Annual Report
Year Ended 30 June 2022
WELCOME
TO SKYCITY
THE HOME OF ENTERTAINMENT
CONTENTS
GENERAL
Report from the Chair and
Chief Executive Officer
About this Annual Report
Year in Review
Navigating the COVID-19 Pandemic
Creating Value
Performance
Supporting Our Communities
Group Strategy
Diversity Snapshot
About SkyCity
Auckland
Adelaide
Hamilton
Queenstown
Online
Risk Profile and Management
Our Board
Our Senior Leadership Team
SUSTAINABILITY
Sustainability
Our Customers
Our People
Our Communities
Our Suppliers
Our Environment
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8
10
12
14
18
20
22
26
28
30
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33
34
35
36
44
47
51
54
62
72
78
82
CORPORATE GOVERNANCE STATEMENT
AND OTHER DISCLOSURES
Corporate Governance Statement
Remuneration Report
Shareholder and Bondholder Information
Directors’ Disclosures
Company Disclosures
FINANCIAL STATEMENTS
Independent Auditor’s Report
Income Statement
Statement of Comprehensive Income
Balance Sheet
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
RECONCILIATION OF NORMALISED
RESULTS TO REPORTED RESULTS
GRI CONTENT INDEX
GLOSSARY
DIRECTORY
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97
107
109
110
115
124
125
126
128
129
130
175
178
182
183
ANNUAL MEETING
The 2022 SkyCity Annual Meeting will be held virtually via an online
platform on 28 October 2022 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 to
security holders.
REPORT
from the Chair and
Chief Executive Officer
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 L
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A Challenging Year
The 2022 financial year has been one of the most
challenging periods for the SkyCity Board and
management to date given the ongoing significant
impacts on SkyCity’s operations from the COVID-19
pandemic as well as ongoing regulatory and media focus
on the casino industry in Australasia.
Throughout the year, the COVID-19 pandemic materially
impacted SkyCity’s operations in New Zealand and
South Australia with Government mandated lockdowns
and restrictions in response to the ongoing COVID-19
pandemic and the emergence of the Omicron variant
– resulting in the closure of the SkyCity Auckland property
for an unprecedented 107 days over the period, the closure
of the SkyCity Hamilton property for 65 days, the closure
of the SkyCity Queenstown property for 22 days, and
the closure of the SkyCity Adelaide property for 8 days.
When permitted to reopen, our properties have initially
operated with significant operational constraints in place,
reduced staff and reduced operating hours.
The SkyCity Auckland
property was closed for an
unprecedented 107 days
over the period
Our key focuses throughout the year have been to keep
our people and guests safe, to preserve employment, to
meet the expectations of our regulators, and to enhance
our governance framework.
Despite the ongoing disruption and volatility, SkyCity
maintained a solid financial position over the period,
delivered credible operating performance when open,
and protected the health and wellbeing of our people.
Critically, the Board and management continued to
recognise the importance of protecting our casino
licences and enhancing our social licence to operate, with
a particular focus on uplifting our anti-money laundering
(AML) and host responsibility programmes.
Refreshed Board and Committee Structure
There has been significant renewal at Board level over
the past 14 months, with the appointment of three
new directors and the departure of two directors. In
June 2022, the SkyCity Board also announced its intention
to appoint to the Board two new Australian-based
directors, Kate Hughes and Glenn Davis. Kate and Glenn
are experienced professionals who bring considerable
expertise to the SkyCity Board across a diverse range
of sectors and industries. Their appointments remain
subject to obtaining the necessary regulatory approvals, a
process which normally takes some months to conclude
- however, pending those approvals, they have been
assisting the Board in an advisory capacity. We are
confident that collectively the refreshed Board has the
requisite skills and experience to deal with the current and
emerging issues of the business but remain committed to
continuing Board renewal and anticipate appointing an
additional director(s) over the next 6–12 months to further
strengthen the Board’s diverse range of expertise.
In addition to this significant Board renewal, the SkyCity
Board also commenced a review of its Board committee
structure in late 2021. Following this review, in June
2022, the Board resolved in principle to separate the
Board’s Audit and Risk Committee into two separate
Board committees, an Audit Committee and a Risk and
Compliance Committee (recognising the importance
of the governance of the Group’s risk management
function), and to disestablish the Sustainability
Committee and reallocate its roles and responsibilities to
the other standing Board committees.
The primary objective of the new Risk and Compliance
Committee is to assist the SkyCity Board in fulfilling
its responsibilities relating to risk management and
compliance, including in respect of the company’s key
compliance obligations, host responsibility, AML, and
health and safety matters. The Board intends to appoint
Kate Hughes as the Chair of the new Risk and Compliance
Committee given her comprehensive experience in risk
management, health, safety and environment, business
resilience, crisis management, regulatory compliance,
privacy and fraud prevention.
Regulatory Focus
The SkyCity Board and management are committed
to ensuring that SkyCity provides safe and responsible
experiences and environments for its people and customers.
SkyCity continues to cooperate with the Australian
Transaction Reports and Analysis Centre (AUSTRAC) in
relation to its enforcement investigation (commenced
in June 2021) into potential serious non-compliance by
SkyCity Adelaide Pty Limited (SkyCity Adelaide) with the
Australian Anti-Money Laundering and Counter-Terrorism
Financing Act 2006 and Anti-Money Laundering and
Counter-Terrorism Financing Rules Instrument 2007
(No 1). That engagement has included the provision of
information and documents required by AUSTRAC.
At the date of this annual report, AUSTRAC has not
filed proceedings against SkyCity Adelaide or indicated
whether it intends to take any enforcement action
against SkyCity Adelaide. At this stage, the timetable for
completion of the AUSTRAC investigation into SkyCity
Adelaide remains unclear.
In the course of its reviews, SkyCity Adelaide has
identified certain areas where enhancements to the
Adelaide Anti-Money Laundering and Counter-Terrorism
Financing (AML/CTF) Programme are required or
appropriate. Consequently, in late 2021, we developed an
AML Enhancement Programme for SkyCity Adelaide in
response to the concerns raised by AUSTRAC and taking
into account the findings and recommendations from an
independent expert’s review, and our own internal review,
of SkyCity Adelaide’s AML/CTF Programme and wider AML
function. The AML Enhancement Programme is designed
to lift the maturity of the SkyCity Adelaide AML/CTF
Report from the Chair and Chief Executive Officer
5
Programme and broader AML function across certain
key areas over a two-year period. SkyCity continues to
steadily progress the activities in the AML Enhancement
Programme, including the recruitment of additional
resourcing, the establishment of a dedicated Programme
Management Office to drive the implementation of
the AML Enhancement Programme and its initiatives,
ongoing improvements in oversight/controls and
significant investment in ICT systems and processes.
The resulting improvements to the SkyCity Adelaide
AML function are being applied across the New Zealand
properties where appropriate.
Given that AUSTRAC’s enforcement investigation remains
ongoing, and we have identified certain areas where
enhancements to the Adelaide AML/CTF Programme
are required or appropriate, there is a possibility that
AUSTRAC could bring an enforcement action against
SkyCity Adelaide. Any such action and any associated
penalties could have a significant financial and
reputational impact on SkyCity.
SkyCity has also made steady progress over the past
financial year on initiatives to enhance our host
responsibility framework with significant effort, resource
and capital allocated to support these initiatives,
such as increased resourcing and investment in ICT
systems (including facial recognition technology for
both carded and uncarded long stay and specialised
customer screening tools). These market leading
initiatives collectively improve our ability to prevent and
minimise harm from problem gambling. We continue
to explore available technology solutions, seek expert
advice, consult stakeholder groups and source a range of
research material to ensure that SkyCity provides safe and
responsible experiences and environments for its people
and customers.
On 1 July 2022, Consumer and Business Services (the
South Australian gaming regulator) advised that it
had appointed the Honourable Brian Martin AO QC to
undertake an independent review of SkyCity Adelaide
in accordance with Part 3 of the Casino Act 1997 (SA) in
light of interstate inquiries into various casino operations.
We are continuing to cooperate with the review and look
forward to the completion of the review and findings,
which are due to be reported back to the South Australian
Liquor and Gambling Commissioner by 1 February 2023.
Revised Remuneration Framework
Consistent with our ongoing focus on best practice
regulatory compliance, we have made changes to the
senior executive remuneration framework to introduce
specific requirements relating to compliance and
introduced “malus” and clawback provisions into incentive
plans. These changes ensure that executive remuneration
is aligned with SkyCity’s performance in relation to AML,
host responsibility, and health and safety targets, which
are critically important to SkyCity’s business. In addition
to specific targets set for senior executives, which make
up a balanced scorecard, a new compliance gateway has
1 Due to the impact of tax accounting following the year end, FY22 Group
normalised NPAT is slightly above the market guidance provided during
June 2022.
6
also been introduced into SkyCity’s short term incentive
and deferred short term incentive plan framework
which will further embed alignment between executive
remuneration and SkyCity’s key compliance goals.
FY22 Performance
SkyCity achieved Group normalised EBITDA of
$137.9 million and Group normalised NPAT1 of $9.7 million
for the 2022 financial year, which was at the top end of
the guidance provided to the market during June 2022,
but still well below the prior comparable period and pre
COVID-19 earnings – the financial result having been
materially impacted by property closures and other
restrictions in response to COVID-19 as noted above.
SkyCity’s local gaming businesses performed well when
open and operating without restrictions and SkyCity
Online Casino continued to perform consistently across
the period with strong revenue and EBIDTA growth
despite operational constraints and an increasingly
competitive landscape. SkyCity Online Casino has quickly
become a meaningful earnings contributor to the Group.
There has been positive momentum over the period
on the New Zealand International Convention Centre
project with reinstatement works progressing. The roof
construction is due to commence in October 2022 – a
significant milestone in the fire remediation works.
The latest programme from the contractor indicates
completion of the Horizon Hotel during 2024 and the
Convention Centre during 2025.
SkyCity secured debt covenant relief from its banking
syndicate and United States Private Placement holders
for the 31 December 2021 and 30 June 2022 testing
periods, reflecting material earnings disruption due
to COVID-19, and, in particular, the extended property
closures in New Zealand. SkyCity has also prospectively
secured an amendment to the debt covenants for the
31 December 2022 testing period (to be based on 2x 1H23
EBITDA) as a matter of prudence to provide the Group
with contingency in the event of a further material
disruption of the near term operating environment due
to COVID-19. Additionally, during August 2022, SkyCity
completed a refinancing of $160 million of bank debt due
to mature in May/June 2023 – consequently, SkyCity's next
debt maturity is now in mid 2024.
We are appreciative of the continued support from our
financiers as we continue to navigate the impacts of
COVID-19 disruptions. During the waiver relief period,
SkyCity is unable to make distributions to shareholders or
secure new debt facilities.
SkyCity’s BBB- credit rating from Standard & Poor’s was
reconfirmed as “Stable” Outlook during May 2022 and
SkyCity has around $300 million of available funding
liquidity as at the date of this annual report.
Outlook
Following the relaxation of operating restrictions during
the final quarter of the 2022 financial year, SkyCity has seen
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 the strong performance from its local gaming businesses
in New Zealand continue into the 2023 financial year and
improved performance from SkyCity Adelaide. SkyCity’s
tourism-related businesses continue to recover and are
benefiting from positive domestic visitation, particularly
during weekend and holiday periods.
Provided there are no material changes to the current
operational environment/settings and trading conditions,
SkyCity sees a credible pathway for a return to pre
COVID-19 earnings during FY23, underpinned by the
ongoing recovery of local gaming, particularly in New
Zealand, optimising SkyCity Adelaide post expansion, the
reopening of international borders and robust cost control
to counteract inflationary pressure on costs. SkyCity expects
to largely offset cost pressures (including additional AML
and compliance costs) through operational efficiencies,
productivity gains and optimising its operating model.
SkyCity remains committed to its existing dividend policy
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(paying out 60-90% of normalised NPAT per annum).
We wish to thank the SkyCity Board and management
team and, in particular, the broader SkyCity team for their
collective efforts in navigating the challenges over the
past financial year and for their continuing support of
the business. Thank you also to our external stakeholders
– from our shareholders, financiers, suppliers to our
customers - for your ongoing support of the SkyCity
business. We look forward to welcoming you all to our
vibrant places over the course of the year.
Julian Cook
Chair of the
SkyCity Board
Michael Ahearne
Chief Executive Officer
We look forward to welcoming
you all to our vibrant places
Report from the Chair and Chief Executive Officer
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ABOUT
this Annual Report
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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 2022.
Where appropriate, information is also provided in relation
to activities that have occurred after 30 June 2022, but prior
to publication of this annual report.
This annual report has been prepared in accordance with
the NZX Listing Rules and Corporate Governance Code, 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 ASX
Listing Rules 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. A GRI reference index based on the GRI
Sustainability Reporting Standards is included on pages
178–181 of this annual report.
The financial statements have been prepared in accordance
with the International Financial 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 175–177
of this annual report.
Unless otherwise stated, all dollar amounts in this annual
report are expressed in New Zealand dollars. Certain totals,
subtotals and percentages stated in this annual report may
not agree throughout due to rounding.
An electronic copy of this annual report is available in the
Investor Centre section of the company’s website at
www.skycityentertainmentgroup.com.
If you have any feedback and/or questions in relation to
SkyCity’s sustainability framework and/or reporting, please
contact SkyCity at sustainability@skycity.co.nz.
This annual report is dated 25 August 2022 and is signed on
behalf of the SkyCity Board by:
Julian Cook
Chair of the
SkyCity Board
Jennifer Owen
Chair of the Audit
and Risk Committee
About this Annual Report
9
YEAR in Review
JULY
1
2
0
2
• The ‘long stop date’ under the
New Zealand International
Convention Centre Project
and Licensing Agreement
(for completion of the
New Zealand International
Convention Centre project) is
extended from 2 January 2025
to 15 December 2027
AUGUST
• FY21 full year result
announced* with
reported NPAT of $156.1
million (down 33.7% from
the prior period) and
normalised NPAT of $90.3
million (up 36.3% from the
prior period)
SEPTEMBER
• Ordinary dividend of $0.07
per ordinary share paid to
shareholders
• SkyCity sells its interest
in esport provider Let’s
Play Live Media to Esports
International Limited
JANUARY
FEBRUARY
MARCH
• Julian Cook appointed as
Chair of the SkyCity Board
2
2
0
2
• FY22 interim result released
with reported NPAT of
-$33.7 million (down 143.3%
from the prior period) and
normalised NPAT of -$19.5
million (down 145.3% from
the prior period)
• SkyCity re-accredited with the
Rainbow Tick in New Zealand
• SkyCity named as a finalist
in the Diversity & Inclusion
Leadership Award category for
Te Roopū Māori o SkyCity in the
Deloitte Top 200 Awards
* Subsequently restated to be reported NPAT of $155.8 million and normalised NPAT of
$90.0 million as a result of software as a service (SaaS) accounting policy changes.
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OCTOBER
• SkyCity Chair, Rob
Campbell, announces his
intention to retire from the
SkyCity Board
NOVEMBER
DECEMBER
• Julian Cook appointed as
Chair-elect to replace Rob
Campbell upon his retirement
• SkyCity secures debt covenant
relief from its banking
syndicate and United States
Private Placement holders for
the 31 December 2021 and
30 June 2022 testing periods
• SkyCity enters into a
binding agreement to
subscribe for €25 million
of new equity in Gaming
Innovation Group Inc
APRIL
• SkyCity completes its €25
million equity investment in
Gaming Innovation Group Inc
MAY
• SkyCity secures debt
covenant relief from its
banking syndicate and
United States Private
Placement holders for
the 30 June 2022 and
31 December 2022
testing periods
JUNE
• SkyCity Board announces
its intention to appoint
Kate Hughes and Glenn
Davis as non-executive
directors subject to
obtaining approvals from
regulatory authorities
• Sky Slide opens in Auckland
Year in Review
11
Navigating the
COVID-19
pandemic
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This past financial year, we purchased over 305,000 masks and over
33,000 Rapid Antigen Test kits to keep our people safe
The COVID-19 pandemic has continued to materially
impact SkyCity over the last financial year with significant
trading restrictions imposed on our business and
operations by the New Zealand and South Australian
Governments in response to the ongoing COVID-19
pandemic and the emergence of the Omicron variant.
In New Zealand, Government mandated lockdowns and
restrictions resulted in the closure of the SkyCity Auckland
property for 107 days over the period, the closure of the
SkyCity Hamilton property for 65 days and the closure of
the SkyCity Queenstown property for 22 days.
When permitted to reopen, our properties have not
only operated with significant operational constraints
due to restrictions on mass gatherings and physical
distancing requirements during much of the period, but
with a reduced workforce and resulting operating hours
due to employees being required to isolate at home
after contracting COVID-19 or coming into contact with
someone who has contracted COVID-19.
Fortunately, SkyCity’s New Zealand properties have been
able to operate without restrictions on mass gatherings
and physical distancing requirements from 14 April 2022
when the country moved to the ‘orange’ setting under the
COVID-19 Protection Framework. At the orange setting,
mask wearing is required for staff, but not customers, and
there is no requirement to provide proof of a COVID-19
vaccination or scan a COVID-19 QR code upon entry.
In South Australia, although the SkyCity Adelaide
property was closed for only 8 days over the period,
the business operated for much of the period with
significant constraints in place, including social distancing
restrictions, reduced venue capacity and mandatory mask
wearing. From March 2022, operating restrictions have
been progressively relaxed and the Adelaide business
has been able to operate without density limits or social
distancing requirements with mask wearing no longer
required for staff or customers from 15 April 2022.
In addition to Government mandated restrictions, COVID-19
has also affected customer behaviour more generally.
Visitation to our properties, particularly in Auckland, was
reduced due to lower CBD visitation as a result of changing
customer behaviour in response to COVID-19 and increased
flexible working policies. Visitation to our properties
recovered over the final quarter of the 2022 financial year
as customers continued to adapt to the changing nature of
the COVID-19 pandemic.
To keep our staff and customers safe, we implemented
COVID-19 vaccination policies across our properties from
1 December 2021 in New Zealand and from 10 February
2022 in Adelaide. These policies (other than the Adelaide
staff mandate which remains in place) were lifted in April
2022 consistent with the easing of COVID-19 requirements
by the New Zealand and South Australian Governments.
SkyCity Online Casino, SkyCity’s offshore online casino
platform based in Malta, continued to trade over
the period without interruption from COVID-19 and,
consistent with prior lockdown periods, saw strong
growth in its customer base during lockdown periods in
New Zealand.
Due to the continued efforts of the SkyCity team and
the strength of our business continuity framework, we
have fortunately been able to respond to the ongoing
challenges presented by COVID-19 and manage the
impacts to our business and operations. Pleasingly, our
core New Zealand domestic gaming business was quick
to rebound and performed well when our properties were
open without restrictions.
SkyCity’s focus remains on managing the post COVID-19
recovery and operating sustainably as a domestic focused
business, pending the gradual recovery of international
visitation.
Navigating the COVID-19 Pandemic
13
Creating
Our Business
VALUE
(as at 30 June 2022)
3,923
staff
5properties across
New Zealand and Australia
GAMING
1online casino
5land-based
casino licences
309table games
378automated
table games
3,451
electronic
gaming machines
HOSPITALITY
HOTELS
SKY TOWER
17restaurants
15bars
755hotel rooms
328metres tall
FY22 REVENUE BY BUSINESS ACTIVITY
Gaming (land-based)
Gaming (online)
Hotels and Conventions
Food and Beverage
Other
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Reported
Normalised
%
75%
3%
6%
10%
6%
%
77%
3%
5%
10%
5%
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 L
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FY22 Outputs and Financial Results
FY22 revenue and annual visitation
$443.6
million
including online
(reported)
GAMING
$499.4million*
including online
(normalised)
1.4million
visits from loyalty card
members to our
land-based casinos**
HOSPITALITY
HOTELS
SKY TOWER
$60.3million
2.5
million
restaurant/bar covers
$33.5million
$7.1million
113,790
rooms occupied
133,338
visits
$100.8million
in taxes and levies to
Governments
$5.1million
in community contributions,
sponsorships and donations
CONTRIBUTIONS
$260.4million
in remuneration
and benefits to staff
$252.7million
to suppliers
$31.9million
in interest paid to lenders
$53.1
million
in dividends declared for
shareholders (in relation
to the FY21 period)
$153.6million
of capital invested
*Includes gaming GST.
** Calculated by reference to customers who used their SkyCity customer loyalty card 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.
Creating Value
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FY22 Outcomes and Impacts
OUR CUSTOMERS
OUR PEOPLE
Established a new team of
Responsible Gambling Hosts
in Auckland and Hamilton who
provide additional and dedicated
host responsibility coverage in
gaming areas
629
customers
identified within our casino
properties in breach of their
exclusion orders during FY22
FY21 – 1,373
901
exclusion orders
issued across our casino
properties during FY22
FY21 – 1,077
31%
of all vacancies were filled by
internal SkyCity candidates
FINALIST
in the Diversity and Inclusion
Leadership Award at the 2021
Deloitte Top 200 Awards for
Te Roopū Māori o SkyCity
Achieved a
50%
decrease in the total recordable
incident frequency rate
OUR COMMUNITIES
Since establishing the
first SkyCity Auckland
Community Trust in 1996,
SkyCity has awarded more
than 5,000 grants totalling
over $66.2 million to various
community groups and
organisations in New Zealand,
large and small, through the
four SkyCity Community Trusts
$3.0 million
paid to the SkyCity
Community Trusts
FY21 – $4.1 million
$34.3 million
paid in gaming taxes and
problem gaming levies
FY21 – $39.2 million
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 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 focused on doing good for our customers, our people,
our communities, our suppliers, our environment and our shareholders.
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OUR SUPPLIERS
OUR ENVIRONMENT
OUR SHAREHOLDERS
$53.1 million
in dividends paid to
shareholders during FY22 (in
relation to the FY21 period)
Over
$446 million
paid to suppliers of goods and
services during FY22 (including
capital expenditure)
FY21 – over $426 million
487
key ongoing
significant suppliers
across the SkyCity Group
FY21 – around 587
79
active suppliers
had completed an EcoVadis
assessment/audit process as at
30 June 2022 representing over
$32 million (25%) of our total
annual procurement spend
FY21 – 71 active suppliers
Achieved carbon zero status for the
SkyCity Group for FY22 by way of
offset through Toitū Envirocare
15,637
tonnes CO2e
total carbon footprint
FY21 – 16,521 tonnes CO2e
81%
reduction
in waste sent by SkyCity to
landfill since 2015*
EV
CHARGERS
installed at the
SkyCity Auckland and
Hamilton properties
*In part due to the mandated property
closures and travel restrictions during FY20–FY22.
Creating Value
17
PERFORMANCE
FY22 Highlights
SkyCity’s result for the financial year ended 30 June 2022 was again significantly impacted by the COVID-19 pandemic
with normalised EBITDA and NPAT for the Group for the period to 30 June 2022 negatively impacted.
The key features of the FY22 result are:
REVENUE
Reported
NPAT
Reported
$639.0 million
$(33.6)million
FY21 (Restated) – $952.0 million
FY21 (Restated) – $155.8 million
Normalised
$631.5 million
FY21 (Restated) – $822.5 millon
Normalised
$9.7 million
FY21 (Restated) – $90.0 million
EBITDA
Reported
$96.9 million
FY21 (Restated) – $313.9 million
Normalised
$137.9 million
FY21 (Restated) – $248.6 million
EARNINGS PER SHARE
Reported
(4.4) cents per share
FY21 – 20.6 cents per share
Normalised
1.3 cents per share
FY21 – 11.9 cents per share
The restated FY21 results reflect SkyCity’s restated financial results to account for a revised accounting policy for the configuration and customisation costs
associated with software as a service (SaaS) arrangements. This change in accounting policy was implemented retrospectively by restating the opening equity
position and comparative financial statements. See note 23 of the FY22 financial statements on pages 156–158 of this annual report.
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Our Performance History
Group Revenue
1,101
1,119
1,125
816
822
780
952
822
631
639
n
o
i
l
l
i
m
$
1,200
1,000
800
600
400
200
0
Reported
Normalised
(Including gaming GST)
FY18
FY19
FY20
FY21 (Restated)
FY22
Group EBITDA
338
310
343
298
348
314
249
201
n
o
i
l
l
i
m
$
350
300
250
200
150
100
50
0.0
138
97
Reported
Normalised
FY18
FY19
FY20
FY21 (Restated)
FY22
Earnings Per Share (EPS) and Dividend Per Share (DPS)
35.4
35.0
e
r
a
h
s
r
e
p
s
t
n
e
C
30.0
25.0
20.0
15.0
10.0
5.0
0.0
-5.0
25.4
25.3
25.6
20.0
21.4
20.0
20.6
10.0
10.0
11.9
7.0
Normalised EPS
Reported EPS
Declared DPS
1.3
-4.4 0.0
FY18
FY19
FY20
FY21 (Restated)
FY22
Enterprise Value
3,196
447
2,749
3,036
488
2,548
2,308
541
1,767
3,258
590
2,845
633
2,668
2,212
n
o
i
l
l
i
m
$
3,500
3,000
2,500
2,000
1,500
1,000
500
0.0
FY18
FY19
FY20
FY21 (Restated)
FY22
FY21 results adjusted to reflect updated accounting policy relating to software as a service (SaaS) arrangements as applicable.
Equity Value
Net Debt
Performance
19
SUPPORTING
Our Communities
SkyCity is standing tall with women's sport and is proud to be an official sponsor
of the Rugby World Cup New Zealand 2021 (playing in 2022).
We play a significant role in our communities and are proud of the contribution we make
to the communities we operate in. It has taken significant skill, energy and dedication from
our team to continue to deliver a high standard of excellence in such an uncertain operating
landscape and this has been recognised in a number of industry accolades over the period.
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•
•
•
•
•
Depot, Gusto at the Grand,
The Sugar Club and MASU by Nic
Watt each received one hat in the
Cuisine Good Food Awards 2021/22
SkyCity Auckland named Oceania's
Leading Casino Resort 2021 in the
World Travel Awards
The Grand by SkyCity named a
nominee in the World's Leading
Business Hotel 2021 category in the
World Travel Awards
Sky Tower awarded the Qualmark
Gold Award for sustainable tourism
Sol Bar and Restaurant named
Restaurant of the Year at the South
Australian Restaurant and Catering
Awards
• Eos by SkyCity awarded:
• The Guardsman:
– Best New Tourism Business at
the South Australian Tourism
Awards
– Best Tourism Restaurant at
the South Australian Tourism
Awards
– Best Deluxe Hotel in South
Australia at the Australian
Hotels Association SA Awards for
Excellence
– Best New Hotel at the Hotel
Management Awards for Hotel
and Accommodation Excellence
•
– Bronze medal in the Australia’s
Best New Tourism Business
category at the 2021 Qantas
Australian Tourism Awards
– Bronze medal in the Tourism
Restaurants and Catering
Services category at the 2021
Qantas Australian Tourism
Awards
Bowl and Social named winner of
the Best Leisure & Entertainment
category at the Hamilton Central
Business Association Awards 2021
We have proudly sponsored and partnered with great organisations in our communities over the last financial year:
Supporting Our Communities
21
OUR PURPOSE
We are trusted to create vibrant places for gaming,
entertainment and hospitality
Group
STRATEGY
In early 2022, we commenced a review of SkyCity’s sustainability framework and strategy – the purpose of which was
to understand the drivers for sustainability for SkyCity into the early-mid 2020s, adopt a fit-for-purpose framework
for driving sustainability decisions in the business, and gain confidence that sustainability activity is aligned to
organisational purpose and strategy and is reflective of today’s operating context.
Following this review, in June 2022, we adopted a new corporate purpose statement and integrated business strategy,
effective from 1 July 2022, that integrates environmental, social, and governance considerations into our current
business strategy.
Our purpose statement provides our Board and management with a foundational guideline for decision-making, our
employees with a reason for choosing to work with SkyCity, and our external stakeholders with an understanding of
what drives SkyCity. The following table illustrates the intention behind each element of our purpose statement:
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We are trusted
to create
vibrant places
by the community to hold
casino licences
to invest in community
outcomes through our
community trusts
SkyCity has a history of
building entertainment
venues in New Zealand
and Australia
SkyCity’s precincts are
destinations in the
cities/towns where SkyCity
operates in Auckland,
Adelaide, Queenstown
and Hamilton
by our customers to
provide entertainment
experiences in safe
venues and with
responsible hosting
SkyCity provides
customers with
entertainment
experiences on a daily
basis
SkyCity is a destination
for customers seeking
entertainment experiences
in the communities where
we operate
for gaming,
entertainment
and hospitality
SkyCity provides gaming,
entertainment and
hospitality destinations
in Auckland, Adelaide,
Queenstown, Hamilton and
online. These precincts are
destinations in the
cities/towns where we
operate
SkyCity provides gaming,
entertainment and
hospitality destinations for
customers in Auckland,
Adelaide, Queenstown,
Hamilton and online
by our investors with
their capital and to return
dividends, by running
responsible gaming and
entertainment venues
to operate ethically and
transparently, with strong
governance in place
by our suppliers to be a
good partner in business
Investors provide
SkyCity the capital to
create vibrant places
and experiences, in
expectation of future
returns
Investors provide SkyCity
the capital to create vibrant
places and experiences,
in expectation of future
returns
Investors provide SkyCity
the capital to create vibrant
places and experiences, in
expectation of future returns
SkyCity’s suppliers
contribute to customer
entertainment
experiences
SkyCity’s suppliers
contribute to the operation
of SkyCity’s vibrant and
sustainable precincts
SkyCity’s suppliers
contribute to the operation
of SkyCity’s vibrant and
sustainable precincts
by our regulators to
hold casino licences and
comply with all gaming
and AML regulations
SkyCity’s licences provide
the platform from which
to provide gaming,
entertainment and
hospitality experiences
SkyCity’s licences provide
the platform from which
to provide gaming,
entertainment and
hospitality experiences
SkyCity’s licences provide
the platform from which
to provide gaming,
entertainment and
hospitality experiences
SkyCity has a culture of
compliance
SkyCity does the right thing
SkyCity employees
create vibrant customer
experiences
SkyCity employees are part
of the communities where
we operate
SkyCity employees provide
gaming, entertainment and
hospitality experiences
by employees to
provide satisfying
jobs, remuneration,
and opportunities for
development, within
a safe and inclusive
environment
•
•
•
•
•
•
•
•
COMMUNITY
CUSTOMERS
INVESTORS
SUPPLIERS
REGULATORS
EMPLOYEES
•
by stakeholders to
respect, protect and
enhance the environment
SkyCity is committed to
respecting, protecting
and enhancing the
environment
ENVIRONMENT
SkyCity’s precincts are
sustainable
SkyCity’s precincts are
sustainable
SkyCity respects and protects the trust placed in it by stakeholders and is committed to shared value
Group Strategy
23
Sportnco Gaming SAS and, in return, became a major
shareholder of GiG, with SkyCity’s Chief Executive Officer,
Michael Ahearne, joining the main GiG Board. GiG is an
established online operator who we have come to know
well since partnering in mid-2019 to launch the SkyCity
Online Casino. The partnership has provided access to a
complementary and high-growth gaming category and
has enabled us to pursue an omnichannel strategy in New
Zealand which is a core critical pillar of our Group strategic
plan. The combined GiG/Sportnco business is licensed
or certified in over 20 jurisdictions, including key growth
markets such as the United States, Western Europe,
Canada and Latin America.
SkyCity views the transaction as strategic, and as a
relatively low cost and low risk exposure to the fastest
growing segment of our industry globally. We continue
to support regulation of online casinos in New Zealand
and expect clarity from the New Zealand Government
shortly regarding its intentions to regulate online gaming.
We continue to believe that a significant omnichannel
opportunity exists for SkyCity if the New Zealand online
market becomes regulated given the sizable addressable
market which already exists in New Zealand (which
is expected to grow significantly) and the unique
opportunity SkyCity has to offer an integrated offline and
online experience to customers.
New Zealand International Convention Centre and
Horizon Hotel Project
The New Zealand International Convention Centre and
Horizon Hotel project remains complex, but reinstatement
is progressing post the significant fire in October 2019,
although slower than expected. The roof construction
is due to commence in October 2022 – a significant
milestone in the fire remediation works – and there are
over 600 workers onsite currently each day.
We expect the Horizon Hotel and New Zealand
International Convention Centre to be delivered in 2024
and 2025 respectively and, whilst we remain comfortable
with our contractual position on the project, pursuing
further compensation for costs and losses due to project
delays remains under active consideration. Expected total
project costs remain unchanged (around $750 million),
of which around $150 million is still to be spent net of
recoveries and reinstatement costs which are funded via
insurance responding on the project.
Whilst the delays caused by the fire are regrettable,
the thesis for the project remains intact and we remain
confident that, when completed, the project will deliver
world-class tourism infrastructure for Auckland and New
Zealand and will be a significant driver of demand for our
broader Auckland precinct.
Our Integrated Business Strategy
Our strategic plan remains largely unchanged, namely to:
•
•
•
•
•
•
focus on continuous improvement in our core business
and operational performance;
focus on maximising the value of our exclusive casino
licences;
execute the Adelaide expansion and New Zealand
International Convention Centre and Horizon Hotel
project and leverage benefits;
monetise the omnichannel and consolidate on our
leadership position in the gaming industry;
protect and enhance our social licence to operate and
secure our future success across various financial,
social and human capitals; and
focus on enhancing Group-wide host responsibility and
AML programmes and Group risk/compliance.
SkyCity continues to monitor and evaluate adjacent
opportunities in the casino industry as they arise.
SkyCity has an absolute focus on continuing to navigate
through the ongoing uncertainty of the current operating
environment whilst ensuring financial resilience and the
ability to manage the balance sheet to set the business up
for success over the medium term, to grow earnings and
shareholder value.
Capital Allocation Framework
SkyCity recently modified its capital allocation framework
to reflect a preference for dividends and capital returns
over growth investments and to ensure alignment with
shareholder expections and preferences. The capital
allocation framework should support strategic goals (and
be a key enabler of the capital management strategy) and
include the following key elements:
• an understanding of key sources and uses of capital;
•
•
key financial settings and benchmarks influencing
capital allocation decisions;
priorities for allocating capital driven by strategic goals
and what will create shareholder value; and
• appropriate governance and incentive structures.
New Zealand Online Casino Strategy
The performance of the SkyCity Online Casino was a
highlight of the 2022 financial period with strong revenue
and EBITDA growth, despite operational constraints and
an increasingly competitive landscape. We experienced
strong growth in active customers and the SkyCity
Online Casino has quickly become a meaningful earnings
contributor to the Group.
In December 2021, we announced the expansion of our
strategic partnership with Gaming Innovation Group
Inc (GIG). SkyCity invested €25 million of new equity
in GiG to support the funding of GiG’s acquisition of
24
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 PURPOSE
We are trusted to provide vibrant places for gaming, entertainment
and hospitality in New Zealand and Australia
L
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SUSTAINABLE
OPERATIONS
CREATING VIBRANT
PLACES
RESPONSIBLE
GROWTH
Operational excellence
and responsibility
Complete major projects
and optimise portfolio
Pursue the omnichannel
opportunity and
adjacencies
Implementation Principles
11
1
Stakeholder
value creation
22
2
Committment to
responsibility
33
3
Culture of
compliance
Financial and capital settings to deliver objectives
Group Strategy
25
DIVERSITY
Snapshot
At SkyCity, 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 make up of SkyCity’s workforce as at 30 June 2022 and, where relevant, as a
comparison against our workforce numbers as at 30 June 2021.
3,923
staff
(full-time, part-time and casual)
64%
of our workforce are
41 years old and under
FY21 – 4,259
FY21 – 62%
37 YEARS
average age of
our workforce
FY21 – 34 years
49.3%
women
50.4%
men
0.3%
gender diverse
FY21 – 49%
FY21 – 51%
FY21 – 0%
80 YEARS
age of our oldest
staff member
FY21 – 79 years
1%
identify as having
a disability
FY21 – 1%
49%
of leadership roles
held by women
FY21 – 37%
6%
identify as being a member of
the LGBTTI+ community
60LANGUAGES
spoken and/or written
by staff
FY21 – 6%
FY21 – 61
Mandarin
Tagalog (Philippines)
Hindi
our top 3 non-English languages
FY21 – Mandarin, Tagalog, Hindi
OUR TOP 10 ETHNICITIES STAFF IDENTIFY WITH
L
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G
15%
13%
14%
7%
Chinese
New Zealander
Australian
Indian
FY21 – 15%
FY21 – 14%
FY21 – 12%
FY21 – 8%
7%
Filipino
FY21 – 7%
7%
5%
4%
4%
3%
Other Asian
Māori
Other South East
Asian
FY21 – 7%
FY21 – 6%
FY21 – 4%
Samoan
FY21 – 4%
European
FY21 – 4%
Given as a percentage of those staff members who provided details about their ethnicity and those who elected “prefer not to say”.
PLEDGING SUPPORT TO THE 40:40 VISION
SkyCity is a signatory to the 40:40 Vision - an investor-led initiative to achieve gender
balance across the executive leadership teams of all ASX200 companies by
2030 - 40% women, 40% men and 20% any gender.
AGE BREAKDOWN
19.9%
44.6%
26.0%
9.4%
0.1%
Generation Z
(<26 years)
Millennials
(26–41 years)
Generation X
(42–57 years)
Baby Boomers
(58–76 years)
Veterans
(77+ years)
FY21 – 24.4%
FY21 – 37.8%
FY21 – 28.3%
FY21 – 9.5%
FY21 – 0%
About
SKYCITY
SkyCity is New Zealand’s largest tourism, leisure and entertainment company and is listed on
the New Zealand and Australian stock exchanges.
SkyCity operates integrated entertainment complexes in New Zealand (in Auckland, Hamilton and Queenstown) and
in Adelaide, South Australia – each featuring casino gaming facilities and premium restaurants and bars, which appeal
to both domestic and international visitors alike. SkyCity also offers premium hotel accommodation in Auckland and
Adelaide.
In addition to its land-based casino operations, SkyCity Online Casino (based out of Malta) offers New Zealanders an
exciting online gaming experience.
SkyCity Online Casino Malta
SkyCity Auckland
and Group
Head Office
SkyCity Adelaide
SkyCity Hamilton
SkyCity
Queenstown
and SkyCity
Wharf*
55 ONLINE
11
PROPERTIES
across New Zealand
and Australia
CASINO
HOTELS33
*Wharf Casino has been closed since March 2020 at the commencement of the first COVID-19 lockdown in New Zealand.
28
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 OUR HISTORY AT A GLANCE
L
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2021
SkyCity Auckland celebrates
its 25th anniversary
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 breaks out at the
New Zealand International Convention
Centre (under construction)
2013
SkyCity acquires SkyCity Wharf
in Queenstown
2005
2022
SkyCity completes a €25 million equity
investment in Gaming Innovation Group
Inc and becomes its largest independent
shareholder (at around 11%)
Sky Tower celebrates its 25th anniversary
2020
SkyCity Adelaide expansion
project officially opens
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
2012
SkyCity acquires full ownership of
SkyCity Queenstown
SkyCity acquires full ownership
of SkyCity Hamilton
2004
SkyCity acquires SkyCity Darwin
2002
SkyCity Hamilton opens
1999
SkyCity lists on the Australian
stock exchange
1997
Sky Tower opens in Auckland
1994
Construction of the SkyCity Auckland
complex commences
2000
SkyCity Queenstown opens
SkyCity acquires SkyCity Adelaide
1998
Harrah’s management contract
ends and SkyCity becomes a
New Zealand-managed operation
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
About SkyCity
29
Auckland
Property
Property Manager
SkyCity Auckland, New Zealand
Callum Mallett, Chief Operating Officer New Zealand
Opened
1996
Casino Venue Licence
Runs until 2048*
Facilities
• Casino, including luxury VIP
• Car parking
gaming facilities
• Hotels
• Food and beverage
• Entertainment
• Day spa
• Sky Tower
• Theatre
• Telecommunications and
broadcasting facilities
• Office/retail space
Licensed Gaming Product
• 1,877 electronic gaming machines**
Workforce
FY22 Revenue
• 150 table games**
• 240 automated table games***
~2,300 staff
$296.8 million^ (reported)
$330.6 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.
**This allowance may be alternatively utilised to enable automated table game terminals.
***This allowance may be alternatively utilised to enable table games.
^Excludes New Zealand International Convention Centre fire income and liquidated damages received.
SkyCity Auckland is the flagship property of the
SkyCity Entertainment Group, featuring 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. Located in the heart of Auckland’s CBD,
the SkyCity Auckland precinct occupies ~295,000sqm of
gross floor area across the majority of three city blocks
(~3.5 hectares).
The SkyCity Auckland casino features the latest electronic
gaming machines and automated table games, an
exciting array of table games, and luxurious VIP gaming
facilities. EIGHT is an exclusive area reserved for VIP table
game players and PLATINUM and VIP BLACK are exclusive
areas reserved for VIP gaming machine players – each
combining luxurious gaming facilities with dedicated
personal host service.
Federal Street, the gateway to the SkyCity Auckland
precinct, features some of Auckland City’s best eateries,
including SkyCity’s award-winning restaurants Gusto at the
Grand, Masu by Nic Watt, The Sugar Club, Huami, Depot
and the Federal Delicatessen with an impressive accolade
of awards between them.
SkyCity is currently investing around $750 million within
the SkyCity Auckland precinct to develop the New Zealand
International Convention Centre, an adjacent laneway,
over 1,250 additional car parking spaces, and Horizon Hotel
– a new 300-room, 5-star hotel. This development was
originally expected to be completed in 2019. Due to delays
by the contractor, the significant fire that broke out at
the New Zealand International Convention Centre (under
construction) in October 2019 and the impacts of the
COVID-19 pandemic, Horizon Hotel is now expected to be
completed during 2024 and the New Zealand International
Convention Centre and adjacent laneway are expected
to be completed in 2025. When open, 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.
30
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 FY22 PERFORMANCE
SkyCity Auckland was significantly impacted by COVID-19
disruptions over the period with the property closed for
107 days during the first half of the 2022 financial year
and operating in the ‘red’ setting under the COVID-19
Protection Framework for 80 days during January to
April 2022. The property achieved strong performance
prior to its closure in August 2021 with premium gaming
activity well up against the prior comparable period,
record electronic gaming machine revenue in July 2021,
and positive 4Q22 trading as operating restrictions
were relaxed at the ‘orange’ setting under the COVID-19
Protection Framework.
SkyCity Auckland achieved May 2022 and June 2022
EBITDA consistent with pre COVID-19 levels (around
$20 million per month) underpinned by strong gaming
activity, particularly from electronic gaming machines,
whilst table games were impacted by staff shortages
and a slower return of VIP customers. The non-gaming
businesses benefited from the recovery of domestic
tourism and are ready to leverage the return of
international visitors now that borders have reopened.
Cost mitigations were implemented to address reduced
revenue, but margins were impacted by negative
operating leverage (significant fixed cost base).
CELEBRATING 25 YEARS
The 328-metre tall Sky Tower is the tallest free-standing
structure in the Southern Hemisphere and has become
an icon of the Auckland skyline since opening on
3 August 1997. Today, visitors can enjoy breathtaking
views right across Auckland from the observation decks
or any of the three restaurants in the Sky Tower, including
Auckland’s only 360º 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.
In June 2022, a new attraction, Sky Slide, opened in the
Sky Tower complementing the existing Sky Jump and
Sky Walk attractions. Sky Slide utilises
state-of-the-art multi-sensory
technology – taking riders on an
adrenaline-fuelled 360º virtual
reality tour of the Auckland skyline.
Throughout the year, SkyCity lights
the Sky Tower in support of charities
and community initiatives, to mark
national holidays, milestones or other
celebrations or events, and as a symbol
of respect or solidarity.
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About SkyCity
31
Adelaide
Property
Property Manager
SkyCity Adelaide, Australia
Acquired
2000
Licensing Agreement
Runs until 2085*
David Christian, Chief Operating Officer Australia
Facilities
• Casino, including luxury
VIP gaming facilities
• Hotel
• Conventions
• Food and beverage
• Entertainment
• Car parking
• Wellness centre
Licensed Gaming Product
• 1,075 electronic gaming machines (allowance for 1,500)
• 118 table games (allowance for 200)**
• 138 automated table games (allowance for 300)
Workforce
FY22 Revenue
~1,300 staff
A$171.8 million (reported)
A$184.5 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.
**This allowance may be alternatively utilised to enable automated table game terminals.
Located in and around the historic Railway Station
building on the banks of the Torrens River, SkyCity
Adelaide is South Australia’s only casino destination on
the Festival Plaza forecourt adjacent to the Adelaide
Festival Centre and Adelaide Convention Centre and near
the Adelaide Oval.
Following completion of a significant expansion
development in late 2020, SkyCity Adelaide is now a
world-class integrated entertainment hub featuring a
120-room luxury hotel – Eos by SkyCity, a wellness centre
with a day spa, pool, sauna and gym, VIP gaming facilities,
a function and conference facility for up to 650 guests,
bars and restaurants.
The SkyCity Adelaide precinct is home to award-winning
eateries – Madame Hanoi, Sean’s Kitchen, iTL, the
immersive rooftop destination Sôl Rooftop, and Australia’s
first fully functional microbrewery within a casino
(operated by Pirate Life).
Eos by SkyCity is 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.
Since opening in December 2020, Eos by SkyCity has
been named as the Best New Tourism Business at the
South Australian Tourism Awards, Best Deluxe Hotel in
South Australia at the Australian Hotels Association SA
Awards for Excellence and Best New Hotel at the Hotel
Management Awards for Hotel and Accommodation
Excellence. Eos by SkyCity was also awarded a Bronze
medal in the Australia’s Best New Tourism Business
category at the 2021 Qantas Australian Tourism Awards.
FY22 PERFORMANCE
SkyCity Adelaide was impacted by COVID-19 disruptions
and other external factors during the period, but achieved
comparable revenue performance against the prior
comparable period.
Strong growth in electronic gaming machine revenue
with increased market share (around 10%) was a highlight,
particularly given the Adelaide pubs and clubs market
grew 7% over the same period. Table games activity
continued to be impacted by operational settings,
external factors and ongoing AML risk assessment for
local VIPs. Solid performance was achieved from Eos by
SkyCity with market-leading revenue per available room
as measured against comparable hotels.
There was positive performance at the property in the
final quarter of the 2022 financial year after operating
restrictions were relaxed and the property benefited
from the domestic tourism recovery – fourth quarter 2022
EBITDA corresponded to around 40% of EBITDA for the
full financial year.
Margins were impacted by a higher fixed cost base
post the expansion development, particularly in the
non-gaming business and ongoing investment in the AML
function. Despite subdued 2022 financial performance
against expectations, there has been no material change to
medium term earnings outlook for the property.
Hamilton
Property
General Manager
SkyCity Hamilton, New Zealand
Opened
Michelle Baillie
2002
Increased ownership from 70% to 100% in 2005
Casino Venue Licence
Runs until 2027*
Facilities
• Casino
• Food and beverage
• Entertainment
• Conventions
• Car parking
• Tenpin bowling
Licensed Gaming Product
• 339 electronic gaming machines**
Workforce
FY22 Revenue
• 23 table games**
~270 staff
$49.8 million (reported)
$56.2 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.
**This allowance may be alternatively utilised to enable automated table game terminals.
Situated within Hamilton’s historic Chief Post Office,
a building designed to maximise its 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 – Bowl and Social.
The SkyCity Hamilton precinct is home to Hamilton’s
favourite eating and drinking destinations right in the
heart of Hamilton’s CBD, including The Local Taphouse,
Eat Burger and Zone Sports Bar.
Over the last financial year, SkyCity has continued to invest
in its core casino and hospitality businesses with a range
of improvements across the SkyCity Hamilton property,
including preparing for new restaurant tenancies
opening in FY23. A key focus remains on product and
layout optimisation within the casino to maintain SkyCity
Hamilton’s market leader position and manage high
demand for electronic gaming machines (which remain
capacity constrained at peak times).
SkyCity Hamilton is a key member and supporter of the
local community and is committed to being the Waikato
region’s premier entertainment destination.
FY22 PERFORMANCE
SkyCity Hamilton was significantly impacted by COVID-19
disruptions over the period with the property closed for
65 days (42 days at Alert Level 2) and operating at the ‘red’
setting under the COVID-19 Protection Framework for 80
days during January to April 2022.
SkyCity Hamilton achieved strong performance prior
to the property closure in August 2021 with record
like-for-like EBITDA performance in July 2021 and
strong local gaming activity, particularly from premium
customers.
Performance in the third quarter of the 2022 financial
year was impacted by operating at the ‘red’ setting
under the COVID-19 Protection Framework (due to the
Omicron outbreak), but there was a strong final quarter as
operating restrictions relaxed at the ‘orange’ setting under
the COVID-19 Protection Framework with EBITDA up 7%
against the prior comparable period (and 30% above pre
COVID-19 levels) and local gaming activity well above pre
COVID-19 levels.
Strong local economic conditions persist in the Waikato
region, despite COVID-19 disruptions, which remain
supportive of customer visitation and activity,
including population growth, increased business
investment/diversification and domestic tourism.
Effective cost control over the period partially offset
revenue reduction with EBITDA margins of 43.5% stable
against the prior comparable period.
About SkyCity
33
Queenstown
Property
Situated within Hamilton’s historic Chief Post Office, a building designed to maximise its 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 – Bowl and Social.
SkyCity Queenstown and SkyCity Wharf, New Zealand
General Manager
Over the last financial year, SkyCity has continued to invest in its core casino and hospitality businesses with a range
of improvements across the SkyCity Hamilton property, including a new Baccarat Lounge and a refurbished function
space, The Garden Room. A key focus has been on product and layout optimisation within the casino to maintain SkyCity
Hamilton’s market leader position and manage high demand for electronic gaming machines (which remain capacity
constrained at peak times).
Jono Browne
SkyCity Hamilton is a key member and supporter of the local community and is committed to being the Waikato
Opened Queenstown in 2000 and increased ownership from 60% to
Opened/Acquired
region’s premier entertainment destination. We were therefore thrilled to have been named the winner of the Best
100% in 2012
Social Responsibility category at the Hamilton Central Business Association’s 2020 CBD Celebration Awards, recognising
Acquired Wharf in 2013
SkyCity Hamilton’s commitment to community, customers, diversity and sustainability, and the runner-up in the
Community Contribution category at the 2020 Waikato Business Awards.
Casino Venue Licence
FY21 PERFORMANCE
Runs until 2025* for Queenstown
Runs until 2024* for Wharf
SkyCity Hamilton delivered a strong revenue and earnings result for a full year period, underpinned by strong local
Facilities
gaming activity and cost control, despite 51 days operating under Alert Level 2 restrictions over the period.
• Casino, including VIP gaming facilities
• Food and beverage
Consistent with prior periods, Hamilton delivered strong electronic gaming machine activity, despite capacity
• Entertainment
constraints, benefitting from improved product mix and new gaming areas, particularly for VIP customers.
• Conventions
The property has shown resilience to the impacts of COVID-19 over the last financial year due to having a predominantly
domestic (and gaming) focused business and supportive external factors, including population growth, an increasingly
Licensed Gaming Product
diverse local economy (less reliance on the primary sector) and improved connectivity to the Auckland region. The
Waikato region has also benefitted from strong domestic tourism activity in New Zealand as international borders
remain closed.
• 86 electronic gaming machines (Queenstown)**
• 74 electronic gaming machines (Wharf)**
• 12 table games (Queenstown)**
• 6 table games (Wharf)**
A focus on cost control and operating efficiencies delivered significant margin improvement compared to the prior
comparable period.
Workforce
~50 staff
FY22 Revenue
$9.0 million (reported)
$10.2 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.
**This allowance may be alternatively utilised to enable automated table game terminals.
SkyCity’s two Queenstown casinos, SkyCity Queenstown
and SkyCity Wharf, are located in central Queenstown,
surrounded by the majestic Southern Alps.
Whilst the larger SkyCity Queenstown property reopened
on 14 May 2020 after the first COVID-19 lockdown in
New Zealand, the smaller SkyCity Wharf property
has remained closed since 23 March 2020 due to the
detrimental effect on the local Queenstown economy
from the COVID-19 pandemic’s ongoing impacts on the
international tourism market.
FY22 PERFORMANCE
SkyCity Queenstown was significantly impacted by
COVID-19 disruptions over the period with the property
closed for 22 days and operating for 86 days at Alert Level
2 in the first half of FY22, and operating at the ‘red’ setting
under the COVID-19 Protection Framework for 80 days
during January to April 2022.
Pleasingly, local gaming revenue was consistent on a
like-for-like basis during the first quarter of the 2022
financial year against the prior comparable period despite
operational constraints and limited domestic tourism
with particularly strong electronic gaming machine
performance in July 2021.
Third quarter 2022 performance was impacted when
SkyCity Queenstown operated at the ‘red’ setting under
the COVID-19 Protection Framework (due to the Omicron
outbreak), but the business had a strong fourth quarter as
operating restrictions relaxed at the ‘orange’ setting with
significant EBITDA growth against the prior comparable
period (and well above pre COVID-19 levels).
Wharf Casino remains closed with the licence value
fully impaired (totaling around $4 million) and SkyCity
continues to pursue a sale of the development land at
633 Frankton Road in Queenstown.
34
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 L
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Online
Property
Managing Director
Launched
Facilities
FY22 Revenue
SkyCity Online Casino, Malta
Steve Salmon
2019
Online casino
$16.9 million (reported)
$16.9 million (normalised)
SkyCity Online Casino provides New Zealanders with
an offshore online casino platform, featuring over 2,000
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 a Managing
Director based in Europe. GiG provides a full-suite online
casino solution, including a technical platform, gaming
content, managed services and front-end development.
In April 2022, SkyCity expanded its strategic partnership
with GiG and subscribed for €25 million (around
$40 million) of new equity in GiG to help fund GiG’s
purchase of Sportnco Gaming SAS, a European-based
business-to-business online sports and player account
management provider. As at 1 August 2022, SkyCity holds
an 11% shareholding in GiG and has a representative
director on the GiG Board.
Growth in online gambling continues to be a significant
global industry theme with numerous international
jurisdictions regulating online gambling (or intending to
do so) to address the transition from physical to online
entertainment, which has been exacerbated by the
impact of COVID-19 over recent times. The New Zealand
online gaming market continues to grow significantly
with recent estimates indicating a market in excess of
$350 million per annum.
Following a public consultation which commenced
during 2019, the Department of Internal Affairs (the New
Zealand gambling regulator) continues to develop a
policy framework for potential regulation. SkyCity remains
supportive of regulation of the New Zealand online
gaming market. Regulation of the New Zealand online
gaming market would enable SkyCity to pursue
the omnichannel opportunity and address a
fast-growing category which is highly complementary
to our land-based activities whilst offering customers a
varied gaming experience (both physical and digital).
SkyCity remains supportive of future regulation of online
gaming in New Zealand with an emphasis on strong
host responsibility and delivering community benefits in
New Zealand and we continue to prepare for a regulated
industry to deliver on the omnichannel opportunity for
the Group.
FY22 PERFORMANCE
SkyCity Online Casino is performing exceptionally well
with revenue and EBITDA up 29% and 42% against the
prior comparable period respectively, despite operational
constraints and an increasingly competitive landscape.
SkyCity Online Casino benefited from the closure of the
New Zealand land-based casinos during the period, and
had resilient performance following the reopening of
land-based casinos from December 2021. SkyCity Online
Casino had strong retention of existing customers over
the period with weekly average active customers stable at
around 10,000 and deposit conversion rates consistently
around 60%.
SkyCity Online Casino is now a meaningful contributor to
Group earnings (9% of FY22 Group normalised EBITDA)
with EBITDA margin of 34.2% comparable against the
prior comparable period.
About SkyCity
35
RISK
PROFILE
and Management
SkyCity operates in a dynamic, highly regulated 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.
management framework and instils and promotes a
culture which values the principles of honesty, fairness,
cooperation, diversity and inclusion, and accountability
– as reflected in the SkyCity Group’s Code of Conduct
(available in the Governance section of the company’s
website at www.skycityentertainmentgroup.com).
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Recognising the importance of the governance of the
Group’s risk management function, the SkyCity Board
commenced a review of its Board committee structure
in late 2021 and, in June 2022, resolved in principle to
separate the Board’s Audit and Risk Committee into two
separate Board committees - an Audit Committee and a
Risk and Compliance Committee - and disestablish the
Sustainability Committee and reallocate its roles and
responsibilities to the other standing Board committees.
The primary objective of the Audit Committee is to assist
the SkyCity Board in fulfilling its responsibilities relating to
financial accounting and reporting, external and internal
audit, tax planning and compliance, and treasury. The
primary objective of the Risk and Compliance Committee
is to assist the SkyCity Board in fulfilling its responsibilities
relating to risk management and compliance, including
in respect of the company’s key compliance obligations,
host responsibility, anti-money laundering, and health
and safety matters. The restructure was effected in
August 2022.
SkyCity 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 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, assurance planning, and ongoing
business improvements. Management reports to the
SkyCity Board and the Risk and Compliance Committee
(previously to the Audit and Risk Committee) on the
effectiveness of the company’s management of its
material business risks at least annually.
SkyCity operates a combined assurance model which is
led by the Group Risk team and includes a combination
of business self-assurance (production and maintenance
of business unit risk registers), internal audit activity, and
the selected outsourcing of a number of independent
reviews. The overall effectiveness of the combined
assurance model is monitored and assessed by, and all
significant assurance findings are communicated to, the
Audit Committee.
The SkyCity Board and management recognise that
a positive culture is fundamental to an effective risk
The Group Risk team monitors the company’s culture for
indications on how well the risk culture is performing
and/or areas for improvement by way of:
•
•
•
•
leadership risk culture surveys conducted annually
across the SkyCity Group;
mini risk culture surveys conducted as part of each
assurance and risk review;
bi-annual reviews of various metrics to help provide a
proxy view of risk culture;
bi-annual presentation of a risk culture dashboard to
the Risk and Compliance Committee (previously to the
Audit and Risk Committee); and
•
regular discussions with management on risk culture.
In June 2022, we extended our annual risk culture survey
to all SkyCity staff (not just the leadership team) with
the assistance of an external organisational psychologist
with significant experience in risk culture surveys. The
focus and objective of this ‘Speak Up About Risk’ survey
was on ‘doing the right thing’ in areas critical to SkyCity’s
business, including in AML, host responsibility, and health
and safety, and to constructively diagnose areas where
SkyCity may require further uplift in helping our people to
understand and execute their responsibilities in relation
to risk and compliance in these areas. Pleasingly, 74% of
our employees participated in the survey with the results
indicating overall positive attitudes, behaviours and
practices in relation to risk culture.
Our Material Risks
SkyCity’s ability to create and preserve value for its
shareholders requires the successful execution of its
business strategy, while maintaining a sound culture
and practices to maintain compliance with responsible
gaming frameworks. 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 in the table overleaf.
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 pages 84–86 of this annual
report.
Risk Profile and Management
37
Material Exposure
Risk Management
Highly Regulated Industry
SkyCity operates in the casino industry, which is highly
regulated. The regulatory framework in which the
business operates is not only complex but also subject
to change from time to time, which may impact the
environment in which SkyCity operates and increase
the costs and complexities of operating its business.
In addition, there is an increased regulatory focus by
different regulators of the casino industry, as well as
ongoing pressure to keep improving SkyCity’s standards.
Potential examples include changes to gaming legislation
and regulations, licence conditions and gaming taxes and
levies. Such changes may be introduced for a variety of
reasons, including in response to the behaviour of others
operating in the industry or increased government and
regulatory conservatism in relation to the casino industry
in New Zealand and Australia.
Over the past financial year, there has been continued
focus on regulatory oversight of land-based casino
operators in New Zealand and Australia (including in
respect of anti-money laundering and host responsibility
obligations) and on SkyCity’s ‘social licence’ to operate
– see page 41 of this annual report for more details.
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.
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 regulatory risk is mitigated by close monitoring of
the evolving regulatory landscape, including maintaining
frequent and transparent engagement with the
governments and regulators in each jurisdiction in which
SkyCity operates and with industry stakeholders to
ensure that expectations are met and high standards of
compliance are maintained.
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 supports a robust compliance culture and
framework to ensure compliance with licence conditions
and applicable legislation and regulations.
To mitigate this risk, SkyCity maintains a comprehensive
business continuity framework, which supports
preparedness and response to a wide range of critical
events, including natural disasters, fire, emergency
incidents and pandemics.
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 have
worked well in responding to and managing the ongoing
impacts of the global COVID-19 pandemic to date.
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 ensure SkyCity remains relevant to its customers,
key strategic projects are progressed, with a focus
on emerging industry trends and opportunities for
leveraging new technology and demographic changes.
Master planning also continues to be progressed for
each of the SkyCity sites to explore opportunities for food
and beverage, new gaming spaces and entertainment
offerings.
38
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Material Exposure
Risk Management
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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 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).
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’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.
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. Extensions to the Hamilton and
Queenstown casino licences can be sought in accordance
with the renewal provisions of the Gambling Act 2003
(New Zealand).
The suspension, cancellation or expiry of any of SkyCity’s
other casino licences would also have a negative impact
on SkyCity.
In addition, SkyCity mitigates this 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 25
years and is committed to working cooperatively with its
regulators on matters of concern.
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.
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.
Development and Project Risk
(including Return from Major Projects)
SkyCity has a significant project still underway (the
New Zealand International Convention Centre and
Horizon Hotel development in Auckland). Potential
project risks include project delays, supply chain
constraints and project cost overruns.
The COVID-19 pandemic has significant implications for
return on capital invested in major projects. For example,
the closures of Australian interstate and international
borders significantly impacted visitation to the expanded
SkyCity Adelaide property (completed in December 2020).
SkyCity also continually reviews the optimal mix for its
business activities to ensure it has a balanced portfolio
reflecting its risk appetite.
SkyCity seeks to mitigate these risks by continually
monitoring progress by contractors against contractual
obligations, and maintaining robust project management.
SkyCity has established strong governance and oversight
frameworks for both current and future major growth
projects. SkyCity also ensures robust governance over
capital allocation and shareholder returns.
Risk Profile and Management
39
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.
Health and Safety Risk
SkyCity has Health and Safety Risk Registers in place
that identify 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 and
cuts from manual task related injuries.
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 (particularly
around ensuring improved levels of ICT disaster
recovery preparedness) and to keep abreast of the latest
cybersecurity issues and security patches. Additionally,
there is a strong, ongoing focus on technology project
governance, risk management and assurance.
A management-led Privacy and Cybersecurity Steering
Committee is in place to 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.
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's
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.
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. 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.
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requirements and a management-led AML Senior
Management Group provides enhanced governance to
AML/CFT related matters across the Group and supports
the effective implementation of SkyCity’s AML/CFT
obligations across the Group. SkyCity senior managers
and employees engaged in AML/CFT related duties also
receive training on AML/CFT matters.
As part of SkyCity’s assurance activities, an independent
review is conducted on a regular basis of SkyCity’s
New Zealand and Australian AML/CFT Programmes to
assess the effectiveness of these Programmes. An internal
assurance function is responsible for monitoring the
outcomes of the independent reviews and ensuring that
any issues are appropriately addressed.
SkyCity’s online gaming site, SkyCity Online Casino, is
operated out of Malta in partnership with international
iGaming company Gaming Innovation Group Inc
(GiG). GiG has in place an AML/CFT Policy that includes
procedures to detect, deter, manage and mitigate money
laundering and the financing of terrorism, customer due
diligence processes (including customer identification
and verification of identity), and suspicious activity
reporting, auditing and annual reporting systems and
processes. A Money Laundering Reporting Officer
administers and maintains the AML/CFT Policy.
We continue to explore available technology solutions and
seek expert advice where required to deliver best practice
AML/CFT standards at SkyCity.
Increased Focus on the Casino Industry
In recent years, there has been continued media and
regulator focus on the casino industry in Australia with
a particular focus on the operations of Crown Resorts
Limited and The Star Entertainment Group Limited.
This has resulted in increased focus and scrutiny on
SkyCity and other casino operators and could lead to more
stringent regulations for casino operators in Australia and
New Zealand in relation to money laundering and other
financial crimes.
Consequently, there are heightened expectations on
SkyCity around its obligations under AML/CFT
legislation and regulations, monitoring cash and
third-party transactions, and undertaking enhanced due
diligence checks on higher risk customers. Banks in both
New Zealand and Australia are also signalling to casinos
that they have a significantly reduced risk appetite for
accepting cash deposits from higher risk customers.
Financial Crime
The New Zealand and Australian anti-money laundering
and counter terrorism financing legislation places
obligations on certain organisations (including financial
institutions and casinos) to detect and deter money
laundering and terrorism financing and take appropriate
measures to guard against money laundering and
terrorism financing. Money laundering is how criminals
disguise the illegal origins of their money. Financers of
terrorism use similar techniques to money launderers to
avoid detection by authorities and to protect the identity
of those providing and receiving the funds.
At SkyCity, we place great importance on our anti-money
laundering (AML) and countering financing of
terrorism (CFT) obligations throughout every part of
the organisation. We are committed to ensuring that
we provide entertaining and profitable, yet safe and
responsible, experiences and environments.
As a casino operator and reporting entity for the purposes
of the AML/CFT legislation in New Zealand and Australia,
SkyCity has the following measures in place across its
land-based casinos:
•
•
•
•
•
an assessment of the money laundering and financing
of terrorism risks that SkyCity could face in the course
of running its business;
AML/CFT Programmes in New Zealand and Australia
that include procedures to detect, deter, manage
and mitigate money laundering and the financing of
terrorism;
an AML Compliance Officer appointed in each of
New Zealand and Australia to administer and maintain
the AML/CFT Programmes;
customer due diligence processes, including customer
identification and verification of identity;
suspicious activity reporting, threshold transaction
reporting, auditing and annual reporting of systems
and processes. For example, SkyCity reports any
suspicious activity that may be related to illegal activity,
and cash transactions over $10,000, to the New Zealand
Police and the Australian Transaction Reports and
Analysis Centre (AUSTRAC) (as applicable); and
•
regular internal and external audits and reviews of
AML/CFT compliance.
The Risk and Compliance Committee (previously
the Audit and Risk Committee) is a dedicated Board
committee that has responsibility for, amongst other
things, ensuring compliance with AML/CFT requirements
in New Zealand and Australia and is intended to provide
increased and focused Board oversight over SkyCity’s risk
and compliance obligations. The Risk and Compliance
Committee discusses, as a standing agenda item at
each scheduled meeting, matters relating to the Group’s
AML/CFT obligations.
Within the business, a specialist Financial Crime team
oversees the Group’s ongoing compliance with AML/CFT
Risk Profile and Management
41
SkyCity Anti-Money Laundering Control Framework
Senior Management
Governance & Oversight
• An AML Senior Management
Group meets to discuss AML
issues relevant to the Group
• An Adelaide AML
Senior Management
Committee oversees
AML issues specific
to the Adelaide operations
• A management steering
committee oversees the
implementation of the
Adelaide AML Enhancement
Programme
Board Governance
& Oversight
SkyCity Board and
Risk and Compliance
Committee oversight of
AML compliance
AML Programmes
AML Programmes
established in New Zealand
and Adelaide outlining
SkyCity’s AML processes
and procedures for customer
screening, transaction
monitoring, regulatory
reporting, customer due
diligence and enhanced due
diligence (subject to regular
internal and external review)
Learning &
Development
AML training programmes
for staff
External Advisors
Assisted by experienced
external AML advisors
Independent
Assurance
An independent review
is carried out every
2–3 years in New Zealand
and Adelaide to monitor
compliance with the
AML Programmes
AML Roles & Duties
A specialist Financial
Crime team (including
designated AML
Compliance Officers)
within the business
oversees the Group’s
ongoing day-to-day
compliance with
AML requirements
AML Risk Assessment
Each AML Programme
contains a risk assessment
identifying the money
laundering and terrorism
financing risks that SkyCity
may reasonably expect to face
in the course of its business
IT Systems
• Internal IT systems
(Bally and iTrak) used for
AML record keeping
• An external specialist
AML system (Jade
ThirdEye) used to
facilitate customer
screening and reporting
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 AUSTRAC Enforcement Investigation into
SkyCity Adelaide
Programme and uplift, and this will remain ongoing over
the coming years.
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As at the date of this annual report, AUSTRAC’s
enforcement investigation is continuing and SkyCity
continues to cooperate with AUSTRAC, including
continued engagement and the provision of information
and documents required by AUSTRAC. To date, AUSTRAC
has not filed civil penalty proceedings against SkyCity
Adelaide or indicated whether it intends to take any
enforcement action against SkyCity Adelaide, but
enforcement action remains an option open to AUSTRAC
in connection with its investigation into SkyCity Adelaide.
At this stage, the timetable for completion of the
AUSTRAC investigation into SkyCity Adelaide remains
unclear. However, given that AUSTRAC’s enforcement
investigation remains ongoing, and we have identified
certain areas where enhancements to the Adelaide
AML/CTF Programme are required or appropriate, there
is a possibility that AUSTRAC could bring an enforcement
action against SkyCity Adelaide. Any such action and any
associated penalties could have a significant financial and
reputational impact on SkyCity.
Independent Review of SkyCity Adelaide
On 1 July 2022, SkyCity was advised by Consumer and
Business Services (the South Australian gaming regulator)
that it had appointed the Honourable Brian Martin AO QC
to undertake an independent review of SkyCity Adelaide
in accordance with Part 3 of the Casino Act 1997 (SA) in
light of interstate inquiries into various casino operations.
Mr Martin QC is due to report back to the South Australian
Liquor and Gambling Commissioner by 1 February 2023.
SkyCity is continuing to cooperate with the review and
requests for information and documents as they arise.
In June 2021, SkyCity was informed by AUSTRAC’s
Regulatory Operations Team that it had identified
potential serious non-compliance by SkyCity Adelaide
Pty Limited (SkyCity Adelaide)with the Australian
Anti-Money Laundering and Counter-Terrorism Financing
Act 2006 (Cth) and Anti-Money Laundering and
Counter-Terrorism Financing Rules Instrument 2007
(No. 1) and that it had, consequently, referred the matter
to AUSTRAC’s Enforcement Team which had initiated a
formal enforcement investigation into the compliance of
SkyCity Adelaide. The potential non-compliance includes
concerns relating to ongoing customer due diligence,
adopting and maintaining a compliant AML/CTF
Programme and compliance with Part A of an AML/CTF
Programme. These concerns were identified in the course
of a compliance assessment which AUSTRAC commenced
in September 2019 focusing on SkyCity Adelaide’s
management of customers identified as high risk and/or
politically exposed persons.
The SkyCity Board and management team take the
concerns raised by AUSTRAC very seriously and took
immediate steps to investigate and seek to address
AUSTRAC's concerns. Those steps have included
establishing a Steering Committee to oversee
SkyCity Adelaide's engagement with AUSTRAC
throughout the investigation process and its response
to addressing AUSTRAC’s concerns and engaging an
independent expert to conduct a comprehensive review
of SkyCity Adelaide’s AML/CTF Programme and broader
AML function to assist SkyCity where appropriate to
enhance and improve the AML/CTF Programme and
AML function. These reviews have not been limited to
matters specifically raised by AUSTRAC – they have also
been directed to identifying any areas where SkyCity
Adelaide’s AML/CTF Programme and AML function could
be enhanced or uplifted more generally.
In November 2021, we developed a comprehensive
AML Enhancement Programme for SkyCity Adelaide in
response to the concerns raised by AUSTRAC and taking
into account the independent expert’s recommendations
and the findings of SkyCity’s own internal review of
the SkyCity Adelaide AML/CTF Programme and wider
AML function. The AML Enhancement Programme
encompasses the ongoing process of 'business as usual'
continuous improvement and is designed to lift the
maturity of the SkyCity Adelaide AML/CTF Programme
and broader AML function across certain key areas over
a two-year period. As part of the AML Enhancement
Programme, we are building and enhancing our internal
AML resourcing, including the appointment of a new
General Manager Financial Crime and AML Compliance
Officer for SkyCity Adelaide in October 2021 to lead the
AML function at SkyCity Adelaide and the recruitment of
additional roles within the SkyCity Adelaide AML team.
Significant investment has been made and budgeted in
resourcing and capital to support the AML Enhancement
Risk Profile and Management
43
OurBOARD
1
3
5
7
44
2
4
6
1. JULIAN COOK – Chair
Chair of the People and Culture Committee
Member of the Audit Committee
Member of the Risk and Compliance Committee*
Chair of the Governance and Nominations Committee
Appointed a director of SkyCity in June 2021
and Chair of the SkyCity Board in January 2022
Resides in New Zealand
Julian Cook was Chief Executive Officer of Summerset
Group Holdings Limited from 2014 to March 2021 and,
prior to becoming Chief Executive Officer, Summerset’s
Chief Financial Officer where he oversaw the company’s
transition to become a publicly listed company on the
New Zealand and Australian stock exchanges.
Prior to joining Summerset in 2010, Mr Cook was an
Associate Director at Macquarie Group where he gained
significant experience in the energy, industrial services,
tourism and aged care sectors over a 12-year career.
Julian is currently a director of WEL Networks Limited
and Winton Land Limited and holds a Master of Finance
from Victoria University and a Master of Science from the
University of Waikato.
2. SUE SUCKLING – Director
Member of the Governance and Nominations
Committee
Appointed a director of SkyCity in May 2011
Resides in New Zealand
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, 5th Element Limited, Eat My Lunch
Limited, Rubix Limited, Jade Software Corporation
Limited, Boulcott Hospital and Taska Prosthetics 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 holds 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.
Sue will retire as a director in early 2023.
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3. JENNIFER OWEN – Director
Chair of the Audit Committee
Member of the Governance and Nominations
Committee
Appointed a director of SkyCity in December 2016
Resides in Australia
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 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 Master
of 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.
Jennifer will retire as a director at the company's
upcoming Annual Meeting on 28 October 2022.
4. SILVANA SCHENONE – Director
Member of the People and Culture Committee
Member of the Governance and Nominations Committee
Appointed a director of SkyCity in June 2021
Resides in New Zealand
Silvana Schenone is an experienced corporate advisor. In
October 2021, Silvana will take up the role of Managing
Director and Co-Head of Investment Banking at leading
investment bank Jarden. Prior to this, Silvana was a
partner at MinterEllisonRuddWatts in Auckland where she
successfully led the firm’s Corporate division.
Silvana has extensive expertise in mergers and
acquisitions, private equity investments, takeovers,
schemes of arrangement, capital raisings and corporate
governance matters.
Silvana is recognised internationally for her commercial
acumen and negotiation skills, and is a thought leader
on corporate governance issues. Prior to moving to
New Zealand in 2007, Ms Schenone was a corporate
lawyer at Sullivan & Cromwell LLP in New York and prior
to that at Cariola Diez Pérez-Cotapos in Chile.
Committed to championing greater diversity, Silvana is
a founding member of OnBeingBold. She is also a Board
member of the New Zealand Takeovers Panel and holds a
Master of Laws from Harvard University.
5. CHAD BARTON – Director
Member of the Audit Committee
Member of the Risk and Compliance Committee*
Member of the People and Culture Committee
Member of the Governance and Nominations Committee
Appointed a director of SkyCity in June 2021
Resides in Australia
Chad Barton has extensive experience across finance,
capital markets, mergers, acquisitions and property
development. He is currently the Chief Operating Officer
and Chief Financial Officer of Nuix Limited, an ASX-listed
global software company, and was the Chief Financial
Officer of ASX-listed companies The Star Entertainment
Group Limited from 2014 to 2019 and Salmat Limited from
2009 to 2014. Prior to this, he was Chief Financial Officer of
the Australia and New Zealand business of Electronic Data
Systems from 2006 to 2009.
Chad, as founding Chairperson, established Women in
Gaming & Hospitality Australasia to achieve gender equity
and support the development and success of women in
the gaming industry.
He is a member of the Australian Institute of Company
Directors and Chartered Accountants ANZ and holds a
Bachelor of Business from the University of Technology in
Sydney.
*The Risk and Compliance Committee will be established with effect from 26 August 2022.
Our Board
45
6. KATE HUGHES – Director-elect
7. GLENN DAVIS – Director-elect
Appointment remains subject to regulatory approvals
Resides in Australia
Appointment remains subject to regulatory approvals
Resides in Australia
Kate Hughes is an experienced non-executive director,
holding board and committee roles across a diverse
portfolio, including the Victorian Department of Health,
SuniTAFE and Lower Murray Water. She also holds
committee roles with two Commonwealth regulators,
Comcare Authority and the Australian Prudential
Regulation Authority.
Prior to embarking on a governance career, Kate held
executive roles in risk management, governance and
compliance across various sectors, including financial
services, agribusiness, fast moving consumer goods,
telecommunications, and tertiary education. Her private
sector experience is complemented by regulatory
experience at the Australian Securities and Investments
Commission and NSW Treasury.
Kate holds tertiary qualifications in commerce, applied
finance, and occupational health and safety and is a
graduate of the Australian Institute of Company Directors.
The SkyCity Board intends to appoint Kate as the Chair of
the Risk and Compliance Committee*.
Glenn Davis has practised as a solicitor in corporate and
risk throughout Australia for over 35 years with expertise
and experience in the execution of large transactions, risk
management and in corporate activity regulated by the
Australian Corporations Act and the ASX.
Glenn has extensive board experience across the public,
private, family and government sectors. He is currently
the Chair of ASX-listed companies Beach Energy Limited
and iTech Minerals Limited. He is also chair of a number
of large private companies with broad board experience
over many years in the manufacturing, resources, retail,
property, seafood and primary production industries.
Glenn holds tertiary qualifications in law and economics
and is a fellow of the Australian Institute of Company
Directors.
In addition to being appointed to the SkyCity Board, it is
intended that Glenn also be appointed as a non-executive
director and Chair of SkyCity's Australian Subsidiary,
SkyCity Adelaide Pty Ltd.
*The Risk and Compliance Committee will be established with effect from 26 August 2022.
46
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Our Senior
LEADERSHIP
Team
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1. MICHAEL AHEARNE – Chief Executive Officer
Michael was appointed Chief Executive Officer in
November 2020. He joined SkyCity in December 2017
as Group Chief Operating Officer and was responsible
for enhancing value across SkyCity’s properties in New
Zealand and Australia. Michael also led SkyCity’s online
gaming strategy, including overseeing the establishment
of SkyCity Online Casino in 2019.
Michael’s extensive global experience in the gaming
industry spans over 20 years across multiple sectors,
including land-based and online casinos, as well as retail
and online sports betting. Prior to joining SkyCity, Michael
held a number of senior executive roles at Paddy Power
Betfair, one of the world leaders in sports betting and
gaming. Michael was formerly the Chief Operating Officer
for Aristocrat in the Australia and New Zealand regions
and has held several senior management positions at
The Star Casino in Sydney.
Michael is currently a director of Gaming Innovation
Group Inc. He is a qualified accountant and holds a
Master of Business Administration from the University of
Technology, Sydney.
2. JULIE AMEY – Chief Financial Officer
Julie joined SkyCity as Chief Financial Officer in May
2021 and is responsible for the financial management of
SkyCity, including reporting, treasury, risk management
and corporate development. She also oversees SkyCity’s
Information and Communications Technology function
and helps to drive the strategic direction of the SkyCity
Group.
Julie joined SkyCity from Shell Australia where she held
the role of Vice President Finance Integrated Gas. She
has also held a number of senior finance roles with the
Shell Group around the world since 2001, including as
Vice President Finance Qatar Shell, Chief Financial Officer
for Shell & Turcas A.S. Turkey and Business Finance
Manager and Financial Controller for Upstream Middle
East in the United Arab Emirates. Prior to joining Shell,
she held finance roles at Fletcher Challenge Energy, BBC
Worldwide Publishing and Deloitte & Touche.
Julie is a chartered accountant and holds a Bachelor of
Management Studies from the University of Waikato.
Our Senior Leadership Team
47
3. CALLUM MALLETT – Chief Operating Officer New
5. CLAIRE WALKER – Chief People and Culture Officer
Zealand
Callum was appointed Chief Operating Officer New
Zealand in February 2021 and has operating responsibility
for SkyCity’s New Zealand businesses, including the
day-to-day operations of SkyCity Auckland.
Callum has significant gaming and hospitality experience
having held a number of senior roles at SkyCity since
joining in 2009, including as General Manager of SkyCity
Darwin, General Manager SkyCity Auckland Hotels,
Convention Centre and Sky Tower, and Executive General
Manager of Hospitality for SkyCity Auckland.
Callum chairs SkyCity’s Host Responsibility Governance
Group, which has oversight of SkyCity’s host responsibility
uplift program and has driven significant investment in
both host responsibility resourcing and technology over
the past 24 months in particular.
Prior to joining SkyCity, Callum held numerous senior
leadership roles across the hospitality, retail and financial
investment sectors. He holds a Bachelor of Commerce
from Victoria University of Wellington, and has completed
studies with Cornell University, The London Business
School and the University of Nevada.
4. DAVID CHRISTIAN – Chief Operating Officer Australia
David was appointed Chief Operating Officer Australia
in February 2021 and is responsible for SkyCity’s Adelaide
business and overseeing the Australian interstate gaming
business.
David has more than 30 years’ experience in hospitality,
hotel and casino management, including working in
several Australian States and Singapore. He has held a
number of senior roles during his career with SkyCity
since joining in 2005, including General Manager SkyCity
Adelaide (where he was responsible for overseeing the
construction and opening of the A$330 million Adelaide
expansion development), General Manager SkyCity
Darwin, General Manager SkyCity Auckland and General
Manager SkyCity Hamilton.
David holds a Master of Business Administration from
Deakin University, Victoria, and a Diploma of Hospitality
Management from Drysdale House, Tasmania.
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.
6. JO WONG – General Counsel and Company Secretary
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 over 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 and 2020 New Zealand Law Awards
and was recognised in New Zealand Lawyer’s 2019 and
2020 In-House Leaders lists as one of the leading lawyers
across New Zealand. 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 from Victoria University of
Wellington.
48
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 L
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7. SIMON JAMIESON – General Manager NZICC
9. NIRUPA GEORGE – Chief Corporate Affairs Officer
Nirupa joined SkyCity as Chief Corporate Affairs Officer
in June 2021 and is responsible for leading SkyCity’s
corporate affairs activities, including government,
community and industry stakeholder relations and
SkyCity’s public policy and advocacy.
Before joining SkyCity, Nirupa was Chief of Staff to the
Mayor of Auckland responsible for running his office and
executing the Mayor’s political priorities. Prior to this, she
ran Mayor Phil Goff’s successful mayoral campaign in
2016 and worked in Parliament as a Political and Media
Advisor. Early in her career, Nirupa was a Senior Solicitor
specialising in refugee and humanitarian law.
Nirupa is currently the vice-Chair of Amnesty International
Aotearoa New Zealand and sits on its Audit and Risk
Committee. She holds a Bachelor of Laws and Bachelor of
Health Science from the University of Auckland.
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 SkyCity’s development projects
in New Zealand and health and safety.
With more than 35 years’ experience in large-scale
hospitality businesses, Simon brings a wealth of
commercial, property, project and tourism experience to
the SkyCity business. Simon has governance experience
on industry boards and Local Government owned entities
and trusts.
8. GLEN MCLATCHIE – Chief Information Officer
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.
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 over 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 member of the Institute of Directors in New
Zealand, 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, Australia, and a
Bachelor of Business Studies from Massey University,
New Zealand.
Our Senior Leadership Team
49
BOARD AND SENIOR LEADERSHIP TEAM STRUCTURE
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 89–96 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 COMMITTEES1
Governance and
Nominations
Committee
Audit
Committee
People and
Culture
Committee
Risk and
Compliance
Committee
CHIEF EXECUTIVE OFFICER
Michael Ahearne
SENIOR LEADERSHIP TEAM
Chief
Financial
Officer
Julie Amey
Chief Operating
Officer
New Zealand
Callum Mallett
Chief Operating
Officer
Australia
David Christian
Chief People
and Culture Officer
Claire Walker
General Counsel and
Company Secretary
Jo Wong
General
Manager
NZICC
Simon Jamieson
Chief Information
Officer
Glen McLatchie
Chief
Corporate Affairs
Officer
Nirupa George
1 With effect from 26 August 2022, the Audit and Risk Committee will be renamed the Audit Committee, the Risk and Compliance
Committee will be established, and the Sustainability Committee will be disestablished.
50
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 SUSTAINABILITY
51
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.
As a casino operator, we must continually focus on
our social licence to operate. 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, our environment and our shareholders. 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.
Our Sustainability Framework and Strategy
In 2016, after engaging with both internal and external
stakeholders on which sustainability issues were most
relevant to SkyCity’s business, we adopted our 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. This framework
was 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.
Since adopting our initial sustainability framework and
strategy, there has been considerable external and
internal change in relation to sustainability practices,
perspectives and operating context. Accordingly, during
the 2022 financial year, we commenced a review of
SkyCity’s sustainability framework and strategy - the
purpose of which was to understand the drivers for
sustainability for SkyCity into the early-mid 2020s, adopt
a fit-for-purpose framework for driving sustainability
decisions in the business, and gain confidence that
sustainability activity is aligned to organisational purpose
and strategy and is reflective of today’s operating context.
As an outcome of this review, in June 2022, we adopted a
new integrated business strategy, effective from
1 July 2022, that integrates environmental, social, and
governance considerations into our current business
strategy – as further detailed on pages 22–25 of this
annual report.
SkyCity has also developed and adopted a new three-year
sustainability implementation plan for FY23 – FY25 which
reflects the priority sustainability activity underpinning
our new integrated business strategy. We continue to
focus on embedding our sustainability framework and
strategy into all levels of the organisation and in the
way SkyCity operates. As part of this implementation
plan, SkyCity will report on its progress in relation to
sustainability priorities, objectives and activities against
its integrated business strategy from FY23 onwards rather
than against the previous sustainability pillars.
The Board maintains 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 Sustainability Pillars
The following pages outline our priorities, objectives
and activities for each of the sustainability pillars under
our previous sustainability framework and strategy (as
detailed in our 2021 annual report) – ‘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 2022. Commentary on the ‘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.
52
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 SkyCity Sustainability Implementation Plan FY23 – FY25
CUSTOMERS
COMMUNITY
ENVIRONMENT
Providing our customers vibrant
experiences, responsibly
Positively contributing to vibrant
communities in the places where
we operate
Protecting and enhancing the
environment in the places where
we operate
(a) Creating vibrant experiences for
(a) Building and operating vibrant
(a) Respecting, protecting, and
Y
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PRIORITIES
Implementation
Principles
(a) Stakeholder
SkyCity customers and exceeding
their expectations
value creation
(b) Ensuring customer experiences
(b) Commitment to
responsibility
(c) Culture of
compliance
are provided safely and
responsibly
(c) Commitment to continuous
improvement and having the
systems and processes necessary
to deliver vibrant experiences,
responsibly
Focus Areas
•
Creating vibrant customer
experiences, delivered responsibly
by our people
• Host responsibility
• Prevention of financial crime
Activities
Our Targets
•
•
•
•
•
•
•
•
•
•
•
Customer experience programme
Host responsibility programme
Financial crime programme
Employee retention, training and
development
Customer satisfaction score
improvement year on year
Compliant host responsibility
programme as evidenced by
internal/external audit processes
and mystery shopper exercises
Compliant prevention of financial
crime programme as evidenced
by delivery of the Group AML
Enhancement Programme
High levels of employee
engagement as evidenced by
maintaining or improving survey
scores
100% of eligible employees have
completed mandatory training
requirements (host responsibility
and AML/financial crime)
Retain employees by growing
access to career paths within
SkyCity, targeting 40%+ of roles
filled internally each year
Support vibrant and responsible
customer experiences by
targeting year on year growth
in the number of employees
accessing voluntary learning and
development opportunities
destinations in the places where
we operate. Contributing back
to local communities
(b) Exceeding the expectations
of a responsible business in
the communities in the places
where we operate
(c) Commitment to continuous
improvement and having
the systems and processes
necessary to deliver vibrant
experiences, responsibly
enhancing the environment in
the places where we operate
(b) Responsible use of natural
resources and a commitment
to minimise our impact and,
where possible, enhancing
the environment in the places
where we operate
(c) Dedicated focus on complying
with all relevant environmental
regulations, including
climate-related risk disclosures
•
•
•
•
•
•
•
•
•
•
•
Supporting our communities
through our Community Trusts
Investing in collaborative
partnerships in our local
communities where we operate
Providing employment and
development opportunities
for young people in our
communities
Build SkyCity’s confidence
and capability to engage
authentically with mana
whenua and the indigenous
peoples of South Australia
SkyCity youth employment
and development programme
(Project Nikau)
In collaboration with the SkyCity
Community Trusts, youth
development, employment and
career path programmes
Community based partnerships
that deliver on the SkyCity
purpose and make an impact
300 Project Nikau recruits by 2025
Project Nikau retention rate
equivalent or better than
SkyCity Group retention rate
Commitments (in line with
Community Trust Deeds)
met, and impact of these
commitments measured
SkyCity Adelaide employee
population reflects South
Australia with 1.49% of employees
identifying as Aboriginal or Torres
Strait Islander
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Climate change mitigation,
adaptation and transition for
our business
Transitioning to a circular
economy for our business
Building a sustainability
culture and engaging
employees on climate change
and sustainability
Supporting the environmental
performance of our supply chain
Mitigation: measure emissions,
set targets according to
science and reduce emissions
Adaptation: assess climate
change risks and respond
Transition: employee and
supply chain engagement on
climate change
Reduction of waste and diversion
from landfill, including in
partnership with the value chain
Environmental performance of
our supply chain
Recalibrate climate change
action plan by end of FY23
Climate risk assessment and
reporting (TCFD) completed
for FY24
Emissions reduction of 25% by
2025 (38% reduction in Scope 1
and 2 by 2030 and 73% by 2050)
100% of contracted suppliers
engaged to discuss measuring
emissions and setting science
aligned targets by end of FY23
5% reduction year on year in
waste to landfill
10% reduction year on year in
single-use plastic products
Employees’ knowledge of, and
engagement on, sustainability
enhanced
By FY25, SkyCity’s EcoVadis
score is at or above the
benchmark score of 55
Our
Customers
BE RESPONSIBLE HOSTS
Ensure safe and enjoyable experiences for our
customers, employees and communities.
The promotion of responsible gaming and safe consumption
of alcohol are topics at the heart of our business.
We take our responsibilities to minimise risk and harm
from problem gambling very seriously.
Priority Issues
•
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 in New Zealand and
Relationships Australia, Overseas Chinese
Association, PEACE Multicultural Services
and OARS SA in South Australia
• Australasian Gaming Council
• Police
• Local councils
FY22 Performance Highlights
•
•
•
•
Expanded our New Zealand host responsibility training
programme to include a virtual module for ‘Level 2’ training and
scenario-based training for customer facing teams
Further enhanced our re-entry processes with the introduction
of mandatory pre-commitment plans for re-entry customers at
SkyCity’s New Zealand casinos
Updated the internal data used to support the Focal algorithm
with the latest behavioural criteria
Upgraded iTrak, SkyCity’s customer relationship management
(CRM) tool for host responsibility
FY22 Key Challenges
•
•
•
Maintaining best practice host responsibility has continued to be
challenging in a COVID-19 operating environment
Alignment of host responsibility and harm minimisation practice
and culture across the SkyCity casinos remains challenging due to
differences from site to site
Media focus on the Department of Internal Affairs’ audit report
issued in May 2021 relating to its 2019 audit of the SkyCity Auckland
Host Responsibility Programme
FY23 Focus Areas
•
•
•
•
Continue to enhance and further embed a culture of customer
care within SkyCity
Maximise the use of existing host responsibility technologies
across all SkyCity properties and investigate new technologies
entering the market
Develop an effective technological solution to monitor uncarded
gaming play
Continued alignment of host responsibility practices across the
SkyCity casinos
Our Customers
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SkyCity Group Harm Minimisation Framework
Senior Management
Governance &
Oversight
A Host Responsibility
Governance Group
meets regularly
to discuss host
responsibility matters
Board Governance &
Oversight
SkyCity Board and
Risk and Compliance
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 & 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
iTrak Monitoring
& Reporting
A record management
tool for host
responsibility incidents
and assessments,
including reports for
ongoing oversight
Learning &
Development
Framework
A suite of host
responsibility modules
for staff, including online
courses, in-person
courses, and annual
refresher courses
Facial Recognition
Technology
Use of facial recognition
and alert technology to
detect excluded patrons
Communications
& Brand
An internal brand
communications
campaign to
promote awareness of
host responsibility
Reports to the
Regulator
Annual reporting to
the regulator on the
effectiveness of SkyCity’s
Host Responsibility
Programmes
Stakeholder
Engagement
Regular engagement
with community gaming
organisations and
academics
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Leading and Best Practice
Host Responsibility
When done responsibly, gambling is 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. GiG 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. Through rigid processes
and industry leading software, GiG also ensures that
international AML regulation and best practice is strictly
adhered to. 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.
Up until August 2022, the Board’s Sustainability Committee
was 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. From
August 2022, the Board’s newly established Risk and
Compliance Committee will assist the SkyCity Board in
fulfilling its responsibilities relating to risk management
and compliance, including in respect of the company’s key
compliance obligations relating to host responsibility,
anti-money laundering, and health and safety matters.
Within the business, a management-led Host
Responsibility Governance Group meets regularly to
discuss and review host responsibility matters that have
arisen or may arise in the future across the SkyCity Group.
The principle 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 environments, 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.
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 staff receive training in host responsibility
awareness. A dedicated team of experienced host
responsibility specialists are employed at each of SkyCity’s
land-based casinos and, through our partnership with GiG,
an experienced harm minimisation team is in place for
SkyCity Online Casino.
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 technology measures to improve our
ability to prevent and minimise harm from problem
gambling, including:
•
•
•
the expanded use of facial recognition technology
to alert Host Responsibility staff when a gambler of
interest enters a SkyCity gaming area;
upgrading SkyCity’s customer relationship
management tool, iTrak, with improved usability
and reporting functionality, which further improves
SkyCity’s ability to be insight-led; and
updating the internal data used to support the
Focal predictive algorithm risk model with the latest
behavioural criteria to ensure that the algorithm is
analysing customer behaviour based on our most
recent behavioural data.
Our Customers
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In addition to technology enhancements, we also
established a new team of Responsible Gambling Hosts
in Auckland and Hamilton who provide additional and
dedicated host responsibility coverage in gaming areas.
Working collaboratively with our Gaming Machines, Table
Games, Security and Surveillance teams, the Responsible
Gambling Hosts are responsible for:
•
•
•
•
proactively monitoring the main gaming floor for
customers who remain within the casino or play for
extended periods and approach and interact with
customers as required;
assist with the actioning of continuous play system
alerts;
assist with the actioning of continuous presence
system alerts; and
act as a visible point of contact for customers that
would like to know more about SkyCity’s host
responsibility practices.
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.
Assurance and Audit
As part of SkyCity’s assurance activities, an independent
audit is carried out every two years at each land-based
casino to monitor compliance with SkyCity’s relevant Host
Responsibility Programme. SkyCity also has an internal
independent assurance programme in place to monitor
and improve compliance with SkyCity’s land-based harm
minimisation framework and undertakes internal mystery
shopping training exercises across its land-based casinos
to test the robustness of its host responsibility practices.
Each SkyCity Host Responsibility Programme is also
subject to audit by the relevant gambling regulator.
In March 2022, Newshub (a news media service)
conducted a covert filming exercise at the SkyCity
Auckland casino to test SkyCity’s compliance with
the SkyCity Auckland Host Responsibility Programme
following the New Zealand Department of Internal Affairs’
2019 audit of the SkyCity Auckland Host Responsibility
Programme (conducted in January and February 2019)
which found that, while SkyCity had good policies and
processes in place, it needed “to significantly improve
its operation to match its processes and policies in
regard to its host responsibility obligations”. As part of
the covert filming exercise, a Newshub employee was
filmed gaming for a period of time. The Department of
Internal Affairs launched an investigation into the incident
after Newshub’s story was broadcast. In July 2022, after
investigating the incident, the Department confirmed
that it had closed its investigation finding that SkyCity
had not breached its host responsibility obligations.
In relation to the Department’s 2019 audit findings,
whilst SkyCity disagreed with a number of the findings,
SkyCity took on board the Department’s feedback and
made significant enhancements to improve its host
responsibility practices and procedures, including the
creation of a new Head of Host Responsibility role,
implementation of a full facial recognition technology
solution across SkyCity’s land-based casinos, and
the development of a 12-month plan to improve
host responsibility performance. In August 2022, the
Department confirmed that it was satisfied that SkyCity
had taken adequate steps to address the concerns raised
in its final audit report (released in May 2021).
Embracing Technology
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.
The algorithm (including the ALeRT BETTOR Protection
System software) was rolled out and implemented at the
SkyCity Hamilton casino in 2020. Discussions with the
South Australian regulator are ongoing regarding the use
of this technology at the SkyCity Adelaide casino.
Since 2019, SkyCity has operated a full facial recognition
technology solution across all its land-based casinos
using cameras positioned at all entry points to the
gambling areas to assist in identifying customers
excluded from re-entering its casinos. An automated
alert is triggered notifying SkyCity personnel when an
individual matching an image from SkyCity’s database
of excluded patrons re-enters a SkyCity gambling area.
Prior to the introduction of this technology, staff recall was
the primary mechanism for identifying excluded persons
returning to the casino in breach of their exclusion orders.
This technology was subsequently enhanced with the
assistance of additional cameras installed within the
casino to assist SkyCity in identifying customers who
remain within the casino for extended periods – with the
enhanced technology being implemented at the SkyCity
Hamilton casino in 2020 and at the SkyCity Auckland
casino in 2021. An automated alert is triggered notifying
SkyCity personnel when an individual is identified
within the casino for an extended period. This initiative
was also intended to be implemented at the SkyCity
Adelaide casino by 30 June 2022 – however, to date the
South Australian regulator has not approved SkyCity’s
application to use this technology at the SkyCity Adelaide
casino.
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The introduction of facial recognition technology and
other technological solutions 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. Further trials
are also currently underway to assess additional facial
recognition technological solutions that may enhance
SkyCity’s host responsibility practices. However, despite
our best efforts and host responsibility measures and
initiatives, there is no guarantee that facial recognition
technology will be effective in each and every case and
some individuals may nonetheless find ways to elude
staff.
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.
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.
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, customers can also choose to exclude
themselves from the SkyCity Adelaide casino and, in
some cases, SkyCity itself or the Liquor and Gambling
Commissioner makes the decision to exclude a customer
– all exclusions are referred to Consumer and Business
Services (the South Australian Gaming regulator).
In 2022, we introduced a dedicated team of Responsible
Gambling Hosts in Auckland and Hamilton whose focus
is to proactively monitor and interact with uncarded
players, action long play alerts for carded and uncarded
players, action long stay alerts, and act as a source of host
responsibility information for all customers.
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 (including new
technologies), some individuals may nonetheless find
ways to elude staff and re-enter a SkyCity casino.
Community Knowledge
Given that a material issue to our internal and external
stakeholders 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. We also invite
treatment service providers to attend our internal host
responsibility training programmes wherever possible.
During the past financial year, the inaugural quarterly
meeting of the Harm Minimisation Community
Stakeholder Committee was hosted at SkyCity Adelaide,
including representatives from South Australian problem
gaming organisations.
Our Customers
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Excluded Persons Identified at SkyCity Properties
The following graph summarises the number of excluded persons identified returning to each of the SkyCity
properties in breach of an exclusion order over the 2019–2022 financial years:
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
703
1,410
940
81
33
57
182
109
56
391
226
148
59
107
76
55
FY19
FY20
FY21
FY22
Auckland
Hamilton
Queenstown
Adelaide
The reduction in the number of exclusion-related breaches from FY20 is likely due to changes in excluded
patron behaviour following the introduction of facial recognition technology and COVID-19 closures.
Exclusions at SkyCity Properties
The following graph summarises the number of exclusion orders issued by each of the SkyCity properties over the
2018–2022 financial years:
696
766
620
678
386
391
138
66
25
169
61
44
189
112
61
217
124
58
81
43
FY18
FY19
FY20
FY21
FY22
Auckland
Hamilton
Queenstown
Adelaide
The reduction in the number of exclusion orders issued from FY21 to FY22 is likely to have been impacted
by COVID-19 closures.
900
800
700
600
500
400
300
200
100
0
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Our challenge is to ensure that our
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Our People
INSPIRE OUR PEOPLE
A great place to work where our people are
empowered to grow and achieve.
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As a major employer with around 4,000 staff, we know
that taking care of our people is the key to creating a great
and safe place to work. 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.
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
FY22 Performance Highlights
• Health, safety and wellbeing
• Diversity, inclusion and belonging
• Employee engagement
•
Meaningful career and development
pathways
Key Stakeholders
•
Employees (existing, former and
potential)
• Union representatives
•
Ministry of Business, Innovation and
Employment
• Ministry of Social Development
•
Nominated as a finalist in the Diversity and Inclusion Leadership
Award at the 2021 Deloitte Top 200 Awards for Te Roopū Māori
o SkyCity
• Achieved Gender Tick and Rainbow Tick reaccreditation
• Launch of the Good Yarn mental health literacy programme
FY22 Key Challenges
•
•
It remains challenging to fill vacant roles given the constrained
candidate markets due to ongoing COVID-19 related border closures
Providing ongoing support for employee mental and physical health
and wellbeing as employees continue to cope with the challenges
and uncertainties arising from COVID-19
• Continuing to support employees to access COVID-19 vaccinations
• Ministry of Health
FY23 Focus Areas
•
Department of Education, Skills and
Employment
•
Accident Compensation Corporation
• WorkSafe NZ
• SafeWork SA
• ReturnToWorkSA
•
•
Immigration New Zealand
Women in Gaming and Hospitality
Australasia
• Gender Tick
• Rainbow Tick
• Southern Cross Healthcare
•
•
•
•
•
•
Ensure Group implementation of our five-year Health, Safety and
Wellbeing Strategy Plan into FY23 and reduce our injury frequency
rates and injury management costs
Enhance and build the health and safety risk management capability
of our people
Continue our focus on closing SkyCity’s gender and ethnic pay gaps
and on the representation of women and ethnic minorities in our
leadership teams
Make progress towards ensuring the SkyCity Adelaide employee
population reflects South Australia with a target of 1.49% of
employees identifying as Aboriginal or Torres Strait Islander
Retain employees by offering access to career paths within SkyCity,
targeting 40%+ of vacancies filled internally
100% of eligible employees have completed mandatory compliance
training requirements
Our People
63
Health, Safety and Wellbeing
Staff Support Programmes
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.
Health and Safety
Over the last financial year, our primary focus has
remained on keeping our people and guests safe from
COVID-19 and supporting Government initiatives to
minimise the risk of COVID-19 in our communities. We
have implemented extensive processes to plan, manage
and review our COVID-19 health management response.
In October 2021, the SkyCity Board adopted a new Group
Health, Safety and Wellbeing Strategy for FY22 – FY25 that
builds on the strategic goals set out in the earlier Group
Health and Safety Strategy adopted in 2018. Our new
strategy focuses on a number of key themes to continue
our improvement journey, including effective risk
management, strong leadership and better engagement,
resources to support improvement, and healthier people.
Employee Wellbeing
SkyCity has programmes in place to promote healthy
behaviours and personal responsibility for mental and
physical health.
As part of SkyCity’s wellness programme, all SkyCity
employees are invited to receive a free flu vaccination.
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. Around 670 vaccinations have
been delivered in the past financial year.
SkyCity has a range of services designed to assist
employees who may need a helping hand. At our
Auckland and Hamilton sites, SkyCity offers confidential
help and advice for SkyCity employees, through the
Connect employee advocacy team, for work issues
and situations outside of work. They offer advice about
practical and effective ways to handle difficult or sensitive
issues and, where appropriate, assist employees in
working with agencies outside of SkyCity who may be
able to help.
The Group-wide Employee Assistance Programme
(delivered via EAP Services) 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.
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.
FY22 Health and Safety Scorecard
Indicator
Target
FY22 Performance
Safety Success
Indicator 1
Safety Success
Indicator 2
Zero fatalities or life altering injuries
Achieved – no fatalities or life altering
Reduce Total Recordable Incident
Frequency Rate (TRIFR) by 10% from the
FY20 baseline
injuries
Achieved – decreased by 50%
Safety Success
Indicator 3
Increase hazard reports by 10% from the
FY20 baseline
Not achieved – decreased by 48%
The final TRIFR and hazard reporting results were significantly impacted by the COVID-19 disruptions and closures,
which significantly reduced the total number of hours worked, and accordingly meant that various targets (such as
targeted increased hazard reporting) were very difficult to achieve in practice.
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GOAL 2
Effective Risk
Management
•
•
•
•
Developed a more accurate
business health and safety
risk profile with employee
consultation to include
our most critical health
and safety hazards and
associated risks which our
people are exposed to daily
and could lead to serious
harm
Developed the risk
management capability
of our people so they have
the skills, knowledge and
confidence to deliver good
risk management practices
in their ability as individuals,
and in their respective work
activities
•
•
GOAL 3
Resources to Support
Improvement
Developed and implemented
a Health and Safety Team
Charter offering our
people more effective
influence, engagement and
coaching from the Health
and Safety team so they
become involved in practice
in owning and driving
improved HSW across the
business and worksites
Introduced a revised
Employee Health and
Safety Participation and
Consultation Framework
so our people have a say in
addressing health and safety
matters and making further
improvements across our
worksites
GOAL 4
Healthier People
Introduced an Employee
Injury Prevention
Programme that enables
employees to receive
early expert support and
guidance when reporting
early notification of pain
and discomfort so this can
be addressed and managed
accordingly before it
escalates into injury or harm
Reframed our employee
wellbeing with a programme
that offers a more holistic
and co-creation approach,
which is more focused with
the interrelations of people
at work, the work they
undertake, self-organisation
and social inclusion into the
workgroup
FY22 Key Achievements
•
•
•
GOAL 1
Strong Leadership and
Better Engagement
Developed and promoted
a more pragmatic Health
and Safety Policy with
employee consultation
for ensuring improved
leadership, ownership, and
empowerment from our
people in health and safety
matters
Implemented a reframed
Health and Safety
Governance Framework
for ensuring our officers
and leaders exercise due
diligence and achieve
excellence in health, safety
and wellbeing (HSW)
Worked with our key
business divisions for
continuous improvement
in HSW to introduce a
constitution which is driven
by HSW governance and
engagement leadership
groups for addressing key
employee HSW matters
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 2023 are to:
•
continue to ensure strong female candidates are
identified in the recruitment process for all Board and
senior executive roles;
•
achieve and maintain gender balance in SkyCity’s
executive leadership team (gender balance is defined
as having 40% female representation, 40% male
representation and 20% any gender);
maintain a gender balance across the SkyCity
employee population and at each tier of the
organisation hierarchy;
continue to review gender and ethnic 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 and Gender 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;
continue to work with advisors and experts 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.
•
•
•
•
•
•
•
Our People
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Gender Composition
SkyCity is a signatory to the 40:40 Vision - an investor-led initiative to achieve gender
balance across the executive leadership teams of all ASX200 companies by 2030 - 40%
women, 40% men and 20% any gender. In March 2022, a year after the launch of the
40:40 Vision, SkyCity was one of the 17 ASX200 companies (representing close to 25 per
cent of the market capitalisation of all ASX 200 companies) who had signed up to the
initiative.
The gender composition of SkyCity’s directors, officers, senior executives and total
workforce as at 30 June 2022 and, comparatively as at 30 June 2021, is set out below:
Female
Male
2022
Number
3
4
5
1,933
2021
Number
Female
3
4
5
2,082
%
60%
44%
56%
49%
%
43%
44%
45%
49%
Number
2
5
4
1,977
Number
4
5
6
2,167
Male
%
40%
56%
44%
51%
%
57%
56%
55%
51%
Directors
Officers
Senior Executives
Total Workforce
Directors
Officers
Senior Executives
Total Workforce
In the above tables:
Total
5
9
9
3,923
Total
7
9
11
4,249
• '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
• 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.
Employee Resource Groups
An Inclusion Council, comprising representatives of
various Employee Resource Groups, supports the
embedding of an authentic and inclusive culture at
the SkyCity Auckland and SkyCity Adelaide properties.
The leaders of the Employee Resource Groups bring
together their respective communities and work together
to drive initiatives that impact the groups they represent.
There are currently six core Employee Resource Groups at
SkyCity Auckland – Winning Women, NZ Asian Leaders,
SkyCity Pride, Pasifika Village, Te Roopū Māori o SkyCity
and Youth Council – and five core Employee Resource
Groups at SkyCity Adelaide - Women's Voice, LGBTTIQA+,
Disability/Ability, Aboriginal and Life Stages.
In New Zealand, Te Roopū Māori o SkyCity (with support
from Ngāti Whātua Ōrākei) continues to provide a
significant amount of support and guidance to SkyCity
management, and the broader workforce, with the aim
of delivering better outcomes for Māori. SkyCity was
recognised at the 2021 Deloitte Top 200 Awards as a
finalist in the Diversity and Inclusion Leadership Award
category for Te Roopū Māori o SkyCity.
Supporting Our Rainbow Community
SkyCity has maintained a Rainbow Tick for its Auckland
and Hamilton properties for a seventh year. 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 2020, 2021 and 2022. 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.
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Pay Equality
SkyCity continues to monitor and report on remuneration
outcomes by gender and ethnicity 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 did not identify indications of
gender bias across similar positions.
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 four 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.
Research has shown that organisations which integrate
pay transparency practices into remuneration principles
are better able to recognise and address gender pay gaps
(the difference between the median amount women and
men are paid within an organisation) and gender pay
equity (ensuring women and men are paid the same for
work of equal value).
Over recent years, SkyCity has taken a leading position in
New Zealand and Australia in relation to pay transparency
through the publication of our gender and ethnic pay
gaps, as well as the measurable actions SkyCity is taking to
reduce underrepresentation and areas of disparity which
may lead to gender and ethnic pay gaps.
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The following table illustrates the SkyCity gender pay gap as at 30 June 2022 and as a comparison against the prior
periods and the respective national gender pay gaps:
New Zealand
Australia
SkyCity Gender
Pay Gap
(as at 30 June)
6.8%
6.9%
7.5%
8.2%
National Gender
Pay Gap
9.1% (August 2021)
9.5% (August 2020)
9.3% (August 2019)
9.2% (August 2018)
SkyCity Gender
Pay Gap
(as at 30 June)
3.5%
6.1%
1.5%
1.5%
National Gender
Pay Gap
13.8% (November 2021)
13.4% (November 2020)
13.9% (November 2019)
14.1% (November 2018)
2022
2021
2020
2019
Percentage difference between median hourly rate for women compared to the median hourly rate for men as at 30 June in the relevant year. Includes
permanent and temporary employees.
The following table illustrates the SkyCity ethnic pay gap as at 30 June 2022 and, by way of comparison, as at 30 June 2021:
SkyCity Ethnic Pay Gap as compared
to Pakeha Men
(as at 30 June 2022)
SkyCity Ethnic Pay Gap as compared
to Pakeha Men
(as at 30 June 2021)
National Ethnic Pay Gap*
New Zealand
Pakeha Women
Māori Women
Pacific Women
Asian Women
6.8%
14.0%
13.8%
10.9%
7.9%
18.9%
16.6%
11.3%
Australia
11.9%
22.0%
25.4%
19.0%
SkyCity Ethnic Pay Gap as compared to
European Men (as at 30 June 2022)
SkyCity Ethnic Pay Gap as compared to
European Men (as at 30 June 2021)
European
Asian Women
0%
13.4%
2.0%
13.3%
* The New Zealand Household Labour Force Survey pay gaps (to Pakeha men) as at 30 June 2021.
Our People
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Performance Against FY22 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 2022:
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. In the past financial year, two new Board members were identified, one of
whom is female.
Recruitment briefs for the senior leadership recruitment process explicitly specified
that SkyCity required female candidates to be identified wherever possible. In the past
financial year, no senior executive appointments have been made.
During the year under review, SkyCity became a signatory to 40:40 Vision, an investor-led
initiative to achieve gender balance in executive leadership across all ASX200 companies
by 2030.
During the past financial year, gender balance has been maintained across the
organisation with 49% of employees being female and 51% being male. Within the top
four levels of the organisational hierarchy, 51% of employees were female and 49% were
male, demonstrating an equal gender representation in our talent pipeline.
SkyCity continues to monitor and report on remuneration outcomes by gender and
ethnicity to ensure pay equality. SkyCity also conducted gender pay equality analysis for
like-for-like positions, and 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.
While our analysis did not identify evidence of a gender driven pay gap for
like-for-like positions, we remain focused on addressing the overall gender pay gap by
increasing the representation of women in senior roles (attracting higher remuneration)
across the business through a gender balanced talent pipeline.
SkyCity’s New Zealand overall gender pay gap decreased to 6.8% (at 30 June 2022) from
6.9% (at 30 June 2021). SkyCity’s Australian overall gender pay gap decreased to 3.5%
(at 30 June 2022) from 6.1% (at 30 June 2021). SkyCity’s New Zealand and Australian ethnic
pay gaps at 30 June 2022 are outlined in the tables on the previous page.
Several initiatives were delivered during the past financial year with the objective of
developing a more ethnically diverse leadership population:
•
•
•
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 one summer intern for three
months within our corporate business;
SkyCity Adelaide initiated a new partnership with Career Trackers and, through this
programme, engaged a pre-professional indigenous university student for a paid
multi-year internship; and
• SkyCity continued its sponsorship of the New Zealand Asian Leaders Forum.
A number of specialists have been engaged to provide perspectives and guidance to both
Management and Employee Resource Groups from the Inclusion Council, with a focus on
building cultural understanding and competence.
Maintain a gender
balance across the
population of employees
who make up the
top four levels of the
organisation hierarchy
Continue to review
gender and ethnic 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
Continue to work with
a panel of advisors
and experts to provide
informed perspectives
and guidance to the
Chief Executive Officer
and Inclusion Council on
diversity and inclusion
matters
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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
SkyCity maintained its New Zealand site ‘Gender Tick’ and ‘Rainbow Tick’ accreditations
during FY22 and secured advanced criteria in achievements across the following
categories:
• ethnicity pay gap measurement and rectifying goals;
•
introduction of systems to minimise gender bias in the recruitment process;
• annual leave accruals for parental leave;
• a comprehensive demographic data collection to analyse intersectionality;
•
•
ability for employees to join internal or external networking groups that provide
support to all genders; and
genuine support from senior leaders and being successful in our establishment of a
safe environment for Rainbow employees to connect.
Our Adelaide site maintained its Pride in Diversity membership.
Build the capability of all
leaders in understanding
and leveraging
diversity of thought
through ensuring
appropriate learning and
development solutions
are delivered
The SkyCity Inclusion Council continued to encourage employee-led initiatives and
provide strong executive visibility and sponsorship across the New Zealand properties.
With the addition of the new Youth Council, there are now six core groups represented,
including Winning Women, NZ Asian Leaders, SkyCity Pride, Pasifika Village and Te Roopū
Māori o SkyCity with the formation of an Accessibility Group in planning for FY23.
SkyCity Adelaide has launched an Inclusion Council, which replicates the model already
established in New Zealand. Still in its formative stages, there are now five core groups
represented being Women’s Voice, LGBTTIQA+, Life Stages, Aboriginal, and
Disability/Ability.
Continue to provide
support and education
to employees and
managers to promote
mental health
awareness and
wellbeing
SkyCity Auckland launched its rollout of the ‘Good Yarn’ mental health literacy
programme, which is an evidence-based, peer-delivered mental health session that
enables people to talk about mental health. Its purpose is to create awareness, build
confidence and improve knowledge on where to get help with mental health issues.
SkyCity’s Bouncing Back Brain Snack series launched in October 2021 offers a way for
employees to virtually connect and refocus during COVID-19 lockdowns and prior to
returning to work. This virtual series touched on topics such as ‘Resilience’, ‘Fatigue’ and
‘Responding to Change’.
SkyCity continued to invest in and improve critical work health and safety training
modules, adapting to suit accessibility preferences during and post COVID-19 lockdowns.
Employee Engagement and Developing Meaningful Career Pathways
A Centre of Expertise
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
Since 2018, SkyCity has run Tahuna Te Ahi, a tailored
programme developed by New Zealand company
Indigenous Growth Limited, for our New Zealand-based
employees. 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.
17 employees from SkyCity Auckland and Hamilton
completed the Tahuna Te Ahi programme during the last
financial year.
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.
Our People
69
Our Staff Numbers
Worked Full-Time Equivalent (FTE)* by Site
Site
Adelaide
Auckland
Hamilton
Queenstown
Number of
Employees
%
FY22
843
FY21
FY22
FY21
733
29%
27%
1,830
1,726
63%
64%
204
41
185
43
7%
1%
7%
2%
Total
2,918
2,687
100%
100%
* The FTE calculation is based on actual hours worked by staff, not
contracted hours. This definition provides a more accurate assessment
of full-time equivalent staff.
Total Headcount for Group
Site
Adelaide
Auckland
Hamilton
Queenstown
Number of Staff
%
FY22
1,297
FY21
FY22
FY21
1,346
33%
32%
2,309
2,562
59%
60%
268
49
293
58
7%
1%
7%
1%
29%
63%
7%
1%
Adelaide
Auckland
Hamilton
Queenstown
33%
59%
7%
1%
Group Total
3,923
4,259
100%
100%
Adelaide
Auckland
Hamilton
Queenstown
Employment Contract Type for Group
Number of
Employees
%
Contract Type
FY22
FY21
FY22
FY21
Permanent
3,496
3,784
89%
89%
Temporary
427
475
11%
11%
Group Total
3,923
4,259
100%
100%
89%
11%
Permanent
Temporary
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Employment Type by Gender
Contract Type
Permanent
Temporary
Female
Gender Diverse
Male
Group Total
FY22
89%
11%
FY21
89%
11%
FY22
80%
20%
FY21
100%
0%
FY22
89%
11%
FY21
88%
12%
FY22
89%
11%
FY21
89%
11%
Employment Contract Type by Site
Contract Type
Permanent
Temporary*
Adelaide
Auckland
Hamilton
Queenstown
FY22
68%
32%
FY21
68%
32%
FY22
100%
0%
FY21
98%
2%
FY22
100%
0%
FY21
100%
0%
FY22
100%
0%
FY21
100%
0%
*Adelaide defines casual employees as temporary whereas the New Zealand sites define employees with a fixed end date as temporary.
Employment Type by Gender
Contract Type
Full-Time
On Demand
Part-Time
Female
Gender Diverse
Male
Group Total
FY22
50%
22%
28%
FY21
49%
21%
30%
FY22
30%
60%
10%
FY21
50%
33%
17%
FY22
61%
18%
21%
FY21
60%
18%
22%
FY22
56%
20%
24%
FY21
54%
20%
26%
Employees in Collective Agreements by Site
Adelaide
Auckland
Hamilton
Queenstown
Group Total*
Yes
No
FY22
77%
23%
FY21
77%
23%
FY22
21%
79%
FY21
20%
80%
FY22
3%
97%
FY21
3%
97%
FY22
0%
FY21
0%
100%
100%
FY22
38%
62%
FY21
37%
63%
*Group total percentages are weighted proportionately based on site worked FTE.
Employee Absenteeism*
Adelaide
Auckland
Hamilton
Queenstown
Group Total**
Absenteeism
FY22
3.4%
FY21
4.06%
FY22
6.3%
FY21
3.76%
FY22
5.3%
FY21
3.62%
FY22
3.1%
FY21
2.32%
FY22
5.0%
FY21
3.78%
*As a percentage of scheduled days.
**Group total percentages are weighted proportionately based on site worked FTE.
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Our
Communities
GROW OUR COMMUNITIES
Serve a social purpose by investing in the local
economies and communities in which we operate.
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.
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Priority Issues
• Economic contribution
•
•
Building communities by
developing people
Developing deeper connections
with mana whenua and indigenous
peoples
FY22 Performance Highlights
•
•
SkyCity Hamilton continued its support of women’s sport by sponsoring
women’s cricket team, the Northern Spirit, and netball team, Waikato
Bay of Plenty Magic
SkyCity contributed a total of $3.0 million to the SkyCity Community
Trusts for distribution to community groups and organisations in the
Auckland, Waikato and Queenstown Lakes regions
•
Investing in our communities
FY22 Key Challenges
Key Stakeholders
• Community groups
•
COVID-19 related closures and business disruption have resulted in
reduced contributions being made to the SkyCity Community Trusts in
New Zealand
FY23 Focus Areas
•
•
Onboard up to 60 new rangatahi (young people) through the Project
Nikau Academy and support our existing Project Nikau cohort to
develop their career paths at SkyCity
Continue our collaboration with the SkyCity Community Trusts through
funding programmes that support rangatahi, and the provision of
services that meet community wellbeing and resilience needs
•
Sponsorship partners, including
Leukaemia & Blood Cancer New
Zealand and Variety – The Children’s
Charity
• Community partnerships
•
Recipients of SkyCity Community
Trust grants
•
Philanthropy New Zealand
• Mana Whenua
• Ministry of Social Development
• Te Puni Kōkiri
• TupuToa
• First Foundation
•
Indigenous Growth Limited
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Investing in our Local Economies
and Communities
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 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.
Sourcing Locally
SkyCity is committed to sourcing and procuring locally
made and supplied products from Australasian owned
and operated businesses as a preference wherever
possible. In the financial year ended 30 June 2022, SkyCity
spent approximately $127 million on operational goods
and services, the bulk of which was spent with local
suppliers – with over $39 million on food and beverage
items across New Zealand and Australia.
Leukaemia & Blood Cancer New Zealand
Each year, firefighters from communities across New
Zealand join forces to raise money for Leukaemia & Blood
Cancer 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. SkyCity is proud to have Leukaemia & Blood Cancer
New Zealand as a charity partner and to have worked
together to have raised in excess of $10 million over the
18-year partnership, through the Sky Tower Stair
Challenge.
Variety – The Children’s Charity
SkyCity supports Variety – The Children’s Charity (a charity
focused on improving the wellbeing of children and
young people) through the delivery of Variety Bingo in
Auckland, Adelaide and Hamilton. Working with Variety
– The Children’s Charity, SkyCity has helped to raise more
than $40,000 over the last financial year, and in excess of
$4.7 million over the 22-year partnership, to help support
the important work it does in our communities.
Building Communities by
Developing People and Developing
Deeper Connections
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 as well as
the ongoing support and mentoring rangatahi often need
as they take their first steps into sustainable employment.
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
Te Puni Kōkiri, 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. Despite
the programme being significantly impacted by COVID-19
in recent years, there are currently 27 rangatahi enrolled
in Project Nikau, including seven recruited in 2022. SkyCity
has designed and implemented a wraparound youth
mentoring support for each cohort and has designed
individualised learning and development plans for each
cadet. SkyCity was awarded the Diversity and Inclusion
Leadership award in the 2020 Deloitte Top 200 Awards in
December 2020 and the Diversity and Inclusion Award at
the 2021 NZ HR Awards in May 2021 for Project Nikau.
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.
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We continue to be a major partner of TupuToa, an
organisation focused on ensuring corporate New Zealand
is representative of the diversity of our country, by
developing and empowering young Māori and Pasifika
peoples and building the cultural capability of their
employment partners. In the last financial year, SkyCity
successfully onboarded and supported an internship for
a TupuToa intern, who is completing the final part of their
study with SkyCity as an intern.
Investing in our Communities
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.
SkyCity contributed a total of $3.0 million to the SkyCity
Community Trusts for distribution to community
groups and organisations in the Auckland, Waikato and
Queenstown Lakes regions for the financial year ended
30 June 2022, which was contributed to the aggregate
funds of $4.3 million distributed by the Trusts in the
financial year ended 30 June 2022.
Since establishing the first SkyCity Auckland Community
Trust in 1996, SkyCity has awarded grants to more than
5,000 groups totalling over $66.2 million to various
community groups and organisations in New Zealand,
large and small, through the four SkyCity Community
Trusts.
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SkyCity Community Trust Recipients in FY22
SkyCity Auckland Community
Trust
Blue Light Ventures Incorporated
Brainwave Trust Aotearoa
Caps Northland Incorporated/
Jigsaw North-Manaaki Whanau
Coast Youth Community Trust Inc.
Dayspring Trust
Far North Safer Community
Council Society Incorporated
Glen Innes Family Centre
Charitable Trust
Grandparents Raising
Grandchildren Trust New Zealand
Great Families Charitable Trust
Great Potentials Foundation
Grief Support and Education
Charitable Trust
Henderson Budget Service
Incorporated
IHC New Zealand Incorporated
InZone Education Foundation
Island Base Trust
Just Move Charitable Health Trust
Kindred Family Services
Malosi Pictures
Matatini
Migrant Action Trust
Ngā Rangatahi Toa Creative Arts
Initiative
Ngā Takiwā o Tāmaki Trust
Otara Status Youth Collective
Outwest Youth Community Trust
Penina Health Trust
PHAB Association (Auckland)
Incorporated
Pillars Ka Pou Whakahou
Incorporated
Rangatahi Ora
Rape Prevention Education
Whakatu Mauri Trust
Recreate NZ
Refugees As Survivors New
Zealand Trust
Rock Quest Charitable Trust
Sistema Whangarei-Toi Akorangi
Taiohi Whai Oranga
Te Karanga Charitable Trust
Te Matatini Society Inc
Te Mataurau Education Trust
Te Pou Theatre Trust
Te Whangai Trust
The Community Builders NZ Trust
The Crescendo Trust Of Aotearoa
The Friendship House Trust
The Key To Life Charitable Trust
The Kindness Institute
The Operating Theatre Trust
The Rising Foundation Trust
The TYLA Tryst
To'utupu Tonga Trust
United Nations Association Of
New Zealand (United Nations
Youth Association Of New Zealand
Branch) Incorporated
Upside Youth Mentoring Aotearoa
Vision West
VOYCE - Whakarongo Mai
What Hope Community Trust
YES Disability Resource Centre
Youth Arts New Zealand
Youth in Transition Charitable
Trust
Youthline Auckland Charitable
Trust
Zeal Education Trust
SkyCity Hamilton Community
Trust
Big Buddy Mentoring Trust
Community Link Trust
Community Waikato
Diabetes New Zealand
Diversity Counselling New Zealand
Dress for Success Hamilton Trust
Evolve Peer Support Charitable
Trust
Grandparents Raising
Grandchildren Trust New Zealand
Hamilton Christian Nightshelter
Trust
Hamilton Combined Christian
Foodbank Trust
Kids in Need Waikato Charitable
Trust
Loving Arms Charitable Trust
Male Support Services Waikato
McKenzie Centre Trust
Mental Health Solutions Ltd
Midlands Sexual Assault Support
Service (MSASS)
Rakau Humarie Trust
Refugee Orientation Centre
South East Kirikiriroa Community
Association Incorporated
St Vincent De Paul Hamilton
Te Po Ki Te Ao Marama
Te Whakaruruhau 2013
Incorporated - Waikato Women's
Refuge
Te Whare o Te Ata Fairfield -
Chartwell Community Centre Trust
The House of Grace Trust Inc
The Serve
The Te Kauwhata & Districts
Information & Support Centre Inc
Thrive Ōtorohanga Youth Trust
University of Waikato
Management Studies
VOYCE Whakarongo Mai
Waikato Environment Centre Trust
Waikato Ethnic Family services
Trust
Waikato Family Centre Trust
Waikato Korean Cultural Centre
Trust
Whāingaroa Environment Centre
Youthline Auckland Charitable
Trust
Zeal Education Trust
SkyCity Queenstown Community
Trust
Alpine Community Development
Trust
Arasan NZ Foundation Trust
Citizens Advice Bureau
Queenstown
Happiness House Trust
Kahu Youth Trust
Mint Charitable Trust
Queenstown Harvest Gardens
Queenstown Lakes Baby Box
Charitable Trust
Snow Sports NZ Inc
Te Atamira Whakatipu Community
Trust
Te Kākano Aotearoa Trust
The Kiwi Kit Community Trust
VOYCE Whakarongo Mai
Whakatipu Youth Trust
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Auckland City Mission HomeGround Project
The Auckland City Mission – Te Tāpui Atawhai
opened its new facility HomeGround to the public
in February 2022. The planning required to replace
the old rundown facility took over ten years and
involved securing funding from the SkyCity
Auckland Community Trust. During 2017, the SkyCity
Auckland Community Trust approved a grant of $1
million to support the total funding required of $90
million. The grant approved by the SkyCity Auckland
Community Trust was the largest ever approved by
the SkyCity Community Trusts.
The SkyCity Auckland Community Trust and SkyCity
are excited to continue the relationship with the
Auckland City Mission and will be working with key
relationship staff to determine our next steps and
how Trust funding can align, particularly around
our focus of supporting rangatahi. This includes the
provision of supportive housing at HomeGround
as well as identifying employment opportunities at
SkyCity.
“ I am so incredibly grateful
to the SkyCity Community
Trust for believing in the
vision of HomeGround and
helping make this big dream
a reality. When I walk through
the building every day, I
bump into people living in
the apartments, enjoying kai
in the beautiful community
dining room or comfortably
waiting for service in the
laneway.
It’s so deeply humbling and
uplifting to know that their
lives are being positively
impacted through all that
HomeGround is and all that
it offers.”
Helen Robinson
Missioner Manutaki
– Auckland City Mission
Our Communities
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Our Suppliers
SOURCING RESPONSIBLY
Source ethically and locally.
We leverage our relationships with other organisations
to promote positive outcomes in areas of impact such as
anti-corruption, fair competition and promoting social and
environmental responsibility in our supply chain.
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Priority Issues
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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
FY22 Performance Highlights
• Key SkyCity Adelaide suppliers joined the EcoVadis programme
•
Modern slavery training rolled out across key stakeholders in the
business
FY22 Key Challenges
•
•
Managing product sourcing and supply chain issues/challenges
arising from the impacts of COVID-19, including mandated property
closures
While we expect our suppliers to ensure that their suppliers have
an ethical approach, it can be challenging to verify that an ethical
supply chain is being maintained beyond first tier suppliers given the
complexity of SkyCity's supply chain
FY23 Focus Areas
•
•
•
Continue to influence suppliers to improve performance relating to
SkyCity’s priority issues
Managing the disrupted global supply chain issues without
compromising on progress made to date
Continue our programme of work to better understand the risks of
modern slavery in our supply chain
Our Suppliers
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Ethical and Sustainable
Sourcing Practices
As a major purchaser of goods and services (we spent over
$446 million with a vast array of suppliers of goods and
services in the financial year ended 30 June 2022), 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.
SkyCity has 487 key ongoing significant suppliers across
the Group, with a substantial number of these being in
the food and beverage sector. Of the total spend of over
$127 million in the financial year ended 30 June 2022
relating to operational goods and services – a breakdown
of which is shown in the graph below – over $39 million
was spent on food, beverage and retail procurement:
Food, Beverage
& Retail
Marketing
Repairs &
Maintenance
FY21 – 35.4%
FY21 – 13.2%
FY21 – 5.5%
Utilities, Rates
& Rent
Operating
Consumables
Travel &
Entertainment
FY21 – 12.3%
FY21 – 6.9%
FY21 – 1.2%
Professional
Fees &
Insurance
ICT
Other
Expenses
FY21 – 9.3%
FY21 – 10.3%
FY21 – 5.9%
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Ethical Sourcing Code
Our Ethical Sourcing Code outlines SkyCity’s 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. All new vendors are made aware
of the Code at the time of onboarding and we request
that our suppliers acknowledge SkyCity’s 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.
Supply Chain Transparency and Traceability
Since September 2017, we have engaged an external
provider, EcoVadis, to audit and rate our key suppliers
in New Zealand against an industry-tailored set of
environmental, social and governance criteria (where
suppliers are invited to complete a questionnaire and
provide supporting evidence). This process was expanded
to include SkyCity’s key Adelaide suppliers during the
2022 financial year as the expanded SkyCity Adelaide
property (including the new hotel and additional food
and beverage facilities) has a comparable procurement
footprint to SkyCity’s New Zealand business.
As at 30 June 2022, 79 of our key active New Zealand and
Adelaide suppliers, representing over $32 million (25%) of
our total annual procurement spend, had completed the
EcoVadis assessment/audit process. Of SkyCity’s $39 million
food, beverage and retail procurement spend across the
Group in the last financial year, 60% was captured under
the EcoVadis process – a decrease from 70% for the New
Zealand properties. Some Adelaide suppliers are still being
onboarded in the assessment process.
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, together
with 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, local 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 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 and ensure that our
procurement teams continue to have strong relationships
with the businesses we procure from.
12.4%4.6%30.4%12.4%7.1%14.3%3.4%1.4%14%SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Y
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Local Suppliers
SkyCity is able to categorise items in some detail,
including location of the supplier, which enables SkyCity
to modify procurement practices where required
to support the intention outlined in SkyCity’s Group
Procurement Framework. The framework 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 2022, SkyCity spent
over $39 million on food and beverage items across New
Zealand and Adelaide. This equates to over 30% of our
operational spend. We will continue 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.
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.
Category
Suppliers
Same country
Locally based
Majority locally owned
Products
Locally manufactured
Locally produced
and/or manufactured
Definition
Products procured from
businesses in the same
country
Products procured from
businesses in the same
region as the relevant SkyCity
property (for example, the
Waikato region for SkyCity
Hamilton)
Products procured from
businesses with greater than
50% local ownership
Products manufactured
locally, but from imported
products
Entire product is
manufactured from locally
sourced products
Top 100
Suppliers Per
Site (as at
30 June 2022)
Auckland
Hamilton
Queenstown
Adelaide
Same
Country
Locally
Based
Majority
Locally
Owned
88%
95%
94%
96%
79%
71%
34%
43%
57%
67%
71%
66%
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.
SkyCity’s annual modern slavery statements are
published on the Australian Government’s Online
Register for Modern Slavery Statements at
www.modernslaveryregister.gov.au/statements/299/
and are also available in the Governance section
of the company’s website at
www.skycityentertainmentgroup.com.
SkyCity is fully supportive of the Australian 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. SkyCity has
zero tolerance towards modern slavery and is 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 notes the ongoing consultation and legislative
proposals in New Zealand relating to modern slavery and
worker exploitation, forced labour, people trafficking and
slavery. SkyCity is tracking the progress of this proposed
legislation closely, and will work to ensure that SkyCity is
fully compliant with its requirements once it is enacted
and in force (including by reviewing and updating our
detailed modern slavery roadmap).
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
suppliers’ 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.
Our Suppliers
81
Our
Environment
PROTECT THE ENVIRONMENT
Active commitment to reducing
our environmental footprint.
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.
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Priority Issues
FY22 Performance Highlights
•
Climate change/emissions
reduction
• Reducing waste
• Reducing water use
• Employee activation
Key Stakeholders
• Toitū Envirocare
• Climate Leaders Coalition
•
Energy Efficiency and
Conservation Authority
• SUEZ-ResourceCo
• Beca
• Sustainable Business Council
•
•
•
•
Development of a de-carbonisation roadmap to guide SkyCity
towards its science-based targets
Continued reduction in the use of single-use plastics across all SkyCity
properties (against the 30 June 2020 baseline) assisted by COVID-19
mandated property closures
Achieved carbon zero status for the SkyCity Group (by way of offset
thorough Toitū Envirocare)
Installation of four EV chargers at the SkyCity Hamilton car park
and agreement for installation of EV chargers at SkyCity Auckland
car park
FY22 Key Challenges
•
•
Lack of alternatives to certain single-use plastics, making zero
single-use plastics difficult to achieve
With the opening of Eos Hotel at the SkyCity Adelaide site, our carbon
emissions for that site have increased significantly, despite a small
decrease in emissions across the Group
FY23 Focus Areas
• Recalibrate climate change action plan
•
•
•
•
•
•
•
Continued focus on reducing carbon emissions across the Group by
25% by 2025 (38% reduction in Scope 1 & 2 by 2030 and 73% by 2050)
Continued focus on waste diversion from landfills, including a 5%
reduction year on year in waste to landfill
Preparation for climate risk assessment and reporting (TCFD) which
will commence in FY24
Continued focus on supply chain sustainability by ensuring 100% of
contracted suppliers are engaged to discuss measuring emissions
and setting science aligned targets
Achieve a 10% reduction year on year in single-use plastic products
Enhance employee knowledge of, and engagement on, sustainability
Continuous improvement in SkyCity’s EcoVadis score to achieve the
benchmark score of 55
Our Environment
83
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
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 Auckand sent over
109 tonnes of food waste to be commercially composted
– bringing the total amount collected and composted
since the programme began in April 2017 to over 1,100
tonnes. SkyCity’s focus on reducing food wastage has
resulted in a reduction of food waste being composted
each year since the programme began.
Plastics
The goals of SkyCity’s Zero Waste Strategy are to
eliminate waste sent to landfill and improve the efficiency
of resource use through reduction and recycling – in
particular, by removing or reducing plastic packaging.
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 (where appropriate
alternatives exist). During the last financial year, we have
continued to reduce our use of single-use plastics across
SkyCity’s properties assisted by COVID-19 mandated
property closures.
Eliminate Waste to Landfill
Since 2015, SkyCity has reduced its waste sent to landfill
by 81%, in part due to the mandated property closures
during FY20-22 (in response to the COVID-19 pandemic).
SkyCity has engaged 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%. Since commencing
this partnership with SUEZ in December 2020, SkyCity
Adelaide has significantly increased its waste diversion
from landfill from an average of 30% to an average
of 100% every consecutive month over the last seven
months. Over the seven-month period from November
2021 to May 2022 (inclusive), this has resulted in:
CO2 being emitted into the atmosphere) – enough
to produce 250 tonnes of clinker blocks or 860m3 of
concrete; and
•
111 tonnes of organic food waste being collected by
SUEZ for reuse in soil compost by many of SkyCity
Adelaide’s suppliers, creating a circular economy and
second use of our food waste.
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–FY21 through the Certified Emissions
Measurement and Reduction Scheme programme
operated by Toitū Envirocare, a government-owned
environmental certifications body in New Zealand.
Climate Change Strategy
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. The SkyCity Adelaide property also became
carbon neutral, alongside SkyCity’s New Zealand sites, in
September 2020.
The emissions generated by the SkyCity Group during
the year ended 30 June 2021 (16,521 tonnes of carbon)
were offset by the purchase of $166,663 in carbon
credits through Toitū Envirocare in August 2021 and
the emissions generated by the SkyCity Group during
the year ended 30 June 2022 (15,637 tonnes of carbon)
were offset by the purchase of $220,325 in carbon credits
through Toitū Envirocare in August 2022. SkyCity’s carbon
credit investments have been used to fund renewable
energy infrastructure and assist with other energy
efficiency initiatives.
EV Chargers
In the past financial year, SkyCity has, in partnership with
Meridian Energy, installed EV chargers at the SkyCity
Hamilton car park, and has reached an in principle
agreement with Meridian Energy for the installation of EV
chargers at the SkyCity Auckland car park to provide EV
charging for customers.
Climate Change Governance and Risks
SkyCity’s climate change strategy is overseen by the
Board (previously the Sustainability Committee).
A management-led Climate Change Committee
is responsible for working with wider operational
management to execute the strategy.
•
115 tonnes of dry waste being processed at the
SUEZ-ResourceCo facility (preventing 46.92 tonnes of
The New Zealand Government published its first National
Climate Change Risk Assessment in August 2020 and,
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has passed legislation to make climate-related disclosures
aligned with the Recommendations of the Task-Force on
Climate-related Financial Disclosures (TCFD) mandatory
for some organisations, including publicly listed
companies (such as SkyCity) and large insurers, banks,
non-bank deposit takers and investment managers. The
Financial Sector (Climate-related Disclosures and Other
Matters) Amendment Act 2021 was passed into legislation
in October 2021. The new law requires climate-related
disclosures from financial years commencing in 2023,
subject to the publication of climate standards from the
External Reporting Board. The New Zealand Government
issued its first National Adaptation Plan in August
2022 in response to the National Climate Change Risk
Assessment, released in 2020. The Plan presents the best
available evidence for a planned approach to addressing
climate change risks and covers a six-year period through
to 2028. These documents and legislation are a critical
resource for SkyCity to take its climate change strategy,
planning and reporting to the next stage. SkyCity is
committed to progressing towards TCFD-compliant
reporting and aims to progress with detailed scenario
analysis as part of its ongoing journey towards
TCFD-compliant reporting.
SkyCity is 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. In June 2022, members of the
Climate Leaders Coalition launched a new Statement of
Ambition to accelerate business action on climate change.
SkyCity, as a member of the Climate Leaders Coalition, has
committed to:
•
measuring its emissions, have them independently
verified, and report them publicly;
•
•
•
•
•
adopt short and long term gross absolute science
aligned targets for scope 1, 2, and 3 emissions to
support the delivery of substantial reductions needed
to limit future warming to 1.5 degrees Celsius;
assess climate change risks and opportunities
(including in the value chain), set objectives
and/or target(s) to reduce these risks and maximise
opportunities, and publicly disclose them;
proactively enable its employees, board members,
customers, and suppliers to reduce their emissions and
climate change risks;
embed plans within its businesses to accelerate climate
action across mitigation, adaptation, and transition,
and incorporate te ao Māori perspectives; and
prepare for the next frontier of climate action,
including considering the assessment of nature-based
risks and long-term climate positive targets.
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.
SkyCity has committed to reduce absolute Scope 1 and 2
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 1 and 2 targets by the year 2023.
The emissions generated by the SkyCity Group during the year
ended 30 June 2022 (15,637 tonnes of carbon) were offset by the
purchase of $220,325 in carbon credits through Toitū Envirocare
in August 2022
Our Environment
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SkyCity Climate Related Risks
Nature of Risk
Physical risks
Description and Impact
Rise in global temperatures
Increase in violent weather
events, including cyclone, sea
surge and tornado
Rise in sea levels
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
Salt intrusion in soils impacting
supply chain
Market and reputational risks
and opportunities
Policy and legal risks
Economic risks and
opportunities
•
•
•
•
•
•
•
•
•
•
•
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
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FY22 Carbon Footprint Inventory
57%
23.5%
0.8%
1.8%
16.9%
Electricity
Gas
Flights
Waste
Other
FY21 – 67%
FY21 – 21%
FY21 – 1%
FY21 – 4%
FY21 – 7%
FY15–FY22 Performance
The following graphs summarise SkyCity's key environmental performance data for FY15–FY22. SkyCity's science-based
reduction targets are set from its FY15 base year.
SkyCity has continued efforts to reduce its carbon footprint – with Scope 1 and 2 emissions combined reducing by
23% since FY15 and emissions from waste reducing by 81%, in part due to the mandated property closures and travel
restrictions during FY20–22 (in response to the COVID-19 pandemic).
Total Emissions (Scope 1, 2 and 3) (Tonnes CO2e) – by Site
12,000
10,000
10,093
8,000
7,290
6,000
4,000
2,000
0
8,934
6,226
7,506
8,047
7,102
5,158
8,800
5,733
1,119
314
903
281
658
292
833
644
746
234
FY15
FY19
FY20
FY21
FY22
Adelaide
Auckland
Hamilton
Queenstown
Our Environment
87
Scope 1 and 2 Emissions (Tonnes CO2e) – Group
17,333
15,129
15,196
12,207
10,367
12,822
8,085
10,784
13,417
8,903
5,126
4,761
4,736
4,412
4,514
17,500
15,000
12,500
10,000
7,500
5,000
2,500
0.0
FY15
FY19
FY20
FY21
FY22
Scope 1
Scope 2
Scope 1 & 2
Scope 3 Emissions (Tonnes CO2e) – Group
3,000
2,500
2,000
1,500
1,000
500
0
2,747
1,425
1,477
1,152
1,520
654
654
FY15
FY19
Waste
FY20
Flights
122
277
124
FY21
FY22
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).
88
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 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 2022. 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.
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;
Corporate Governance Statement
89
•
•
•
•
•
•
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.
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.
The areas of expertise and experience determined by the
Board as being the key competencies required to meet
these objectives are:
• health and safety
• people and culture
• accounting/finance
•
legal
• property/real estate
•
investment banking
• public relations/media
• government/regulatory
• marketing
• sustainability
• customer insight
• hospitality/tourism
• digital/new markets
• gaming industry
Each director and senior executive has a written
agreement with the company setting out their terms of
appointment and responsibilities.
•
•
risk management
listed company experience
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.
In July 2022, Board members completed a
self-assessment survey to identify the Board’s overall
competency in relation to the agreed areas of expertise
and experience. The results of the survey are set out in
the graph overleaf – where 1 indicates low competency
and 5 indicates high competency. Details of individual
expertise and experience of the directors are set out on
pages 44–46 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.
90
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 4.60
4.60
4.40
4.00
3.60
4.00
3.80
3.80
3.60
4.00
3.20
3.80
3.80
3.80
3.40
E
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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.
Corporate Governance Statement
91
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).
At its June 2022 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.
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
As at the date of this annual report, the Board has four
formally appointed standing committees – the Audit
Committee, the Risk and Compliance Committee, the
Governance and Nominations Committee, and the People
and Culture 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.
Recognising the importance of the governance of the
Group’s risk management function, the SkyCity Board
commenced a review of its Board committee structure
in late 2021 and, in June 2022, resolved in principle to
separate the Board’s Audit and Risk Committee into two
separate Board committees - an Audit Committee and a
Risk and Compliance Committee – and disestablish the
Sustainability Committee. The primary objective of the
Audit Committee is to assist the SkyCity Board in fulfilling
its responsibilities relating to financial accounting and
reporting, external and internal audit, tax planning and
compliance, and treasury. The primary objective of the
Risk and Compliance Committee is to assist the SkyCity
Board in fulfilling its responsibilities relating to risk
management and compliance, including in respect of the
company’s key compliance obligations host responsibility,
anti-money laundering, and health and safety matters).
The restructure will be effective from 26 August 2022.
Each of the Board’s standing 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
or more regularly if required.
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 a
uthority as the Board may elect to delegate to that
sub-committee.
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 the date of this annual
report. The Board's intention is to refresh committee
memberships when regulatory approvals have been
obtained for the appointment of Kate Hughes and Glenn
Davis and they are appointed to the SkyCity Board.
Biographical details of individual directors, and their
respective qualifications and experience, are set out on
pages 44–46 of this annual report.
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BOARD
Chair
Julian Cook
Members
Sue Suckling
Jennifer Owen
Silvana Schenone
Chad Barton
Kate Hughes
Glenn Davis
APPOINTMENT TO OFFICE
8 June 2021
9 May 2011
5 December 2016
8 June 2021
8 June 2021
Pending(1)
Pending(1)
GOVERNANCE AND NOMINATIONS COMMITTEE
RISK AND COMPLIANCE COMMITTEE (2)
Chair
Julian Cook
Members
Sue Suckling
Jennifer Owen
Silvana Schenone
Chad Barton
Kate Hughes(1)
Glenn Davis(1)
AUDIT AND RISK COMMITTEE (3)
Chair
Members
Jennifer Owen
Julian Cook
Chad Barton
Chair
Members
Kate Hughes(1)
Julian Cook
Chad Barton
PEOPLE AND CULTURE COMMITTEE
Chair
Julian Cook
Members
Silvana Schenone
Chad Barton
(1) Appointment remains subect to obtaining regulatory approvals.
(2) The Risk and Compliance Committee will be established with effect from 26 August 2022.
(3) The Audit and Risk Committee will be renamed the Audit Committee with effect from 26 August 2022.
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 2022.
BOARD
AUDIT AND RISK5
PEOPLE AND
CULTURE
GOVERNANCE AND
NOMINATIONS
SUSTAINABILITY6
TOTAL NUMBER
OF MEETINGS
Julian Cook(1)
Sue Suckling
Jennifer Owen(2)
Silvana Schenone
Chad Barton
Rob Campbell(3)
Murray Jordan(4)
16
16
16
16
15
16
10
6
6
6
–
6
–
6
2
2
5
5
–
1
5
5
2
1
1
1
1
1
1
1
0
–
3
2
3
–
3
–
1
–
(1) Julian Cook was appointed Chair of the Board and a member of the Sustainability Committee effective from 1 January 2022.
(2) Jennifer Owen resigned as a member of the People and Culture Committee effective from 30 September 2021.
(3) Rob Campbell resigned as a director effective from 31 December 2021.
(4) Murray Jordan resigned as a director effective from 30 September 2021.
(5) The Audit and Risk Committee will be renamed the Audit Committee with effect from 26 August 2022.
(6) The Sustainability Committee will be disestablished with effect from 26 August 2022.
Corporate Governance Statement
93
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.
The SkyCity Board 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 2022.
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.
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 casino.
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 Committee (previously 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 results presentations, and
its relationships with its internal and external auditors.
The Audit 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 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 Audit Committee has adopted an External Audit
Independence Policy that sets out the framework for
assessing and maintaining audit independence. The Audit
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
Audit Committee that it is not aware of any matters that
could affect its independence in performing its duties as
auditor of the company.
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Fees paid to PricewaterhouseCoopers during the
financial year ended 30 June 2022 are set out in note 6
to the financial statements. Fees for audit and other
assurance work for the financial year ended 30 June 2022
represented 91% of total PricewaterhouseCoopers fees.
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.
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.
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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 Risk and Compliance Committee and Board
on the effectiveness of the company’s management of
its material business risks at least annually. The Risk and
Compliance Committee approves the assurance plan, with
results and performance of the organisation’s risk and
controls regularly reviewed by the Risk and Compliance
Committee and the external auditors.
The Chief Executive Officer and the Chief Financial Officer
are required to confirm in writing to the Audit 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 August 2022.
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, while maintaining a sound culture
and practices to maintain compliance with responsible
gaming frameworks. 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 36–43 of this annual report.
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.
During the last financial year, the annual evaluation
of the Board’s and its committees’ performance was
carried out by way of self-evaluation questionnaires in
October/November 2021, with the results discussed by the
Board in December 2021.
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.
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Remuneration Report
I am pleased to present the remuneration report for
the financial year ended 30 June 2022, which outlines
SkyCity’s remuneration frameworks and plans, including
detailed remuneration information for the Chief Executive
Officer and non-executive directors and outcomes for the
financial year ended 30 June 2022.
•
•
In light of the continuing economic impact of the
COVID-19 pandemic, the company will not be seeking
shareholder approval to increase the non-executive
director fee pool at the 2022 annual meeting on 28
October 2022, 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.
As such, the People and Culture committee did not seek
independent benchmarking of the non-executive director
fee pool and fees this year but did commission external
remuneration benchmarking specialists to provide
remuneration benchmarking for Group executives.
Detailed in this remuneration report are the employment
and remuneration arrangements for the Chief Executive
Officer, Michael Ahearne – noting that:
•
in consideration of Mr Ahearne’s long term retention
as Chief Executive Officer, and to ensure Mr Ahearne
is appropriately incentivised to grow sustainable
shareholder value through share price returns, during
the period Mr Ahearne received a one-off offer of
restricted share rights under the SkyCity Restricted
Share Rights Plan, which vest over a three to four-year
period and are exercisable over a five-year period. This
offer was made to Mr Ahearne in lieu of an allocation
under the 2018 SkyCity Executive Long Term Incentive
Plan for the financial year ended 30 June 2022 – further
details of which are provided in this remuneration
report; and
•
Mr Ahearne’s remuneration package for the financial
year ended 30 June 2022 did not include a short
term incentive component. However, this has been
reinstated for FY23 to the value of $750,000 and will
replace the annual anniversary share entitlement.
For the financial year ended 30 June 2022, the 2018
SkyCity Executive Long Term Incentive Plan, the SkyCity
Performance Incentive Plan and the SkyCity Short Term
Incentive Plan were amended to include malus provisions
(which enable SkyCity to reduce or cancel an award before
it has been paid out) alongside the existing clawback
provisions (which enable SkyCity to recover an award after
it has been paid out).
For the financial year ending 30 June 2023, the SkyCity
Short Term Incentive Plan and the SkyCity Performance
Incentive Plan has been further amended to include:
•
explicit weighted company-wide compliance goals,
which, in addition to the inclusion of malus provisions,
ensures SkyCity’s incentives are responsive to any
compliance breaches and that any underperformance
in compliance has consequences for participants;
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a balanced scorecard for participants in terms of
outcomes and goals to provide greater transparency
for stakeholders; and
a new company compliance gateway and a revised
financial gateway, alongside the individual
non-financial gateway for the plan. These three
gateways have been designed to align with the
weighted sections of the balanced scorecard (financial,
individual non-financial and compliance).
It is the Company’s intention to introduce a new Executive
Long Term Incentive Plan with the first allocation to
occur in September 2023. The new Executive Long
Term Incentive Plan, which will replace the 2018 SkyCity
Executive Long Term Incentive Plan, will be developed
during the financial year ending 30 June 2023 and will
include a review of the performance hurdles.
One of the performance hurdles in the existing 2018
SkyCity Executive Long Term Incentive Plan is a
competitor total shareholder return comparison against
both The Star Entertainment Group Limited and Crown
Resorts Limited. The delisting of Crown Resorts in
June 2022 required the Board to review this hurdle (as
prescribed under the performance hurdles schedule of
the disclosure statement for the Plan) for the 2019, 2020
and 2021 grants. Details of this decision are outlined in the
Long Term Incentive Remueration section on page 103 of
this annual report.
Full details of the changes to the SkyCity Short Term
Incentive Plan and the SkyCity Performance Incentive
Plan and a comprehensive overview of the 2018 SkyCity
Executive Long Term Incentive Plan are provided within
this remuneration report.
The Chief Executive Officer and other Group executives
did not receive a salary increase for the financial
year ended 30 June 2022. However, following a
remuneration review in July 2022, salary increases have
been implemented for the Group executives (with the
exception of the Chief Executive Officer) effective from
1 July 2022. This remuneration review also included all
salaried employees, and was the first remuneration review
for salaried employees since October 2019.
Details of the various employee incentive plans are
available in the Remuneration Policy Statement in
the Governance section of the company’s website at
www.skycityentertainmentgroup.com.
Julian Cook
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) 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.
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 non-executive directors’ fees (exclusive of GST, if any) for the Board and its committees
as at 30 June 2022:
BOARD/COMMITTEE
APPROVED POSITION
FEES (PER FINANCIAL YEAR)
Board
Chair
Audit and Risk Committee
Non-Executive Director
Chair
Member
People and Culture Committee
Chair
Sustainability Committee
Member
Chair
Member
$280,000
$128,500
$35,000
$15,000
$35,000
$15,000
$35,000
$15,000
Governance and Nominations
All non-executive directors are members of this Committee,
Committee
but receive no additional fees for this Committee
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. SkyCity also meets the
expenses incurred by directors in relation to company matters, which are incidental to the performance of their duties,
including travel.
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Non-Executive Director Fees for the Year Ended 30 June 2022
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 2022 and, comparatively during the financial year ended
30 June 2021, are listed in the table below:
DIRECTOR
Julian Cook
Sue Suckling
Jennifer Owen
Silvana Schenone
Chad Barton
Rob Campbell
Murray Jordan
FINANCIAL YEAR
BOARD AND
COMMITTEE FEES
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
$234,250.00
(1)
$10,126.39
(2)
$163,500.00
$163,500.00
$167,250.00
$164,534.95
$158,500.00
$10,126.39
(2)
$158,500.00
$10,126.39
(2)
$140,000.00
(5)
$280,000.00
$48,375.00
(6)
$171,887.10
OTHER
BENEFITS
–
$29,618.24
(3)
$4,475.95
(4)
$4,523.82
(4)
–
–
–
$29,618.24
(3)
–
$29,618.24
(3)
–
–
–
–
TOTAL
$234,250.00
$39,744.63
$167,975.95
$168,023.82
$167,250.00
$164,534.95
$158,500.00
$39,744.63
$158,500.00
$39,744.63
$140,000.00
$280,000.00
$48,375.00
$171,887.10
The figures shown are gross amounts and exclude GST where applicable.
(1) Julian Cook was appointed Chair of the Board effective from 1 January 2022.
(2) Julian Cook, Silvana Schenone and Chad Barton were appointed directors effective from 8 June 2021.
(3) Being fees payable for consultancy services provided to the company for the period from 29 March to 7 June 2021 (inclusive) prior to his/her appointment as
a director on 8 June 2021. Individuals who are invited by the SkyCity Board to join the Board as non-executive directors are appointed subject to the company
obtaining the approval of the regulatory authorities in each of the gaming jurisdictions in which the company operates (a process which usually takes some
months to conclude) and are entitled to receive remuneration for consultancy services provided to the company pending receipt of the requisite approvals.
(4) Being premiums paid to SkyCity’s health insurance provider during the period for the relevant director, who received the benefit of a health insurance plan that
SkyCity offers to all of its employees (either at no cost or at a discounted rate).
(5) Rob Campbell retired as a director effective from 31 December 2021.
(6) Murray Jordan retired as a director effective from 30 September 2021.
Share Ownership in SkyCity
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 in
shares in the company.
The directors disclosed the following relevant interests in SkyCity securities as at 30 June 2022:
DIRECTOR
Julian Cook
Sue Suckling
Jennifer Owen
Silvana Schenone
Chad Barton
NATURE OF SECURITY
Shares
Shares
Shares
Shares
Fixed Rate Bonds
Shares
(1) Shares held by Motutapu Investments Limited.
(2) Shares held by the trustees of The Sue Suckling Family Trust.
(3) Shares held by the trustee of the Owen & Paull Retirement Fund.
(4) Non-beneficially owned bonds held by Silvana Schenone as independent trustee of the Sequin Family Trust.
(5) Shares held by the trustee of the Casheaw Super Fund.
TOTAL HELD
AS AT 30 JUNE 2022
100,000(1)
60,949(2)
75,983(3)
31,745
160,000
(4)
60,000(5)
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Remuneration of Employees
Variable Remuneration
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 2022.
A. Remuneration of 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 (with the exception of the
Chief Executive Officer) 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 (STI) at-risk remuneration and long term
incentive (LTI) at-risk remuneration.
The remuneration arrangements for the Chief Executive
Officer are detailed in the ‘Remuneration of Chief
Executive Officer’ section on pages 104–105 in this
annual report.
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.
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 SkyCity Performance
Incentive Plan and/or the 2018 SkyCity Executive Long
Term Incentive Plan) equivalent to at least one year of
their base salary.
The disclosures in this remuneration report reflect the
total rewards earned by, although not necessarily paid
to, Group executives for the financial year ended 30
June 2022 as the Board believes this approach more
appropriately describes executive pay and performance.
Accordingly, the disclosures include the STI and LTI
components earned by Group executives in respect of the
financial year ended 30 June 2022.
Fixed Remuneration
The company endeavours to set fixed remuneration
at levels that are relative to similar positions in the
appropriate market and, for “casino-specific” positions,
account is taken of salaries within the wider sector,
including Australia. 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 SkyCity Performance
Incentive Plan (PIP) for Group executives and senior
managers in 2018. The PIP:
•
recognises and rewards short and medium 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 are 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 125% of the target award (previously 150%).
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 equivalent to
between 10% and 30% of their base salary. 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 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 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).
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The intention of the deferred STI component under the
PIP is to act both as a retention and an engagement tool.
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 death. In the case of select
Group executives however, if they cease 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 they have been employed by SkyCity
for at least three years as at the date of cessation of their
employment, then they will continue to be eligible to
have shares transferred to them 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.
Participants do not have the right to receive 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 from
the date of issue of the restricted share rights to the date
the 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).
Group Executive STI Remuneration for the Financial Year
ended 30 June 2022
For the financial year ended 30 June 2022, offers made
under the PIP introduced company risk goals as part
of a balanced scorecard, which also included individual
financial and non-financial goals. The company risk
goals accounted for 10% of the target outcome with the
individual financial and non-financial goals comprising
60% and 30%, respectively, of target.
For the financial year ended 30 June 2022, the Board
exercised its discretion under the PIP and STI plans by
waiving the financial performance gateway of meeting or
exceeding the SkyCity Group’s normalised NPAT for the
prior year.
Changes to the PIP and STI Plans for the Financial Year
ending 30 June 2023
For the financial year ending 30 June 2023, 334 employees
will be invited to participate in the STI plan and a further
97 employees will be invited to participate in the PIP.
The changes made to the STI and PIP for the financial
year ending 30 June 2023 are detailed in the table below:
CHANGE
DESCRIPTION
RATIONALE
Introduction of a
Each plan now includes detailed company
This change further ensures the incentive plans align with
Balanced Scorecard
compliance goals which directly impact the
SkyCity’s risk programme as well as recognising achievement
outcomes for participants of the STI and PIP.
of the company compliance goals. Further, it ensures there is
These company compliance goals are part of the
an appropriate focus on how things are achieved (the actions
overall balanced scorecard, which also includes
and behaviours of our people, risk and compliance adherence)
individual financial and non-financial goals.
as much as what is achieved (performance, both financial and
An overview of the company compliance goals is
individual).
included in the table overleaf.
Change in Financial
The financial gateway for any cash STI payment
This change recognises the importance of participants having
Gateway
or issue of restricted share rights under the
a meaningful ability to impact the outcomes under the plan,
deferred STI scheme under the PIP is the SkyCity
whilst still ensuring the overall affordability of the plan. It also
Group’s normalised NPAT. Under the updated
recognises that having a threshold relative to budget is preferable
gateway, NPAT must exceed 90% of the SkyCity
than increasing the gateway year on year, which may become
Group’s budgeted normalised NPAT.
cumulatively unattainable over time.
Previously the financial gateway was meeting
or exceeding the NPAT for the previous
financial year.
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CHANGE
DESCRIPTION
RATIONALE
Introduction of a
The addition of the compliance gateway
This additional gateway further incentivises participants to
Compliance Gateway
aligns with the introduction of the company
ensure that SkyCity is responsive to any compliance breaches
compliance goals and ensures that there is
and confirms SkyCity’s continuing and evolving focus on the
a gateway hurdle for each of the balanced
importance of compliance to participants. The Board has ultimate
scorecard categories.
discretion as to whether achievement has been acceptable to
ensure no inconsistent payment outcomes arise.
This new compliance gateway requires
acceptable achievement of the company
compliance goals as determined by the Board.
Those goals include measurement of SkyCity’s
performance against health and safety,
anti-money laundering and host responsibility
targets.
Change in Financial
Under the amended plans, participants may earn
The reduction in the maximum multiplier for the financial and
and Non-Financial
up to 125% of their financial and non-financial
non-financial goals rebalances the plan to a more appropriate
Multipliers
goal targets. Previously participants could earn
overachievement reward.
up to 150% of their financial and non-financial
goal targets.
The cap on the compliance multiplier recognises that full
achievement of company compliance goals should not exceed
Additionally, the financial goal achievement
100% as rewarding overachievement on this component may
threshold has been reduced to 90% of budget,
result in an inconsistent outcome.
from 95% of budget.
The compliance goal cap is limited to 100%.
By way of example, the high level balanced scorecard for the Chief Executive Officer, including weightings for the three
goal categories, is set out in the table below. These goals will cascade down appropriately through the organisation and
recognise the focus for each individual through their non-financial goals. The compliance goals are standardised across
all salaried roles and are pre-populated into the performance system.
GOAL CATEGORY
GOAL
Financial
Achievement of company NPAT target
Non-Financial
A number of non-financial objectives based on the strategic priorities for the Group
Compliance
Goals specifically relating to anti-money laundering, host responsibility, and health
and safety
WEIGHTING
50%
30%
20%
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Long Term Incentive Remuneration
In the financial year ended 30 June 2022, grants were
made to Group executives (excluding the Chief Executive
Officer) under the 2018 SkyCity Executive Long Term
Incentive Plan. In lieu of an allocation to the Chief
Executive Officer under the 2018 SkyCity Executive Long
Term Incentive Plan for the financial year ended 30 June
2022, a one-off offer of restricted share rights was made to
the Chief Executive Officer under the SkyCity Restricted
Share Rights Plan - full details of which are included in the
‘Remuneration of Chief Executive Officer’ section overleaf.
During the financial year ended 30 June 2022, the
following vesting calculations were completed in relation
to allocations made to participants in August 2017 under
the 2009 SkyCity Senior Executive Long Term Incentive
Plan and in August 2018 under the 2018 SkyCity Executive
Long Term Incentive Plan as follows:
•
•
August 2017 allocation: the third (and final) test was
completed. No shares have vested to executives in
respect of the 2017 allocation. All unvested shares were
accordingly forfeited in accordance with the terms of
the 2009 SkyCity Senior Executive Long Term Incentive
Plan; and
August 2018 allocation: the first (and final) test was
completed and resulted in 16.7% of the shares vesting
to participants in respect of the 2018 allocation. The
unvested shares (83.3%) were accordingly forfeited in
accordance with the terms of the 2018 SkyCity Senior
Executive Long Term Incentive Plan.
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. As at 30 June 2022, the Public Trust held a total
of 2,697,388 shares – 1,211,209 of which were allocated
and held on behalf of eligible participants and 1,486,129
of which were unallocated and held on behalf of future
participants in the company’s employee incentive plans.
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 ASX200 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. Due to the delisting of Crown Resorts Limited
from the ASX in June 2022, the Board reviewed this
hurdle as required under the performance hurdle
schedule of the disclosure statement for the Plan.
Under the schedule, if this situation arises during the
restrictive period, the Board will remove the entity from
the comparator group and can substitute another
entity in its place. The Board decided not to substitute
Crown Resorts with another entity – as such, The Star
Entertainment Group Limited will now be the sole
comparator for the 2019, 2020 and 2021 LTI grants.
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 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.
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.
Remuneration Report
103
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.
As at 30 June 2022, a total of 1,211,209 shares were issued under the 2018 SkyCity Executive Long Term Incentive Plan and
held by the Public Trust on behalf of 10 participants. The shares vest in a participant only when performance hurdles set
by the Board of directors are met.
B. 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.
C. Remuneration of Chief Executive Officer
Michael Ahearne’s remuneration package is paid using a total remuneration approach whereby the contribution to
KiwiSaver is packaged and can be taken as base salary if requested.
The total remuneration earned by Mr Ahearne for duties relating to the Chief Executive Officer position during the
financial year ended 30 June 2022 and for the period of the financial year ended 30 June 2021 Mr Ahearne was employed
in the position of Chief Executive Officer (covering the period from 16 November 2020 to 30 June 2021) is outlined in the
following table:
SALARY AND BENEFITS
EQUITY BASED REMUNERATION
PERIOD
SALARY KIWISAVER BENEFITS
PAYMENTS SUBTOTAL
ENTITLEMENT LTI GRANT
BASE
OTHER
ANNUAL SHARE
ANNUALISED
VALUE OF
RETENTION
LTI GRANT
SUBTOTAL
TOTAL
REMUNERATION
FY22
FY21
$1,463,488
Nil
$4,533
$11,620(1)
$1,479,961
$500,000(2)
$912,994
$29,680
$2,783
Nil
$945,457
$500,000(4)
Nil
Nil
875,000(3)
$1,375,000
$2,854,961
Nil
$500,000
$1,445,457
(1) Reflects payments equivalent to the cash dividends declared and paid by SkyCity from the date of issue of restricted share rights under his annual share
entitlement to the date they were transferred to Mr Ahearne.
(2) Calculated on the basis of 157,347 SkyCity shares issued to Mr Ahearne on the anniversary of his commencement in the role of Chief Executive Officer, which
will vest on 16 November 2022.
(3) Total value of the Retention LTI is $3,000,000 split into two equal tranches, Tranche one vests in three years and tranche two vests in four years. The annualised
value is reflected in the table. Refer to the section on one-off retention LTI for further details.
(4) Calculated on the basis of 166,003 SkyCity shares issued to Mr Ahearne on his commencement in the role of Chief Executive Officer which vested on
16 November 2021.
Mr Ahearne will not receive an increase to base salary or an LTI grant for the year ending 30 June 2023. Mr Ahearne has
been invited to participate in the FY23 STI plan, with a target incentive value of $750,000 or 50% of base salary. This will
replace the annual anniversary share entitlement of $500,000 for the year ending 30 June 2023.
Equity Based Incentives
The following equity-based incentives vested to Mr Ahearne in the financial year ended 30 June 2022:
PLAN
GRANT
YEAR
VESTING
DATE
Annual Share
Entitlement
Financial
Year 2020
SECURITIES
SkyCity shares
PERFORMANCE
PERIOD
PERFORMANCE
MEASURE
VESTING
OUTCOME
SHARES
VESTED
VALUE ON
VESTING
16 November 2020
to 16 November
2021
Employed on
anniversary date
100% vested $166,003
$528,737(1)
SkyCity
Performance
Incentive Plan
2018 SkyCity
Executive Long
Term Incentive
Plan
Financial
Year 2019
Restricted
Share Rights
1 July 2018 to
30 June 2019
Financial
Year 2019
23 August
2021
LTI
Performance
Shares
22 August 2018 to
23 August 2021
Financial and
Non-Financial
Objectives
Absolute and
Relative TSR
Measures
100% vested 25,585
$84,717.05(2)
16.7% vested 7,292
$22,094.76(3)
16
November
2021
6
September
2021
(1) Determined by multiplying the number of ordinary SkyCity shares transferred to you by the volume weighted average price (“VWAP”) over the last five trading
days ending on (and including) 16 September 2021 (being $3.185109 per share).
(2) Determined by multiplying the number of ordinary SkyCity shares transferred to Mr Ahearne by the volume weighted average price over the last five trading
days ending on (and including) 6 September 2021 (being $3.3112 per share).
(3) Determined by multiplying the number of ordinary SkyCity shares transferred to Mr Ahearne by the closing share price on 23 August 2021 (being $3.03 per share).
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One-off Retention Long Term Incentive
During the period, the Board made a one-off retention
incentive grant to Mr Ahearne of 3,947,368 restricted share
rights (RSRs) under the SkyCity Restricted Share Rights
Plan – split into two equal tranches vesting in three and
four years from the grant date (being 8 September 2021),
with a final exercise date five years following the grant
date. This grant was made to Mr Ahearne in consideration
of his long term retention as the Chief Executive Officer
and to ensure Mr Ahearne is appropriately incentivised to
grow sustainable shareholder value through share price
returns, and was made in lieu of an allocation under the
2018 SkyCity Executive Long Term Incentive Plan for the
financial year ended 30 June 2022.
The RSRs will only vest if Mr Ahearne remains continuously
employed by the company until 8 September 2024
(in respect of the first tranche of the RSRs) and/or
8 September 2025 (in respect of the second tranche of
the RSRs). The performance measures associated with
the vesting of the RSRs relate to the increase in share
price achieved with an exercise price of $3.237 per RSR
(reduced by any dividends paid by the company between
8 September 2021 and the exercise date). Each vested
RSR may be exercised by Mr Ahearne on or before the
termination date (being 8 September 2026) by paying the
exercise price.
For the financial year ending 30 June 2023, Mr Ahearne
has been invited to participate in the FY23 STI plan, with
a target incentive value of $750,000 or 50% of base salary.
This will replace the annual anniversary share entitlement
of $500,000 for FY23.
The graphs below show the mix of remuneration that
was earned by Mr Ahearne for his performance over the
financial year ended 30 June 2022 for his position as Chief
Executive Officer, alongside graphs illustrating the target
and maximum remuneration mixes.
Pay Gap
Mr Ahearne’s base salary remuneration ratio to the
median annualised employee base salary is 26.
Employment Agreement
Mr Ahearne’s employment agreement for the position of
Chief Executive Officer is dated 13 November 2020 and
reflects standard conditions that are appropriate for a
senior executive of a listed Australasian company.
Mr Ahearne’s employment agreement may be terminated
by:
•
•
•
either Mr Ahearne 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 Ahearne or the Board otherwise wishes to terminate
his employment when he is not at fault (including a
redundancy situation or medical incapacity).
FY22 Actual Remuneration
FY22 Target Remuneration
FY22 Maximum Remuneration
75%
25%
75%
25%
75%
25%
Fixed Remuneration
Equity Based Remuneration
Remuneration Report
105
Employee Remuneration
REMUNERATION
NUMBER OF EMPLOYEES
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 2022, are listed in
the table opposite.
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 2021
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.
$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
$280,000-$289,999
$290,000-$299,999
$300,000-$309,999
$320,000-$329,999
$330,000–$339,999
$340,000–$349,999
$350,000–$359,999
$380,000–$389,999
$390,000–$399,999
$400,000–$409,999
$420,000–$429,999
$430,000–$439,999
$580,000–$589,999
$600,000–$609,999
$640,000–$649,999
$690,000–$699,999
$700,000–$709,999
$710,000–$719,999
$730,000–$739,999
$740,000–$749,999
$800,000–$809,999
$910,000–$919,999
$1,100,000–$1,109,999
$3,180,000–$3,189,999
TOTAL
95
50
39
38
28
21
18
12
12
9
7
7
6
6
9
5
2
4
3
1
2
1
2
1
2
1
1
1
2
2
1
2
1
1
2
1
1
1
2
1
1
1
402
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Twenty Largest Registered Shareholders as at 1 August 2022
NUMBER OF SHARES
% OF SHARES
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Citibank Nominees (New Zealand) Limited – NZCSD
Accident Compensation Corporation – NZCSD
HSBC Nominees (New Zealand) Limited – NZCSD
HSBC Nominees (New Zealand) Limited A/C State Street – NZCSD
JPMorgan Chase Bank NA NZ Branch-Segregated Clients Acct – NZCSD
HSBC Nominees A/C NZ Superannuation Fund Nominees Limited – NZCSD
ANZ Custodial Services New Zealand Limited – NZCSD
New Zealand Depository Nominee Limited
BNP Paribas Noms Pty Ltd
BNP Paribas Nominees (Nz) Limited – NZCSD
BNP Paribas Nominees (Nz) Limited – NZCSD
ANZ Wholesale Australasian Share Fund – NZCSD
Forsyth Barr Custodians Limited
Citicorp Nominees Pty Limited
National Nominees Limited
Masfen Securities Limited
Netwealth Investments Limited
Total
100,576,625
93,958,534
80,816,088
44,473,103
39,847,524
36,314,843
35,063,458
23,788,297
23,024,420
13,751,275
13,502,931
13,295,651
11,842,008
11,647,880
10,440,026
8,784,938
8,633,201
8,109,385
5,750,986
4,613,746
13.23
12.36
10.63
5.85
5.24
4.78
4.61
3.13
3.03
1.81
1.78
1.75
1.56
1.53
1.37
1.16
1.14
1.07
0.76
0.61
588,234,919
77.40
Total ordinary shares on issue as at 1 August 2022 were 760,205,209 of which 2,697,338 were held in aggregate by the Public
Trust on behalf of eligible and future participants pursuant to the 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.
Distribution of Ordinary Shares and Registered Shareholdings as
at 1 August 2022
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
> 100,000
Total
NUMBER OF
SHAREHOLDERS
NUMBER OF
SHARES
% OF TOTAL ORDINARY
SHARES IN THE COMPANY
4,579
6,107
2,472
2,549
157
15,864
1,733,001
16,683,167
17,768,515
63,127,537
660,892,989
760,205,209
0.23
2.19
2.34
8.30
86.94
100
As at 1 August 2022, there were 1,788 shareholders (with a total of 139,610 shares) holding less than a marketable parcel of
shares under the ASX Listing Rules, based on the closing share price of A$2.49.
The ASX Listing Rules define a marketable parcel of shares as a parcel of shares of not less than A$500.
Shareholder and Bondholder Information
107
Substantial Security Holders
The following persons had given notice as at 30 June 2022, 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.
Investors Mutual Limited
Allan Gray Group
Accident Compensation Corporation
AustralianSuper Pty Ltd
Commonwealth Bank of Australia
Sumitomo Mitsui Trust Holdings, Inc.
Yarra Management Nominees Pty Ltd
and TA Universal Investment Holdings Ltd
DATE OF SUBSTANTIAL
SECURITY NOTICE
RELEVANT INTEREST IN
NUMBER OF SHARES
% OF SHARES HELD AT
DATE OF NOTICE
7/06/2022
6/06/2022
1/06/2022
10/05/2022
2/12/2021
23/08/2021
14/04/2021
38,436,546
39,397,214
38,135,129
55,229,888
46,598,778
70,963,067
65,593,783
5.06%
5.206%
5.016%
7.27%
6.130%
9.33%
8.6284%
Substantial security holder notices received since 30 June 2022 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 2022 was 760,205,209.
Bonds
On 21 May 2021, the company issued 175 million unsecured, unsubordinated, fixed rate, 6 year bonds at an issue price of
$1.00 per bond. The bonds pay a fixed rate of interest of 3.02% per annum until the maturity date and are quoted on the
NZX Debt Market under the ticker code ‘SKC050’.
Twenty Largest Registered Bondholders as at 1 August 2022
NUMBER OF BONDS
% OF BONDS
Forsyth Barr Custodians Limited
Custodial Services Limited
FNZ Custodians Limited
Hobson Wealth Custodian Limited
BNP Paribas Nominees (NZ) Limited – NZCSD
HSBC Nominees (New Zealand) Limited – NZCSD
National Nominees Limited – NZCSD
Investment Custodial Services Limited
Forsyth Barr Custodians Limited
JBWere (NZ) Nominees Limited
FNZ Custodians Limited
Westpac Banking Corporate NZ Financial Markets Group – NZCSD
FNZ Custodians Limited
Forsyth Barr Custodians Limited
Woolf Fisher Trust Incorporated
Falstaff Investments Limited
Hobson Wealth Custodian Limited
Tea Custodians Limited Client Property Trust Account – NZCSD
BNP Paribas Nominees (NZ) Limited – NZCSD
Queen Street Nominees ACF Hobson Wealth – NZCSD
45,104,000
32,916,000
23,494,000
13,490,000
9,100,000
5,776,000
5,125,000
4,893,000
2,935,000
2,527,000
2,234,000
1,234,000
981,000
980,000
815,000
770,000
610,000
610,000
600,000
600,000
25.78
18.81
13.43
7.71
5.20
3.30
2.93
2.80
1.68
1.44
1.28
0.71
0.56
0.56
0.47
0.44
0.35
0.35
0.34
0.34
Total
154,794,000
88.48
Distribution of Bonds and Registered Holdings as at 1 August 2022
NUMBER OF BONDHOLDERS
NUMBER OF BONDS
% OF TOTAL
BONDS ISSUED
1,000–5,000
5,001–10,000
10,001–100,000
> 100,000
Total
108
32
123
405
50
610
160,000
1,183,000
12,788,000
160,869,000
175,000,000
0.09
0.68
7.31
91.92
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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 140(2) of the Act, 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 2022 (notices given by directors
during the financial year ended 30 June 2022 are marked with an asterisk):
JULIAN COOK (CHAIR)
SILVANA SCHENONE
Motutapu Investments Limited
Director
MinterEllisonRuddWatts
WEL Networks Limited
Winton Land Limited
SUE SUCKLING
5th Element Limited
Boulcott Hospital
Eat My Lunch Limited
Insurance & Financial Services
Ombudsman Scheme Commission
Jacobsen Holdings Limited
Jade Software Corporation Limited
NZ Healthcare Investments Limited
Rubix Limited
Director*
Jarden Management Limited
Director*
Chair
Chair*
Chair
Chair
Chair
Chair
Director*
Chair
New Zealand Takeovers Panel
OnBeingBold Limited
Sequin Family Trust
CHAD BARTON
Casheaw Pty Limited
Nuix Holding Pty Limited
Nuix Ireland Limited
Nuix Limited
Sue Suckling Holdings Limited
Managing Director
Taska Prosthetics Limited
Chair
Nuix North America Inc
Nuix Philippines ROHQ
(Branch of Nuix Holding Pty Limited)
JENNIFER OWEN
Aspire Child Care (Mascot) Pty Ltd
Owen Gaming Research
Director
Principal
Nuix Pte. Ltd
Nuix SaleCo Limited
Nuix Technology UK Limited
Nuix USG Inc
Partner
Managing Director &
Co-Head of Investment
Banking NZ* (1)
Member
Director
Independent Trustee
Chair and Shareholder
Director*
Director*
Chief Operating Officer
and Chief Financial
Officer*
Director*
Director*
Director*
Director*
Director*
Director*
(1) In May 2022, Silvana Schenone was appointed Managing Director and Co-Head of Investment Banking New Zealand and will take up this new role in October 2022.
The following details included in the Interests Register as at 30 June 2021, or entered during the financial year ended
30 June 2022, have been removed during the financial year ended 30 June 2022:
•
Chad Barton is no longer a director of Neurological Research Australia (NeuRA) or an external adviser of Bain &
Company
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 Securities Transactions
Directors disclosed, pursuant to section 148 of the New Zealand Companies Act 1993, the following acquisitions and
disposals of relevant interests in SkyCity securities during the period to 30 June 2022:
DIRECTOR
Silvana Schenone
Chad Barton
Rob Campbell(2)
NATURE OF RELEVANT
INTEREST
NATURE OF
SECURITY
DATE OF TRANSACTION
DURING PERIOD
CONSIDERATION
(PER SECURITY)
ACQUIRED/
(DISPOSED)
Beneficially owned
Beneficially owned(1)
Beneficially owned(3)
Shares
Shares
Shares
19/10/2021
$3.1610
24/02/2022
A$2.735 (average)
26/08/2021
$3.3233
31,745
60,000
9,064
(1) Shares held by the trustee of the Casheaw Super Fund.
(2) Rob Campbell resigned as a director effective from 31 December 2021.
(3) Shares held by FNZ Custodians Limited on behalf of Tutanekai Investments Limited.
Details of the directors’ relevant interests in SkyCity securities as at 30 June 2022 are outlined on page 99 of this annual
report.
Directors' Disclosures
109
Company Disclosures
Stock Exchange Listings
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 ‘SKC050’).
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 page 111 of
this annual report.
SkyCity is listed as a ‘Foreign Exempt Listing’ on the ASX.
SkyCity Entertainment Group Limited
The following persons held office as directors of SkyCity
Entertainment Group Limited as at 30 June 2022:
DIRECTORS
APPOINTMENT TO OFFICE
Julian Cook (Chair)
8 June 2021
Sue Suckling
9 May 2011
Jennifer Owen
5 December 2016
Subsidiary Companies
The following persons held office as directors of
subsidiaries of SkyCity Entertainment Group Limited as at
30 June 2022:
NEW ZEALAND SUBSIDIARIES
Directors
Michael Ahearne, Jo Wong
Companies
Cashel Asset Management Limited
Horizon Tourism (New Zealand) Limited
New Zealand International Convention
Centre 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
Silvana Schenone
8 June 2021
OVERSEAS SUBSIDIARIES
Chad Barton
8 June 2021
Directors
Michael Ahearne, Jo Wong
Murray Jordan ceased to hold office as a director of
SkyCity Entertainment Group Limited effective from 30
September 2021 and Rob Campbell ceased to hold office
as a director of SkyCity Entertainment Group Limited
effective from 31 December 2021.
On 20 June 2022, the SkyCity Board announced its
intention to appoint Kate Hughes and Glenn Davis as
non-executive directors to the SkyCity Board, subject to
obtaining the requisite approvals from the regulatory
authorities in each of the gaming jurisdictions in which
SkyCity operates. As at the date of this annual report,
those regulatory approvals remain pending.
Companies
Horizon Tourism Limited
SkyCity Investment Holdings Limited
Directors
Michael Ahearne, Jo Wong, David Christian
Companies
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 2022, 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 2022.
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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 below. 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.
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.
Voting Rights Attached to Securities
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.
There are no voting rights attached to SkyCity’s debt
securities although bondholders are welcome to attend
the annual meeting of shareholders.
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.
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:
• holding more than 5% of the shares in SkyCity; or
•
increasing their combined holding further beyond 5% if:
– 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.
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 2022, 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.
Company Disclosures
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Donations
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 remuneration report on pages 103–104
of 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 BBB– rating (stable outlook) from
S&P Global Ratings.
Donations of $3,308.35 were made by the company during
the financial year ended 30 June 2022 ($15,924.50 during
the financial year ended 30 June 2021).
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.
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 113
FINANCIAL
Statements and Notes
FOR THE YEAR ENDED 30 JUNE 2022
These financial statements were signed on 24 August 2022
on behalf of the Board of directors of SkyCity Entertainment
Group Limited by:
Julian Cook
Chair of the SkyCity Board
Jennifer Owen
Chair of the Audit and Risk Committee
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Independent auditor’s report
To the shareholders of SkyCity Entertainment Group Limited
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 2022, 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).
What we have audited
The Group's financial statements comprise:
the balance sheet as at 30 June 2022;
●
the income statement for the year then ended;
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the statement of comprehensive income for the year then ended;
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the statement of changes in equity for the year then ended;
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the statement of cash flows for the year then ended; and
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the notes to the financial statements, which include significant accounting policies and other
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explanatory information.
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.
Independence
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 services for the Group in the areas of tax compliance, provision of market survey
data relating to executive remuneration benchmarking, other assurance services in relation to compliance
with banking and debt covenants and agreed-upon-procedure services in relation to the allocation of
Community Trust Revenue, compliance with banking and debt covenants, the reconciliation of normalised
results to reported results, scrutineering of the vote count at the Annual General Meeting and the verification
of share-based payment calculations. The provision of these other services have not impaired our
independence as auditor of the Group.
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.
PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand
T: +64 9 355 8000, www.pwc.co.nz
Independent Auditor's Report
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Description of the key audit matter
How our audit addressed the key audit matter
We have obtained management's workings on the
estimates of damage and insurance recoveries and
assessed the Group's estimates and related
judgements by performing the following procedures:
● Assessing the facts and circumstances,
assumptions and methodology underpinning the
key estimates that were used by management in
the calculation of the estimates of damage and
insurance recoveries with reference to supporting
documentation and through meetings with
management and their experts;
● Considering legal and expert insurance advice
on the interpretation of the insurance policy in
respect of the total indemnity limits, sub-limits
and likelihood of recovery of any further cost
escalation;
● Discussed the uncertainties and complexities in
relation to the insurance policy with
management’s external legal advisor; and
● Challenged management on the judgements
applied in relation to the virtual certainty
assessment for insurance recoveries.
Additionally, we have:
● Assessed the professional competence,
independence and objectivity of the Group's
damage estimate 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;
● Substantively tested a sample of other recoveries
back to supporting documentation to validate the
amounts recorded during the year; and
● Considered the adequacy of the associated
disclosures in the financial statements.
Accounting for the NZICC fire
As disclosed in note 5 of the financial
statements, the extent of damage pertaining to
the New Zealand International Convention
Centre (NZICC) and adjacent Hobson Street
Hotel (HSH) as a result of the fire, has been
re-estimated by an independent external expert
engaged by the Group, Rider Levett Bucknall
Auckland Limited (RLB).
Expert investigation in respect of the damage
sustained remains ongoing and as a result, the
estimates are sensitive and continue to be
based on incomplete information. During the
year, the estimate for the extent of damage has
been reduced and $34.3 million of previously
derecognised capitalised work in progress has
been recapitalised, offset by the re-recognition
of deferred licence value liability of $12.6 million.
The related insurance recovery receivable and
income estimate has been informed by the early
estimates the Group received from RLB on the
possible reconstruction costs, current estimates
provided by Fletcher Construction Company
Limited (the Contractor), the total indemnity
limits, sub-limits, terms and conditions of the
Contract Works Insurance policy (the insurance
policy), feedback from the insurers and their
representatives to date, and advice from the
Group’s legal and insurance advisors as to the
likely insurance policy response.
As at 30 June 2022, the total insurance income
recognised since the date of the fire of $595.2
million represents what the Group has
determined to be virtually certain under the
insurance policy. Due to uncertainty in relation
to the response by the insurers to future claims,
the recovery of future insurance income over
and above this amount is not considered to be
virtually certain. This position and the
interpretation of the insurance policy has been
supported by legal and expert insurance advice
received by the Group.
The most significant assumptions, and
associated risk to the estimates provided, relate
to the extent of damage to the NZICC, the
percentage of contingency included in the
estimates, the timeline for remediation, insurer
responses and the apportionment of costs
between capitalisation and expenditure. Any
changes to these and other assumptions can
significantly impact the amounts recorded.
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How our audit addressed the key audit matter
There is significant estimation uncertainty
inherent in the balances recorded on the
balance sheet and the amounts recognised in
the income statement pertaining to the
accounting implications of the fire. It is possible
that the actual financial impacts of the fire will
differ from those recorded and those differences
may be material. We have therefore considered
this to be an area of focus for our audit.
Impairment considerations in respect of
goodwill and other intangible assets
At 30 June 2022, the carrying amount of
goodwill and casino licences totalled $582.7
million (30 June 2021: $585.4 million). Refer to
note 23 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 impairment assessment of goodwill
and other indefinite life intangible assets at least
annually. Due to the significance of the
judgement involved, we considered this to be an
area of focus for our audit.
The Group performed an impairment
assessment for the Auckland and Hamilton cash
generating units (CGUs), both of which include
indefinite life intangible assets. An assessment
of the value in use using discounted cash flow
forecast (DCF) models was prepared for both of
these CGUs. The Group concluded that the
recoverable amount exceeds the carrying
amount and no impairment has been recorded.
An impairment assessment was also prepared
in relation to the Adelaide CGU which includes a
finite life intangible asset, the Adelaide casino
licence. In FY20, the Group recorded an
impairment charge of $160.6 million against the
Adelaide casino licence.
The Group engaged a valuation expert to
perform an independent valuation of the
Adelaide CGU which was prepared using a DCF
model under the fair value less costs of disposal
(FVLCOD) method.
Impairment testing is a key focus of our audit
due to the materiality of the balances and the
significant level of management estimation and
judgement in determining the key assumptions
used in the impairment assessments. The most
significant of these are disclosed in note 23.
For the Auckland and Hamilton CGUs, we performed
the following audit procedures:
● Understood the process undertaken by
management to prepare the forecast cash flows;
● Compared the forecast cash flows used for FY23
to the Board approved business plan;
● Considered and challenged key assumptions, in
particular those underpinning the earnings before
interest, tax, depreciation and amortisation
(EBITDA) margin and the ongoing impacts of
COVID-19;
● Engaged our auditor’s valuation expert to assess
management’s valuation conclusions and key
assumptions, including the pre tax discount rates
and terminal growth rates; and
● Compared historical performance against
budget, investigated material differences and
considered the impact on future cash flow
forecasts.
For the Adelaide CGU, we performed the following
audit procedures:
● Understood the process undertaken by
management to prepare the forecast cash flows;
● Compared the forecast cash flows used for FY23
to the Board approved business plan;
● Considered the adoption by the Board of the five
year forecast included in management’s expert’s
valuation;
● Compared historical performance against
budget, investigated material differences and
considered the impact on future cash flow
forecasts;
● Considered and challenged key assumptions,
including: the ongoing impacts of COVID-19;
international business strategy; and the key
drivers of EBITDA growth and overall business
performance, with reference to external evidence
where possible;
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Description of the key audit matter
How our audit addressed the key audit matter
In relation to Adelaide, the impairment review
and independent valuation concluded on a
valuation of the CGU being within a reasonable
range, the mid point of which implies a potential
impairment reversal of $3.2 million at 30 June
2022 (with the low end of the range resulting in
an additional impairment of $19.3 million and
the high end a reversal of impairment of $28.4
million).
However, given the uncertainties associated
with forecasting in a COVID-19 environment,
and acknowledging the sensitivities of the
valuation to small changes in assumptions as
disclosed in note 23, management determined
that the resulting valuation range did not warrant
a reversal of the impairment previously
recognised, nor any additional impairment.
Capital structure and liquidity
As at 30 June 2022, the Group's net debt was
$601.8 million (30 June 2021: $557.9 million).
The Group's borrowings are comprised of
syndicated banking facilities, United States
Private Placement (USPP) notes, and a retail
bond. Subsequent to the reporting date but prior
to the date of the financial statements, the
Group has extended the maturity date of
syndicated bank facilities amounting to $160.0
million. Further details have been disclosed in
notes 11, 12, 13 and 39 of the financial
statements.
● Considered the potential impact of the ongoing
Australian Transaction Reports and Analysis
Centre (AUSTRAC) investigation and
subsequently announced Consumer and
Business Services (CBS) investigation;
● Engaged our auditor’s valuation expert to:
‒
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Assess and challenge key assumptions,
including the discount and terminal growth
rates;
Assess the reasonableness of the 2% cost of
disposal assumption applied under the fair
value less costs of disposal (FVLCOD)
method; and;
Evaluate the valuation conclusions and cross
checks performed by management’s
valuation expert with reference to external
market evidence.
●
In conjunction with our auditor’s valuation expert,
we also met with management’s valuation expert
to understand and challenge the valuation
approach and key assumptions, including the
ongoing impact of COVID-19, in particular the
impact on international business;
● Considered the key drivers for movements in
both the independent valuation of the CGU and
the carrying value of the CGU from the prior year.
Assessed whether the valuation conclusion
supports both no impairment reversal and no
further impairment, noting consistent with the
prior year that there remains significant
uncertainty in forecasting in a COVID-19
environment; and
● Considered and challenged the extent of
disclosure provided in note 23 of the financial
statements, with particular emphasis on the
valuation sensitivities.
We considered the Group's assessment of their
ability to continue as a going concern and our
procedures included the following:
● Reviewed agreements between the Group and
their funding providers to obtain an
understanding of the revised covenant terms;
● Assessed and challenged management's
forecasted cash flows and associated
assumptions, placing particular emphasis on
management’s assessment of the potential
outcomes for the contingent liabilities disclosed
in note 36, with reference to supporting
documentation and/or expert advice received by
management;
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As noted in note 1 of the financial statements,
the Group's performance has been significantly
impacted in the current year due to COVID-19
restrictions. The Group obtained covenant
waivers for the 31 December 2021 testing
period and also obtained covenant waivers and
amended covenant terms for the 30 June 2022
testing period. The Group is currently compliant
with all debt covenants as at 30 June 2022.
There remain significant uncertainties in relation
to future events and operating conditions of the
Group which may impact funding liquidity and
the going concern assumption. To address
these uncertainties, management has prepared
forecasts that consider a range of possible
scenarios including consideration of the
contingent liabilities disclosed in note 36. These
scenarios have been informed by recent trading
performance and assumes no further COVID-19
lockdowns at any sites nor a move to the red
traffic light setting under the COVID-19
Protection Framework in New Zealand.
Because of the significance of the judgements
involved in the assumptions, we have
considered this to be an area of focus for the
audit.
As a result of management’s forecasted cash
flows and scenario/sensitivity analysis, the
Group has concluded that it continues to have
access to a sufficient level of liquidity to sustain
the business and remain compliant with its
financial obligations. The Directors have
therefore concluded that there are no material
uncertainties related to the Group being a going
concern.
Contingent liabilities relating to regulatory
matters
The Group operates in a highly regulated
environment. The SkyCity Adelaide casino is
currently the subject of an enforcement
investigation by the Australian Transaction
Reports and Analysis Centre (AUSTRAC) into
potential serious breaches of the requirements
of the Anti-Money Laundering and
Counter-Terrorism Financing Act 2006 (the Act).
●
Tested the mathematical accuracy of
management’s forecasted covenant calculations
for the 31 December 2022 and 30 June 2023
testing periods;
● Performed a range of sensitivities on the
forecasts and considered possible alternative
scenarios, including a scenario incorporating a
reduction in forecasted EBITDA as a result of
further COVID-19 restrictions; and
● Considered the appropriateness of the Group's
disclosures.
Our procedures included the following:
● Held meetings with management, including
in-house legal counsel, to obtain the most recent
facts and circumstances in relation to ongoing
regulatory matters;
● Assessed our obligations under auditing and
ethical standards and relevant legislation to
determine whether the matters are required to be
reported to third parties;
● Read meeting minutes from relevant committees
to identify and consider information relating to
regulatory matters;
● Discussed the matters with external legal
counsel, where applicable, to corroborate the
information provided by management;
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Description of the key audit matter
How our audit addressed the key audit matter
● Read correspondence between the Group and
the applicable regulatory bodies;
● Evaluated the Group’s assessment of whether a
present obligation exists arising from past
events, against the criteria in NZ IAS 37
Provisions, contingent liabilities and contingent
assets; and
● Assessed the appropriateness of the associated
disclosures in the financial statements.
The investigation remains ongoing, and
AUSTRAC are yet to clarify the nature and
extent of any potential breaches of the Act.
There remains a high degree of uncertainty in
relation to the outcome of the investigation. As
such, the Group has deemed that there is
insufficient information available to assess the
likelihood of AUSTRAC taking enforcement
action; or the magnitude of any potential
financial penalties that may be imposed. The
Group has disclosed the AUSTRAC
investigation as a contingent liability in note 36
of the financial statements.
In addition, on 1 July 2022, Consumer and
Business Services South Australia (CBS)
advised that they would be conducting an
investigation under the Casino Act 1997 into
SkyCity Adelaide's suitability to hold a casino
licence in South Australia. In accordance with
statements from CBS, it is the Group's view that
this is in response to perceived industry-wide
issues within the Australian casino sector.
SkyCity has not to date been advised by CBS of
any specific misconduct by SkyCity Adelaide.
The investigation remains ongoing and is due to
be completed by February 2023.
Given the ongoing investigations by regulators
in Australia, and the general nature of casino
operations across both New Zealand and
Australia, there remains a high degree of risk in
respect of legal and regulatory compliance.
Contingent liabilities in relation to legal and
regulatory matters are therefore considered to
be a key audit matter.
Given the significance of the matters outlined
above, their subjective nature and the
associated uncertainties, any related
assumptions have the potential to be subject to
bias, error or inconsistent application by
management. This was therefore considered to
be an area of focus for our audit.
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SkyCity Entertainment Group Annual Report Year Ended 30 June 2022
Our audit approach
Overview
Overall group materiality: $5.6 million, which approximately represents
5% of weighted-average profit before tax from continuing operations
over the past five years, excluding the net gain on the Auckland car park
concession transaction, NZICC fire related income, NZICC fire related
expenses and income from liquidated damages, recorded in either or
both the current and prior years.
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.
We chose to use a weighted average of the last five years and to adjust
it as described above because, in our view, it provides a more stable
measure of the Group’s performance.
We selected transactions and balances to audit based on the overall
group materiality to SkyCity Entertainment Group rather than
determining the scope of procedures to perform by auditing only specific
subsidiaries or entities.
As reported above, we have four key audit matters, being:
● Accounting for the NZICC fire
●
Impairment considerations in respect of goodwill and other
intangible assets
● Capital structure and liquidity
● Contingent liabilities relating to regulatory matters.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in
the financial statements. In particular, we considered where management made subjective judgements; for
example, in respect of significant accounting estimates that involved making assumptions and considering
future events that are inherently uncertain. 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.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of the
financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the financial statements as a whole as set out above. These,
together with qualitative considerations, helped us to determine the scope of our audit, the nature, timing
and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in
aggregate, on the financial statements as a whole.
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How we tailored our group audit scope
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 industry in which the Group operates.
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the Annual report, but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of audit opinion or assurance conclusion thereon.
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 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 information, we are required
to report that fact. We have nothing to report in this regard.
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.
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.
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.
A further description of our responsibilities for the audit of the financial statements is located at the External
Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
122
PwC
8
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022
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
24 August 2022
Auckland
PwC
Independent Auditor's Report
9 123
Income Statement
For the year ended 30 June 2022
Revenue
Other income
NZICC fire related income
NZICC fire related expenses
Employee benefits expense
Asset impairment
Other expenses
Directors' fees
Gaming taxes and levies
Direct consumables
Marketing and communications
Community contributions, sponsorships and donations
Fair value (losses)/gains on investment properties
Earnings Before Interest, Tax, Depreciation
and Amortisation Expenses (EBITDA)
Depreciation and amortisation
Depreciation on right-of-use assets
Earnings Before Interest and Tax (EBIT)
Net finance costs
(Loss)/Profit Before Income Tax
Income tax expense
(Loss)/Profit for the Year Attributable to Shareholders of the Company
Earnings per share for Profit Attributable
to the Shareholders of the Company
Basic and diluted (loss)/earnings per share
*Refer to note 23 for details on prior period restatement.
The above income statement should be read in conjunction with the accompanying notes.
NOTES
3
4
5(a)
5(b)
6
6
14
6
9
10
17
7
2022
$'000
553,543
32,969
52,483
(88,849)
(254,778)
(7,293)
(92,550)
(1,070)
(37,438)
(34,143)
(15,440)
(5,098)
(5,400)
96,936
(88,692)
(5,968)
2,276
(35,044)
(32,768)
(827)
RESTATED*
2021
$'000
713,216
67,936
170,727
(141,845)
(269,126)
(8,834)
(112,330)
(962)
(41,146)
(44,042)
(18,701)
(8,350)
7,386
313,929
(86,556)
(1,894)
225,479
(32,455)
193,024
(37,191)
(33,595)
155,833
CENTS
(4.4)
CENTS
20.6
124
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022
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Statement of Comprehensive Income
For the year ended 30 June 2022
NOTES
(Loss)/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
30
Asset revaluation reserve – income tax
Items that may be subsequently reclassified to profit or loss
Foreign Currency Translation Reserve
Exchange differences on translation of overseas subsidiaries
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
*Refer to note 23 for details on prior period restatement.
30
30
30
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
2022
$'000
(33,595)
–
–
–
RESTATED*
2021
$'000
155,833
8,755
(1,921)
6,834
10,681
(4,676)
13,777
(3,369)
(2,914)
37
462
(140)
18,534
18,534
(15,061)
(24,859)
35,790
(3,076)
(6)
463
(128)
3,508
10,342
166,175
Statement of Comprehensive Income
125
Balance Sheet
As at 30 June 2022
ASSETS
Current Assets
Cash and cash equivalents
Receivables and prepayments
Inventories
Derivative financial instruments
Current tax receivables
NZICC fire recoveries
Assets held for sale
Total Current Assets
Non-current Assets
NZICC fire recoveries
Deferred tax assets
Finance lease receivable
Other non-current assets
Derivative financial instruments
Investments in associates
Investment properties
Property, plant and equipment
Intangible assets
Right-of-use assets
Total Non-current Assets
Total Assets
NOTES
2022
$'000
RESTATED*
2021
RESTATED*
1 JULY 2020
$'000
$'000
26
25
31
5(c)
27
5(d)
18
31
24
14
22
23
9
48,698
25,826
7,528
363
4,431
212,475
26,646
325,967
17,183
19,372
12,737
2,000
11,598
42,136
119,720
1,442,680
623,897
126,412
2,417,735
2,743,702
49,940
33,405
7,187
156
–
175,352
13,517
279,557
54,224
42,252
6,628
53,288
1,989
49,571
11,019
218,971
233,000
227,000
9,740
11,605
–
4,109
–
124,368
1,370,762
627,065
126,755
2,507,404
2,786,961
6,910
10,574
–
23,100
–
72,400
1,528,902
630,592
51,967
2,551,445
2,770,416
*Refer to note 23 for details on prior period restatement.
The above balance sheet should be read in conjunction with the accompanying notes.
126
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022
Balance Sheet (continued)
As at 30 June 2022
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
NOTES
28
12
31
9
15
11
21
31
19
9
16
29
30
*Refer to note 23 for details on prior period restatement.
The above balance sheet should be read in conjunction with the accompanying notes.
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RESTATED*
2021
RESTATED*
1 JULY 2020
$'000
$'000
2022
$'000
187,199
78,000
94
12
3,576
–
200,165
48,031
16,256
–
3,014
2,088
268,881
269,554
451,372
24,557
29,501
–
60,591
117,530
219,996
903,547
1,172,428
1,571,274
440,964
20,317
36,310
7,528
51,975
115,793
207,436
880,323
1,149,877
1,637,084
221,842
302,509
776
6,113
485
153,165
684,890
282,731
10,569
39,815
24,375
39,903
52,188
214,972
664,553
1,349,443
1,420,973
1,340,556
1,338,223
1,288,287
(4,445)
235,163
(22,979)
321,840
(33,321)
166,007
1,571,274
1,637,084
1,420,973
Balance Sheet
127
Statement of Changes in Equity
For the year ended 30 June 2022
Balance as at 1 July 2020
Adjustment on change in accounting policy*
Restated balance at the beginning of the year*
Total comprehensive income
Equity raising
Share rights issued for employee service
Net movement in treasury shares
Balance as at 30 June 2021 (restated)*
Balance as at 1 July 2021 (restated)*
Total comprehensive income
Dividends paid
Share rights issued for employee service
Net movement in treasury shares
Balance as at 30 June 2022
NOTES
29
29
29
8
29
29
SHARE
CAPITAL
$'000
1,288,287
–
1,288,287
–
48,737
3,253
(2,054)
1,338,223
1,338,223
–
–
2,292
41
RESERVES
RETAINED
EARNINGS
TOTAL EQUITY
$'000
(33,321)
–
(33,321)
10,342
–
–
–
(22,979)
(22,979)
18,534
–
–
–
$'000
179,641
(13,634)
166,007
155,833
–
–
–
321,840
321,840
(33,595)
(53,082)
–
–
$'000
1,434,607
(13,634)
1,420,973
166,175
48,737
3,253
(2,054)
1,637,084
1,637,084
(15,061)
(53,082)
2,292
41
1,340,556
(4,445)
235,163
1,571,274
*Refer to note 23 for details on prior period restatement.
The above statement of changes in equity should be read in conjunction with the accompanying notes.
128
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Statement of Cash Flows
For the year ended 30 June 2022
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Government grants
Other insurance income
Gaming taxes and levies paid
Income taxes paid
Net Cash Inflow from Operating Activities
Cash Flows from Investing Activities
Acquisition of associate
Capital additions
Purchased intangible assets
Proceeds from disposal of assets held for sale
NZICC fire related income
NZICC fire related costs
Net Cash Outflow from Investing Activities
Cash Flows from Financing Activities
Issue of new share capital
Cash flows associated with net derivatives
Proceeds from borrowings
Repayment of borrowings
Movement in treasury shares
Dividends paid to company shareholders
Interest paid
Lease interest paid
Repayment of lease liabilities
Net Cash Outflow from Financing Activities
Net 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
*Refer to note 23 for details on prior period restatement.
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NOTES
38
24
27
8
13
26
2022
$'000
554,816
(414,543)
7,476
10,749
(41,698)
(25,679)
91,121
(42,136)
(100,065)
(11,411)
3,250
231,177
(112,494)
(31,679)
–
(2,531)
224,429
(194,460)
41
(53,082)
(25,735)
(6,169)
(3,177)
(60,684)
(1,242)
49,940
48,698
RESTATED*
2021
$'000
718,898
(401,113)
28,643
–
(46,074)
(15,569)
284,785
–
(171,673)
(2,399)
–
30,533
(108,040)
(251,579)
46,683
17,669
208,031
(267,447)
–
–
(35,857)
(2,879)
(3,690)
(37,490)
(4,284)
54,224
49,940
The above statement of cash flows should be read in conjunction with the accompanying notes.
Statement of Cash Flows
129
CONTENTS
of the Notes to the
Financial Statements
1
2
3
4
5
6
7
8
9
Summary of Significant Accounting Policies
Segment Information
Revenue
Other Income
NZICC Fire
Expenses
Earnings per Share
Dividends
Leases - SkyCity as the Lessee
10 Net Finance Costs
11
Non-current Liabilities - Interest Bearing Liabilities
12 Current Liabilities - Interest Bearing Liabilities
13 Net Debt Reconciliation
14 Non-current Assets - Investment Properties
15 Current Liabilities - Deferred Licence Value
16 Non-current Liabilities - Deferred Licence Value
17
Income Tax Expense
18 Deferred Tax Assets
19 Deferred Tax Liabilities
20
Imputation and Franking Credits
21 Non-current Liabilities - Lease Income in Advance
22 Property, Plant and Equipment
23
24
Intangible Assets
Investments in Associates
25 Receivables and Prepayments
26 Cash and Cash Equivalents
27 Assets Held for Sale
28 Payables and Provisions
29 Share Capital
30 Reserves
31 Derivative Financial Instruments
32 Financial Risk Management
33
Share-Based Payments
34 Related Party Transactions
35
Subsidiaries
36 Contingencies
37 Commitments
38
Reconciliation of Profit After Income Tax to Net Cash
Inflow from Operating Activities
39 Events Occurring after the Balance Sheet Date
130
131
134
135
136
137
140
142
142
143
144
144
146
146
146
148
148
149
150
151
151
151
152
154
160
160
161
161
161
162
162
163
164
167
170
171
172
173
174
174
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022
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1 Summary of Significant
Accounting Policies
SkyCity Entertainment Group Limited (the Company) and
its subsidiaries (together, SkyCity or the Group) operate in
the gaming, entertainment, hotel, convention, hospitality
and tourism sectors. The Group has operations in New
Zealand and Australia.
The Company is a limited liability company incorporated
and domiciled in New Zealand. The Company is registered
under the Companies Act 1993 and is an FMC reporting
entity under Part 7 of the Financial Markets Conduct Act
2013. The address of its registered office is 99 Albert Street,
Auckland. The Company is listed on the New Zealand
stock exchange and has a foreign exempt listing on the
Australian stock exchange (NZX and ASX respectively).
These consolidated financial statements were approved for
issue by the Board of Directors (Board) on 24 August 2022.
The Board does not have the power to amend the financial
statements once they have been issued.
For the purposes of complying with generally accepted
accounting practice in New Zealand (GAAP), the Group is a
for-profit entity.
(a) Basis of Preparation
The financial statements of the Group have been prepared
in accordance with GAAP. They comply with New Zealand
Equivalents to International Financial Reporting Standards
(NZ IFRS), International Financial Reporting Standards, the
requirements of Part 7 of the Financial Markets Conduct
Act 2013 and the NZX Listing Rules.
The Group financial statements incorporate the assets and
liabilities of all subsidiaries of the Group as at 30 June 2022
and the results of all subsidiaries for the year then ended.
Non-GAAP Financial Information
The Group’s standard profit measure prepared under
GAAP is profit for the year. When discussing financial
performance, the Group also uses non-GAAP financial
information, which is not prepared in accordance with
NZ IFRS and therefore may not be comparable to similar
financial information presented by other entities. The
Directors and management believe that this non-GAAP
financial information provides useful information to
readers of the financial statements to assist them in
understanding 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.
Going Concern
For the 12 months to 30 June 2022, the Group incurred a
loss of $33.6 million. This loss arose substantially as a result
of the trading restrictions imposed by the New Zealand
and South Australian Governments in response to the
ongoing COVID-19 pandemic. Information on those trading
restrictions is provided below.
The significant financial impact of these closures and
trading restrictions on the Group created the potential for
a breach of financial covenants at 30 June 2022. To ensure
that such a breach would not occur, the Group obtained a
waiver of EBITDA-based covenants (debt gearing ratio and
interest cover ratio) measured at 30 June 2022.
SkyCity has prepared forecasts to support its going
concern assessment that consider a range of possible
scenarios including consideration of the contingent
liabilities disclosed in note 36. These scenarios have been
informed by recent trading performance and assume
there are no further COVID-19 lockdowns at any sites nor
a move to the red traffic light setting under the COVID-19
Protection Framework in New Zealand. While there
remain uncertainties regarding the near term financial
performance of the Group, SkyCity’s forecasts indicate that
the Group continues to have access to a sufficient level of
liquidity to sustain the business, remain compliant with its
financial obligations and meet any future challenges that
may arise from contingent liabilities.
The Company's directors (Directors) have therefore
concluded that there are no material uncertainties related
to the Group being a going concern and, accordingly,
these annual financial statements are prepared on a going
concern basis.
Measurement Basis
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation
of certain assets and liabilities, as identified in specific
accounting policies below and in the notes.
Presentation Currency
The financial statements are presented in New Zealand
dollars, which is the Company's functional currency.
Amounts are rounded to the nearest thousand dollars,
unless otherwise stated.
Critical Accounting Estimates and Judgements
The preparation of financial statements requires the use
of certain critical accounting estimates and the exercise
of judgement regarding the application of accounting
policies. The critical estimates and judgements made in
the preparation of these financial statements relate to the
following:
•
•
goodwill and casino licences that have an indefinite
useful life are impairment tested annually, which
requires the use of key estimates. Details of the
estimates made are provided in note 23;
the SkyCity Adelaide casino licence, which has a
finite useful life, was impaired in a prior period and
consequently was tested for impairment in the current
period. This impairment testing required the use of key
estimates, which are discussed in note 23(c);
Notes to the Financial Statements
131
•
•
•
as reported in the Group’s 30 June 2020 financial
statements, in October 2019 there was a significant
fire at the construction site of the New Zealand
International Convention Centre (NZICC). Accounting
for the consequences of the fire has required the
exercise of judgement and the use of estimates.
Details of the judgements and estimates made are
provided in note 5;
investment properties are carried at fair value.
Determining the fair value of properties requires
the use of estimates. Details of estimates made are
provided in note 14;
in some instances judgement is required to determine
whether a payment that may occur in the future
constitutes a provision or a contingent liability. A
provision is recognised where an obligating event
that gives rise to a requirement to make a payment
has occurred. Information on the Group's provisions
is provided in note 28 and information on the Group's
contingent liabilities is provided in note 36; and
•
judgement and estimation is required when
determining the amount of deferred tax assets to be
recognised. Further information is provided in note 18.
(b) COVID-19 Pandemic
On 11 March 2020, the World Health Organization declared
a global pandemic as a result of the outbreak and spread
of COVID-19. As a result of the pandemic, SkyCity has faced
a number of closures and other trading restrictions during
the 2020, 2021 and 2022 financial years.
In the 2020 financial year, SkyCity took a number of
actions to manage the impacts of COVID-19. Those
actions, which are detailed in the Group's 30 June 2020
annual financial statements, included a rapid restructure
of the New Zealand workforce, the implementation of
cost and capital savings initiatives, an equity raise, the
arrangement of new bank facilities and securing covenant
waivers in relation to lending facilities.
During the comparative year:
•
•
•
•
the SkyCity Auckland site was closed from 12 August
to 30 August 2020, 15 February to 17 February 2021
and 28 February to 6 March 2021 and operated with
social distancing restrictions from 30 August to
8 October 2020, 18 February to 22 February 2021 and
7 March to 11 March 2021;
the SkyCity Adelaide site was closed for three days
from 18 November 2020 and operated under social
distancing restrictions for the majority of the remainder
of the year;
the Group received both the New Zealand Government
wage subsidy and Australian JobKeeper Payments
(note 4); and
the Board resolved to voluntarily return a portion of the
New Zealand Government wage subsidy and Australian
JobKeeper Payments that it had received (note 4).
During the current year:
•
•
•
•
•
the SkyCity Auckland site was closed for 107 days from
18 August to 2 December 2021 and operated with
social distancing restrictions from 3 December to
30 December 2021 and 24 January to 13 April 2022;
the SkyCity Hamilton site was closed for 65 days from
18 August to 7 September 2021 and from 4 October to
17 November 2021 and operated with social distancing
restrictions from 24 January to 13 April 2022;
the SkyCity Queenstown site was closed for 21 days from
18 August to 7 September 2021 and operated with social
distancing restrictions from 24 January to 13 April 2022;
the SkyCity Adelaide site was closed for eight days from
20 July to 27 July 2021; and
the Group continued to receive the New Zealand
Government wage subsidy (note 4).
(c) Principles of Consolidation
Subsidiaries are all entities over which the Group has
control. The Group controls an entity when the Group
is exposed, 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 in the Group financial statements. Unrealised
losses are also eliminated. When necessary, amounts
reported by subsidiaries have been adjusted to conform
with the Group's accounting policies.
(d) Foreign Currency Translation
(i) Transactions and Balances
Items included in the financial statements of each
Group entity are measured using that entity’s functional
currency (which is the currency that best reflects the
economic substance of the events and circumstances
relevant to that operation).
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 or 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 instruments classified at fair value
132
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through other comprehensive income are included in the
Statement of Comprehensive Income.
(h) Standards, Amendments and Interpretations to
Existing Standards that are not yet Effective
There are no published new or amended standards or
interpretations that become effective on or after 1 July
2022 that would have a material impact on the Group’s
financial statements.
(i) Fair Value Hierarchy
Some of the items in the financial statements are carried
at fair value. In addition, for some items carried under a
different measurement basis, fair value is disclosed. Where
a fair value measurement is made, the measurement is
categorised as falling within one of three levels on the fair
value hierarchy, with categorisation based on the nature
of the significant inputs to the valuation:
•
•
•
Level 1 – unadjusted quoted prices in an active market
for identical assets or liabilities;
Level 2 – inputs other than quoted prices included
within level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly
(i.e. as information derived from prices); and
Level 3 – inputs for the asset or liability that are not
based on observable market data (i.e. unobservable
inputs).
(ii) Foreign Operations
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.
(e) 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.
(f) 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.
(g) New Accounting Standards Adopted
in the Year
The accounting policies that materially affect recognition
and measurement in the financial statements have been
applied on a basis consistent with the prior year.
In the current period, the Group revised its accounting
policy for the configuration and customisation
costs associated with software as a service (SaaS)
arrangements. Information on the change made, the
reason for the change, and the impact of the change is
provided in note 23.
Notes to the Financial Statements
133
2 Segment Information
Operating segments are reported in a manner consistent with the internal reports that the Chief Executive Officer
(CEO), who is the chief operating decision maker, uses to assess performance and allocate resources.
(a) Primary Reporting Format – Business Segments
SKYCITY
AUCKLAND
OTHER NZ
OPERATIONS
SKYCITY
ADELAIDE
INTERNATIONAL
BUSINESS
CORPORATE
/GROUP
$'000
$'000
$'000
$'000
$'000
2022
Gaming revenue
Online revenue
Non-gaming revenue
Other income
NZICC fire income
Total income
Expenses
Impairment
NZICC fire expenses
Depreciation and amortisation
Segment profit/(loss) (EBIT)
Net finance costs
Loss before income tax
226,640
–
52,990
27,960
52,483
360,073
(209,923)
(1,057)
(88,849)
(42,450)
17,794
50,367
16,928
6,926
1,682
–
75,903
(35,697)
(4,390)
–
(5,923)
29,893
134,129
–
49,495
96
–
183,720
(161,808)
–
–
(33,055)
(11,143)
19,331
–
42
–
–
19,373
(15,664)
–
–
–
3,709
TOTAL
$'000
430,467
16,928
109,901
32,969
52,483
642,748
–
–
448
3,231
–
3,679
(26,578)
(449,670)
(1,846)
–
(13,232)
(37,977)
(7,293)
(88,849)
(94,660)
2,276
(35,044)
(32,768)
Segment assets
1,805,614
92,243
584,118
1,707
260,020
2,743,702
Net additions to non-current
assets (other than financial
assets and deferred tax)
2021 – RESTATED
Gaming revenue
Online revenue
Non-gaming revenue
Other income
NZICC fire income
Liquidated damages
116,930
4,587
6,781
–
55,319
183,617
345,737
65,360
143,937
24,547
–
81,300
9,640
170,727
39,500
13,140
10,129
1,220
–
–
–
36,359
16,596
–
–
–
35
–
–
–
–
–
–
980
–
–
579,581
13,140
127,823
28,436
170,727
39,500
Total revenue
646,904
89,849
196,892
24,582
980
959,207
Expenses
(243,806)
(43,307)
(156,094)
(21,474)
(38,752)
(503,433)
NZICC fire expenses
Depreciation and amortisation
Segment profit/(loss) (EBIT)
Net finance costs
Profit before income tax
(141,845)
(45,468)
215,785
–
(5,887)
40,655
–
(22,545)
18,253
–
–
3,108
–
(14,550)
(52,322)
(141,845)
(88,450)
225,479
(32,455)
193,024
Segment assets
1,924,204
109,669
596,489
(15,679)
172,278
2,786,961
Net additions to non-current
assets (other than financial
assets and deferred tax)
52,660
3,783
149,900
–
12,217
218,560
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Australia
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2022
$'000
445,868
196,880
642,748
2021
$'000
745,932
213,275
959,207
NON‑CURRENT ASSETS
EXCLUDING FINANCIAL
INSTRUMENTS AND
DEFERRED TAX ASSETS
2022
$'000
1,816,631
570,135
RESTATED
2021
$'000
1,913,487
580,068
2,386,766
2,493,555
(c) Description of Segments
The Group is organised into the following main operating segments:
SkyCity Auckland
This segment consists of the Group’s Auckland operations and includes casino operations, hotels and conventions
(including the NZICC), food and beverage, Sky Tower, investment properties and a number of other related activities.
This segment does not include International Business operations.
Other NZ Operations
This segment consists of the Group's operations at SkyCity Hamilton, SkyCity Queenstown, SkyCity Wharf and online
gaming. This segment does not include International Business operations.
SkyCity Adelaide
This segment consists of the Group’s Adelaide operations, which comprise casino operations, hotel and food and
beverage. This segment does not include International Business operations.
International Business
This segment comprises gaming operations for international customers, most of whom are from Asia. The revenue is
generated at SkyCity's Auckland, Adelaide, Queenstown and Hamilton locations. The results of the segment include
commission and complimentary play.
Corporate/Group
This segment includes head office functions, funding entities and the Group's investment in its associate (note 24). It is
not considered an operating segment.
3 Revenue
Accounting Policy
Gaming revenues represent the net win to the casino from gaming activities, being the difference between amounts
wagered and amounts won by casino patrons. Revenue is recognised at the conclusion of each game. International
Business rebates are accounted for as a reduction in gaming revenue.
The revenue from the online casino is from New Zealand based players using technology developed by Gaming
Innovation Group Inc (GiG) and under a Malta gaming licence held by Silvereye Entertainment Limited (a subsidiary
of GiG). SkyCity is not the principal transacting with online casino customers. Revenue is reported net of GiG costs
allowable under the arrangement.
Non-gaming revenues include revenues arising from hotels and conventions, food and beverage, Sky Tower, car parking
and other sources. These revenues are recognised when the associated goods or services have been provided.
Gaming
Non-gaming
Online gaming
Total revenue
2022
$'000
426,714
109,901
16,928
553,543
2021
$'000
572,249
127,827
13,140
713,216
Notes to the Financial Statements
135
The Group provides complimentary hotel accommodation, food and beverage and other goods and services to certain
groups of customers. As the goods and services offered under these arrangements are tailored to meet the needs
of individual customers, it is not practical to allocate total revenue received to all of the goods and services provided.
Consequently, this revenue is all recognised as gaming revenue. The retail value of complimentary items provided in the
current year was $13.3 million (2021: $18.9 million).
Reconciliation to the segment note
Total revenue
Other income
NZICC fire income
Total income as per Income Statement
International Business rebates
Total income as per segment note
4 Other Income
Net gain/(loss) on disposal of property, plant and equipment
Dividend income
Rental income from investment properties
Government grants
Liquidated damages
Other insurance income
Government Grants
NOTES
3
4
5
2022
$'000
553,543
32,969
52,483
638,995
3,753
642,748
2022
$'000
2,413
2
2,323
17,482
–
10,749
32,969
2021
$'000
713,216
67,936
170,727
951,879
7,328
959,207
2021
$'000
(528)
2
2,148
26,814
39,500
–
67,936
As part of its COVID-19 response, the New Zealand Government introduced wage subsidy schemes to enable businesses
to retain employees. SkyCity received $17.5 million of subsidies for the current financial year under those schemes
(2021: $10.2 million).
The Australian Government also introduced wage subsidies (referred to as JobKeeper Payments) as part of its response
to the COVID-19 pandemic. No payments were received in the current year - however, in the prior year SkyCity received
$16.6 million (A$15.4 million) of JobKeeper Payments.
In June 2021, the Board resolved to voluntarily repay a portion of the wage subsidies/payments received from the New
Zealand and Australian Governments and consequently recognised an expense (note 6) in the year to 30 June 2021 and
a provision at 30 June 2021 (note 28). The $6.7 million voluntary repayment to the New Zealand Government was made
on 27 July 2021 and the A$3.1 million voluntary repayment to the Australian Government was made on 8 October 2021.
Other Insurance Income
As outlined in note 5, in October 2019 there was a fire at the NZICC construction site. As a result of the NZICC fire the Group
is required to make payments to compensate MPF Parking Limited (Macquarie) for carparks that are not available under
a concession agreement (Car Park Concession Agreement) dated 3 April 2019 pursuant to which Macquarie was granted
a long term concession until 2048 over the SkyCity Auckland car parks located at both the SkyCity Auckland main site and
the NZICC site. Other insurance income arises as a result of the insurer's partial payment of the Group's claim in relation to
this payment to Macquarie and is recognised when received.
Liquidated Damages
Fletcher Construction Company Limited (FCC, or the Contractor) is the contractor building the NZICC and Horizon
Hotel (which is on an adjacent site to the NZICC). Included within the construction contracts with FCC for the NZICC and
Horizon Hotel is the right to liquidated damages if certain milestones are not met. As part of a settlement agreement
signed 30 November 2020, FCC agreed to not challenge retention of the amount, and accordingly $39.5 million was
recognised as other income in the previous financial period.
136
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5 NZICC Fire
On 22 October 2019, there was a significant fire at the NZICC construction site which caused extensive damage to the
NZICC and also damaged Horizon Hotel, which is being constructed on the adjacent site.
Both NZICC and Horizon Hotel are insured, and the insurers have acknowledged the fire event and confirmed that
SkyCity's contract works policy will respond in relation to damage caused by the fire. Any costs not covered by insurance
are expected to be incurred by or sought from FCC who is the contractor constructing both buildings.
The NZICC is being built under an agreement between the Group and the Crown. Under that agreement, the
NZICC must be completed by a specified date, referred to as the completion long stop date, which was extended to
15 December 2027. SkyCity expects to complete the NZICC before this date.
In accounting for the impact of the fire, a number of significant judgements and estimates have been made. The most
significant assumptions, and associated risk to the estimates provided, relate to the extent of the damage to the NZICC
building and the uncertain cost to remediate, the timeline for remediation and the final view of the insurers as the claims
are presented. These judgements and estimates will continue to be reviewed as new information becomes available. It is
possible that the actual financial impacts of the fire will differ from those included in these financial statements; those
differences may be material. Details of judgements and estimates made are provided throughout this note.
(a) Income
Other income
Contract works insurance recovery (remediation and pre-remediation)
Other recoveries
Contract Works Insurance Recovery
The accounting treatment of the insurance recovery
for the damage caused by the fire 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, and because
insurance proceeds are recognised when their receipt is
virtually certain, the Group has recognised the following
where recovery of the associated costs is virtually certain
under the Contract Works Insurance policy:
•
the expected insurance proceeds for
reconstruction/remediation of the fire damage as
income and a receivable, based on estimated rebuild
costs; and
•
actual pre-remediation costs as income and a
receivable as the works are undertaken.
Amounts claimed under the Contract Works Insurance
policy relate to the following items:
•
•
•
•
reconstruction costs paid to the Contractor;
pre-remediation costs, including site preparation,
demolition and clearing costs paid to the Contractor;
costs of professional advisers assisting the Group as a
result of the fire; and
insurance premiums and other project costs for
additional periods due to construction delays.
Pre-remediation costs relating to site preparation, and
2022
$'000
52,483
–
52,483
2021
$'000
171,793
(1,066)
170,727
including demolition and clearing costs paid to the
Contractor and associated costs incurred by SkyCity, are
recognised as expenses when they are incurred. Other
recoveries disclosed in 2021 have been restated as they
previously included pre-remediation costs amounting to
$128.2 million that have now been reclassified to contract
works insurance recovery. Payments to the Contractor
for the reconstruction and associated costs incurred by
SkyCity (i.e. remediation costs) are capitalised to property,
plant and equipment as the rebuild occurs over time.
While the insurers have confirmed that SkyCity's
Contracts Works Insurance policy will respond in relation
to the damage caused by the fire, the final insurance
recovery will be dependent on the final view of the
insurers as the claims are presented. The damage
assessment, reconstruction scope and insurance
claim process by the Contractor and the insurers is still
underway, so no complete reconstruction cost insurance
recovery has been confirmed at this stage. Accordingly,
the Group has had to estimate the level of insurance
recovery for the purposes of these accounts with
income not recognised in relation to costs for which the
recoverability has not been assessed to be virtually certain
at this stage.
This estimate has been informed by the early estimates
the Group received from quantity surveyor Rider Levett
Bucknall Auckland Limited (RLB) on the possible
reconstruction costs, current estimates provided by the
Contractor, the total indemnity limits, sub limits, terms
and conditions of the Contract Works Insurance policy,
Notes to the Financial Statements
137
feedback from the insurers and its representatives to date, and advice from the Group’s legal and insurance advisors as
to the likely insurance policy response.
At this stage it is not possible to provide a high level of certainty on the likely outcome and quantum of the recoveries
under the Contract Works Insurance policy. The Group has assumed a total insurance recovery for remediation and
pre-remediation costs for both buildings of $595.2 million (2021: $542.7 million). The Group considers recovery of this
amount to be virtually certain. At 30 June 2022, $328.1 million of this has been provisionally confirmed as covered under
the policy by the insurers. However, as with large and complex claims like this and where expected costs have not all
been incurred to date and not all claims have been presented to the insurers, there are further costs for which policy
coverage has not been confirmed by the insurers at this stage and therefore for which the recoverability has not been
assessed to be virtually certain. The Group will only recognise insurance income in relation to these costs as recovery
becomes virtually certain. Some of these costs are disclosed as a contingent asset (note 36) where recovery is probable.
As outlined above, insurance income related to estimated pre-remediation and remediation costs is recognised when
the recoverability of those costs is considered virtually certain. The assessment of whether the recoverability of specific
costs is virtually certain is a key judgement of the Group, and that judgment is based on limited information and is
highly sensitive to the final view of the insurers as the claims are compiled and presented. In addition, for remediation
costs, the judgement is highly sensitive to the actual extent of rebuild required (i.e. the extent of damage done by the
fire) and the actual remediation costs, and could be further affected by potential market movements in construction
costs. As a result of these factors, the ultimate insurance recovery may differ, potentially materially, from the current
assessment.
The majority of pre-remediation and remediation/reconstruction costs are expected to be incurred by the Contractor.
However, costs are also incurred by SkyCity and initial recovery for these items will be sought from insurers where
appropriate. To the extent that recovery under the Group’s insurance policies is not available, recovery of these costs may
be sought from the Contractor.
Other Recoveries
In addition to recovery of the expected pre-remediation and remediation/reconstruction costs, the Group seeks recovery
of additional costs. These costs include business interruption costs and lost gross profit while the Auckland precinct was
closed or affected by the fire, additional ongoing costs that have arisen as a result of the fire and insurance excess.
Initial recovery for these additional items will be sought from insurers where appropriate and, to the extent that recovery
under the Group’s insurance policies is not available, recovery may be sought from the Contractor.
Income in relation to these items is recognised as other recoveries when the costs are incurred, and it is virtually certain
that these costs will be reimbursed. Where recovery of these costs is considered probable but not considered virtually
certain, a contingent asset is disclosed (note 36). The assessment of whether recoverability of these costs is virtually
certain is a key judgement by the Group.
(b) Expenses
(Add back)/Write-off of NZICC and Horizon Hotel capitalised work-in-progress
Release from deferred licence value liability
NZICC obligation
Site preparation, demolition and other costs
2022
$'000
(34,270)
12,559
–
110,560
88,849
2021
$'000
34,713
(7,536)
(6,551)
121,219
141,845
Write-off of NZICC and Horizon Hotel Capitalised Work-in-Progress
The fire is accounted for as the disposal of the damaged asset and the purchase of new component parts (or, as
applicable, the part-replacement of repaired component parts). As a result, the carrying value of the damaged/destroyed
parts of the NZICC and Horizon Hotel are expensed. As the investigation of the extent of damage is finalised, more
damaged components may be identified and written off.
Based on updated estimates provided by RLB, and additional advice relating to damage assessment from the NZICC
project managers, Beca Limited, the Group estimates that approximately 51% (30 June 2021: 55%) of the NZICC and 13%
(30 June 2021: 13%) of the Horizon Hotel construction work that had been completed to the date of the fire has been
destroyed and will need to be replaced. In addition, the Group estimates that 28% (30 June 2021: 45%) of the associated
138
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overheads and direct costs incurred by the Group that were capitalised to the build prior to the fire were destroyed by
the fire and those costs have consequently been written off. As a result, approximately $194.3 million of costs previously
capitalised as work in progress in property, plant and equipment have been written off (30 June 2021: $228.6 million).
This has resulted in a decrease of $34.3 million in the current financial year to the impairment expense recognised in
relation to the fire (2021: increase of $34.7 million) (note 22).
While there is now more certainty around the extent of damage than in the prior year, and hence refinement of the
numbers above, this estimate is still highly sensitive to the actual extent of damage and the ultimate write off may differ
materially as the final assessment of the damage to both buildings is completed.
Future costs (external and internal) related to rebuilding the NZICC and Horizon Hotel to their level of completion prior
to the fire will be capitalised as incurred.
Release from Deferred Licence Value Liability
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 the NZICC upon completion, and therefore when
derecognising the parts of the building that were destroyed in the fire (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 $160.8 million (30 June 2021: $173.3 million), based on the latest
estimated percentage of damage to the NZICC. This represents 42.2% (30 June 2021: 45.5%) of the remaining deferred
licence value liability (the NZICC was estimated to be 83% complete prior to the fire). The updated estimated damage
percentage has resulted in a $12.6 million increase of the deferred licence value liability in the current financial period.
The ultimate transfer of the deferred licence value liability is highly sensitive to the actual extent of damage and may
differ from this assessment once further assessment of the damage to NZICC has been completed. As a result, it is
possible the amount of the deferred licence value liability transferred may change materially.
Refer to note 16 for details of the deferred licence value liability release.
NZICC Obligation
The Group has recognised a liability to reconstruct the assets associated with the initial 600 NZICC car parks that are
required to be provided to Macquarie. The Group has estimated the liability for the remaining works to be $30.5 million
(30 June 2021: $36.5 million), based on an estimate prepared by RLB and the Group's assessment of the remediation
works carried out to date on the car parks.
The ultimate cost for reconstructing these assets may differ materially from this assessment once detailed planning is
completed and the actual extent of the damage is known.
Site Preparation, Demolition and Other Costs
These costs primarily relate to site preparation, clearing costs and damage assessment on-charged by the Contractor
and various related costs incurred directly by SkyCity relating to site preparation, site clearing and damage assessment.
These costs are generally recoverable from the insurers. To the extent that recovery of these costs is considered virtually
certain, a matching amount is included in fire income above.
(c) Current Assets
Insurance recoveries for damages to the NZICC and Horizon Hotel
Other recoveries
Payments received from the insurers
Reclassification to non-current receivables (refer note below)
2022
$'000
595,191
–
(365,533)
(17,183)
212,475
2021
$'000
542,708
2,177
(136,533)
(233,000)
175,352
Notes to the Financial Statements
139
These assets relate to:
Insurance Recovery for Damage to the NZICC and Horizon Hotel
Insurance recoveries under the Contract Works Insurance policy related to pre-remediation and remediation/
reconstruction costs, as noted in section (a) above. Note that 2021 comparative numbers now include pre-remediation to
give total contract works insurance recoveries (this was previously recognised in Other Recoveries).
Other Recoveries
As outlined above, these relate to recoveries sought for items other than pre-remediation and remediation/
reconstruction costs (such as business interruption costs).
Payments Received from the Insurers
To date the Group has received payment from the insurers of $365.5 million towards pre-remediation (site preparation
and clearing) costs and the cost of remediation.
The Group has also received a $2.3 million payment from insurers towards its business interruption claim.
(d) Non-current Assets
Insurance recoveries for damages to the NZICC and Horizon Hotel
2022
$'000
17,183
17,183
2021
$'000
233,000
233,000
The split between current and non-current is based on estimated cash flows associated with the anticipated timing of
the reconstruction.
6 Expenses
2022
$'000
24,686
–
16,597
14,648
10,956
23,331
–
441
1,891
92,550
75,491
2,622
10,455
124
88,692
RESTATED
2021
$'000
22,848
986
17,247
19,235
8,678
32,510
10,006
803
17
112,330
73,151
2,629
10,703
73
86,556
Other Expenses
Utilities, insurance and rates
Onerous contract expense (relating to the Wharf Casino lease)
Other property expenses
ICT related expenses
Professional fees
Other items
Government grants repaid (note 4)
Expenses relating to short term leases
Impairment of receivables
Depreciation and Amortisation (excluding right-of-use assets)
Depreciation (note 22)
Casino licence amortisation (Adelaide) (note 23)
Computer software amortisation (note 23)
Gaming machine entitlements amortisation (note 23)
140
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Impairment
Impairment of property plant and equipment (note 22)
Impairment of intangible assets (note 23)
Reclassification of Expenses
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$'000
2,903
4,390
7,293
RESTATED
2021
$'000
8,834
–
8,834
Expenses for the comparative period have been reclassified to be consistent with the current year's expense
classification. There has been no impact on total expenses or profit.
Auditor's Fees
During the year the fees outlined in the table below were incurred for services provided by the Company's auditor and
its related practices.
The Group employs PricewaterhouseCoopers (PwC) on assignments additional to their statutory audit duties where
PwC's expertise and experience with the Group are important and auditor independence is not impaired. For other
work, the Group's External Audit Independence Policy requires advisers other than PwC to be engaged wherever
practicable.
PwC is engaged to provide tax compliance services, which relate to ad-hoc queries covering a range of tax related
matters; and also to provide market survey data for the purposes of executive remuneration benchmarking.
PwC also undertook:
•
•
agreed-upon procedures in relation to the Group's allocation of revenue from the SkyCity Community Trusts,
assessment of the normalisation of revenue disclosed in the annual report, verification procedures in relation to
share-based payments, and procedures in relation to the vote count at the annual general meeting; and
other assurance engagements, agreed-upon procedures and specified reporting in relation to compliance with
banking and debt covenants.
(a) Assurance and Agreed upon Procedure Services
Audit and review of financial statements
PwC New Zealand
PwC Australia
PwC Hong Kong
PwC Malta
Total remuneration for audit services
Performed by PwC New Zealand
Other assurance services
Agreed upon procedures
Performed by PwC Australia
Agreed upon procedures
Total remuneration for other assurance services
Total remuneration for assurance related services
2022
$'000
1,035
–
29
51
1,115
16
50
–
66
1,181
2021
$'000
888
52
24
51
1,015
25
19
9
53
1,068
Notes to the Financial Statements
141
(b) Other Services
Performed by PwC New Zealand
Tax advisory services
Provision of market survey data relating to executive remuneration levels
Performed by PwC Australia
Tax compliance services
Tax advisory services
Performed by PwC Hong Kong
Tax advisory services
Performed by PwC Singapore
Tax advisory services
Total remuneration for other services
7 Earnings per Share
Accounting Policy
(i) Basic Earnings per Share
–
59
60
–
–
–
119
1,300
55
30
43
207
17
19
371
1,439
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
8 Dividends
Accounting Policy
Dividends are recognised when declared.
2020 final
2021 interim
30 June 2021
2021 final
2022 interim
30 June 2022
2022
Number
2021
Number
760,205,209
759,687,194
CENTS PER SHARE
$'000
–
–
–
7.0
–
7.0
–
–
–
53,082
–
53,082
During the current year, a supplementary dividend of $5.82 million (1.24 cents per share) was paid on shares held by
non-resident shareholders, for which the Group received an equivalent foreign investor tax credit entitlement. The foreign
investor tax credit entitlement is included in income taxes paid within the Statement of Cash Flows.
The Directors have not declared a final dividend in respect of the 30 June 2022 financial year.
142
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 S
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9 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, as is generally the case, that rate
cannot be readily determined, 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. The incremental borrowing rate is calculated as follows;
•
where possible, using 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;
• using a build-up approach that starts with a risk free interest rate adjusted for credit risk; and
• making adjustments specific to the lease (e.g. term, country, currency and security).
The weighted average incremental borrowing rate for the Group's leases is 5.2% (with rates ranging from 3.3% to 6.0%).
Right-of-use assets are measured at cost comprising the following:
•
the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date;
• any initial direct costs; and
•
restoration costs.
Subsequent to initial recognition:
•
•
lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made; and
right-of-use assets are amortised on a straight-line basis over the remaining term of the lease (or over the remaining
economic life of the asset if, rarely, this is judged to be shorter than the lease term).
A small number of immaterial, short-term leases have not been included in the calculation of lease liabilities or right-of-use
assets. Payments made in relation to these leases are recognised on a straight-line basis over the lease term.
The Group has a small number of long term leases. 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.
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.
The Balance Sheet shows the following amounts relating to leases:
Right-of-use assets net book value
SkyCity Auckland sub soil
SkyCity Auckland airbridges
SkyCity Queenstown – Stratton House
SkyCity Adelaide – Railway Building and extension
SkyCity Adelaide – car park
Lease liabilities
Current
Non-current
2022
$'000
3,089
3,117
1,660
57,202
61,344
126,412
3,576
117,530
121,106
2021
$'000
3,091
3,214
1,930
55,056
63,464
126,755
3,014
115,793
118,807
Notes to the Financial Statements
143
Amounts recognised in the Income Statement are:
Depreciation of right-of-use assets
Interest expense on lease liabilities (part of net finance costs)
10 Net Finance Costs
Finance costs
Foreign exchange gains
Interest income
Capitalised interest (note 22)
Total finance costs
2022
$'000
5,968
6,169
2022
$'000
38,743
(594)
(1,901)
(1,204)
35,044
2021
$'000
1,894
3,566
2021
$'000
41,743
(388)
(1,086)
(7,814)
32,455
11 Non-current Liabilities – Interest Bearing Liabilities
Accounting Policy
Interest bearing liabilities are initially recognised at fair value, net of transaction costs incurred. They 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. However,
the interest margin on US dollar denominated United States private placement notes (USPP) maturing in March 2025 is
accounted for as a fair value hedge and the carrying value of the borrowings is adjusted for fair value changes attributable
to the risk being hedged.
Borrowings are only classified as non-current liabilities if the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
Unsecured Interest Bearing Liabilities
Car park concession (main site nested car parks)
USPP notes
New Zealand bonds
Deferred funding expenses
Total Non-current Interest Bearing Liabilities
(a) USPP Notes
As at 30 June 2022 SkyCity had outstanding:
• US$100.0 million maturing 17 March 2025; and
• A$65.4 million maturing 15 March 2028.
2022
$'000
49,195
229,872
175,000
(2,695)
451,372
2021
$'000
47,167
221,811
175,000
(3,014)
440,964
Movements in the carrying value of the outstanding balance in the current year relate to movements in exchange rates
and interest rates.
The US dollar USPP notes have been hedged to NZ 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 (note 31).
144
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Fair value of USPP debt is estimated at NZ$236.7 million (2021: NZ$243.4 million) compared to a carrying value of
NZ$229.9 million (2021: NZ$221.8 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. This is a level 2 valuation in the
fair value hierarchy.
All financial covenants were met at 30 June 2022.
(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).
S
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As at 30 June 2022, SkyCity had in place revolving credit facilities of:
•
•
•
•
A$100.0 million maturing on 15 June 2023 (NZ$78.0 million drawn at the reporting date);
NZ$50.0 million maturing on 31 May 2023 (undrawn at the reporting date);
NZ$115.0 million maturing on 15 June 2024 (undrawn at the reporting date); and
NZ$115.0 million maturing on 15 June 2025 (undrawn at the reporting date).
In August 2022, the syndicated bank facility was restructured to the following:
•
•
NZ$50 million of bank debt maturing in May 2023 extended and replaced; and
A$100 million of bank debt maturing in June 2023 extended and replaced.
Post the restructure the syndicated bank facilities include:
•
•
•
NZ$135 million of bank debt maturing in June 2024;
NZ$175 million of bank debt maturing in June 2025; and
NZ$80 million of bank debt maturing in June 2026.
Total committed bank debt facilities remain unchanged at around $390 million. There has been no material changes to
current drawn bank debt since 30 June 2022.
(c) New Zealand Bonds
$175.0 million of six year unsubordinated, unsecured redeemable fixed rate bonds were issued on 21 May 2021.
The bonds are quoted on the NZDX. As at 30 June 2022, the closing price was $0.8981 (2021: $1.038) per $1 bond. The
bonds are carried at amortised cost. The total fair value is $157.2 million (2021: $181.7 million) which is a level 1 valuation in
the fair value hierarchy as they are listed securities.
(d) Auckland Car Park Concession
Incorporated in the Car Park Concession Agreement (note 4) is an interest-bearing liability of $49.2 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.
(e) Negative Pledge Deeds
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 there are requirements for minimum guarantee group participation and financial
covenants. Unless waived (note 1), all requirements of the negative pledge deeds have been met as at 30 June 2022.
(f) Weighted Average Interest Rate
Interest bearing liabilities*
2022
%
4.51%
$'000
652,554
2021
%
5.68%
$'000
610,798
*The weighted average debt interest rate includes lease liabilities and the impact of interest rate and foreign currency hedging.
Notes to the Financial Statements
145
12 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 from the reporting date.
Syndicated bank facility
Total current interest-bearing borrowings
Refer note 11(b) for details concerning the syndicated bank facility.
13 Net Debt Reconciliation
2022
$'000
78,000
78,000
CASH AND BANK
BALANCES
BORROWINGS
DUE WITHIN
1 YEAR
BORROWINGS
DUE AFTER
1 YEAR
Net debt as at 1 July 2020
Movement in cash and cash equivalents
Recognition of car park concession liability
Revaluation of New Zealand bonds
Revaluation of USPP notes
Repayment of USPP notes
Amortisation of deferred funding expenses
Net movement in bank drawings
Movement in lease liabilities
Net debt as at 30 June 2021
Movement in cash and cash equivalents
Movement in car park concession liability
Revaluation of USPP notes
Amortisation of deferred funding expenses
Net movement in bank drawings
Movement in lease liabilities
Net debt as at 30 June 2022
$'000
(54,224)
4,284
–
–
–
–
–
–
–
(49,940)
1,242
–
–
–
–
–
(48,698)
$'000
302,994
–
(3,391)
(128,500)
–
(155,618)
–
33,031
2,529
51,045
–
–
–
–
29,969
562
81,576
2021
$'000
48,031
48,031
TOTAL
$'000
583,688
4,284
974
46,500
(19,608)
$'000
334,918
–
4,365
175,000
(19,608)
–
(155,618)
(1,523)
–
63,604
556,756
–
2,028
8,061
319
–
1,737
(1,523)
33,031
66,133
557,861
1,242
2,028
8,061
319
29,969
2,299
568,901
601,779
14 Non-current Assets – Investment Properties
Accounting Policy
Investment property, principally comprising freehold office buildings and display space, is held for long term rental
yields.
Completed 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 which
are level 3 valuations in the fair value hierarchy. Changes in fair value are recorded in the Income Statement.
Investment property under construction is carried at cost if its fair value is unable to be reliably determined during
construction but will be reliably determinable when construction is complete. The NZICC car park is carried at cost on
that basis.
146
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Balance at the beginning of the year
Additions
Net (loss)/gain from fair value adjustment
Transfer from property, plant and equipment – NZICC car parks
Transfer from property, plant and equipment – 86 Federal Street
Transfer from property, plant and equipment – 99 Albert Street
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)/gain from fair value adjustment
S
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S
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2022
$'000
124,368
752
(5,400)
–
–
–
119,720
2022
$'000
2,323
(2,485)
(5,400)
(5,562)
2021
$'000
72,400
937
7,386
2,245
9,750
31,650
124,368
2021
$'000
2,148
(2,455)
7,386
7,079
(b) Investment Properties held at 30 June 2020
With the exception of the NZICC car park (which is
referred to below), investment properties were revalued
to fair value on 30 June 2022 by CBRE, a registered valuer
and member of the New Zealand Institute of Valuers and
the Property Institute of New Zealand who have recent
experience in the location and category of the property
being valued.
At 30 June 2021, the fair value of these investment
properties (other than the NZICC car park) was
$95.0 million. The significant assumptions used in the
valuation were:
• capitalisation rate – range from 4.00% to 5.88%; and
•
passing yield (calculated as net rent divided by fair
value) – range from 3.65% to 5.75%.
At 30 June 2022, the fair value of these investment
properties (other than the NZICC car park) was $90.4
million. The significant assumptions used in the valuation
were:
• capitalisation rate – range from 4.25% to 6.25%; and
•
passing yield (calculated as net rent divided by fair
value) – range from 2.80% to 6.00%.
The 30 June 2021 and 30 June 2022 valuations are
sensitive to movements in estimated capitalisation rate
and passing yield. If the assumed capitalisation rate
increased, or passing yield decreased, fair value would
decrease.
(c) NZICC Car Park
As outlined in note 4, under the Car Park Concession
Agreement, Macquarie was granted a concession until
2048 over car parks on the SkyCity Auckland main site
and the NZICC site. When the Car Park Concession
Agreement was brought into effect, approximately 650
car parks on the NZICC site were due to be made available
to Macquarie at a future date. It was initially determined
that, when those car parks were made available, the Car
Park Concession Agreement in relation to those car parks
would be accounted for as a finance lease. However, due
to the NZICC fire (note 5), delivery of these car parks has
been delayed, with the consequence that the Car Park
Concession Agreement in relation to those car parks will
now be accounted for as an operating lease, with the
underlying car parks classified as investment property.
Initially, $27.1 million of costs associated with these
car parks was transferred from property, plant and
equipment to investment properties. In 2021, an
additional $2.2 million was transferred from property,
plant and equipment to investment properties, as a result
of updated NZICC damage estimates on the car parks
prepared by RLB (note 5). No further adjustment has been
made in the current year.
(d) Transfer from Property, Plant and Equipment in 2021
86 Federal Street
At 30 June 2021, seven floors in the building were
reclassified from property, plant and equipment to
investment property.
As SkyCity carries its property, plant and equipment
under the cost model, and its investment property under
the revaluation model, for each floor transferred from
property, plant and equipment to investment property,
the difference between carrying value under the cost
model and fair value was accounted for as a revaluation of
property, plant and equipment (note 22), which resulted in
an increase of $4.3 million in the asset revaluation reserve
at 30 June 2021 (note 30).
99 Albert Street
At 30 June 2021, six floors in the building, car parks
associated with those floors, and ground floor retail
spaces, were reclassified from property, plant and
equipment to investment property.
Notes to the Financial Statements
147
Immediately before reclassification, those floors being transferred from property, plant and equipment to investment
property were revalued to their fair value, with the revaluation accounted for as a revaluation of property, plant and
equipment. This resulted in an impairment of $4.0 million of land and an increase of $4.4 million in the asset revaluation
reserve in relation to buildings (note 30).
15 Current Liabilities – Deferred Licence Value
Accounting Policy
Regulatory reforms granted which are specific to the Group are initially recognised at their fair value when it is probable
that the reforms will be received, and that the Group will comply with all conditions attached.
Regulatory reforms are recognised as an intangible asset (note 23) and included within the value of casino licences.
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.
2022
Opening Balance
Exchange differences
Transfer to property, plant and equipment (note 22)
Transfer to intangible assets (note 23)
Closing balance
2021 – RESTATED
Opening balance
Transfer from non-current liabilities (note 16)
Transfer to property, plant and equipment (note 22)
Transfer to intangible assets (note 23)
Transfer to right-of-use assets (note 9)
Closing balance
SkyCity Adelaide
ADELAIDE
$'000
2,088
65
(2,248)
95
–
153,165
494
(143,323)
(2,942)
(5,306)
2,088
TOTAL
$'000
2,088
65
(2,248)
95
–
153,165
494
(143,323)
(2,942)
(5,306)
2,088
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.
In the current year, the balance of the SkyCity Adelaide deferred licence value was transferred to property, plant and equipment
and intangible assets, due to the construction work having been completed.
16 Non-current Liabilities – Deferred Licence Value
2022
Opening balance
Impact of NZICC Fire (note 5)
Closing balance
2021
Opening balance
Impact of NZICC fire (note 5)
Closing balance
148
AUCKLAND
$'000
207,436
12,560
219,996
214,972
(7,536)
207,436
TOTAL
$'000
207,436
12,560
219,996
214,972
(7,536)
207,436
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 S
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SkyCity Auckland
Following the NZICC fire, the damaged portion of the NZICC was disposed of for financial reporting purposes (note 5). As a
result of this disposal and the estimates detailed in note 5, $165.8 million was released to the Income Statement in the year
ended 30 June 2020 and a further $7.5 million was released in the year ended 30 June 2021.
In the current year as a result of updated damage assessments prepared by RLB, $12.6 million of the above $173.3 million
adjustment has been reversed (note 5).
These amounts are based on the assessment of the damage from the NZICC fire (note 5) and may materially change as
further information becomes available.
17 Income Tax 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 reporting 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 Expense
Current tax expense
Deferred tax (benefit)/expense
Income tax expense
(b) Numerical Reconciliation of Income Tax Expense to Prima Facie Tax (Receivable)/Payable
(Loss)/Profit from continuing operations before income tax expense
Prima facie income tax @ 28%
Tax effects of:
Items not deductible for tax purposes
Items non-assessable for tax purposes
Differences in overseas tax rates
Assets held for sale
Prior period adjustments
NZICC fire capital (income)/expenses
Non-assessable gain on sale
Impairment adjustments
Fair value adjustments
Non-taxable settlement amount
Controlled foreign company regime
Other
Income tax expense
2022
$'000
4,645
(3,818)
827
(32,768)
(9,175)
2,287
(3,150)
(3,581)
(499)
322
10,182
(498)
1,746
935
–
3,006
(748)
827
RESTATED
2021
$'000
33,053
4,138
37,191
193,024
54,047
3,566
(1,865)
(2,156)
390
(1,502)
(8,385)
–
–
2,138
(11,060)
2,108
(90)
37,191
Notes to the Financial Statements
149
The weighted average applicable tax rate was -2.5% (2021: 19.3%). The weighted average tax rate has been significantly
impacted by:
• NZICC fire capital income/expense;
•
•
impairment adjustments;
fair value adjustments;
• sale of Lets Play Live Media Limited; and
• non-taxable settlement amount.
Excluding these items, the weighted average tax rate would have been 17.5% (2021: 28.7%).
18 Deferred Tax Assets
The balance comprises temporary differences attributable to:
Provisions and accruals
Depreciation
Foreign exchange variances
Cash flow hedges
Lease accounting
Tax losses
Other
Net deferred tax assets
Movements:
Balance at beginning of the year
Foreign exchange differences
Charged to the Income Statement (note 17)
Tax credited directly to other comprehensive income (note 30)
Closing balance at 30 June
Deferred tax assets relate to the Australian and other foreign operations.
2022
$'000
6,999
(13,607)
4
80
489
25,407
–
19,372
9,740
263
9,742
(373)
19,372
RESTATED
2021
$'000
8,112
(11,463)
4
453
(382)
12,441
575
9,740
6,910
21
3,088
(279)
9,740
The Group has recognised a deferred tax asset on tax losses of A$76.5 million (2021: A$38.6 million) in relation to Australia
as it has determined it is probable that taxable profits will be derived in future periods against which the tax losses
can be utilised. As noted in note 23, the Group engaged Deloitte to prepare an independent valuation for the Adelaide
cash generating unit for the purposes of impairment testing. A key input into the valuation was the five year forecast
which has been adopted by the Board. This forecast of future earnings has been the basis for the assessment that
future taxable profit will be available against which the temporary difference can be utilised. It is anticipated based on
the five year forecast that tax losses will be fully utilised by the year ending 30 June 2026. The Group reviews future loss
utilisation at each reporting date.
150
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 19 Deferred Tax Liabilities
The balance comprises temporary differences attributable to:
Provisions and accruals
Depreciation
Lease accounting
Cash flow hedges
Asset revaluation reserve
Other
Net deferred tax liabilities
Movements:
Balance at beginning of the year
Charged to the Income Statement (note 17)
Tax debited directly to other comprehensive income (note 30)
Transfer out for discontinued operations
Closing balance at 30 June
Deferred tax liabilities relate to the New Zealand operations.
20 Imputation and Franking Credits
Balances available for use in subsequent reporting periods
Imputation credit account (New Zealand)
Franking credit account (Australia) (A$)
2022
$'000
(3,676)
64,314
(219)
(1,749)
1,921
–
60,591
51,975
5,924
2,681
11
60,591
2022
$'000
40,292
13,951
As required by the Income Tax Act 2007, the imputation credit account had a credit balance as at 31 March 2022.
21 Non-current Liabilities – Lease Income in Advance
Lease income in advance
2022
$'000
29,501
29,501
S
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N
E
M
E
T
A
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S
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A
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N
A
N
I
F
I
RESTATED
2021
$'000
(9,388)
63,622
(246)
(4,430)
1,921
496
51,975
39,903
7,226
4,846
–
51,975
2021
$'000
51,601
13,951
2021
$'000
36,310
36,310
As detailed in note 14(c), the approximately 650 further NZICC car parks to be delivered as part of the Car Park
Concession Agreement will be accounted for as an operating lease when the car parks have been delivered.
The payment received from Macquarie in relation to the Car Park Concession Agreement was allocated between the
various car parks that Macquarie was granted a concession to based on their respective fair values.
Notes to the Financial Statements
151
22 Property, Plant and Equipment
Accounting Policy
Property, plant and equipment is stated at historical cost less accumulated depreciation and accumulated impairment
losses. 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 fit out
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 reporting 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.
BUILDINGS
AND
FITOUT
PLANT,
EQUIPMENT
AND MOTOR
VEHICLES
FIXTURES
AND
FITTINGS
CAPITAL
WORK IN
PROGRESS
$'000
$'000
$'000
$'000
LAND
$'000
TOTAL
$'000
At 1 July 2020
Cost
211,738
783,956
391,221
Accumulated depreciation and impairment
–
(326,492)
(299,569)
Net book amount
211,738
457,464
91,652
126,345
(97,539)
28,806
739,242
2,252,502
–
(723,600)
739,242
1,528,902
Year Ended 30 June 2021
Opening net book amount
211,738
457,464
–
–
–
–
159
44,852
296,760
(107,113)
(1,674)
(3,765)
(15,262)
(11,944)
–
(272)
–
–
–
–
–
(8,834)
185,968
91,652
55
36,600
53,583
28,806
739,242
1,528,902
8
12,642
35,514
1,115
1,337
41,874
135,968
(385,857)
–
(21,956)
(14,254)
–
–
–
(262)
–
–
–
–
–
–
–
–
–
(143,323)
(5,439)
(27,206)
(2,245)
(2,245)
–
(534)
(34,713)
(34,713)
–
–
(73,151)
(8,834)
(27,199)
(35,759)
(10,193)
–
–
–
648,942
123,913
52,523
359,416
1,370,762
Exchange differences
Net additions/transfers/disposals
Adelaide expansion
Transfer of Adelaide deferred licence (note 15)
Transfer to investment properties
– 86 Federal Street (note 14)
Transfer to investment properties
– 99 Albert Street (note 14)
Transfer to investment properties
– NZICC car parks (note 14)
Assets held for sale (note 27)
NZICC fire disposal
Depreciation charge
Impairment (note 6)
Closing net book amount
152
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 At 30 June 2021
Cost
185,968
1,001,903
445,398
159,320
359,416
2,152,005
Accumulated depreciation and impairment
–
(352,961)
(321,485)
(106,797)
–
(781,243)
Net book amount
185,968
648,942
123,913
52,523
359,416
1,370,762
S
T
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S
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Year Ended 30 June 2022
Opening net book amount
185,968
648,942
Exchange differences
Net additions/transfers/disposals
Adelaide expansion
Transfer of Adelaide deferred licence (note 15)
Impairment (note 6)
Assets held for sale (note 27)
NZICC fire adjustment
Depreciation charge
–
–
–
–
(1,846)
(16,370)
–
–
7,308
1,770
1,446
(1,093)
(1,057)
–
–
123,913
1,441
18,339
1,832
(891)
–
–
–
52,523
359,416
1,370,762
788
1,290
473
(264)
–
–
–
441
102,163
(3,751)
–
–
9,978
123,562
–
(2,248)
(2,903)
1,120
(15,250)
34,270
34,270
(28,895)
(36,500)
(10,096)
–
(75,491)
Closing net book amount
167,752
628,421
108,134
44,714
493,659
1,442,680
At 30 June 2022
Cost
167,752
996,587
402,639
146,724
493,659
2,207,361
Accumulated depreciation and impairment
–
(368,166)
(294,505)
(102,010)
–
(764,681)
Net book amount
167,752
628,421
108,134
44,714
493,659
1,442,680
(a) Capitalised Borrowing Costs
Borrowing costs of $1.2 million have been capitalised in the
current year relating to capital projects (2021: $7.8 million)
using the Group's weighted average cost of debt of 4.51%
across the year (2021: 5.68%).
its revalued amount. This resulted in the recognition of an
impairment of land of $4.8 million.
In 2022, an impairment of buildings of $1.1 million was
recognised for floors that had a valuation lower than their
carrying value.
(b) Transfers to Investment Property
(c) Capitalisation of Adelaide Expansion
86 Federal Street
In 2021, the reclassification of the seven floors from
property, plant and equipment carried under the cost
model, to investment property carried under the fair value
model, was accounted for as a revaluation of property,
plant and equipment and resulted in the recognition of a
$4.3 million increase in the asset revaluation reserve. There
was no change in carrying value of the three floors that
remained classified as property, plant and equipment.
In 2022, there was no change in carrying value of the three
floors that remained classified as property, plant and
equipment.
99 Albert Street
In 2021, the reclassification of the six floors, associated
car parks, and ground floor retail spaces from property,
plant and equipment carried under the cost model, to
investment property carried under the fair value model,
was accounted for as a revaluation of property, plant
and equipment and resulted in the recognition of an
impairment of $4.0 million of land and an increase of
$4.4 million in the asset revaluation reserve in relation to
buildings.
Where the valuation of a floor that was being retained
as property, plant and equipment was lower than the
carrying value of that floor, the floor was written down to
In the current year, minor works were undertaken to
complete the Adelaide casino expansion and hotel
development. As a result, the remaining capital work in
progress was capitalised in the Group's fixed asset register
and allocated to the appropriate asset categories. This
includes the allocation of the Adelaide Deferred Licence
Value of $2.2 million (2021: $151.7 million) A$1.9 million
(2021: A$141.2 million) (note 15).
(d) Encumbrances
A memorandum of encumbrance is registered against
the certificate of title 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 agreement between the Crown and the Group
for the construction of the NZICC (NZICC Agreement),
Notes to the Financial Statements
153
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
Agreement.
23 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 is included in intangible assets. Goodwill is not
amortised but is instead 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.
(ii) Acquired Software
Acquired computer software licences that are not SaaS arrangements are capitalised at cost (which includes acquisition
cost and any costs incurred in bringing the software into use). Subsequent to initial recognition they are carried at cost
less accumulated amortisation and accumulated impairment losses. Amortisation is calculated on a straight-line basis
over the useful life, which ranges from three to 15 years.
(iii) Gaming Machine Entitlements
Gaming machine entitlements (GMEs) are required to operate gaming machines in South Australia. Each GME gives the
licensee the right to own and operate a single gaming machine at the licensee’s venue.
The number of GMEs held by a licensee cannot exceed the maximum number of gaming machines which have been
approved for the venue. SkyCity Adelaide currently owns 1,080 GMEs and is licensed to hold a maximum of 1,500.
GMEs can be purchased or sold during trading rounds by an eligible person via the South Australian Government’s
approved trading system. Trading rounds are usually held at least twice a year at the discretion of the Liquor and
Gambling Commissioner. The trading price of a GME is determined by a number of factors, including the number of
sellers and buyers and the minimum and maximum prices offered.
SkyCity Adelaide’s GMEs are treated as intangible assets. They are carried at cost less accumulated amortisation and
impairment losses. They are amortised over the term of the exclusivity period, which is to 30 June 2035.
(iv) Casino Licences and Regulatory Reforms
The Group's casino licences that have:
•
a finite useful life are carried at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is charged to profit or loss on a straight-line basis over the legal licence term; and
• an indefinite useful life are carried at cost less accumulated impairment losses.
Determining whether a casino licence has a finite or indefinite useful life is a key judgement and involves assessment of
the terms and conditions, and in particular the renewal terms, of the relevant licence.
Regulatory reforms granted by a government that are specific to the Group are accounted for as intangible assets
arising from a government grant. Accordingly, the reforms are initially recognised at their fair value when there is
reasonable assurance that the reforms will be received, and the Group will comply with all conditions attached to them.
Regulatory reforms are recognised as an intangible asset and included within the value of casino licences. 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.
(v) Impairment of Intangible Assets
Intangible assets, including goodwill, that have an indefinite useful life are tested for impairment annually (or more
frequently if events or changes in circumstances indicate that the asset might be impaired). Goodwill is allocated to
cash generating units for the purpose of impairment testing.
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Intangible assets that have a finite useful life are assessed for indicators of impairment annually and tested for
impairment if an indicator of impairment is found.
Impairment testing is done by comparing the carrying value of the asset to its 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.
Impairment on goodwill is not subsequently reversed, but impairment on other assets may be reversed.
The Queenstown Wharf casino has remained closed since 23 March 2020 (at the commencement of the first COVID-19
lockdown in New Zealand) due to the detrimental effect on the local Queenstown economy from the COVID-19
pandemic’s ongoing impacts on the international tourism market. In the current period, the Queenstown Wharf
casino licence was fully impaired (which resulted in the recognition of an impairment loss of $4.4 million) due to
management’s decision not to reopen the Queenstown Wharf casino in the foreseeable future.
GOODWILL
CASINO
LICENCES
COMPUTER
SOFTWARE
GAMING
MACHINE
ENTITLEMENTS
$'000
$'000
$'000
$'000
At 30 June 2020 (RESTATED)
Cost
Accumulated amortisation
Net book amount
Movements in the Year Ended 30 June 2021
Exchange differences
Additions
Adelaide expansion
Transfer of Adelaide deferred licence (note 15)
Assets classified as held for sale
Amortisation charge
Closing net book amount
At 30 June 2021 (RESTATED)
Cost
Accumulated amortisation
Net book amount
Movements in the Year Ended 30 June 2022
Exchange differences
Additions
Adelaide expansion
Transfer of Adelaide deferred licence (note 15)
Impairment charge
Amortisation charge
37,694
777,118
–
(225,281)
37,694
551,837
–
–
–
–
(1,908)
–
35,786
453
–
–
–
–
(2,629)
549,661
35,786
778,303
–
(228,642)
35,786
549,661
–
–
–
–
–
–
4,238
–
–
–
(4,390)
(2,622)
Closing net book amount
35,786
546,887
At 30 June 2022
Cost
Accumulated amortisation
Net book amount
35,786
785,310
–
(238,423)
35,786
546,887
126,142
(85,081)
41,061
9
5,660
5,538
(1,677)
(20)
(10,703)
39,868
135,611
(95,743)
39,868
235
9,822
(16)
95
–
(10,455)
39,549
132,656
(93,107)
39,549
–
–
–
–
–
3,088
(1,265)
–
(73)
1,750
1,823
(73)
1,750
49
–
–
–
–
(124)
1,675
1,879
(204)
1,675
TOTAL
$'000
940,954
(310,362)
630,592
462
5,660
8,626
(2,942)
(1,928)
(13,405)
627,065
951,523
(324,458)
627,065
4,522
9,822
(16)
95
(4,390)
(13,201)
623,897
955,631
(331,734)
623,897
Notes to the Financial Statements
155
CASINO LICENCE
CONTRACT TERM
SkyCity Auckland
Casino (indefinite
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 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 carrying amount of the casino licence is $405.0 million (2021: $405.0 million).
SkyCity Adelaide
(finite useful life)
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 are amortised over 20 years or 71
years depending on whether the incremental benefit is associated with the exclusivity period or
the full licence period.
The carrying value of the casino licence is A$128.1 million (2021: A$130.6 million) (NZ$141.9 million
and NZ$140.3 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.
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 $0.0 million (2021: $4.4 million).
(a) Software as a Service Arrangements
In March 2021, the IFRS Interpretations Committee (Committee), which is responsible for interpreting the application of
IFRS, issued an agenda decision that the costs incurred in configuring and customising software provided under SaaS
arrangements must be expensed unless they:
• create an intangible asset, separate from the software, that the customer controls; or
•
are paid to the supplier of the cloud based software for significant customisation work (in which case the costs are
recorded as a prepayment for services and amortised over the expected term of the SaaS arrangement).
156
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The Committee’s agenda decision was ratified by the International Accounting Standards Board in April 2021.
As a result of the Committee’s decision, during the year the Group revised its accounting policy in relation to
configuration and customisation costs incurred in implementing SaaS arrangements. Until the current period,
the Group’s accounting policy has been to capitalise the costs of configuring and customising SaaS arrangements
as intangible assets. The revised policy is that such costs are expensed as incurred, unless the requirements for
capitalisation established by the Committee’s decision are met.
This change in accounting policy has been implemented retrospectively, by restating the opening equity position (as
at 1 July 2020) and the comparative financial statements. To determine the level of restatement required, the Group
identified all SaaS arrangements for which configuration and customisation costs had been capitalised, but not fully
amortised at 1 July 2020, to determine which assets no longer met the requirements for capitalisation under the Group’s
revised accounting policy. Those assets that did not meet the requirements for capitalisation under the Group’s revised
accounting policy were derecognised.
The impact of this change in accounting policy is presented in the tables below.
The primary impacts of the change in accounting policy are:
• a net reduction in intangible assets of $18.9 million at 1 July 2020 and $19.3 million at 30 June 2021;
• a net decrease in profit after income tax of $0.3 million at 30 June 2021; and
•
a decrease in net operating cash inflows of $3.4 million at 30 June 2021 (offset by an equal decrease in net investing
cash outflows at the same date).
STATEMENT OF FINANCIAL POSITION
Balances as at 1 July 2020
Intangible assets
Deferred tax asset
Deferred tax liability
Net assets
Retained earnings
Total equity
INCOME STATEMENT
Balances as at 30 June 2021
ICT related expenses
Depreciation and amortisation
Profit before income tax
Income tax expense
Profit after income tax
PREVIOUSLY
REPORTED
ADJUSTMENT
RESTATED
$'000
$'000
$'000
649,531
6,877
(45,175)
1,434,607
179,641
1,434,607
(15,835)
(89,519)
193,460
(37,334)
156,126
(18,939)
630,592
33
5,272
(13,634)
(13,634)
(13,634)
(3,400)
2,963
(436)
143
(293)
6,910
(39,903)
1,420,973
166,007
1,420,973
(19,235)
(86,556)
193,024
(37,191)
155,833
STATEMENT OF FINANCIAL POSITION
$'000
$'000
$'000
$'000
PREVIOUSLY
REPORTED
OPENING
ADJUSTMENT
FOR FY20
ADJUSTMENT
FY21
RESTATED
Balances as at 30 June 2021
Intangible assets
Deferred tax asset
Deferred tax liability
Deferred licence value
Net assets
Retained earnings
Other equity balances
Total equity
646,326
(18,939)
9,344
(57,031)
(1,963)
1,651,018
335,767
(22,972)
1,651,018
33
5,272
–
(13,634)
(13,634)
–
(13,634)
(322)
363
(216)
(125)
(300)
(293)
(7)
(300)
627,065
9,740
(51,975)
(2,088)
1,637,084
321,840
(22,979)
1,637,084
Notes to the Financial Statements
157
STATEMENT OF CASH FLOWS
Balances as at 30 June 2021
Payments to suppliers and employees
Net cash inflow from operating activities
Purchased intangible assets
Net cash out flow from investing activities
PREVIOUSLY
REPORTED
ADJUSTMENT
FY21
RESTATED
$'000
$'000
$'000
(397,713)
288,185
(5,799)
(254,979)
(3,400)
(3,400)
3,400
3,400
(401,113)
284,785
(2,399)
(251,579)
In the current period, if the previous policy had been retained, $0.9 million of software configuration and customisation
costs would have been capitalised to intangible assets and $2.7 million of amortisation would have been expensed.
However, under the new accounting policy, the $0.9 million of configuration and customisation costs were expensed as
incurred and amortisation on assets previously capitalised not recognised, as those assets had been derecognised at the
beginning of the current period (i.e. 1 July 2021). As a result of this change in policy, income tax expense decreased and
deferred tax liability increased by $0.5 million respectively and loss for the period decreased by $1.3 million.
(b) Impairment Tests for Intangibles with Indefinite Lives
Goodwill and the casino licences of SkyCity Auckland, SkyCity Hamilton and SkyCity Wharf have indefinite useful lives
and consequently are tested annually for impairment.
2022
Goodwill
Casino licence
Total
2021
Goodwill
Casino licence
Total
SKYCITY
AUCKLAND
OTAGO
CASINOS
LIMITED*
SKYCITY
HAMILTON*
$'000
$'000
$'000
–
405,000
405,000
–
405,000
405,000
–
–
–
–
4,391
4,391
35,786
–
35,786
35,786
–
35,786
TOTAL
$'000
35,786
405,000
440,786
35,786
409,391
445,177
* SkyCity Hamilton and SkyCity Wharf are included within the "Other NZ Operations" segment in note 2.
Other than SkyCity Wharf, 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 International Business where those cash flows relate to the relevant cash generating unit. For all of these assets, the
calculated value in use significantly exceeds carrying value. The value of the SkyCity Wharf casino licence is the potential
ability to utilise the licence to enhance the Group's gaming offering.
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.
(c) Key Assumptions used for Value in Use Calculations of Cash Generating Units
SkyCity Auckland
SkyCity Hamilton
EBITDA MARGIN
TERMINAL
GROWTH RATE
PRE‑TAX
DISCOUNT RATE
2022
29.7%
43.5%
2021
40.8%
47.9%
2022
2.5%
2.5%
2021
2.0%
2.0%
2022
13.9%
13.9%
2021
11.5%
11.5%
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.
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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.
(d) Impairment Review of the Adelaide Casino Licence
In the 2020 financial year the Group engaged Deloitte to independently determine the recoverable amount of the
Adelaide cash generating unit (CGU), for the purposes of determining whether the SkyCity Adelaide casino licence was
impaired. This valuation resulted in a A$150 million impairment of the SkyCity Adelaide casino licence. In 2021 another
independent valuation was obtained from Deloitte, but this did not result in the recognition of further impairment, or
the reversal of previously recognised impairment. In the current year Deloitte was again engaged to independently
determine the recoverable amount of the Adelaide CGU for the purposes of determining whether the SkyCity Adelaide
casino licence was impaired. A key input to Deloitte's assessment was the updated Board approved five year forecast for
SkyCity Adelaide. The recoverable amount for the current year was determined using the fair value less costs of disposal
approach (which is a level 3 measurement in the fair value hierarchy). The valuation resulted in a range - taking the
midpoint of the range implies an impairment reversal of A$2.9 million (NZ$3.2 million) (with the low end of the range
being an increase in impairment of A$17.4 million (NZ$19.3 million) and the high end of the range being a reversal in
impairment of A$25.6 million (NZ$28.4 million)).
The valuation of the CGU is highly sensitive to changes in earnings estimates. The unknown future impact of COVID-19,
regulatory matters and customer responses to enhancements in the SkyCity Adelaide AML/CTF Program, create a
heightened level of uncertainty that makes forecasting challenging. Small changes in assumptions could lead to an
increase in, or a reversal of, impairment of the CGU. Given these uncertainties, management determined that the
current period valuation did not warrant an increase in, or a reversal of, the impairment recognised in 2020 on the
SkyCity Adelaide casino licence of A$150 million.
The 2021 and 2022 independent valuations were based on the following key estimates:
• compound annual EBITDA growth rate from 2023 to 2027 = 10.2% (2021: 2022 to 2026 = 8.2%);
•
terminal growth rate = 2.5% (2021: 2.0%); and
• discount rate = 11.0% (2021: 10.8%).
EBITDA Growth
Determining an appropriate growth rate has been made difficult by the impact of COVID 19 on the current and prior
periods' results and its expected impact on future years. Given the Adelaide expansion has not been able to operate at
full capacity for the majority of the time since opening (December 2020) due to COVID-19 restrictions, a significant initial
EBITDA uplift is expected over financial years 2023 and 2024. Further growth is then expected until the 2026 financial
year, with growth expected to level off from then onwards. Growth estimates have considered a number of factors,
including an expected increase in gaming machine market share, an expected increase in premium and VIP gaming
activity, an expected increase in visitors to the area due to the new hotel and restaurants and an expected positive
impact from recent developments in the surrounding precinct (including a new car park building).
Discount Rate
The discount rate has been independently calculated by Deloitte. It reflects the current market assessment of the risks
specific to SkyCity Adelaide, taking into account the time value of money and individual risks of the underlying assets,
including those arising from COVID-19 and regulatory reviews, that have not been incorporated in the cash flow estimates.
The impairment assessment is sensitive to changes in the discount rate and information on this sensitivity is provided
below.
Valuation Sensitivities
The impact of COVID-19 on the Group has already been wide-ranging and significant. Given 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:
•
•
•
an EBITDA increase/decrease of 5.0% would lead to an increase/decrease in the enterprise value of approximately
A$23 million (2021: an increase/decrease of 5.0% would have led to a variance in enterprise value of A$26 million);
a 0.5% increase in terminal growth rate (to 3.0%) would lead to an increase in the enterprise value of approximately
A$20 million (2021: an increase of 0.5% would have led to an increase in enterprise value of approximately A$19 million),
while a decrease in terminal growth rate of 0.5% (to 2.0%) would lead to a decrease in the enterprise value of approximately
A$18 million (2021: a decrease of 0.5% would have decreased the enterprise value by A$17 million); and
a 0.5% increase in the discount rate (to 11.5%) would lead to a decrease in the enterprise value of A$21 million
(2021: A$21 million), while a decrease in discount rate of 0.5% (to 10.5%) would lead to an increase in the enterprise
value of A$23 million (2021: A$24 million).
Notes to the Financial Statements
159
The valuation assumes no repeat of the previous COVID-19 lockdown in Adelaide, which is a key judgement and assumption.
Annual Impairment Review
The Group will complete an annual impairment review of the SkyCity 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 recognised in 2020. Decreases in the fair value less costs of disposal may result in the
recognition of an additional impairment charge.
24 Investments in Associates
On 1 April 2022, the Group made an equity investment of €25 million (NZ$42.1 million) in GiG, in return for which GiG issued
13,487,500 ordinary shares to SkyCity. These shares represent approximately 11.0% of GiG’s equity and voting rights. The
investment includes notional goodwill of €23.6 million (NZ$39.7 million). Under the terms of the share purchase agreement,
SkyCity also gained entitlement to appoint a director to GiG. That director appointment was made on 4 April 2022.
Although the Group holds less than 20% of the equity shares of GiG, the Group exercises significant influence by virtue of
its contractual right to appoint a director to GiG's Board, which gives the Group the power to participate in the financial
and operating policy decisions of GiG.
GiG is a European-based online gaming platform provider and media services operator that is listed on the Oslo and
Stockholm stock exchanges. As outlined in note 3, the Group earns revenue from an online casino using technology
developed by GiG and under a Malta gaming licence held by Silvereye Entertainment Limited (a subsidiary of GiG).
SkyCity's investment in GiG supported the funding of GiG’s acquisition of France-Pari/Sportnco (Sportnco). Sportnco is
a European-based business-to-business online sports and player account management provider, licensed in regulated
and high-growth markets globally.
The carrying value of SkyCity's investment in GiG is:
Shares in associates
2022
$'000
42,136
2021
$'000
–
Due to the timing of GiG’s quarterly results releases, the Group’s investment in GiG is accounted for using information to 31 March.
At 31 March 2022, GiG has:
•
•
•
•
total current assets of €35.7 million;
total non-current assets of €60.6 million;
total current liabilities of €25.9 million; and
total non-current liabilities of €57.2 million.
As at 30 June 2022, the fair value of the Group's interest in GiG, which is listed on the Oslo Stock Exchange, was €21.1 million
(NZ$35.5 million). Although the fair value of the investment is below cost at the reporting date, management has determined
that the investment is not impaired, principally because GiG has demonstrated strong revenue and earnings growth in the
last two years and is targeting continued organic revenue growth and because the movement in its share price reflects
general market fluctuations.
25 Receivables and Prepayments
Accounting Policy
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less impairment.
Net trade receivables
Trade receivables (gross)
Impairment
Trade receivables (net)
Sundry receivables
Prepayments
Total receivables and prepayments
2022
$'000
10,827
(4,543)
6,284
1,776
17,766
25,826
2021
$'000
13,606
(6,206)
7,400
1,898
24,107
33,405
Due to the short-term nature of these receivables, their carrying value approximates fair value.
26 Cash and Cash Equivalents
Cash at bank
Cash in house
Total cash and bank balances
27 Assets Held for Sale
Accounting Policy
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
I
F
I
2022
$'000
8,779
39,919
48,698
2021
$'000
15,537
34,403
49,940
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.
Land
Buildings
Plant and equipment
Intangibles
Total
2022
$'000
24,492
2,151
3
–
26,646
2021
$'000
8,965
2,359
265
1,928
13,517
Assets held for sale include certain development land in Queenstown and the Little Mindil site in Darwin (2021: Darwin
Little Mindil site and Lets Play Live Media).
During the current period, the sale of Lets Play Live Media, which was classified as held for sale at 30 June 2021, was
completed and a gain on sale of $1.8 million was recognised as other income (note 4). The consideration received for the
sale included $2.0 million of convertible notes issued by the acquirer, which are recognised as other non-current assets.
The Queenstown land has been classified as held for sale in the current period and has been written down to fair value
less the costs of disposal, which has resulted in an impairment loss of $1.8 million being recognised in the Income
Statement. Fair value was measured on a comparable sales basis by Bower Valuations Limited, which has recent
experience in the location and category of the property being valued.
At the reporting date, the Little Mindil site in Darwin was subject to a sale and purchase agreement and the purchaser
had partially paid the purchase price. Subsequent to the reporting date, the balance of the purchase price was received
on 27 July 2022, and on 10 August title was transferred to the purchaser and the asset was derecognised (note 39).
28 Payables and Provisions
Accounting Policy
Accounts payable are initially recognised at fair value, net of transaction costs, and thereafter carried at amortised cost.
A provision is recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Notes to the Financial Statements
161
Trade payables
Deferred income
Accrued expenses
Employee benefits
NZICC obligation (note 5)
Other provisions
Total payables and provisions
2022
$'000
21,128
21,899
67,733
45,227
30,487
725
187,199
2021
$'000
29,541
13,833
57,341
52,077
36,496
10,877
200,165
Other provisions primarily relate to the repayment of the New Zealand Government wage subsidy and Australian
JobKeeper Payments (for 2021) (note 6).
The carrying amounts of trade and other payables approximates their fair value, due to their short-term nature.
29 Share Capital
2022
Shares
2021
Shares
2022
$'000
2021
$'000
Opening balance of ordinary shares issued
760,205,209
739,196,806
1,338,223
1,288,287
Share rights issued for employee services
Net issue of treasury shares
Equity raising
–
–
–
–
–
21,008,403
2,292
41
–
3,253
(2,054)
48,737
760,205,209
760,205,209
1,340,556
1,338,223
All ordinary shares rank equally with one vote attached to each fully-paid ordinary share.
Included within the number of shares is 2,697,338 treasury shares (2021: 3,394,058) 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 (note 33). 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
In the prior period a share purchase plan was completed on 9 July 2020 and involved the issue of 21,008,403 new shares
at $2.38 per share raising a total of $50.0 million. Costs associated with the placement of $1.3 million were deducted from
the share proceeds.
30 Reserves
Reserves
Asset revaluation reserve
Hedging reserve – cash flow hedges
Foreign currency translation reserve
Cost of hedging reserve
Total reserves
162
2022
$'000
12,770
(4,564)
(11,797)
(854)
(4,445)
2021
$'000
12,770
(12,058)
(22,478)
(1,213)
(22,979)
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Movements
Asset Revaluation Reserve
Opening balance
Revaluation
Deferred tax
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
Closing balance
Cost of Hedging Reserve
Opening balance
Revaluations
Transfer to finance costs
Deferred tax
Closing balance
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
I
F
I
2022
$'000
12,770
–
–
12,770
(12,058)
13,777
(3,369)
(2,914)
(4,564)
(22,478)
10,681
(11,797)
(1,213)
37
462
(140)
(854)
2021
$'000
5,936
8,755
(1,921)
12,770
(19,913)
(24,859)
35,790
(3,076)
(12,058)
(17,802)
(4,676)
(22,478)
(1,542)
(6)
463
(128)
(1,213)
31 Derivative Financial Instruments
Accounting Policy
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured 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:
• hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or
•
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.
Cash Flow Hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognised as 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.
Notes to the Financial Statements
163
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.
Current Assets
Interest rate swaps – cash flow hedges
Forward foreign exchange contracts
Total current derivative financial instrument assets
Non-current Assets
Interest rate swaps – cash flow hedges
Cross currency interest rate swaps – cash flow hedges*
Total non-current derivative financial instrument assets
Current Liabilities
Forward foreign currency contracts
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
2022
2021
2022
2021
$'000
Notional Value
$'000
Notional Value
$'000
Fair Value
$'000
Fair Value
50,000
20,946
70,946
80,000
160,927
240,927
51,943
51,943
–
30,826
30,826
–
142,898
142,898
–
–
–
–
130,000
130,000
200
163
363
1,134
10,464
11,598
12
12
–
–
11,949
–
156
156
–
4,109
4,109
–
–
7,528
7,528
(3,263)
*A component of the interest margin in US$100.0 million of these cross currency interest rate swaps (CCIRS) is treated as a fair value hedge.
32 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.
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 USPP 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 the USPP notes detailed in note 11) has been fully hedged by way of
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 the Treasury Policy. All IRS and CCIRS are in designated hedging relationships that are highly
effective.
164
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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 5). 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.
(c) Liquidity Risk
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 11.
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
160,730
115,000
30 June 2022
Bank facility
USPP
New Zealand bonds
Car park concession liability
Lease liabilities
Total committed debt facilities
Total drawn debt
Future contracted interest on drawn debt
Future interest of lease liabilities
Future contracted interest on CCIRS/IRS
Total drawn debt and derivatives
–
–
–
–
1,764
1,764
1,751
8,043
3,155
427
13,376
–
–
–
1,812
162,542
79,798
7,562
3,133
522
91,015
–
–
–
3,947
118,947
3,917
15,291
6,142
1,053
115,000
157,471
175,000
–
14,444
461,915
–
390,730
72,401
–
49,195
99,139
229,872
175,000
49,195
121,106
220,735
965,903
346,809
220,278
652,553
30,704
2,594
64,194
17,171
560
300,966
330,567
–
2,562
26,403
395,244
523,838
1,049,876
Notes to the Financial Statements
165
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 2021
Bank facility
USPP
New Zealand bonds
Car park concession liability
Lease liabilities
Total committed debt facilities
Total drawn debt
Future contracted interest on drawn debt
Future interest of lease liabilities
Future contracted interest on CCIRS/IRS
–
–
–
–
1,400
1,400
1,400
7,280
1,702
1,101
360,752
85,000
–
–
–
–
–
–
85,000
151,580
–
–
–
530,752
70,231
221,811
175,000
175,000
47,167
47,167
118,807
1,615
3,457
11,513
100,822
362,367
49,645
7,157
1,453
1,083
88,457
248,093
393,220
1,093,537
3,457
14,433
2,567
1,626
163,092
36,096
5,557
1,040
393,221
10,769
610,815
75,735
329,625
340,904
–
4,850
Total drawn debt and derivatives
11,483
59,338
22,083
205,785
733,615
1,032,304
(d) Fair Value Estimation
Other than the New Zealand bonds, which are listed on the NZDX and therefore level 1 in the fair value hierarchy, all
SkyCity financial instruments that are carried at fair value, which includes CCIRS, IRS and forward foreign currency
contracts, are valued using level 2 in the fair value 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.
Specific valuation techniques used to value financial instruments include:
•
•
the fair value of IRS and CCIRS 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 reporting
date, with the resulting value discounted back to present value.
Further details on derivatives are provided in note 31.
(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 cover ratio
2022
4.6 x
3.8 x
2021
2.3 x
6.2 x
Ratios for 2022 have been significantly distorted due to the impact of COVID-19 on 2022 EBITDA due to closures.
166
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33 Share-Based Payments
Accounting Policy
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 reporting 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 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 2022, the interest-free loans relating to the LTI
Plan total $3,889,982 (2021: $7,152,885).
2021 Chief Executive Officer Incentive Shares
(CEO Plan)
Under the terms of his employment agreement, the
CEO will be issued 157,347 ordinary SkyCity shares on
16 November 2022. There are no performance targets
associated with these shares (other than continued
employment during the period from his commencement
date to November 2022). The CEO will also receive a cash
payment equivalent to the cash dividends declared and
paid by SkyCity on shares during the 12-month period
preceding the anniversary of the commencement date.
CEO Restricted Share Rights (CEO RSR Grant)
On 21 December 2021 a one-off issue of restricted share
rights (RSRs) was granted to the CEO. This grant is subject
to the rules of the SkyCity Restricted Share Rights Plan, as
amended by the specific terms of the CEO RSR Grant.
Each RSR confers a right to receive one ordinary share
in the Company. There are no performance measures
associated with the vesting of the RSRs under the CEO
RSR Grant (other than continued employment by the
Company at the respective vesting dates being):
•
•
8 September 2024 in respect of 50% of the RSRs; and/or
8 September 2025 in respect of the remaining 50% of
the RSRs.
Each vested RSR may be exercised on or before the
termination date (being 8 September 2026) by paying
the exercise price of NZ$3.237 per RSR, as reduced by the
aggregate cash amount per share of any dividends paid
by the Company between 8 September 2021 and the
relevant date of exercise of the RSR. No dividends will be
paid on the RSRs.
Performance Incentive Plan (PIP)
The PIP 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 RSRs of
an amount equivalent to between 10% and 50% of their
base salary. RSRs (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 and
until:
•
•
the first anniversary of the Declaration Date in respect
of 50% of the RSRs; and
the second anniversary of the Declaration Date in
respect of the remaining 50% of the RSRs.
However, if a participant’s deferred short term incentive
entitlement in any financial year is to RSRs 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 RSRs to be issued to the participant), the RSRs
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 RSRs will be issued to staff after the finalisation of
the Group’s results.
2018 SkyCity Restricted Share Rights Plan (2018 RSR
Plan)
A prior plan, the 2018 Short Term Incentive Plan, was
replaced with the 2018 RSR Plan for 116 staff, with RSRs
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
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.
Notes to the Financial Statements
167
Outstanding Share Rights
Movements in the number of share rights outstanding are as follows:
GRANT DATE
EXPIRY DATE
2022
LTI Plan
23/08/17
22/08/18
28/08/19
17/09/20
08/09/21
CEO Plan
16/11/20
16/11/21
23/08/21
22/08/21
28/08/22
17/09/23
08/09/24
16/11/21
16/11/22
CEO RSR Plan
08/09/21
08/09/26
PIP
06/09/19
10/09/19
07/09/21
07/09/21
Total
2021
LTI Plan
24/08/16
23/08/17
22/08/18
28/08/19
17/09/20
CEO Plan
06/09/21
10/09/21
07/09/23
07/09/23
24/08/20
23/08/21
22/08/21
28/08/22
17/09/23
16/11/20
16/11/21
2018 RSR Plan
PIP
06/09/19
10/09/19
06/09/19
10/09/19
Total
06/09/20
10/09/20
06/09/21
10/09/21
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
750,883
376,019
420,418
556,986
–
–
–
–
–
233,805
–
(750,883)
(62,670)
(313,349)
–
–
–
166,003
–
(166,003)
–
–
157,347
3,947,368
–
–
–
–
–
–
–
–
–
–
–
–
420,418
556,986
233,805
–
157,347
3,947,368
–
–
666,092
103,502
459,327
8,720
–
–
–
–
(459,327)
(8,720)
688,834
122,860
–
–
(22,742)
(19,358)
2,738,356
5,150,214
(696,720)
(1,106,332)
6,085,518
380,000
850,883
434,035
484,638
–
–
–
–
–
–
642,067
166,003
–
–
–
–
–
–
–
–
–
–
–
(1,808,708)
(503,744)
(23,047)
–
–
503,744
23,047
472,291
8,720
(380,000)
(100,000)
(58,016)
(64,220)
(85,081)
–
–
–
–
–
750,883
376,019
420,418
556,986
166,003
–
–
–
(12,964)
459,327
–
8,720
4,966,066
808,070
(2,335,499)
(700,281)
2,738,356
11/09/18
01/07/20
1,808,708
The weighted average remaining contractual life of rights outstanding at the end of the period was 3.08 years
(2021: 0.74 years).
168
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
I
F
I
Fair Values
Fair Value of Share Rights Granted (LTI Plan)
The assessed fair value at grant date of the rights granted on 8 September 2021 was $1.40 (17 September 2020 was $0.96).
This was calculated using the single index model by Ernst & Young Transaction Advisory Services Limited.
The valuation inputs for the rights granted on 8 September 2021 included:
•
rights are granted for no cash consideration;
• exercise price: nil (17 September 2020: nil); and
• share price at grant date: $3.24 (17 September 2020: $2.94).
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 Executive Officer Incentive Shares (CEO Plan)
The assessed fair value at grant date of the incentive shares at 16 November 2021 was $2.53 (16 November 2020 was $2.62).
This was calculated using the European call option model by Ernst & Young Transaction Advisory Services Limited.
The valuation inputs for the commencement shares on 16 November 2021 included:
•
rights granted for no cash consideration;
• exercise price: nil; and
• share price at grant date: $3.18 (16 November 2020: $2.96).
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 Chief Executive Restricted Share Rights (CEO RSR Grant)
The assessed fair value at grant date of the rights granted on 21 December 2021 was $0.76. This was calculated using the
Black Scholes model by Ernst & Young Transaction Advisory Services Limited.
The valuation inputs for the rights granted on 21 December 2021 included:
•
rights are granted for no consideration;
• exercise price: $3.24 per RSR pre-adjustments for cash dividends paid throughout the period; and
• share price at grant date: $3.00.
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 SkyCity Deferred Share Rights (PIP Plan)
The assessed value of each 2021 right was determined by Ernst & Young Transaction Advisory Services Limited. RSRs
vesting one year after year end were valued at $2.84 and RSRs vesting two years after year end were valued at $2.57.
No RSRs were issued in respect of the year ended 30 June 2020.
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
2022
$'000
2,292
2021
$'000
3,253
Notes to the Financial Statements
169
34 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.
2022
2021
SHORT TERM
BENEFITS
TERMINATION
BENEFITS
SHARE‑BASED
PAYMENTS
$'000
8,087
11,618
$'000
–
1,456
$'000
851
1,424
TOTAL
$'000
8,938
14,498
(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.
In the current year consultancy services of $8,769 (2021: $88,855) were paid to incoming Directors, for the period from
20 June to 30 June 2022 (inclusive), prior to their appointment.
From time to time certain Directors provide additional consultancy services to the Group outside of their capacity as
Directors. No additional fees were paid in the current year (2021: Nil).
(c) Subsidiaries
Interests in subsidiaries are set out in note 35.
(d) Associates
As outlined in note 24, the Group acquired an associate, GiG, on 1 April 2022. As outlined in note 3, the Group also earns
revenue from online gaming under a gaming licence held by GiG. From 1 April to 30 June 2022, the Group earned
€2.4 million (NZ$4.0 million) from online gaming under the gaming licence held by GiG. At 30 June 2022, the Group
has a receivable of €1.4 million (NZ$2.3 million) from GiG in relation to online gaming.
170
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 35 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(c):
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
I
F
I
Cashel Asset Management Limited
New Zealand
Ordinary
Horizon Tourism New Zealand Limited
(formerly SkyCity Wellington Limited)
New Zealand
Ordinary
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
SkyCity International Holdings Limited
SkyCity Investments Australia 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
New Zealand
Ordinary
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
Australia
Hong Kong
Hong Kong
Malta
Malta
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
SkyCity Management (UK) Limited
United Kingdom
All wholly-owned subsidiary companies have balance dates of 30 June.
2022
%
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%
2021
%
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
171
36 Contingencies
(a) Contingent Liabilities
Car Parks
As outlined in note 4, the Car Park Concession Agreement
provides Macquarie with a long-term concession over
the car parks on the SkyCity Auckland main site and the
NZICC site, for the consideration of $220 million.
If SkyCity is unable to hand over the car parks on the
NZICC site to Macquarie by 22 October 2022 due to the
damage caused by the NZICC fire, Macquarie has the
option to terminate the Car Park Concession Agreement.
In the event Macquarie chooses to exercise this option,
this would result in the Car Park Concession Agreement
being terminated and SkyCity taking back the operation
of all of the car parks under the concession agreement, in
return for a consideration determined by a methodology
and process detailed in the Car Park Concession
Agreement.
SkyCity is engaging with Macquarie on this matter. To
date, Macquarie has not indicated whether it will exercise
the termination option that may crystalise on 22 October
2022 in the likely event that the car parks on the NZICC
site are not handed over to them by this date. Due to this
uncertainty, no provision has been recognised at 30 June
2022. If Macquarie chooses to exercise the termination
option, all costs and/or losses incurred by SkyCity because
of the termination will be assessed for recovery from the
NZICC Contractor.
Regulators
SkyCity operates in an industry with a complex regulatory
framework. During the current and prior periods, there
has been heightened focus from a range of regulators
across New Zealand and in particular Australia. SkyCity
takes its obligations seriously and continues to work
proactively with its regulators and respond to their
inquiries.
(i) AUSTRAC Enforcement Investigation
On 4 June 2021, SkyCity Adelaide Pty Ltd was notified
by the Australian Transaction Reports and Analysis
Centre’s (AUSTRAC) Regulatory Operations Team that
it had identified potential serious non compliance by
SkyCity Adelaide Pty Ltd with the Australian Anti Money
Laundering and Counter Terrorism Financing Act 2006
and Anti Money Laundering and Counter Terrorism
Financing Rules Instrument 2007 (No.1). The Regulatory
Operations Team had therefore referred the matter to
AUSTRAC's Enforcement Team, which initiated a formal
enforcement investigation into the compliance of SkyCity
Adelaide Pty Ltd.
The potential serious non-compliance noted by AUSTRAC
includes concerns relating to ongoing customer due
diligence, adopting and maintaining an AML/CTF
Program and compliance with Part A of an AML/CTF
Program. These concerns were identified in the course of
a compliance assessment which AUSTRAC commenced
in September 2019, focusing on SkyCity Adelaide Pty Ltd's
management of customers identified as high risk and
politically exposed persons for the periods of 1 July 2015 to
30 June 2016 and 1 July 2018 to 30 June 2019.
AUSTRAC has not yet indicated that it has made a decision
regarding the appropriate regulatory response that it
may apply to SkyCity Adelaide Pty Ltd, including whether
enforcement action will be taken. If any enforcement
action is taken, this could result in a significant financial
penalty, however SkyCity Adelaide Pty Ltd considers
that it is not yet possible to reliably estimate a potential
financial penalty and accordingly no provision has been
raised in respect of these matters. SkyCity Adelaide Pty Ltd
regards the matters raised by AUSTRAC with the utmost
seriousness and, in June 2021, appointed an independent
expert to conduct a comprehensive review of its AML/CTF
Program and broader AML function which, together
with SkyCity Adelaide Pty Ltd’s own internal review, is
aimed at putting in place a comprehensive enhancement
programme to address issues in, and improve more
generally, the quality of its AML/CTF Program and
AML function.
Judgments in civil penalty proceedings brought
by AUSTRAC to date demonstrate that the Federal
Court’s determination of the appropriate penalty
(where contraventions are admitted or established) is
very specific to the facts in each case. The Court will
have regard to all relevant matters in determining an
appropriate penalty, including the nature and extent of
any contravention(s), loss and damage suffered as a result
of any contravention(s), steps taken to improve existing
systems, and relative size and financial position of the
business.
(ii) Independent Review
On 1 July 2022, SkyCity and SkyCity Adelaide Pty Ltd
were advised by Consumer and Business Services (the
South Australian gaming regulator) that it had appointed
the Honourable Brian Martin AO QC to undertake an
independent review of SkyCity Adelaide Pty Ltd in
accordance with Part 3 of the Casino Act 1997 (SA).
In its media release dated 1 July 2022, Consumer and
Business Services noted that it was commissioning an
independent review of the casino operations in South
Australia “in light of interstate inquiries into various casino
operations” given “a number of the matters raised to date
extend beyond any one organisation and point instead to
broader systemic issues within the casino industry”. Mr
Martin has been asked to consider, amongst other things,
whether SkyCity Adelaide Pty Ltd is a suitable person to
continue to hold the casino licence in South Australia,
whether SkyCity is a suitable person to continue to be a
close associate of SkyCity Adelaide Pty Ltd, and, if neither
is a suitable person, what changes (if any) are required for
that party to become a suitable person.
Mr Martin is due to report back to the South Australian
Liquor and Gambling Commissioner by 1 February 2023.
Prior to this report back occurring, it is not possible to
determine what penalties, if any, might be applied to
SkyCity Adelaide Pty Ltd.
172
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 S
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T
S
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A
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N
A
N
I
F
I
(iii) Casino Duty
SkyCity Adelaide Pty Ltd has had an ongoing contractual dispute with Revenue South Australia concerning the
interpretation of the Casino Duty Agreement (CDA) in relation to the treatment of loyalty points converted to gaming
machine play and the deduction of loyalty points earned for the purpose of calculating casino duty at the SkyCity
Adelaide casino. Both parties have agreed to seek declaratory relief from the South Australian Courts as to the proper
construction of the CDA to determine the correct interpretation on both issues. Proceedings are expected to commence
in the 2023 financial year. As Revenue South Australia and SkyCity Adelaide Pty Ltd have agreed to seek a Court ruling
on the matter, and proceedings have not yet commenced no provision has been raised in respect of these matters as
there is no present obligation. An unfavourable ruling could result in additional casino duty being payable, however as
potential Court rulings on either issue could produce a range of positive or negative outcomes SkyCity Adelaide Pty Ltd
considers it is not possible to reliably estimate the potential financial outcome.
(b) Contingent Assets
As detailed in note 5, while the insurers have confirmed that SkyCity's Contracts Works Insurance policy will respond
in relation to the damage caused by the fire, the final insurance recovery will be dependent on the final view of the
insurers as the claims are presented and no final insurance recovery has been confirmed at this stage. There are further
remediation costs for which policy coverage has not yet been confirmed by the insurers and therefore for which the
recoverability has not been assessed to be virtually certain.
The Group will also seek recovery from the Contractor for additional costs and losses associated with the NZICC fire
that are not covered by the insurers. These include insurance excesses, payments to Macquarie under the Car Park
Concession Agreement, additional project costs, and other items.
The Group has identified $68.7 million (2021: $23.3 million) of costs incurred to date where it does not believe that
recovery is virtually certain at this time given the position currently being taken by the Contractor and by the Insurers,
and therefore no income has been recognised. However, recovery of these costs is considered probable and they are
therefore included as a contingent asset. This does not include the full extent of the costs and losses that have been
incurred or that could be claimed from the NZICC and Horizon Hotel contractor relating to the fire and construction
delays.
There are no other significant contingent assets at year end.
37 Commitments
Capital Commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as set out below.
Property, plant and equipment
2022
$'000
296,575
2021
$'000
445,269
The majority of the capital commitments relate to the construction of the NZICC and Horizon Hotel.
Notes to the Financial Statements
173
38 Reconciliation of Profit after Income Tax to
Net Cash Inflow from Operating Activities
(Loss)/Profit for the year
Depreciation and amortisation
Net finance costs
Current period employee share expense
Gain on sale of fixed assets
Fair value (losses)/gains to investment property
NZICC fire related income
NZICC fire related costs
Asset impairment
Change in operating assets and liabilities
Change in receivables and prepayments
Change in inventories
Change in deferred tax asset
Change in current payables
Change in deferred tax liability
Change in tax receivable – current
Change in non-current payables
Change in tax payable – current
Investing and financing items included in working capital movements
Net cash inflow from operating activities
2022
$'000
(33,595)
94,660
35,044
2,292
(634)
5,400
(52,483)
88,849
7,293
7,579
(341
(9,632)
(12,966)
8,616
(4,431)
4,240
(16,162)
(32,608)
91,121
2021
$'000
155,833
88,306
32,455
3,253
528
(7,386)
(170,727)
141,845
8,834
8,847
(559)
(2,467)
(21,677)
11,856
1,989
9,748
15,480
8,627
284,785
39 Events Occurring after the Reporting Date
Syndicated Bank Facility
Subsequent to the reporting date, SkyCity’s syndicated bank facility was restructured (note 11).
Little Mindil
On 27 July 2022, the balance of the purchase price for Little Mindil was received from the purchaser. Title transferred to
the purchaser on 10 August 2022 and the asset was derecognised on that date (note 27).
Regulatory Review of SkyCity Adelaide Pty Ltd
On 1 July 2022, Consumer and Business Services (the South Australian gambling regulator) advised that it had
commenced an independent review of SkyCity Adelaide Pty Ltd (note 36). SkyCity is continuing to cooperate with the
review and requests for information and documents as they arise.
AUSTRAC Enforcement Investigation
As outlined in note 36, AUSTRAC has initiated a formal enforcement investigation into the compliance of SkyCity
Adelaide Pty Ltd with the Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and
Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1). SkyCity is continuing to
cooperate with the investigation and requests for information and documents as they arise.
174
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 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 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 inherent volatility or the “luck” factor from International Business, which has variable turnover and actual
win % 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 future performance. For internal purposes, including budgeting
and determination of staff incentives, normalised results are used.
Non-GAAP information is prepared in accordance with a Board approved Non-GAAP Financial Information Policy and is
reviewed by the Board at each reporting period. The Non-GAAP Financial Information Policy was applied in FY22 consistent
with the approach adopted in FY21.
Reported
International Business
revenue adjustment
Gaming GST
International Business at
theoretical win rate
NZICC fire impacts
Liquidated damages
Asset impairment
Property revaluation
Normalised
FY22
FY21
Revenue
$m
EBITDA
$m
EBIT
$m
NPAT
$m
Revenue
$m
EBITDA
$m
EBIT
$m
NPAT
$m
639.0
96.9
2.3
(33.6)
952.0
313.9
225.5
155.8
3.8
57.1
–
–
–
–
–
–
(5.2)
(3.8)
(3.8)
(2.7)
7.3
78.7
(5.3)
–
–
–
–
–
–
(4.9)
(4.9)
(3.6)
(63.2)
–
–
–
32.1
–
7.3
5.4
32.1
33.3
(170.7)
–
7.3
5.4
–
7.3
5.4
9.7
(22.4)
(39.5)
8.8
(7.4)
(39.5)
–
–
(22.4)
(24.2)
(39.5)
(39.5)
8.8
(7.4)
160.1
8.8
(7.4)
90.0
631.5
137.9
43.3
822.5
248.6
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 $3.8 million in FY22 and $7.3 million
in FY21)
•
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.
Reconciliation of Normalised Results to Reported Results
175
Adjustment
Discussion
Add gaming GST to reported revenue
(by $57.1 million in FY22 and $78.7
million in FY21)
Apply a theoretical win rate of 1.35% for
International Business vs an actual win
rate of 1.77% (FY22) and 1.67% (FY21)
Eliminate net loss ($33.3 million
post-tax) arising from impacts of the
NZICC fire, which includes recoveries
of compensation payments made to
Macquarie for car parks compromised by
reinstatement of the NZICC and Horizon
Hotel ($24.2 million net gain in FY21)
Reverse impact of revaluation (decrease
of $5.4 million) of Auckland investment
properties (FY21: increase of $7.4 million)
176
•
•
•
•
•
•
•
•
•
•
•
•
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.
On 22 October 2019, there was a significant fire at the construction site of the
New Zealand International Convention Centre (NZICC) in Auckland. The fire
caused extensive damage to the NZICC and 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 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 which were recognised in FY20 – these impacts are explained further
on pages 184-188 of SkyCity’s FY20 financial statements which have been
released to the NZX and ASX.
The FY20 financial statements included a number of significant judgements
and estimates to determine the appropriate accounting. These judgements
and estimates have continued to be reviewed as new information has
become available – following a revised damage assessment for the NZICC/
Horizon Hotel project, the expected insurance recovery relating to the asset
has increased and is required to be recognised as income as SkyCity is the
principal in the insurance relationship. This income has been offset by an
increase in costs relating to demolition and deconstruction of the site post
fire that are required to be expensed as incurred.
The NZICC fire (and associated accounting impact) is a significant, one-off
event that has impacted the comparability of the FY22 result with the prior
year.
SkyCity has a number of investment properties in Auckland. In
accordance with the appropriate accounting standard, these investment
properties are revalued by an independent expert every year and the
carrying value adjusted within the Group’s financial statements.
•
This adjustment eliminates/reverses the increase/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.
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022 Adjustment
AA Centre (SkyCity HQ) impairment
(decrease of $1.1 million FY21: increase of
$7.4 million)
SkyCity Queenstown land impairment
(decrease of $1.8 million)
SkyCity Wharf licence impairment
(decrease of $4.4 million)
Eliminate benefit ($39.5 million) arising
from liquidated damages for the NZICC/
Horizon Hotel project withheld in lieu of
late practical completion (FY21 only)
Discussion
AA Centre
•
In FY21, the Group impaired the AA Centre (SkyCity HQ), majority
owned by SkyCity, by $8.8 million. The impairment arose due to revised
expectations regarding the carrying value of the asset and the cost of
significant improvements and remediation required to the building. In
FY22, the Group impaired the AA Centre by a further $1.1 million following
valuation by an independent expert.
Queenstown Land
•
During FY22, SkyCity concluded that it was no longer feasible to develop
land it owns in Queenstown into a VIP gaming and hotel resort and,
as such, the property is now classified as property held for sale. An
independent valuation of the property resulted in an impairment to the
carrying value of $1.8 million.
Wharf Licence
•
•
•
•
•
•
•
The Queenstown Wharf casino has remained closed since 23 March 2020
(at the commencement of the first COVID-19 lockdown in New Zealand)
due to the detrimental effect on the local Queenstown economy from
the COVID-19 pandemic’s ongoing impacts on the international tourism
market. In the current period, the Queenstown Wharf casino licence
was fully impaired (which resulted in the recognition of an impairment
loss of $4.4 million) due to management’s decision not to reopen the
Queenstown Wharf casino in the foreseeable future.
This group of adjustments eliminate these non-cash expenses, which are
unrelated to the operations of the Group.
SkyCity entered into Building Works Contracts for the NZICC and Horizon
Hotel projects in November 2015.
Under the Building Works Contracts, liquidated damages apply for late
delivery of separable portions related to contractual completion dates.
Given the significant delays to completion of the NZICC and Horizon Hotel,
SkyCity is entitled to claim the liquidated damages under the Building
Works Contracts up to the agreed cap ($39.5 million in total).
Following several pre-fire claims being settled with Fletcher Construction
during 1H21, recovery of the liquidated damages has been deemed virtually
certain and hence the full amount is required to be accounted for as income
in SkyCity’s interim financial statements.
The liquidated damages are a significant, one-off event − making this
adjustment (which eliminates the one-off gain) will enhance the reader’s
understanding as this item does not impact the underlying operations of the
Group.
Reconciliation of Normalised Results to Reported Results
177
GRI Content Index
General Standard Disclosures
SECTION
Organisational
Profile
ASPECT / GRI
DISCLOSURE DESCRIPTION
102-1
Name of organisation
PUBLICATION
PAGE(S)
LIMITATIONS
Annual Report 2022:
Company Disclosures
9
102-2
Activities, brands, products
and services
Annual Report 2022:
About SkyCity
28–35
102-3
Location of headquarters
102-4
Location of operations
Annual Report 2022:
About SkyCity
Annual Report 2022:
Directory
28
183
Annual Report 2022:
About SkyCity
28–35
Annual Report 2022:
Directory
183
102-5
Ownership and legal form Annual Report 2022:
131
Notes to the Financial
Statements
Annual Report 2022:
Shareholder and
Bondholder
Information
107–108
102-6
Markets served
Annual Report 2022:
About SkyCity
28–35
102-7
Scale of organisation
i. Total number of
employees
Annual Report 2022:
Diversity Snapshot
Annual Report 2022:
Our People
26
63
ii. Total number of
operations
Annual Report 2022:
Creating Value
14–15
iii. Net sales
Annual Report 2022:
About SkyCity
Annual Report 2022:
Income Statement
28
124
iv. Total capitalisation
Annual Report 2022:
Balance Sheet
126–127
v. Quantity of products
and services provided
Annual Report 2022:
Creating Value
14–15
Annual Report 2022:
About SkyCity
28
Additional information
Annual Report 2022
14–21
102-8
Information on employees
and other workers
Annual Report 2022:
Our People
62–71
Note 1
178
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022
SECTION
Organisational
Profile
ASPECT / GRI
DISCLOSURE DESCRIPTION
102-9
Supply chain
102-10
Significant changes to the
organisation and its
supply chain
PUBLICATION
PAGE(S)
LIMITATIONS
Annual Report 2022:
Our Suppliers
78–81
4–7
22–25
Annual Report 2022:
Chair's Review, Chief
Executive Officer's
Review and
Delivering Our
Group Strategy
102-11
Precautionary principle
or approach
SkyCity Ethical
Sourcing Code
80
102-12
External initiatives
Annual Report 2022:
Our Sustainability
51–53
Annual Report 2022:
Our People
62–71
Strategy
102-14
Statement from senior
decision-maker
Ethics and
Integrity
102-16
Values, principles,
standards and norms
of behaviour
Annual Report 2022:
Our Environment
Annual Report 2022:
Chair's Review, Chief
Executive Officer's
Review and
Delivering Our
Group Strategy
SkyCity Code
of Conduct
82–88
4–7
22–25
www.skycityentertainmentgroup.
com
Governance
102-18
Governance structure Annual Report 2022:
47–50
Our Senior
Leadership Team
89–112
Annual Report 2022:
Corporate Governance
Statement and Other
Disclosures
Stakeholder
Engagement
102-40
List of stakeholder groups
Annual Report 2022:
Our Sustainability
www.skycityentertainmentgroup.
com
102-41
102-42
102-43
102-44
102-45
102-46
Reporting
Practice
Collective bargaining
agreements
Annual Report 2022:
Our People
62–71
Identifying and selecting
stakeholders
SkyCity Code
of Conduct
www.skycityentertainmentgroup.
com
Approach to stakeholder
engagement
SkyCity Code
of Conduct
www.skycityentertainmentgroup.
com
Key topics and
concerns raised
Annual Report 2022:
Our Sustainability
51–53
Entities included in the
consolidated financial
statements
Annual Report 2022:
Notes to the Financial
Statements
130–174
Defining report content
and topic boundaries
Annual Report 2022:
About this Annual
Report
28–35
102-47
List of material topics
Annual Report 2022:
Our Sustainability
51–53
Annual Report 2022:
Our Sustainability
51–53
GRI Content Index
179
SECTION
Reporting
Practice
ASPECT / GRI
DISCLOSURE DESCRIPTION
102-48
Restatements of
information
PUBLICATION
PAGE(S)
LIMITATIONS
Not applicable
N/A
102-49
Changes in reporting
Annual Report 2022:
Notes to the Financial
Statements
102-50
Reporting period
Annual Report 2022
131–133
Cover
Page
102-51
Date of most recent report
Annual Report 2022:
About this Annual
Report
9
102-52
Reporting cycle
Annual Report 2022
Cover
Page
102-53
Contact point for questions
regarding the report
Annual Report 2022:
Our Sustainability
9
Annual Report 2022:
Directory
183
102-54
Claims of reporting in
accordance with the
GRI standards
Annual Report 2022:
About this Annual
Report
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
ASPECT / GRI
DISCLOSURE DESCRIPTION
PUBLICATION
PAGE(S)
LIMITATIONS
Conserve the
Environment
GRI 103
Energy management
approach
Annual Report 2022:
Our Environment
82–88
GRI 302-3
Energy intensity
Annual Report 2022:
Our Environment
82–88
GRI 103
Emissions management
approach
Annual Report 2022:
Our Environment
82–88
GRI 305-4
GHG emissions intensity
Annual Report 2022:
Our Environment
82–88
Source Ethically
and Responsibly
GRI 103
Ethical and sustainable
procurement management
approach
Annual Report 2022:
Our Suppliers
78–81
180
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022
SECTION
Inspire Our
People
ASPECT / GRI
DISCLOSURE DESCRIPTION
GRI 103
Health and safety
management approach
GRI 403-2
Types and rates of injury
PUBLICATION
PAGE(S)
LIMITATIONS
Annual Report 2022:
Our Risk Profile and
Management
Annual Report 2022:
Health, Safety and
Wellbeing
Annual Report 2022:
Our Risk Profile and
Management
Annual Report 2022:
Health, Safety and
Wellbeing
36–43
64–65
36–43
64–65
62–71
62–71
GRI 103
Employee engagement
management approach
Annual Report 2022:
Our People
GRI 404-2
Employee programmes
Annual Report 2022:
Our People
GRI 103
Diversity, inclusion and
belonging management
approach
Annual Report 2022:
Our People
62–71
GRI 405-1
Governance and employee
diversity
Annual Report 2022:
Our People
62–71
Host Responsibly GRI 103
Customer health and
safety management
approach
Annual Report 2022:
Our Risk Profile and
Management
36–43
SkyCity Diversity and
Inclusion Policy
www.skycityentertainmentgroup.
com
Annual Report 2022:
Our Customers
54–61
GRI 416-1
Assessment of health and
safety of products and
services
Annual Report 2022:
Our Risk Profile and
Management
36–43
GRI 416-2
GRI 103
GRI 419-1
Annual Report 2022:
Our Customers
54–61
Non-compliance incidents
related to health and safety
of products and services
Annual Report 2022:
Our Customers
54–61
Socio-economic
compliance management
approach
Non-compliance with
socio-economic laws and
regulations
Annual Report 2022:
Our Customers
54–61
Annual Report 2022:
Our Customers
54–61
Note 2
Limitations:
Note 2 – 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
181
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/(loss) 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/(loss) 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
182
SkyCity Entertainment Group Annual Report Year Ended 30 June 2022
DIRECTORY
REGISTERED OFFICE
AUDITOR
SkyCity Entertainment Group Limited
PricewaterhouseCoopers
Level 27
15 Customs Street West
Private Bag 92162
Auckland 1010
SUPERVISOR FOR BONDS
Public Trust
Private Bag 5902
Wellington 6140
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
NEW ZEALAND
Level 13
99 Albert Street
Auckland 1010
New Zealand
Telephone: +64 9 363 6000
AUSTRALIA
North Terrace
Adelaide
SA 5000
Australia
Telephone: +61 8 8212 2811
Email: sceginfo@skycity.co.nz
www.skycityentertainmentgroup.com
SKYCITY LOCATIONS
SKYCITY AUCKLAND
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 0400
SKYCITY ADELAIDE
Railway Building
North Terrace
Adelaide
SA 5000
Australia
Telephone: +61 8 8212 2811
Directory
183
skycityentertainmentgroup.com