adelaide
Expansion Project
Sub-Committee
CHIEF EXECUTIVE OFFICER
Graeme Stephens
SENIOR LEADERSHIP TEAM
Chief
Financial
Officer
Rob Hamilton
Chief
Operating
Officer
Michael Ahearne
Chief People
and Culture
Officer
Claire Walker
General Counsel
and Company
Secretary
Jo Wong
General
Manager
NZICC
Simon Jamieson
Chief
Marketing
Officer
Liza McNally
Chief
Information
Officer
Glen McLatchie
KEY MANAGEMENT-LED GOVERNANCE GROUPS AND COMMITTEES
Host
Responsibility
Governance
Group
Anti-Money
Laundering
Senior
Management
Group
Privacy and
Cybersecurity
Steering
Committee
Project
Investment
Committee
Group and
Site Crisis
Committees
Climate Change
Committee
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The BLACK gaming area at SkyCity Auckland is due to open later this year and will provide an
unrivalled VIP offering and experience to our domestic VIP customers.
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Being a
responsible
corporate
citizen
We are committed to maintaining
the highest levels of sustainability
objectives and practices.
Sustainability
At SkyCity, we recognise that
sustainability is critical to all levels of our
business and operations. Part of being a
responsible business is understanding
the impacts arising from our operations.
The aim of this understanding is to
enable positive impacts to be fostered
and negative impacts to be at the very
least mitigated and ideally abated.
This is particularly true when there is
potential for harm to either people or
the environment.
At SkyCity, we need to continually focus on our
social licence to operate – as, in the casino industry,
we have to try harder than most to justify our place
in society. SkyCity is committed to maintaining
the highest levels of sustainability objectives and
practices, with priority given to minimising the
impacts associated with problem gambling as an
area of primary focus.
Our sustainability initiatives are focused on
doing good for our customers, our employees,
our communities, our suppliers and our
environment. Our objective is to ensure that our
strategic decisions strengthen the communities
we operate in and provide environments and
opportunities for our customers, suppliers and staff
to enjoy, to be entertained and to be safe.
Setting Our Framework
In 2016, after engaging with both internal and
external stakeholders on which sustainability
issues were most relevant to SkyCity’s business,
SkyCity adopted its first set of sustainability goals,
priority actions and targets and developed a
materiality matrix to identify a set of priority impact
areas and issues for the business. These were
subsequently refined in 2018 to incorporate global
trends and local market conditions in our approach
to, and assessment of, risks and opportunities,
culminating in a refreshed set of sustainability pillars.
In early 2020, we commenced a review of our
materiality matrix to prioritise the issues most
important to our business and stakeholders and
to ensure the issues were appropriately weighted
in our sustainability strategy. From a long list of
potentially material issues identified via a desktop
review, the following issues (grouped under our
existing sustainability pillars) were identified by
internal and external stakeholders as material to
SkyCity’s business:
OUR CUSTOMERS
• Responsible hosting
• Customer experience
• Cybersecurity and data privacy
• Regulatory risk
OUR PEOPLE
• Employee engagement
• Health, safety and wellbeing
• Organisational culture
• Diversity, inclusion and belonging
OUR COMMUNITIES
• Community investment
• Community and Iwi engagement
OUR SUPPLIERS
• Ethical sourcing
OUR ENVIRONMENT
• Climate change
ISSUES IMPACTING
MULTIPLE PILLARS
• Business continuity
• Return on investment
• Theft and fraud
• Operational efficiency
• Sustainable portfolio
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Despite the challenges presented by the COVID-19
global pandemic, SkyCity’s current sustainability
strategy and strategic pillar goals, plans and
priorities (as validated by the feedback from our
stakeholders as part of the materiality review
in 2020) remain relevant today. We have learnt
through the COVID-19 pandemic that we cannot
take for granted that the core business will generate
profit. Recognising that to be a sustainable
business we must be a responsible business actively
protecting and promoting the people we serve
and the places we share whilst creating value for
our shareholders, SkyCity’s sustainability strategy
has this year been amended to also incorporate
financial performance alongside social and
environmental performance.
Our new 'Our Shareholders' pillar recognises that
SkyCity must create value for its shareholders while
maintaining its social licence to operate. The priority
issues relevant to this pillar are business continuity,
improving SkyCity’s operating performance,
optimising SkyCity’s existing portfolio, and growing
and diversifying SkyCity’s business. The objectives
for this pillar are to:
•
•
•
•
•
•
•
strengthen and maintain good relationships with
all stakeholders, including shareholders and debt
providers;
grow gaming visitation and spend and develop
complementary activities that drive gaming;
achieve operating efficiencies which protect and
grow margins;
develop digital businesses and leverage
investment in technology;
ensure capital allocation balances short term
returns and long term sustainability;
ensure ownership of assets balances strategic
control and return on capital; and
monitor and evaluate regional merger and
acquisition opportunities in our industry.
We continue to focus on embedding our
sustainability pillars into all levels of the
organisation and in the way SkyCity operates.
The material issues identified have influenced
our focus on managing SkyCity’s risks and
have informed our sustainability strategy and
priorities, which underpin our reporting on our
non-financial performance.
Our Sustainability Committee
The Sustainability Committee is a dedicated
Board committee that assists the SkyCity Board to
contribute to SkyCity’s vision and strategic plan by
ensuring that the company’s sustainability strategy
is best practice and supports the highest level of
sustainability objectives, with priority given to
minimising the impacts associated with problem
gambling as an area of primary focus.
The responsibilities of the Sustainability Committee
include reviewing and recommending to the Board
the sustainability strategy, principles, policies and
practices of the company to ensure alignment
with the company’s strategic objectives and
performance, and reviewing and reporting to the
Board on the company’s impacts associated with
SkyCity’s sustainability pillars.
The guiding principles that underpin SkyCity’s
sustainability activities and the role, responsibilities,
composition, structure and membership of
the Sustainability Committee are set out in the
Sustainability Committee Charter (available
in the Governance section of the company’s
website at www.skycityentertainmentgroup.com),
which is reviewed and approved by the Board on
an annual basis.
The Board and Sustainability Committee maintain
operational supervision of SkyCity’s sustainability
activities through clearly defined policy and
effective management. Claire Walker, SkyCity’s
Chief People and Culture Officer, has executive
responsibility for SkyCity’s sustainability activities
with key operational personnel within the business
having day-to-day responsibility for the activities.
Our Pillars
The following pages outline our priorities, objectives
and activities for each of the sustainability pillars –
‘Our Customers’, ‘Our People’, ‘Our Communities’,
‘Our Suppliers’ and ‘Our Environment’, outline
the activities undertaken to support our
sustainability strategy, and provide a summary
of our achievement against our priorities for the
financial year ended 30 June 2020. Commentary
on the new ‘Our Shareholders’ pillar is provided in
an overarching way throughout the entirety of our
financial and non-financial disclosures.
The areas identified as priority issues are those
considered highly material for SkyCity’s business
and for our stakeholders. Our objectives and
activities set out what we intend to do both in our
business and our communities. They are intended
to challenge the business and staff and provide a
dedicated framework for measuring progress over
the coming years. We are committed to measuring
performance on each goal, through specific key
performance indicators, which will ensure the
business strives to keep pace with internal and
external expectations.
We Welcome Your Feedback
If you have any feedback or questions in
relation to SkyCity’s sustainability framework
and/or reporting, please contact SkyCity at
sustainability@skycity.co.nz.
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 Our
Sustainability
Vision
To be a sustainable business, we must be a responsible business
actively protecting and promoting the people we serve and the
places we share, whilst creating value for our shareholders.
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B e r e s p
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a
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P
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P
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Suppliers
l e a ders in our com
m
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s
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o
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A l w a ys put c
v ir o n
n
E
m ent
Customers
PLACE
PEOPLE
PLACE
PROFIT
Inspire our people
Protect our environments
Create sustainable value
Createagreatplacetowork
wherepeopleareempowered
togrowandachieve
Respectandprotectour
physicalenvironmentsfor
futuregenerations
Ensurebusinesscontinuitythrough
operationalefficiency,sustainable
investmentandcustomerfocus
Great, safe place to work
Sustainable success
Reliable return on investment
Sustainability
65
CUSTOMERS | Always put customers first | Be responsible leaders in our community
Ensure safe and enjoyable experiences for our customers, employees and communities
Our Priorities
Our Plan
Leading host
responsibility
• Maintain industry-leading harm minimisation practices
• Host Responsibility Programme performance and problem
gambling indicators
• Industry benchmarking of SkyCity’s Host Responsibility
Programmes
• Leverage technology to enhance the identification of actual
or potential problem gamblers and act on that information
Customer experience
and engagement
• Employee Host Responsibility training completion rates
• Accelerate customer experience and engagement through
improved data, digital and loyalty capability
Community awareness
of harm minimisation
practices
• Increase in community knowledge and understanding of
SkyCity’s harm minimisation practices
• Customer data security and privacy practices
Material Issues
• Responsible hosting
• Customer experience
• Cybersecurity and
data privacy
• Regulatory risk
Sustainable
Development Goals
SUPPLIERS | Be responsible leaders in our communities
Source ethically and locally
Our Priorities
Our Plan
Material Issues
Low carbon
supply chain
• Encourage suppliers to set science-based targets and strive
to achieve zero carbon by 2050
Buy local
and seasonal
• Serve meals from a sustainable supply chain
to employees and customers
• Source animal products responsibly (eg. free range eggs)
• Track and report on local vs international
• Ethical sourcing
procurement spend
• Support supplier diversity (indigenous economy)
and working conditions
Connect to the
circular economy
• Remove single-use plastics from our supply chain
Progress initiatives to
eliminate modern slavery
• In accordance with the Modern Slavery Act 2019 (Cth),
develop a modern slavery statement by 31 December 2020
Sustainable
Development Goals
Ethical supply chain
• Progressively work towards an end-to-end understanding
of our supply chain, ensuring that all suppliers meet the
standards of our Ethical Sourcing Code
ENVIRONMENT | Be responsible leaders in our communities
Offer a great and safe place to work
Active commitment to reducing our environmental footprint
Our Priorities
Our Plan
Climate change/
emissions reduction
• Measure, report and offset SkyCity’s
carbon emissions
Reducing waste
• Reduction of waste and diversion from landfill
Employee activation
• Employee-led Green Fund
Reduction in water use
• Implement initiatives to reduce water use
Material Issues
• Climate change
Sustainable
Development Goals
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COMMUNITY | Be responsible leaders in our communities
Serve a social purpose by investing in our local economies and communities
Our Priorities
Our Plan
Material Issues
Economic
contribution
• Measure and evaluate SkyCity’s economic contribution
to the communities in which we operate, through local
procurement spend
Building communities
by developing people
• In collaboration with the SkyCity Community Trusts, make
a positive impact on youth development, employment and
career paths
• Community investment
• Community and Iwi
engagement
Investing in our
communities through the
SkyCity Community Trusts
in New Zealand
Developing deeper
connections with Iwi and
indigenous peoples
• Community based partnerships that achieve sustainable
social change
• Report on community outcomes through narrative and case
studies accompanied by quantitative results
Sustainable
Development Goals
• Build SkyCity’s confidence and capability to engage
authentically with Māori and indigenous peoples
PEOPLE | Offer a great and safe place to work
A great place to work where our people are empowered to grow and achieve
Our Priorities
Our Plan
Employee engagement
• Employee engagement pulse checks
Meaningful career and
development pathways
• Internal promotions and development opportunities
Diversity, inclusion
and belonging
Health, safety and
wellbeing
• Leverage the competitive advantage SkyCity’s diverse
workforce provides
• Ethnicity and gender reporting, including gender equality
of pay, and representation
• Health, safety and wellbeing scorecards
Material Issues
• Employee engagement
• Meaningful career and
development pathways
• Diversity, inclusion
and belonging
• Health, safety and wellbeing
Sustainable
Development Goals
SHAREHOLDERS | Improve our operating performance | Optimise our
existing portfolio | Grow and diversify our business | Always put customers first
Create value and maintain our social licence to operate
Our Priorities
Our Plan
Material Issues
Business continuity
• Strengthen and maintain good relationships with all
stakeholders, including shareholders and debt providers
Improve operating
performance
• Grow gaming visitation and spend and develop
complementary activities that drive gaming
Optimise existing portfolio
• Achieve operating efficiencies which protect and
grow margins
Grow and diversify
our business
• Develop digital businesses and leverage investment
in technology
• Capital allocation balances short term returns and
long term sustainability
• Ownership of assets balances strategic control and return
on capital
• Monitor and evaluate regional merger and acquisition
opportunities in our industry
• Business continuity
• Return on investment
• Operational efficiency
• Sustainable portfolio
• Regulatory risk
Sustainability
67
Be responsible
hosts
Ensure safe and enjoyable
experiences for our customers,
employees and communities.
Our Customers
At our core, SkyCity is a provider of casino
entertainment. The promotion of responsible
gaming and safe consumption of alcohol are
therefore topics at the heart of our business.
We take our responsibilities to minimise risk and
harm from problem gambling very seriously.
Priority Issues
FY20 Performance Highlights
•
•
•
Leading host responsibility
Customer experience and
engagement
Community awareness of harm
minimisation practices
Key Stakeholders
• Customers (existing and potential)
• Department of Internal Affairs
• Gambling Commission
•
Office of Liquor and
Gambling Commissioner
• Consumer and Business Services
•
•
Government Ministers, agencies
and officials, including the
Ministry of Health
Treatment service providers and
public health providers, including
Asian Family Services, Problem
Gambling Foundation, Salvation
Army, Raukura Hauora o Tainui
and Hāpai Te Hauora
• Australasian Gaming Council
• Police
• Local councils
•
•
•
•
•
Deployed facial recognition technology across all SkyCity’s
land-based casinos to assist in identifying excluded customers
Commenced operation of a predictive algorithm risk model at
the SkyCity Hamilton casino to assist in identifying players who
may be at risk from gambling harm by analysing loyalty data
Implemented ‘Live View’ system technology at the
SkyCity Auckland and SkyCity Hamilton casinos to assist in
identifying continuous play on electronic gaming machines
Increased host responsibility training for SkyCity Auckland
Customer Service Ambassadors – a front line customer service
team whose role is to engage and build rapport with customers
with an emphasis on host responsibility
The SkyCity Auckland and SkyCity Hamilton casinos
participated in Gambling Harm Awareness Week in
New Zealand – with treatment and public health stakeholders
stationed within the casino environs to create awareness of
problem gambling and access to support and treatment
networks
FY20 Key Challenges
•
•
•
Remains challenging to identify and prevent excluded persons
from re-entering and remaining within our land-based casinos
Maintaining effectiveness, relevancy and consistency in harm
minimisation best practice is an ongoing challenge
Alignment of host responsibility and harm minimisation
practice and culture across the SkyCity Group remains
challenging due to differences from site to site, such as size,
scale and staffing structure
FY21 Focus Areas
•
•
Review and refresh the delivery of host responsibility training to
staff, including development of a new coaching and education
programme for front line staff to improve capability around
identifying uncarded and excluded players
Maintain leading and best practice host responsibility by
leveraging available technology solutions
•
Increase and upweight host responsibility team/resourcing
69
Our challenge is to ensure
that our business provides
entertaining and profitable,
yet safe and responsible,
experiences and environments
Leading and Best Practice
Host Responsibility
When done responsibly, gambling can be a fun
and enjoyable entertainment activity. However, it
can also have harmful effects on some individuals,
their families and their communities. Our challenge
is therefore to ensure that our business provides
entertaining and profitable, yet safe and
responsible, experiences and environments.
This section largely focuses on SkyCity’s approach
to host responsibility across its land-based casinos.
Due to limitations in the New Zealand Gambling
Act 2003, SkyCity launched its online gaming site,
SkyCity Online Casino, offshore in August 2019 via
its Maltese subsidiary, SkyCity Malta Limited, in
partnership with international iGaming company
Gaming Innovation Group Inc (GiG). GiG provides
a full-suite online casino solution, which includes
a technical platform, gaming content, managed
services, front-end development and best-in-class
host responsibility procedures. SkyCity Malta
Limited has tailored the host responsibility tools
available from its offshore platform to align
wherever possible with SkyCity’s land-based
practices and, in some cases, has developed
new processes specifically applicable to the
New Zealand market such as the casino age
restriction and contact information for support
services. Further details of SkyCity Online Casino’s
host responsibility practices are available at
www.skycityentertainmentgroup.com/
our-commitment/responsible-gambling
for all customers and staff.
Commitment to Host Responsibility
At SkyCity, we place great importance on
host responsibility throughout every part of
the organisation.
The Sustainability Committee is a dedicated
Board committee that assists the SkyCity Board
to contribute to SkyCity’s vision and strategic plan
by ensuring that the company’s sustainability
strategy is best practice and supports the highest
level of sustainability objectives, with priority
given to minimising the impacts associated with
problem gambling as an area of primary focus.
The Sustainability Committee is responsible for
overseeing and monitoring the company’s host
responsibility and responsible gambling programme
and initiatives and monitoring licensing and
regulatory compliance in respect of such matters.
At each scheduled Sustainability Committee
meeting, progress against host responsibility and
responsible gambling measures and targets is
reported and discussed as a standing agenda item.
Within the business, a Host Responsibility
Governance Group meets monthly to discuss and
review host responsibility matters that have arisen
or may arise in the future across the SkyCity Group.
Membership of the Governance Group includes
the Chief Operating Officer, General Counsel and
Company Secretary, Group Regulatory Manager,
Group Risk Manager, the General Managers for
Auckland, Hamilton, Queenstown and Adelaide, and
Host Responsibility representatives. The principal
objectives of the Governance Group are to:
•
•
•
•
provide collective guidance to SkyCity
management on host responsibility matters
of interest;
enable senior management to discuss any
relevant topics and to receive advice, support and
ongoing learnings in a confidential environment;
expose senior management personnel to host
responsibility topics that may have bearing
or impact on SkyCity’s regulatory environs,
customers, their site/jurisdiction of operation or
its employees; and
develop initiatives that will collectively benefit
SkyCity customers and shareholders by way
of discussion, provision or endorsement
of responsible gambling and/or harm
prevention components.
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 We are immensely proud of
the culture of care we have
developed within our casinos
and continue to focus on ways
to ensure that this culture of
care is maintained
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A robust Host Responsibility Programme is in place
at each of our physical sites, and within SkyCity
Online Casino, to prevent and minimise harm from
problem gambling.
All SkyCity Board members and staff receive training
in problem gambling awareness. A dedicated
team of experienced host responsibility specialists
is employed at each of SkyCity’s land-based
casinos and, through our partnership with
Gaming Innovation Group plc, an experienced
harm minimisation team is in place for SkyCity
Online Casino. Additionally, at our largest and
busiest Auckland site, a team of Customer Service
Ambassadors is trained to interact with our
customers and report any concerns to our specialist
Host Responsibility team so preventative action can
be taken, where required.
An outline of SkyCity’s commitment to host
responsibility and detailed individual site-related
information, including the Host Responsibility
Programme for each site and SkyCity Online Casino,
is available at www.skycityentertainmentgroup.com/
our-commitment/responsible-gambling.
Maintaining Leading and Best Practice
Host Responsibility
We are immensely proud of the culture of care we
have developed within our casinos and continue to
focus on ways to ensure that this culture of care is
maintained and that we have the highest standard
of host responsibility best practice.
Over the past financial year, we implemented
additional host responsibility measures to improve
our ability to detect excluded persons and
continuous play, including:
•
•
the introduction of facial recognition technology
across all our land-based casinos in New Zealand
and Adelaide, South Australia, in November 2019
to assist in identifying excluded customers;
the introduction of ‘Live View’ system technology
at the SkyCity Auckland and SkyCity Hamilton
casinos to assist in identifying uncarded
continuous play on electronic gaming machines;
•
•
•
upgrading the ‘Carpark Assist’ technology at
SkyCity Auckland casino to ensure alerts relating
to vehicles of interest are sent to mobile devices
to improve response times;
increased host responsibility training for
Customer Service Ambassadors; and
more regular and dedicated physical sweeps
of gaming areas by SkyCity personnel.
In addition, we continued to undertake internal
mystery shopping training exercises to test the
robustness of our host responsibility practices.
Prior to the introduction of facial recognition
technology in November 2019, SkyCity was
largely reliant on its casino staff and Security and
Surveillance teams using photographs to recognise
excluded people. The introduction of facial
recognition technology and other technological
solutions (such as ‘Live View’ system technology at
the SkyCity Auckland and SkyCity Hamilton casinos)
significantly bolsters and assists SkyCity’s ongoing
efforts to detect and prevent excluded customers
from re-entering its casinos and to detect
continuous presence and play – however, despite
our best efforts and host responsibility measures
and initiatives, some individuals may nonetheless
find ways to elude staff.
In a dynamic casino environment, maintaining
effectiveness, relevancy and consistency in harm
minimisation best practice is an ongoing challenge.
In response to that challenge, SkyCity continues to
explore available technology solutions, seek expert
advice, consult stakeholder groups and source a
range of research material.
SkyCity has regular and robust dialogue with its
regulators, including the Department of Internal
Affairs in New Zealand, through which SkyCity is
always challenged to do better in respect of its host
responsibility practices and the effectiveness of its
Host Responsibility Programmes. This dialogue has
driven some of the host responsibility measures
outlined above and will continue to drive initiatives
in the future.
Our Customers
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Senior Management
Governance & Oversight
a Host Responsibility
Governance Group meets
monthly to discuss host
responsibility matters
(chaired by the
Chief Operating Officer)
Board Governance & Oversight
SkyCity Board and Sustainability
Committee governance and
oversight of performance of harm
minimisation framework
Host Responsibility
Programmes
site-specific programmes
outlining SkyCity’s host
responsibility obligations
(approved by the regulator)
Host Responsibility
Roles and Duties
roles and activities
focused on customer care
and host responsibility
monitoring
Software and Algorithms
to Monitor Gaming
Machine Play
blended software for
analysis and insight into
player behaviour and
spend/visitation traits,
including real time
monitoring of continuous
use of gaming machines
Independent Assurance
• an independent audit is carried
out every two years at each
land-based casino to monitor
compliance with its
Host Responsibility Programme
• internal independent assurance
programme (internal audit and
continuous improvement)
• mystery shopping programme
SkyCity
Group Harm
Minimisation
Framework
Learning &
Development
Framework
a suite of host
responsibility modules
for staff, including online
courses, in-person courses,
and annual refresher
courses
iTrak Monitoring
& Reporting
a record management
tool for host
responsibility incidents
and assessments,
including reports for
ongoing oversight
Reports to the Regulator
annual reporting to
the regulator on the
effectiveness of SkyCity’s
Host Responsibility
Programmes
Communications
& Brand
an internal brand
communications
campaign to promote
awareness of host
responsibility
Facial Recognition
Technology
use of facial recognition
and alert technology to
detect excluded patrons
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contribute towards the ongoing understanding
of gambling problems;
develop an amicable relationship with the
local community and other stakeholders
(eg. treatment providers, educational
programmes, research community, faith groups,
etc); and
promote a positive reputation that accurately
reflects the integrity of SkyCity as a responsible
gaming operator.
Following his assessment (which included an
onsite review in September 2019), Dr Griffiths
found that all seven of these objectives were met
by SkyCity and that he was “highly impressed
with the measures that are in place for player
protection and harm minimisation, as well as the
measures implemented to promote responsible
gambling among its clientele as outlined in the
Host Responsibility Programme”.
Dr Griffiths commented that, based on all the
information that he had been provided with and on
the basis of his onsite visit to the SkyCity Hamilton
casino, SkyCity’s host responsibility regime was one
of the best that he had seen compared with casinos
he had been to in other jurisdictions including those
he had personally visited in the UK, Australia, USA,
Canada, Macao, Singapore, Argentina, Uruguay,
Holland, Austria, Switzerland, Greece, Hungary,
Albania, Slovenia, Italy, Poland, Belgium, Finland,
Sweden, and Malta.
While Dr Griffiths’ report was provided in respect
of SkyCity Hamilton’s Host Responsibility
Programme, that Programme is largely similar to
the Host Responsibility Programme in place at each
of SkyCity’s other land-based casinos.
Independent Evaluation
In connection with SkyCity’s application to the
New Zealand Gambling Commission to replace
three table games at the SkyCity Hamilton casino
with 60 electronic gaming machines, in 2019,
we commissioned Dr Mark Griffiths to provide an
independent report in relation to the application,
which, amongst other things, expressed his opinion
on the overall host responsibility regime in place at
the SkyCity Hamilton casino.
Dr Griffiths is a chartered psychologist specialising
in the field of behavioural addictions, including
gambling disorder and gaming addiction,
a Distinguished Professor of Behavioural
Addiction at the School of Social Sciences at
Nottingham Trent University and the Director of the
International Gaming Research Unit at Nottingham
Trent University. He is internationally known for his
work into gambling and gaming addictions, and
has been researching, teaching and writing in this
area for 32 years.
Dr Griffiths assessed SkyCity Hamilton casino’s
responsible gaming policies and procedures against
a model best-in-class responsible gaming strategy
that he developed. It was envisaged that SkyCity’s
responsible gaming strategy would achieve the
following objectives:
•
•
•
•
minimise the likelihood of a ‘vulnerable player’
developing a gambling problem whilst playing
games within SkyCity’s gaming environment;
encourage well-informed and rational gambling
behaviour among SkyCity’s clientele;
provide support for clientele who develop
problems and/or who show distress as a result
of playing on SkyCity games within their
gaming platforms;
protect vulnerable groups from either gambling
online within the gaming platform in the first
place (for example, excluding underaged players),
or minimise the harm to problem gamblers who
continue to gamble;
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We continue to focus on
ways to ensure that we have
the highest standard of host
responsibility best practice
for extended periods. If the results of the trial
indicate that this initiative may be beneficial to
SkyCity’s ability to detect continuous presence,
SkyCity will evaluate its application at its other
land-based casinos.
Number of Excluded Persons Identified
Returning to a SkyCity Property in Breach
of an Exclusion Order
1,410
1,410
1,410
1,410
1,500
1,400
1,300
1,200
1,100
1,000
900
774
800
774
774
703
703
703
703
700
600
500
400
300
200
51 33 39
100
81
51 33 39
33
81
57
51 33 39
57
33
182
182
182
182
81
109
81
33
56
57
33
109
109
109
57
56
56
56
0
FY18
FY18
FY19
FY18
FY19
FY19
FY20
FY19
FY20
FY20
FY20
Auckland
Hamilton
Queenstown
Adelaide
Embracing Technology
Facial Recognition
After trialling different available technology
solutions from late 2018, SkyCity successfully
implemented a full facial recognition technology
solution across all its land-based casinos in
November 2019. This technology assists SkyCity
to recognise customers who have been excluded
from re-entering its casinos by notifying SkyCity
personnel when an individual matching an image
1,500
from SkyCity’s database of excluded patrons
re-enters a SkyCity gambling area.
1,500
1,500
1,400
1,400
1,100
1,100
1,200
1,200
1,300
1,300
Prior to the introduction of facial recognition
technology in November 2019, staff recall was
the primary mechanism for identifying excluded
persons returning to the casino in breach of
their exclusion orders. Initial indications are that
the new technology is proving to be useful in
assisting SkyCity to identify excluded customers
from re-entering SkyCity’s casinos, with a marked
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increase in the number of excluded persons
identified returning to a SkyCity casino in breach
of their exclusion orders during the financial
year ended 30 June 2020 in comparison to
preceding periods.
1,000
1,000
600
600
800
800
900
900
700
700
900
800
700
600
1,400
1,300
1,200
1,100
1,000
500
500
500
While there is no guarantee that facial recognition
400
technology will be effective in each and every
case, the technology nonetheless significantly
bolsters SkyCity’s ongoing efforts to deter, detect
and prevent excluded customers from re-entering
200
SkyCity’s casinos.
400
400
300
300
300
200
200
100
100
51 33 39
100
In July 2020, we commenced a trial at the
SkyCity Hamilton casino using facial recognition
FY18
technology in conjunction with up to 26 additional
cameras within the casino as a further means
of identifying customers who remain onsite
0
0
0
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These differences mean that while SkyCity’s
Host Responsibility Programmes have similarities,
they are often carried out quite differently.
However, problem gambling is an addiction and
the possibility of harm from this type of behaviour
manifests itself in the same way regardless
of jurisdiction or location. That is why SkyCity
endeavours to lead in this area and employ best
practice prevention methods across the business.
A key strategic focus across the SkyCity Group
for minimising gambling harm is prevention.
Robust prevention initiatives can be developed
and implemented across the Group with few
or no regulatory or local procedural constraints.
By adopting a prevention approach, we can
increase our ability to identify and respond early
to new or emerging concerns that may lead to
problem gambling related issues for our customers.
We are committed to carrying out regular reviews
of each of our Host Responsibility Programmes to
ensure alignment of our practices across our sites.
Predicative Algorithm
Since 2014, SkyCity has operated a predictive
algorithm risk model created by Focal Research at
SkyCity’s largest and busiest casino in Auckland,
which analyses loyalty data as a tool to identify
players who may be at risk from gambling harm.
The algorithm was upgraded in May 2019 and
again in June 2020 with the addition of Focal
Research’s ‘ALeRT BETTOR Protection System’
software to enhance and improve SkyCity’s ability
to identify potential at-risk gamblers. The ALeRT
BETTOR Protection System software uses routinely
stored customer data to create complex models
for identifying and managing high-risk play (the
algorithm) that otherwise may not be outwardly
visible to operators or customers.
In June 2020, the algorithm (including the ALeRT
BETTOR Protection System software) was rolled out
and implemented at the SkyCity Hamilton casino.
Consistency of Responsible
Gaming Culture and Practice
The alignment of excellent host responsibility and
harm minimisation practice and culture across
the SkyCity Group remains challenging due to
differences from site to site, such as size, scale
and staffing structure. There are also market and
customer differences that impact our approach to
staff training and programme design, in addition
to unique cultural distinctions to consider.
Furthermore, our sites across New Zealand and
in South Australia each have different regulatory
environments in which to operate.
Our Customers
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We offer extensive
information to customers
about exclusion options and
referral details to problem
gambling support services
Customer Experience
and Engagement
SkyCity promotes a range of tools in order to
facilitate responsible gambling – however, exclusion
is an equally important host responsibility
offering for those who may be vulnerable to
problem gambling.
Our casinos offer extensive information to
customers about exclusion options and referral
details to problem gambling support services,
including gambling helplines and face-to-face
counselling organisations.
In New Zealand, customers can choose to exclude
themselves from all SkyCity casinos in New Zealand
for a period of up to two years. In some cases,
SkyCity itself makes the decision to exclude a
customer as a means to prevent risk of harm
occurring, or as a means to stop further harm
through a customer’s gambling at SkyCity’s casinos.
In Adelaide, all exclusions are referred to
Consumer Business Services (the South Australian
Government’s regulator) who has overall
management of exclusions.
With the size of our customer base and premises,
it can be a challenge to identify individuals
immediately and, despite our best efforts and
measures, some individuals may nonetheless find
ways to elude staff and re-enter a SkyCity casino.
The following graph summarises the number of exclusions issued by each of the SkyCity properties over the
2016–2020 financial years:
Exclusions at SkyCity Properties
806
696
766
644
620
120
84
37
131
138
59
29
66
25
61
44
169
189
112
61
FY16
FY17
FY18
FY19
FY20
Auckland
Hamilton
Queenstown
Adelaide
900
800
700
600
500
400
300
200
100
0
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Community Knowledge
Given that a material issue to our stakeholders,
internal and external, is responsible gambling,
we aim to foster good relationships with problem
gambling stakeholders.
As part of this approach, we provide tours of our
facilities and literature to treatment providers
to assist them in understanding our gaming
environments and Host Responsibility Programmes.
We also partner with local experts and support
agencies to ensure we have up-to-date resources in
place for harm minimisation and prevention.
The objective is to improve information sharing
and collaboration between stakeholders in order
to advance SkyCity’s harm minimisation approach.
This collaborative approach ensures that knowledge
about problem gambling is shared between SkyCity
and the relevant stakeholders, who will work
together to minimise harm.
During the past financial year, we continued to
engage with community stakeholders, both at
their request and through more formal bi-monthly
Host Responsibility Community Liaison Group
meetings in Auckland attended by treatment
service providers, public health providers and
Government agencies.
In September 2019, SkyCity also participated
in Gambling Harm Awareness Week in
New Zealand, partnering with treatment services
and stakeholders to promote support and harm
minimisation initiatives with customers within our
SkyCity Auckland and SkyCity Hamilton casinos.
We also include treatment providers in our
internal host responsibility training programmes
wherever possible.
Would You Like a Helping Hand?
At SkyCity, we take our responsibilities as a host
very seriously - the safety and wellbeing of our
customers is a top priority.
Gambling can be fun for most people. However,
for some, losing control of their gambling
can happen quickly (or over time) without
recognising the early warning signs that there
may be a problem developing and can cause
harm, including financial problems, emotional
distress and relationship difficulties.
The negative consequences of problem gambling
can affect the gambler, their family or friends,
their employer and/or the community at large.
It is important to recognise early warning signs,
such as guilt or remorse after a gambling session
or overspending money and/or time.
you care about shows the signs and symptoms
of problem gambling, help is at hand.
The signs and symptoms of problem gambling
include:
• gambling makes home life unhappy;
•
•
feeling sad or unhappy after gambling;
trying to win back losses;
• gambling to escape worry or trouble;
•
changing sleeping or eating habits due to
gambling;
• borrowing to finance gambling;
•
•
considering committing or actually committing
an illegal act to finance gambling; and/or
considering harming yourself as a result of
gambling.
SkyCity is committed to promoting responsible
gaming behaviour. But problems can arise for a
small percentage of players. If you or someone
Call the Gambling Helpline (free and
confidential 24 hours) 0800 654 655
or text 8006.
Our Customers
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Inspire
our people
A great place to work where our people
are empowered to grow and achieve.
Our People
As a major employer with over 3,800 staff, we know
that taking care of our people is the key to creating a
great place to work.
We are committed to providing our employees with
sustainable career paths at SkyCity and want our
staff to grow their careers with us.
Priority Issues
FY20 Performance Highlights
•
•
Employee engagement
• Launched ‘SkyCity FLEX’, a new flexible working framework
Meaningful career and
development pathways
•
Held the SkyCity Diversity and Inclusion Conference, attended
by 170 people leaders from across the SkyCity business
•
Diversity, inclusion and belonging
• Sponsored the 2019 Rainbow Excellence Awards
• Health, safety and wellbeing
Key Stakeholders
•
•
•
Employees (existing, former
and potential)
Union representatives
Ministry of Business, Innovation
and Employment
•
Ministry of Social Development
• Ministry of Health
•
•
Department of Education,
Skills and Employment
Accident Compensation
Corporation
• WorkSafe NZ
• SafeWork SA
• ReturnToWorkSA
•
Immigration New Zealand
• Women’s Refuge
•
Women in Gaming and
Hospitality Australasia
• Gender Tick
• Rainbow Tick
• Southern Cross Healthcare
•
•
•
•
•
•
Awarded the 2019 Rainbow Tick Training and Development
Award for SkyCity’s Transition Support Framework, a
transgender employee framework and tool kit
Finalist in the ‘Employer of Choice’ category at the 2019
New Zealand Tourism Awards
Announced as a Platinum winner in the ‘Best Learning and
Development Project – Leadership Capability’ category at the
2019 LearnX Asia Pacific Awards for SkyCity’s Tahuna Te Ahi
programme
Launched refreshed employee values
Developed and implemented employee pulse surveys
Continued to focus on improving our health and safety
performance against our four health and safety goals set out in
our Group Health and Safety Strategy for 2019-2021
FY20 Key Challenges
•
•
•
Better representation of women at more senior levels
Downsized our New Zealand workforce by around 25% in
response to the COVID-19 pandemic
The COVID-19 global pandemic created an emerging risk
relating to health and wellness requiring support for our
employees in dealing with anxiety and stress
FY21 Focus Areas
•
•
•
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Continue the momentum on closing the gender pay gap
Implement the final stage of SkyCity’s ‘$20 by 2020’ wage
initiative in New Zealand – a commitment to pay a $20-an-hour
minimum wage (announced by SkyCity in March 2018)
Establish a new SkyCity Diversity and Inclusion Advisory Panel to
provide a minority perspective on diversity and inclusion issues
Continue to promote awareness of mental health issues and to
evaluate the impact on psychosocial risks
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Our vision is to be a centre
of expertise that delivers
high value learning and
development solutions
for staff
At SkyCity, we aim to create an environment where
our people are at the centre and ensure that our
staff can work safely, are motivated to work hard,
progress in their careers, and have the tools and
knowledge they need to look after both themselves
and our customers.
Employee Engagement,
Meaningful Career and
Development Pathways
With a large and diverse workforce, SkyCity is
recognised for taking a lead in staff development
and care. Our vision is to be a centre of expertise
that delivers high value learning and development
solutions for staff which contribute to the
achievement of our business priorities.
We have an advanced set of priorities and
programmes in place across our sites to achieve
our goal of being a great place to work where our
people are empowered to grow and to achieve.
To ensure that these programmes remain effective
and relevant, we regularly review the effectiveness
of the programmes, in terms of both interest and
sustained impact, and make refinements as required.
New programmes are also trialled and introduced
where appropriate. We regularly seek advice from
staff on how to remove barriers to participation
(such as release time) and introduce better incentives
for participation.
Tahuna Te Ahi – Ignite the Fire
Recognising the special standing of Māori as
tangata whenua and the indigenous people of
Aotearoa, SkyCity launched Tahuna Te Ahi, a
tailored programme developed by New Zealand
company Indigenous Growth Limited, for
our New Zealand-based employees in 2018.
The programme provides accelerated leadership
development specifically for Māori employees in
addition to implementing initiatives which elevate
the standing of Māori at SkyCity more broadly.
The programme connects people to indigenous
values and culture while at the same time giving
them the tools to incorporate their culture into a
business environment.
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SkyCity was awarded the 2018 Deloitte Top 200
Diversity & Inclusion Leadership Award for the
programme in November 2018 and was named
as a Platinum winner in the ‘Best Learning &
Development Project – Leadership Capability’
category at the 2019 LearnX Asia Pacific Awards for
the programme in June 2019.
15 employees commenced the Tahuna Te Ahi
programme during the last financial year.
SkyCity Values Refresh
Following the rollout of a refreshed company
vision and business, character and culture goals,
we commenced a process to refresh SkyCity’s
values, using a consultative process across all sites
which unearthed the core values shared by SkyCity
employees when they operate at their best.
The refreshed values are people centric, simple and
tell the story of the behaviours and actions people
need to practice to enable themselves, their teams
and SkyCity to succeed. We have integrated the
values into our performance and development
framework, MyPATH.
You bring your best to play
a unique role at SkyCity
You're part of a team
built on passion,
respect and equality
We're all about
entertainment and making
every experience the best
for guests
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Health, Safety and Wellbeing
At SkyCity, our people are paramount to the success
of our business. Ensuring we take care of our people
at work allows them to provide our guests with a
safe and enjoyable experience. Our health and safety
mission is to prevent harm and build wellness.
Health and Safety
Each property within the SkyCity Group must
demonstrate compliance with our Group Health
and Safety policy and standards for safety. We also
conduct internal audits annually and external audits
as required for registration and certification. Findings
from these audits are monitored and tracked for
continuous improvement.
In 2018, SkyCity adopted a new Group Health and
Safety Strategy for 2019–2021 which centres around
the mission “Prevent Harm and Build Wellness” and
four goals:
•
•
•
•
Industry leading safety culture – we will create
a positive safety culture for our workers and
guests with a strong emphasis on genuine and
visible leadership and active engagement of
our workers;
Effective risk management – we will focus on
our critical risks, ensuring we have sufficient risk
mitigation strategies in place to prevent fatal or
serious harm;
Sustainable systems and processes – we will
create a contemporary and resilient approach
to the management and improvement of health
and safety; and
Health and wellbeing – we will adopt a
risk-based approach to health and wellbeing,
including programmes to reduce physical and
psychosocial risks to our workers.
The strategy also addresses the New Zealand
Government’s key goals of its New Zealand Health
and Safety at Work Strategy 2018–2028.
Employee Wellbeing
SkyCity has programmes in place to promote
healthy behaviours and personal responsibility for
mental and physical health. The programmes aim to
promote healthy lifestyles, increase physical activity,
reduce absenteeism and improve productivity.
We continue to evaluate the impact on psychosocial
risks as part of our Group Health and Safety
Strategy. During the last financial year, we promoted
awareness of mental health risks aligning with
Mental Health Awareness Week in New Zealand
and R U OK? Day in Australia. During Mental Health
Awareness Week, the Auckland Sky Tower was
lit purple and green, the colours of the Mental
Health Foundation, to show support to those with
experience of mental illness, as well as their family
and friends.
In January 2020, the COVID-19 global pandemic
created an emerging risk relating to health and
wellness. In response, SkyCity established a specialist
Health and Hygiene team to provide staff with
up-to-date information on the global pandemic,
support in dealing with anxiety and stress relating
to the pandemic, and training and awareness on
health management relating to the pandemic.
Following periods of lockdown, we also focused
on physical and mental health work conditioning.
These programmes were aimed at creating physical
and mental resilience of our operational workers
to minimise the risk of harm, resulting in low rates
of injury and illness following the reopening of
our properties.
Additionally, during the last financial year, SkyCity
commenced a pilot programme to provide health
services across our Auckland property. The pilot
programme is focused on personal health checks
and coaching of our frontline employees.
As part of SkyCity’s wellness programme, all SkyCity
employees across the Group are also invited to
receive their flu vaccinations for free. This service
is offered annually to employees onsite at the
beginning of the flu season to ensure all staff have
easy access to the vaccinations. This year, due to the
impact of COVID-19 and the resulting temporary
closure of all SkyCity sites, employees were
provided with flu vaccination vouchers which were
redeemable at local pharmacies.
Our People
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FY20 Health and Safety Scorecard
Indicator
Target
FY20 Performance
Safety Success
Indicator 1
Safety Success
Indicator 2
Zero fatalities or serious injuries
Reduce Total Recordable Incident
Frequency Rate (TRIFR) by 10% from
the FY19 baseline
Achieved – no fatalities or
serious injuries
Not achieved – reduced by 8%*
Safety Success
Indicator 3
Increase hazard identification reports
by 20% from the FY19 baseline
Achieved – increased by 72%
*ThefinalTRIFRresultwassignificantlyimpactedbytheCOVID-19closures,whichsignificantlyreducedthetotalnumberofhoursworked.Forthe
sixmonthsto31December2019,therewasa17.6%reductioninTRIFRagainstthepriorperiod.
GOAL 1
GOAL 2
GOAL 3
GOAL 4
Industry Leading
Safety Culture
Effective Risk
Management
Sustainable Systems
and Processes
Health and
Wellbeing
Highlights
Highlights
Highlights
Highlights
Carried out a safety
culture review within the
SkyCity Auckland Logistics
department, which led to
the rollout of a targeted
initiative to increase
safety engagement and
leadership within the
department. This has
resulted in a significant
increase in hazards
reported within the
department – thereby
allowing mitigation
strategies to be developed
to lower workplace
incidents
Implementation of
Group standards for
leadership focusing on
individual objectives that
include participation and
engagement targets
Continued to invest in
strengthening our critical
risk controls across the
SkyCity Group, focusing
on achieving zero fatalities
(Safety Success Indicator 1)
Focused on safety in
design of new facilities to
mitigate our risks in the
design phase
Implemented new
emergency preparedness
initiatives, including fire
training simulations to
increase preparedness in
the event of a fire
Continued implementation
of a Construction Safety
Assurance Programme
to ensure our contractors
keep their people safe on
construction projects
at SkyCity
SkyCity Adelaide’s
self-insurance licence
was successfully renewed
for a further five-year
period following
ReturnToWorkSA’s (the
organisation responsible
for providing work injury
insurance and regulating
the South Australian Return
to Work scheme) audit of
SkyCity Adelaide’s health
and safety systems
Successfully implemented
a new hazard reporting
system using technology
to drive a greater
understanding of our risks,
resulting in a significant
improvement in the
quantity of
hazards reported
A significant increase in
the number of employees
electing to participate in
our health vaccination
programme with a focus on
influenza vaccinations
Commenced a Health
Check Programme aimed
at increasing awareness
on personal health
whilst providing
practical strategies
Significant focus on
the implementation
of infectious disease
prevention strategies for
employees, contractors
and guests
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 We established a $1 million
SkyCity Employee Hardship
Fund in response to the
impacts of the COVID-19
pandemic on our people
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Staff Support Programmes
SkyCity has a range of services designed to assist
employees who may need a helping hand.
At our Auckland and Hamilton sites, the Connect
Centre offers confidential help and advice for SkyCity
employees – for work issues and situations outside of
work. They offer advice about practical and effective
ways to handle difficult or sensitive issues. Where
needed, they can also assist employees in working
with agencies outside of SkyCity who may be able
to help.
The Group-wide Employee Assistance Programme
(EAP) is a supportive and confidential programme
designed to assist SkyCity employees who may
have problems that affect them at work – advice
and support is available 24 hours a day, seven days a
week, from trained professional counsellors who can
help staff with their problems.
SkyCity also provides emergency financial assistance
for employees suffering financial hardship. This
help can include budgeting advice, and last
resort financial help through a ‘SMILE’ loan to
New Zealand-based staff who qualify for support.
Employee Hardship Fund
Like many other businesses, the COVID-19 pandemic
has adversely impacted SkyCity’s business and
operations and necessitated significant changes
across the SkyCity business from March/April 2020,
including significantly reducing capital expenditure,
minimising operating costs and restructuring
SkyCity’s workforce.
In April 2020, the SkyCity Employee Hardship Fund
was established to initially assist SkyCity’s departing
employees in New Zealand who found themselves
in financial difficulties that could not fully be
addressed by their redundancy payments. The Fund
was established using funds contributed by the
Senior Leadership Team and other senior executives
across the business via voluntary reductions in
their salaries from 1 April – 30 June 2020 and from
voluntarily contributions by other staff members.
As at 31 August 2020, a total of $209,142 had been
granted (with no obligation for repayment) to
95 affected employees.
SkyCity also provided support to departing staff
beyond financial assistance - collaborating with
essential service providers in the healthcare and
grocery sectors (where employment demand
increased) to set up the Keep New Zealand Working
job portal and providing free independent services,
such as out-placement assistance, counselling
support and budgeting advice.
In a further step to support individuals displaced
from employment in the tourism sector due to the
COVID-19 pandemic, SkyCity partnered with Go with
Tourism (an initiative launched by Auckland Tourism,
Events and Economic Development with the aim
of growing interest in careers in tourism through an
online portal connecting employers with potential
employees) to support the 'We’re Here to Help'
campaign. The 'We’re Here to Help' campaign was
launched in April 2020 and repurposed the online
portal to provide support to displaced workers with
coaching, career guidance and connecting them
with new employment opportunities. SkyCity saw an
opportunity to provide urgent and vital support to a
key industry partner by seconding members of the
SkyCity Auckland Human Resources team to join the
Go with Tourism team, delivering over 800 calls of
personalised support between May and July 2020.
Healthcare
SkyCity understands that healthcare can be
expensive and sometimes difficult to access for
members of the workforce. We therefore offer
permanent, full-time employees in our New Zealand
sites health insurance via our healthcare provider
Southern Cross Healthcare. SkyCity fully subsidises
the RegularCare plan, which provides shared cover
for surgical treatment, recovery, support, imaging
and diagnostic tests and day-to-day treatment.
Employees are also able to add their family members
to the insurance plan at an additional cost.
Our People
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A Winning Career at SkyCity
Roiroi Paotama has been with SkyCity Auckland
for over 16 years and began as a Wardrobe
Attendant. Today Roiroi leads a team of 19 as
Wardrobe Supervisor, supporting our people
across the Auckland business with their garment
requirements – from design and purchase to
internal customer service.
“When I applied for the Attendant job, there was
one part-time vacancy and two of us applied for the
position, so they hired both of us and offered us a
day each. I ended up working four to five days on
the graveyard shift in my first three months. I was
so happy!
In 2011, an opportunity became available for the
Wardrobe Supervisor role and, though I didn’t
have much confidence that I would get it, I put my
hand up and applied. I thought my interview didn’t
go well at all, but I knew I had experience in the
department and sound computer skills and enjoyed
working there. Fortunately, they saw something in
me, and I got the job and was promoted.
In my time at SkyCity, I’ve had so many
opportunities to learn and grow. As a Wardrobe
Attendant, I completed a number of small courses
from Excel Tips and Techniques to Creating
Winning Moments and Problem Solving for Team
Members. When I was promoted, I completed
further courses such as Recruitment and Selection,
Time Management, and Learning to Lead.
These courses helped me to understand my job as
an Attendant and then as a Supervisor.
However, two programmes have really helped me
and my development. The first was The University
of Auckland New Start programme in 2014. I never
ever considered going to university (I hardly went
to school!) so I felt very nervous and uncomfortable
in this environment, but I went so I could prove to
myself that I could do it. I passed the course and
was over the moon!
The second programme was Growing Pasifika Niu
Leaders which I completed in 2017/2018. Again,
I felt nervous and uncomfortable, but I attended
and enjoyed it. I learned so much about myself,
my culture and how I can bring all of this to work
as a leader in a business setting. One of the things
I can happily do now with confidence is public
speaking – something I wouldn’t have done without
this course.
SkyCity is a company that supports its people
to aim high and go for it no matter what your
personal challenges are and I’m very grateful for
the opportunities I’ve had. I didn’t have much
confidence in myself when I first started, but I’ve
made a career here. I’m thankful to the many
people who believed in me and supported
me over the years. This is one of the things I
love about working at SkyCity, the people and
the opportunities!”
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 We value and respect the contributions,
ideas and experiences of people from
all backgrounds and are committed to
an inclusive workplace that enhances
and promotes workplace diversity across
the business
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Diversity, Inclusion and Belonging
We have a strong representation of minority groups
at SkyCity who are often underrepresented at
leadership levels in the workforce. Encouraging
diversity of thought in our workforce, and in
leadership roles in particular, allows us to strategically
reflect our diverse customer base and draw people
with different backgrounds to our business. We
believe this diversity of thought offers an opportunity
to enhance SkyCity’s competitive advantage and
provide long term sustainable business success.
We value and respect the contributions, ideas
and experiences of people from all backgrounds
and are committed to an inclusive workplace that
enhances and promotes workplace diversity across
the business. We are committed to providing
opportunities and initiatives that assist all to reach
their potential, and regularly benchmark and report
on our diversity position, policy and objectives.
SkyCity’s Diversity and Inclusion Policy (available in
the Governance section of the company’s website
at www.skycityentertainmentgroup.com) provides
a framework for the company’s current and future
diversity and inclusion initiatives. Each year, the
SkyCity Board sets measurable objectives to promote
diversity and inclusion. The measurable objectives
set by the Board for the financial year ending
30 June 2021 are to:
•
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•
•
continue to ensure strong female candidates are
identified in the recruitment process for all Board
and senior executive roles;
maintain a gender balance across the population
of employees who make up the top four levels of
the organisation hierarchy;
continue to review gender pay equality and
deliver an organisation-wide programme that
removes any risk of bias or inequality;
leverage and grow diverse talent pools to develop
a more ethnically diverse leadership population;
•
•
•
•
maintain certification with specialist
organisations who represent minority groups
within the SkyCity workforce (for example
Rainbow Tick) to reiterate our commitment to
and support of these minority groups’ interests;
build the capability of all leaders in
understanding and leveraging diversity of
thought through ensuring appropriate learning
and development solutions are delivered;
identify and appoint an advisory panel to provide
informed perspectives and guidance to the
Chief Executive Officer and Inclusion Council on
diversity and inclusion matters; and
continue to provide support and education to
employees and managers to promote mental
health awareness and wellbeing.
We downsized our workforce in New Zealand
by around 25% in April/June 2020 due to the
expected significant impact of COVID-19 on our
operating environment and financial outlook.
When approaching the labour restructure, we were
cognisant of our diversity and inclusion objectives
and initiatives and to ensure that the restructure
did not adversely impact our commitment in
these areas. As part of the restructure process,
we ran a desktop analysis of the redundancies to
ensure no bias in the process with no significant
concerns identified. Post restructure, there has
been no significant impact on gender and/or ethnic
representation in our workforce.
Inclusion Council
In 2019, a SkyCity Inclusion Council was established
to support the embedding of an authentic and
inclusive culture within SkyCity Auckland. The
Council is made up of Employee Resource Groups
whose purpose is to bring to life SkyCity’s diversity
and inclusion objectives. The Employee Resource
Groups sit on a forum to discuss priorities and
proposed actions with senior leadership on a
quarterly basis.
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The five core Employee Resource Groups are Women
in Leadership, NZ Asian Leaders, SkyCity Pride,
Pasifika Leaders and Te Roopu Māori ō SkyCity.
The leaders of the Employee Resource Groups bring
together their respective communities, confirming
their priorities and work together to drive initiatives
that impact the groups they represent.
In the last financial year, the Employee Resource
Groups have worked together across several
initiatives, including Te Roopu Māori ō SkyCity’s
celebration of Te Wiki o te Reo (Māori Language
Week) in September 2019. The celebration included
a number of activations, including Taonga Pūoro,
a performance and storytelling experience about
the different Māori instruments, open to SkyCity
employees, friends and family.
Diversity and Inclusion Leadership Conference
In October 2019, SkyCity held the SkyCity
Diversity and Inclusion Leadership Conference,
with 170 people leaders from across SkyCity in
attendance. There were a number of external
thought leaders who spoke on diversity and
inclusion, with the intent of the conference to
engage people leaders on diversity and inclusion in
their roles as leaders within SkyCity and provide tools
for creating more inclusive teams.
Supporting Our Rainbow Community
SkyCity has maintained a Rainbow Tick for its
Auckland and Hamilton properties for a fifth year,
and our Queenstown site was awarded the Pride
Pledge in 2020. Being a Rainbow Tick employer
means SkyCity has been acknowledged as being a
safe, supportive and welcoming workplace where
employees can bring their whole selves to work
without fear of discrimination or disadvantage
– no matter what their gender identity or
sexual orientation.
Our Adelaide site maintained its Pride in Diversity
programme membership, which reiterates
our commitment to our lesbian, gay, bi-sexual,
trans-sexual and intersex Australian-based staff.
SkyCity Queenstown has been a supporter of the
Winter Pride event in Queenstown for many years
and signed up to the Pride Pledge in June 2018.
The Pride Pledge was started in Queenstown to raise
the visibility of safe spaces within the Queenstown
community after the Winter Pride festival organisers
realised that, although the town had an inclusive
heart, it was very difficult for the rainbow community
to see any visible signs that they were welcome and
included.
Gender Tick
In April 2019, SkyCity was awarded the Gender Tick
in recognition of its commitment to providing a fair
workplace for all employees. The Gender Tick was
reconfirmed in June 2020.
Gender Tick is a New Zealand-based accreditation
for businesses to demonstrate their commitment to
gender equality in the workplace. The programme
assesses organisations across five key indicators,
including gender inclusive culture, flexibility and
leave, women in leadership, gender pay equality and
ensuring a safe workplace.
Pay Equality
SkyCity continues to monitor and report on
remuneration outcomes by gender to ensure
pay equality.
In the last financial year, SkyCity conducted
gender pay equality analysis for like positions
(being positions with similar degrees of know-how,
problem solving and accountability). This analysis
identified that there are no indications of gender
bias across similar positions.
SkyCity is committed to continually improving and
working with the feedback received from Rainbow
Tick to find ways we can further support our SkyCity
rainbow community.
We remain focused on increasing the representation
of women in senior roles across the business through
a gender balanced talent pipeline. These initiatives,
in addition to a strategy deployed over the past two
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years to lift the hourly wage rate of SkyCity’s lowest
paid staff, has contributed to a meaningful reduction
to SkyCity’s gender pay gap in New Zealand and the
maintenance of a low gender pay gap in Australia.
The following graph illustrates the SkyCity gender
pay gap as at 30 June 2020:
NEW ZEALAND
7.5%
FY19 – 8.2%
AUSTRALIA
1.5%
FY19 – 1.5%
Percentagedifferencebetweenmedianhourlyrateforwomen
comparedtothemedianhourlyrateformenasat30June2020.
Includespermanentandtemporaryemployees.
The New Zealand national gender pay gap is 9.3%
(August 2019).
SkyCity Flexible Working Framework
In May 2020, as part of SkyCity’s diversity and
inclusion strategy, we launched the ‘SkyCity
FLEX’ framework following a review of processes
and policies in relation to working flexibly.
Employee experiences and input throughout the
COVID-19 pandemic and lockdown period further
highlighted a demand for employees to access
flexible working arrangements.
As a largely customer facing business, we recognise
that flexible working may not be appropriate
or achievable for all individuals, teams and
departments – however, the new framework
encourages innovation in considering what may
work for both our employees and customers.
The framework provides guidance on both ‘Location
Flex’ and ‘Schedule Flex’, with the requirement that
any flexible working arrangement must meet the
needs of all stakeholders - customers, employees,
teams and SkyCity.
Women in Gaming and Hospitality Australasia
SkyCity is a Platinum Partner of Women in Gaming
and Hospitality Australasia. SkyCity’s partnership
broadened the industry body’s reach into
New Zealand and Adelaide.
Women in Gaming and Hospitality Australasia is
dedicated to achieving an inclusive industry and
promoting gender equitable outcomes in the
workplace. Its purpose is to achieve an inclusive
industry and promote positive outcomes for women
in the gaming, hospitality and gaming related
industries by encouraging the development and
success of women through education, mentorship
and networking opportunities and providing tools
and support for organisations wishing to develop
or enhance their gender diversity and inclusion
initiatives – all of which aligns strongly with
SkyCity’s values.
Our People
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Performance Against FY20 Board Diversity and Inclusion Objectives
SkyCity performed well against the measurable objectives set by the Board to promote diversity and
inclusion for the financial year ended 30 June 2020.
Objective
Progress Made
Continue to ensure strong female
candidates are identified in the
recruitment process for all Board
and senior executive roles
Recruitment briefs for the Board recruitment process during
the past financial year explicitly specified that SkyCity required
female candidates to be identified wherever possible.
Recruitment briefs for the senior leadership recruitment process
explicitly specified that SkyCity require female candidates to be
identified wherever possible.
The Chief Executive Officer personally approved all
appointments made at levels two to four of the organisational
hierarchy (level one being the Chief Executive Officer), asking
for an explanation as to why a female candidate had not been
identified where the preferred candidate was male.
Maintain a gender balance across
the population of employees who
make up the top four levels of the
organisation hierarchy
During the past financial year, gender balance has been
maintained across the top four levels of the organisational
hierarchy with 49% of employees being female and 51% being
male, demonstrating an equal gender representation in our
talent pipeline.
Continue to review gender
pay equality and deliver an
organisation-wide programme
that removes any risk of bias or
inequality
SkyCity continues to monitor and report on remuneration
outcomes by gender to ensure pay equality. The annual salary
review resulted in an average increase for female salaried
employees of 2.41% and an average increase for male salaried
employees of 2.21%.
SkyCity also conducted gender pay equality analysis for like
positions, positions with similar degrees of know-how, problem
solving and accountability. This analysis identified that there are
no indications of gender bias across like for like positions.
While our analysis has identified no evidence of a gender driven
pay gap for like positions, we remain focused on increasing the
representation of women in senior roles across the business
through a gender balanced talent pipeline.
SkyCity’s overall gender pay gap in New Zealand decreased to
7.5% (at 30 June 2020) from 8.2% (at 30 June 2019).
SkyCity’s overall gender pay gap in Australia remained at 1.5%
(at 30 June 2020).
Maintain Rainbow Tick certification
for our New Zealand sites and
partner with Pride in Diversity
Australia to reiterate our
commitment to our lesbian, gay,
bi-sexual, transgender, takatapui
and intersex staff
Rainbow Tick certification was achieved for our Auckland and
Hamilton sites, and our Queenstown site was awarded the
Pride Pledge.
Our Adelaide site maintained its Pride in Diversity membership
and participated in the Australian Workplace Equality
Index survey.
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Objective
Progress Made
Leverage diverse talent pools to
develop a more ethnically diverse
leadership population
Several initiatives were delivered during the past financial year
with the objective of developing a more ethnically diverse
leadership population:
Build the capability of all leaders
in understanding and leveraging
diversity of thought through
ensuring appropriate learning
and development solutions are
delivered
Continue to provide support and
education to employees and
managers to promote mental
health awareness
•
•
•
SkyCity continued to offer its Māori leadership programme,
Tahuna te Ahi, in partnership with Indigenous Growth
Limited;
SkyCity continued as a major partner of TupuToa, hosting
three summer interns for three months within our
corporate business; and
SkyCity continued its sponsorship of the New Zealand
Asian Leaders Forum.
In addition, of the participants in SkyCity’s Emerging Leadership
Programme, 36% identified as Asian and 14% identified as either
Māori or Pasifika.
SkyCity held a Diversity and Inclusion Leadership Conference
with 170 people leaders in attendance. The conference was
intended to broadly educate SkyCity people leaders on diversity
and inclusion, through a range of expert speakers who offered
diverse perspectives and tools for creating more inclusive teams.
The SkyCity Inclusion Council continued to encourage employee
led initiatives and provide strong executive visibility and
sponsorship. Five core groups continue to be represented
including Women in Leadership, NZ Asian Leaders, SkyCity Pride,
Pasifika Leaders and Te Roopu Māori ō SkyCity.
The SkyCity Emerging Leaders Programme has a highly
integrated approach to diversity and inclusion, from the
selection of participants to the collaborative and experiential
modules which focus on exploring bias.
SkyCity Adelaide became a Healthy Minds Accredited Workplace
due to its continued work and dedication to building workplace
practices which encourage strong employee wellbeing. All new
employees complete the Seven Secrets to a Healthy Mind
Programme as part of their onboarding.
An online Healthy Minds Seminar is available to all employees
across our Australian and New Zealand sites.
SkyCity partnered with the Smile Initiative to deliver online
learning to employees through the COVID-19 pandemic.
The Smile Initiative is a social enterprise started by a collective of
mental health clinicians who aim to empower businesses and
employees to create a psychologically safe work environment.
Our People
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Our Staff Numbers
Worked Full-Time Equivalent (FTE)* by Site
Site
Number of Employees
%
Adelaide
Auckland
Hamilton
Queenstown
FY20
FY19
FY20
FY19
616
575
24%
18%
1,696
2,426
67%
73%
179
38
242
75
7%
2%
7%
2%
Total
2,529
3,318
100% 100%
*TheFTEcalculationisbasedonactualhoursworkedbystaff,
notcontractedhours.Thisdefinitionprovidesamoreaccurate
assessmentoffull-timeequivalentstaff.
Total Headcount for Group
Site
Number of Staff
%
Adelaide
Auckland
Hamilton
Queenstown
FY20
1,059
2,414
290
54
FY19
FY20
FY19
997
28%
20%
3,625
63%
72%
320
89
8%
1%
6%
2%
Group Total
3,817
5,031
100% 100%
Employment Contract Type for Group
Contract Type
Number of Employees
%
Permanent
Temporary
Group Total
FY20
3,462
355
3,817
FY19
FY20
FY19
4,642
91%
92%
389
9%
8%
5,031
100% 100%
90
FY20
FY20
Adelaide
Auckland
Hamilton
Queenstown
Adelaide
Auckland
Hamilton
Queenstown
FY20
Permanent
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Employment Contract Type by Gender
Contract type
Female
Gender Diverse
Male
Group Total
Permanent
Temporary
FY20
91%
9%
FY19
94%
6%
FY20
FY19
FY20
FY19
FY20
100%
100%
90%
91%
0%
0%
10%
9%
91%
9%
FY19
92%
8%
Employment Contract Type by Site
Contract type
Adelaide
Auckland
Hamilton
Queenstown
Permanent
Temporary
FY20
72%
28%
FY19
72%
28%
FY20
98%
2%
FY19
97%
3%
FY20
FY19
FY20
FY19
99%
99%
100%
100%
1%
1%
0%
0%
Employment Type by Gender
Contract type
Female
Gender Diverse
Male
Group Total
Full-Time
On Demand
Part-Time
FY20
54%
20%
26%
FY19
52%
19%
29%
FY20
25%
50%
25%
FY19
17%
50%
33%
FY20
FY19
FY20
62%
62%
17%
21%
18%
20%
58%
19%
23%
FY19
57%
19%
24%
Employees in Collective Agreements by Site
Contract type
Adelaide
Auckland
Hamilton
Queenstown
Group Total*
Yes
No
FY20
74%
26%
FY19
75%
25%
FY20
26%
74%
FY19
25%
75%
FY20
FY19
FY20
FY19
FY20
4%
96%
7%
0%
0%
93%
100% 100%
37%
63%
FY19
33%
67%
*GrouptotalpercentagesareweightedproportionatelybasedonsiteWorkedFTE.
Employee Absenteeism**
Contract type
Adelaide
Auckland
Hamilton
Queenstown
Group Total***
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
Absenteeism
3.08%
3.62%
3.95%
3.98%
3.09%
3.60%
1.83% 2.18%
3.70%
3.76%
**Asapercentageofscheduleddays.
***GrouptotalpercentagesareweightedproportionatelybasedonsiteWorkedFTE.
Our People
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Grow our
communities
Serve a social purpose by investing in
our local economies and communities.
Our Communities
Our aim is to create value in our business and in the
communities in which we operate.
We understand that to do this we need to engage
meaningfully with our communities, listen to
their critical needs and expectations, and respond
through developing meaningful community
partnerships and by taking action to address key
issues in our operations.
Priority Issues
FY20 Performance Highlights
•
•
•
•
Economic contribution
Building communities by
developing people
Investing in our communities
Developing deeper connections
with Iwi and indigenous peoples
Key Stakeholders
• Community groups
•
Sponsorship partners, including
Emirates Team New Zealand,
Leukaemia & Blood Cancer
New Zealand and Variety – The
Children’s Charity
• Community partnerships
•
Recipients of SkyCity Community
Trust grants
• Philanthropy New Zealand
• Local Iwi
• Ministry of Social Development
• Te Puni Kōkiri
• TupuToa
• First Foundation
•
•
•
•
Helped to raise more than $325,000 for Leukaemia & Blood
Cancer New Zealand through the Step Up Sky Tower Stair
Challenge
Contributed a total of $3.7 million to the four New Zealand
SkyCity Community Trusts for distribution to communities in
the Auckland, Waikato, and Queenstown Lakes regions – of
which $1.9 million was distributed in the financial year ended
30 June 2020, including $1 million in an extraordinary grant
round by the SkyCity Auckland Community Trust to four
organisations focused on reducing the impact of the COVID-19
pandemic in their communities
Welcomed the 50th young person into Project Nikau,
SkyCity’s youth employment programme focused on offering
employment, training and a career path to young people from
disadvantaged backgrounds
Continued our sponsorship of First Foundation, the Gateways
Programme and TupuToa as part of SkyCity’s ongoing
commitment to youth employment
FY20 Key Challenges
•
Increase public perception of SkyCity as a good
corporate citizen
FY21 Focus Areas
•
•
Support our Project Nikau rangatahi to develop their career
paths at SkyCity
Further our collaboration with the SkyCity Community Trusts
on youth development, wellbeing and advancement
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We helped raise more than $325,000 for
Leukaemia & Blood Cancer New Zealand through
the Step Up Sky Tower Stair Challenge
SkyCity is a cornerstone of each of the communities
in which it operates. We understand that our scope
for influence and change is huge, and SkyCity invests
in and works to develop our communities in a variety
of ways.
Engaging with our stakeholders helps us to
understand community attitudes toward SkyCity,
the communities’ expectations of us, and how
stakeholders believe SkyCity should create value.
SkyCity engages with stakeholders in a variety of
ways, both formal and informal, in each of the
communities in which it operates. These actions
range from legally required engagement with
regulators and problem gambling service providers
for example, to less formal feedback mechanisms
such as social media, customer surveys and public
perception monitoring.
Whilst it is easy for organisations to talk about inputs
and outputs, such as how much money or ‘in-kind’
contributions are given to charity, the number of
charities receiving support, or how many hours staff
spend on volunteering for community projects,
it is a more challenging exercise to determine the
outcomes and impacts of those activities. We want to
ensure that there is genuine and measurable social
impact from our SkyCity Community Trusts and
other charitable giving. We continue to review and
assess our community investments and partnerships
in a more holistic and strategic way, to ensure that
they are aligned to our unique business assets
and are ultimately delivering both social and
business value.
Economic Contribution
Sourcing Locally
SkyCity is committed to sourcing locally.
In the financial year ended 30 June 2020, SkyCity
spent approximately $150 million on operational
goods and services, the bulk of which was spent
with local suppliers – with over $35 million on
food and beverage items across New Zealand
and Australia.
Partnerships
Emirates Team New Zealand
In September 2019, SkyCity was announced as
the ‘Official Hotels and Entertainment Partner’
for the Emirates Team New Zealand defence of
the 36th America’s Cup in March 2021. Through
the partnership, Emirates Team New Zealand and
their guests will have access to SkyCity’s range of
premium accommodation and world-class food
and beverage services and SkyCity will provide
on-water and onshore hospitality for Emirates Team
New Zealand at their waterfront base within the
America’s Cup Village in Auckland. The SkyCity logo
will be featured alongside the other major sponsors
on the team’s AC75 race yacht when Emirates
Team New Zealand launch their new boat for the
first time.
Come summer 2021, the festivities will continue
from the Viaduct with a fan trail to Federal Street in
the SkyCity Auckland precinct, where SkyCity will
host an Emirates Team New Zealand Fan Zone and
exclusive events at its popular food and beverage
outlets. SkyCity’s precincts in Hamilton and
Queenstown will also join in the celebration with
their own fan zones and race screenings.
SkyCity is thrilled to be partnering with Emirates
Team New Zealand for the 36th America's Cup, a
major event for Auckland and in the New Zealand
events calendar.
One of the intentions outlined in the SkyCity Group
Procurement Policy is to source and procure locally
made and supplied products from Australasian
owned and operated businesses as a preference
wherever possible.
Leukaemia & Blood Cancer New Zealand
During May each year, firefighters from
communities across New Zealand join forces again
to raise money for Leukaemia & Blood Cancer
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SkyCity is partnering with Emirates Team New Zealand for the 36th America's Cup.
New Zealand (the national charity dedicated to
supporting patients and their families living with
blood cancers and related blood conditions) in
the Firefighter Sky Tower Stair Challenge, with
each participant climbing the 1,103 steps of the
Sky Tower wearing 25 kilograms of gear. Due to the
impact of COVID-19, the 16th Firefighter Sky Tower
Stair Challenge is now scheduled to take place on
21 November 2020.
SkyCity is proud to have Leukaemia & Blood Cancer
New Zealand as a charity partner and to have
worked together to raise more than $325,000
during the last financial year through the Step Up
Sky Tower Stair Challenge.
To acknowledge the considerable efforts of the
fire and emergency services teams that assisted
with the significant fire at the New Zealand
International Convention Centre in October 2019,
all revenue generated from Sky Tower admissions
on 17 November 2019 ($31,317) was donated to
Leukaemia & Blood Cancer New Zealand.
Variety – The Children’s Charity
SkyCity has continued its 20-year partnership
with Variety – The Children’s Charity through
delivering Variety Bingo in Auckland, Adelaide
and Hamilton. The eighth annual SkyCity Variety
of Chefs campaign scheduled for July 2020 was
unfortunately postponed due to the impact of
COVID-19.
We are really proud of the partnership we have with
Variety, and the support we can provide to continue
the important work they do in our communities.
Our Communities
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Over
$60 million
awarded in grants to community groups and
organisations in New Zealand since 1996
Community Outcomes,
Strategy and Progress
Building Communities by Developing People
During the 2018 financial year, after engaging
with employees from across the SkyCity Group
and community representatives (including
the youth development, family support and
financial capability sectors), SkyCity developed a
new community development and investment
strategy centred around a thematic approach of
'Building Communities by Developing People'.
This approach recognises that SkyCity can
provide employment opportunities for unskilled,
unemployed youth at risk of poor employment
outcomes within each of the communities within
which it operates – we can provide employment,
training and a career path.
During the 2019 financial year, SkyCity finalised
the operational strategy across the SkyCity Group
to deliver this new strategy with the launch of
Project Nikau, a youth employment programme
with a focus on developing work-ready skills.
SkyCity worked in collaboration with the Ministry
of Social Development and a community-based
provider to design a work ready programme
– with the first cohort of 15 cadets joining the
SkyCity Auckland pilot programme in June
2019. The second cohort of 15 cadets joined
in September 2019 and the third cohort of 20
young people joined in February 2020.
SkyCity has designed and implemented a
wraparound youth mentoring support for each
cohort and, in partnership with Te Puni Kōkiri,
has co-designed individualised learning and
development plans for each cadet.
In addition, through collaboration with the
SkyCity Auckland Community Trust, greater
social impact has been achieved in the areas of
youth advancement and development through
the Trust's prioritisation of initiatives that support
youth development, wellbeing and employability.
SkyCity committed to our third First Foundation
Scholarship in 2020. Applications were open to
dependents from the SkyCity employee network
in New Zealand and were managed by the
First Foundation, where strict criteria had to be
met to ensure eligibility. The scholarship supports
an academically talented student, from a low
decile school and low-income family, through
tertiary study.
We continue as a major partner of TupuToa,
an organisation focused on ensuring corporate
New Zealand is representative of the country,
by developing and empowering young Māori
and Pasifika peoples and building the cultural
capability of their partners. In the last financial
year, SkyCity hosted three summer interns for
three months within its corporate teams.
Developing Deeper Connections with Māori
Iwi Māori relationships have been initiated to
support and guide Project Nikau, SkyCity’s youth
employment programme. Our partnership with
Te Puni Kōkiri has enabled young Māori to access
cadetships which support their transition into
employment with SkyCity.
Through SkyCity’s Inclusion Council, Te Roopu
Māori ō SkyCity (an internal Employee Resource
Group) has been established to support authentic
engagement with Māori staff. In addition, SkyCity
formally engaged an experienced and licensed
Māori translator to build our capability across our
New Zealand sites.
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Investing in our Communities
SkyCity Community Trusts
Established to provide funds for community and
charitable purposes, the SkyCity Community
Trusts are one of the vehicles SkyCity uses to
‘put something back’ into the New Zealand
communities in which the company operates.
The SkyCity Auckland Community Trust,
SkyCity Hamilton Community Trust, SkyCity
Queenstown Casino Community Trust and
SkyCity Wharf Casino Community Trust aim to
help local and regional organisations carry out
community assistance and development work,
focusing on supporting families to thrive and
communities to prosper, with a specific focus on
youth development.
Over the last financial year, SkyCity contributed a
total of $3.7 million to the four SkyCity Community
Trusts for distribution to community groups
and organisations in the Auckland, Waikato and
Queenstown Lakes regions - of which $1.9 million
was distributed by the Trusts in the financial year
ended 30 June 2020. Included in the grants made
during the last financial year, the SkyCity Auckland
Community Trust ran an extraordinary grant round
in April 2020 which saw $1 million in funds granted
to four organisations, all of which had strong
COVID-19 response plans, focused on reducing the
impact of the pandemic within their communities.
Since establishing the first SkyCity Auckland
Community Trust in 1996, SkyCity has awarded
more than 4,880 grants totalling over $60 million
to various community groups and organisations
in New Zealand, large and small, through the four
SkyCity Community Trusts.
Whānau Ora Auckland and
Northland COVID-19 Response
The economic and social impacts of the COVID-19
pandemic have directly affected communities,
families and individuals in numerous ways.
Our most vulnerable communities, including Māori
and Pasifika, have been significantly impacted
by unemployment, negative health outcomes,
accessibility to health services and social inequities.
During the COVID-19 Alert Level 4 lockdown in
New Zealand in April 2020, the SkyCity Auckland
Community Trust took a proactive approach to
supporting our vulnerable communities and,
in line with good philanthropic practice, made
the decision to provide a rapid response and
‘act with impact’ – running an extraordinary grant
round which saw $1 million in funds granted to
four organisations in the Greater Auckland and
Northland region – Te Pou Matakana - Whānau
Ora Commissioning Agency (Te Pae Herenga
Auckland collective), Pasifika Futures Whānau
Ora Commissioning Agency (Auckland collective),
Te Manawaroa o Ngāti Hine (Ngāti Hine and
community collective) and Te Kahu o Taonui
(Iwi collective).
The four recipients and their partner organisations
collectively covered the Greater Auckland and
Northland regions delivering food packages,
hygiene parcels and providing wrap around
social services to over 10,000 families. The grants
were used to support frontline services through
the purchasing of hygiene items, food and
supplementary items such as winter clothing,
blankets and heaters, which were then distributed
by the partner organisations. In the Far North,
communities were also dealing with water
shortages, and the grants allowed for several water
tanks to be refilled.
The grants enabled the partner organisations to
connect and support whānau and communities.
While the most at risk were identified as Māori and
Pasifika, a ‘no letter box missed’ and whānau ora
approach meant that all communities benefitted
from the grants.
Our Communities
97
An independent review of the SkyCity Community
Trusts was completed in July 2019 to align the Trusts
with governance, grant making and philanthropic
best practice. The overarching recommendation
arising from the review was to create greater
alignment of the SkyCity Community Trusts to
each other, their communities and to SkyCity’s
corporate social responsibility objectives. To achieve
the overarching recommendation, a number of
subsequent recommendations were suggested,
including establishing a contestable process for
all trustee appointments across the four SkyCity
Community Trusts, developing a trustee skills and
attributes matrix to identify gaps in knowledge, skill
and experience within the makeup of the Trusts,
and establishing a Transitional Chair role to have
oversight of the Trusts and assist in the alignment of
the governance with the operations of the Trusts.
A contestable process was subsequently
implemented across the four SkyCity Community
Trusts, with 16 new trustees being appointed
in February 2020. A Transitional Chair, Kate
Cherrington, was also appointed in February
2020 to commence the implementation of the
recommendations of the review for the funding
rounds across the four SkyCity Community Trusts.
A new Programmes and Relationship Advisor role
was also established to engage with community
organisations and provide advice and information
relating to the Trusts’ funding, including processing
funding applications and supporting recipients
to deliver on their desired outcomes, undertaking
assessments and providing recommendations to
Trustees to support funding decisions.
Biographical details of individual trustees, and their
respective qualifications and experience, are set out
on the Community Trusts section of the company’s
website at www.skycityentertainmentgroup.com/
our-commitment/community-trusts.
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Kate Cherrington
Chair of the SkyCity Community Trusts
(Ngāti Hine, Ngāti Wai, Kapotai, Ngā Puhi,
Ngāi Pākehā)
Kate is an associate with The Centre for Social
Impact based alongside Foundation North in
Auckland. She works across education, community
strategy and advancement projects in Aotearoa and
specialises in working with groups with a kaupapa
Māori focus in education and community strategy,
and advancement projects.
Kate is also a trustee of Miria marae in Waiomio
and serves on Te Manawatoopu the working
group for Te Maara a Hineamaru, the governance
for Te Runanga o Ngāti Hine. She is a Council
member with NorthTec (Northland Polytechnic)
in Whangarei, trustee of Te Putea Whakatupu and
provides support to current young Iwi leaders in the
Advancement of Māori Opportunity (AMO) network
across Aotearoa.
Kate has professional experience in philanthropic
strategy and community capacity support,
education management, programme and policy
development, quality assurance management,
Māori language programme development, and
wānanga development in New Zealand. She is a
facilitator in the Indigenous Leaders Interactive
System™ (ILIS), a structured dialogue tool to assist
community groups across the world in planning
for success and solving complex issues. She has
been a teacher in Te Kōhanga Reo, a Māori cultural
ambassador and a performer in the traditional
Māori performing arts.
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 Meet our SkyCity
Community Trustees
Trustees of the SkyCity Auckland Community Trust
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Back (from left to right) – Donald Mann, Te Arepa Morehu and Wi Pere Mita
Front (from left to right) – Pru Etcheverry, Marama Royal, Veisinia Maka and Rosie Nathan
Absent – Kate Cherrington, Sue Suckling and Rob Hamilton
Trustees of the SkyCity Hamilton Trust
Trustees of the SkyCity Queenstown Casino
Community and SkyCity Wharf Casino
Community Trusts
Back (from left to right) – Ken Williamson,
Lehi Duncan and Aisha Ross
Front (from left to right) – Michelle Baillie,
Amanda Hema, Manaaki Nepia and Kawena Jones
Absent – Kate Cherrington
Back (from left to right) – Jono Browne and Bill Moran
Front (from left to right) – Darren Rewi, Joanne
Conroy and Hetty Van Hale
Absent – Kate Cherrington and Vickie Hill
Our Communities
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Sourcing
responsibly
Source ethically and locally.
Our Suppliers
We can leverage our relationships with other
organisations to promote positive outcomes in
areas of impact such as anti-corruption, responsible
political advocacy, fair competition and promoting
social and environmental responsibility in our
supply chain.
Priority Issues
• Ethical supply chain
• Low carbon supply chain
• Buy local and seasonal
• Connect to the circular economy
•
Progress initiatives to eliminate
modern slavery
Key Stakeholders
• Suppliers (existing and potential)
• EcoVadis
FY20 Performance Highlights
•
•
•
•
•
Agreed and commenced delivery of a 24-month Ethical and
Responsible Sourcing Strategy Roadmap
Presented SkyCity’s ethical sourcing strategy to the
New Zealand Climate Leaders Collation in October 2019
Finalist in the 2020 New Zealand CFO Awards for ‘Finance
Team Contribution to ESG Initiatives’
Announced our commitment to only use cage free eggs across
our New Zealand sites by September 2020 (delayed due to
COVID-19)
Focused on utilising local suppliers for the SkyCity Adelaide
expansion project
• Developed a Modern Slavery Statement
•
Implemented technology to enable greater analysis of
procurement spend
FY20 Key Challenges
•
The scope and geographic spread of our supply chain, and
also the wide variety of suppliers we engage with, creates
challenges for embedding our Ethical Sourcing Code and
ensuring our suppliers are doing more than acknowledging
their commitments
•
Delays to the EcoVadis assessment/audit for suppliers due to
the impacts of COVID-19
FY21 Focus Areas
•
Focus on maximising our systems to track progress on
increasing our local supply chain and obtaining a clearer
picture of our suppliers’ supply chains
• Exclusive use of cage free eggs across all New Zealand sites
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800 key suppliers
across the SkyCity Group
Over
$530 million
spent on goods and services (including capital expenditure)
SkyCity has approximately 800 key ongoing
significant suppliers across the SkyCity Group, with a
substantial number of these being in the food and
beverage sector. As a major purchaser of goods
and services (we spent over $530 million with a
vast array of suppliers of goods and services in the
financial year ended 30 June 2020), SkyCity has a
significant opportunity to use its purchasing power
to drive sustainability.
Our approach is to focus on the areas in which
we can have the biggest impact in terms of
minimising our carbon footprint and with respect
to key vendors at high ongoing expenditure levels.
These areas include food, beverage, property and
marketing portfolios in particular.
Approximately $150 million of the total spend
(of over $530 million) relates to operational goods
and services – a breakdown of which is shown in the
graph below:
Spend by
Cost Area
Food, Beverage & Retail
33%
Marketing
12%
Repairs & Maintenance 5%
Utilities, Rates & Rent
Operating Consumables
Travel & Entertainment
13%
6%
4%
Professional Fees & Insurance 9%
ICT
Other Expenses
9%
9%
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SkyCity engages local contractors wherever possible
for its construction projects who, in turn, procure
local products, materials and subcontractors
where feasible.
Many of the gaming products and equipment
required by SkyCity for its casino operations
are not able to be manufactured or sourced
locally. In sourcing these items internationally,
SkyCity's focus is on procuring such items from
ethical suppliers.
Ethical and Sustainable
Sourcing Practices
Ethical Sourcing Code
In 2016, we adopted an Ethical Sourcing Code
to improve our indirect impact on society and
the environment by carefully selecting and
working with our suppliers to ensure sustainable
procurement. The Code outlines our alignment
with the ten principles of the United Nations Global
Compact, which are derived from the Universal
Declaration of Human Rights, the International
Labour Organization’s Declaration on Fundamental
Principles and Rights at Work, the Rio Declaration
on Environment and Development, and the United
Nations Convention against Corruption.
Whilst it is not a compliance measure in itself,
SkyCity requests its suppliers to acknowledge
our commitment to the principles of the Ethical
Sourcing Code. Through distribution of our Ethical
Sourcing Code, we aim to encourage our suppliers
to improve their practices and to assist them in
doing so, hence improving the quality of life of the
people we touch indirectly and contributing to the
protection of the environment.
In the last financial year, we have worked to embed
the Ethical Sourcing Code into our stakeholder
relationships as one of the key tools to drive
change. In addition, we have strengthened our
understanding of the role SkyCity can play in
progressing initiatives to eliminate modern slavery
and developed a new Modern Slavery Statement.
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020
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Ethical and Responsible Sourcing Strategy
In November 2018, SkyCity engaged sustainability
consulting firm, Proxima, to help formulate a
Group-wide strategy. Their brief was to assist
SkyCity, using their specialist knowledge of
sustainable sourcing practices and understanding
of global best practice, to establish a roadmap
to improve the sustainability performance of all
SkyCity’s procurement activities (focusing initially on
food and beverage), identify priority procurement
challenges to focus on in the short term and define
strategic goals and associated metrics.
Following consultation with key internal
stakeholders, a new ethical and responsible
sourcing strategy was adopted in February 2019.
This strategy seeks to minimise negative impacts
linked to our operational footprint and to make a
positive contribution to the business, people and
communities that make up our supply chain. As a
significant player in Australasia’s hospitality industry,
SkyCity has an opportunity to promote responsible
sourcing practices.
SkyCity’s ethical sourcing strategy focus areas are
outlined in the diagram below.
The focus areas represent the impact and activity
areas that SkyCity believes to be the most relevant
to the business and supply chain. Each focus area is
located within an ambition level which represents
the level of positive impact that SkyCity seeks to
achieve.
In ‘Basics’ focus areas, SkyCity aims to establish a
combination of minimum standards for the supply
chain and pilot initiatives to gain knowledge. In
‘Good Practice’ focus areas, SkyCity aims to focus on
specific product and service categories where these
focus areas are most significant. Finally, ‘Signatory
Level’ focus areas are where SkyCity intends to
implement initiatives broadly across the SkyCity
Group, thereby helping to positively influence its
entire supply chain.
Whilst we have made good progress in both our
ethical sourcing objectives and local sourcing over
the past financial year, we recognise that more
focus and attention is required to achieve our
objectives. To this end, during the past financial
year, we developed and embedded into the
business a 24-month Ethical and Responsible
Sourcing Strategy Roadmap. Pleasingly, SkyCity
has set a target date of September 2020 for the
exclusive use of cage free eggs across all SkyCity’s
New Zealand sites. While this project was delayed
by several months due to the COVID-19 pandemic,
we are committed to this important step.
We are committed to increasing the clarity around
our goals, priorities and metrics for this pillar.
Signatory Level
Leading the industry and
shaping the supply chain
Good Practice
Meeting customer expectations
beyond legal compliance
Basics
Compliance with minimum
standards and build knowledge
Shift to
low carbon
Buy local
and seasonal
Connect to the circular economy
Serve meals from a sustainable
supply chain
Support supplier delivery and working conditions
Source animal products responsibly
Processes and tools
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SkyCity has zero tolerance
towards modern slavery
Modern Slavery Act
The Modern Slavery Act 2018 (Cth) came into force
in Australia on 1 January 2019 and requires reporting
entities to disclose the risks of modern slavery
practices in the operations and supply chains of the
reporting entity, and any entities that the reporting
entity owns or controls. The Modern Slavery Act
applies to SkyCity Entertainment Group Limited,
being an entity based, or operating, in Australia
having an annual consolidated revenue of more
than A$100 million.
The term modern slavery is used to describe
situations where coercion, threats or deception are
used to exploit victims and undermine or deprive
them of their freedom, and includes practices such
as trafficking in persons, slavery, servitude, forced
marriage and forced labour.
Our Position
SkyCity is fully supportive of the Modern Slavery Act
and its intention to eliminate modern slavery in all
its forms, including trafficking in persons, slavery,
servitude, forced marriage and forced labour.
Our Policy
SkyCity has zero tolerance towards modern slavery.
We are committed to implementing and enforcing
effective systems and controls to seek to ensure that
modern slavery is not taking place anywhere in our
business or supply chains.
SkyCity operates primarily in New Zealand and
Australia with limited supply chains and, as such,
we believe that our exposure to the risks of modern
slavery is low. However, we still recognise that
there is scope for modern slavery to occur and our
modern slavery statement sets out the steps we
have taken to minimise this risk.
SkyCity always aims to obtain a clear picture of a
potential supplier's supply chain to ensure that it
will align with SkyCity’s high expectations around
ethical procurement practices. All new suppliers
are asked about their supply practices prior to
becoming an approved supplier. SkyCity has several
policies, practices and procedures in place to assist
in conducting supply chain due diligence which,
in turn, enables SkyCity to take significant measures
to mitigate the risks of modern slavery.
SkyCity’s existing significant suppliers in
New Zealand all undertook (or had previously
undertaken) a Sustainable Supply Chain
Assessment during the reporting period. An
assessment involves the supplier filling out an
online questionnaire in relation to their supply
chain and providing evidence to support their
actions and policies across specific criterion.
Once a supplier completes an assessment, they
receive a rating scorecard that shows areas
where they are achieving good practice in their
supply chain and areas where they may need to
improve. These ratings are measured against an
industry-tailored set of environmental, social and
governance criteria. From FY21, these processes will
be implemented for our Adelaide property.
By having its suppliers complete an assessment,
SkyCity is able to identify critical risks in a supplier’s
provision of goods and services (including potential
modern slavery risks) and can begin a dialogue
with such suppliers with a view to improving and
managing these risks over time.
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 76% ($21 million) of SkyCity’s annual
food and beverage procurement spend
in New Zealand is captured by the
EcoVadis assessment/audit process
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Supply Chain Transparency
and Traceability
Sustainable Supply Chain
In September 2017, we commenced a sustainable
supply chain assessment pilot initiative with 129 of
our key suppliers in New Zealand. As part of this,
we engaged an external provider, EcoVadis, to audit
and rate our suppliers against an industry-tailored
set of environmental, social and governance criteria
and our suppliers were invited to complete a
questionnaire and provide supporting evidence.
Each supplier who completes the assessment then
receives a rating scorecard that shows areas where
they are achieving good practice and areas where
they may need to improve.
Participation in the EcoVadis assessment/audit
process was initially encouraged – however,
as supplier participation is central to SkyCity’s
ability to quantify its impact on the supply
chain and execute its strategy for this pillar, the
EcoVadis assessment/audit was made mandatory
for SkyCity’s significant existing suppliers and
new suppliers during the 2019 financial year.
Unfortunately, during the last financial year, we
paused the EcoVadis assessment/audit for suppliers
due to the impacts of COVID-19, but continue to
actively use the information collected to date to
improve the performance of existing suppliers.
As at 30 June 2020, 79 New Zealand-based
suppliers representing over $46 million of our total
annual procurement spend had completed the
EcoVadis assessment/audit process. Of SkyCity’s
annual food and beverage procurement spend in
New Zealand, 76% ($21 million) is captured under
the EcoVadis process – an increase from 70% in the
2019 financial year.
We continue to focus on obtaining a clearer picture
of our suppliers’ supply chains to ensure they align
with our Ethical Sourcing Code and new suppliers
are asked about their supply practices prior to
becoming an approved supplier of the company.
However, the scope and geographic spread of
our supply chain, and also the wide variety of
suppliers we engage with, creates challenges
for embedding the Ethical Sourcing Code and
ensuring our suppliers are doing more than
acknowledging their commitments. Our suppliers
are very diverse, ranging from small localised
family businesses to global multinationals. In
some cases, our suppliers are very small operators
and they have few resources to provide detailed
information about their policies and sustainability
and governance approaches. In other cases, we
have had long-standing agreements with suppliers,
but have not engaged with them before on
sustainability issues. As we manage these issues
more closely, we will have the opportunity to
deepen our engagement with our suppliers on
the Ethical Sourcing Code. A key way that we will
do that into the future is to undertake supplier
sustainability assessments and audits.
Local Suppliers
As part of a major information technology
upgrade implemented in April 2019, SkyCity
now categorises items in more detail, including
location of the supplier. This enables SkyCity to
modify procurement practices where required to
support the intention outlined in SkyCity’s Group
Procurement Policy - to source and procure locally
made and supplied products from Australasian
owned and operated businesses as a preference
wherever possible.
Our Suppliers
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Over
$35 million
spent on food and beverage items across
New Zealand and Adelaide in FY20
The policy drives greater rigour in the onboarding
of new suppliers and has an emphasis on supplier
consolidation and ethical sourcing with SkyCity
choosing the best mix of suppliers to meet its
business requirements.
Our primary focus is procuring from businesses
operating in the same countries in which SkyCity
operates, thus supporting local economies even
where, in some instances, goods are imported. Our
secondary focus is procuring local products and
produce from businesses that are geographically
close to our businesses.
In the financial year ended 30 June 2020, SkyCity
spent over $35 million on food and beverage items
across New Zealand and Adelaide. This equates
to over 23% of our spend when excluding major
capital construction projects. We will be continuing
to work with our food and beverage suppliers
to gain more understanding as to where our
products are being sourced to ensure a local focus
where practical.
Adelaide Expansion Project
The SkyCity Adelaide expansion project has
provided an opportunity to demonstrate our focus
on locally sourced products and local suppliers.
Iconic South Australian Fashion Designer Liza
Emanuele was commissioned to design new
uniforms for SkyCity Adelaide’s venues and has
created more than 90 unique looks inspired by the
best of South Australia, blended with the glamour,
personality and sense of fun from each SkyCity
venue. Uniforms will be updated for all staff across
the new development and current heritage building
to ensure the style is consistent across the precinct.
In partnership with local craft brewery Pirate Life,
The District at SkyCity (a new live entertainment
area on Level 1 in the existing heritage building) will
feature a new Pirate Life 500-litre microbrewery
when it opens later this year – Australia’s first fully
functional microbrewery within a casino. Pirate
Life was founded in Adelaide in 2014 by Michael
Cameron, Jack Cameron and Jared Proudfoot.
The immediate success of the business attracted
the attention of leading brewers CUB, with Pirate
Life joining the CUB family in November 2017,
before expanding into a brewhouse in Port Adelaide
in 2019.
Following a A$6 million restoration, The Guardsman
opened in January 2020 in the former Overland
Dining Hall in the SkyCity Adelaide Railway
Station building. The new venue pays homage
to the Railway Station’s rich heritage, featuring
a grand central bar, open kitchen and a coffee
front. Award-winning South Australian architects
and interior designers Studio Gram spearheaded
The Guardsman’s design, with the typography
and signage developed by Adelaide’s Tristan Kerr
of Uppercase Studio. The grand central bar and
open kitchen showcase some of South Australia’s
well-known food and beverage producers and
features an exclusive offering of South Australian
beers, with more than 20 local South Australian
beers available on tap, including Coopers, Pirate
Life, Prancing Pony and Mismatch. South Australia’s
world-renowned wine regions feature in the almost
entirely local wine list and local spirits include
23rd Street Distillery and Adelaide Hills Distillery.
The menu uses almost entirely South Australian
suppliers and produce, with signature dishes
including some of South Australia’s finest seafood,
including Fleurieu Peninsula squid, Spencer Gulf
prawns, Eyre Peninsula kingfish and Coffin Bay
oysters. Desserts are inspired by South Australian
food icons, including the ‘Berliner’ and The
Guardsman’s take on the FruChoc.
Local products have been selected wherever
possible for Eos by SkyCity, the new 120-room
luxury hotel. In alignment with our sustainability
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Pirate Life’s Jack Cameron, Michael Cameron and Jared Proudfoot
with SkyCity Adelaide General Manager David Christian.
commitments, all single use plastic has been
substituted with recycled cardboard packaging
for items such as in-room slippers. We also intend
to introduce a sustainable replacement to plastic
room keys to operate in parallel to the keyless entry
technology in development for use on guests’
mobile phones. In-room amenities at Eos by SkyCity
will include Grown Alchemist products, a high-end
natural Australian beauty brand. Minibar snacks and
beverages include products from South Australian
based Steven ter Horst and 23rd Street Distillery
along with locally grown or sourced almonds
and dried fruits. Hotel suites and public areas will
feature an array of local South Australian artwork,
photography and sculptures, including works by
Alice Blanch, Mark Tipple, Peter Syndicas and Danny
Fotopoulos. The Eos by SkyCity spa will also feature
Australian made iKOU organic skincare products.
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" We're so proud to be championed by
SkyCity who sponsor our beehives in
Victoria Park, turning our honey into
desserts as an awareness-raising tool
for pollinator and ecosystem health
in the city." - For the Love of Bees
Sourcing Locally
In Auckland, SkyCity has partnered with For the
Love of Bees, sponsoring one of the beehives
at Victoria Park, an inner-city Auckland park.
SkyCity Auckland's Orbit 360° Dining restaurant
uses the honey from this hive to create a special
'For the Love of Bees' dessert. For each dessert sold,
SkyCity contributes $1 towards For the Love of Bees,
which is used to support the hives, beekeepers and
the flowers needed to support the hives.
For the Love of Bees is a charitable trust and a
collaborative city centre project seeking to make
Auckland the world's most bee-friendly city through
education, events and activations – all based around
a collection of living beehives at Victoria Park.
For each 'For the Love of Bees' dessert sold, SkyCity contributes $1 towards For the Love of Bees,
which is used to support the hives, beekeepers and the flowers needed to support the hives.
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Using Local Ingredients
We operate significant food and beverage operations across the SkyCity Group – from catering a simple
breakfast offering through to large corporate events and weddings. We support our local businesses by
sourcing through them whenever possible.
Here's a glimpse of the local produce SkyCity sourced and utilised in FY20.
Auckland, New Zealand
745,140
whole eggs
19,684kg
of local butter
193,610
litres of milk and cream
42,200kg
of flour
122,473kg
of beef
Adelaide, South Australia
5,786
litres of milk
77,976
oysters (6,498 dozen)
86,500
litres of tap beer
5,586kg
of beef
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Protect the
environment
Active commitment to reducing
our environmental footprint.
Our Environment
We are dedicated to growing in a sustainable
manner with a commitment to environmental
sustainability as a foundation for successful
economic, social and cultural development.
Priority Issues
FY20 Performance Highlights
•
Climate change/emissions
reduction
• Reducing waste
• Reducing water use
• Employee activation
Key Stakeholders
• Kaivolution
• Auckland City Mission
• Toitū Envirocare
• Sustainable Business Network
• Climate Leaders Coalition
•
Energy Efficiency and
Conservation Authority
• SUEZ-ResourceCo
•
•
•
•
•
•
Establishment of an employee-led Green Fund Committee,
which oversaw the selection of emissions reduction projects to
be funded by the SkyCity Green Fund
138,000 single use plastic bottles removed from The Grand by
SkyCity and SkyCity Hotel in New Zealand, and replaced with
glass alternatives
400,000 plastic straws and 100,000 single use plastic bottles
removed from our Adelaide site
Since 2018, 1,000,000 plastic straws have been removed from
our New Zealand sites (equivalent to a two-tonne carbon
reduction)
Sky Tower lighting upgraded to LED resulting in a 10% energy
saving on lighting circuits
Achieved a saving of 96 tonnes of carbon at the Auckland site
with assistance from the B-Tune programme
FY20 Key Challenges
•
•
•
Unable to source a suitable model to satisfactorily calculate
the impacts of the fire at the New Zealand International
Convention Centre construction site in October 2019, which
resulted in a spike in measurable particulates in the air quality
indices for the Auckland Central City while the fire was active
Increasing recycling rates and diverting more waste from
landfill
Introducing food waste composting across all SkyCity
properties
FY21 Focus Areas
•
•
•
Achieve carbon zero status for the SkyCity Group
(by way of offset through Toitū Envirocare)
Deliver a zero waste technology solution for the
SkyCity Auckland site
Continue our focus on reducing water use across our
New Zealand sites
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We have reduced our
waste sent to landfill by
38% since 2016
Working within the limits of the natural
environment will allow current and future
generations to benefit from its resources to ensure
continual economic and social prosperity, which we
believe results in business continuity and positive
impacts on staff and stakeholder wellbeing.
Reducing Waste
Since 2016, SkyCity has reduced its waste sent
to landfill by 38%, in part due to the mandated
property closures during FY20 (in response to the
COVID-19 pandemic).
Food Donations
Since March 2015, SkyCity has partnered with
Kaivolution, a Go Eco Climate Action Project in
Hamilton that rescues edible and useable kai
(food) that would have otherwise gone to waste or
landfill and redistributes it as free kai to registered
community groups and charities. During the past
financial year, the SkyCity Hamilton property
donated around 2,300kgs of food to Kaivolution –
an increase from the prior year and approximately
half of which was donated in March 2020 when the
Hamilton property was closed as a consequence of
the New Zealand Government’s decision to increase
the COVID-19 Alert Level to Level 3 and then Level 4.
In Auckland, SkyCity also continued to support
KiwiHarvest, a national food rescue charity
that redistributes excess food, free of charge, to
community groups and social service agencies,
and the Auckland City Mission with donations of
food from its Auckland property.
Composting
Food that cannot be donated from the
SkyCity Auckland kitchens is collected and
commercially composted offsite to be used on
New Zealand soils to aid the horticulture industry.
During the past financial year, through the efforts of
our kitchen teams, SkyCity sent 292 tonnes of food
waste to be commercially composted - bringing
the total amount collected and composted since
the programme began in April 2017 to 1,106 tonnes.
Pleasingly, SkyCity’s focus on reducing food wastage
has resulted in a reduction of food waste being
composted each year since the programme began.
We are currently investigating the possibility of
commercially composting food waste from our
SkyCity Hamilton property.
Plastics
Implementing a food waste composting system has
allowed SkyCity to also benefit from commercial
composting to reduce single use plastics. SkyCity
continues to transition from traditional plastic to
commercially compostable food and beverage
packaging, such as takeaway coffee cups and lids,
straws, plates, containers and cutlery. The packaging
is made from rapidly replenishing plant-based
material and can be disposed of in food waste bins.
During the last financial year, a three-stage single
use plastic reduction strategy was developed and
will be progressively implemented. The goals of
the SkyCity Zero Waste Strategy are to eliminate
waste sent to landfill and improve the efficiency
of resource use through reduction and recycling.
Stage one involves the removal of all customer
facing single use plastics, such as water bottles
and Styrofoam cups. Stage two is the development
of a plan to remove plastic packaging from the
SkyCity Auckland gift shop. The third stage involves
quantifying all non-customer facing plastics, which
are used by suppliers of goods to SkyCity, and
developing a collaborative plan to reduce or replace
these with more sustainable alternatives.
Eliminate Waste to Landfill
Over the last financial year, we have continued to
consider and progress the feasibility for a waste
converter for SkyCity Auckland, the largest and
busiest property within the SkyCity Group. The
waste converter is a zero waste to landfill option
which can process nearly all waste materials (with
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the exception of construction waste and batteries) –
although materials that can be composted, or that
SkyCity receives a rebate from (such as cardboard),
would continue to be recycled through existing
avenues as would glass and HDPE plastics. The
residual product from the converter has calorific
value that is suitable to be made into an energy
source or a building material (similar to MDF).
The key objectives of the converter are to achieve
zero waste to landfill, reduce associated costs of
disposing waste to landfill and to ensure that the
end product will be recycled in New Zealand.
If achievable, SkyCity Auckland would be the first
casino in the world to achieve a zero waste to
landfill status.
In Adelaide, SkyCity has engaged new service
supplier, SUEZ, to assist SkyCity Adelaide in
achieving zero waste to landfill. SUEZ offers
recycling and commercial food composting
solutions with the remaining dry general
waste being diverted to SUEZ-ResourceCo
(a joint venture between SUEZ and ResourceCo).
The SUEZ-ResourceCo facility processes
commercial, industrial and construction waste into
Processed Engineered Fuel (PEF) which is then
used as a fuel source by Adelaide Brighton Cement
instead of using traditional fossil fuels. PEF is used
to power cement kilns, reducing carbon emissions
by 30%. SUEZ-ResourceCo has the capacity to
convert up to 350,000 tonnes of raw material per
annum into 180,000 tonnes of PEF, and reducing
carbon emissions by 30%.
Climate Change and Emissions
Although SkyCity is not, through its usual day-to-day
operations, a major emitter of greenhouse gases, we
recognise the role that we need to play in reducing
our impacts. We are committed to progressing
initiatives to reduce emissions and taking action to
combat climate change.
As part of SkyCity’s commitment to climate action,
we have measured, audited and verified SkyCity’s
carbon footprint for FY15–FY20 through the
Certified Emissions Measurement and Reduction
Scheme programme operated by Toitū Envirocare,
a Government-owned environmental certifications
body in New Zealand.
SkyCity has submitted to the Science Based
Targets (SBT) initiative, a partnership between CDP
(formerly Carbon Disclosure Project), the United
Nations Global Compact, the World Resources
Institute and the World Wildlife Fund, to set
science-based reduction targets from our FY15
base year. Targets are science-based when in
line with the level of decarbonisation required to
keep global temperature increase well below 2°C.
As part of this, SkyCity has committed to reduce
absolute scope one and scope two Green House
Gas (GHG) emissions by 38% by 2030 and by 73%
by 2050 (from a 2014-2015 base year) and that 67%
of SkyCity’s suppliers, by spend covering purchased
goods and services and capital goods, will set
science-based scope one and scope two targets
by the year 2023. SkyCity was the first hospitality
business in Oceania to set science-based targets
to help keep the rise in global temperature to well
below 2°C.
Achievements
Over the last financial year:
•
SkyCity Auckland hosted the Sustainable
Business Network’s EMBARK conference
in July 2019, a one-day event dedicated to
connecting organisations with low emissions
solutions products, providers and services;
Our Environment
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We were among the first major
New Zealand companies to go
carbon neutral
•
•
•
•
•
we placed copies of Paul Hawken’s renowned
climate change book ‘Drawdown - The Most
Comprehensive Plan Ever Proposed to Reverse
Global Warming’ in all SkyCity hotel rooms
to raise awareness among customers of the
importance of climate change and the things
people can do to reverse it. Paul Hawken is
an American environmentalist, entrepreneur,
author and activist who has dedicated his life
to environmental sustainability and changing
the relationship between business and the
environment, and the founder of Project
Drawdown, a non-profit dedicated to researching
when and how global warming can be reversed;
all the external lights on the Sky Tower were
switched to low wattage LED, supporting
SkyCity’s climate change commitment to reduce
carbon emissions from the Sky Tower lighting
by 10%. Following the upgrade, the number of
external lights on the Sky Tower has doubled,
with 60 LED lights at the top of the Sky Tower
and 96 LED lights at the base – truly lighting up
Auckland’s skyline;
at our Auckland site, the contracted limousine
fleet of diesel vehicles was replaced with more
fuel-efficient vehicles, reducing running costs
by 35% and reducing emissions by 25% over the
previous petrol solution;
SkyCity joined the Energy Efficiency and
Conservation Authority’s Gen Less programme, a
platform to inspire New Zealand businesses and
consumers to live a climate-friendly lifestyle. The
Energy Efficiency and Conservation Authority is
a New Zealand Government agency that works
to improve the energy efficiency of New Zealand
homes and businesses and encourage the
uptake of renewable energy; and
a number of initiatives led by the Property
Services team at our Auckland site, including
continuous commissioning and finetuning of
the Building Management System (BMS) and
the B-Tune programme (building tune), have
cumulatively generated significant reductions
in SkyCity Auckland’s use of utilities reducing
our overall carbon emissions and spend on
electricity, gas and water.
Fire at the New Zealand International
Convention Centre
SkyCity acknowledges the impacts of the
October 2019 fire at the under construction
New Zealand International Convention Centre on
the local environment.
In the months following the fire, SkyCity
investigated methods to measure the carbon
emissions originating from the fire, however
no suitable model was found to be available to
satisfactorily complete the calculation.
While there was an increase in measurable
particulates in the air quality indices for the
Auckland Central City while the fire was active,
these levels returned to normal once the fire
was extinguished.
Watercare pumped approximately 8 million litres
of water from the basement of the building into
wastewater drains for treatment at its Māngere
Wastewater Treatment Plant to reduce the
amount of water (used to fight the fire) from
going into stormwater drains and directly into the
Auckland Harbour. Auckland Council ecotoxicology
testing 10 days after the fire showed no long
term impacts for marine life and water quality in
Auckland City as a result of the water used to fight
the fire travelling through stormwater drains to
the Auckland Harbour. While there were concerns
around contaminants in sediments in the Auckland
Harbour, SkyCity understands that the bulk of these
sediments either have been, or will be, dredged and
safely disposed of in connection with works being
undertaken for the America’s Cup.
Climate Change Strategy
In February 2019, SkyCity announced a climate
change strategy that would see SkyCity’s
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New Zealand sites become carbon neutral by
30 September 2019, with SkyCity’s Adelaide site
achieving carbon neutrality by 30 September 2020.
As part of this strategy, a SkyCity Green Fund was
established – funded by an internal carbon levy
paid by each of SkyCity’s Auckland, Hamilton,
Queenstown and Adelaide sites relative to each
site’s emissions. The levy is an internal charge of $25
per tonne of carbon, in line with the New Zealand
Government’s price of carbon under the Emissions
Trading Scheme. Funds from the levy are used
to offset SkyCity’s carbon footprint to net zero by
investing in emission reduction projects selected
by Toitū Envirocare. The SkyCity Green Fund
also accrues and invests in projects identified
and developed by SkyCity employees to reduce
SkyCity’s carbon emissions in accordance with its
science-based targets set in 2019.
SkyCity employees have the opportunity to measure
and offset their own household carbon footprints,
with SkyCity matching their offset dollar-for-dollar
by payment into the SkyCity Green Fund.
Pleasingly, SkyCity was among the first major
New Zealand companies to go carbon neutral
and was certified carbonzero by Toitū Envirocare
in New Zealand in October 2019. SkyCity paid
$86,000 to offset the equivalent of 12,866 tonnes
of carbon (measured in FY19). The carbon credits
purchased through Toitū Envirocare are generated
by international projects, which will fund 48,000
solar household cookers for rural communities in
China and help build wind farm capacity in India to
replace fossil fuel alternatives.
The New Zealand International Convention Centre,
currently under development in Auckland, will
operate as a carbon neutral venue following
completion of construction and is expected to be
the only one of its kind in the Asia Pacific region. The
New Zealand International Convention Centre has
also adopted a sustainability management plan and
will participate in globally recognised, independent
verification programmes, including the Leadership
in Energy and Environmental Design’s (LEED)
Green Building Rating System. The New Zealand
International Convention Centre aims to achieve
a certified status following the assessment of the
sustainable nature by which the centre has been
designed, built and delivered.
How does SkyCity become carbonzero?
We work out
where our
emissions
come from
We work
with Toitū
Envirocare
to confirm our
footprint
Our emissions
have been
offset and
certified
Our Environment
115
As planned, the Adelaide site will also become
carbon neutral, alongside SkyCity’s New Zealand
sites, when the emissions generated during the year
ended 30 June 2020 (5,518 tonnes of carbon) are
offset by purchasing carbon credits through Toitū
Envirocare in September 2020.
Reduction in Water Use
In response to the severe drought being experienced
in the Auckland region this year, which has
resulted in mandatory water use restrictions in
Auckland City since May 2020 (for the first time in
25 years), initiatives to reduce water use have been
implemented at our Auckland site, including:
•
•
•
•
washing buildings and windows using buckets of
water rather than hoses;
reusing water for other outdoor cleaning tasks;
using dishwashers only when full and turning off
taps in the kitchens;
making staff and hotel guests aware of the water
restrictions; and
•
restrictions on cooling tower usage.
As a consequence of these measures, a good
reduction in water use has been achieved.
Climate Change Governance and Risks
SkyCity’s climate change strategy is overseen
by the Board’s Sustainability Committee.
A management-led Climate Change Committee
is responsible for working with wider operational
management to execute the strategy.
In November 2019, the Climate Change Response
(Zero Carbon) Amendment Act 2019 (New Zealand)
was passed and came into force. The Act
amends the Climate Change Response Act 2002
(New Zealand) and provides a framework by which
New Zealand can develop and implement clear and
stable climate change policies that contribute to
the global effort under the Paris Agreement to limit
the global average temperature increase to 1.5°C
above pre-industrial levels and allow New Zealand
to prepare for, and adapt to, the effects of climate
change. The Act provides for a transitional period to
2021 to develop and implement:
•
•
•
the first National Climate Change Risk
Assessment for New Zealand;
a provisional national emissions budget for
2021–2025; and
policies for climate change adaptation and
mitigation.
These documents will be a critical resource for
SkyCity to take its climate change strategy and
planning to the next stage.
SkyCity is also a signatory to the Climate Leaders
Coalition, a group representing a variety of
businesses from different industries which
contribute to nearly half of New Zealand’s
emissions. The group’s goal is to help New Zealand
transition to a low emissions economy and, in doing
so, create a positive future for New Zealanders,
business and the economy. Members of the
Climate Leaders Coalition have signed a joint
Climate Change Statement, which commits their
companies to action and is the group’s first step
in their drive for positive change. By signing the
statement, each of the business leaders have
committed to:
•
•
•
•
•
measuring their greenhouse gas emissions and
publicly reporting on them;
setting a public emissions reduction target
consistent with keeping within 2°C of warming;
working with their suppliers to reduce their
greenhouse gas emissions;
supporting the Paris Agreement and
New Zealand’s commitment to it; and
supporting the introduction of a climate
commission and carbon budgets enshrined
in law.
The Climate Leaders Coalition recognises the role
that business can play in bringing about change
and demonstrates the significant leadership
direction being taken by businesses on the issue of
climate change.
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SkyCity Climate Related Risks
Nature of Risk
Description and Impact
Physical risks
Rise in global temperatures
Increase in violent weather
events, including cyclone, sea
surge, tornado
Increased load on air conditioning, increased
power outages, increased reliance on
generators, increased fire risk in Adelaide and
a reduced ski season in Queenstown
Damage to property, business interruption,
undrinkable water, gas leaks, power outages,
increased reliance on generators, reduced
visitation/ tourism and the need for new
infrastructure to be more resilient
Market and
reputational risks
and opportunities
Policy and legal risks
Economic risks and
opportunities
Rise in sea levels
Salt intrusion in soils impacting supply chain
•
•
•
•
•
•
•
•
•
•
•
Shift in consumer preferences, increasing societal pressure to participate in
green economy and the stigma of not participating
Potential for banks to increase cost of funds for non-green entities
Increasing long term focus by investors in green funds, which could impact
SkyCity’s share price
Increased challenges with tourism around New Zealand (erratic weather)
increases the opportunity for an indoor “proxy” experience
Potential for New Zealand to become a more attractive tourism destination
for its “green” status
Increase in compliance and reporting costs associated with measuring,
demonstrating and actioning new requirements
Change in policy and regulations (new building construction, building fit outs
and remedial work to maintain building warrant of fitness)
General increase in cost of doing business (through an emissions trading
scheme and/or value chain risk), including fuel, water, waste water, electricity,
gas, transportation, taxes, waste disposal, certain goods and services, and
insurance
Prohibition of non-green consumables, which may cost more or less than
alternative green consumables
Change in infrastructure and furniture, fixtures, and equipment (FFE)
costs (green standards, energy efficiency, electric vehicles and other green
technology)
SkyCity will be considering carbon in future investment and divestment
opportunities
Our Environment
117
FY20 Carbon Footprint Inventory
FY16–FY20 Performance
The following tables summarise SkyCity's key
environmental performance data for FY16–FY20.
SkyCity has continued efforts to reduce its carbon
footprint – with Scope 1 and 2 emissions combined
reducing by 24.6% since FY16 and emissions from
waste reducing by 56%, in part due to the mandated
property closures and travel restrictions during FY20
(in response to the COVID-19 pandemic).
The increase in absolute carbon from FY18 to
FY19 was due to increased air travel across the
Group, which SkyCity reduced in FY20 through
better utilisation of Skype for Business and
economy class flights and due to COVID-19 related
international border restrictions.
Total Emissions (Scope 1, 2 and 3)
(Tonnes CO2e)
21,000
20,650
20,000
19,000
18,000
17,000
16,000
15,000
14,000
19,272
19,093
18,811
15,137
FY16
FY17
FY18
FY19
FY20
FY20
Electricity 53%
(FY19 – 54%)
Gas 24%
(FY19 – 23%)
Flights 10%
(FY19 – 15%)
Waste 4%
(FY19 – 6%)
Other 9%
(FY19 – 2%)
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Scope 1 and 2 Emissions (Tonnes CO2e)
17,013
15,691
15,270
15,032
12,105
11,075
10,629
10,270
12,823
8,086
4,908
4,615
4,641
4,762
4,737
17,500
15,000
12,500
10,000
7,500
5,000
2,500
0.0
FY16
FY17
FY18
FY19
FY20
Scope 1
Scope 2
Scope 1 & 2
Scope 3 Emissions (Tonnes CO2e)
2,044
2,060
2,137
1,481
1,410
1,299
2,747
1,132
1,520
653
3,000
2,500
2,000
1,500
1,000
500
0
FY16
FY17
FY18
FY19
FY20
Waste
Flights
Scope Definitions
Through the Toitū carbonreduce certification (formerly the Certified Emissions Measurement and
Reduction Scheme) operated by Toitū Envirocare, SkyCity must report all Scope 1, Scope 2 and
Scope 3 emissions (unless deemed de minimis), where:
•
•
•
Scope 1 emissions are direct emissions from sources owned or controlled by SkyCity – for
example, gas (LPG and natural), fuel combustion from company vehicles, rental cars and leased
fleet, and refrigerant and air conditioning systems;
Scope 2 emissions are indirect emissions from electricity purchased by SkyCity; and
Scope 3 emissions are indirect emissions from sources not owned or controlled by SkyCity but
resulting from SkyCity's activities – for example, travel (including short and long haul air travel),
waste sent to landfill and freight/couriers (for items exceeding 2kg).
Our Environment
119
Independent Limited
Assurance Statement
Independent Limited Assurance Statement to the
Management and Directors of SkyCity Entertainment
Group Limited
Our Conclusion
Ernst & Young (‘EY’, ‘we’) was engaged by SkyCity Entertainment Group Limited (“SkyCity”) to undertake limited
assurance as defined by the International Standards on Assurance Engagements, over disclosures associated with
selected sustainability performance data (‘sustainability performance data’) using criteria applied by SkyCity
(‘criteria’) included in SkyCity’s Annual Report for the year ended 30 June 2020. Based on our procedures, nothing
came to our attention that caused us to believe that the agreed sustainability performance data detailed in the table
below has not been prepared and presented fairly, in all material respects, in accordance with the criteria defined
below.
What our review covered
We reviewed the sustainability performance data in SkyCity’s Annual report disclosures included in its Annual Report for
the year ended 30 June 2020 as detailed in the table below.
Subject matter
Customer exclusions issued at SkyCity casinos in FY20
Gender pay gap (%) for Australia and New Zealand staff
Workforce diversity statistics
Total Recordable Injury Frequency Rate (TRIFR) % change FY19-20
% change in number of hazard identification reports FY19-20
Contributions by SkyCity casinos to the SkyCity Community Trusts
NZ food and beverage spend from Ecovadis programme suppliers
Total procurement spend on food and beverage from Australia and New Zealand-based suppliers and % of total FY20 spend
excluding construction
% reduction in waste to landfill volume (tonnes) FY16-Fy20
Criteria applied by SkyCity
Report
page
76
87
91
82
82
97
105
106
112
The criteria for our assurance engagement included the Global Reporting Initiative (GRI) Standards and SkyCity’s own
published criteria, as detailed within the SkyCity Annual Report for the year ended 30 June 2020 available at:
https://www.skycityentertainmentgroup.com.
Key responsibilities
EY’s responsibility and independence
Our responsibility was to express a limited assurance conclusion on SkyCity’s selected sustainability performance data
metrics based on our procedures.
We have complied with the relevant ethical requirements relating to assurance engagements, which include
independence and other requirements founded on fundamental principles of integrity, objectivity, professional
competence and due care, confidentiality and professional behaviour.
In accordance with the Professional and Ethical Standard 3 (Amended), Ernst & Young Limited maintains a
comprehensive system of quality control including documented policies and procedures regarding compliance with
ethical requirements, professional standards and applicable legal and regulatory requirements.
SkyCity’s responsibility
SkyCity’s management (“management”) was responsible for selecting the Criteria, and preparing and fairly presenting
the sustainability performance data metrics in accordance with that Criteria. This responsibility includes establishing and
maintaining internal controls, adequate records and making estimates that are reasonable in the circumstances.
Our approach to conducting the engagement
We conducted this engagement in accordance with the International Standard on Assurance Engagements ISAE (NZ)
3000: Assurance Engagements Other than Audits or Reviews of Historical Financial Information and the terms of
reference for this engagement as agreed with SkyCity on 5 July 2020.
Summary of procedures performed
A limited assurance engagement consists of making enquiries, primarily of persons responsible for preparing the
sustainability performance data and related information, and applying analytical and other review procedures.
Our procedures included, but were not limited to:
120
► Conducting interviews with personnel to understand the business and reporting process
► Conducting interviews with key personnel to understand the process for collecting, collating, and reporting the
sustainability performance data during the reporting period
A member firm of Ernst & Young Global Limited
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020
Independent Limited Assurance Statement to the
Management and Directors of SkyCity Entertainment
Group Limited
Our Conclusion
Ernst & Young (‘EY’, ‘we’) was engaged by SkyCity Entertainment Group Limited (“SkyCity”) to undertake limited
assurance as defined by the International Standards on Assurance Engagements, over disclosures associated with
selected sustainability performance data (‘sustainability performance data’) using criteria applied by SkyCity
(‘criteria’) included in SkyCity’s Annual Report for the year ended 30 June 2020. Based on our procedures, nothing
came to our attention that caused us to believe that the agreed sustainability performance data detailed in the table
below has not been prepared and presented fairly, in all material respects, in accordance with the criteria defined
below.
What our review covered
We reviewed the sustainability performance data in SkyCity’s Annual report disclosures included in its Annual Report for
the year ended 30 June 2020 as detailed in the table below.
Subject matter
Customer exclusions issued at SkyCity casinos in FY20
Gender pay gap (%) for Australia and New Zealand staff
Workforce diversity statistics
Total Recordable Injury Frequency Rate (TRIFR) % change FY19-20
% change in number of hazard identification reports FY19-20
Contributions by SkyCity casinos to the SkyCity Community Trusts
NZ food and beverage spend from Ecovadis programme suppliers
excluding construction
% reduction in waste to landfill volume (tonnes) FY16-Fy20
Criteria applied by SkyCity
Total procurement spend on food and beverage from Australia and New Zealand-based suppliers and % of total FY20 spend
Report
page
76
87
91
82
82
97
105
106
112
The criteria for our assurance engagement included the Global Reporting Initiative (GRI) Standards and SkyCity’s own
published criteria, as detailed within the SkyCity Annual Report for the year ended 30 June 2020 available at:
https://www.skycityentertainmentgroup.com.
Key responsibilities
EY’s responsibility and independence
Our responsibility was to express a limited assurance conclusion on SkyCity’s selected sustainability performance data
metrics based on our procedures.
We have complied with the relevant ethical requirements relating to assurance engagements, which include
independence and other requirements founded on fundamental principles of integrity, objectivity, professional
competence and due care, confidentiality and professional behaviour.
In accordance with the Professional and Ethical Standard 3 (Amended), Ernst & Young Limited maintains a
comprehensive system of quality control including documented policies and procedures regarding compliance with
ethical requirements, professional standards and applicable legal and regulatory requirements.
SkyCity’s responsibility
SkyCity’s management (“management”) was responsible for selecting the Criteria, and preparing and fairly presenting
the sustainability performance data metrics in accordance with that Criteria. This responsibility includes establishing and
maintaining internal controls, adequate records and making estimates that are reasonable in the circumstances.
Our approach to conducting the engagement
We conducted this engagement in accordance with the International Standard on Assurance Engagements ISAE (NZ)
3000: Assurance Engagements Other than Audits or Reviews of Historical Financial Information and the terms of
reference for this engagement as agreed with SkyCity on 5 July 2020.
► Undertaking analytical review procedures to support the reasonableness of the data
Summary of procedures performed
► Identifying and testing assumptions supporting the calculations
A limited assurance engagement consists of making enquiries, primarily of persons responsible for preparing the
sustainability performance data and related information, and applying analytical and other review procedures.
► Testing, on a sample basis, underlying source information to check the accuracy of the data
Our procedures included, but were not limited to:
► Performing recalculations of performance data metrics to confirm quantities stated were replicable
► Conducting interviews with personnel to understand the business and reporting process
► Reviewing the appropriateness of presentation of disclosures.
► Conducting interviews with key personnel to understand the process for collecting, collating, and reporting the
We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance
conclusions.
► Undertaking analytical review procedures to support the reasonableness of the data
Limited Assurance
A member firm of Ernst & Young Global Limited
► Identifying and testing assumptions supporting the calculations
Procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for,
► Testing, on a sample basis, underlying source information to check the accuracy of the data
a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement
► Performing recalculations of performance data metrics to confirm quantities stated were replicable
is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been
performed.
► Reviewing the appropriateness of presentation of disclosures.
sustainability performance data during the reporting period
We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance
While we considered the effectiveness of management’s internal controls when determining the nature and extent of our
conclusions.
procedures, our assurance engagement was not designed to provide assurance on internal controls. Our procedures did
not include testing controls or performing procedures relating to checking aggregation or calculation of data within IT
Limited Assurance
systems.
Procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for,
a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement
Use of our Assurance Statement
is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been
We disclaim any assumption of responsibility for any reliance on this assurance report to any persons other than
performed.
management and the Directors of SkyCity or for any purpose other than that for which it was prepared.
While we considered the effectiveness of management’s internal controls when determining the nature and extent of our
procedures, our assurance engagement was not designed to provide assurance on internal controls. Our procedures did
Ernst & Young Limited
not include testing controls or performing procedures relating to checking aggregation or calculation of data within IT
systems.
Use of our Assurance Statement
We disclaim any assumption of responsibility for any reliance on this assurance report to any persons other than
management and the Directors of SkyCity or for any purpose other than that for which it was prepared.
Graeme Bennett
Partner - Assurance
Ernst & Young Limited
01 September 2020
Graeme Bennett
Partner - Assurance
01 September 2020
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Committed to
maintaining
the highest
standards
Corporate Governance Statement
and Other Disclosures
SkyCity Entertainment Group Limited is committed
to maintaining the highest standards of corporate
behaviour and responsibility and has adopted
governance policies and procedures reflecting this.
In establishing its governance policies and
procedures, the SkyCity Board has adopted
eleven governance parameters as the cornerstone
principles of its corporate governance charter as set
out in the company’s Board Charter (available in the
Governance section of the company’s website at
www.skycityentertainmentgroup.com).
As a New Zealand company listed on the
New Zealand and Australian stock exchanges,
these cornerstone principles, detailed below
and on the following pages, reflect the Listing
Rules and Corporate Governance Code
of NZX Limited (NZX), the Listing Rules of
ASX Limited (ASX), the Corporate Governance
Principles and Recommendations (Fourth Edition)
of the ASX Corporate Governance Council, and
the New Zealand Financial Markets Authority’s
Corporate Governance Principles and Guidelines.
SkyCity is listed as a ‘Foreign Exempt Listing’ on
the ASX. The ASX Foreign Exempt Listing category
is based on a principle of substituted compliance
recognising that, for secondary listings, the primary
regulatory role and oversight rest with the home
exchange and the supervisory regulator in that
jurisdiction. As a company with ASX Foreign
Exempt Listing status, SkyCity is not required to
comply with ASX Listing Rule 4.10, which requires
entities to include certain prescribed information in
their annual reports, or the Corporate Governance
Principles and Recommendations (Fourth Edition)
of the ASX Corporate Governance Council.
Notwithstanding, SkyCity has taken into account
ASX Listing Rule 4.10 when preparing this annual
report and considers its corporate governance
practices and principles have substantially
reflected the recommendations set by the ASX
Corporate Governance Council, in addition to all
the corporate governance principles set out in
the NZX’s Corporate Governance Code, during the
financial year ended 30 June 2020. In addition,
as mentioned above, the cornerstone principles
set out in SkyCity’s Board Charter (available in the
Governance section of the company’s website at
www.skycityentertainmentgroup.com) continue to
reflect the principles in the Corporate Governance
Principles and Recommendations (Fourth Edition)
of the ASX Corporate Governance Council.
1. Roles and Responsibilities of
the Board and Management
SkyCity’s procedures are designed to:
•
•
•
enable the Board to provide strategic guidance
for the company and effective oversight
of management;
clarify the respective roles and responsibilities of
Board members and senior executives in order to
facilitate Board and management accountability
to both the company and its shareholders; and
ensure a balance of authority so that no single
individual has unfettered powers.
The Board Charter details the Board’s role
and responsibilities. The Board establishes the
company’s objectives, the major strategies
for achieving those objectives and the overall
policy framework within which the business
of the company is conducted, and monitors
management’s performance with respect to
these matters.
The Board is also responsible for ensuring that the
company’s assets are maintained under effective
stewardship, that decision-making authorities
within the organisation are clearly defined, that
the letter and intent of all applicable company and
casino laws and regulations are complied with,
and that the company is well managed for the
benefit of its shareholders and other stakeholders.
123
Specific responsibilities of the Board include:
•
•
•
•
•
•
•
•
oversight of the company, including its control
and accountability procedures and systems;
appointment, performance, and removal of the
Chief Executive Officer;
confirmation of the appointment and removal
of the senior executive group (being the direct
reports to the Chief Executive Officer);
setting the remuneration of the Chief Executive
Officer and approval of the remuneration of the
senior executive group;
approval of the corporate strategy and
objectives and oversight of the adequacy of the
company’s resources required to achieve the
strategic objectives;
approval of, and monitoring of actual results
against, the annual business plan and budget
(including the capital expenditure plan);
review and ratification of the company’s systems
of risk management and internal compliance
and control, codes of conduct and legal
compliance; and
approval and monitoring of the progress of
capital expenditures, capital management
initiatives, acquisitions and divestments.
The Board has responsibility for the affairs and
activities of the company, which in practice is
achieved through delegation to the Chief Executive
Officer and others (including SkyCity appointed
directors on subsidiary company boards) who
are charged with the day-to-day leadership and
management of the company. The Board maintains
a formal set of delegated authorities that details
the extent to which employees can commit the
company. These delegated authorities are approved
by the Board and are subject to annual review by
the Board.
The Chief Executive Officer also has the
responsibility to manage and oversee the interfaces
between the company and the public and to act as
the principal representative of the company.
Each director and senior executive has a written
agreement with the company setting out their
terms of appointment and responsibilities.
2. Structure the Board to
Add Value
Board effectiveness requires the efficient discharge
of the duties imposed on the directors by law and
the addition of value to the company.
To achieve this, the SkyCity Board is structured to:
•
•
•
have a sound understanding of, and competence
to deal with, the current and emerging issues of
the business;
effectively review and challenge the performance
of management and exercise independent
judgement; and
assist in the selection of candidates to stand for
election by shareholders at annual meetings.
Board Composition and Skills Matrix
The Board ensures that it is of an effective
composition and size to adequately discharge its
responsibilities and duties and to add value to the
company’s decision-making.
In order to meet these requirements, the
Board membership comprises a range of skills
and experience to ensure that it has a proper
understanding of and competence to deal
with the current and emerging issues of the
business, to effectively review and challenge the
performance of management, and to exercise
independent judgement.
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N
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N
R
E
V
O
G
E
T
A
R
O
P
R
O
C
• occupational health and safety;
• marketing;
• digital capability and exposure;
• sustainability; and
• millennial understanding.
In June 2019, Board members completed a
self-assessment survey to identify the Board’s
overall competency in relation to the above areas
of expertise and experience. The results of the
survey are set out in the table below – where
1 indicates lower competency and 5 indicates
higher competency. Details of individual expertise
and experience of the directors are set out on
pages 53–55 of this annual report.
Where there is an identified gap in expertise and/or
experience, the Board seeks to address that gap
through learning and personal development, the
use of independent expert advisors in specific
areas of perceived need when necessary, or by the
appointment of a director or directors with the
relevant expertise and experience.
4.00
4.00
4.00
3.60 3.60
3.40
3.40
3.80
3.20 3.20
3.20
3.20
3.00
The areas of expertise and experience determined
by the Board as being the key competencies
required to meet these objectives were most
recently agreed by the Board in May 2018
and include:
•
•
•
•
gaming industry experience and understanding;
understanding of Asia and Asian consumers;
local market knowledge of Auckland;
local market knowledge of Adelaide;
• government relations;
• public relations and communications;
•
investment banking;
• property and real estate acumen;
•
hospitality industry experience and
understanding;
•
law;
• finance and accounting;
• mathematical fluency;
• human resources;
Director Competencies
4.50
4.20
4.20
4.20
3.80
4.00
3.40
3.40
3.60
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Corporate Governance Statement
125
Appointment
The Board has established the Governance and
Nominations Committee to:
•
•
•
•
•
•
•
•
identify and recommend to the Board suitable
persons for nomination as members of the Board
and its committees (taking into account such
factors as experience, qualifications, judgement,
and the ability to work with other directors);
annually review the overall composition and
structure of the Board and its committee
memberships and, if appropriate, the removal of
a director from the Board and/or its committees;
monitor the succession and rotation of Board
and committee members;
monitor the outside directorships and other
business interests of directors with a view to
ensuring independence/no conflicts of interest,
and director capability and time availability to
effectively undertake the requirements of their
SkyCity Board and committee positions;
monitor related parties, conflicts of interest, and
independence issues;
ensure that potential candidates understand
the role of the Board and the time commitment
involved when acting as a member of the Board;
oversee the evaluation of the Board; and
review the Board’s succession planning.
External consultants are engaged to access a wide
base of potential candidates and to review the
suitability of candidates for appointment.
The procedures for the appointment and removal
of directors are prescribed in the company’s
constitution, which, amongst other things, requires
all potential directors to have satisfied the extensive
probity requirements of each jurisdiction in which
the Group holds gaming licences.
Subject to satisfaction of the probity requirements,
the Board may appoint directors to fill casual
vacancies that occur or to add persons to the
Board up to the maximum number (currently 10)
prescribed by the constitution. If the Board appoints
a new director during the year, that person will
stand for election by shareholders at the next
annual meeting. Shareholders are provided with
relevant information on any candidate standing for
election in the company’s notice of meeting.
Directors are appointed under the company’s
Terms of Appointment and Reference for
Directors and Board Charter (both available in
the Governance section of the company’s website
at www.skycityentertainmentgroup.com) for a
term of three years and subject to re-election
by shareholders in accordance with the rotation
requirements of NZX and ASX and as prescribed in
the company’s constitution.
Director Independence
The Board Charter and the company’s constitution
require that the Board contains a majority of
its number who are independent directors.
SkyCity also supports the separation of the role
of Board chair from the Chief Executive Officer
position. The Board Charter requires the Board
chair and (where appointed) deputy chair to be
independent directors and prohibits the company’s
Chief Executive Officer from filling either of
these roles.
Directors are required to ensure all relationships
and appointments bearing on their independence
are disclosed to the Governance and Nominations
Committee on a timely basis. In determining
the independence of directors, the Board has
adopted the definition of independence set
out in the NZX Main Board Listing Rules and
has taken into account the independence
guidelines as recommended in the ASX Corporate
Governance Council’s Corporate Governance
Principles and Recommendations (Fourth Edition)
(ASX Independence Guidelines).
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At its June 2020 meeting, the Board reviewed the
status of each director in accordance with the
definition of independence set out in the NZX Main
Board Listing Rules and taking into account the ASX
Independence Guidelines and determined that all
current non-executive directors were independent
at the balance date having regard to the factors
described in the NZX Corporate Governance Code
and ASX Independence Guidelines that may impact
director independence.
Access to Information and Advice
New directors participate in an individual induction
programme, tailored to meet their particular
information requirements.
Directors receive regular reports and comprehensive
information on the company’s operations before
each Board and committee meeting and have
unrestricted access to any other information they
require. Senior management is also available at and
outside each meeting to address queries.
Directors are expected to maintain an up-to-date
knowledge of the company’s business operations
and of the industry sectors within which the
company operates. Directors are provided with
updates on industry developments and undertake
training and regular visits to the company’s key
operations. The Board also undertakes periodic
educational trips (as a group and/or individually) to
observe and receive briefings from other companies
in the gaming and entertainment industries.
The most recent group educational Board trip was
to the United States and Canada in March 2019.
Directors are entitled to obtain independent
professional advice (at the expense of the company)
on any matter relating to their responsibilities
as a director or with respect to any aspect of the
company’s affairs, provided they have previously
notified the Board chair of their intention to do so.
Indemnities and Insurance
The company provides a deed of indemnity in
favour of each director and member of senior
management and provides professional indemnity
insurance cover for directors and executives
acting in good faith in the conduct of the
company’s affairs.
Board Committees
The Board has four formally appointed
standing committees – the Audit and Risk
Committee, Governance and Nominations
Committee, People and Culture Committee and
Sustainability Committee.
The members of each of these committees are
non-executive directors and the non-executive
directors of the Board appoint the chair of
each committee.
Each of these committees operates under a
formal charter document as agreed by the Board.
Each charter sets out the role and responsibilities
of the relevant committee and is available in the
Governance section of the company’s website at
www.skycityentertainmentgroup.com.
Each committee charter and the performance of
each committee are subject to formal review by the
Board on an annual basis.
From time to time, the Board creates specific
sub-committees to deal with a particular matter
or matters and/or to have certain decision-making
authority as the Board may elect to delegate to
that sub-committee. As at 30 June 2020, the Board
had established a sub-committee to oversee the
New Zealand International Convention Centre
and Horizon Hotel development and a separate
sub-committee to oversee the SkyCity Adelaide
expansion project.
Corporate Governance Statement
127
Board and Committee Membership
The following table lists the members and chair of the SkyCity Board and each of its four formally appointed
standing committees as at 30 June 2020 and as at the date of this annual report.
Biographical details of individual directors, and their respective qualifications and experience, are set out on
pages 53–55 of this annual report.
BOARD
Chair
Rob Campbell
Deputy Chair
Bruce Carter
Members
Sue Suckling
Jennifer Owen
Murray Jordan
Appointment to Office
25 June 2017
12 October 2010
9 May 2011
5 December 2016
5 December 2016
AUDIT AND RISK COMMITTEE
PEOPLE AND CULTURE COMMITTEE
Chair
Members
Bruce Carter
Rob Campbell
Jennifer Owen
Chair
Members
Murray Jordan
Rob Campbell
Jennifer Owen
SUSTAINABILITY COMMITTEE
GOVERNANCE AND NOMINATIONS COMMITTEE
Chair
Sue Suckling
Members
Rob Campbell
Bruce Carter
Chair
Members
Rob Campbell
Bruce Carter
Sue Suckling
Jennifer Owen
Murray Jordan
Board and Committee Meeting Attendance
The following table shows director attendance at Board meetings and committee member attendance at
committee meetings (both scheduled and unscheduled) during the financial year ended 30 June 2020.
BOARD
AUDIT AND RISK
PEOPLE AND
CULTURE
GOVERNANCE AND
NOMINATIONS
SUSTAINABILITY
TOTAL NUMBER
OF MEETINGS
Rob Campbell
Bruce Carter(2)
Sue Suckling
Jennifer Owen
Murray Jordan
Richard Didsbury(3)
20(1)
20
20
19
20
20
3
7
7
7
–
7
–
–
6
6
–
–
6
6
–
1
1
1
1
1
1
–
4
4
3
4
–
–
1
(1) The Board met weekly during the period from 17 March - 9 June 2020 in response to the COVID-19 pandemic.
(2) Bruce Carter was appointed a member of the Sustainability Committee effective from 12 November 2019.
(3) Richard Didsbury retired as a director effective from 11 November 2019.
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3. Integrity and
Ethical Behaviour
For SkyCity, it is important to be a good corporate
citizen, whilst operating a sustainable and
successful business model.
SkyCity expects its Board, management and
employees to act in accordance with the company’s
values, policies and legal obligations and actively
promotes ethical and responsible behaviour and
decision-making by:
•
•
clarifying and promoting observance of its
guiding values; and
clarifying the standards of ethical behaviour
required of company directors and key
executives (that is, officers and employees who
have the opportunity to materially influence the
integrity, strategy and operations of the business
and its financial performance) and encouraging
the observance of those standards.
Training and information on the company’s
values, policies and legal obligations are provided
to all employees on induction and periodically
throughout their time at SkyCity.
Sustainability
To help the company define its responsibilities and
the effectiveness of its activities, SkyCity maintains
operational supervision of its sustainability activities
through management as well as governance-level
oversight through the Board’s Sustainability
Committee. This Committee directs the company’s
commitment to care activities and is responsible
for developing and maintaining SkyCity’s
sustainability policies.
The Sustainability Committee focuses on the
agreed pillars of the company’s sustainability
strategy, which are described in further detail on
pages 63–119 of this annual report together with
details of SkyCity’s sustainability activities.
Code of Conduct
The Sustainability Committee is responsible for
monitoring the organisational integrity of business
operations to ensure the maintenance of a high
standard of ethical behaviour. This includes
ensuring that SkyCity operates in compliance
with its Code of Conduct (available in the
Governance section of the company’s website at
www.skycityentertainmentgroup.com), which sets
out the guiding principles of its relationships with
stakeholder groups such as regulators, shareholders,
suppliers, customers, community groups
and employees.
Compliance with the Code of Conduct is monitored
through education and notification by individuals
who become aware of any breach. In addition, all
senior managers are required annually to provide
a confirmation to the company that to the best of
their knowledge all business matters undertaken
within their areas of responsibility have been
conducted in accordance with the Code of Conduct.
The most recent annual confirmations were
provided by senior managers in August 2020.
Trading in Securities
The company maintains a Securities
Trading Policy (available in the Governance
section of the company’s website at
www.skycityentertainmentgroup.com) for directors
and employees that sets out guidelines in respect of
trading in, or giving recommendations concerning,
the company’s securities, including derivatives of
such listed securities.
Details of any securities trading by directors or
executives who are subject to the company’s
Securities Trading Policy are notified to the Board.
In addition, directors and officers of the company
must comply with the disclosure obligations
under subpart 6 of the New Zealand Financial
Markets Conduct Act 2013 and the NZX Main
Board Listing Rules and formally disclose their
SkyCity shareholdings and other securities
holdings to the NZX and, consequently, ASX within
prescribed timeframes.
Corporate Governance Statement
129
Conflicts of Interest
SkyCity expects its directors and employees to
avoid conflicts of interest in their decisions and to
avoid any direct or indirect interest, investment,
association, or relationship which is likely to,
or appears to, interfere with the exercise of their
independent judgement.
Where conflicts of interest may arise (or where
potential conflicts of interest may arise),
directors must formally advise the company or,
in the case of an employee, their manager about
any matter relating to that conflict (or potential
conflict) of interest.
Gaming Prohibition
Directors and employees are not permitted to
participate in any gaming or wagering activity at
any SkyCity land-based property.
4. Safeguard the Integrity of
the Company’s Financial
Reporting
The Board is responsible for ensuring that effective
policies and procedures are in place to provide
confidence in the integrity of the company’s
financial reporting.
The Audit and Risk Committee has responsibility
for oversight of the quality, reliability, and
accuracy of the company’s internal and external
financial statements, the quality of the company’s
external result presentations, its internal control
environment and risk management programmes,
and for its relationships with its internal and
external auditors.
The Audit and Risk Committee and the Board
undertake sufficient inquiry of the company’s
management and the company’s internal and
external auditors in order to enable them to be
satisfied as to the validity and accuracy of the
company’s financial reporting. The Chief Executive
Officer and the Chief Financial Officer are required
to confirm in writing that the annual and interim
financial statements present a true and fair
view of the company’s financial condition and
results of operations, and comply with relevant
accounting standards.
The Audit and Risk Committee oversees the
independence of the company’s internal and
external auditors and monitors the scope and
quantum of work undertaken and fees paid to
the auditors for non-audit services.
The Committee has adopted an External Audit
Independence Policy that sets out the framework
for assessing and maintaining audit independence.
The Committee has formally reviewed the
independence status of PricewaterhouseCoopers
and is satisfied that its objectivity and
independence is not compromised as a
consequence of non-audit work undertaken for
the company.
PricewaterhouseCoopers has confirmed to the
Committee that it is not aware of any matters that
could affect its independence in performing its
duties as auditor of the company.
Fees paid to PricewaterhouseCoopers during the
financial year ended 30 June 2020 are set out in
note 7 to the financial statements. Fees for audit
and other assurance work for the financial year
ended 30 June 2020 represented 80% of total
PricewaterhouseCoopers fees.
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5. Timely and
Balanced Disclosure
The Board is committed to ensuring timely
and balanced disclosure of all material matters
concerning the company to ensure compliance
with the letter and intent of the NZX and
ASX Listing Rules such that:
•
•
all investors have equal and timely access to
material information concerning the company,
including its financial situation, performance,
ownership and governance; and
company announcements are factual
and comprehensive.
SkyCity believes high standards of reporting and
disclosure are essential for proper accountability
between SkyCity and its investors, employees
and stakeholders.
The company is committed to promoting investor
confidence by providing timely and balanced
disclosure of all material matters relating to SkyCity
and its subsidiaries (SkyCity Group). The company
maintains a Market Disclosure Policy (available in
the Governance section of the company’s website at
www.skycityentertainmentgroup.com) for directors
and employees that sets out guidelines in respect of
the company’s continuous disclosure obligations.
The Policy is designed to ensure that SkyCity:
•
•
•
•
satisfies the requirements of the New Zealand
Financial Markets Conduct Act 2013, Australian
Corporations Act 2001, NZX Main Board Listing
Rules and ASX Listing Rules;
meets its disclosure obligations in a way that
allows all interested parties equal opportunity to
access information;
meets stakeholders’ expectations for equal,
timely, balanced and meaningful disclosure; and
provides guidance on the processes to
ensure compliance.
The company is also committed to presenting its
financial and key operational performance results
in a clear, effective, balanced and timely manner
to the stock exchanges on which the company’s
securities are listed, and to its shareholders,
analysts and other market commentators, and
ensures that such information is available on the
company’s website.
The company’s annual report (including this
annual report) is prepared by the General Counsel
for the SkyCity Entertainment Group with input
from the Chief Executive Officer and other senior
management who bear responsibility for the topics
covered in the annual report with a view to ensuring
the contents are materially accurate, balanced
and provide investors sufficient information about
SkyCity and its performance over the relevant
financial year. The Board also contributes to and
approves the contents of the annual report.
Jo Wong, General Counsel, is Company Secretary
and the Disclosure Officer for SkyCity Entertainment
Group Limited and is responsible for bringing to
the attention of the Board any matter relevant to
the company’s disclosure obligations. The Company
Secretary is also accountable directly to the Board,
through the chair of the Board, on all matters to do
with the proper functioning of the Board.
6. Respect and Facilitate the
Rights of Shareholders
The company’s shareholder communications
strategy is designed to facilitate the effective
exercise of shareholder rights by:
•
•
•
communicating effectively with shareholders;
providing shareholders with ready access to
balanced and understandable information about
the company and corporate proposals; and
facilitating participation by shareholders in
general meetings of the company.
Corporate Governance Statement
131
The company achieves this by:
•
•
•
•
•
•
ensuring that information about the company
(including its corporate governance framework,
media releases, current and past annual
reports, dividend histories and notices of
meeting) is available to all shareholders
in the Investor Centre and Governance
sections of the company’s website at
www.skycityentertainmentgroup.com;
posting stock exchange announcements in the
Investor Centre section of the company’s website
promptly after they have been disclosed to
the market;
giving shareholders the option to
receive communications from, and send
communications to, the company and its security
registry, Computershare, electronically;
engaging in a programme of regular interactions
with institutional investors, shareholder
associations and proxy advisers;
promoting two-way interaction with
shareholders, by encouraging shareholders to
attend general meetings of the company;
making appropriate time available at such
meetings for shareholders to ask questions of
directors and management. Each year, in the
company’s notice of meeting, shareholders are
invited to submit questions to the company prior
to the annual meeting to enable the company
to aggregate the main themes of the questions
asked and respond to them at the annual
meeting. Representatives of the company’s
external auditors are also invited to attend
the company’s annual meeting to answer any
shareholder questions concerning their audit
and external audit report; and
•
ensuring that continuous disclosure obligations
are understood and complied with throughout
the SkyCity Group.
7. Recognise and Manage Risk
The company maintains a risk management
framework for the identification, assessment,
monitoring and management of risk to the
company’s business.
SkyCity maintains an independent, centrally
managed Group Risk function which evaluates
and reports on risks and controls across the Group.
Management is required to report to the Audit and
Risk Committee and Board on the effectiveness of
the company’s management of its material business
risks at least annually.
The Audit and Risk Committee approves the
assurance plan, with results and performance
of the organisation’s risk and controls regularly
reviewed by both the Committee and the external
auditors. The Chief Executive Officer and the
Chief Financial Officer are required to confirm in
writing to the Audit and Risk Committee at least
annually that the statement in respect of the
integrity of the company’s financial statements
referred to above is founded on a sound system
of risk management and internal control which
aligns to the policies of the Board, and that the
company’s risk management and internal control
systems are operating efficiently and effectively in
all material respects. The most recent confirmations
were provided by the Chief Executive Officer and
Chief Financial Officer in September 2020.
The company maintains business continuity,
material damage and liability insurance cover to
ensure that the earnings of the business are well
protected from adverse circumstances.
SkyCity’s ability to create and preserve value for its
shareholders requires the successful execution of
its business strategy. Risks influencing its ability to
do this, including SkyCity’s material exposure to
economic, environmental and social sustainability
risks, if any, and how it manages or intends to
manage those risks, are outlined on pages 45–51 of
this annual report.
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8. Performance Evaluation
Evaluation of the Board and its Committees
The Board and committee charters require an
evaluation of the Board’s and its committees’
performance on an annual basis. The Governance
and Nominations Committee determines and
oversees the process for evaluation, which includes
assessment of the role and responsibilities,
performance, composition, structure, training
and membership requirements of the Board and
its committees.
The annual evaluation of the Board’s and its
committees’ performance is generally carried
out in the form of a self-evaluation questionnaire
completed by each of the directors and select
management. From time to time, an independently
facilitated evaluation process may be carried out, in
addition to or in substitution of the self-evaluation
process, for the purpose of evaluating the
performance of the Board and its committees.
In June 2019, the Board agreed to participate in
an independently facilitated evaluation process by
a specialist facilitator with significant experience
in board evaluations. As part of the evaluation
process, the facilitator held structured interviews
on a one-on-one basis with each director and
relevant senior managers and attended the Board’s
October 2019 meeting to conduct a structured
assessment of Board dynamics, contribution, and
effectiveness. The facilitator’s insights on Board and
individual director strengths and opportunities for
enhanced performance and development were
then discussed at the Board’s December 2019
meeting with the facilitator in attendance.
Evaluation of Senior Management
The Board undertakes the performance review
of the Chief Executive Officer and reviews the
performance outcomes of those reporting directly
to that position in accordance with the company’s
performance review procedures.
In the case of the Chief Executive Officer, the review
generally involves a formal response/feedback
process at both the half year and full year. In the
case of each senior executive, the review involves
a formal response/feedback process between the
Chief Executive Officer and each senior executive.
9. Remunerate Fairly
and Responsibly
The guiding principles that underpin SkyCity’s
remuneration policies are to:
•
•
•
•
•
be market competitive at all levels to ensure
the company can attract and retain the best
available talent;
be performance-oriented so that remuneration
practices recognise and reward high levels of
performance and to avoid an entitlement culture;
provide a significant at-risk component of total
remuneration which drives performance to
achieve company goals and strategy;
manage remuneration within levels of cost
efficiency and affordability; and
align remuneration for senior managers with the
interests of shareholders.
SkyCity’s remuneration strategy and policies are
based on a “pay for performance” philosophy.
The People and Culture Committee has reviewed
the structure of SkyCity’s incentive schemes
to ensure they are competitive and effective
to enable the company to attract and retain
the leadership and talent required to drive
business strategy and financial performance in
the interests of shareholders. Any subsequent
change to the company’s remuneration strategy
and/or policies will continue to reflect SkyCity’s
“pay for performance” philosophy and drive
shareholder value.
Corporate Governance Statement
133
Remuneration Report
As Chair of the People and Culture Committee
of the Board, I am pleased to present our
remuneration report for the financial year ended
30 June 2020.
This remuneration report outlines SkyCity’s
remuneration frameworks and plans, including
detailed information on group executives and
non-executive director remuneration and outcomes
for the financial year ended 30 June 2020.
In light of the economic impact of the COVID-19
pandemic, group executives’ salaries will be
frozen for the financial year ending 30 June 2021.
In addition, the company will not be seeking
shareholder approval to increase the non-executive
director fee pool at the 2020 annual meeting on
16 October 2020 (noting the non-executive director
fee pool was last increased by shareholders at the
2018 annual meeting and, prior to that, at the 2014
annual meeting).
Despite the challenges in FY20, SkyCity continues
to make great progress across its diversity and
inclusion programme. The gender pay gap for the
New Zealand business reduced to 7.5% from 8.2%,
in part as a result of our targeted wage programme
‘$20 by 2020’, and SkyCity’s gender balance has
remained consistent across the top four levels of
the organisation with 49% being female. SkyCity
continues to make investment in building the
capability of all leaders in understanding and
leveraging diversity of thought through our Diversity
and Inclusion Leadership Conference, the SkyCity
Inclusion Council and the SkyCity Emerging
Leaders Programme.
As the financial gateway for the SkyCity
Performance Incentive Plan and the SkyCity Short
Term Incentive Plan was not met this year, and
taking into account a number of factors that have
contributed to a very difficult year, no awards were
made under either plan in relation to the financial
year ended 30 June 2020.
134
The format of this remuneration report differs
from previous years. Details of the various
employee incentive plans are now available
in the Remuneration Policy Statement in the
Governance section of the company’s website
at www.skycityentertainmentgroup.com or
can be obtained by contacting the Company
Secretary. In addition, and with the aim of
greater transparency and disclosure, the Board
has elected to provide details regarding total
remuneration paid to the Chief Operating Officer
and Chief Financial Officer.
I hope you find the new format of our remuneration
report useful and, as always, I welcome
your feedback.
Murray Jordan
Chair
People and Culture Committee
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Non-Executive Directors Fees
This section details the fees paid to non-executive directors.
The company’s Policy on Non-Executive Director Remuneration (available in the Governance section of the
company’s website at www.skycityentertainmentgroup.com or by contacting the Company Secretary) sets
out a framework for SkyCity to attract and retain qualified, highly capable directors from a pan-Australasian
talent pool for the purpose of driving value and maintaining the highest standards of corporate governance
on behalf of shareholders.
In addition to directors’ fees, non-executive directors may also receive remuneration for additional services
provided to the company outside of their capacities as directors of the company at the discretion of the
Board and subject to the maximum remuneration amount which has been approved by the shareholders
of the company. Shareholders at the annual meeting determine the total remuneration available to the
company’s non-executive directors.
At the 2018 annual meeting, shareholders approved, effective from 1 July 2018, a total remuneration amount
for non-executive directors of $1,440,000 per annum (plus GST, if any).
The following table outlines the approved non-executive directors’ fees (exclusive of GST, if any) for the Board
and its committees as at 30 June 2020:
Board
POSITION
Chair
Deputy Chair
Non-Executive Director
Audit and Risk Committee
Chair
Member
People and Culture Committee
Chair
Member
Sustainability Committee
Chair
Member
FEES (PER FINANCIAL YEAR)
$280,000
$160,000
$128,500
$35,000
$15,000
$35,000
$15,000
$35,000
$15,000
All non-executive directors are members of the Governance and Nominations Committee and receive no
additional fees for this committee.
The Board chair does not receive separate fees for the Board committees that he sits on.
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Non-Executive Director Fees for the Year Ended 30 June 2020
Remuneration paid to, and other benefits received by, non-executive directors for services in their capacity
as directors of the company during the financial year ended 30 June 2020 are as listed below:
Rob Campbell
2020
2019
Bruce Carter
2020
2019
Sue Suckling
2020
2019
Jennifer Owen
2020
2019
Murray Jordan
2020
2019
Richard Didsbury(3)
2020
2019
BOARD AND
COMMITTEE FEES
OTHER
(1)
$245,000.00
$280,000.00
(1)
$178,333.40
$195,000.00
(1)
$143,062.50
$163,500.00
$3,429.70(2)
$2,586.37(2)
(1)
$138,687.50
$153,983.87
$14,850.00(4)
(1)
$143,062.50
$163,500.00
$4,050.00(5)
$11,700.00(6)
$51,819.45
$143,600.00
$16,800(7)
ThefiguresshownaregrossamountsandexcludeGSTwhereapplicable.
(1)Non-executivedirectorselectedtowaive50%oftheirBoardandcommitteefeesforthefinalquarterofthefinancialyearended
30June2020.
(2)BeingpremiumspaidtoSkyCity’shealthinsuranceproviderduringtheperiodfortherelevantdirector,whoreceivedthebenefitofahealth
insuranceplanthatSkyCityofferstoallofitsemployees(eitheratnocostoratadiscountedrate).
(3)RichardDidsburyretiredasadirectoreffectivefrom11November2019.
(4)BeingfeespayableforconsultancyservicesprovidedbyJenniferOweninrelationtotheSkyCityAdelaideexpansionproject,whichwere
providedasadditionalservicesoutsideofhercapacityasadirectorofthecompany.ThisincludesfeesforconsultancyservicesprovidedinFY19
butpaidinFY20.
(5)BeingfeespayableforconsultancyservicesprovidedbyMurrayJordaninrelationtotheNewZealandInternationalConventionCentre
development,whichwereprovidedasadditionalservicesoutsideofhiscapacityasadirectorofthecompany.
(6)BeingfeespayableforconsultancyservicesprovidedbyMurrayJordaninrelationtotheNewZealandInternationalConventionCentre
developmentandtheSkyCityAdelaideexpansionproject,whichwereprovidedasadditionalservicesoutsideofhiscapacityasadirectorof
thecompany.
(7)BeingfeespayableforconsultancyservicesprovidedbyRichardDidsburyinrelationtotheNewZealandInternationalConventionCentre
development,whichwereprovidedasadditionalservicesoutsideofhiscapacityasadirectorofthecompany.
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In addition to remuneration paid for services in
their capacity as directors of the company, SkyCity
meets the expenses incurred by directors in relation
to company matters, which are incidental to the
performance of their duties, including travel.
Board believes this approach more appropriately
describes executive pay and performance.
Accordingly, the following disclosures include the
STI and LTI components earned by group executives
in respect of the financial year ended 30 June 2020.
Share Ownership in SkyCity
Fixed Remuneration
To further align non-executive directors’ interests
with those of shareholders, each non-executive
director is encouraged, over a period of two years
from appointment, to build up and retain shares
in the company (purchased on market by each
non-executive director) equivalent to at least one
year of their base non-executive director fees.
Following this initial two-year period, non-executive
directors are then encouraged to acquire 15% of
their base director fees per year.
Remuneration of Employees
This section details the company’s approach
to remuneration frameworks, outcomes and
performance of SkyCity’s Chief Executive Officer,
other group executives and employees for the
financial year ended 30 June 2020.
Chief Executive Officer and Other
Group Executives
Remuneration components are offered in
the context of a total remuneration package,
measured on a 'total cost to the company' basis.
The remuneration arrangements for each group
executive comprise both fixed and variable
remuneration where the fixed portion comprises
a base salary, a KiwiSaver/superannuation
contribution and a limited number of other benefits
and the variable portion comprises both short term
incentive at-risk remuneration (STI) and long term
incentive at-risk remuneration (LTI).
The Board determines appropriate levels
of fixed remuneration taking into account
recommendations from the People and Culture
Committee. The STI component is based on
performance against both key financial and
non-financial measures and all STI bonuses are at
the ultimate discretion of the Board.
The disclosures on the following pages of this
annual report reflect the total rewards earned by,
although not necessarily paid to, group executives
for the financial year ended 30 June 2020 as the
The company endeavours to set fixed remuneration
at levels that are relative to similar positions in the
broader Australasian market and, for casino-specific
positions, account is taken of salaries within
the sector.
Fixed remuneration is reviewed annually for each
group executive and, when appropriate, the People
and Culture Committee approves remuneration
increases for group executives.
Short Term Incentive Remuneration
To drive outstanding company and individual
performance, SkyCity introduced the Performance
Incentive Plan (PIP) for the Chief Executive Officer,
other group executives and senior managers in 2018.
The PIP:
•
•
recognises and rewards short and longer
term performance by providing participants
an opportunity to be further aligned with
shareholders’ interests by earning, subject to the
company achieving its financial performance
gateway, an incentive award which is delivered in
cash and deferred equity awards (in the form of
restricted share rights in the company); and
provides participants the opportunity to earn
a cash payment under a STI scheme and
acquire restricted share rights under a deferred
STI scheme.
STI Scheme Component of PIP
STI awards will be delivered in cash at the end of
the financial year following the completion of the
external audit of the company’s year-end results,
where the maximum award under the STI is 150%
of the target award.
Deferred STI Component of PIP
The deferred STI scheme under the PIP
offers participants, subject to the relevant STI
performance conditions being met, the opportunity
to acquire restricted share rights of an amount
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137
equivalent to between 10% and 50% of their base
salary at no cost. Restricted share rights (if any)
issued to a participant on a STI cash payment date
(Declaration Date) will only vest if that participant
remains an employee up to and until:
•
•
the first anniversary of the Declaration Date in
respect of 50% of the restricted share rights; and
the second anniversary of the Declaration Date
in respect of the remaining 50% of the restricted
share rights.
they have been employed by SkyCity for at least
three years as at the date of cessation of his/her
employment, then he/she will continue to be
eligible to have shares transferred to him/her on
the first and second anniversaries (as applicable)
of the Declaration Date as if their employment
had not ceased, at the discretion of the Board.
As a rule, a group executive will not be eligible to
the extent they are terminated for cause, breach
the terms of their employment agreement or
for underperformance.
However, if a participant’s deferred STI entitlement
in any financial year is to restricted share rights
having a value of $10,000 or less (calculated using
the volume-weighted average sale price of SkyCity
shares used to determine the number of restricted
share rights to be issued to the participant), the
restricted share rights will not be split out equally
into two separate tranches, but will instead
comprise one tranche and (subject to the vesting
criteria being satisfied) vest to the participant on
the first anniversary of the Declaration Date.
Upon vesting, a participant will be allocated one
ordinary share in the company for each restricted
share right that vests as soon as practicable after the
relevant anniversary of the Declaration Date. Subject
to complying with the Company’s Securities Trading
Policy and Code of Business Practice, participants
are free to sell, transfer or otherwise deal with
shares issued to them under the PIP (subject to
minimum shareholding requirements for the Chief
Executive Officer and other group executives).
The intention of the deferred STI component
under the PIP is to act both as a retention and an
engagement tool. The maximum award under the
deferred STI scheme is 150% of the target award.
Any unvested restricted share rights will be forfeited
if a participant ceases to be employed by SkyCity (or
a company in the SkyCity Group) before the relevant
Declaration Date, although the Board has discretion
to determine otherwise such as where a participant
ceases to be an employee due to injury, permanent
disability, ill health or redundancy or dies. In the
case of selective group executives however, if he/she
ceases employment for any reason (other than as
a result of the termination of their employment by
SkyCity for cause, including for serious misconduct)
prior to vesting of any restricted share rights, and
Participants do not have the right to receive any
dividends in respect of restricted share rights.
However, if any restricted share rights vest and
shares are issued or transferred to a participant,
then that participant may receive (at the Board’s
sole discretion) a cash payment equivalent to the
cash dividends declared and paid by the company
in respect of SkyCity shares from the date of issue
of such restricted share rights to the date such
shares are issued or transferred to that participant.
The cash payment will not include any imputation
credits, franking credits or similar benefits in respect
of such dividends.
In the event that a genuine error is made by, or on
behalf of, the Board or the company in determining
any entitlement under the PIP, including where the
company’s financial statements are subsequently
required to be restated, the Board may seek to
recover from a participant the value of any benefits
erroneously awarded to a participant under the PIP.
Restricted share rights issued under the PIP may
not be transferred, assigned or disposed of and
participants may not create any interest in favour
of any third party over the restricted share rights
(except with Board approval).
For the financial year ended 30 June 2020, no cash
or restricted share rights will be granted under the
PIP as the financial gateway was not achieved.
For the financial year ending 30 June 2021,
424 employees will be invited in October 2020 to
participate in the PIP for the opportunity to earn a
cash payment under the STI scheme – 94 of whom
also have the opportunity to acquire restricted share
rights under the deferred STI scheme.
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Long Term Incentive Remuneration
Two LTI plans were in operation during the financial
year ended 30 June 2020 for the company’s most
senior employees, including the group executives.
These plans were the SkyCity Senior Executive
Long Term Incentive Scheme and the 2018 SkyCity
Executive Long Term Incentive Plan. Copies of the
plan documents and rules are available on the
Governance section of the company’s website at
www.skycityentertainmentgroup.com.
In the financial year ended 30 June 2020, grants
were made to the Chief Executive Officer and other
group executives under the 2018 SkyCity Executive
Long Term Incentive Plan.
To further align the group executives’ interests
with those of shareholders, each group executive is
encouraged, over a period of five years, to build up
and retain shares in the company (acquired under
the PIP and/or 2018 SkyCity Executive Long Term
Incentive Plan) equivalent to at least one year of
their base salary.
2018 SkyCity Executive Long Term Incentive Plan
The 2018 SkyCity Executive Long Term Incentive
Plan provides participants with financial assistance
by way of an interest-free loan by a subsidiary of
the company to acquire shares in the company.
A trustee holds legal title to the relevant shares on
behalf of those participants for a restrictive period
of three years until the following performance
hurdles are tested:
•
•
•
50% of the shares are allocated to an absolute
total shareholder return (TSR) tranche which
includes a cost of equity premium;
the remaining 50% of the shares are allocated
equally to each of an NZX comparator group
tranche, an ASX comparator group tranche and a
competitor comparator group tranche; and
performance is assessed three years after the
issue of the shares, with no retesting dates in the
event the performance hurdles are not satisfied
as at that date.
In order to determine whether any shares will vest
in a participant following the three-year restrictive
period for those shares, each tranche is measured
against the performance hurdle for that tranche
on the performance testing date for those shares,
where the performance hurdle for each of the
tranches is:
•
•
•
•
for the absolute TSR tranche, a comparison of
SkyCity’s TSR over the restrictive period against
the cost of equity for the SkyCity Group over the
restrictive period as determined by the Board;
for the NZX comparator group tranche, a
comparison of SkyCity’s TSR over the restrictive
period against the TSR of each of the constituent
entities of the NZX 50 index (as at the grant date,
other than SkyCity) over the same period;
for the ASX comparator group tranche, a
comparison of SkyCity’s TSR over the restrictive
period against the TSR of each of the constituent
entities of the ASX 200 index (as at the grant
date, other than SkyCity) over the same period;
and
for the competitor comparator group tranche, a
comparison of SkyCity’s TSR over the restrictive
period against the TSR of each of Crown Resorts
Limited and The Star Entertainment Group
Limited over the same period.
As at 30 June 2020, a total of 918,673 shares were
issued under the 2018 SkyCity Executive Long
Term Incentive Plan and held by the Public Trust
on behalf of eight participants. The shares vest in a
participant only when performance hurdles set by
the Board of directors are met.
The maximum award under the 2018 SkyCity
Executive Long Term Incentive Plan is 100% of the
relevant grant allocation.
The transfer of shares to participants at the end
of the three-year restrictive period is dependent
on satisfaction of the performance conditions
and continued employment with SkyCity. If a
participant resigns or is dismissed for misconduct or
poor performance before the end of the restrictive
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period, any unvested shares will be forfeited, unless
SkyCity terminates the employment of a group
executive without cause, a group executive ceases
employment as a result of a material change to the
terms and conditions of his/her employment which
results in a diminution of that group executive’s
role, status and responsibility in the period of
12 months immediately preceding a performance
testing date or a group executive dies or ceases
to be an employee due to medical incapacity or
permanent disability.
However, to support long term decision-making,
execution of strategy and to encourage strong
succession planning by the Chief Executive Officer,
the Chief Executive Officer will continue to be
eligible to have shares transferred to him, at the
Board’s discretion, if he ceases employment with
SkyCity for any reason (other than as a result of
the termination of employment by SkyCity for
cause, including for serious misconduct) during the
restrictive period and the performance conditions
are satisfied – in this situation, the performance
conditions will be tested on the performance
testing date as if his employment had not ceased.
In the event that a genuine error is made by,
or on behalf of, the Board or the company in
determining a participant’s entitlement under the
2018 SkyCity Executive Long Term Incentive Plan,
including where the company’s or a third party’s
financial statements are subsequently required to
be restated, the Board may seek to recover from
a participant the value of any shares erroneously
determined to have vested to that participant.
Until the restrictive period for the relevant shares
has ended and the relevant loan on those shares
is repaid, a participant may not sell those shares or
use them as security for another loan.
From time to time as directed by SkyCity, the Public
Trust acquires shares in the company on-market
for the purposes of the company’s long term
incentive employee plans, including the SkyCity
Senior Executive Long Term Incentive Plan and the
2018 SkyCity Executive Long Term Incentive Plan.
As at 30 June 2020, the Public Trust held a total of
5,155,841 shares – 2,149,556 of which were allocated
and held on behalf of eligible participants and
3,006,285 of which were unallocated and held on
behalf of future participants.
Fixed Remuneration of Salaried Employees
All salaried roles within SkyCity are sized using a
recognised methodology to measure the impact,
accountability and complexity of each role as it
contributes to the organisation. Remuneration
data is obtained from several sources to determine
remuneration ranges by job band or level to ensure
competitiveness at both base salary and total
remuneration levels.
Individual remuneration is set within the
appropriate range considering such matters as
individual performance, scarcity/availability of
resource/skill, internal relativities and specific
business needs. This process ensures internal equity
between roles and allows comparison with the
overall market. Remuneration ranges are reviewed
annually to reflect market movements.
Chief Executive Officer's Remuneration
Graeme Stephens’ employment agreement
(a copy of which is available in the Governance
section of the company’s website at
www.skycityentertainmentgroup.com) is dated
4 November 2016 and reflects standard conditions
that are appropriate for a senior executive of a listed
Australasian company. Subsequent amendments
are also available online.
Mr Stephens’ employment agreement may be
terminated by:
•
•
•
either Mr Stephens or the company by giving
six months' notice in writing;
the company without notice in the case of
serious misconduct, serious breach (including
substantial non-performance) or other cause
justifying summary dismissal; or
the company immediately if the SkyCity Board
forms the view that substantial incompatibility
and/or irreconcilable differences have developed
with Mr Stephens or the Board otherwise wishes
to terminate his employment when he is not
at fault (including a redundancy situation or
medical incapacity).
All entitlements payable to Mr Stephens on
termination of his employment are outlined in his
employment agreement.
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The total remuneration earned by Mr Stephens for duties relating to the Chief Executive Officer position for
the financial years ended 30 June 2018, 30 June 2019 and 30 June 2020 is outlined in the following table:
FIXED ANNUAL REMUNERATION
PIP OUTCOME
SALARY
AND
ANNUAL
LEAVE
SACRIFICE(1) KIWISAVER
BASE
SALARY
OTHER
BENEFITS
SUBTOTAL
CASH STI DEFERRED STI
LTI GRANT
SUBTOTAL
TOTAL
REMUNERATION
2020
$1,519,673
$151,967
$42,363 $10,592 $1,420,661
$0
$0
$1,063,771(2)
$1,063,771
$2,484,432
2019
$1,489,875
$0
$44,374
$4,433 $1,538,682
$595,950 $744,938(3)
$1,042,912(4)
$2,383,800
$3,922,482
2018 $1,450,000
$0 $43,500
$5,302 $1,498,802
$0 $1,015,000(5)
$1,250,000(6)
$2,265,000
$3,763,802
(1)ThesefundsweresacrificedtotheSkyCityEmployeeHardshipFundasdetailedonpage83ofthisannualreport.
(2)Calculatedonthebasisof273,112SkyCitysharesallocatedtoMrStephensunderthe2018SkyCityExecutiveLongTermIncentivePlanin
August2019.
(3)Calculatedonthebasisof195,872restrictedsharerightsgrantedtoMrStephensunderthePIPinAugust2019.Therestrictedsharerightswill
vestintwotranches,withthefirsttranchevestinginSeptember2020andthesecondtranchevestinginSeptember2021.
(4)Calculatedonthebasisof246,726SkyCitysharesallocatedtoMrStephensunderthe2018SkyCityExecutiveLongTermIncentivePlanin
August2018.
(5)Calculatedonthebasisof251,238restrictedsharerightsgrantedtoMrStephensundertheRestrictedShareRightsPlaninSeptember2018,
whichvestedinJuly2020.
(6)Calculatedonthebasisof320,883SkyCitysharesallocatedtoMrStephensundertheSkyCitySeniorExecutiveLongTermIncentivePlanin
August2017.
Equity Based Incentives Vested in FY20
None of Mr Stephens’ equity-based incentives vested in the financial year ended 30 June 2020.
251,238 SkyCity shares were issued to Mr Stephens on 1 July 2020 pursuant to the terms of the Restricted
Share Rights Plan.
The first testing date relating to shares allocated to Mr Stephens under the Senior Executive Long Term
Incentive Scheme on 23 August 2017 was on 23 August 2020, with no shares vesting to Mr Stephens.
The graph below shows the mix of remuneration that was earned by Mr Stephens for his performance
over the financial year ended 30 June 2020, alongside graphs illustrating the target and maximum
remuneration mixes:
41%
FY20
Actual
59%
27%
38%
FY20
Target
23%
FY20
Maximum
33%
BaseSalary(excludes
thevalueofKiwiSaver
andotherbenefits)
STITarget
LTITarget
35%
44%
Pay Gap
Mr Stephens’ base salary remuneration ratio to the median annualised employee base salary is 28.
STI Outcome
For the financial year ended 30 June 2020, no cash or restricted share rights will be granted to Mr Stephens
under the PIP as the financial gateway was not achieved.
LTI Grant
Mr Stephens was granted an allocation of 273,112 shares in the company equal to $1,063,771 under the 2018
SkyCity Executive Long Term Incentive Plan in August 2019.
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Other Group Executives’ Remuneration
The total remuneration earned by the Chief Operating Officer, Michael Ahearne, for the financial year ended
30 June 2020 is outlined in the following table:
FIXED ANNUAL REMUNERATION
PIP OUTCOME
SALARY
AND ANNUAL
LEAVE
SACRIFICE(1)
BASE
SALARY
KIWISAVER
OTHER
BENEFITS
SUBTOTAL
CASH
STI
DEFERRED
STI
LTI GRANT
SUBTOTAL
TOTAL
REMUNERATION
2020
$1,024,750
$102,475
$26,057
$10,417
$958,749
$0
$0
$204,951(2)
$204,951
$1,163,700
The total remuneration earned by the Chief Financial Officer, Rob Hamilton, for the financial year ended
30 June 2020 is outlined in the following table:
FIXED ANNUAL REMUNERATION
PIP OUTCOME
SALARY
AND ANNUAL
LEAVE
SACRIFICE(1)
BASE
SALARY
KIWISAVER
OTHER
BENEFITS
SUBTOTAL
CASH
STI
DEFERRED
STI
LTI GRANT
SUBTOTAL
TOTAL
REMUNERATION
2020
$831,470
$83,147
$21,316 $10,803
$780,442
$0
$0
$166,293(3)
$166,294
$946,735
(1)ThesefundsweresacrificedtotheSkyCityEmployeeHardshipFundasdetailedonpage83ofthisannualreport.
(2)Calculatedonthebasisof52,619SkyCitysharesallocatedtoMrAhearneunderthe2018SkyCityExecutiveLongTermIncentivePlanin
August2019.
(3)Calculatedonthebasisof42,694SkyCitysharesallocatedtoMrHamiltonunderthe2018SkyCityExecutiveLongTermIncentivePlanin
August2019.
Equity Based Incentives Vested in FY20 for the Chief Operating Officer
35,000 SkyCity shares were issued to Mr Ahearne on 27 November 2019 pursuant to the terms of his
employment agreement dated 18 November 2017.
49,066 SkyCity shares were issued to Mr Ahearne on 1 July 2020 pursuant to the terms of the Restricted
Share Rights Plan.
Equity Based Incentives Vested in FY20 for the Chief Financial Officer
The final testing date relating to shares allocated to Mr Hamilton under the Senior Executive Long Term
Incentive Scheme on 26 August 2015 was on 26 August 2019, with no shares vesting to Mr Hamilton.
All unvested shares were accordingly forfeited in accordance with the terms of the SkyCity Senior Executive
Long Term Incentive Plan.
80,614 SkyCity shares were issued to Mr Hamilton on 1 July 2020 pursuant to the terms of the Restricted
Share Rights Plan.
The first testing date relating to shares allocated to Mr Hamilton under the Senior Executive Long Term
Incentive Scheme on 23 August 2017 was on 23 August 2020, with no shares vesting to Mr Hamilton.
The final testing date relating to shares allocated to Mr Hamilton under the Senior Executive Long Term
Incentive Scheme on 24 August 2016 was on 24 August 2020, with no shares vesting to Mr Hamilton.
All unvested shares will accordingly be forfeited in accordance with the terms of the SkyCity Senior
Executive Long Term Incentive Plan.
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Group Executive Shareholdings
The following table summarises the Chief Executive Officer, Chief Operating Officer and Chief Financial
Officer’s acquisitions and disposals of relevant interests in SkyCity shares during the period to 30 June 2020
and relevant interests in SkyCity shares as at 30 June 2020:
GROUP EXECUTIVE
NATURE OF
RELEVANT INTEREST
NATURE OF SECURITY
DATE OF
TRANSACTION
DURING PERIOD
CONSIDERATION
(PER SECURITY)
ACQUIRED/
(DISPOSED)
TOTAL SECURITIES
HELD AS AT
30 JUNE 2020
Graeme Stephens
Chief Executive
Officer
Michael Ahearne
Chief Operating
Officer
Rob Hamilton
Chief Financial
Officer
Beneficially
owned
Beneficially
owned(1)
Beneficially
owned(1)
Beneficially
owned(1)
Beneficially
owned
Beneficially
owned(1)
Beneficially
owned(1)
Beneficially
owned
Beneficially
owned(1)
Beneficially
owned(1)
Beneficially
owned(1)
Beneficially
owned(1)
Beneficially
owned(1)
Shares
23/08/2019
3.94
(325,000)
0
Shares (LTI 2017)
Shares (LTI 2018)
N/A
N/A
320,883
246,726
Shares (LTI 2019)
30/08/2019
$3.8950
273,112
273,112
Shares
27/11/2019
Nil(2)
35,000
Shares (LTI 2018)
N/A
840,721
35,000
43,754
Shares (LTI 2019)
30/08/2019
$3.8950
52,619
52,619
Shares
N/A
131,373
63,374
Shares (LTI 2015)
24/09/2019
Nil(3)
(70,000)
0
Shares (LTI 2016)
Shares (LTI 2017)
Shares (LTI 2018)
N/A
N/A
N/A
70,000
70,000
38,570
Shares (LTI 2019)
30/08/2019
$3.8950
42,694
42,694
284,638
(1)SharesheldbythePublicTrust.
(2)NilinaccordancewiththetermsoftheChiefOperatingOfficer’semploymentagreement.
(3)Thebalanceofshareshasbeenforfeitedinaccordancewiththetermsofthe2009SkyCityExecutiveLongTermIncentivePlan.
LTI Vesting Calculations
During the financial year ended 30 June 2020, the following LTI vesting calculations were completed:
•
•
August 2015 LTI: the third (and final) test was completed with no shares vesting. All unvested shares
were accordingly forfeited in accordance with the terms of the SkyCity Senior Executive Long Term
Incentive Plan. No shares vested to executives in respect of the 2015 allocation; and
August 2016 LTI: the first and second tests were completed with no shares vesting. The third (and final)
test was completed during August 2020 with no shares vesting. All unvested shares will accordingly
be forfeited in accordance with the terms of the SkyCity Senior Executive Long Term Incentive Plan.
No shares vested to executives in respect of the 2016 allocation.
Remuneration Report
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Employee Remuneration
The numbers of employees or former employees of the company and its subsidiaries, not being directors
of the company, who received remuneration and other benefits in their capacity as employees, the value
of which was in excess of $100,000 and was paid to those employees during the financial year ended
30 June 2020, are listed in the table below.
For the purposes of the table, remuneration includes, where applicable (if any): (a) salary; (b) short term
cash bonuses; (c) health insurance premiums and other health benefits; (d) the value of shares expected to
vest under the 2019 SkyCity Performance Incentive Plan; (e) the value of share rights expensed during the
year (including PAYE and PAYG on vested share rights, but excluding accrued PAYE and PAYG on unvested
share rights) under the SkyCity Senior Executive Long Term Incentive Plan and the 2018 SkyCity Executive
Long Term Incentive Plan; (f) the value of commencement shares expensed during the year; (g) sign-on cash
payments; and (h) settlement payments and payments in lieu of notice with respect to certain employees
upon their departure from the company.
REMUNERATION
NUMBER OF EMPLOYEES
REMUNERATION
NUMBER OF EMPLOYEES
89
57
64
30
31
18
14
12
11
19
16
13
12
10
4
4
4
5
1
3
1
2
1
$360,000–$369,999
$370,000–$379,999
$390,000–$399,999
$410,000–$419,999
$430,000–$439,999
$440,000–$449,999
$450,000–$459,999
$570,000–$579,999
$600,000–$609,999
$650,000–$659,999
$660,000–$669,999
$690,000–$699,999
$720,000–$729,999
$730,000–$739,999
$760,000–$769,999
$770,000–$779,999
$810,000–$819,999
$840,000–$849,999
$1,030,000–$1,039,999
$1,050,000–$1,059,999
$1,410,000–$1,419,999
$1,690,000–$1,699,999
$3,180,000–$3,189,999
TOTAL
2
2
1
2
2
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
449
$100,000–$109,999
$110,000–$119,999
$120,000–$129,999
$130,000–$139,999
$140,000–$149,999
$150,000–$159,999
$160,000–$169,999
$170,000–$179,999
$180,000–$189,999
$190,000–$199,999
$200,000–$209,999
$210,000–$219,999
$220,000–$229,999
$230,000–$239,999
$240,000–$249,999
$250,000–$259,999
$260,000–$269,999
$270,000–$279,999
$300,000–$309,999
$310,000–$319,999
$320,000–$329,999
$330,000–$339,999
$350,000–$359,999
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Twenty Largest Registered Shareholders as at 1 August 2020
NUMBER OF SHARES
% OF SHARES
1. HSBC Custody Nominees (Australia) Limited
2. JP Morgan Nominees Australia Limited
3. HSBC Nominees (New Zealand) Limited – NZCSD
4. Accident Compensation Corporation – NZCSD
5. Citicorp Nominees Pty Limited
6. Citibank Nominees (New Zealand) Limited – NZCSD
7. HSBC Nominees (New Zealand) Limited A/C State Street – NZCSD
8. JPMorgan Chase Bank NA NZ Branch – Segregated Clients Acct – NZCSD
9. BNP Paribas Noms Pty Ltd
10. BNP Paribas Nominees Pty Ltd
11. ANZ Custodial Services New Zealand Limited – NZCSD
12. BNP Paribas Nominees (NZ) Limited – NZCSD
13. New Zealand Depository Nominee Limited
14. Citicorp Nominees Pty Limited
15. HSBC Nominees A/C NZ Superannuation Fund Nominees Limited – NZCSD
16. BNP Paribas Nominees (NZ) Limited – NZCSD
17. National Nominees Limited
18. ANZ Wholesale Australasian Share Fund – NZCSD
19. Masfen Securities Limited
20. UBS Nominees Pty Limited
Total
137,576,780
79,722,766
44,365,094
43,885,498
42,817,823
40,841,912
31,474,586
23,470,685
21,405,119
19,954,863
14,686,488
13,408,250
11,616,795
10,017,024
9,441,124
8,905,204
8,346,807
8,216,900
5,750,986
5,629,253
18.097%
10.487%
5.836%
5.773%
5.632%
5.372%
4.14%
3.087%
2.816%
2.625%
1.932%
1.764%
1.528%
1.318%
1.242%
1.171%
1.098%
1.081%
0.757%
0.74%
581,533,957
76.496%
Total ordinary shares on issue as at 1 August 2020 were 760,205,209 of which 1,178,582 were held in
aggregate by Public Trust on behalf of eligible and future participants pursuant to the SkyCity Senior
Executive Long Term Incentive Plan and 2018 SkyCity Executive Long Term Incentive Plan.
The ordinary shares are quoted on both the NZX Main Board and ASX under the ticker code ‘SKC’.
No shares were held by the company directly as treasury stock.
Shareholder and Bondholder Information
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Distribution of Ordinary Shares and Registered Shareholdings as
at 1 August 2020
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
> 100,000
Total
NUMBER OF
SHAREHOLDERS
4,895
6,851
2,774
2,870
153
17,543
NUMBER OF
SHARES
1,932,108
18,720,463
19,749,257
69,855,822
649,947,559
760,205,209
PERCENTAGE OF
TOTAL ORDINARY
SHARES IN THE
COMPANY
0.25%
2.46%
2.6%
9.19%
85.5%
100%
As at 1 August 2020, there were 1,855 shareholders (with a total of 166,234 shares) holding less than a
marketable parcel of shares under the ASX Listing Rules, based on the closing share price of A$2.28.
The ASX Listing Rules define a marketable parcel of shares as a parcel of shares of not less than A$500.
Substantial Security Holders
The following persons had given notice as at 30 June 2020, in accordance with subpart 5 of Part 5 of
the New Zealand Financial Markets Conduct Act 2013, that they were substantial security holders in the
company and held a relevant interest in the number of ordinary shares shown below.
The Vanguard Group, Inc
Investors Mutual Limited
Commonwealth Bank of Australia
Lazard Asset Management Pacific Co
Sumitomo Mitsui Trust Holdings, Inc
BlackRock, Inc
Accident Compensation Corporation
DATE OF SUBSTANTIAL
SECURITY NOTICE
RELEVANT INTEREST IN
NUMBER OF SHARES
% OF SHARES HELD
AT DATE OF NOTICE
19/12/2018
07/02/2020
11/02/2020
05/05/2020
14/05/2020
23/06/2020
30/06/2020
36,018,413
47,644,678
54,447,148
48,914,000
59,079,433
34,282,378
45,188,797
5.278%
7.14%
8.161%
7.331%
8.85%
5.138%
6.113%
Substantial security holder notices received since 30 June 2020 can be viewed at
www.nzx.com/companies/SKC/announcements.
The total number of listed voting securities of SkyCity Entertainment Group Limited as at 30 June 2020
was 739,196,806.
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Bonds
On 28 September 2015, the company issued 125 million unsubordinated, unsecured, redeemable, fixed rate,
seven year bonds at an issue price of $1 per bond. The bonds pay a fixed rate of interest of 4.65% per annum
until the maturity date and are quoted on the NZX Debt Market under the ticker code ‘SKC040’.
On 17 June 2020, SkyCity announced its intention to redeem all the bonds on 28 September 2020
(before the 28 September 2022 maturity date) as part of a comprehensive funding plan to strengthen the
company’s balance sheet and secure additional liquidity in response to uncertainty around the impacts of
COVID-19. The redemption payment of $1.0280 per bond will be paid on 28 September 2020 to registered
holders of the bonds on the record date of 18 September 2020. The final day of trading for the bonds will be
16 September 2020 (prior to the bonds being suspended at the close of business on that date) and the final
quotation date for the bonds will be 28 September 2020.
Twenty Largest Registered Bondholders as at 1 August 2020
NUMBER OF BONDS
% OF BONDS
1. FNZ Custodians Limited
2. Forsyth Barr Custodians Limited
3. Custodial Services Limited
4. Investment Custodial Services Limited
5. Custodial Services Limited
6. ANZ Custodial Services New Zealand Limited – NZCSD
7. Custodial Services Limited
8. Citibank Nominees (New Zealand) Limited – NZCSD
9. Custodial Services Limited
10. Forsyth Barr Custodians Limited
11. Custodial Services Limited
12. JBWere (NZ) Nominees Limited
13. Tappenden Holdings Limited
14. Tea Custodians Limited Client Property Trust Account – NZCSD
15. Custodial Services Limited
16. BNP Paribas Nominees (NZ) Limited – NZCSD
17. FNZ Custodians Limited
18. ANZ Bank New Zealand Limited – NZCSD
19. Investment Custodial Services Limited
20. Liang Zhang & Yingrui Li
Total
14,798,000
14,666,000
9,374,000
8,502,000
7,274,000
5,931,000
5,686,000
5,235,000
2,718,000
2,417,000
2,323,000
2,320,000
2,000,000
1,916,000
1,412,000
1,363,000
1,287,000
1,271,000
750,000
500,000
11.838%
11.733%
7.499%
6.802%
5.819%
4.745%
4.549%
4.188%
2.174%
1.934%
1.858%
1.856%
1.6%
1.533%
1.13%
1.09%
1.03%
1.017%
0.6%
0.4%
91,743,000
73.395%
Distribution of Bonds and Registered Holdings as at 1 August 2020
NUMBER OF BONDHOLDERS
NUMBER OF BONDS
PERCENTAGE OF
TOTAL BONDS ISSUED
1,000–5,000
5,001–10,000
10,001–100,000
> 100,000
Total
69
189
640
65
963
345,000
1,827,000
21,910,000
100,918,000
125,000,000
0.28%
1.46%
17.53%
80.73%
100%
Shareholder and Bondholder Information
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Directors' Disclosures
Disclosure of Directors’ Interests
Section 140(1) of the New Zealand Companies Act 1993 requires a director of a company to disclose certain
interests. Under subsection (2), a director can make disclosure by giving a general notice in writing to the
company of a position held by a director in another named company or entity.
The following are particulars included in the company’s Interests Register as at 30 June 2020 (notices given
by directors during the financial year ended 30 June 2020 are marked with an asterisk):
Rob Campbell (Chair)
New Zealand Rural Land
Company Limited
NZ Equity Partners
Paua Wealth Management Limited
Precinct Properties New Zealand
Limited
RC Custodian Limited
Investment Committee
Member*
Advisory Board
Member*
Director and
Shareholder
Director
Sue Suckling
Chair*
Brannigans Consulting Limited
Insurance & Financial Services
Ombudsman Scheme Commission
Jacobsen Holdings Limited
Jade Software Corporation Limited
Rubix Limited
Soltians Group (including Zag Limited)
Chair
Chair
Chair
Chair
Chair*
Chair*
Sue Suckling Holdings Limited
Managing Director
Summerset Group Holdings Limited
Chair and Shareholder
Tourism Holdings Limited
Chair and Shareholder
Jennifer Owen
Tutanekai Investments Limited
Ultrafast Fibre Limited
WEL Networks Limited
Bruce Carter (Deputy Chair)
AIG Australia Limited
ASC Pty Limited
Aventus Capital Limited
Badge Management Pty Limited
Bank of Queensland Limited
Burnside Village Pty Limited
Chapman Capital Partners
Pty Limited
Cobbadah Pty Ltd
COVID-19 Business Advisory
Committee
Eudunda Farmers Limited
RSC Nominees Pty Limited
Sage Automation Pty Ltd
Sage Group Holdings Ltd
Scissor Holdings Pty Limited T/A
One Rail Australia
Aspire Child Care (Mascot) Pty Ltd
Owen Gaming Research
Director
Principal
Murray Jordan
Chorus Limited
Foodstuffs’ Members
Protection Trust
Metcash Limited
Real Clarity Limited
Southern Cross Benefits Limited
Southern Cross Health Trust
Southern Cross Hospitals Limited
Southern Cross Medical Care
Society
Starship Foundation
Stevenson Group Limited
The Foodstuffs Co-operative
Perpetuation Trust
Director
Trustee
Director
Director and
Shareholder
Director*
Trustee*
Director*
Director*
Trustee
Director
Trustee
Director and
Shareholder
Chair*
Chair
Director*
Chair
Chair
Director
Director
Director*
Director
Director
Chair*
Director
Director*
Director*
Director*
Chair*
The following details included in the Interests Register as at 30 June 2019, or entered during the financial
year ended 30 June 2020, have been removed during the financial year ended 30 June 2020:
• Rob Campbell is no longer a director of King Tide Asset Management Limited;
• Rob Campbell became Chair of Ultrafast Fibre Limited (previously a director);
•
Bruce Carter is no longer a representative of the Management Committee of Genesee & Wyoming
Australia Holdings Limited Partnership or a director of Genesee and Wyoming Inc; and
• Sue Suckling is no longer Chair of Blinc Innovation Limited.
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Directors’ and Senior Managers’ Indemnities
Indemnities have been given to directors and senior managers of the company and its subsidiaries to
cover acts or omissions of those persons in carrying out their duties and responsibilities as directors and
senior managers.
Disclosure of Directors’ Interests in Share Transactions
Directors disclosed, pursuant to section 148 of the New Zealand Companies Act 1993, the following
acquisitions and disposals of relevant interests in SkyCity shares during the period to 30 June 2020:
DATE OF ACQUISITION/
DISPOSAL DURING PERIOD
CONSIDERATION
SHARES
ACQUIRED/(DISPOSED)
Rob Campbell
Murray Jordan
23/08/2019
$3.9573 per share
02/09/2019
$3.8448 per share
17,200(1)
39,014(2)
(1)SharesheldbyFNZCustodiansLimitedonbehalfofTutanekaiInvestmentsLimited.
(2)SharesheldbythetrusteesofEndeavourTrust.
Disclosure of Directors’ Interests in Shares
Directors disclosed the following relevant interests in SkyCity shares as at 30 June 2020:
Rob Campbell
Bruce Carter
Sue Suckling
Jennifer Owen
Murray Jordan
SHARES
BENEFICIALLY HELD
70,928(1)
64,618(2)
39,941(3)
35,000(4)
73,698(5)
(1)SharesheldbyFNZCustodiansLimitedonbehalfofTutanekaiInvestmentsLimited.
(2)SharesheldbyTarquayPtyLimitedontrustforTarquaySuperannuationFund.
(3)SharesheldbythetrusteesofTheSueSucklingFamilyTrust.
(4)SharesheldbythetrusteeoftheOwen&PaullRetirementFund.
(5)SharesheldbythetrusteesofEndeavourTrust.
Company Disclosures
STOCK EXCHANGE LISTINGS
SKYCITY ENTERTAINMENT GROUP LIMITED
SkyCity Entertainment Group Limited is a listed
issuer with ordinary shares quoted on both the NZX
Main Board and ASX (in each case, under the ticker
code ‘SKC’) and bonds quoted on the NZX Debt
Market (under the ticker code ‘SKC040’).
SkyCity Entertainment Group Limited has been
designated as ‘Non-Standard’ by the NZX due to the
nature of the company’s constitution. In particular,
the constitution places restrictions on the transfer
of shares in the company in certain circumstances
and provides that votes and other rights attached
to shares may be disregarded and shares may be
sold if these restrictions are breached, as more
particularly described on pages 151–152 of this
annual report.
SkyCity is listed as a ‘Foreign Exempt Listing’ on
the ASX.
The following persons held office as directors
of SkyCity Entertainment Group Limited as at
30 June 2020:
Rob Campbell (Chair)
Bruce Carter (Deputy Chair)
Sue Suckling
Jennifer Owen
Murray Jordan
Richard Didsbury ceased to hold office as a director
of SkyCity Entertainment Group Limited effective
from 11 November 2019.
Directors' Disclosures
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SUBSIDIARIES
Subsidiary Companies
The following persons held office as directors
of subsidiaries of SkyCity Entertainment Group
Limited as at 30 June 2020:
New Zealand
Subsidiaries
Directors
Graeme Stephens, Jo Wong
Companies
Cashel Asset Management Limited
New Zealand International Convention
Centre Limited
Horizon Tourism (New Zealand) Limited
Lets Play Live Media Limited
Otago Casinos Limited
Queenstown Casinos Limited
Sky Tower Limited
SkyCity Action Management Limited
SkyCity Auckland Holdings Limited
SkyCity Auckland Limited
SkyCity Casino Management Limited
SkyCity Development Limited
SkyCity Enterprises Limited
SkyCity Hamilton Limited
SkyCity Holdings Limited
SkyCity International Holdings Limited
SkyCity Investments Australia Limited
SkyCity Investments Queenstown Limited
SkyCity Management Limited
SkyCity Precinct Limited
SkyCity Projects Limited
SkyCity Properties Limited
SkyCity Properties Albert St Limited
SkyCity Properties Victoria St Limited
SkyCity Ventures Limited
TNZ Esports Limited
Overseas
Subsidiaries
Directors
Graeme Stephens, Jo Wong
Companies
Horizon Tourism Limited
SkyCity Investment Holdings Limited
Directors
Companies
Graeme Stephens, Jo Wong,
Bruce Carter, David Christian
LPL Media Pty Limited
SkyCity Adelaide Pty Limited
SkyCity Australia Finance Pty Limited
SkyCity Australia Pty Limited
SkyCity Treasury Australia Pty Limited
Directors
Steve Salmon, Joe Borg
Company
SkyCity Malta Limited
Directors
Steve Salmon, WH Management Limited
Company
SkyCity Malta Holdings Limited
Directors
Steve Salmon, Michael Ahearne
Company
SkyCity Management (UK) Limited
For the financial year ended 30 June 2020, SkyCity
paid director’s fees of:
•
•
€12,000 (plus VAT) to WH Partners for
professional services provided by Joe
Borg in relation to his directorship of
SkyCity Malta Limited; and
€6,000 (plus VAT) to WH Management Limited
for professional services provided in relation to its
directorship of SkyCity Malta Holdings Limited.
No director’s fees were paid to, or received by,
any other director of a subsidiary company during
the financial year ended 30 June 2020.
Waivers from the New Zealand and Australian
Stock Exchanges
The following waivers from the NZX and ASX Listing
Rules were either granted and published by NZX
or ASX (as the case may be) within, or relied upon
by the company during, the 12-month period
preceding the balance date:
•
•
on 17 September 2019, NZX granted SkyCity
a waiver from NZX Listing Rule 8.1.5 (which
provides that no benefit or right attaching to
a quoted financial product may be cancelled
or varied by reason only of a transfer of that
quoted financial product) to the extent that
that rule would otherwise prevent SkyCity from
suspending voting rights or requiring a transfer
of shares in accordance with the provisions set
out in the company’s constitution. Further details
of those provisions are set out on pages 151–152
of this annual report. The waiver was granted
following the introduction of new NZX Listing
Rules on 1 January 2019 and effectively
re-documents prior decisions of NZX Regulation
in respect of the same matters; and
a class waiver and ruling issued by NZX dated
19 March 2020, which amended, on a temporary
basis until 31 October 2020, the definition of a
Share Purchase Plan under the NZX Listing Rules
to increase the cap per registered holder for
issues under a Share Purchase Plan from $15,000
to $50,000 and the total cap from 5% to 30% of
equity securities of that class at the time of offer.
All other waivers granted prior to the 12-month
period preceding the balance date had ceased
to have effect or were not relied upon during
the period.
SkyCity has also relied on a class waiver and ruling
issued by NZX dated 3 April 2020 in relation to
NZX Listing Rules 3.5.1, 3.5.3, 3.6.1 and 3.12.1, which,
in light of the challenges posed by COVID-19,
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provides issuers with up to an additional 30 days
to prepare and release results announcements
(including preliminary interim and full year
financial statements).
Voting Rights Attached to Securities
Accordingly, the constitution contains the following
provisions restricting the acquisition of shares in the
company to achieve this.
Clause 11.12 of the constitution provides that if a
transfer of shares results in the transferee, and the
persons associated with that transferee:
Each share gives the holder a right to attend and
vote at a meeting of shareholders. Holders have
the right to cast one vote per share on a poll of any
resolution put to the shareholders.
•
•
holding more than 5% of the shares in SkyCity; or
increasing their combined holding further
beyond 5% if:
There are no voting rights attached to SkyCity’s
debt securities although bondholders are welcome
to attend the annual meeting of shareholders.
However, as noted on page 147 of this annual report,
on 17 June 2020, SkyCity announced its intention
to redeem all the bonds on 28 September 2020
(before the 28 September 2022 maturity date) as
part of a comprehensive funding plan to strengthen
the company’s balance sheet and secure additional
liquidity in response to uncertainty around the
impacts of COVID-19 and, accordingly, there will
be no bondholders as at the date of the company’s
2020 annual meeting on 16 October 2020.
Limitations on Acquisitions of Ordinary Shares
The company’s constitution contains various
provisions which are included to take into account
the application of the:
• Gambling Act 2003 (New Zealand);
• Casino Act 1997 (South Australia); and
•
legislation providing for the establishment,
operation and regulation of casinos in any
other jurisdiction in which SkyCity or any of its
subsidiaries may hold a casino licence.
SkyCity needs to ensure when it participates in
gaming activities that:
•
•
it has the power under its constitution to take
such action as may be necessary to ensure that
its suitability to do so in a particular jurisdiction is
not affected by the identity or actions (including
share dealings) of a shareholder; and
there are appropriate protections to ensure
that persons do not gain positions of significant
influence or control over SkyCity or its business
activities without obtaining any necessary
statutory or regulatory approvals in those
jurisdictions.
– they already hold more than 5% of the shares
in SkyCity; and
– the transferee has not been approved by the
relevant regulatory authority as an associated
casino person of any casino licence holder,
then the votes attaching to all shares held by the
transferee and the persons associated with that
transferee are suspended unless and until either:
•
•
•
•
each regulatory authority advises that approval is
not needed; or
any regulatory authority which determines that
its approval is required approves the transferee,
together with the persons associated with that
transferee, as an associated casino person of any
applicable casino licence holder; or
the Board of the company is satisfied that
registration of the proposed transfer will not
prejudice any casino licence; or
the transferee and the persons associated with
that transferee dispose of such number of
SkyCity shares as will result in their combined
holding falling below 5% or, if the regulatory
authorities approve in respect of the transferee
and the persons associated with that transferee
a higher percentage, the lowest such percentage
approved by the regulatory authorities.
If a regulatory authority does not grant its approval
to the proposed transfer, SkyCity may sell such
number of the shares held by the transferee and
by any persons associated with that transferee,
as may be necessary to reduce their combined
shareholding to a level that will not result in the
transferee and the persons associated with that
transferee being an associated person of that casino
licence holder.
Company Disclosures
151
The power of sale can only be exercised if SkyCity
has given one month’s notice to the transferee of its
intention to exercise that power and the transferee
has not, during that one-month period, transferred
the requisite number of shares in SkyCity to a
person who is not associated with the transferees.
During the financial year ended 30 June 2020,
the Board considered all such transfers and was
satisfied in each case that the registration of
the relevant transfer would not prejudice any
casino licence.
Donations
Donations of $104,244 were made by the
company during the financial year ended
30 June 2020 ($57,421 during the financial year
ended 30 June 2019).
Other Legislation and Requirements
General limitations on the acquisition of securities
imposed by the jurisdiction in which SkyCity is
incorporated (ie. New Zealand law) are outlined in
the following paragraphs.
Other than the provisions included in the
company's constitution, the only significant
restrictions or limitations in relation to the
acquisition of securities are those imposed by
New Zealand laws relating to takeover, overseas
investment and competition.
The New Zealand Takeovers Code creates a general
rule under which the acquisition of more than 20%
of the voting rights in SkyCity, or the increase of an
existing holding of 20% or more of the voting rights
in SkyCity, can only occur in certain permitted ways.
These include a full takeover offer in accordance
with the Takeovers Code, a partial takeover
offer in accordance with the Takeovers Code,
an acquisition approved by an ordinary resolution,
an allotment approved by an ordinary resolution,
a creeping acquisition (in certain circumstances), or
compulsory acquisition if a shareholder holds 90%
or more of the shares in the company.
The New Zealand Overseas Investment Act 2005
and the Overseas Investment Regulations 2005
regulate certain investments in New Zealand by
overseas persons. In general terms, the consent
of the New Zealand Overseas Investment Office
is likely to be required when an ‘overseas person’
acquires shares or an interest in shares in SkyCity
Entertainment Group Limited that amount to 25%
or more of the shares issued by the company or, if
the overseas person already holds 25% or more, the
acquisition increases that holding.
The New Zealand Commerce Act 1986 is likely
to prevent a person from acquiring shares in
SkyCity if the acquisition would have, or would be
likely to have, the effect of substantially lessening
competition in a market.
Escrow and Buy Back Arrangements
SkyCity Entertainment Group Limited has no
securities subject to an escrow arrangement.
From time to time, the Public Trust acquires shares
in the company on-market for the purposes of
the company's long term incentive employee
plans as detailed in the Director and Employee
Remuneration section in this annual report.
In addition, SkyCity (or a nominee or agent of
SkyCity) may, from time to time, acquire existing
shares in the company to satisfy its obligations to
participating shareholders under the company’s
Dividend Reinvestment Plan established in
February 2011.
Credit Rating
As at the date of this annual report, SkyCity
Entertainment Group Limited has a Standard &
Poor’s BBB– rating (negative outlook).
152
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 The Federal Street dining precinct at SkyCity Auckland.
Our financial
performance
Financial Statements for the
Year Ended 30 June 2020
These financial statements were signed on
2 September 2020 on behalf of the Board of directors
of SkyCity Entertainment Group Limited by:
Rob Campbell
Chair
Bruce Carter
Deputy Chair and Chair of the
Audit and Risk Committee
155
Independent auditor’s report
Independent auditor’s report
To the shareholders of SkyCity Entertainment Group Limited
To the shareholders of SkyCity Entertainment Group Limited
We have audited the financial statements on pages 164 to 223 which comprise:
We have audited the financial statements on pages 164 to 223 which comprise:
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the balance sheet as at 30 June 2020;
the balance sheet as at 30 June 2020;
the income statement for the year then ended;
the income statement for the year then ended;
the statement of comprehensive income for the year then ended;
the statement of comprehensive income for the year then ended;
the statement of changes in equity for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended; and
the statement of cash flows for the year then ended; and
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the notes to the financial statements, which include a summary of significant accounting policies.
the notes to the financial statements, which include a summary of significant accounting policies.
Our opinion
In our opinion, the accompanying financial statements of SkyCity Entertainment Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 30 June 2020, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ
IFRS) and International Financial Reporting Standards (IFRS).
Our opinion
In our opinion, the accompanying financial statements of SkyCity Entertainment Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 30 June 2020, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ
IFRS) and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other non-audit services for the Group in the areas of tax compliance, tax advisory,
and the licensing of a software tool for subsidiary statutory financial statement preparation. Our firm
also carries out other assurance and agreed upon procedure services in relation to: compliance with
banking and USPP covenants; the allocation of Community Trust revenue; the Group's application for the
COVID-19 wage subsidy extension scheme; and the reconciliation of normalised results to reported
results. The provision of these other services has not impaired our independence as auditor of the Group.
Our firm carries out other non-audit services for the Group in the areas of tax compliance, tax advisory,
and the licensing of a software tool for subsidiary statutory financial statement preparation. Our firm
also carries out other assurance and agreed upon procedure services in relation to: compliance with
banking and USPP covenants; the allocation of Community Trust revenue; the Group's application for the
COVID-19 wage subsidy extension scheme; and the reconciliation of normalised results to reported
results. The provision of these other services has not impaired our independence as auditor of the Group.
PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
156
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Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current year. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
We have audited the financial statements on pages 164 to 223 which comprise:
the balance sheet as at 30 June 2020;
●
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Description of the key audit matter
the income statement for the year then ended;
How our audit addressed the key audit matter
● Reviewing management’s analysis and the
● Reviewing legal advice which supports the
the statement of cash flows for the year then ended; and
the statement of changes in equity for the year then ended;
the statement of comprehensive income for the year then ended;
independent technical accounting advice they
received;
assessment that SkyCity is the principal in the
insurance relationship; and
the notes to the financial statements, which include a summary of significant accounting policies.
We have performed a detailed assessment of the
accounting implications of the fire, with the
involvement of our technical accounting specialists, by:
● Reviewing the New Zealand International
Convention Centre Project and Licensing
Agreement, Building Works Insurance contract
and Project Specific Contract Works Policy to
assess all the relevant facts and circumstances
relevant to the technical accounting implications;
Our opinion
In our opinion, the accompanying financial statements of SkyCity Entertainment Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 30 June 2020, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ
IFRS) and International Financial Reporting Standards (IFRS).
Accounting for the NZICC fire
As disclosed in notes 1(a), 1(h) and 6 to the financial
statements, on 22 October 2019, there was a
significant fire at the construction site of the New
Zealand International Convention Centre (NZICC).
The fire caused extensive damage to the NZICC and
relatively minor damage to the Horizon Hotel.
Several accounting implications have arisen as a
result and the Group (also referred to throughout as
SkyCity), aided by their independent technical
accounting experts, have had to exercise
considerable professional judgement in determining
the appropriate accounting treatment. The most
significant judgements and estimates have been
disclosed within note 1(a) of the financial
Basis for opinion
statements.
The accounting treatment of the insurance recovery
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
for the damage is dependent on the relationship
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
between SkyCity, the insurers and Fletcher
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
Construction Company Limited (FCC). It is the
report.
Group's view that SkyCity is the principal in the
insurance relationship and therefore receives, and
has control over, all insurance proceeds. The Group
has considered the credit standing of the insurers
and concluded that the insurance receivable
recognised is fully recoverable.
The extent of damage and insurance recovery has
been estimated by an independent external expert
engaged by the Group. As a result, an insurance
recovery of $336.7 million has been recognised as
NZICC fire related income and $193.9 million of
capitalised work in progress has been derecognised,
offset by the release from the deferred licence value
liability of $165.8 million.
Expert investigation in respect of the damage
sustained and remediation works required remains
ongoing and as a result, the estimates are highly
sensitive and are based on limited information. The
most significant assumptions, and associated risk to
the overall damage assessment and related
insurance recovery, relate to: the extent of damage
to the structural steel which is still under validation;
the percentage of contingency included in the
estimates; and the timeline for remediation.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
● Noted the fact that the baseline figures upon which
Our firm carries out other non-audit services for the Group in the areas of tax compliance, tax advisory,
the extent of damage and insurance recovery have
and the licensing of a software tool for subsidiary statutory financial statement preparation. Our firm
been estimated remain subject to a material level
also carries out other assurance and agreed upon procedure services in relation to: compliance with
of uncertainty given the limited information
banking and USPP covenants; the allocation of Community Trust revenue; the Group's application for the
available; and
COVID-19 wage subsidy extension scheme; and the reconciliation of normalised results to reported
results. The provision of these other services has not impaired our independence as auditor of the Group.
We obtained management’s expert’s independent
assessment of the extent of damage and insurance
recovery. We engaged our own in-house real estate
experts to assist in our assessment and challenge of the
valuation methodologies and assumptions used by
management’s expert. In conjunction with our experts,
we:
● Considered whether the reports on a whole, and
● Noted that if the integrity of the structural steel is
compromised this would result in a material
difference to the resulting write-off of capitalised
work in progress, release from the deferred licence
value liability and insurance recovery income and
receivable.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
● Assessing the resulting accounting treatment
against the relevant accounting standard,
considering any counterfactual information and
scenarios.
the key components included within, are
consistent with what we would expect;
PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
PwC
Independent Auditor's Report
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We have audited the financial statements on pages 164 to 223 which comprise:
Description of the key audit matter
Independent auditor’s report
To the shareholders of SkyCity Entertainment Group Limited
How our audit addressed the key audit matter
Additionally, we have:
● Assessed the professional competence,
There is significant estimation uncertainty inherent
in the balances recorded, and the amounts
recognised in the income statement pertaining to
the accounting implications of the fire.
During the year, the Crown agreed to an extension
of the Completion Long Stop Date included in the
New Zealand International Convention Centre
Project and Licensing Agreement. The revised date
is now 2 January 2025 and completion is expected
before this date.
the balance sheet as at 30 June 2020;
the income statement for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended; and
independence and objectivity of the Group's
damage and insurance recovery estimate expert
and technical accounting expert;
● Checked the mathematical accuracy of the
underlying calculations of the fire related
adjustments;
● Assessed the recoverability of the insurance
recoveries recognised giving consideration to the
credit risk of the respective insurers;
● Reviewed the extension agreement for the long
the statement of comprehensive income for the year then ended;
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the notes to the financial statements, which include a summary of significant accounting policies.
Our opinion
In our opinion, the accompanying financial statements of SkyCity Entertainment Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 30 June 2020, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ
IFRS) and International Financial Reporting Standards (IFRS).
stop date included in the New Zealand
International Convention Centre Project and
Licensing Agreement; and
● Considered the adequacy of the related financial
statement disclosures.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
We have performed the following audit procedures:
● Reviewed agreements with the Group’s banking
and USPP partners to understand the revised
arrangements and actions the Group has taken,
including renegotiation of existing debt facilities,
establishment of new debt facilities and agreeing
waivers from meeting financial loan covenants in
future periods;
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
● Reviewed documentation relating to the equity
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
● Reperformed the Group's calculation of forecast
compliance with financial covenants at each
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
compliance date within the next 12 months (31
have fulfilled our other ethical responsibilities in accordance with these requirements.
December 2020 and 30 June 2021);
raise which occurred prior and subsequent to
balance date and tested the receipt of funds and
issue of shares;
Our firm carries out other non-audit services for the Group in the areas of tax compliance, tax advisory,
and the licensing of a software tool for subsidiary statutory financial statement preparation. Our firm
forecast cash flows to assess the level of
also carries out other assurance and agreed upon procedure services in relation to: compliance with
forecasting risk, including management’s
consideration of the impact of COVID-19 on the
banking and USPP covenants; the allocation of Community Trust revenue; the Group's application for the
business;
COVID-19 wage subsidy extension scheme; and the reconciliation of normalised results to reported
results. The provision of these other services has not impaired our independence as auditor of the Group.
● Assessed and challenged the reasonableness of the
Capital structure and funding liquidity, including
the impact of COVID-19
As at 30 June 2020 the Group's net debt was $583.7
million (30 June 2019: $503.5 million). The Group's
borrowings comprise a syndicated bank facility,
United States Private Placements (USPP) and a
retail bond. As disclosed in the financial statements,
certain facilities expire within 12 months after 30
June 2020.
Refer to notes 1(a), 1(h), 12, 13 and 14 of the
financial statements.
Management's updated forecast scenarios, to
account for the impacts of COVID-19 on the
business, indicated that it was reasonably possible
that breaches in financial covenants in respect of the
debt facilities could occur on the test date of 31
December 2020. The Group has subsequently
received covenant waivers for the 31 December
2020 test period from their banking and USPP
partners.
To address funding liquidity concerns, the Group
announced and executed a $230.0 million equity
raise, comprising a $180.0 million institutional
placement (executed in June 2020) and a $50.0
million share purchase plan (executed in July
2020). Subsequent to year end, the Group also has:
● Obtained an Amendment and Waiver from its
banking partners to extend the maturity of two
tranches, add an additional tranche of $60.0
million and provide further covenant relief for
testing periods up to and including 30 June
2021;
● Performed additional sensitivities on the forecast
cash flows and considered possible alternate
scenarios, taking into consideration the
uncertainty of the current environment, including
the impact of COVID-19; and
● Considered the appropriateness of the Group's
disclosures.
● Obtained Waiver Letters from its USPP partners
to provide covenant relief for testing periods up
to and including 30 June 2021; and
PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
PwC
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Description of the key audit matter
Independent auditor’s report
To the shareholders of SkyCity Entertainment Group Limited
● Entered into a new $100.0 million revolving
How our audit addressed the key audit matter
We have audited the financial statements on pages 164 to 223 which comprise:
credit facility maturing on 31 December 2021.
Given the impact of COVID-19 and the significant
changes to the capital and funding structure, both
prior and subsequent to 30 June 2020, we
considered this to be a key audit matter.
the balance sheet as at 30 June 2020;
the income statement for the year then ended;
the statement of comprehensive income for the year then ended;
management to prepare the forecast;
● Considered and challenged key assumptions, in
the statement of cash flows for the year then ended; and
the statement of changes in equity for the year then ended;
the Board approved business plan;
● Understood the process undertaken by
the notes to the financial statements, which include a summary of significant accounting policies.
For the Auckland and Hamilton CGUs, we performed
the following audit procedures:
● Compared the forecast cash flows used for FY21 to
particular those underpinning the earnings before
interest, tax, depreciation and amortisation
(EBITDA) margin and the potential impacts of
COVID-19;
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
● Engaged our auditor’s valuation expert to assess
management’s valuation conclusion and key
assumptions, including the pre tax discount rates
and terminal growth rates, based on their
experience and external evidence;
Our opinion
In our opinion, the accompanying financial statements of SkyCity Entertainment Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 30 June 2020, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ
IFRS) and International Financial Reporting Standards (IFRS).
Impairment considerations in respect of goodwill
and other intangible assets, including the impact of
COVID-19
At 30 June 2020, the carrying amount of goodwill
and casino licences totalled $589.5 million (30 June
2019: $746.7 million). This is after an impairment
charge of $160.6 million that has been recorded
against the Adelaide casino licence (30 June 2019:
nil impairment).
Refer to note 24 of the financial statements.
Accounting standards require an entity to assess at
the end of each reporting period whether there is
any indication that an asset may be impaired. There
is also a requirement to perform an annual
Basis for opinion
impairment assessment of goodwill and other
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
indefinite life intangible assets.
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
The Group performed an impairment assessment
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
for the Auckland and Hamilton cash generating
units (CGUs), both of which include indefinite life
report.
intangible assets.
An assessment of the value in use using discounted
cash flow forecast (DCF) models was made for each
of these CGUs.
In addition, an impairment assessment was also
prepared in relation to the Adelaide CGU which
includes a finite life intangible asset, the Adelaide
casino licence. This was prepared as the Group
considered there to be indications that the CGU may
be impaired, including the impact of the COVID-19
global pandemic on the business. The Group
prepared a DCF model under the Fair Value less
Costs of Disposal (FVLCOD) method and engaged
Deloitte (management’s valuation expert) to
perform an independent valuation of the Adelaide
CGU.
In preparing the DCFs, management made a
number of key assumptions that impact the CGUs’
recoverable value. This is a key focus of our audit
due to the inherent judgement in assessing
impairments, including the impact of COVID-19 on
the assumptions that the Group's assessment is
based on. The most significant of these judgements
are disclosed in note 24.
In relation to the Auckland and Hamilton CGUs, the
recoverable amount exceeds the carrying amount
and no impairment has been recorded.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other non-audit services for the Group in the areas of tax compliance, tax advisory,
and the licensing of a software tool for subsidiary statutory financial statement preparation. Our firm
also carries out other assurance and agreed upon procedure services in relation to: compliance with
management’s expert’s valuation, as adopted by
the Board;
banking and USPP covenants; the allocation of Community Trust revenue; the Group's application for the
COVID-19 wage subsidy extension scheme; and the reconciliation of normalised results to reported
results. The provision of these other services has not impaired our independence as auditor of the Group.
● Compared historical performance against budget,
investigated material differences and considered
the impact on future cash flow forecasts;
● Considered and challenged key assumptions
including the impacts of COVID-19, and the key
drivers of EBITDA growth and overall business
performance, with reference to external evidence
where possible;
For the Adelaide CGU, we performed the following
audit procedures:
● Compared the forecast cash flows used for FY21 to
● Compared historical performance against budget,
investigated material differences and considered
the impact on future cash flow forecasts; and
cash flows to determine whether a reasonably
possible change in assumptions could lead to an
impairment.
● Performed a sensitivity analysis on the forecast
● Considered the five year forecast included in
● Understood the process undertaken by
management to prepare the forecast;
the Board approved business plan;
PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
PwC
Independent Auditor's Report
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We have audited the financial statements on pages 164 to 223 which comprise:
Description of the key audit matter
Independent auditor’s report
To the shareholders of SkyCity Entertainment Group Limited
● Engaged our auditor’s valuation expert to:
How our audit addressed the key audit matter
the balance sheet as at 30 June 2020;
In relation to the Adelaide CGU, an impairment of
$160.6 million was recorded which broadly
represents the difference between the mid point of
the valuation range (determined by management’s
valuation expert under the FVLCOD method and
●
adopted by the Directors) and the CGU’s carrying
●
value at 30 June 2020.
●
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the income statement for the year then ended;
the statement of comprehensive income for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended; and
− Review and challenge key assumptions,
including the discount and terminal growth
rates based on their experience and external
market evidence;
− Assess the reasonableness of the 2% cost of
disposal assumption applied under the
FVLCOD method based on their experience and
industry knowledge; and
− Evaluate the final conclusions reached with
reference to external market evidence.
the notes to the financial statements, which include a summary of significant accounting policies.
●
Our opinion
In our opinion, the accompanying financial statements of SkyCity Entertainment Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 30 June 2020, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ
IFRS) and International Financial Reporting Standards (IFRS).
In conjunction with our auditor’s valuation expert,
we assessed the valuation report prepared by
management's valuation expert and considered key
sensitivities over the model. In doing so, we met
with management’s valuation expert to understand
and challenge their approach and assumptions; and
● Understood the impacts of the Adelaide expansion
currently in progress on future performance and
cash flows.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
For all CGUs, we assessed the appropriateness of
disclosures made in the financial statements including
those for key assumptions and sensitivities.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other non-audit services for the Group in the areas of tax compliance, tax advisory,
and the licensing of a software tool for subsidiary statutory financial statement preparation. Our firm
also carries out other assurance and agreed upon procedure services in relation to: compliance with
banking and USPP covenants; the allocation of Community Trust revenue; the Group's application for the
COVID-19 wage subsidy extension scheme; and the reconciliation of normalised results to reported
results. The provision of these other services has not impaired our independence as auditor of the Group.
We read the final agreement between SkyCity and
Macquarie and independently assessed and challenged
the accounting for the transaction, with the involvement
of our technical accounting specialists.
We read management’s paper and the independent
technical accounting advice they received, outlining the
considerations for the appropriate grouping of the
carparks under the leasing criteria and the
counterfactual scenarios.
We obtained management's calculation of the allocation
of the carrying value and the fair value of the unnested
car parks between the main site and the initial 600
NZICC carparks and the remaining 650 NZICC carparks.
We specifically considered how management have
treated the penalty payments and factored in judgement
with regards to the expected lease commencement date.
The resulting values were used to determine whether the
finance lease accounting criteria has been met for the
remaining 650 NZICC car parks.
We tested the receipt of the concession payment and the
calculation of the recognised gain, corroborating the
amounts recognised in the financial statements to
management's analysis, supported by the valuation of
the carrying value of the car parks as previously
determined and audited when the transaction was
entered into during the year ended 30 June 2019.
Accounting for the sale of the Auckland car park
concession
On 19 August 2019, the Auckland Car Park
Concession transaction was completed. Macquarie
Principal Finance Group (Macquarie) took over the
operation and management of the main site car park
and an initial 600 restricted use NZICC car parks at
that time. Approximately 650 further NZICC car
parks were to be provided at a date no later than 31
December 2020, otherwise penalty payments would
be incurred under the concession agreement.
As a result of the NZICC fire, Macquarie no longer
has access to the initial 600 NZICC car parks and
delivery of the remaining approximately 650 NZICC
car parks is likely to be delayed beyond 31
December 2020. As there is significant judgement
in determining how the car parks should be grouped
for the assessment of the impact of the fire on the
accounting treatment of the sale, this was a key
audit matter.
SkyCity used independent technical accounting
experts to assist in determining the accounting
treatment.
Refer to notes 4 and 6 of the financial statements.
A net gain of $66.4 million has been recognised in
the income statement which is the excess of the
concession payment allocated to the unnested main
site and initial 600 NZICC carparks over their
determined carrying value.
PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
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To the shareholders of SkyCity Entertainment Group Limited
How our audit addressed the key audit matter
Material uncertainty in investment property
valuations relating to COVID-19
As disclosed in note 15 of the financial statements,
the Group’s investment properties total $72.4
●
million, of which $45.3 million is measured at fair
value as at 30 June 2020 (30 June 2019: $40.6
●
million). The remaining $27.1 million of investment
●
property relating to the NZICC car park is held at
cost as disclosed in note 15(d) of the financial
●
statements.
●
The valuation of the Group’s investment properties
●
held at fair value is inherently subjective and the
valuations were performed by an independent
registered valuer. The Group has adopted the
assessed values determined by the valuer.
The valuer takes into account property specific
information such as the contracted tenancy
agreements and rental income earned by the asset.
The valuer has used the income capitalisation
approach and has applied assumptions in relation to
capitalisation rates and market rent, based on
market data and transactional evidence, where
available. These assumptions were adjusted at 30
June 2020 to recognise the estimated impact of
COVID-19.
As at the 30 June 2020 valuation date, the
independent registered valuer included a material
valuation uncertainty clause in their report as a
result of the COVID-19 pandemic. This clause
highlights the difficulties in undertaking valuations
due to the absence of relevant transactional
evidence that demonstrates current market pricing.
Therefore, less certainty and a higher degree of
caution should be attached to the point estimate
valuation. This represents an increase in the
estimation uncertainty in the valuation of
investment properties. Because of the material
valuation uncertainty we have considered the
valuation of investment properties held at fair value
to be a key audit matter.
We have audited the financial statements on pages 164 to 223 which comprise:
the balance sheet as at 30 June 2020;
the income statement for the year then ended;
the statement of comprehensive income for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended; and
Given the subjectivity involved in determining
valuations for individual properties, including
alternative assumptions and valuation methods, there
is a range of values that could be considered reasonable.
The impact of COVID-19 at 30 June 2020 has resulted
in material valuation uncertainty and a wider range of
possible values than at past valuation points.
We considered the adequacy of the disclosures made in
note 1(h) and note 15 to the financial statements, which
sets out the significant assumptions. These notes
explain that there is material estimation uncertainty
and there has been a material impact on the valuation
of investment properties. We discussed with
management and obtained sufficient appropriate audit
evidence to demonstrate that management’s
assessment of the suitability of the inclusion of the
valuation in the balance sheet and disclosures made in
the financial statements was appropriate.
In assessing the valuation of investment properties, we
performed the audit procedures outlined below:
● Reviewed the valuation reports from the
the notes to the financial statements, which include a summary of significant accounting policies.
Our opinion
In our opinion, the accompanying financial statements of SkyCity Entertainment Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 30 June 2020, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ
IFRS) and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
independent valuation expert for investment
properties held at fair value;
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
● Engaged our own in-house real estate valuation
expert to assess the methodologies and critique
and challenge the key assumptions used by the
valuer to market evidence and current market
conditions, including the appropriateness of the
assumptions made for COVID-19 impacts; and
● For all properties held at fair value, the carrying
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
value was agreed to the external valuation reports,
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
and we corresponded with the independent valuer,
International Code of Ethics for Professional Accountants (including International Independence
in conjunction with our auditor's expert, on the
reports. This correspondence included the impact
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
that COVID-19 has had on market activity and
have fulfilled our other ethical responsibilities in accordance with these requirements.
how the valuer had factored this into their key
assumptions.
Our firm carries out other non-audit services for the Group in the areas of tax compliance, tax advisory,
and the licensing of a software tool for subsidiary statutory financial statement preparation. Our firm
also carries out other assurance and agreed upon procedure services in relation to: compliance with
banking and USPP covenants; the allocation of Community Trust revenue; the Group's application for the
COVID-19 wage subsidy extension scheme; and the reconciliation of normalised results to reported
results. The provision of these other services has not impaired our independence as auditor of the Group.
The independent valuer and auditor’s expert confirmed
that the valuation approach for each property was in
accordance with accounting standards and suitable for
use in determining the carrying value of investment
properties at 30 June 2020.
We assessed the independent valuer’s qualifications,
expertise and their objectivity and we found no
evidence to suggest that their objectivity was
compromised in their performance of the valuations.
We carried out audit procedures, on a sample basis, to
test whether property-specific information supplied to
the valuer by the Group reflected the underlying
property records held by the Group.
PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
PwC
Independent Auditor's Report
161
●
●
●
●
●
●
Our audit approach
Overview
Independent auditor’s report
To the shareholders of SkyCity Entertainment Group Limited
An audit is designed to obtain reasonable assurance whether the financial
statements are free from material misstatement.
We have audited the financial statements on pages 164 to 223 which comprise:
the balance sheet as at 30 June 2020;
the income statement for the year then ended;
Overall Group materiality: $8 million, which represents approximately 5% of
average profit before tax from continuing operations over the past three years,
excluding the net gain on the Auckland car park concession transaction,
NZICC fire-related income, NZICC fire-related expenses and impairment of
the Adelaide casino licence.
the statement of comprehensive income for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended; and
We chose profit before tax from continuing operations, which is a generally
accepted benchmark, because in our view, it is the benchmark against which
the performance of the Group is most commonly measured by users.
the notes to the financial statements, which include a summary of significant accounting policies.
We chose to use an average of the last three years and to normalise it as
described above because, in our view, it provides a more stable measure of the
Group’s performance.
Our opinion
In our opinion, the accompanying financial statements of SkyCity Entertainment Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
As reported above, we have five key audit matters, being:
position of the Group as at 30 June 2020, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ
• Accounting for the NZICC fire
IFRS) and International Financial Reporting Standards (IFRS).
• Capital structure and funding liquidity, including the impact of COVID-19
•
Impairment considerations in respect of goodwill and other intangible
assets, including the impact of COVID-19
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
• Accounting for the sale of the Auckland car park concession
• Material uncertainty in investment property valuations relating to
COVID-19.
Materiality
The scope of our audit was influenced by our application of materiality.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
including the overall Group materiality for the financial statements as a whole as set out above. These,
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
together with qualitative considerations, helped us to determine the scope of our audit, the nature, timing
International Code of Ethics for Professional Accountants (including International Independence
and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
aggregate on the financial statements as a whole.
have fulfilled our other ethical responsibilities in accordance with these requirements.
Audit scope
We designed our audit by assessing the risks of material misstatement in the financial statements and our
application of materiality. As in all of our audits, we also addressed the risk of management override of
internal controls including among other matters, consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
Our firm carries out other non-audit services for the Group in the areas of tax compliance, tax advisory,
and the licensing of a software tool for subsidiary statutory financial statement preparation. Our firm
also carries out other assurance and agreed upon procedure services in relation to: compliance with
banking and USPP covenants; the allocation of Community Trust revenue; the Group's application for the
COVID-19 wage subsidy extension scheme; and the reconciliation of normalised results to reported
results. The provision of these other services has not impaired our independence as auditor of the Group.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion
on the financial statements as a whole, taking into account the structure of the Group, the accounting
processes and controls, and the industries in which the Group operates.
The structure of the Group means the majority of the audit work for the Group is performed by the New
Zealand Group audit team. Our Group audit team also included people based in Australia who supported
us in executing our audit procedures and brought knowledge of the trading environment and legal and
regulatory framework in Adelaide.
PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
PwC
162
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020
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Information other than the financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the financial statements does not
cover the other information included in the annual report and we do not express any form of assurance
conclusion on the other information.
Independent auditor’s report
To the shareholders of SkyCity Entertainment Group Limited
We have audited the financial statements on pages 164 to 223 which comprise:
the balance sheet as at 30 June 2020;
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
the statement of comprehensive income for the year then ended;
misstated. If, based on the work we have performed on the other information that we obtained prior to
the date of this auditor’s report, we conclude that there is a material misstatement of this other
the statement of changes in equity for the year then ended;
information, we are required to report that fact. We have nothing to report in this regard.
the income statement for the year then ended;
the statement of cash flows for the year then ended; and
●
●
●
●
●
●
the notes to the financial statements, which include a summary of significant accounting policies.
Responsibilities of the Directors for the financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the
financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Our opinion
In our opinion, the accompanying financial statements of SkyCity Entertainment Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 30 June 2020, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ
IFRS) and International Financial Reporting Standards (IFRS).
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (NZ) and ISAs will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
A further description of our responsibilities for the audit of the financial statements is located at the
External Reporting Board’s website at:
This description forms part of our auditor’s report.
Our firm carries out other non-audit services for the Group in the areas of tax compliance, tax advisory,
and the licensing of a software tool for subsidiary statutory financial statement preparation. Our firm
also carries out other assurance and agreed upon procedure services in relation to: compliance with
banking and USPP covenants; the allocation of Community Trust revenue; the Group's application for the
COVID-19 wage subsidy extension scheme; and the reconciliation of normalised results to reported
results. The provision of these other services has not impaired our independence as auditor of the Group.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken
so that we might state those matters which we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s shareholders, as a body, for our audit work, for this
report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Richard Day.
For and on behalf of:
Chartered Accountants
2 September 2020
PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
Auckland
PwC
Independent Auditor's Report
163
Income Statement
For the year ended 30 June 2020
Continuing Operations
Revenue
Other income
Net gain on the Auckland car park concession transaction
Government grants
Share of losses from associates
NZICC fire related income
NZICC fire related expenses
Employee benefits expense
Impairment of Adelaide casino licence
Other expenses
Directors' fees
Gaming taxes
Direct consumables
Marketing and communications
Community contributions, levies and sponsorships
Fair value loss on investment property
Earnings Before Interest, Tax, Depreciation
and Amortisation Expenses (EBITDA)
Depreciation and amortisation expense
Depreciation on right-of-use assets
Earnings Before Interest and Tax (EBIT)
Net finance costs
Profit Before Income Tax
Income tax benefit/(expense)
Profit from continuing operations
NOTES
3
5
4
5
6(a)
6(b)
24
7
15
7
10
11
18
2020
$'000
641,653
3,310
66,431
29,183
(83)
384,500
(108,090)
(284,867)
(160,600)
(97,134)
(900)
(30,254)
(54,376)
(16,045)
(10,382)
(14,055)
348,291
(85,446)
(1,114)
261,731
(28,613)
233,118
2,152
235,270
2019
$'000
802,265
20,799
–
–
(737)
–
–
(289,896)
–
(91,799)
(1,143)
(38,117)
(59,862)
(26,170)
(14,330)
(3,204)
297,806
(79,988)
–
217,818
(10,240)
207,578
(46,753)
160,825
Profit/(loss) from discontinued operations
30
118
(16,244)
Profit for the Year Attributable to Shareholders of the Company
235,388
144,581
Earnings per share for Profit Attributable
to the Shareholders of the Company
Basic and diluted earnings per share attributable
to continuing operations
Basic and diluted earnings per share attributable
to discontinued operations
Basic and diluted earnings per share
CENTS
CENTS
8
8
8
35.4
–
35.4
23.8
(2.4)
21.4
TheaboveIncomeStatementshouldbereadinconjunctionwiththeaccompanyingnotes.
164
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020
Statement of Comprehensive Income
For the year ended 30 June 2020
NOTES
Profit for the Year
Other comprehensive income
Items that will not be reclassified to profit or loss
Asset Revaluation Reserve
Asset revaluation reserve – revaluation on transfer to investment property
15, 31
Items that may be subsequently reclassified to profit or loss
Foreign Currency Translation Reserve
Exchange differences on translation of overseas subsidiaries
Transfer to Income Statement on disposal of discontinued operation
Cash flow Hedge Reserve
Cash flow hedges – revaluations
Cash flow hedges – transfer to finance costs
Cash flow hedges – income tax
Cost of Hedging Reserve
Cost of hedging reserve – costs incurred/revaluations
Cost of hedging reserve – transfer to finance costs
Cost of hedging reserve – income tax
Other Comprehensive Income for the Year, Net of Tax
Total Comprehensive Income for the Year
31
31
31
2020
$'000
235,388
5,936
5,936
6,285
–
9,154
(5,143)
(1,239)
(113)
462
(98)
9,308
15,244
250,632
Theabovestatementofcomprehensiveincomeshouldbereadinconjunctionwiththeaccompanyingnotes.
2019
$'000
144,581
–
–
(11,498)
27,864
3,986
(5,459)
279
(195)
462
(75)
15,364
15,364
159,945
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NOTES
14, 26
25
32
6(c)
27
23
24
4
32
15
19
10
6(d)
2020
$'000
54,224
42,252
53,288
6,628
1,989
49,571
11,019
218,971
1,528,902
649,531
–
10,574
23,100
72,400
6,877
51,967
227,000
2,570,351
2,789,322
2019
$'000
41,574
49,293
85
6,459
930
–
115,687
214,028
1,436,257
798,408
1,553
–
56,201
40,660
4,843
–
–
2,337,922
2,551,950
Balance Sheet
As at 30 June 2020
ASSETS
Current Assets
Cash and bank balances
Receivables and prepayments
Derivative financial instruments
Inventories
Current tax receivables
NZICC fire recoveries
PP&E classified as held for sale
Total Current Assets
Non-current Assets
Property, plant and equipment
Intangible assets
Investment in associate
Finance lease receivable
Derivative financial instruments
Investment properties
Deferred tax assets
Right-of-use asset
NZICC fire recoveries
Total Non-current Assets
Total Assets
166
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020
Balance Sheet (continued)
As at 30 June 2020
LIABILITIES
Current Liabilities
Payables and provisions
Interest bearing liabilities
Current tax liabilities
Derivative financial instruments
Lease liabilities
Deferred licence value
Total Current Liabilities
Non-current Liabilities
Interest bearing liabilities
Non-current payables
Lease income in advance
Derivative financial instruments
Deferred tax liabilities
Lease liabilities
Deferred licence value
Total Non-current Liabilities
Total Liabilities
Net Assets
EQUITY
Share capital
Reserves
Retained earnings
Total Equity
Theabovebalancesheetshouldbereadinconjunctionwiththeaccompanyingnotes.
NOTES
2020
$'000
2019
$'000
28
13, 14
32
10
16
221,842
302,509
776
6,113
485
153,165
684,890
228,112
49,127
14,653
784
–
–
292,676
12, 14
282,731
495,913
22
32
20
10
17
29
31
10,569
39,815
24,375
45,175
52,188
214,972
669,825
1,354,715
1,434,607
1,288,287
(33,321)
179,641
1,434,607
1,512
–
30,913
70,160
–
504,804
1,103,302
1,395,978
1,155,972
1,126,996
(48,565)
77,541
1,155,972
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Statement of Changes in Equity
For the year ended 30 June 2020
NOTES
SHARE
CAPITAL
RESERVES
RETAINED
EARNINGS
TOTAL EQUITY
Balance as at 1 July 2018
Adjustment on adoption of IFRS15
$'000
$'000
1,152,260
(63,929)
–
–
Restated balance at the beginning of the year
1,152,260
(63,929)
Total comprehensive income
Dividends paid
Shares issued under Dividend Reinvestment Plan
Share rights issued for employee service
Net movement in treasury shares
Buy back and cancellation of shares
Balance as at 30 June 2019
Balance as at 1 July 2019
Total comprehensive income
Dividends paid
Equity raising
Share rights issued for employee service
Net movement in treasury shares
Buy back and cancellation of shares
9
29
29
29
29
9
29
29
29
29
–
–
8,591
4,540
397
(38,792)
1,126,996
1,126,996
–
–
177,160
3,698
436
(20,003)
15,364
–
–
–
–
–
$'000
69,695
(1,046)
68,649
144,581
$'000
1,158,026
(1,046)
1,156,980
159,945
(135,689)
(135,689)
–
–
–
–
8,591
4,540
397
(38,792)
1,155,972
1,155,972
(48,565)
(48,565)
77,541
77,541
15,244
235,388
250,632
–
–
–
–
–
(133,288)
(133,288)
–
–
–
–
177,160
3,698
436
(20,003)
Balance as at 30 June 2020
1,288,287
(33,321)
179,641
1,434,607
Theabovestatementofchangesinequityshouldbereadinconjunctionwiththeaccompanyingnotes.
168
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 Statement of Cash Flows
For the year ended 30 June 2020
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Government grants
Gaming taxes and levies paid
Income taxes paid
NOTES
Net Cash Inflow from Operating Activities
39
Cash Flows from Investing Activities
Disposal of business
Cash and bank balances disposed as part of discontinued operations
Disposal of Federal Street car park
Net purchase of property, plant and equipment
Payments for investment property
Auckland car park concession disposal
Payments for intangible assets
NZICC fire related income
NZICC fire related costs
Lease income received in advance
Net Cash Outflow from Investing Activities
Cash Flows from Financing Activities
Issue of new share capital
Cash flows associated with derivatives
New borrowings
Repayment of borrowings
Net issue of treasury shares
Dividends paid to company shareholders
9
Interest paid
Buy back of shares
Repayment of lease liabilities
Net Cash Outflow from Financing Activities
Net Increase/(Decrease) in Cash and Bank Balances
Cash and bank balances at the beginning of the year
Cash and Bank Balances at the End of the Year
14, 26
Theabovestatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotes.
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2020
$'000
655,470
(480,613)
27,354
202,211
(40,988)
(41,057)
120,166
–
–
–
(324,625)
(2,252)
128,946
(20,515)
106,000
(26,638)
39,815
(99,269)
177,160
(2,327)
45,814
(34,127)
–
(133,288)
(41,444)
(19,566)
(469)
(8,247)
12,650
41,574
54,224
2019
$'000
860,352
(498,602)
–
361,750
(58,800)
(50,626)
252,324
197,065
(12,204)
40,000
(303,651)
(8,564)
–
(29,129)
–
–
–
(116,483)
–
3,540
28,000
–
397
(127,098)
(37,787)
(37,274)
–
(170,222)
(34,381)
75,955
41,574
169
1 Summary of Significant
Accounting Policies
SkyCity Entertainment Group Limited (SkyCity or
the company and its subsidiaries or the Group)
operates in the gaming, entertainment, hotel,
convention, hospitality and tourism sectors.
The Group has operations in New Zealand
and Australia.
SkyCity is a limited liability company incorporated
and domiciled in New Zealand. The address of
its registered office is 99 Albert Street, Auckland.
The company is dual-listed on the New Zealand and
Australian stock exchanges.
These consolidated financial statements were
approved for issue by the Board of Directors on
2 September 2020.
(a) Basis of Preparation
The financial statements of the Group have been
prepared in accordance with Generally Accepted
Accounting Practice (GAAP). They comply with
New Zealand Equivalents to International Financial
Reporting Standards (NZ IFRS) and other applicable
Financial Reporting Standards, as applicable to
for-profit entities. The financial statements also
comply with International Financial Reporting
Standards (IFRS).
The Group is designated as a for-profit entity for
financial reporting purposes.
The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of the
Group as at 30 June 2020 and the results of all
subsidiaries for the year then ended.
Going Concern
There are inherent uncertainties in both
New Zealand and Australia relating to COVID-19,
the impact of continued border closures and the
extent of the deterioration in general economic
conditions. Accordingly, the Directors consider
it appropriate to take a cautious outlook for the
prospects of SkyCity's businesses. The Directors are
of the view that these factors will continue to have a
negative impact on the Group’s earnings in the near
term compared to previous expectations.
In response, the Group has taken the following
measures to ensure the business has adequate
liquidity available and to ensure SkyCity continues
to be a going concern:
•
introduced cost control measures such as
reducing the New Zealand workforce by
approximately 25% to right-size the business to
the expected new level of customer demand;
•
•
•
•
•
•
cancelled or deferred some capital and
operating spend;
applied for and received the New Zealand
Government wage subsidy and the Australian
JobKeeper payment;
raised $230 million of additional equity in June
and July 2020;
restructured bank debt to increase available
facilities and extend maturities;
obtained covenant waivers and amendments
from banks and USPP noteholders; and
announced the early redemption of the
New Zealand bonds in September 2020 to
avoid the risk of breaching financial covenants
associated with the bonds.
Notwithstanding the uncertainties around
forecasting earnings in the COVID-19 environment,
the directors have concluded there are no
material uncertainties related to SkyCity being
a going concern. Accordingly, the directors have
concluded that it is appropriate that these financial
statements continue to be prepared on a going
concern basis.
The Group has a negative working capital balance of
$466 million, largely as a result of the classification
of some debt as current liabilities and transfer of
Adelaide's deferred licence value from non-current
to current liabilities. The Group has significant
available undrawn committed banking facilities
totalling $405 million as at 30 June 2020 (refer to
note 12) and has the ability to fully pay all debts as
they fall due.
Statutory Base
SkyCity Entertainment Group Limited is a company
registered under the Companies Act 1993 and is a
FMC reporting entity under Part 7 of the Financial
Markets Conduct Act 2013. The financial statements
of the Group have been prepared in accordance
with the requirements of Part 7 of the Financial
Markets Conduct Act 2013 and the NZX Main Board
Listing Rules.
Measurement Basis
These financial statements have been prepared
under the historical cost convention, as modified by
the revaluation of financial assets and liabilities and
investment properties at fair value through profit
or loss.
Non-GAAP Financial Information
The Group’s standard profit measure prepared
under New Zealand Generally Accepted Accounting
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Practice (GAAP) is profit for the year, or net profit
after tax. The Group also uses non-GAAP financial
information which is not prepared in accordance
with New Zealand International Financial Reporting
Standards (NZ IFRS) when discussing financial
performance. The directors and management
believe that this non-GAAP financial information
provides useful information to readers of the
financial statements to assist in the understanding
of the Group’s financial performance and is
consistent with the information used internally to
evaluate the performance of business units.
Definitions of non-GAAP financial information used
in these financial statements are:
•
EBITDA: earnings before interest, tax,
depreciation and amortisation; and
• EBIT: earnings before interest and tax.
Critical Accounting Estimates and Judgements
The preparation of financial statements requires
the use of certain critical accounting estimates.
It also requires the company to exercise its
judgement in the process of applying the Group’s
accounting policies.
Impairment Tests
Judgement is used in the determination of the
recoverable amount of goodwill and indefinite
useful life casino licences.
The Group tests annually whether goodwill and
indefinite useful life licences have suffered any
impairment, in accordance with the accounting
policy stated in note 24. The recoverable amounts of
cash-generating units have been determined based
on value in use calculations. These calculations
require the use of estimates.
There is sufficient headroom between the value
in use calculations and the carrying value of the
related cash generating units' assets that significant
changes in the assumptions used would not require
an impairment.
Professional judgement has been made to treat
the entire Auckland precinct as a single cash
generating unit given the close and interconnected
relationship of the cash flows across all of
SkyCity’s Auckland businesses.
Impairment testing has also been completed on
the Adelaide casino licence (an amortising asset).
Judgement was used to determine the valuation
and resulting impairment charge. The assessment
was prepared using a fair value less costs of disposal
approach and is discussed further in note 24.
New Zealand International Convention Centre
Matters
Judgement has been used in determining
the appropriate accounting consequences
of the New Zealand International
Convention Centre (NZICC) fire, including
the following:
•
•
•
•
•
the nature of the contractual relationships
between the Group, Fletcher Construction
Company Limited (FCC) and the insurers;
the extent of the damage resulting from the fire,
including an initial assessment of the extent of
damage to the structural steel;
the estimated cost of rebuilding the damaged
portion of the impacted buildings;
timing of the remediation work; and
likelihood of recovery by the Group for the costs
associated with the fire.
These are discussed further in note 6.
Judgement has been used in determining the
appropriate accounting for liquidated damages
arising from delays in the construction of the NZICC
and Horizon Hotel (note 37) and the closure of the
Nelson Street car park access tunnel (note 6).
Auckland Car Park Concession Transaction
Judgement has been used in determining
the accounting treatment as a finance lease
of a significant part of the Auckland car park
concession (which was sold during the period).
The determination of the finance lease accounting
required the use of estimates including determining
the fair value of the car parks immediately before
the transaction, the fair value of exclusive use car
parks and the calculation of the carrying value
of the existing car park assets. Further details are
provided in note 4.
Investment Properties – Valuations
The Group carries its investment properties at fair
value, with changes in fair value being recognised in
profit or loss. The Group engaged an independent
valuation expert to assess fair values as at 30 June
2020 for the investment properties. The valuer notes
in their valuations of investment property that there
is currently material valuation uncertainty as a result
of COVID-19. Further details are provided in note 15.
COVID-19 Impacts
Judgement has been used in determining the
appropriate accounting consequences of the
impacts of COVID-19 on a number of account
balances. These impacts are discussed further in
note 1(h).
Notes to the Financial Statements
171
(b) Principles of Consolidation
(iii) Foreign Operations
(i) Subsidiaries
Subsidiaries are all entities (including structured
entities) over which the Group has control.
The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability
to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the
Group. They are deconsolidated from the date that
control ceases.
Inter-company transactions, balances and
unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are
also eliminated. When necessary, amounts reported
by subsidiaries have been adjusted to conform with
the Group's accounting policies.
(c) Foreign Currency Translation
The results and financial position of foreign
entities (none of which has the currency of a
hyperinflationary economy) that have a functional
currency different from the presentation currency
are translated into the presentation currency as
outlined below:
•
•
•
assets and liabilities for each balance sheet
presented are translated at the closing rate at
the date of that balance sheet;
income and expenses for each income statement
are translated at average exchange rates; and
all resulting exchange differences are recognised
in other comprehensive income.
Exchange differences arising from the translation
of any net investment in foreign entities, and
of borrowings and other currency instruments
designated as hedges of such investments, are
taken to shareholders' equity.
(i) Functional and Presentation Currency
(d) Goods and Services Tax (GST)
The Income Statement, Statement of Cash
Flows, Statement of Comprehensive Income
and Statement of Changes in Equity have been
prepared so that all components are stated
exclusive of GST. All items in the Balance Sheet are
stated net of GST, with the exception of receivables
and payables, which include GST invoiced.
(e) Statement of Cash Flows
Cash flows associated with derivatives that are part
of a hedging relationship are off-set against cash
flows associated with the hedged item.
(f) New Accounting Standards Adopted
in the Year
Other than the adoption of NZ IFRS 16 Leases,
the accounting policies that materially affect
the measurement of the Income Statement,
Statement of Comprehensive Income, Balance
Sheet, Statement of Changes in Equity and the
Statement of Cash Flows have been applied on a
basis consistent with prior year.
Items included in the financial statements of
each Group Company's operations are measured
using the currency that best reflects the
economic substance of the underlying events
and circumstances relevant to that operation
(functional currency). The consolidated financial
statements are presented in New Zealand dollars
which is the Group's presentation currency.
(ii) Transactions and Balances
Foreign currency transactions are translated
into the functional currency using the exchange
rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from
the settlement of such transactions and from the
translation at year end exchange rates of monetary
assets and liabilities denominated in foreign
currencies are recognised in the Income Statement,
except when deferred in other comprehensive
income as qualifying cash flow hedges and
qualifying net investment hedges.
Translation differences on financial assets and
liabilities carried at fair value through profit and loss
are recognised in the Income Statement as part of
the fair value gain or loss. Translation differences
on non-monetary financial assets such as equity
classified at fair value through other comprehensive
income are included in the Statement of
Comprehensive Income.
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With effect from 1 July 2019, the Group adopted
NZ IFRS 16 Leases. The effect of this was to create as
at 1 July 2019 Right-Of-Use Assets of $50.8 million
and recognise Lease Liabilities of $50.8 million
(calculated based on a weighted average
incremental borrowing rate of 5.87%).
•
•
reduce Net Profit After Taxation by
approximately $0.5m; and
lease payments are no longer part of operating
cash flows but are included within financing
cash flows.
The impact on the FY20 Income Statement was to:
•
•
•
reduce operating expenses by approximately
$3.6 million;
increase depreciation by approximately $1.1 million;
increase finance costs by approximately
$3.1 million;
The above has no cash effect to the Group and the
change is for financial reporting purposes only.
The Group adopted the simplified transition
approach under NZ IFRS 16 in the year ended
30 June 2020 and did not restate comparative
amounts for 2019.
Measurement of Lease Liabilities
Operating lease commitments disclosed as at 30 June 2019
Discounted using the incremental borrowing rates
Lease liability recognised as at 1 July 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
$'000
358,263
50,821
50,821
707
50,114
50,821
(g) Standards, Amendments and Interpretations
(h) Significant Transactions During the Year
to Existing Standards that are not
yet Effective
There are no new standards, amendments and
interpretations to existing standards that have
been published that are mandatory for the
Group’s accounting periods beginning on or after
1 July 2020 or later periods that would have a
material impact.
New Zealand International Convention Centre Fire
On 22 October 2019, there was a significant fire
at the construction site of the New Zealand
International Convention Centre (NZICC)
in Auckland. This fire has caused extensive damage
to the NZICC and relatively minor damage to
Horizon Hotel which is being constructed on the
adjacent site. To date, it has not been possible to
complete a full assessment of the extent of damage
caused by the fire. The Group has engaged an
independent expert to estimate the likely extent
of damage. The expert does not yet have sufficient
information to complete a full assessment.
Notes to the Financial Statements
173
The following table summarises the impact of the NZICC fire:
ITEM
NZICC IMPACT
NZICC Fire Related Income
NZICC Fire Related Expenses
Cost Capitalisation
Estimated insurance proceeds to cover the full
reinstatement to the pre-fire condition have been
recognised as income.
Insurance proceeds for other costs incurred (business
interruption costs, site preparation and clearing costs,
payments under the Auckland car park concession
agreement and other ongoing costs as a result of the fire)
are recognised as income when the costs are incurred.
Damaged/destroyed components have been recognised as
an expense, partially offset by a transfer from the deferred
licence value.
Other costs as a result of the fire are expensed as incurred.
Capitalisation of borrowing costs and some internal costs
associated with the NZICC and Horizon Hotel has been
suspended.
Property, Plant and Equipment
Damaged/destroyed components of both buildings have
been derecognised.
Deferred Licence Value
Insurance Proceeds
Liquidated Damages
Auckland Car Park Concession
NZICC Long Stop Date
Partial release of the deferred licence value for the NZICC
based on the percentage of the building damaged.
Estimated insurance proceeds to cover the full
reinstatement to the pre-fire condition have been
recognised as a receivable on the Balance Sheet.
Insurance proceeds to cover the cost of site clean-up and
preparation have been recognised as the underlying costs
are incurred.
Recognition of liquidated damages for the closure of the
Nelson Street car park access tunnel.
Accounting treatment for the previously announced sale
of the Auckland car park concession has been updated to
reflect the delays to completion of the NZICC car park.
The Crown has agreed to an extension of the Completion
Long Stop date included in the New Zealand International
Convention Centre Project and Licensing Agreement.
The revised date is now 2 January 2025 (previously
1 January 2023).
SkyCity expects to complete the NZICC before this date.
The accounting impact of the NZICC fire is discussed in detail in note 6.
NOTE
6
6
6
23
17
6
6
4
174
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Partial Lease of the Existing Auckland
Convention Centre
With effect from 31 October 2019, portions of the
existing Auckland convention centre have been
leased to All Blacks Experience Limited and Weta
Workshop Limited. As a result, this portion of the
existing convention centre has been reclassified
as Investment Property. Immediately before
reclassification, this portion of the building
was revalued.
This has resulted in the following adjustments as at
31 October 2019:
•
•
•
a reduction in Property, Plant and Equipment of
$10.5 million (refer note 23);
an increase in Investment Properties of
$16.4 million (refer note 15); and
an increase in the Asset Revaluation Reserve of
$5.9 million (refer note 31).
A further revaluation was completed as at
30 June 2020 which resulted in a fair value loss of
$5.3 million.
Auckland Car Park Concession Transaction
On 4 April 2019, the Group announced it had
entered into a binding, conditional agreement
to sell a long term concession to 2048 over the
Auckland car parks to Macquarie Principal Finance
Group (Macquarie) for $220.0 million, to be paid
upfront in a lump sum on completion.
The Auckland car park concession transaction was
completed on 19 August 2019 and is discussed in
note 4.
Share Buy Back
In February 2019, the Group announced an
on market share buy back of up to 5.0% of its
total shares during 2019. During the year ended
30 June 2020, the Group purchased and cancelled
$20.0 million of shares. Since the announcement
in February 2019, a total amount of $58.7 million
of shares have been purchased and cancelled.
The effect of this is shown in note 29.
Liquidated Damages
Included within the FCC construction contracts
for the NZICC and Horizon Hotel is the right to
liquidated damages if certain milestones are
not met.
As at 30 June 2020, SkyCity had withheld
$39.5 million from payments to FCC for liquidated
damages. This is treated as a contingent asset and
further details are provided in note 37.
COVID-19
On 11 March 2020, the World Health
Organization declared a global pandemic
as a result of the outbreak and spread of
COVID-19. On 23 March 2020, SkyCity closed
all its New Zealand and Adelaide properties.
The New Zealand properties reopened on
14 May 2020, with the exception of Wharf Casino
in Queenstown which currently remains closed.
SkyCity Adelaide reopened on 29 June 2020 as part
of the South Australian Government’s three-stage
approach to easing the COVID-19 restrictions.
A number of decisions and actions have had to be
taken to mitigate the impacts of these events:
•
•
•
•
significant operational effort has gone into
closing and reopening SkyCity's properties with
rigorous health and safety measures in place;
SkyCity rapidly restructured its New Zealand
workforce, downsizing it by around 25% to
ensure SkyCity continued to be sustainable as a
smaller domestically focused business;
SkyCity implemented other cost and capital
saving initiatives; and
SkyCity undertook an equity raising, arranged
new bank facilities and secured covenant waivers
to ensure that it has sufficient liquidity and
funding capacity.
These actions mean that SkyCity is now well
positioned to manage ongoing future risks
associated with COVID-19. SkyCity has also been
aided by government responses in the form of
wage subsidies and other assistance measures.
SkyCity's core domestic gaming business is resilient
and has rapidly returned to being cash positive and
profitable. Other businesses that are more reliant
on international visitors (including international
VIP gaming, hotels and restaurants) are likely to fully
recover only when international borders reopen.
Development work on the SkyCity Adelaide
expansion and hotel projects and associated master
planning projects was able to continue over the
period due to construction being deemed as an
essential service in Australia. Work recommenced
in late May 2020 on the NZICC and Horizon Hotel
projects following the move to Alert Level 3
of the COVID-19 Alert system in New Zealand.
The Horizon Hotel is now expected to be delivered
during 2021 and the NZICC is now expected to be
completed during 2023.
Notes to the Financial Statements
175
The equity raising completed in July 2020 ensures that the major projects under construction remain
fully funded and that SkyCity is also able to continue with smaller projects that will enhance operations.
Following the equity raising and the arrangement of new bank facilities, SkyCity now has significant liquidity
available should the COVID-19 situation worsen. Dividends are currently suspended as a requirement of the
covenant waivers and amendments.
A summary of the accounting impacts of COVID-19 on the Group is set out below:
ITEM
COVID‑19 IMPACTS
NOTE
Closure of SkyCity's
Land-based Casinos
New Zealand casinos closed on 23 March 2020 and,
with the exception of Wharf Casino, reopened on
14 May 2020. SkyCity Adelaide closed on 23 March 2020
and reopened on 29 June 2020.
Reduction in Revenues
The closure of SkyCity's casinos has significantly
reduced revenues.
3
To highlight the extent of the reduced revenues,
total revenues in the relevant comparative periods
(New Zealand properties: 23 March 2019 to 13 May 2019;
SkyCity Adelaide: 23 March 2019 to 28 June 2019; and
International Business 1 March 2019 to 30 June 2019
(reflecting the period of international travel restrictions))
are estimated at approximately $170 million.
The Group has applied for, and received, the New Zealand
Government wage subsidy and the Australian JobKeeper
payment.
5
Total payments relating to the year ended 30 June 2020
were $29.2 million.
Over the period of closure, New Zealand salaried staff
who continued to work received their full salary (less
any voluntary contribution to a staff hardship fund).
Salaried staff were requested to take annual leave over
the lockdown period if they were not able to work.
New Zealand waged and casual employees who were
unable to work received 80% of their average earnings.
They were able to top this up to 100% of their average
earnings by taking paid leave. New Zealand waged
employees who were able to work received their
normal pay.
Over the period of closure, around 90% of Australian
staff were fully stood down and the remaining 10%
of employees were partially stood down on reduced
hours. 80% of Australian staff were eligible for the
JobKeeper payment.
As a result of payment difficulties for a small number
of customers, a provision against International Business
debtors of $5.7 million has been included within the
Income Statement.
There has been a decline in the fair value of investment
properties due to the expected reaction of the property
market to COVID-19.
25
15
The valuer has also noted material valuation uncertainty
in determining the fair value of the Group's investment
properties given the potentially material and unknown
impact of COVID-19. The valuer has recommended
frequent reviews of the valuations for changes in the
underlying assumptions.
Government Grants
Employment Costs
Receivables
Investment Properties
176
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 ITEM
COVID‑19 IMPACTS
Property, Plant and Equipment
Various capital projects have been delayed, placed on hold
or terminated. Costs of delays have been included in the
carrying value of Property, Plant and Equipment.
Costs incurred to date on terminated projects have been
written off in the current year.
NOTE
23
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Intangible Assets
Tax Expense and Deferred Tax
Liabilities
Funding Plan
An impairment of the Adelaide casino licence has been
recognised in the current year. In the absence of COVID-19
it was very likely that an impairment of the Adelaide casino
licence would still have been required. However, COVID-19
has increased the size of the impairment recognised.
24
The impacts of COVID-19 have also reduced the valuation
surpluses associated with the Auckland and Hamilton
intangible assets (although these continue to be strongly
positive).
During the year, the New Zealand Government
reintroduced depreciation on industrial and commercial
buildings for tax purposes. The change applies from
1 July 2020 and the Group has elected to use the 2%
diminishing value basis depreciation rate.
18, 20
As a result, the tax base of the Group’s buildings as at
30 June 2020 increased by $86.1 million. The resulting
difference between the accounting carrying value and the
reinstated tax base gave rise to a reduction in deferred tax
liabilities and a reduction in tax expense of $24.1 million.
A comprehensive funding plan was announced on
17 June 2020 to strengthen the Group's balance sheet
and secure additional liquidity in response to uncertainty
around future impacts of COVID-19:
12, 29
•
•
•
•
•
raised $230 million of additional equity in June and
July 2020;
restructured bank debt to increase available facilities
and extend maturities;
obtained covenant waivers and amendments from
banks and USPP noteholders;
announced the early redemption of the New Zealand
bonds in September 2020 to avoid the risk of breaching
financial covenants associated with the bonds; and
suspended dividends for the period of covenant
waivers/relief.
Notes to the Financial Statements
177
2 Segment Information
Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision maker. The chief operating decision maker has been identified as the
Chief Executive Officer (CEO).
Prior period disclosures have been adjusted to treat the NZICC as part of the Auckland segment to align
with the current period.
(a) Primary Reporting Format – Business Segments
SKYCITY
AUCKLAND
OTHER NZ
OPERATIONS
SKYCITY
ADELAIDE
SKYCITY
DARWIN
INTERNATIONAL
BUSINESS
CORPORATE
/GROUP
TOTAL
$'000
$'000
$'000
$'000
$'000
$'000
$'000
2020
Gaming revenue
312,282
51,554
90,995
Online revenue
Non-gaming revenue
NZICC fire income
Sale of Auckland car park
concession
–
138,680
384,500
66,431
4,521
11,166
–
–
–
27,151
–
–
Total revenue
901,893
67,241
118,146
Shares of net profits/(losses)
of associates
–
(83)
–
Expenses
(292,198)
(41,625)
(107,126)
Adelaide casino licence
impairment
–
NZICC fire expenses
(108,090)
–
–
(160,600)**
–
Depreciation and amortisation
(46,073)
(6,159)
(19,090)
Segment profit/(loss) (EBIT)
455,532
19,374
(168,670)
Net finance costs (including
discontinued operations)
Profit before income tax
Plus: Discontinued operations
before tax (note 30)
Profit before income tax from
continuing operations
Segment assets
1,738,081
100,891
617,139
Net additions to non-current
assets (other than financial
assets and deferred tax)
147,380
9,573
229,369
*Includesrebatesandcomplimentaryplay.
**EquivalenttoA$150million.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
75,948*
–
8
–
–
–
–
530,779
4,521
1,144
178,149
–
–
384,500
66,431
75,956
1,144
1,164,380
–
–
(83)
(72,184)
(34,183)
(547,316)
–
–
–
–
–
(160,600)**
(108,090)
(15,238)
(86,560)
3,772
(48,277)
261,731
(28,613)
233,118
118
233,236
–
–
333,211
2,789,322
19,692
406,014
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AUCKLAND
OTHER NZ
OPERATIONS
SKYCITY
ADELAIDE
SKYCITY
DARWIN
INTERNATIONAL
BUSINESS
CORPORATE
/GROUP
TOTAL
$'000
$'000
$'000
$'000
$'000
$'000
$'000
2019
Gaming revenue
378,061
56,533
124,801
60,699
122,580
Non-gaming revenue
189,862
9,922
21,101
22,402
36
Total revenue
567,923
66,455
145,902
83,101
122,616
Shares of net profits/(losses)
of associates
–
(737)
–
–
–
–
–
–
–
742,674
243,323
985,997
(737)
Expenses
(290,153)
(37,160)
(123,566)
(62,679)
(119,610)
(33,848)
(667,016)
Depreciation and amortisation
(47,436)
(5,390)
(17,687)
(4,711)
–
(9,474)
(84,698)
Segment profit/(loss) (EBIT)
230,334
23,168
4,649
15,711
3,006
(43,322)
233,546
Net finance costs (including
discontinued operations)
Profit before income tax
Less: Discontinued operations
before tax (note 30)
Profit before income tax from
continuing operations
(10,212)
223,334
(15,756)
207,578
Segment assets
1,647,453
101,584
548,778
–
Net additions to non-current
assets (other than financial
assets and deferred tax)
261,636
20,490
73,075
3,933
–
–
254,135 2,551,950
30,183
389,317
(b) Secondary Reporting Format – Geographical Segments
New Zealand
Australia
TOTAL REVENUE
NON‑CURRENT ASSETS
EXCLUDING FINANCIAL
INSTRUMENTS AND
DEFERRED TAX ASSETS
2020
$'000
2019
$'000
2020
$'000
2019
$'000
1,021,158
749,699
1,951,348
1,736,037
143,222
236,298
589,026
540,841
1,164,380
985,997
2,540,374
2,276,878
Notes to the Financial Statements
179
(c) Description of Segments
SkyCity Darwin
Management has determined the operating
segments based on the reports reviewed by the
Chief Executive Officer (CEO) that are used to assess
performance and allocate resources.
The Group is organised into the following main
operating segments:
In 2019, SkyCity Darwin has been treated as a
discontinued operation within the financial
statements. For internal management reporting
purposes, SkyCity Darwin continued to be reported
to the CEO on the same basis as previously and
therefore the segment information note has been
prepared on a consistent basis with prior periods.
SkyCity Auckland
SkyCity Auckland includes casino operations, hotels
and convention, food and beverage, car parking,
Sky Tower, investment properties and a number of
other related activities, and excludes International
Business operations.
The Group's interest in the NZICC is also
included here.
Other New Zealand Operations
International Business
The International Business segment is made up
of gaming operations for international customers
sourced mainly from Asia. The revenue is generated
at SkyCity's Auckland, Darwin (2019 only),
Adelaide, Queenstown and Hamilton properties.
The results of the segment includes rebates and
complimentary play. No assets are allocated to
this segment.
Other operations include SkyCity Hamilton,
SkyCity Queenstown, SkyCity Wharf, Lets Play Live
Media, SkyCity Online Casino and associates.
Corporate/Group
Includes head office functions and funding entities
and is not considered an operating segment.
SkyCity Adelaide
SkyCity Adelaide includes casino operations
and food and beverage, and excludes
International Business operations.
3 Revenue
Accounting Policy
Gaming revenue represents the net win to the casino from gaming activities, being the difference between
amounts wagered and amounts won by casino patrons. International Business rebates are treated as a
reduction in revenue.
Non-gaming revenue includes hotel and convention, food and beverage, Sky Tower, car parking and other
revenues. These are recognised when the goods are provided or services are rendered.
Gaming
Non-gaming
Online
Total revenue
2020
$'000
491,477
145,655
4,521
641,653
2019
$'000
601,696
200,569
–
802,265
The Group also provides complimentary hotel accommodation, food and beverage and other promotions to
certain groups of customers and it is not practical to separate the related revenues from gaming revenues.
Retail values of such complimentary items amounted to $19.5 million (2019: $30.9 million).
180
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3,310
29,183
39,303
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66,431
384,500
1,164,380
2020
$'000
66,431
66,431
2019
$'000
802,265
20,799
–
80,269
82,664
–
–
985,997
2019
$'000
–
–
Reconciliation to the segment note
Total revenue
Other income
Government grants
International Business rebates
Darwin – discontinued operations
Gain on sale of Auckland car park concession
NZICC fire income
Total revenue as per segment note
NOTES
3
5
5
4
6
4 Auckland Car Park Concession Transaction
•
•
•
Net gain on sale of the Auckland car park concession transaction
On 4 April 2019, the Group announced it had
entered into a binding, conditional agreement
to sell a long term concession to 2048 over the
Auckland car parks to Macquarie for $220.0 million,
to be paid upfront in a lump sum on completion.
The agreement:
gives Macquarie the right to undertake
the operations and management of the
approximately 3,200 car parks under the existing
Auckland casino/hotel complex and the NZICC
currently under construction, with all economic
benefit of ownership passed to Macquarie for the
concession period;
On 19 August 2019, the Auckland car park
concession transaction was completed and SkyCity
received $220.0 million. Macquarie took over the
main site car park and the initial 600 NZICC car
parks and was to be provided with approximately
650 further NZICC car parks no later than
31 December 2020.
Nested Car Parks
The Group has determined that it retains the
significant risks and rewards of ownership of
these car parks and therefore this part of the
concession payment should be accounted for as a
financial liability.
provides SkyCity with exclusive access to 450 car
parks, which will be used for VIP customers, to be
paid for by SkyCity irrespective of use (these are
known as the “nested car parks”); and
As a result of this determination, on settlement
of the transaction, $45.8 million of the $220.0
million concession payment was treated as a
financial liability.
provides SkyCity with non exclusive access to
further car parks at agreed rates on a pay per
use basis (these are known as the “unnested car
parks”), which will also be available to the public.
Notes to the Financial Statements
181
Main Site and Initial 600 NZICC Unnested Car
Parks
Remaining Approximately 650 Further NZICC
Unnested Car Parks
The Group has determined, based on an evaluation
of the terms and conditions of the arrangement,
including the proportion of the $220.0 million
concession payment relating to these car parks
amounting to substantially all of the fair value
of these car parks, that substantially all the
significant risks and rewards of ownership of these
unnested car parks passed to the concession
holder on 19 August 2019. Therefore, this part of the
concession payment has been accounted for as a
finance lease (note 13).
As a result of this determination, as at
19 August 2019:
•
•
•
•
•
the current carrying value of these car parks of
$96.6 million was derecognised;
a finance lease receivable of $133.2 million for
these car parks was recognised and immediately
settled in cash by the upfront payment;
a finance lease receivable of $9.9 million was
recognised for the residual value of these car
parks (the value beyond the period of the
concession term);
an adjustment to the Deferred Licence
Value liability associated with the NZICC of
$24.2 million was recognised in the Income
Statement (note 17); and
a resulting gain of $66.4 million was recognised
in the Income Statement.
In determining the carrying value, judgement
was required to distinguish the value of the
unnested car parks from the value of the Auckland
casino/hotel asset. Judgement was also required
to determine the carrying value of the initial
600 NZICC car parks.
As detailed in the NZICC fire note 6, the Group is
unable to determine when these car parks will be
provided to Macquarie.
A final determination as to whether the lease
relating to the approximately 650 car parks is an
operating lease or finance lease will be made when
the car parks are finally provided to Macquarie.
If this date is after 31 December 2020 (as expected),
delay payments to Macquarie that are required to
be made from that date will be deducted from the
$39.8 million allocation of the concession payment
for the purposes of making the lease determination.
As a result, the Group is treating $39.8 million of the
$220.0 million concession payment as lease income
received in advance.
Given the delay in providing these car parks to
Macquarie, this part of the concession is likely to
be treated as an operating lease and these car
parks will be treated as an investment property.
In the current year $27.1 million of costs associated
with these car parks have been transferred from
Property, Plant and Equipment (note 23) to
investment properties (note 15).
Comparison to 30 June 2019 Financial Statements
The accounting outlined above for the Auckland
car park concession transaction differs from that
disclosed in the 30 June 2019 financial statements
as a result of the NZICC fire. Refer to note 6 for
more details.
182
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 5 Other Income
Net gain on disposal of property, plant and equipment
Dividend income
Rental income from investment properties
Government grants
Government Grants
New Zealand
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$'000
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9
2,953
29,183
32,493
2019
$'000
18,453
8
2,338
–
20,799
As part of its COVID-19 response, the New Zealand Government introduced a wage subsidy covering an
initial 12-week period from application for companies with a greater than 30% reduction in revenue as a
result of COVID-19.
SkyCity made two claims for this subsidy in the year ended 30 June 2020:
• $15.4 million primarily relating to waged staff covering the period 30 March to 19 June 2020; and
•
$6.4 million primarily relating to salaried staff covering the period 20 April to 10 July 2020 (this has been
allocated between this financial year and the year ending 30 June 2021).
The New Zealand Government extended the wage subsidy for a further 8 weeks, after the initial 12 weeks, for
companies with a greater than 40% reduction in revenue in the 30 days preceding the second application.
In July 2020, SkyCity made an application for the extended wage subsidy, which will be accounted for in the
2021 financial statements.
Adelaide
The Australian Government introduced the JobKeeper Payment plan which is effective until
30 September 2020. Under this plan, eligible companies receive A$1,500 per fortnight per eligible employee
provided the company has paid its employee at least this amount. In the current financial year, SkyCity has
received or accrued $8.3 million (A$7.8 million).
Notes to the Financial Statements
183
6 NZICC Fire
On 22 October 2019, there was a significant fire
at the construction site of the NZICC in Auckland.
This fire has caused extensive damage to the NZICC
and relatively minor damage to Horizon Hotel
which is being constructed on the adjacent site.
To date, it has not been possible to complete a full
assessment of the extent of damage caused by
the fire. The Group has engaged an independent
expert to estimate the likely extent of damage.
The expert does not yet have sufficient information
to complete a full assessment.
Both buildings are insured and all significant
costs associated with the fire are expected to be
fully covered. Any costs not covered by insurance are
expected to be sought from Fletcher Construction
Company Limited (FCC or the Contractor) who is the
contractor constructing both buildings.
As noted above, at this point in time a full
assessment of the damage is not available, nor is an
agreed reconstruction timeline available. As a result,
these financial statements include a number of
significant judgements and estimates to determine
the appropriate accounting. The estimated damage
assessment and cost of remediation is particularly
sensitive to the assessment of the extent of
damage to the structural steel. These judgements
and estimates will continue to be reviewed as
new information becomes available. It is possible
that the actual financial impacts will differ from
those included in these financial statements and
these differences may be material. Details of the
judgements and estimates made are provided in
the following parts of this note.
The Group has engaged external expert advisers to
assist in determining the appropriate treatment of
the NZICC fire. A technical accounting expert has
been appointed to assist with accounting advice
and Rider Levett Bucknall Auckland Limited (RLB)
has been appointed to assist with assessing the
NZICC damage and cost of remediation.
Cessation of Capitalisation of Borrowing Costs
and Some Internal Costs
With effect from 22 October 2019, interest
capitalisation on both the NZICC and Horizon Hotel
developments has ceased. From 1 July 2019 to
22 October 2019, $9.6 million of interest was
capitalised. No decision has been made as to when
interest capitalisation will recommence.
Accounting Treatment for the Previously
Announced Auckland Car Park Concession
Transaction
The impact of the planned Auckland car park
concession transaction was disclosed in note 2(a) of
the 30 June 2019 financial statements.
On 19 August 2019, the Auckland car park
concession transaction was completed and SkyCity
received $220 million. Macquarie took possession
of the main site car park and an initial 600 NZICC
car parks at that time, and was to be provided with
approximately 650 further NZICC car parks no later
than 31 December 2020. The use of the 600 NZICC
car parks was restricted to use by SkyCity staff and
contractors while NZICC construction was ongoing,
as a condition of the NZICC Building Works Contract
with the Contractor, and this restriction was also
included in the car park concession agreement.
If the additional approximately 650 further NZICC
car parks are not delivered by 31 December 2020,
daily delay payments are required to be made by
SkyCity to Macquarie.
As a result of the fire, Macquarie no longer has
access to the initial 600 NZICC car parks and
delivery of the remaining approximately 650
NZICC car parks is likely to be delayed beyond
31 December 2020.
For the purpose of analysing the impact of the fire
on the sale of the Auckland car park concession, it is
necessary to split the car parks up as follows:
•
nested car parks, being 450 car parks that are
available exclusively to SkyCity (referred to as
"nested car parks")
There is no change to the accounting for the
nested car parks and these continue to be
treated as a financing arrangement as set out in
the Group’s 30 June 2019 financial statements.
•
main site unnested and initial 600 NZICC
car parks
There is no change to the accounting for the
main site unnested and initial 600 NZICC
car parks and these continue to be treated
as a finance lease as set out in the Group’s
30 June 2019 financial statements.
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remaining approximately 650 further NZICC
car parks
The status of these car parks has changed as a
result of the fire and expected delays to handover
and these will now likely be accounted for as
a future operating lease when handed over to
Macquarie – this is discussed further below.
Professional judgement was required in
determining the appropriate split of the car
parks for assessment of the impacts of the fire.
It is the Group’s view that the main site unnested
and initial 600 NZICC car parks already passed
to Macquarie should be considered together.
During the concession agreement negotiations all
parts were considered together and were viewed as
being inter-related for pricing and other purposes.
These car parks were also considered together for
demand management purposes, including how
SkyCity staff and contractors use and access the
available car parks across both sites.
Accounting Treatment of the Remaining
Approximately 650 NZICC Car Parks
In the Group’s 30 June 2019 financial statements
(which did not envision the fire or a significant delay
in the delivery of the car parks to Macquarie), it
was assumed that all parts of the car park, except
the nested car parks, would be a finance lease at
their lease commencement date. As a result, the
Property, Plant and Equipment balances relating to
the car parks were transferred to “PP&E classified as
held for sale”.
For these car parks, the lease from SkyCity to
Macquarie has not yet started – this will happen on
the date they are handed over to Macquarie. Prior to
this date, the portion of the car park concession
agreement payment relating to these car parks
($39.8 million), is treated as lease income in advance
(refer note 22).
Determination as to whether the lease is an
operating lease or finance lease is made as at the
date the car parks are provided to Macquarie, being
the lease commencement date. If this date is after
31 December 2020 (as expected), delay payments
to Macquarie from 31 December 2020 until the
final handover date are deducted from the car park
concession agreement payment for the purposes of
making the lease determination.
As a result, the following adjustments to the
30 June 2019 classifications have been recorded in
the 30 June 2020 financial statements:
•
•
reclassify $56.8 million of assets from PP&E
Classified as Held for Sale to Property, Plant
and Equipment (debit Property, Plant and
Equipment, credit Assets Classified as Held for
Sale); and
reclassify $25.6 million of liabilities from PP&E
Classified as Held for Sale to Deferred Licence
Value liability, being the portion of Deferred
Licence Value liability expected to be allocated
to the car park assets on completion (debit
PP&E Classified as Held for Sale, credit Deferred
Licence Value liability).
(a) Income
Other income
Contract works insurance recovery
Other insurance recoveries
Liquidated damages (Nelson Street car park access)
2020
$'000
336,702
37,456
10,342
384,500
2019
$'000
–
–
–
–
Notes to the Financial Statements
185
NZICC fire related income consists of:
Other Insurance Recoveries ($37.5 million)
Insurance Recovery for Damage to the NZICC and
Horizon Hotel ($336.7 million)
The accounting treatment of the insurance recovery
for the damage is dependent on the relationship
between SkyCity, the insurers and the Contractor.
It is the Group's view, supported by legal advice,
that SkyCity is the principal in the insurance
relationship and therefore receives, and has control
over, all insurance proceeds. As a result of this
relationship, the Group recognises the expected
insurance proceeds for the damage as a receivable
and income at the time of the fire and separately
accounts for payments to the Contractor as the
development of the new assets occurs over time.
While the insurers have acknowledged the fire event
and confirmed the SkyCity's contracts works policy
will respond in relation to damage to the NZICC and
Horizon Hotel, no complete reconstruction cost or
damage estimates are currently available from the
Contractor or the insurers. Accordingly, the Group
has engaged an independent expert to estimate the
likely reconstruction costs to address the damage.
These are based on limited information and are
highly sensitive to the actual extent of damage
which has not yet been fully assessed. For the
NZICC, reconstruction costs have been estimated
to be between $330.0 million and $375.0 million.
For the Horizon Hotel, reconstruction costs have
been estimated at $6.0 million. Based on this
information, the Group has assumed an insurance
recovery for both buildings of $336.0 million,
being the lower end of the NZICC range and
Horizon Hotel estimate. The Group considers
recovery of this amount to be virtually certain.
Prior to 30 June 2020, the insurers made an initial
payment of $105.0 million, meaning that the Group
has therefore recognised a further receivable of
$231.0 million.
These initial estimates are highly sensitive to the
actual extent of damage and the ultimate insurance
recovery for the damage may differ from this
initial assessment once detailed assessment of the
actual damage and rebuild planning is completed
for both buildings. As a result, it is possible
the insurance recovery of $336.0 million may
change materially.
In addition to recovery of the expected
reconstruction costs, the Group is able to seek
recovery of additional items, including the
following:
•
•
•
•
•
business interruption costs and lost gross profit
while the Auckland precinct was closed or
affected by the fire;
payments required to be made by SkyCity under
the Auckland car park concession agreement (for
lack of access to the NZICC car parks);
site preparation and clearing costs;
costs of professional advisers assisting the Group
as a result of the fire; and
additional ongoing operating costs (such as staff
parking) as a result of the fire.
The additional expenses are recognised when
incurred (debit Income Statement, credit
Cash/Liabilities) and any recovery of these items is
recognised when recovery is virtually certain (debit
Receivables, credit Income Statement). In the
year ended 30 June 2020, the Group estimates
that the additional costs incurred and lost gross
profit totalled $46.4 million. An initial recovery of
$37.5 million has been accrued for these items and
the balance of $8.9 million has been included as a
contingent asset (refer note 37).
Initial recovery for these additional items will be
sought from insurers where appropriate. To the
extent recovery under the Group’s insurance policies
is not available, recovery will be sought from the
Contractor, including all insurance excesses.
Recovery of Liquidated Damages for Access
to the Nelson Street Car Park Access Tunnel
($10.3 million)
A further recovery from the Contractor for
liquidated damages for the closure of the
Nelson Street car park entrance/exit tunnel
is available under the NZICC Building Works
Contract. Based on the dates the tunnel was
closed (22 October 2019 to 20 December 2019),
a recovery of $10.3 million is virtually certain and
has been recognised as NZICC fire related income
in the Income Statement and a receivable for the
uncollected balance from FCC has been recognised
in the Balance Sheet (debit Receivables, credit
Income Statement).
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Write-off of NZICC and Horizon Hotel capitalised work-in-progress
Release from Deferred Licence Value liability
NZICC obligation
Other recoverable costs
Non recoverable costs
2020
$'000
193,868
(165,785)
43,047
34,213
2,747
108,090
2019
$'000
–
–
–
–
–
–
NZICC fire related expenses consist of:
Write-off of NZICC and Horizon Hotel Capitalised
Work-in-Progress ($193.9 million)
Under the accounting standards, an insurance
event, such as the NZICC fire, is treated as a
disposal of the damaged asset and the purchase
of a new replacement asset for fully replaced
component parts. As a result the carrying value
of the damaged/destroyed parts of the NZICC
and Horizon Hotel are written off to the Income
Statement (debit Income Statement and credit
Property, Plant and Equipment)
Based on updated estimates provided by RLB,
the Group has estimated that approximately
52% of the NZICC and 5% of the Horizon Hotel
construction work to date has been destroyed and
will need to be replaced. As a result, approximately
$193.9 million of costs previously capitalised as a
work in progress in Property, Plant and Equipment
have been written off (refer note 23).
This initial estimate is highly sensitive to the actual
extent of damage and the ultimate write-off may
differ once further assessment is completed on the
damage to both buildings. As a result, it is possible
the write off of $193.9 million may increase or
decrease materially.
Future costs (external and internal) related to the
replacement of the derecognised asset components
will be capitalised as incurred as a new asset
(debit Capital Work in Progress (part of Property,
Plant and Equipment), credit Cash/Liabilities).
Release from Deferred Licence Value Liability
($165.8 million reduction in write-off)
In 2016, SkyCity accounted for the granting of the
NZICC Auckland casino licence enhancements
and recognised a Deferred Licence Value liability of
$405.0 million. Based on the Group’s accounting
policy adopted in 2014 (at the time of recognising
the Adelaide casino licence enhancements),
this amount was to be accounted for as a reduction
in the carrying value of the NZICC upon completion.
The Deferred Licence Value would normally be
allocated against each component asset of the
NZICC upon completion, and therefore when
derecognising some components (as detailed
above) there is also a requirement under the
Group’s accounting policy to release a portion of the
Deferred Licence Value liability.
The amount of the release has been estimated
at $165.8 million based on the latest estimated
percentage of damage to the NZICC. This represents
43.5% of the remaining Deferred Licence Value
liability (the NZICC was estimated to be 83%
complete prior to the fire, so 43.5% is therefore
52% (being the estimated extent of damage noted
above) of 83%).
The ultimate transfer of the Deferred Licence Value
liability is highly sensitive to the actual extent of
damage and may differ from this initial assessment
once a detailed assessment of the actual extent of
damage to the NZICC is completed. As a result, it is
possible the amount of the Deferred Licence Value
liability transferred may change materially.
Refer to note 17 for details of the Deferred Licence
Value liability release.
NZICC Obligation ($43.0 million)
The Group has recognised a liability to reconstruct
the assets associated with the initial 600 NZICC
car parks. The Group has estimated this to be
$43.0 million based on a proportionate allocation
of the expected total insurance proceeds relating to
the damage.
The ultimate cost for reconstructing these assets
may differ from this assessment once detailed
planning is completed and the actual extent of
the damage is known. As a result, it is possible the
$43.0 million liability may change materially.
Notes to the Financial Statements
187
Other Recoverable Costs ($34.2 million)
Non Recoverable Costs ($2.7 million)
The Group and Contractor have incurred costs
relating to site preparation and cleaning.
These costs are recoverable from the insurers and a
matching amount is included in NZICC fire income.
These are additional costs incurred by the Group in
relation to the NZICC fire where recovery from the
insurers or Contractor is not virtually certain. A claim
will be made for these costs against the Contractor
and recovery of these costs is included within
contingent assets (refer note 37).
(c) Current Assets
Insurance recoveries for damages to the NZICC and Horizon Hotel
Other insurance recoveries
Recovery of liquidated damages
Payments received from the Insurers
Transfer to non-current receivables (refer note below)
2020
$'000
336,702
37,456
8,413
(106,000)
(227,000)
49,571
2019
$'000
–
–
–
–
–
–
In addition to the $49.6 million of current NZICC recoveries, there are also non-current recoveries of
$227.0 million (refer below). NZICC recoveries (current plus non-current) total $276.6 million.
NZICC recoveries relate to:
Insurance Recovery for Damage to the NZICC and
Horizon Hotel ($336.7 million)
The Group has recognised insurance recoveries of
$336.7 million related to the damage to the NZICC
($330.0 million), Horizon Hotel ($6.0 million) and
various ICT equipment ($0.7 million).
The cost of remediating the NZICC was assessed
by SkyCity's experts at between $330.0 million and
$375.0 million. Both amounts include a significant
contingency given the uncertainty involved in
making this assessment. The $330.0 million amount
includes a 20% contingency, while the higher
$375.0 million amount includes a 35% contingency.
tunnel is closed. The tunnel was closed from
22 October 2019 to 20 December 2019 and, based
on the Building Works Contract, SkyCity is entitled
to receive $10.3 million of liquidated damages
from FCC.
To date, the Group has withheld $1.9 million for
these liquidated damages from payments due to
the Contractor. The remaining balance collectable is
$8.4 million.
SkyCity believes recovery of this amount is virtually
certain and has recognised $10.3 million within
NZICC fire related income (refer note 6(b)).
Payments Received from the Insurers
($106.0 million)
Other Insurance Recoveries ($37.5 million)
These recoveries relate to business interruption
following the fire and initial costs incurred relating
to site clearance. SkyCity believes recovery of this
amount is virtually certain.
Prior to 30 June 2020, the Group received an
initial $105.0 million payment from the insurers
towards site preparation, cleaning costs and the
cost of remediation. To 30 June 2020, $34.2 million
of this prepayment has been spent on damage
assessment, site preparation and cleaning.
Recovery of Liquidated Damages for Access
to the Nelson Street Car Park Access Tunnel
($8.4 million)
The Group has also received an initial $1.0 million
payment from insurers towards its business
interruption claim.
The NZICC Building Works Contract with FCC
includes the right for SkyCity to receive liquidated
damages while the Nelson Street car park access
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Insurance recoveries for damages to the NZICC and Horizon Hotel
2020
$'000
227,000
227,000
2019
$'000
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Refer note 6(c). The split between current and non-current is based on estimated cash flows associated with
the anticipated timing of the reconstruction.
7 Expenses
Other Expenses
Utilities, insurance and rates
Onerous contract expense (relating to the Wharf Casino lease (note 10))
Other property expenses
Other items
Expenses relating to short term leases and leases of low value assets
Provision for bad and doubtful debts
Depreciation and Amortisation (excluding right of use assets)
Depreciation
Casino licence amortisation (Adelaide)
Computer software amortisation
2020
$'000
21,949
958
12,096
55,246
1,203
5,682
97,134
67,459
5,507
12,480
85,446
2019
$'000
21,863
–
12,124
52,216
4,351
1,245
91,799
66,739
5,556
7,693
79,988
Provision for Bad and Doubtful Debts
In the current year the Group has recognised an expense of $5.7 million (2019: $1.2 million) for bad and
doubtful debts primarily relating to a small number of International Business customers. The Group is
continuing to pursue recovery of these balances.
Notes to the Financial Statements
189
Auditor's Fees
During the year the following fees were paid, or are payable, for services provided by the auditor of the
parent entity and its related practices.
The Group employs PricewaterhouseCoopers on assignments additional to their statutory audit duties
where PricewaterhouseCoopers’ expertise and experience with the Group are important and auditor
independence is not impaired. These assignments are principally tax advice and tax compliance.
For other work, the Group's External Audit Independence Policy requires that advisers other than
PricewaterhouseCoopers should be engaged wherever practicable.
Tax advisory services relates to ad-hoc queries covering a range of tax related matters.
Agreed upon procedures are in relation to the Group's Community Trust allocation of revenue, assessment
of the application of revenue under the wage subsidy scheme and assessment of the normalisation of
revenue disclosed in the annual report. Other assurance services are in relation to compliance with banking
and debt covenants.
2020
$'000
2019
$'000
(a) Assurance and Agreed upon Procedure Services
Audit and review of financial statements
PwC New Zealand
PwC Australia
PwC Hong Kong
PwC Malta
Total audit and review fees
Performed by PwC New Zealand
Other assurance services
Agreed upon procedures
Total remuneration for other assurance services and agreed upon procedures
Total remuneration for assurance and agreed upon services
(b) Other Services
Performed by PwC New Zealand
Tax compliance services
Tax advisory services
Executive remuneration
Provision of software tool for subsidiary statutory financial statement preparation
Performed by PwC Australia
Tax compliance services
Tax advisory services
Performed by PwC Hong Kong
Tax advisory services
Total remuneration for other services
Total fees expense
755
74
23
42
894
20
28
48
942
1
78
–
12
50
63
26
230
1,172
684
74
17
–
775
24
14
38
813
–
266
142
27
59
226
8
728
1,541
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8 Earnings Per Share
Accounting Policy
(i) Basic Earnings per Share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by
the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year.
(ii) Diluted Earnings per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares, and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
There are no dilutive potential ordinary shares and therefore basic and diluted earnings per share are
the same.
Weighted average number of ordinary shares used as the denominator
in calculating basic and diluted earnings per share (including shares
issued on 9 July 2020 – refer note 29)
2020
Number
2019
Number
664,946,279
675,772,802
9 Dividends
Accounting Policy
Provision is made for the amount of any dividend declared on or before the end of the financial year but not
distributed at balance date.
Prior year final dividend
Current year interim dividend
Total dividends provided for or paid
Cents per share
Prior year final dividend (per share)
Current year interim dividend (per share)
2020
$'000
66,867
66,421
133,288
10.0
10.0
2019
$'000
67,751
67,938
135,689
10.0
10.0
The directors have not declared a final dividend in respect of the year ended 30 June 2020.
Notes to the Financial Statements
191
10 Leases – SkyCity as the Lessee
Accounting Policy
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payments that are based on an index or a rate; and
• payments to be made under reasonably certain extension options.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be
determined, or the Group’s incremental borrowing rate.
Right-of-use assets are measured at cost comprising the following:
•
the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date;
• any initial direct costs; and
•
restoration costs.
A small number of immaterial, short term leases have not been included in the calculation of lease liabilities
or right-of-use assets.
The balance sheet shows the following amounts relating to leases:
Right-of-use assets net book value
SkyCity Auckland subsoil
SkyCity Auckland pedestrian airbridge
SkyCity Auckland services airbridge
Stratton House – Queenstown
Adelaide Railway Building and extension
Lease liabilities
Current
Non-current
2020
$'000
3,095
2,006
312
2,367
44,187
51,967
485
52,188
52,673
In the previous year, under NZ IAS 17 Leases, the Group had operating leases which were not recognised on
the Balance Sheet. For the current year, opening balances of right-of-use assets and lease liabilities reflect
accounting for the operating leases under NZ IFRS 16 Leases for the first time.
(a) Amounts Recognised in the Income Statement
Depreciation charge of right-of-use assets
Right-of-use assets
Interest expense on lease liabilities
Interest expense on lease liabilities (part of net finance costs)
192
2020
$'000
1,114
1,114
3,088
3,088
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Lease payments are allocated between principal
and finance cost. The finance cost is charged to the
Income Statement over the lease period so as to
produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are depreciated over the shorter
of the asset's useful life and the lease term on a
straight-line basis.
Payments associated with short term or low
value leases that are not material are recognised
on a straight-line basis as an expense in the
Income Statement.
(c) Extension and Termination Options
Extension and termination options are included
in a number of leases across the Group. These are
used to maximise operational flexibility in terms of
managing the assets used in the Group’s operations.
The majority of extension and termination options
held are exercisable only by the Group and not by
the respective lessor.
(d) SkyCity Wharf Lease
Given the financial performance of SkyCity Wharf,
the lease agreement has been treated as an
onerous contract. As a result, the future costs of
the lease to termination (6 September 2021) of
$1.0 million have been recognised in the year ended
30 June 2020.
(b) The Group's Leasing Activities and How These
are Accounted for
The Group has a small number of long term leases
relating to airbridges, subsoil access rights and the
Adelaide Railway Building.
Lease terms are negotiated on an individual basis
and contain a wide range of different terms and
conditions. The lease agreements do not impose
any covenants other than the security interests
in the leased assets that are held by the lessor.
Leased assets may not be used as security for
borrowing purposes.
Until the current financial year, leases of Property,
Plant and Equipment were classified as operating
leases. From 1 July 2019, leases are recognised as a
right-of-use asset and a corresponding liability at
the date at which the leased asset is available for
use by the Group.
The lease payments are discounted using the
interest rate implicit in the lease. If that rate
cannot be readily determined, which is generally
the case for leases in the Group, the Group's
incremental borrowing rate is used, being
the rate that the Group would have to pay to
borrow the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar
economic environment with similar terms, security
and conditions.
To determine the incremental borrowing rate,
the Group:
•
•
•
where possible, uses recent third-party
financing received by the individual lessee as
a starting point, adjusted to reflect changes in
financing conditions since third party financing
was received;
uses a build-up approach that starts with a
risk-free interest rate adjusted for credit risk; and
makes adjustments specific to the lease
(eg. term, country, currency and security).
Notes to the Financial Statements
193
11 Net Finance Costs
Finance costs
Foreign exchange gains
Interest income
Debt restructuring costs (refer note 12)
Capitalised interest (refer Property, Plant and Equipment note 23)
Net finance costs
2020
$'000
45,419
(195)
(1,060)
7,506
(23,057)
28,613
2019
$'000
41,598
(316)
(723)
–
(30,319)
10,240
12 Non-current Liabilities – Interest Bearing Liabilities
Accounting Policy
Interest bearing liabilities are recognised initially at fair value, net of transaction costs incurred.
Interest bearing liabilities are subsequently carried at amortised cost and any difference between the
proceeds (net of transaction costs) and the redemption value is recognised in the Income Statement over
the period of the borrowings using the effective interest method, apart from:
•
the interest margin on US dollar denominated USPP notes maturing in March 2025 is accounted for
under NZ IFRS 9 as a fair value hedge. The carrying values of the borrowings are adjusted for fair value
changes attributable to the risk being hedged; and
• as at 30 June 2020, the New Zealand bonds are carried at the cost of early redemption (refer note 12(c)).
Unsecured Interest Bearing Liabilities
Car park concession (main site nested car parks)
United States private placement notes
New Zealand bonds
Deferred funding expenses
Total Non-current Interest Bearing Liabilities
2020
$'000
42,802
241,420
–
(1,491)
282,731
2019
$'000
–
373,091
125,000
(2,178)
495,913
(a) United States Private Placement (USPP) Notes
movements in exchange rates and interest rates.
As at 30 June 2020 (and 30 June 2019), SkyCity
had outstanding:
• US$100.0 million maturing 15 March 2021;
• US$100.0 million maturing 17 March 2025; and
• A$65.4 million maturing 15 March 2028.
Movements in the carrying value of the outstanding
balance in the current year relate to maturity of
NZ$21.1 million of notes on 15 March 2020 plus
The US dollar USPP notes have been hedged to
New Zealand dollars or Australian dollars by way
of cross currency interest rate swaps to eliminate
foreign exchange exposure to the US dollar.
The offsetting changes in the value of the cross
currency interest rate swaps are included within
derivative financial instruments in note 32.
Fair value of USPP debt is estimated at
NZ$429.4 million compared to a carrying value of
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NZ$397.0 million. Fair value has been calculated
based on the present value of future principal and
interest cash flows, using market interest rates
and credit margins at balance date. Fair value is
calculated using inputs other than quoted prices
that are observable for the liability, either directly
(that is, as prices) or indirectly (that is, derived from
prices). This is a level 2 valuation.
Recognising the potential for breaches of financial
covenants at 31 December 2020 and 30 June 2021,
due to the impact of COVID-19, amendments and
waivers to the financial covenants as at these dates
were agreed with USPP investors in June 2020.
All financial covenants were met at 30 June 2020.
(b) Syndicated Bank Facility
The unsecured syndicated banking facility is
provided by ANZ (New Zealand and Australia),
Commonwealth Bank of Australia, Bank of
New Zealand, National Australia Bank and Westpac
(New Zealand and Australia).
As at 30 June 2020, SkyCity had in place revolving
credit facilities of:
incorporated waivers and amendments to the
financial covenants for these periods. All financial
covenants were met at 30 June 2020.
(c) New Zealand Bond
$125 million of unsubordinated, unsecured,
redeemable fixed rate bonds were issued on
28 September 2015 with a maturity of seven years.
In June 2020, SkyCity notified bond holders
of its intention to exercise its right to redeem
the bonds early. The bonds will be redeemed
on 28 September 2020 at $1.028 per bond,
equating to a total redemption cost of
$128.5 million. Consequently, the bonds are
classified as current liabilities at 30 June 2020 and
carried at the redemption amount.
(d) Auckland Car Park Concession
Incorporated in the Auckland car park concession is
an interest-bearing liability of $46.2 million relating
to the main site nested car parks. This liability will
be amortised to nil over the life of the contract with
the movements recognised in interest income.
• NZ$120.0 million maturing 15 March 2021; and
(e) Negative Pledge Deeds
• A$280.0 million maturing 31 March 2022.
Subsequent to Balance Date
Consistent with the funding plan announced
on 17 June 2020, in July 2020 the syndicated
bank facility was restructured and extended to
the following:
• A$280.0 million maturing 31 March 2022;
• NZ$60.0 million maturing 15 June 2022;
A negative pledge deed has been executed in
relation to each of the funding facilities – bank
facilities, USPP notes and New Zealand bonds.
In each deed are requirements for minimum
guarantee group participation as well as
financial covenants. All requirements of the
negative pledge deeds have been met as at
30 June 2020.
(f) CBA Revolving Credit Facility
• NZ$85.0 million maturing 15 June 2023; and
Subsequent to Balance Date
• NZ$85.0 million maturing 15 June 2024.
Recognising the potential for breaches of financial
covenants at 31 December 2020 and 30 June 2021,
directly as a result of the impact of COVID-19, the
restructuring and extension of the bank facilities
Consistent with the funding plan
announced on 17 June 2020, in July 2020 a
NZ$100.0 million revolving credit facility was
established with the Commonwealth Bank of
Australia, maturing 31 December 2021.
(g) Weighted Average Interest Rate
2020
2019
Weighted
average
interest rate
Balance
Weighted
average
interest rate
Balance
%
$'000
%
$'000
Interest bearing liabilities*
6.39%
586,731
6.56%
547,218
*Theweightedaveragedebtinterestrateincludestheimpactofinterestrateandforeigncurrencyhedging.
Notes to the Financial Statements
195
13 Current Liabilities – Interest Bearing Liabilities
Accounting Policy
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.
Unsecured Interest Bearing Liabilities
Syndicated bank facility
United States private placement notes
New Zealand bonds
Car park concession (main site nested car parks)
Total current interest-bearing borrowings
2020
$'000
15,000
155,618
128,500
3,391
302,509
2019
$'000
28,000
21,127
–
–
49,127
Refer note 12(a) for details concerning the US private placement notes, note 12(b) for details concerning the
syndicated bank facility, note 12(c) for details concerning the New Zealand bonds and note 12(d) for details
concerning the car park concession.
14 Net Debt Reconciliation
CASH AND
BANK
BALANCES
BORROWINGS
DUE WITHIN
1 YEAR
BORROWINGS
DUE AFTER
1 YEAR
Net debt as at 1 July 2018
Movement in cash and cash equivalents
Revaluation of USPP notes
Amortisation of deferred funding expenses
Net movement in bank drawings
Reclassification
Initial recognition of lease liabilities
$'000
(75,955)
34,381
–
–
–
–
–
TOTAL
$'000
$'000
$'000
–
–
–
–
28,000
21,127
–
508,453
432,498
–
7,560
1,027
34,381
7,560
1,027
–
28,000
(21,127)
–
–
–
Net debt as at 30 June 2019
(41,574)
49,127
495,913
503,466
Movement in cash and cash equivalents
(12,650)
–
(12,650)
–
3,391
3,500
6,230
(21,127)
–
(13,000)
42,802
–
17,716
–
687
–
274,388
(274,388)
485
–
50,336
1,852
46,193
3,500
23,946
(21,127)
687
(13,000)
–
50,821
1,852
–
–
–
–
–
–
–
–
–
(54,224)
302,994
334,918
583,688
Recognition of car park concession liability
Revaluation of NZ bonds
Revaluation of USPP notes
Repayment of USPP notes
Amortisation of deferred funding expenses
Net movement in bank drawings
Reclassification
Initial recognition of lease liabilities
Increase in lease liabilities
Net debt as at 30 June 2020
196
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15 Non-current Assets – Investment Properties
Accounting Policy
Investment property, principally comprising freehold office buildings, is held for long term rental yields
and is not occupied by the Group. Investment property is carried at fair value, which is based on active
market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific
asset. If this information is not available, the Group uses alternative valuation methods such as recent
prices in less active markets or discounted cash flow projections. Changes in fair values are recorded in the
Income Statement.
Balance at the beginning of the year
Acquisitions
Net (loss) from fair value adjustment
Transfer from property, plant and equipment – existing convention centre
Transfer from property, plant and equipment – NZICC car parks
Closing balance at 30 June
(a) Amounts Recognised in Profit and Loss for Investment Property
Rental income
Direct operating expenses from property that generated rental income
Net (loss) from fair value adjustment
2020
$'000
40,660
2,252
(14,055)
16,420
27,123
72,400
2020
$'000
2,953
(1,594)
(14,055)
(12,696)
2019
$'000
35,300
8,564
(3,204)
–
–
40,660
2019
$'000
2,338
(819)
(3,204)
(1,685)
(b) Valuation Basis
Investment properties were valued on 30 June 2020 by Bower Valuations Limited and Extensor Advisory
Limited, Registered Valuers and Members of the New Zealand Institute of Valuers and the Property
Institute of New Zealand, at a total value of $45.3 million (excluding the NZICC car parks). The valuer has
recent experience in the location and category of the investment being valued. The basis of the valuation
of investment properties is fair value being the amounts for which the properties could be exchanged
between willing parties in arm’s length transactions, based on current prices in an active market for similar
properties in the same locations and conditions and subject to similar leases.
The following were the significant assumptions used in the 30 June 2020 valuation of the existing
convention centre:
• capitalisation rate of 9.73%; and
•
passing yield calculated as net rent divided by fair value of 7.00%.
Notes to the Financial Statements
197
The following were the significant assumptions used
in the 30 June 2020 valuation of other investment
properties:
• capitalisation rate of 7.53% (2019: 5.0%); and
•
passing yield calculated as net rent divided by
fair value of 5.82% (2019: 4.4%).
The valuations are sensitive to movements in these
assumptions, adverse changes in the assumptions
will result in a lower valuation.
Due to the uncertainty related to COVID-19 that
has led to a reduction in the number of real estate
transactions and has impacted the availability of
market data as at 30 June 2020, the independent
valuations as at 30 June 2020 have been reported
on the basis of ‘material valuation uncertainty’,
meaning less certainty and a higher degree of
caution should be applied to the valuations.
The opinion of value has been determined at
the valuation date based on a certain set of
assumptions used by the valuers, however these
could change in a short period of time due to
subsequent changes in the property market when
transactional activity resumes.
(c) Transfer from Property, Plant and Equipment
– Existing Convention Centre
With effect from 31 October 2019, portions of the
existing Auckland convention centre have been
leased to All Blacks Experience Limited and Weta
Workshop Limited. As a result, this portion of the
convention centre has been reclassified as an
Investment Property ($16.4 million).
Immediately before reclassification this portion
of the convention centre was revalued and the
resulting uplift in value of $5.9 million has been
transferred to the Asset Revaluation Reserve
(note 31).
The portion of the Auckland convention centre
was valued by Bower Valuations Limited and
Extensor Advisory Limited, Registered Valuers and
Members of the New Zealand Institute of Valuers
and the Property Institute of New Zealand, as at
31 October 2019 at a total value of $16.4 million.
The valuer has recent experience in the location and
category of the investment being valued. The basis
of the valuation is fair value being the amounts for
which the property could be exchanged between
willing parties in an arm’s length transaction, based
on current prices in an active market for similar
properties in the same location and condition
and subject to similar leases. The valuation was
completed on the footing that the rental payments
have commenced and there is a hypothetical
subdivision to create a separate legal title which
could be sold.
The following were the significant assumptions
used in the valuation:
• capitalisation rate of 7.99%; and
•
passing yield calculated as net rent divided by
fair value of 5.48%.
(d) Transfer from Property, Plant and Equipment
– NZICC Car Park
As detailed in note 4, approximately 650 car parks
are due to be provided to Macquarie as part of the
Auckland car park concession transaction. Based on
the expected delay in providing these car parks it
is expected that this will be an operating lease and
therefore those car parks will form an investment
property. As a result $27.1 million has been
transferred from Property, Plant and Equipment
(note 23) to Investment Properties.
It is the Group's policy to carry investment
properties at fair value in accordance with NZ IAS
40 Investment Property (NZ IAS 40).
NZ IAS 40 allows an investment property under
construction to be carried at cost if it is not possible
to reliably measure fair value during construction
but will be possible on completion. Given the
impact of the NZICC fire, it is the directors' view
that it is not currently possible to reliably measure
fair value. As a result, this investment property will
continue to be carried at cost until such time as fair
value can be reliably determined.
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Accounting Policy
Regulatory reforms granted which are specific to the Group are initially recognised at their fair value
where there is a reasonable assurance that the reforms will be received and the Group will comply with all
conditions attached.
Regulatory reforms are recognised as an intangible asset (note 24) and included within the value of
casino licences in accordance with NZ IAS 20. Where a regulatory reform is related to Property, Plant and
Equipment, once constructed the carrying value of that Property, Plant and Equipment is reduced by the
value of the regulatory reforms. Prior to completion of the related Property, Plant and Equipment, the value
of the regulatory reforms is accounted for as a deferred licence value.
SkyCity Adelaide
2020
$'000
153,165
153,165
2019
$'000
–
–
The SkyCity Adelaide deferred licence value liability was initially recognised in 2014 following an
amendment to the Adelaide Approved Licensing Agreement (ALA). The agreement to amend the ALA
required SkyCity Adelaide to agree to undertake a A$350.0 million casino expansion and hotel development
project and the deferred licence value liability relates to this requirement.
This balance is now current as it will be transferred to Property, Plant and Equipment in the next 12 months.
17 Non-current Liabilities – Deferred Licence Value
2020
Opening balance
Exchange rate movement
Transferred to current liabilities (note 16)
Adjustment to PP&E classified as held for sale (note 6)
Impact of NZICC Fire (note 6)
Closing balance
2019
Opening balance
Exchange rate movement
Transferred to PP&E classified as held for sale (note 27)
Closing balance
SkyCity Auckland
AUCKLAND
ADELAIDE
$'000
355,179
–
–
25,578
(165,785)
214,972
$'000
TOTAL
$'000
149,625
504,804
3,540
3,540
(153,165)
(153,165)
–
–
–
25,578
(165,785)
214,972
405,000
155,835
560,835
–
(6,210)
(6,210)
(49,821)
355,179
–
(49,821)
149,625
504,804
On 5 July 2013, SkyCity and the Crown entered
into the New Zealand International Convention
Centre Project and Licensing Agreement (the NZICC
Agreement). The NZICC Agreement modified the
Auckland casino licence and required SkyCity to
develop the NZICC. The SkyCity Auckland Deferred
Licence Value liability relates to that requirement.
As detailed in note 6, it was initially expected
that all NZICC car parks included in the sale
of the Auckland car park concession would be
treated as part of a finance lease. As a result of this
assumption, in 2019 $49.8 million of the deferred
licence value was transferred to PP&E classified as
held for sale. Following the NZICC fire, it was
determined that approximately 650 of the NZICC
car parks were unlikely to be part of a finance lease.
Therefore, in 2020, $25.6 million of the 2019 transfer
was reversed to give an ultimate net transfer of
$24.2 million.
Following the NZICC fire, the damaged portion of
the NZICC was disposed (refer note 6). As a result of
this disposal, $165.8 million of the SkyCity Auckland
Deferred Licence Value liability has been released to
the Income Statement.
The $165.8 million release is based on an initial
assessment of the damage from the NZICC fire
(refer note 6) and may materially change as further
information becomes available.
199
18 Income Tax (Benefit)/Expense
Accounting Policy
The income tax expense for the year is the tax payable on the current year’s taxable income, based on the
income tax rate for each jurisdiction. This is then adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying
amounts in the financial statements.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax
is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will
be available against which the temporary differences can be utilised.
(a) Income Tax (Benefit)/Expense
Current tax
Deferred tax
Income tax (benefit)/expense
(b) Numerical Reconciliation of Income Tax (Benefit)/Expense to Prima Facie Tax Payable
Profit from continuing operations before income tax expense
Prima facie income tax @ 28%
Tax effects of:
Expenses not deductible for tax purposes
Foreign exchange rate differences
Share of partnership expenditure
Differences in overseas tax rates
Asset held for sale
Capital gain - Federal Street car park
Prior period adjustments (including ATO settlement)
NZICC fire capital income/expenses
Auckland car park concession proceeds
Adelaide casino licence impairment
Fair value adjustments
Reinstatement of New Zealand tax building depreciation
Other
Income tax (benefit)/expense
2020
$'000
26,115
(28,267)
(2,152)
233,118
65,273
2,210
(53)
–
(3,402)
(411)
–
243
(73,955)
(20,062)
48,188
3,955
(24,145)
7
(2,152)
2019
$'000
60,616
(13,863)
46,753
207,578
58,122
2,361
(3)
(1,920)
1,116
(11,509)
(6,211)
3,888
–
–
–
897
–
12
46,753
The weighted average applicable tax rate was -0.9% (2019: 22.5%). The weighted average tax rate has been
significantly impacted by:
• NZICC fire capital income/expense;
• Auckland car park concession proceeds;
• Adelaide casino licence impairment;
•
•
fair value adjustments; and
reinstatement of New Zealand tax building depreciation.
Excluding these items the weighted average tax rate would have been 27.4% (2019: 22.1%).
200
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The balance comprises temporary differences attributable to:
Provisions and accruals
Depreciation
Foreign exchange variances
Cash flow hedges
Lease accounting
Tax losses
Net deferred tax assets
Movements:
Balance at beginning of the year
Transferred from deferred tax liabilities
Foreign exchange differences
Transferred to discontinued operations
Charged to the Income Statement (note 18)
Tax credited directly to other comprehensive income (note 31)
Closing balance at 30 June
Deferred tax assets relate to the Australian operations.
20 Deferred Tax Liabilities
The balance comprises temporary differences attributable to:
Provisions and accruals
Depreciation
Lease accounting
Cash flow hedges
Other
Net deferred tax liabilities
Movements:
Balance at beginning of the year
Transferred to deferred tax assets
(Credited)/charged to the Income Statement (note 18)
Tax debited/(credited) directly to other comprehensive income (note 31)
Foreign exchange differences
Closing balance at 30 June
Deferred tax liabilities relate to the New Zealand operations.
S
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2020
$'000
5,316
(7,723)
166
653
185
8,280
6,877
4,843
–
89
–
3,157
(1,212)
6,877
2020
$'000
(14,972)
64,702
(28)
(7,355)
2,828
45,175
70,160
–
(25,110)
125
–
45,175
2019
$'000
5,303
(4,365)
1,713
1,846
–
346
4,843
–
(1,097)
84
5,088
2,651
(1,883)
4,843
2019
$'000
(11,664)
89,958
–
(7,480)
(654)
70,160
84,547
(1,097)
(11,212)
(2,101)
23
70,160
Notes to the Financial Statements
201
21 Imputation and Franking Credits
Balances available for use in subsequent reporting periods
Imputation credit account (New Zealand)
Franking credit account (Australia) (A$'000)
2020
$'000
21,347
13,951
2019
$'000
46,926
15,176
As required by relevant tax legislation, the imputation credit account had a credit balance as at 31 March 2020.
22 Non-current Liabilities – Lease Income in Advance
Lease income in advance
2020
$'000
39,815
39,815
2019
$'000
–
–
As detailed in note 6, the approximately 650 further NZICC car parks to be delivered as part of the Auckland
car park concession transaction have been determined to be an operating lease.
The $220.0 million concession payment has been allocated between the 450 nested car parks and
the unnested car parks based on their respective fair values. The payment for the unnested car parks
(refer note 6) was further allocated based on the number of car parks. At 19 August 2019, $39.8 million was
allocated to these approximately 650 further NZICC car parks and was recognised as a lease payment
in advance.
23 Property, Plant and Equipment
Accounting Policy
Property, Plant and Equipment is stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from
equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of Property, Plant
and Equipment.
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate
their cost, net of their residual values, over their estimated useful lives, as below:
Buildings and fitout
Plant, equipment and motor vehicles
Fixtures and fittings
5–75 years
2–75 years
3–20 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount.
202
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Cost
BUILDINGS
AND
FITOUT
PLANT,
EQUIPMENT
AND MOTOR
VEHICLES
FIXTURES
AND
FITTINGS
CAPITAL
WORK IN
PROGRESS
TOTAL
$'000
$'000
$'000
$'000
$'000
LAND
$'000
180,974
985,155
443,233
137,689
511,992
2,259,043
Accumulated depreciation
–
(348,275)
(319,153)
(93,005)
–
(760,433)
Net book amount
Year Ended 30 June 2019
180,974
636,880
124,080
44,684
511,992
1,498,610
Opening net book amount
180,974
636,880
124,080
44,684
511,992
1,498,610
Exchange differences
Net additions/transfers
Disposals
(1,095)
(6,864)
56,828
12,000
(1,564)
31,704
(435)
5,925
(4,085)
(14,043)
244,836
351,293
(17,661)
(122,977)
(17,172)
(4,916)
(253)
(162,979)
Assets classified as held for sale
(8,729)
(45,428)
(710)
–
(110,641)
(165,508)
Depreciation charge*
–
(22,658)
(37,551)
(10,907)
–
(71,116)
Closing net book amount
210,317
450,953
98,787
34,351
641,849
1,436,257
At 30 June 2019
Cost
210,317
775,739
371,060
123,996
641,849
2,122,961
Accumulated depreciation
–
(324,786)
(272,273)
(89,645)
–
(686,704)
Net book amount
Year Ended 30 June 2020
210,317
450,953
98,787
34,351
641,849
1,436,257
Opening net book amount
210,317
450,953
98,787
34,351
641,849
1,436,257
Exchange differences
Net additions/transfers
Transfer to investment properties
– existing convention centre (note 15)
Transfer to investment properties
– NZICC car parks (note 15)
Reversal of 2019 assets classified
as held for sale (note 6)
NZICC fire disposal (note 6)
Depreciation charge
–
1,421
–
–
–
–
–
959
41,162
(10,484)
–
–
–
421
90
4,123
5,593
25,461
3,681
257,460
329,185
–
–
–
–
–
–
–
–
–
(10,484)
(27,123)
(27,123)
56,801
56,801
(193,868)
(193,868)
(25,126)
(33,017)
(9,316)
–
(67,459)
Closing net book amount
211,738
457,464
91,652
28,806
739,242
1,528,902
At 30 June 2020
Cost
211,738
783,956
391,221
126,345
739,242
2,252,502
Accumulated depreciation
–
(326,492)
(299,569)
(97,539)
–
(723,600)
Net book amount
211,738
457,464
91,652
28,806
739,242
1,528,902
*FY19depreciationchargeaboveincludesdepreciationonbothcontinuinganddiscontinuedoperations.
Notes to the Financial Statements
203
(a) Capitalised Borrowing Costs
Borrowing costs of $23.1 million have been
capitalised in the current year relating to capital
projects (2019: $30.3 million) using the Group's
weighted average cost of debt of 6.36% across the
year (2019: 6.11%).
(b) Encumbrances
A memorandum of encumbrance is registered
against the title of land for the Auckland casino
in favour of Auckland Council. Auckland Council
requires prior written consent before any transfer,
assignment or disposition of the land. The intent of
the covenant is to protect the Council's rights under
the resource consent, relating to the provision of the
bus terminus, public car park and public footpaths
around the complex.
A further encumbrance records the Council's
interest in relation to the sub soil areas under
Federal and Hobson Streets used by SkyCity as car
parking and a vehicle tunnel. The encumbrance is
to notify any transferee of the Council's interest as
lessor of the sub soil areas.
There are four encumbrances relating to the NZICC
site land. One encumbrance protects the rights of
the Crown under the NZICC Project and Licensing
Agreement, two relate to firewalls between
buildings that have now been demolished and
the final encumbrance protects the underground
vehicle entrance to the car park on the main
Auckland casino site. The NZICC site land is also
subject to a covenant in favour of the Crown
which restricts the subdivision and use of the site
to that permitted under the NZICC Project and
Licensing Agreement.
24 Intangible Assets
Accounting Policy
(i) Goodwill
Goodwill represents the excess of the cost of an
acquisition over the fair value of the Group’s share of
the net identifiable assets of the acquired business
at the date of acquisition. Goodwill on acquisitions
of businesses is included in Intangible Assets.
Goodwill acquired in business combinations is
not amortised. Instead, goodwill is tested for
impairment annually or more frequently if events
or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated
impairment losses.
Goodwill is allocated to cash generating units for
the purpose of impairment testing.
Goodwill impairment reviews are undertaken
annually or more frequently if events or changes
in circumstances indicate a potential impairment.
The carrying value of goodwill is compared to the
recoverable amount, which is the higher of value
in use and the fair value less costs of disposal.
Any impairment is recognised immediately as an
expense and is not subsequently reversed.
(ii) Casino Licences
The Group's casino licences that have a
finite useful life are carried at cost less
accumulated amortisation. Amortisation of these
casino licences is calculated on a straight line basis
so as to expense the cost of the licences over their
legal life.
The casino licences that have been determined
to have an indefinite useful life for amortisation
purposes are not amortised but are reviewed for
impairment on an annual basis. The casino licences
that have been determined to have a finite life for
amortisation purposes are reviewed for impairment
if there are indicators of impairment.
Judgement is exercised in determining whether a
casino licence has a finite or indefinite useful life.
Consideration is given to the terms and conditions
of the relevant licence and in particular the
renewal terms.
(iii) Regulatory Reforms Associated with
Casino Licences
Regulatory reforms granted which are specific to
the Group are initially recognised at their fair value
where there is a reasonable assurance that the
reforms will be received and the Group will comply
with all conditions attached.
Regulatory reforms are recognised as an intangible
asset and included within the value of casino
licences in accordance with NZ IAS 20. Where a
regulatory reform is related to Property, Plant and
Equipment, once constructed the carrying value
of that Property, Plant and Equipment is reduced
by the value of the regulatory reforms. Prior to
completion of the related Property, Plant and
Equipment, the value of the regulatory reforms is
accounted for as deferred licence value.
204
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(iv) Acquired Software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring
to use the specific software. These costs are amortised over their estimated useful life (three to 15 years) on a
straight line basis.
(v) Amortisation
FY19 amortisation charge below includes amortisation on both continuing and discontinued operations.
At 1 July 2018
Cost
Accumulated amortisation
Net book amount
Movements in the Year Ended 30 June 2019
Exchange differences
Additions
Transferred to disposal group classified as held for sale
Amortisation charge
Closing net book amount
At 30 June 2019
Cost
Accumulated amortisation
Net book amount
Movements in the Year Ended 30 June 2020
Exchange differences
Additions
Impairment of Adelaide casino licence
Amortisation charge
Closing net book amount
At 30 June 2020
Cost
Accumulated amortisation
Net book amount
*EquivalenttoA$150million.
GOODWILL
CASINO
LICENCES
COMPUTER
SOFTWARE
$'000
$'000
$'000
TOTAL
$'000
35,786
–
35,786
–
–
–
–
35,786
35,786
–
35,786
–
1,908
–
–
37,694
821,364
(57,705)
763,659
(14,117)
–
(33,094)
(5,556)
710,892
768,618
(57,726)
710,892
102,842
959,992
(70,454)
(128,159)
32,388
831,833
(138)
29,461
(1,955)
(8,026)
51,730
(14,255)
29,461
(35,049)
(13,582)
798,408
127,311
931,715
(75,581)
(133,307)
51,730
798,408
7,052
68
–
20,682
7,120
22,590
(160,600)*
–
(160,600)*
(5,507)
551,837
(12,480)
60,000
(17,987)
649,531
37,694
777,118
147,798
962,610
–
(225,281)
(87,798)
(313,079)
37,694
551,837
60,000
649,531
Notes to the Financial Statements
205
CASINO LICENCE
CONTRACT TERM
SkyCity Auckland
Casino (indefinite
useful life)
SkyCity Adelaide
(finite useful life)
SkyCity Auckland Limited holds a casino premises licence for the
Auckland premises.
The initial licence was granted in 1996 for nil consideration, and hence there was no
associated initial carrying value.
Pursuant to the terms of the New Zealand International Convention Centre Project
and Licensing Agreement between Her Majesty the Queen in Right of New Zealand
and the Company dated 5 July 2013 (NZICC Agreement), the initial term of the
licence was extended to 30 June 2048.
The licence can be renewed for further periods of 15 years pursuant to section 138 of
the Gambling Act 2003 (NZ).
In addition to the licence extension, the casino premises licence was amended to
(a) permit the implementation of account based cashless gaming and ticket in
ticket out (TITO) gaming systems; (b) permit an increase in the number of gaming
machines, gaming tables and automated table games; and (c) implement various
other operational improvements. Under the NZICC Agreement, the Company has
agreed to construct the NZICC for a total cost of at least $430.0 million.
The reforms (a to c above) are exclusive to the Group and were recorded at fair value
based on the estimated incremental benefit over the life of the reforms. The fair
value was determined using a discounted cashflow model falling within level 3 of
the fair value hierarchy over the life of the reforms.
The asset is not amortised but is reviewed for impairment annually.
The carrying amount of the casino licence is $405.0 million (FY19: $405.0 million).
The casino and associated operations are carried out by SkyCity Adelaide Pty
Limited under a casino licence (the Approved Licensing Agreement (ALA)) dated
October 1999 (as amended). Unless terminated earlier, the expiry date of the ALA
is 30 June 2085. The term of the ALA can be renewed for a further fixed term
pursuant to section 9 of the Casino Act 1997 (SA). The carrying value of the casino
licence is amortised over the life of the ALA.
The casino licence and associated regulatory reforms asset is amortised over
20 years or 71 years depending on whether the incremental benefit is associated
with the exclusivity period or the full licence period.
Due to the impairment of the Adelaide casino licence, the carrying value of the
casino licence is A$133.0 million (FY19: A$288.3 million) (NZ$142.4 million and
NZ$301.5 million respectively).
SkyCity Hamilton
Casino (indefinite
useful life)
SkyCity Hamilton Limited holds a casino premises licence for the Hamilton
premises. The casino premises licence is for an initial 25 year term from
19 September 2002. The licence can be renewed for further periods of 15 years
pursuant to section 138 of the Gambling Act 2003 (NZ). As the licence was initially
granted for nil consideration, there is no associated carrying value.
SkyCity Queenstown
Casino (indefinite
useful life)
Queenstown Casinos Limited holds a casino premises licence for the Queenstown
premises. The casino premises licence is for an initial 25 year term from
7 December 2000. The licence can be renewed for further periods of 15 years
pursuant to section 138 of the Gambling Act 2003 (NZ). As the licence was initially
granted for nil consideration, there is no associated carrying value.
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CASINO LICENCE
CONTRACT TERM
SkyCity Wharf Casino
(Queenstown)
(indefinite useful life)
Otago Casinos Limited holds a casino premises licence for the Queenstown
Wharf premises. The casino premises licence is for an initial 25 year term from
11 September 1999. The licence can be renewed for further periods of 15 years
pursuant to section 138 of the Gambling Act 2003 (NZ). The carrying value of the
casino licence, which arose on SkyCity's acquisition of Otago Casinos Limited, is
$4.4 million (FY19: $4.4 million).
The asset is not amortised but is reviewed for impairment annually.
(a) Impairment Tests for Intangibles with Indefinite Lives
2020
Goodwill
Casino Licence
Total
2019
Goodwill
Casino Licence
Total
SKYCITY
AUCKLAND
OTAGO
CASINOS
LIMITED*
SKYCITY
HAMILTON*
$'000
$'000
$'000
TOTAL
$'000
–
–
35,786
35,786
405,000
405,000
4,391
4,391
–
409,391
35,786
445,177
–
–
35,786
35,786
405,000
405,000
4,391
4,391
–
409,391
35,786
445,177
Other than Otago Casinos Limited, the recoverable amount of a cash generating unit is determined based
on value in use calculations. These calculations use cash flow projections approved by directors which
include cash flows in relation to the International Business where those cash flows relate to the relevant
cash generating unit. There is a significant surplus between the calculated value in use and the carrying
value for each cash generating unit. The value of the Wharf (Otago Casinos Limited) casino licence is the
potential ability to utilise the licence to enhance the Group's gaming offering.
*SkyCityHamiltonandOtagoCasinosLimitedareincludedwithinthe'OtherNewZealandOperations'segmentinnote2.
(b) Key Assumptions used for Value in Use Calculations of Cash Generating Units
SkyCity Auckland
SkyCity Hamilton
EBITDA MARGIN
TERMINAL
GROWTH RATE
PRETAX
DISCOUNT RATE
2020
$'000
36.0%
41.4%
2019
$'000
40.0%
43.5%
2020
$'000
2.0%
2.0%
2019
$'000
2.0%
2.0%
2020
$'000
11.0%
11.0%
2019
$'000
11.6%
11.6%
These assumptions are consistent with past experience adjusted for economic indicators. The discount rates
are pre-tax and reflect specific risks relating to the relevant operating segment. The estimated impacts of
COVID-19 have been factored into these assumptions.
There is sufficient headroom between the value in use calculations and the carrying value of the related
cash generating units' assets that significant changes in the assumptions used would not require an
impairment.
Notes to the Financial Statements
207
(c) Adelaide Casino Licence Impairment Charge
In the current year, the Group has impaired
the Adelaide casino licence by A$150.0 million
(NZ$160.6 million). The recoverable amount has
been determined using the fair value less cost of
disposal approach using Level 3 of the fair value
measurement hierarchy.
The impairment has arisen due to revised
expectations regarding the time frame for
SkyCity Adelaide to achieve its long term
potential earnings following completion of the
expansion project. The reduced earnings outlook
for SkyCity Adelaide has been exacerbated in
the short-to-medium term by the recent and
expected ongoing impacts of COVID-19, including
an expectation that International Business activity
may take some years to recover.
The Group engaged Deloitte to prepare an
independent valuation for the Adelaide cash
generating unit for the purposes of determining the
impairment amount. A key input into the valuation
was the five-year forecast for SkyCity Adelaide which
had been adopted by the Board. Deloitte calculated
a valuation range which was used to assess
impairment and resulted in an impairment range
of A$125.0 million to A$173.0 million. Directors have
adopted an impairment of A$150 million, which
is approximately the mid-point of the
impairment range.
The independent valuation was based on the
following key assumptions:
uplift is expected from the Adelaide expansion,
further growth is expected for the next few years
before levelling off from FY26 onwards. Growth has
been estimated factoring in the expected increase
in gaming machine market share, the expected
increase in premium and VIP gaming activity, the
positive impact of the new hotel and restaurants
attracting additional visitors, the positive impact
of recent and current developments in the
surrounding precinct (including a new car park
building) and other known factors.
The impairment amount is sensitive to changes
in the EBITDA growth and information on this
sensitivity is provided below.
Terminal Growth Rate
The directors and Deloitte have assessed the
terminal growth rate at 2% based on long
term inflation rates and a continued focus on
cost efficiencies.
The impairment amount is sensitive to changes in
the terminal growth rate and information on this
sensitivity is provided below.
Terminal Capex
Terminal capex has been based on the
experience at SkyCity's other casino locations and
benchmarking against other casino companies.
The impairment amount is sensitive to changes in
the terminal capex amount and information on this
sensitivity is provided below.
compound annual EBITDA growth rate from FY19
to FY25 = 21.1%;
Discount Rate
The discount rate has been independently
calculated by Deloitte and reflects the valuation of
SkyCity Adelaide on a standalone basis and future
uncertainty regarding performance after opening
the expansion.
The discount rate represents the current market
assessment of the risks specific to Adelaide,
taking into account the time value of money and
individual risks of the underlying assets that have
not been incorporated in the cash flow estimates
including COVID-19.
The impairment amount is sensitive to changes in
the discount rate and information on this sensitivity
is provided below.
•
•
•
terminal growth rate = 2%;
terminal capex amount = 75% of tangible asset
depreciation; and
•
discount rate = 10.8%.
The directors have reviewed and adopted these
assumptions and the Deloitte valuation.
EBITDA Growth
Determining an appropriate growth rate is made
difficult by the impact of COVID-19 on the FY20
results and its expected impact on FY21 results
and is further complicated by the opening of the
Adelaide expansion expected between October
and December 2020. A significant initial EBITDA
208
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Valuation Sensitivities
The impact of COVID-19 on the Group has already
been wide-ranging and significant. Given the
pending opening of the Adelaide expansion and
the unknown future impact of COVID-19, there is a
heightened level of uncertainty at present which
makes accurate forecasts of the future particularly
challenging.
The sensitivities below illustrate the impact on
the impairment assessment of changes in the key
assumptions:
•
•
•
•
(decrease)increase of 5% in the initial five-year
EBITDA = increase(decrease) to the impairment
of around $27 million;
(decrease)increase of 0.5% in terminal growth
rate (1.5% to 2.5%) = increase(decrease) to the
impairment of around $20 million;
(increase)decrease of $2.5 million in terminal
capex = increase(decrease) to the impairment of
around $18 million; and
(increase)decrease of 0.5% in the discount rate
(10.3% to 11.3%) = increase(decrease) to the
impairment of around $24 million.
The valuation assumes no repeat of the previous
COVID-19 lockdown in Adelaide, which is a key
judgement and assumption. For illustrative
purposes only, directors have estimated the
potential valuation impact of a three-month
lockdown of a similar nature to the previous
lockdown, commencing 1 October 2020, to be
an increase in the impairment of approximately
A$18 million. The actual valuation impact of a
renewed lockdown (if any) would depend on the
length of the lockdown, the nature of the lockdown
restrictions and the Federal and State Government
responses. Therefore, the valuation impact of a
lockdown (if any) may differ significantly from
this estimate.
Annual Impairment Review
The Group will complete an annual impairment
review of the Adelaide casino licence going forward.
Increases in the fair value less costs of disposal or
reductions in the carrying value of the Adelaide
business could result in a partial reversal of the
impairment charge. Decreases in the fair value
less costs of disposal may result in an additional
impairment charge.
25 Receivables and Prepayments
Accounting Policy
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less
provision for doubtful debts.
Net trade receivables
Trade receivables (gross)
Provision for doubtful receivables
Trade receivables (net)
Sundry receivables and prepayments
Total receivables and prepayments
2020
$'000
50,069
(20,509)
29,560
12,692
42,252
2019
$'000
51,307
(15,147)
36,160
13,133
49,293
Due to the short term nature of these receivables, their carrying value is assumed to be equal to their fair value.
Notes to the Financial Statements
209
26 Cash and Bank Balances
Cash at bank
Cash in house
Total cash and bank balances
2020
$'000
26,047
28,177
54,224
2019
$'000
7,256
34,318
41,574
27 PP&E Classified as Held for Sale
Accounting Policy
Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally
through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying
amount and fair value less costs to sell.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other
expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
Land
Buildings
Plant and equipment
Total
2020
$'000
8,936
2,080
3
11,019
2019
$'000
8,729
104,041
2,917
115,687
Assets held for sale consist of the Darwin Little Mindil site ($11.0 million (30 June 2019: $10.8 million)). Prior
period assets held for sale included the Auckland car park concession (30 June 2019: $104.9 million) (note 4).
28 Payables and Provisions
Accounting Policy
The carrying amounts of trade and other payables are considered to be the same as their fair values, due to
their short term nature.
2020
$'000
19,364
2,302
76,366
40,427
43,047
836
39,500
221,842
2019
$'000
26,489
1,779
117,448
42,896
–
–
39,500
228,112
Trade payables
Deferred income
Accrued expenses
Employee benefits
NZICC payables (note 6)
Onerous contract provision
Liquidated damages (note 37)
Total payables and provisions
210
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 29 Share Capital
Opening balance of ordinary shares issued
672,351,166
680,342,108
1,126,996
1,152,260
Share rights issued for employee services
–
–
3,698
4,540
2020
Shares
2019
Shares
2020
$'000
2019
$'000
S
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Share buy back and cancellation
Net issue of treasury shares
Equity raising
(5,154,360)
(10,095,373)
(20,003)
(38,792)
–
72,000,000
–
–
436
177,160
–
397
–
8,591
Shares issued under dividend reinvestment plan
–
2,104,431
739,196,806
672,351,166
1,288,287
1,126,996
All ordinary shares rank equally with one vote attached to each fully-paid ordinary share.
Included within the number of shares is 5,155,841 treasury shares (2019: 5,190,841) held by the Company.
The movement in treasury shares during the year related to the issuance of shares under the employee
incentive plans and purchases of shares by an external trustee as part of the executive long term incentive
plan (refer note 34). Treasury shares may be used to issue shares under the Company's employee incentive
plans or upon the exercise of share rights/options.
Equity Raising
On 17 June 2020, the Company announced a $180.0 million institutional share placement and a
$50.0 million share purchase plan.
Institutional Share Placement
The institutional share placement was completed on 24 June 2020 (before the balance date).
The institutional share placement involved the issue of 72,000,000 new shares at $2.50 per share raising
$180.0 million. Costs associated with the placement of $2.8 million (including brokerage and legal and other
fees) were deducted from the share proceeds.
Share Purchase Plan
Subsequent to Balance Date
The share purchase plan was completed on 9 July 2020 (after the balance date) and is therefore not
included within the above table. The share purchase plan involved the issue of 21,008,403 new shares at
$2.38 per share raising $50.0 million.
30 Discontinued Operations
Sale of Darwin Operations
On 8 November 2018, SkyCity announced the sale of the Darwin business to Delaware North. A sale and
purchase agreement for A$188.0 million was signed subject to regulatory approval and other minor matters.
All conditions were satisfied and the disposal was completed on 4 April 2019.
Notes to the Financial Statements
211
31 Reserves
Asset revaluation reserve
Hedging reserve - cash flow hedges
Foreign currency translation reserve
Cost of hedging reserve
Total reserves
Movements
Asset Revaluation Reserve
Opening balance
Revaluation on transfer from property, plant and equipment
Closing balance
Hedging Reserve - Cash Flow Hedges
Opening balance
Revaluation
Transfer to net profit - finance costs (net)
Deferred tax
Closing balance
Foreign Currency Translation Reserve
Opening balance
Exchange difference on translation of overseas subsidiaries
Transfer to Income Statement on disposal of discontinued operations
Closing balance
Cost of Hedging Reserve
Opening balance
Revaluations
Transfer to finance costs
Deferred tax
Closing balance
2020
$'000
5,936
(19,913)
(17,802)
(1,542)
(33,321)
–
5,936
5,936
(22,685)
9,154
(5,143)
(1,239)
(19,913)
(24,087)
6,285
–
(17,802)
(1,793)
(113)
462
(98)
(1,542)
2019
$'000
–
(22,685)
(24,087)
(1,793)
(48,565)
–
–
–
(21,491)
3,986
(5,459)
279
(22,685)
(40,453)
(11,498)
27,864
(24,087)
(1,985)
729
(462)
(75)
(1,793)
212
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32 Derivative Financial Instruments
Accounting Policy
Cash Flow Hedge
Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and
are subsequently re-measured at their fair value.
The method of recognising the resulting gain or loss
depends on whether the derivative is designated as
a hedging instrument, and if so, the nature of the
item being hedged. The Group designates certain
derivatives as either:
(1) hedges of the fair value of recognised assets
or liabilities or a firm commitment (fair value
hedge); or
(2) hedges of exposures to variability in cash flows
associated with recognised assets or liabilities or
highly probable forecast transactions (cash flow
hedges).
Fair Value Hedge
Changes in the fair value of derivatives that are
designated and qualify as fair value hedges are
recognised in the Income Statement, together with
any changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk.
The effective portion of changes in the fair value
of derivatives that are designated and qualify as
cash flow hedges is recognised in equity in the
hedging reserve. The gain or loss relating to the
ineffective portion is recognised immediately in the
Income Statement.
Amounts accumulated in equity are recognised
in the Income Statement in the periods when the
hedged item will affect profit or loss (for instance
when the forecast sale that is hedged takes place).
When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative gain
or loss existing in equity at that time remains in
equity and is recognised in the Income Statement
when the forecast transaction is ultimately
recognised in the Income Statement. When a
forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in
equity is transferred to the Income Statement.
Derivatives that do not Qualify for
Hedge Accounting
Changes in the fair value of any derivative instrument
that does not qualify for hedge accounting are
recognised in the Income Statement.
2020
2019
2020
2019
$'000
Notional
Value
$'000
Notional
Value
$'000
Fair Value
$'000
Fair Value
Current Assets
Cross currency interest rate swaps – cash flow hedges
Forward foreign exchange contracts
Total current derivative financial instrument assets
Non-current Assets
108,220
2,152
110,372
–
53,218
6,798
6,798
Cross-currency interest rate swaps - cash flow hedges*
Total non‑current derivative financial instrument assets
155,618
155,618
255,106
255,106
Current Liabilities
Forward foreign currency contracts
Interest rate swaps – cash flow hedges
Total current derivative financial instrument liabilities
Non-current Liabilities
Interest rate swaps - cash flow hedges
Total non‑current derivative financial instrument liabilities
Total net derivative financial instruments
133,932
194,223
328,155
210,000
210,000
75,459
–
75,459
401,721
401,721
*AcomponentoftheinterestmargininUS$100.0millionoftheseCCIRSistreatedasafairvaluehedge.
70
53,288
23,100
23,100
192
5,921
6,113
24,375
24,375
45,900
–
85
85
56,201
56,201
784
–
784
30,913
30,913
24,589
Notes to the Financial Statements
213
33 Financial Risk Management
The Group’s activities expose it to a variety of
financial risks: market risks (including currency
and interest rate risk), liquidity risk, and credit risk.
The Group’s overall risk management programme
recognises the nature of these risks and seeks
to minimise potential adverse effects on the
Group’s financial performance. The Group uses
derivative financial instruments to hedge certain
risk exposures.
Risk management is carried out by a central
treasury department under a formal Treasury Policy
approved by the Board of Directors. The Treasury
Policy sets out written principles for overall risk
management, as well as policies covering specific
areas such as currency risk, interest rate risk,
credit risk, use of derivative financial instruments
and non-derivative financial instruments, and
investment of excess funds. The Treasury Policy
sets conservative limits for allowable risk exposures
which are formally reviewed regularly.
(a) Market Risk
(i) Currency Risk
The Group operates internationally and is exposed
to currency risk, primarily with respect to Australian
and US dollars. Exposure to the Australian dollar
arises from the Group’s investment in, and
intercompany loans to, its Australian operations.
Exposure to the US dollar arises from funding
denominated in that currency.
The Group utilises natural hedges wherever possible
with forward foreign exchange contracts used
to manage any significant residual risk to the
Income Statement.
The Group’s exposure to the US dollar (refer to US
private placement notes detailed in note 13) has
been fully hedged by way of cross currency interest
rate swaps (CCIRS), hedging US dollar exposure on
both principal and interest. The CCIRS correspond
in amount and maturity to the US dollar borrowings
with no residual US dollar exposure.
(ii) Interest Rate Risk
The Group's interest rate risk arises from
long term borrowings.
Interest rate swaps (IRS) and CCIRS are utilised to
modify the interest repricing profile of the Group’s
debt to match the profile required by Treasury
Policy. All IRS and CCIRS are in designated hedging
relationships that are highly effective.
As the Group has no significant interest bearing
assets, the Group’s revenue is substantially
independent of changes in market interest rates.
(iii) Summarised Sensitivity Analysis
SkyCity manages its interest rate and foreign
exchange rate exposure to minimise the impact of
fluctuations in the market. The residual exposure is
not considered material or significant.
(b) Credit Risk
Credit risk is the risk of financial loss to the Group
if a customer or counterparty to a financial
instrument fails to meet its financial obligations.
SkyCity is largely a cash based business and its
material credit risks arise mainly from financial
instruments utilised in funding and from
International Business activity.
Financial instruments (other than International
Business discussed below) that potentially create
a credit exposure can only be entered into with
counterparties that are explicitly approved by
the Board. Maximum credit limits for each of
these parties are approved on the basis of long
term credit rating (Standard & Poor’s or Moody’s).
A minimum long term rating of A+ (S&P) or
A1 (Moody’s) is required to approve individual
counterparties.
The maximum credit risk of any financial
instrument at any time is the fair value where that
instrument is an asset. All derivatives are carried at
fair value in the balance sheet. Trade receivables
are presented net of an allowance for estimated
doubtful receivables.
International Business activity is managed in
accordance with accepted industry practice.
Settlement risk associated with International
Business customers is minimised through credit
checking and a formal review and approval process.
The Group has a significant receivable from the
NZICC insurers (note 6). The lead insurer is a
subsidiary of a leading global firm and has an
AA- insurer financial strength rating given by
S&P Global Ratings.
Other than the NZICC fire insurance receivable,
there are no other significant concentrations of
credit risk in the Group.
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Liquidity risk management implies maintaining sufficient cash and the availability of funding through
an adequate amount of unutilised committed credit facilities. The Group manages liquidity risk by
continuously monitoring forecast and actual cash flows and maintaining flexibility in funding by keeping
committed credit lines available with a variety of counterparties and maturities.
Maturities of Committed Funding Facilities
Debt maturities are detailed in note 12.
LESS
THAN 6
MONTHS
6–12
MONTHS
BETWEEN
1 AND 2
YEARS
BETWEEN
2 AND 5
YEARS
OVER
5 YEARS
$'000
$'000
$'000
$'000
$'000
TOTAL
$'000
30 June 2020
Bank facility
US Private Placement
NZ Bond
Car park concession liability
Lease liabilities
–
–
128,500
–
240
120,000
299,786
–
419,786
155,618
–
–
–
–
–
171,414
70,005
397,037
–
–
–
128,500
46,193
50,013
46,193
52,673
245
507
1,668
Total committed debt facilities
128,740
275,863
300,293
173,082
166,211
1,044,189
Total drawn debt
128,740
170,863
507
173,082
166,211
639,403
Future contracted interest on drawn debt
10,829
Future interest of lease liabilities
Future contracted interest on CCIRS/IRS
1,317
3,620
6,589
1,306
2,162
9,635
2,578
4,088
27,145
7,443
7,644
9,579
63,777
301,989
314,633
1,093
18,607
Total drawn debt and derivatives
144,506
180,920
16,808
215,314
478,872
1,036,420
30 June 2019
Bank facility
US Private Placement
NZ Bond
Total committed debt facilities
Total drawn debt
Future contracted interest on drawn debt
Future contracted interest on CCIRS/IRS
Total drawn debt and derivatives
–
–
–
–
–
12,012
3,839
15,851
200,000
120,000
292,856
–
612,856
21,127
149,388
–
223,704
394,219
–
–
125,000
–
125,000
221,127
269,388
417,856
223,704
1,132,075
49,127
149,388
125,000
223,704
547,219
11,816
3,797
21,183
4,478
35,200
8,819
16,951
1,907
97,162
22,840
64,740
175,049
169,019
242,562
667,221
Notes to the Financial Statements
215
(d) Fair Value Estimation
The financial instruments are measured in the
balance sheet at fair value by level of the fair value
measurement hierarchy:
•
•
•
quoted prices (unadjusted) in active markets for
identical assets or liabilities (level 1);
inputs other than quoted prices included within
level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly
(that is, derived from prices) (level 2); and
inputs for the asset or liability that are not based
on observable market data (that is unobservable
inputs) (level 3).
Other than the New Zealand bonds, which are
listed on the NZDX and therefore level 1, all
SkyCity financial instruments, which includes
cross-currency interest rate swaps, interest rate
swaps and forward foreign currency contracts,
are valued using level 2 in the above fair value
measurement hierarchy.
The fair value of financial instruments that are
not traded in an active market (for example, over
the counter derivatives) is determined by using
valuation techniques. These valuation techniques
maximise the use of observable market data where
it is available and rely as little as possible on entity
specific estimates. If all significant inputs required
to fair value an instrument are observable, the
instrument is included in level 2.
Investment Properties are valued using level 3 in
the above fair value measurement hierarchy.
Specific valuation techniques used to value financial
instruments include:
•
•
the fair value of interest rate swaps and cross
currency interest rate swaps is calculated as the
present value of the estimated future cash flows
based on observable yield curves; and
the fair value of forward foreign exchange
contracts is determined using forward exchange
rates at the balance sheet date, with the
resulting value discounted back to present value.
Further details on derivatives are provided in
note 32.
(e) Capital Risk Management
The Group’s objectives when managing capital
are to safeguard its ability to continue as a going
concern and to maximise returns for shareholders
and benefits for other stakeholders over the
long term.
In order to optimise its capital structure, the Group
manages actual and forecast operational cash flows,
capital expenditure and equity distributions.
The Group primarily manages capital on the
basis of gearing measured as a ratio of net debt
(debt at hedged exchange rates less cash at bank)
to normalised EBITDA and interest coverage
(normalised EBITDA relative to net interest cost).
The primary ratios were as follows at 30 June:
Gearing ratio
Interest coverage
2020
2.7 x
4.5 x
2019
1.5 x
8.4 x
These ratios have been significantly distorted by the impact of the NZICC fire, sale of the Auckland car park
concession and the COVID-19 lockdown.
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34 Share-Based Payments
Accounting Policy
continued employment during the period from his
commencement date to November 2019) and no
right to dividends prior to the issuance of the shares.
SkyCity operates an equity-settled, share-based
compensation plan. The fair value of the employee
services received in exchange for the grant of the
share rights is recognised as an expense. The total
amount to be expensed over the vesting period
is determined by reference to the fair value of
the share rights granted, excluding the impact of
any non-market vesting conditions (for example,
profitability and sales growth targets). At each
balance sheet date, the Company revises its
estimates of the number of shares expected to
be distributed. It recognises the impact of the
revision of original estimates, if any, in the Income
Statement, and a corresponding adjustment to
equity over the remaining vesting period.
Current Plans
Executive Long Term Incentive Plan (LTI Plan)
Under the LTI Plan, executives purchase ordinary
SkyCity shares funded by an interest-free loan from
the Group. The shares purchased by the executives
are held by a trustee company with executives
entitled to exercise the voting rights attached to the
shares and receive dividends, the proceeds of which
are used to repay the interest-free loan.
At the end of the restricted period (three to
four years), the Group will pay a bonus to each
executive to the extent their performance targets
have been met which is sufficient to repay the
initial interest-free loan associated with the shares
which vest. The shares upon which performance
targets have been met will then fully vest to
the executives. The loan owing on shares upon
which performance targets have not been met
(the forfeited shares) will be novated from the
executives to the trustee company and will be
fully repaid by the transfer of the forfeited shares.
Performance targets relate to total shareholder
return relative to other comparable companies.
At 30 June 2020, the interest free loans relating to
the LTI Plan total $7,918,365 (2019: $7,760,214).
2018 Chief Operating Officer Commencement
Shares (COO Plan)
Under the terms of his employment agreement
dated 18 November 2017, the COO was
issued 35,000 ordinary SkyCity shares on
27 November 2019. There were no performance
targets associated with these shares (other than
2018 SkyCity Restricted Share Rights Plan
(2018 RSR Plan)
The 2018 Short Term Incentive Plan was replaced
with the 2018 RSR Plan for 116 staff, with restricted
share rights issued to staff after the finalisation of
the Group's results. Each right conferred a right to
receive one ordinary SkyCity share, which, unless
otherwise agreed by the SkyCity Board, would only
vest if the relevant employee remained continuously
employed by SkyCity (or a company within the
Group) from the date of issue until the vesting date
on 1 July 2020.
Performance Incentive Plan (PIP)
The 2018 RSR Plan was replaced in 2019 with the
PIP which includes both cash (the short term
incentive scheme component of the PIP) and
deferred equity components (the deferred short
term incentive component of the PIP).
The deferred short term incentive scheme under
the PIP offers participants, subject to the relevant
performance conditions being met, the opportunity
to acquire restricted share rights of an amount
equivalent to between 10% and 50% of their base
salary. Restricted share rights (if any) issued to a
participant on a short term incentive cash payment
date (Declaration Date) will only vest if that
participant remains an employee up to and until:
•
•
the first anniversary of the Declaration Date in
respect of 50% of the restricted share rights; and
the second anniversary of the Declaration Date
in respect of the remaining 50% of the restricted
share rights.
However, if a participant’s deferred short term
incentive entitlement in any financial year is to
restricted share rights having a value of $10,000 or
less (calculated using the volume-weighted average
sale price of SkyCity shares used to determine
the number of restricted share rights to be issued
to the participant), the restricted share rights
will not be split out equally into two separate
tranches, but will instead comprise one tranche
and (subject to the vesting criteria being satisfied)
vest to the participant on the first anniversary of the
Declaration Date.
These restricted share rights will be issued to staff
after the finalisation of the Group’s results.
Notes to the Financial Statements
217
Outstanding Share Rights
Movements in the number of share rights outstanding are as follows:
GRANT DATE
EXPIRY DATE
BALANCE
AT START
OF THE
YEAR
GRANTED
DURING THE
YEAR
EXERCISED
DURING THE
YEAR
EXPIRED
DURING
THE YEAR
BALANCE
AT END OF
THE YEAR
Number
Number
Number
Number
Number
2020
LTI Plan
26/08/15
28/08/19
24/08/16
24/08/20
23/08/17
23/08/21
22/08/18
22/08/21
28/08/19
28/08/22
COO Plan
18/11/17
18/11/19
2018 RSR Plan
11/09/18
01/07/20
PIP
06/09/19
06/09/20
10/09/19
10/09/20
06/09/19
06/09/21
10/09/19
10/09/21
Total
2019
LTI Plan
27/08/14
27/08/18
26/08/15
28/08/19
24/08/16
24/08/20
23/08/17
23/08/21
22/08/18
22/08/21
CEO Plan
04/11/16
03/11/18
COO Plan
18/11/17
18/11/19
2018 RSR Plan
11/09/18
01/07/20
Total
360,000
395,000
865,883
434,035
–
–
–
–
–
508,207
35,000
1,859,641
–
–
–
–
–
–
508,296
23,047
498,004
8,720
–
–
–
–
–
(360,000)
–
(15,000)
380,000
(15,000)
850,883
–
434,035
(23,569)
484,638
(35,000)
–
–
–
–
–
–
–
(50,933)
1,808,708
(4,552)
503,744
–
23,047
(25,713)
472,291
–
8,720
3,949,559
1,546,274
(35,000)
(494,767)
4,966,066
555,000
380,000
415,000
910,883
–
–
–
–
–
434,035
325,000
35,000
–
–
–
1,898,564
–
–
–
–
–
(325,000)
–
–
(555,000)
–
(20,000)
360,000
(20,000)
395,000
(45,000)
865,883
–
–
–
434,035
–
35,000
(38,923)
1,859,641
2,620,883
2,332,599
(325,000)
(678,923)
3,949,559
The weighted average remaining contractual life of rights outstanding at the end of the period was 0.65 years
(2019: 1.42 years).
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Fair Values
Fair Value of Share Rights Granted
The assessed fair value at grant date of the rights
granted on 28 August 2019 was $1.14 (22 August 2018
was $1.17). This was calculated using the single
index model by Ernst & Young Transaction
Advisory Services Limited.
The valuation inputs for the rights granted on
28 August 2019 included:
(a) rights are granted for no consideration;
(b) exercise price: nil (2019: nil); and
(c) share price at grant date: $3.90 (2019: $4.34).
The expected price volatility is derived by analysing
the historic volatility over a recent historical period
similar to the term of the right.
Fair Value of Chief Operating Officer
Commencement Shares
The assessed fair value at grant date of the
commencement shares at 18 November 2017
was $2.68. This was calculated using the European
call option model by Ernst & Young Transaction
Advisory Services Limited.
The valuation inputs for the commencement shares
on 18 November 2017 included:
(a) no consideration;
(b) exercise price: nil;
(c) share price at grant date: $3.57; and
(d) no right to dividends.
The expected price volatility is derived by analysing
the historic volatility over a recent historical period
similar to the term of the commencement shares.
Fair Value of SkyCity Restricted Share Rights
The assessed fair value of each right was determined
by Ernst & Young Transaction Advisory Services
Limited at $3.02.
Fair Value of SkyCity Deferred Share Rights
No rights will be issued in respect of the year ended
30 June 2020. The assessed fair value of each 2019
right was determined by Ernst & Young Transaction
Advisory Services Limited. Rights vesting one year
after year end were valued at $3.68 and rights vesting
two years after year end were valued at $3.33.
Expenses Arising from Share-Based Payment Transactions
Total expenses arising from share-based payment transactions recognised during the period as part of
employee benefit expense were as follows:
Rights issued under Share Rights Plans
2020
$'000
3,698
2019
$'000
4,540
Notes to the Financial Statements
219
35 Related Party Transactions
(a) Key Management Personnel Compensation
Key management personnel compensation is set out below. The key management personnel are all the
directors of the company, the CEO and the Senior Leadership Team.
2020
2019
SHORT TERM
BENEFITS
SHARE‑BASED
PAYMENTS
$'000
7,372
8,993
$'000
2,045
2,311
TOTAL
$'000
9,417
11,304
(b) Other Transactions with Key Management Personnel or Entities Related to Them
Certain directors and management have relevant interests in a number of companies with which SkyCity
has transactions in the normal course of business. A number of SkyCity directors are also non-executive
directors of other companies, and a register of directors' interests is maintained. Any transactions
undertaken with these entities have been entered into in the normal course of business.
Certain directors and management hold shares in SkyCity and receive dividends in the normal course
of business.
Certain directors provided additional consultancy services to the Group outside of their capacity as directors.
Consultancy fees paid to directors during the year amounted to $18,900 (FY19: $28,500).
(c) Subsidiaries
Interests in subsidiaries are set out in note 36.
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36 Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following
significant subsidiaries in accordance with the accounting policy described in note 1(b):
NAME OF ENTITY
PRINCIPAL
PLACE OF
BUSINESS
CLASS OF
SHARES
Cashel Asset Management Limited
New Zealand
Ordinary
EQUITY HOLDING
2020
%
100%
2019
%
100%
Horizon Tourism New Zealand Limited
(formerly SkyCity Wellington Limited)
New Zealand
Ordinary
100%
100%
Lets Play Live Media Limited
New Zealand
Ordinary
New Zealand International Convention Centre Limited
New Zealand
Ordinary
Otago Casinos Limited
Queenstown Casinos Limited
Sky Tower Limited
SkyCity Action Management Limited
SkyCity Auckland Holdings Limited
SkyCity Auckland Limited
SkyCity Casino Management Limited
SkyCity Development Limited
SkyCity Enterprises Limited
SkyCity Hamilton Limited
SkyCity Holdings Limited
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
SkyCity International Holdings Limited
New Zealand
Ordinary
SkyCity Investments Australia Limited
New Zealand
Ordinary
SkyCity Investments Queenstown Limited
New Zealand
Ordinary
SkyCity Management Limited
SkyCity Precinct Limited
SkyCity Projects Limited
SkyCity Properties Limited
SkyCity Properties Albert St Limited
SkyCity Properties Victoria St Limited
SkyCity Ventures Limited
TNZ Esports Limited
LPL Media Pty Limited
SkyCity Adelaide Pty Limited
SkyCity Australia Finance Pty Limited
SkyCity Australian Limited Partnership
SkyCity Australia Pty Limited
SkyCity Treasury Australia Pty Limited
Horizon Tourism Limited
SkyCity Investment Holdings Limited
SkyCity Malta Holdings Limited
SkyCity Malta Limited
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
Australia
Ordinary
Australia
Ordinary
Australia
Ordinary
Australia
Ordinary
Australia
Ordinary
Australia
Ordinary
Hong Kong
Ordinary
Hong Kong
Ordinary
Malta
Malta
Ordinary
Ordinary
SkyCity Management (UK) Limited
United Kingdom
Ordinary
All wholly-owned subsidiary companies have balance dates of 30 June.
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
100%
100%
100%
100%
100%
100%
100%
100%
–
–
100%
–
100%
100%
100%
100%
–
–
100%
100%
100%
–
–
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Notes to the Financial Statements
221
37 Contingencies
(a) Contingent Liabilities
The possibility exists for the Group to receive third party claims in respect of the NZICC fire. However, only
minor claims have been received to date. It is the Group’s expectation that any claims received will be
covered by either the insurers or the Contractor (30 June 2019: nil).
(b) Contingent Assets
Included within the FCC construction contracts for the NZICC and Horizon Hotel is the right to liquidated
damages if certain milestones are not met. To date SkyCity has withheld $39.5 million (2019: $39.5 million)
from payments to FCC for liquidated damages. The amounts withheld have been recognised as part of
current liabilities (refer note 28) as ultimate recovery is not able to be considered virtually certain due to the
fact that SkyCity’s right to retain these liquidated damages is disputed by FCC. Costs incurred by SkyCity
due to the delays in the NZICC and Horizon Hotel project are expected to be partially covered by the
liquidated damages.
As detailed in note 6, the Group intends to seek recovery from FCC for losses associated with the NZICC
fire to the extent that they are not covered by the insurers. These losses may include insurance excesses,
payments to Macquarie under the Auckland car park concession agreement and other items. To date,
the Group has identified $8.9 million of costs that may not be covered by insurance. These have not yet been
recognised as income as recovery is not considered virtually certain at this time.
There are no other significant contingent assets at year end (2019: nil).
38 Commitments
(a) Capital Commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as set out below.
Property, plant and equipment
2020
$'000
440,342
2019
$'000
257,735
The majority of the capital commitments relate to the construction of the NZICC, Horizon Hotel and the
SkyCity Adelaide expansion.
The above commitments include the estimated cost of reinstating the NZICC and Horizon Hotel. The cost of
reinstating the damage to the NZICC and Horizon Hotel arising from the NZICC fire is currently estimated
to be $330.0 million to $375.0 million for the NZICC and $6.0 million for the Horizon Hotel, all of which
is expected to be paid for using insurance proceeds. The actual costs may be materially different to these
estimates, however these costs are expected to be fully covered by insurance. Further information is
included in note 6.
222
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 39 Reconciliation of Profit After Income Tax to Net Cash Inflow
from Operating Activities
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
I
F
I
Profit for the year
Depreciation and amortisation (including discontinued operations)
Net finance costs
Current period employee share expense
Gain on sale of fixed assets
Fair value adjustment to investment property
NZICC fire related income
NZICC fire related costs
Adelaide casino licence impairment
Share of profits/(losses) of associates
Transfer from Foreign Currency Translation Reserve
Change in operating assets and liabilities
Change in receivables and prepayments
Change in inventories
Change in deferred tax asset
Change in payables
Change in deferred tax liability
Change in tax receivable – current
Change in non current payables
Change in tax payable – current
Working capital relating to discontinued operations
Investing and financing items included in working capital movements
Net cash inflow from operating activities
*EquivalenttoA$150million.
2020
$'000
235,388
86,559
28,613
3,697
(66,779)
14,055
(384,500)
108,090
160,600*
83
–
7,041
(169)
(2,748)
(6,270)
(24,271)
(1,059)
9,057
(13,877)
–
(33,344)
120,166
2019
$'000
144,581
84,698
10,240
4,540
(18,453)
3,204
–
–
–
737
27,864
(25,914)
1,111
(4,843)
34,387
(9,299)
3,869
(1,776)
7,277
11,415
(21,314)
252,324
40 Events Occurring after the Balance Sheet Date
(a) Funding plan
On 17 June 2020, SkyCity announced a funding plan to provide additional financial flexibility in response to
COVID-19 (note 1(h)). That plan included a $230 million equity raising and additional debt facilities.
As detailed in note 12, in July 2020 the existing bank facility was restructured and extended, a new revolving
credit facility was established and funding covenant waivers obtained.
As detailed in note 29, in July 2020 the second part of the equity raising (the share purchase plan) was
completed and a further $50.0 million raised.
(b) COVID-19
On 13 July 2020, SkyCity applied for the extended New Zealand wage subsidy and received $9.5 million.
On 12 August 2020, the New Zealand Government reinstated COVID-19 Alert Level 3 for the Auckland
region and the rest of New Zealand moved to Alert Level 2. On 31 August 2020, the Auckland region
moved to Alert Level 2, consistent with the rest of New Zealand. From 12 – 30 August 2020, the vast
majority of SkyCity Auckland’s operations were closed, including all gaming areas. From 12 August 2020,
SkyCity Hamilton and SkyCity Queenstown, and SkyCity Auckland from 31 August 2020, have operated
in compliance with the New Zealand Government’s requirements for social gatherings, contact tracing
and hygiene. Following the initial COVID-19 outbreak, SkyCity restructured its operations and funding
arrangements to withstand a long recovery period and the latest closure and operating restrictions have
not required any further restructuring.
223
Reconciliation of Normalised Results
to Reported Results
SkyCity’s objective of producing normalised financial information is to provide data that is useful to the
investment community in understanding the underlying operations of the Group. The intention is to provide
information that:
•
is representative of SkyCity’s underlying performance (as a potential indicator of future performance);
• can be compared across years; and
• can assist with comparison between publicly listed casino companies in New Zealand and Australia.
This objective is achieved by:
•
eliminating the inherent volatility (or “luck” factor) from International Business, which has variable
turnover and actual win percentage from period to period;
• eliminating structural differences in the business between periods; and
•
eliminating known different treatments with other New Zealand and Australian publicly listed
casino companies.
SkyCity believes that, by making these adjustments, the users of the financial information will be able
to understand the underlying performance of the Group and form a view on the future performance of
the business.
For internal purposes, including budgeting and determination of staff incentives, the normalised results
are used.
Non-GAAP information is prepared in accordance with the company’s Non-GAAP Financial Information
Policy, which is reviewed and approved by the SkyCity Board at each reporting period. The Non-GAAP
Financial Information Policy was applied consistently in respect of the financial statements for the financial
years ended 30 June 2019 and 30 June 2020.
The differences between the company’s FY20 and FY19 reported and normalised information is summarised
in the table below:
FY20
FY19
Revenue
$m
EBITDA
$m
EBIT
$m
NPAT
$m
Revenue
$m
EBITDA
$m
EBIT
$m
NPAT
$m
Reported
1,125.0*
348.3
261.7
235.4
822.3
297.8
217.8
144.6
International Business
revenue adjustment
Gaming GST
International Business at
theoretical win rate
39.3
73.4
(7.3)
–
–
–
–
–
–
80.3
95.2
–
–
–
–
–
–
0.1
0.1
0.2
49.9
38.7
38.7
27.8
Gain on sale – Auckland car parks
(66.4)
(66.4)
(66.4)
(66.4)
(17.4)
(17.4)
(17.4)
(17.7)
Revaluation of Auckland properties
Significant tax events
NZICC fire impacts
Labour restructure
Funding plan costs
Deferred tax liability reversal
Adelaide casino licence impairment
Sale of Darwin
Normalised
–
–
14.1
–
14.1
14.1
–
–
(384.5)
(269.4)
(269.4)
(268.5)
13.5
13.5
–
–
–
–
9.7
5.4
(24.1)
160.6**
160.6**
160.6**
–
–
–
–
–
–
–
–
(0.4)
–
–
–
–
–
–
–
3.2
3.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3.2
(9.5)
–
–
–
–
–
16.2
779.5
200.7
114.2
66.3
1,029.8
322.2
242.4
164.6
*ThisisasummationofthefirstsixlinesonthefaceoftheIncomeStatement.
**EquivalenttoA$150million.
224
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 Adjustment
Discussion
Treat International Business
commissions as an expense
rather than reduction in
revenue which reduces both
reported revenue and operating
expenses within International
Business (by $39.3 million in
FY20 and $80.3 million in FY19)
Add gaming GST to reported
revenue (by $73.4 million in
FY20 and $95.2 million in FY19)
Apply theoretical win rate of
1.35% for International Business
vs. actual win rate of 1.47%
(FY20) and 1.00% (FY19)
Eliminate gain ($66.4 million)
arising from Auckland car park
concession sale (completed
in August 2019) and the FY19
gain ($17.4 million) on sale of
Federal Street car park (sold in
April 2019)
Reverse impact of revaluation
(reduction of $14.1 million) of
Auckland investment properties
(FY19 $3.2 million)
•
•
•
•
•
•
This adjustment adds back International Business commissions
(treated as a reduction from revenue in the reported results) and
increases both revenue and expenses. This adjustment does not
impact EBITDA, EBIT or NPAT
This adjustment has been made to maintain the relationship
between turnover and the theoretical win rate of 1.35% when
determining normalised revenue
Reported revenue included within the financial statements of the
Group excludes GST
This adjustment adds back GST associated with gaming so that
normalised revenue equals the amount bet by gaming customers
All publicly listed New Zealand and Australian casino companies
include GST associated with gaming within their revenue results.
Including gaming GST within reported revenue is not consistent
with GAAP and SkyCity therefore does not do so
However, SkyCity does include gaming GST within its
normalised revenue
•
This adjustment does not impact EBITDA, EBIT or NPAT
•
•
•
•
•
This adjustment recalculates gaming win from International Business
to the theoretical win rate. The vast majority of International Business
play is Baccarat. Statistically, over the long term the casino expects
to win 1.35% of all bets taken on Baccarat. However, in any particular
reporting period the actual results of play will vary depending
on “luck”
The 1.35% win rate is used by all publicly listed New Zealand and
Australian casino companies in addition to casino companies in Asia
and the United States
In order to understand the long term results within International
Business there is the need to eliminate the inherent volatility or
“luck” factor
The FY20 reported results include a significant gain relating to the
Auckland car park concession sale which settled in August 2019
The FY19 reported results include a significant gain relating to the sale
of the Federal Street car park which settled in April 2019
• The adjustment reverses these gains
•
•
•
•
SkyCity has a number of investment properties in Auckland.
In accordance with the appropriate accounting standard, these
investment properties will be revalued by an independent expert
every year and the carrying value adjusted within the Group’s
financial statements
This adjustment reverses the decline in value of these properties
The revaluation is non-cash and unrelated to the operations of
the Group
This adjustment will be made each year to determine the Group’s
normalised results
225
Adjustment
Discussion
Eliminate net gain
($268.5 million after tax) arising
from impacts of NZICC fire
Labour restructure
(FY20 $9.7 million after
tax) and funding plan costs
(FY20 $5.4 million after tax)
Deferred tax liability reversal,
$24.1 million
•
•
•
•
•
•
•
On 22 October 2019, there was a significant fire at the construction
site of the New Zealand International Convention Centre (NZICC)
in Auckland
This fire has caused extensive damage to the NZICC and relatively
minor damage to the Horizon Hotel which is being constructed on
the adjacent site
Both buildings are insured and all significant costs associated with
the fire are expected to be fully covered. Any costs not covered by
insurance are expected to be sought from Fletcher Construction
The fire has significant implications for the financial statements for
the Group – these are explained further on page 184 and in SkyCity’s
financial statements which have been released to the NZX and ASX
At this point in time, a full assessment of the damage is not
available, nor is an agreed reconstruction timeline available. As a
result, the financial statements include a number of significant
judgements and estimates to determine the appropriate accounting.
These judgements and estimates will continue to be reviewed as new
information becomes available
The NZICC fire (and associated accounting impact) is a significant,
one-off event that has impacted the comparability of the FY20 result
with the prior year
As part of its response to COVID-19, SkyCity undertook a labour
restructure and implemented a new funding plan
• This adjustment eliminates the costs associated with those actions
•
As part of its response to COVID-19, the New Zealand Government
reinstated tax depreciation for commercial properties, this resulted in
a non-cash accounting reduction in the FY20 tax expense
• This adjustment eliminates this one-off reduction to tax expense
Adelaide casino licence
impairment $160.6 million
(A$150 million)
•
•
In the current year, the Group has impaired the Adelaide casino
licence by A$150.0 million (NZ$160.6 million)
The impairment has arisen due to revised expectations regarding the
time frame for SkyCity Adelaide to achieve its long term potential
earnings following completion of the expansion project. The reduced
earnings outlook for SkyCity Adelaide has been exacerbated in the
short-to-medium term by the recent and expected ongoing impacts
of COVID-19, including an expectation that International Business
activity may take some years to recover
• This adjustment eliminates this non-cash expense
226
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 Adjustment
Discussion
FY19 only Adjustments
Eliminate significant tax events
(net $9.5 million decrease to
normalised NPAT)
During FY19, SkyCity had a number of significant tax events which have
impacted the reported effective tax rate.
ATO Tax Review
As part of the Australian Tax Office’s (ATO) Streamlined Assurance
Review of SkyCity’s Australian operations, SkyCity and the ATO
agreed to settle differences of opinion on the treatment of certain
financing arrangements. As a result of this settlement, SkyCity made
a A$3.5 million payment to the ATO. This payment relates to historical
items only and does not change SkyCity’s future tax payments or
tax expense.
Auckland Car Park Concession Sale Deferred Tax
The deferred tax consequences of the Auckland car park concession
sale were recognised in FY19 – this was a $11.5 million reduction in
tax expense.
Share of Partnership Expenditure – Tax Election
In the current year, SkyCity made a New Zealand tax election for the
SkyCity Australian Limited Partnership. This resulted in a one-off benefit
of $1.9 million in the FY19 tax expense.
Summary
This adjustment eliminates the net reduction (from the above items) in
tax expense for the purpose of the normalised results.
Eliminate Darwin operations
from normalised results
• During FY19, SkyCity sold its Darwin operations
•
Darwin has been fully excluded from FY19 normalised results to
enable appropriate comparisons with FY20
Reconciliation of Normalised Results to Reported Results
227
GRI Content Index
General Standard Disclosures
SECTION
Organisational
Profile
ASPECT / GRI
DISCLOSURE
DESCRIPTION
PUBLICATION
PAGE(S) LIMITATIONS
EXTERNAL
ASSURANCE
102-1
Name of organisation
Annual Report 2020:
Company Disclosures
149
102-2
Activities, brands, products
and services
Annual Report 2020:
About SkyCity
29–43
102-3
Location of headquarters
102-4
Location of operations
102-5
Ownership and legal form
102-6
Markets served
102-7
Scale of organisation
Annual Report 2020:
About SkyCity
Annual Report 2020:
Directory
29
233
Annual Report 2020:
About SkyCity
29–43
Annual Report 2020:
Directory
Annual Report 2020:
Notes to the Financial
Statements
233
170
145–147
Annual Report 2020:
Shareholder and
Bondholder
Information
Annual Report 2020:
About SkyCity
29–43
i. Total number of
employees
Annual Report 2020:
Diversity Snapshot
18–19
Yes
Annual Report 2020:
Our People
90–91
ii. Total number of
operations
Annual Report 2020:
Creating Value
12
iii. Net sales
Annual Report 2020:
About SkyCity
29–43
Annual Report 2020:
Income Statement
164
iv. Total capitalisation
Annual Report 2020:
Balance Sheet
166–167
v. Quantity of products
and services provided
Annual Report 2020:
Creating Value
12–13
Annual Report 2020:
About SkyCity
29–43
Additional information
Annual Report 2020
12–19
102-8
Information on employees
and other workers
Annual Report 2020:
Our People
18–19
79–91
Note 1
Yes
228
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020
SECTION
Organisational
Profile
ASPECT / GRI
DISCLOSURE
DESCRIPTION
PUBLICATION
PAGE(S) LIMITATIONS
EXTERNAL
ASSURANCE
102-9
Supply chain
102-10
Significant changes to the
organisation and its
supply chain
101–109
Yes
4–7,
21–27
Annual Report 2020:
Our Suppliers
Annual Report 2020:
Chair's Review, Chief
Executive Officer's
Review and
Delivering Our
Group Strategy
102-11
Precautionary principle
or approach
SkyCity Ethical
Sourcing Code
102
102-12
External initiatives
Strategy
102-14
Statement from senior
decision-maker
Annual Report 2020:
Our Sustainability
63–64
Annual Report 2020:
Our People
79–89
Annual Report 2020:
Our Environment
111–119
4–7,
21–27
Annual Report 2020:
Chair's Review, Chief
Executive Officer's
Review and
Delivering Our
Group Strategy
Yes
Yes
Ethics and
Integrity
102-16
Values, principles, standards
and norms of behaviour
SkyCity Code
of Conduct
www.skycityentertainmentgroup.com
Governance
102-18
Governance structure Annual Report 2020:
60
Our Senior
Leadership Team
123–133
Annual Report 2020:
Corporate Governance
Statement and Other
Disclosures
Stakeholder
Engagement
102-40
List of stakeholder groups
Annual Report 2020:
Our Sustainability
69, 79, 93, 101, 111
www.skycityentertainmentgroup.com
102-41
102-42
102-43
102-44
102-45
102-46
Reporting
Practice
Collective bargaining
agreements
Annual Report 2020:
Our People
91
Identifying and selecting
stakeholders
SkyCity Code
of Conduct
129
www.skycityentertainmentgroup.com
Approach to stakeholder
engagement
SkyCity Code
of Conduct
129
www.skycityentertainmentgroup.com
Key topics and
concerns raised
Annual Report 2020:
Our Sustainability
63–67
Entities included in the
consolidated financial
statements
Annual Report 2020:
Notes to the Financial
Statements
172, 221
Defining report content and
topic boundaries
Annual Report 2020:
About this Annual
Report
9
102-47
List of material topics
Annual Report 2020:
Our Sustainability
63–67
Annual Report 2020:
Our Sustainability
65–67
GRI Content Index
229
SECTION
Reporting
Practice
ASPECT / GRI
DISCLOSURE
102-48
DESCRIPTION
PUBLICATION
PAGE(S) LIMITATIONS
EXTERNAL
ASSURANCE
Restatements of
information
Not applicable
None
102-49
Changes in reporting
Annual Report 2020:
Notes to the Financial
Statements
172–173
102-50
Reporting period
Annual Report 2020
Cover Page
102-51
Date of most recent report
Annual Report 2020:
About this Annual
Report
9
102-52
Reporting cycle
Annual Report 2020
Cover page
102-53
Contact point for questions
regarding the report
Annual Report 2020:
Our Sustainability
64
Annual Report 2020:
Remuneration Report
134
Annual Report 2020:
Directory
102-54
Claims of reporting in
accordance with the
GRI standards
Annual Report 2020:
About this Annual
Report
233
9
Limitations:
Note 1 – The reporting on GRI 102-8 on employees and other workers does not include ‘activities performed
by workers who are not employees’ and ‘significant variations in numbers reported’.
Specific Standard Disclosures
SECTION
Conserve the
Environment
ASPECT / GRI
DISCLOSURE
GRI 103
DESCRIPTION
PUBLICATION
PAGE(S) LIMITATIONS
EXTERNAL
ASSURANCE
Energy management
approach
Annual Report 2020:
Our Environment
111–117
GRI 302-3
Energy intensity
Annual Report 2020:
Our Environment
111–117
GRI 103
Emissions management
approach
Annual Report 2020:
Our Environment
111–119
GRI 305-4
GHG emissions intensity
Annual Report 2020:
Our Environment
118–119
Source Ethically
and Responsibly
GRI 103
Ethical and sustainable
procurement management
approach
Annual Report 2020:
Our Suppliers
101–109
230
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020
SECTION
Inspire Our
People
ASPECT / GRI
DISCLOSURE
GRI 103
Health and safety
management approach
DESCRIPTION
PUBLICATION
PAGE(S) LIMITATIONS
EXTERNAL
ASSURANCE
GRI 403-2
Types and rates of injury
Annual Report 2020:
Our Risk Profile and
Management
Annual Report 2020:
Health, Safety and
Wellbeing
Annual Report 2020:
Our Risk Profile and
Management
50–51
81–82
50
Yes
Annual Report 2020:
Health, Safety and
Wellbeing
81–82
GRI 103
Employee engagement
management approach
Annual Report 2020:
Our People
79–89
GRI 404-2
Employee programmes
GRI 103
Diversity, inclusion and
belonging management
approach
Annual Report 2020:
Our People
79–89
Annual Report 2020:
Our People
85–89
GRI 405-1
Governance and employee
diversity
Annual Report 2020:
Our People
85–89
Yes
SkyCity Diversity and
Inclusion Policy
www.skycityentertainmentgroup.com
Host Responsibly GRI 103
Customer health and safety
management approach
Annual Report 2020:
Our Risk Profile and
Management
50–51
Annual Report 2020:
Our Customers
69–77
GRI 416-1
Assessment of health and
safety of products and
services
Annual Report 2020:
Our Risk Profile and
Management
50–51
GRI 416-2
GRI 103
GRI 419-1
Non-compliance incidents
related to health and safety
of products and services
Socio-economic
compliance management
approach
Non-compliance with
socio-economic laws and
regulations
Annual Report 2020:
Our Customers
69–77
Annual Report 2020:
Our Customers
69–77
Annual Report 2020:
Our Customers
69–77
Annual Report 2020:
Our Customers
69–77
Note 1
Limitations:
Note 1 – The reporting of GRI 419-1 on Non-compliance with Socio-Economic Laws and Regulations does
not include economic laws and regulations.
GRI Content Index
231
Glossary
Casino Win
EBIT
EBITDA
GAAP
the amount lost or spent by players, calculated as Turnover minus amounts
awarded to players
earnings before interest and tax
earnings before interest, tax, depreciation and amortisation
generally accepted accounting principles
Hold or Win Rate
casino win expressed as a percentage of turnover
Normalised EBITDA
earnings before interest, tax, depreciation and amortisation adjusted to take into
account a theoretical win rate of 1.35% on International Business play and other
adjustments and calculated in accordance with SkyCity's Non-GAAP Financial
Information Policy
Normalised NPAT
net profit after tax adjusted to take into account a theoretical win rate of
1.35% on International Business play and other adjustments and calculated in
accordance with SkyCity's Non-GAAP Financial Information Policy
Normalised Revenue
revenue adjusted to take into account a theoretical win rate of 1.35% on
International Business play and other adjustments and calculated in accordance
with SkyCity's Non-GAAP Financial Information Policy
Normalised Win Rate
the expected long term average hold
NPAT
net profit after tax
Reported EBITDA
earnings before interest, tax, depreciation and amortisation calculated in
accordance with GAAP in New Zealand
Reported NPAT
net profit after tax calculated in accordance with GAAP in New Zealand
Reported Revenue
revenue calculated in accordance with GAAP in New Zealand
RevPar
Turnover
revenue per available room
total amount wagered by players
232
SkyCity Entertainment Group Annual Report Year Ended 30 June 2020
Directory
REGISTERED OFFICE
SKYCITY LOCATIONS
SkyCity Entertainment Group Limited
SKYCITY AUCKLAND
NEW ZEALAND
Level 13
99 Albert Street
Auckland
New Zealand
Telephone: +64 9 363 6000
AUSTRALIA
Railway Building
North Terrace
Adelaide
SA 5000
Australia
Telephone: +61 8 8212 2811
Email: sceginfo@skycity.co.nz
www.skycityentertainmentgroup.com
Corner Victoria and Federal Streets
Auckland 1010
New Zealand
Telephone: +64 9 363 6000
SKYCITY HAMILTON
346 Victoria Street
Hamilton 3204
New Zealand
Telephone: +64 7 834 4900
SKYCITY QUEENSTOWN
Level 2, Stratton House
16-24 Beach Street
Queenstown 9300
New Zealand
Telephone: +64 3 441 0400
SKYCITY QUEENSTOWN WHARF
Steamer Wharf
88 Beach Street
Queenstown 9300
New Zealand
Telephone: +64 3 441 1495
SKYCITY ADELAIDE
Railway Building
North Terrace
Adelaide
SA 5000
Australia
Telephone: +61 8 8212 2811
233
Directory
AUDITOR
PricewaterhouseCoopers
188 Quay Street
Private Bag 92162
Auckland
SUPERVISOR FOR BONDS
The New Zealand Guardian Trust
Company Limited
Dimension House
99–105 Customhouse Quay
PO Box 3845
Wellington
REGISTRARS
NEW ZEALAND
Computershare
Investor Services Limited
Level 2
159 Hurstmere Road
Takapuna
Private Bag 92119
Auckland
Telephone:
+64 9 488 8700
Facsimile:
+64 9 488 8787
Email: enquiry@computershare.co.nz
AUSTRALIA
Computershare Investor Services
Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000
GPO Box 7045
Sydney NSW 2000
Telephone:
+61 2 8234 5000
Facsimile:
+61 2 8234 5050
Email: enquiry@computershare.co.nz
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2020 skycityentertainmentgroup.com