Annual Report
Year Ended 30 June 2023
Welcome to
SkyCity
the home of entertainment
for over 25 years
2
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Contents
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44
GENERAL
64
SUSTAINABILITY
Report from the Chair and
Chief Executive Officer
About this Annual Report
Year in Review
Creating Value
Performance
Contributing to our Communities
Group Strategy
Diversity Snapshot
About SkyCity
28 Auckland
30 Adelaide
32 Hamilton
34 Queenstown
36 Online
Risk Management
Our People
44 Our Board
47 Our Senior Leadership Team
52 Our Workforce
HYBRID ANNUAL MEETING
The 2023 SkyCity Annual Meeting will be held at
the SkyCity Theatre, Level 3, SkyCity Auckland,
Corner of Wellesley and Hobson Streets, Auckland,
and online on 27 October 2023 commencing at
11am (New Zealand time).
Instructions and further details on how shareholders
can participate in the Annual Meeting will be
included in the Notice of Meeting to security holders.
SkyCity Entertainment Group Limited has been
designated as ‘Non-Standard’ by NZX Limited due
to certain restrictions in the company’s constitution.
See pages 134-135 of this annual report for further
details.
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68
82
90
Sustainability
Our Customers
Our Community
Our Environment
CORPORATE GOVERNANCE
STATEMENT AND OTHER
DISCLOSURES
102
102
Corporate Governance Statement
114
Remuneration Report
126
Shareholder and Bondholder Information
130
Directors’ Disclosures
132
Company Disclosures
136
FINANCIAL STATEMENTS
137
Independent Auditor’s Report
144
Income Statement
145
Statement of Comprehensive Income
146
Balance Sheet
148
Statement of Changes in Equity
149
Statement of Cash Flows
150
Notes to the Financial Statements
RECONCILIATION OF NORMALISED
RESULTS TO REPORTED RESULTS
206
209 GRI CONTENT INDEX
212
GLOSSARY
213
DIRECTORY
3
GENERAL Report
from the Chair and
Chief Executive Officer
A Year of Re-emerging Performance
The 2023 financial year was marked by the recovery of
SkyCity’s core operations with the Group’s operating
earnings exceeding pre COVID-19 levels on a like-for-like
basis – our businesses not having been impacted by
COVID-19 related closures or trading restrictions (unlike
the prior comparable period). This result was achieved
against the backdrop of a weaker macroeconomic
environment in New Zealand and Australia due to the
impact of higher interest rates, inflationary pressures
and recovering immigration. The strong performance
of our operating businesses is testament to their
underlying quality.
Throughout the year, the management of regulatory
issues has continued to occupy a considerable amount
of Board and management focus. We recognise the
importance of retaining our social licence to operate and
are committed to upholding standards commensurate
with this. This does not mean minimum compliance with
regulatory obligations. Since the commencement of the
Australian Transaction Reports and Analysis Centre’s
(AUSTRAC) enforcement investigation into SkyCity
Adelaide Pty Limited (SkyCity Adelaide), the operator of
the SkyCity Adelaide casino, two years ago, we have made
considerable investment to uplift our financial crime
and host responsibility systems in Adelaide, and we are
extending this investment into the broader New Zealand
business and our Group management and governance
systems to ensure we stay ahead of expectations.
These changes have meant that it is harder for some
customers to qualify to play in our premises and some
forms of business are no longer undertaken, such as
junket play. This has impacted revenue in some segments
of the business although the ongoing steady growth of
the mass market segments has offset this.
Progress on the New Zealand International Convention
Centre (NZICC) rebuild has been good although
negotiating the repurchase of the long term concession
granted over our SkyCity Auckland car parks has proved
challenging with the counterparty to this transaction
proving intransigent and difficult.
The contribution of the New Zealand operations has
again been led by the performance of the SkyCity
Auckland business, where both gaming and non-gaming
revenues have benefited from a full year of operation and
significant improvement in customer visitation.
Revenue from electronic gaming machines (EGMs) in
Auckland returned to pre COVID-19 levels by the end
of the financial year as a result of strong local visitation
(particularly on weekends), investment in new products
and customer promotions. Auckland table games
revenue was slower to recover with table games opening
hours impacted by staffing pressures during the year and
lower local VIP table games visitation. However, we expect
the Auckland table games performance to improve as
international tourism returns and table games opening
hours increase.
Our Auckland hotels, bars, restaurants and attractions
(including Sky Tower) grew progressively over the
financial year, accounting for 24% of total revenue from
the Auckland business for the period. Our food and
4
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL beverage portfolio is a key driver of visitation to the
Auckland precinct and was bolstered by two new outlet
openings in 2023 – Cassia, an award-winning Indian
restaurant within the SkyCity Grand Hotel, and Sky Bar,
an up-market cocktail bar at the top of the Sky Tower
opened in partnership with Moët & Chandon. Pleasingly,
there were margin improvements across this portfolio
over the period as a result of productivity initiatives and
operational efficiencies, including the utilisation of QR
ordering and robot waiters at Andy’s Burgers & Bar.
The growth in the SkyCity Auckland business will be
underpinned by strong demographic and economic
drivers with the forecast increase in international tourism
supporting the entertainment and hospitality industry
across the next decade. Once completed, the NZICC and
Horizon Hotel, plus the new City Rail Link (a new
$5.5 billion underground rail system being constructed
in the Auckland CBD), will drive increased visitation to
the SkyCity Auckland precinct.
The SkyCity Hamilton business continued to trade well
over the period, returning to pre COVID-19 levels of
earnings. The opening of a new restaurant tenancy, EGM
product investment and increased table games opening
hours improved the customer experience and supported
gaming revenue over the period. Property improvements
currently underway are expected to further underpin
growth in both gaming and non-gaming earnings in the
2024 financial year.
The consolidated SkyCity Queenstown business
performance was strong despite higher operating costs
and staff shortages. Revenue was impacted by lower
tourist numbers to the region and casino trading hours
were curtailed by a shortage of staff. We expect trading to
improve as international visitors return, starting with the
current winter seasonal boost around snow sports.
Trading in Adelaide over the last financial year was
negatively impacted by the slowing South Australian
economy, the ongoing regulatory focus and resulting
additional legal and compliance costs, and a lower level
of VIP play compared to previous years. However,
non-gaming revenue improved significantly in 2023
as a result of the investment in the property over the
last five years.
Our International Business, which has previously been
centred on hosting international VIPs, was restructured
over the past year and is now focused on domestic,
interstate Australian VIP customers. Significant
operational changes have been made as a result,
including capping table games differentials.
The online casino business has contributed significantly
to Group earnings despite online EBITDA declining
year on year. This was due to the New Zealand market
continuing to be aggressively targeted by offshore
operators in breach of local marketing regulations.
SkyCity does not operate in this way and has lost market
share as a result. The Group continues to advocate for
the introduction of online gaming regulation that is
appropriate for the New Zealand online gaming industry.
Operational Performance
For the 12-months ended 30 June 2023, normalised Group
EBITDA was $310.3 million and normalised Group NPAT
was $138.8 million, and reported Group EBITDA was $165.9
million and reported Group NPAT was $8.0 million.
Normalised Group EBITDA of $310.3 million was up 125%
on the previous financial year, reflecting a full year of
operations uninterrupted by COVID-19 closures of the prior
year. Normalised Group NPAT was significantly higher than
the prior year (up 1332%) due to the higher level of EBITDA
and aided by a lower net interest cost.
SkyCity’s New Zealand operations performed well over the
period with normalised EBITDA of $291.9 million up 127%
from the prior comparable period and reported EBITDA of
$255.5 million (up 102.5%). This was driven predominantly
by a significant increase in normalised EBITDA for the
Auckland property with gross gaming revenue of
$444.9 million, up 71% from $260.5 million previously, and
non-gaming revenue of $123.9 million (up 77%) due mainly
to there being no COVID-19 related closures over the period.
SkyCity Adelaide’s performance was significantly
impacted by the ongoing regulatory matters and focus,
which impacted visitation and resulted in significant
operating costs. Despite this, SkyCity Adelaide's normalised
EBITDA of $34.9 million was 70% higher than the prior
period ($20.5 million) due to an increase in gaming
machine and non-gaming revenues offset by higher
operating costs, including A$8 million of legal and
compliance expenses.
SkyCity Online Casino EBITDA (attributable to SkyCity) of
$10.7 million was down 17% from $12.9 million in the prior
comparable period with the increase in gross gaming
revenue being offset by higher bonusing and jackpots, and
increased costs of operating the online platform.
Reinstatement works on the NZICC have progressed well
over the period, with construction of the new roof expected
to be completed by December 2023. We expect that the
building will be reinstated to the state it was in just prior
to the devastating fire in October 2019 in early 2024 - an
important and key milestone. This also gives us confidence
around the contractor’s latest programme which indicates
that the Horizon Hotel will be completed in 2024 and the
NZICC in 2025. We have already started taking bookings
for conferences from mid-2025 with strong interest from
offshore organisations looking to host their events in
New Zealand.
In March 2023, SkyCity drew down US$75 million in funding
from the issue of US Private Placement notes to partially
fund the buy-back of the long term concession granted
over the SkyCity Auckland car parks from MPF Parking
NZ Limited. However, as at the date of this annual report,
the termination of the Auckland Car Park Concession
Agreement has not completed, resulting in $6.2 million of
interest revenue over the period. This led to net interest
expense of $23.5 million, down from $35.0 million in the
previous year.
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GENERAL As at 30 June 2023, gross debt was $522 million, cash at
hand was $245 million and net debt was $443 million.
SkyCity has significant funding headroom in its debt
facilities with $390 million of its debt undrawn and its
current ratio of net debt is 1.5x EBITDA, well within the
company’s banking covenants and consistent with
its BBB- credit rating from S&P Global Ratings which
was reconfirmed as “Stable” outlook during June 2023.
Management expects net debt to increase in the coming
year given a return to a more normal year of maintenance
capital expenditure and some large one-off payments
– however, SkyCity is expected to remain comfortably
within its mandated debt thresholds.
Given its improved financial performance over the period,
SkyCity paid an interim dividend of 6 cents per share in
March 2023 and has announced a final dividend of
6 cents per share payable to qualifying shareholders on
8 September 2023 - consistent with our dividend policy
of paying 60% – 90% of normalised NPAT per annum.
Regulatory Focus
On 7 December 2022, AUSTRAC filed civil penalty
proceedings in the Federal Court of Australia against
SkyCity Adelaide alleging serious and systemic
contraventions of its obligations under the Australian
Anti-Money Laundering and Counter Terrorism Financing
Act 2006 following an enforcement investigation
commenced by AUSTRAC in June 2021. At the date of
this annual report, the proceedings remain at a relatively
early stage with AUSTRAC and SkyCity Adelaide currently
working toward agreeing facts and potential admissions
before the Court identifies a process for any remaining
disputed issues (if any) and potential penalty to be
determined. SkyCity continues to engage with AUSTRAC
and expects the proceedings will be resolved during the
2024 financial year.
On 7 February 2023, Consumer and Business Services
(CBS), the South Australian gaming regulator, announced
that the Honourable Brian Martin KC’s independent
review into the suitability of SkyCity Adelaide to continue
to hold the SkyCity Adelaide casino licence and the
suitability of SkyCity to continue to be a close associate
of SkyCity Adelaide (which commenced in July 2022)
had been placed on hold pending the resolution of the
AUSTRAC proceedings. The South Australian Liquor
and Gambling Commissioner also announced that he
was considering his options regarding any action he
should take while the independent review was on hold.
Subsequently, on 29 May 2023, the Commissioner issued
a direction notice to SkyCity Adelaide under section 10
of the Gambling Administration Act 2019 (SA) requiring
SkyCity Adelaide to appoint an independent expert
to review its anti-money laundering and countering
financing of terrorism (AML/CFT) and host responsibility
enhancement programmes, monitor the implementation
of those enhancement programmes by SkyCity Adelaide
and SkyCity Adelaide’s compliance with its AML/CFT and
gambling harm minimisation obligations, and report
back to the Commissioner on those matters - to provide
an independent perspective of SkyCity Adelaide’s
AML/CFT and host responsibility enhancement
programmes and an additional layer of assurance.
SkyCity Adelaide is working with the Commissioner to
finalise the appointment of the independent expert,
and will continue to work pro-actively and cooperatively
with the Commissioner to provide the additional layer of
assurance required.
On 14 August 2023, SkyCity announced that it had
recognised a A$45 million (NZ$49 million) provision on
its balance sheet as at 30 June 2023 in accordance with
accounting standards for a potential AUSTRAC civil
penalty and associated legal costs. This provision is an
estimate of the potential exposure to penalties and legal
costs associated with the proceedings, and considers
a wide range of parameters that could potentially be
considered by AUSTRAC and the Court. The provision,
including how it was arrived at, is outlined in more detail in
note 30 to the FY23 financial statements on page 187
of this annual report. It is important to note that the
estimate of the amount of the provision was made on the
basis of all relevant information available to SkyCity at the
time and in the context of considerable uncertainty (as
outlined in note 30), and any eventual civil penalty applied
to SkyCity Adelaide may be materially higher or lower than
the provision.
A Commitment to Continuous Improvement
The SkyCity Board and management remain committed
to ensuring that SkyCity provides safe and responsible
experiences and environments for its people and
customers.
We are acutely aware that in Adelaide we have not met the
standards which we need to hold ourselves to. Accordingly,
there has been a significant focus on, and investment in,
the continuous improvement of the business in Adelaide
and the Board is happy with progress in this area. It is
critical that we are not complacent in terms of our New
Zealand operations and work is therefore underway to
take the learnings from Adelaide and look to how we can
improve our New Zealand operations in respect of our
AML/CFT obligations.
The Board has made a number of changes over the last
year which support this refocus on core compliance
systems and processes - these include completing a refresh
of the Board, the appointment of independent directors
to the SkyCity Adelaide Board, the creation of a dedicated
Board Risk and Compliance Committee to take carriage of
our AML/CFT and host responsibility obligations (among
other key obligations), the appointment of a Chief Risk
Officer, and moving the AML/CFT and host responsibility
teams’ reporting line directly to the Chief Risk Officer.
Across the Group over the period, we have further
enhanced and invested in our internal AML/CFT and host
responsibility resourcing and capability, processes and
systems. For example, we have enhanced our approach
to ongoing customer due diligence, and completed more
customer assessments than ever before. In Adelaide, we
have also piloted a daily cash limit per player for buy-ins
and cash outs, and players within the premium gaming
areas can only conduct ‘carded’ play (where all gaming
activity is recorded). The additional people and resources
have necessarily increased the cost base, but it is essential
that these areas of the business in particular are resourced
appropriately.
We continue to explore available technology solutions
where possible to improve our ability to prevent and
minimise harm from problem gambling. Over the period,
we enhanced our facial recognition technology at our
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SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Auckland and Hamilton properties to monitor continuous
play periods, and we trialled the use of facial recognition
technology to monitor repeat withdrawals and multiple
declined transactions at some of our Auckland ATMs for
indicators of problem gambling. We are progressing the
rollout of this technology at our Auckland and Hamilton
properties initially.
Looking longer term, cashless gaming and the
introduction of mandatory carded play are starting
to make their way into Australia in the wake of the
regulatory issues in the sector. The technological
challenges to achieve this are not insubstantial, but as
a business we are committed to moving towards this
over time. We have introduced initiatives to test carded
play and cashless gaming in our properties and are
developing detailed planning to achieve this. We have
already achieved very high levels of carded play with
more than 90% of gaming turnover being tracked in our
VIP areas. Work is also under way to enable mandatory
carded play which will create greater cashless optionality.
This will likely encourage further use of technology like
QuickPay – an electronic customer wallet available to
gaming machine customers that already has over 50%
uptake in our VIP areas.
Changes to Board
There has been further renewal of the Board over
the period with the departure of two non-executive
directors (Jennifer Owen and Silvana Schenone) and the
appointment of three new non-executive directors.
In September 2022, Kate Hughes and Glenn Davis
were appointed to the Board with Mr Davis also being
appointed as Chair of the SkyCity Adelaide Board. Both
are experienced non-executive directors across a number
of industries. Ms Hughes is a board member of the
Australian Prudential Regulation Authority and is Chair of
the Authority's Audit and Risk Committee. Mr Davis has
practised as a solicitor in corporate and risk throughout
Australia for over 35 years.
David Attenborough was appointed to the SkyCity Board
in March 2023 and brings with him strong gaming
experience having been the Chief Executive Officer
and Managing Director of ASX-listed Tabcorp Holdings
Limited and, prior to this, the Chief Executive Officer
(South Africa) of Phumelela Gaming and Leisure.
On 20 July 2023, we announced our intention to
appoint Donna Cooper to the SkyCity Board, subject to
regulatory approvals being obtained. Donna has extensive
experience in the financial services industry, most
recently as Chief Executive of TSB Bank Limited where
she led an extensive transformation of the culture and
processes around AML/CFT and compliance. Donna will
fill a vacancy left by Sue Suckling who has indicated her
intention to step down from the Board.
The Board also intends to appoint a seventh director over
the next year to complement the current mix of skills and
experience.
The Board intends to seek an increase to the
non-executive directors’ fee pool at the upcoming
2023 SkyCity Annual Meeting to provide the Board with
sufficient headroom to appoint the seventh director
and to meet the fees payable to the independent
non-executive directors on the separate SkyCity Adelaide
Board and any ad-hoc Committee fees – see the
Remuneration Report in this annual report for further details.
FY24 Outlook
Recent trading has seen a lift in visitation and spend in
our non-gaming business in Auckland, and this trend
has continued into the current financial year buoyed by
the 2023 FIFA Women’s World Cup tournament in July
and August 2023, which has had an incrementally positive
impact on our Auckland operations.
We see a continued recovery in tourism combined with
improved staff availability as positive factors for the year
ahead. These could be offset by an uncertain economic
environment with continued inflationary pressures, some
one-off project costs, and further investment in risk and
AML/CFT capability. Additionally, initiatives that we have
recently implemented and are continuing to execute
in FY24 should support our future earnings growth and
mitigate some of the cost pressures. A good example of
these initiatives is a recent restructuring of the cost base
at Adelaide to ensure that the business is more aligned
with its future focus.
The opening of the Horizon Hotel in Auckland in the
second half of FY24 will incur some pre-opening costs
and its operation will take some time to ramp up. We also
expect car park earnings to be integrated into Auckland
operating earnings in FY24 although the exact timing is
uncertain.
Provided there are no material changes to the operational
environments and trading conditions, normalised Group
EBITDA in the current financial year is expected to be
modestly higher than for the 2023 financial year.
Our thanks to the SkyCity Board, employees across
the business, and our external stakeholders for their
continued focus and support of the business over the last
financial year.
Julian Cook
Chair of the SkyCity Board
Michael Ahearne
Chief Executive Officer
7
GENERAL About this
Annual Report
This annual report is a review of SkyCity Entertainment
Group Limited (SkyCity or the company and, together
with its subsidiaries, the Group) and its subsidiary
companies’ performance for the financial year ended
30 June 2023. Where appropriate, information is also
provided in relation to activities that have occurred after
30 June 2023.
This annual report has been prepared in accordance with
the NZX Listing Rules, the NZX Corporate Governance
Code (1 April 2023 Edition), 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
the Australian Securities Exchange, 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
209-211 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
8
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL 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, and eliminating structural
differences in the business between periods.
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
206-208 of this annual report.
Unless otherwise stated, all dollar amounts in this annual
report are expressed in New Zealand dollars.
IMAGE: SkyCity Adelaide casino
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 23 August 2023 and is signed on
behalf of the SkyCity Board by:
Julian Cook
Chair of the SkyCity Board
Chad Barton
Chair of the Audit Committee
9
GENERAL Year in Review
REPORTED NPAT
-$33.6 million
$9.7 million
NORMALISED NPAT
JULY
Honourable Brian
Martin AO KC appointed
by the South Australian
gaming regulator
to undertake an
independent review of
SkyCity Adelaide
(the operator of the
SkyCity Adelaide casino)
AUGUST
Sky Tower celebrates
its 25th birthday
FY22 full year result
announced with
reported NPAT of
-$33.6 million
(down 121.6% over
the prior period)
and normalised
NPAT of $9.7 million
(down 89.2% over
the prior period)
OCTOBER
MPF Parking NZ Limited
terminates its long term
concession over the SkyCity
Auckland car park
NOVEMBER
SkyCity secures an additional
US$125 million in United States
Private Placement funding
US
$125 million
SEPTEMBER
Kate Hughes and Glenn Davis
appointed as non-executive
directors to the SkyCity Board
SkyCity Hamilton
celebrates its 20th
birthday
DECEMBER
AUSTRAC commences civil
penalty proceedings in the
Federal Court of Australia
alleging contraventions of
SkyCity Adelaide's obligations
under the Australian
Anti-Money Laundering and
Counter-Terrorism Financing
Act 2006
2022
10
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL 2023
REPORTED NPAT
$22.8 million
$73.1 million
NORMALISED NPAT
JANUARY
The NZICC staff car
park reopens to
SkyCity employees
APRIL
Carolyn Kidd
joins SkyCity as
Chief Risk Officer
FEBRUARY
Independent review of SkyCity
Adelaide put on hold by the South
Australian gaming regulator
pending resolution of AUSTRAC’s
civil penalty proceedings
FY23 interim result
announced with
reported NPAT of $22.8
million (up 167.8% from
the prior period) and
normalised NPAT of $73.1
million (up 474.3% from
the prior period)
MAY
Award-winning Indian
restaurant, Cassia, by Chef
Sid Sahrawat, opens at
SkyCity Auckland
The South Australian gaming
regulator issues a direction
notice requiring SkyCity Adelaide
to appoint an independent
expert to review, and monitor its
implementation of, its AML/CFT and
host responsibility enhancement
programmes in Adelaide
MARCH
Dividend of $0.06 per
ordinary share paid to
shareholders
David Attenborough
appointed as a
non-executive director
to the SkyCity Board
JUNE
Awarded a Gold Award
(General Awards)
and a Silver Award
(Sustainability Reporting
Awards) at the 2023
Australasian Reporting
Awards for SkyCity’s 2022
annual report
Sky Bar, New Zealand’s
highest bar, opens
at the top of the Sky
Tower in partnership
with Moët & Chandon
11
GENERAL Creating Value
Our Business
(as at 30 June 2023)
4,559
staff
5 properties across
New Zealand^
and Australia
1 online
casino
GAMING
HOSPITALITY
HOTELS
5^
land-based casino
licences
19
restaurants
12
bars
755
hotel rooms
3,456
electronic gaming machines
CONVENTIONS
SKY TOWER
307
table games
378
1,250 sqm
automated table games
of SkyCity convention space
328
metres tall
^ Includes the SkyCity Wharf Casino in Queenstown which has remained closed since March 2020 at
the commencement of the first COVID-19 lockdown in New Zealand.
12
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL FY23 REVENUE BY BUSINESS ACTIVITY
12%
FOOD AND
BEVERAGE
8%
HOTELS AND
CONVENTIONS
2%
GAMING
(ONLINE)
4%
OTHER
11%
FOOD AND
BEVERAGE
74%
GAMING
(LAND-BASED)
7%
HOTELS AND
CONVENTIONS
3%
OTHER
77%
GAMING
(LAND-BASED)
REPORTED
NORMALISED
2%
GAMING
(ONLINE)
FY23 REVENUE BY BUSINESS PROPERTY
2%
ONLINE
2%
INTERNATIONAL BUSINESS
2%
ONLINE
3%
INTERNATIONAL BUSINESS
28%
ADELAIDE
1%
QUEENSTOWN
8%
HAMILTON
59%
AUCKLAND
27%
ADELAIDE
59%
AUCKLAND
REPORTED
NORMALISED
1%
QUEENSTOWN
8%
HAMILTON
13
GENERAL FY23 Outputs and Financial Results
FY23 revenue and annual visitation
GAMING
HOSPITALITY
HOTELS
$654.5 million
including online (reported)
$105.4 million
$57.9 million
$758.6 million*
including online (normalised)
4.4 million
restaurant/bar covers
219,698
rooms occupied
2.2 million
visits from loyalty card members to
our land-based casinos**
CONVENTIONS
(including out catering)
$9.3 million
119,739
conference delegates
SKY TOWER
$15.5 million
404,525
visits
CONTRIBUTIONS
$189.5 million
in taxes to Governments
(including GST, income tax,
and gaming tax and duties)
$10.1 million
in community contributions,
levies and sponsorships
$307.9 million
in remuneration and benefits
to staff
$91.1 million
in dividends declared for
shareholders (in relation to
the FY23 period)
$281.0 million
to suppliers
$262.9 million
of capital invested
$28.4 million
in interest paid to lenders
* 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.
14
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL 15
GENERAL FY23 Outcomes and Impacts
Our sustainability vision recognises that to be a
sustainable business we must be a responsible business.
OUR
CUSTOMERS
1,087 customers*
identified within our casino properties
in breach of their exclusion orders
during FY23
FY22 - 629
$4.5 million
paid to the SkyCity New Zealand
Community Trusts
FY22 - $3.0 million
OUR
COMMUNITY
A record
$5.3 million
in grants was approved by the SkyCity
New Zealand Community Trusts to
122 community organisations in FY23
$52.2 million
Over
$540 million
paid in gaming taxes and problem
gaming levies
paid to suppliers of goods and services
during FY23 (including capital expenditure)
FY22 - $34.3 million
FY22 - over $446 million
OUR
ENVIRONMENT
17,107 tonnes CO2e*
total carbon footprint
FY22 - 16,144 tonnes CO2e
16
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL See pages 64-101 of this annual report for further details of our sustainability activities and
achievements over the financial year ended 30 June 2023.
1,288
exclusion*
orders
issued across our casino properties during FY23
FY22 - 901
Trialled the use of
facial recognition
technology in ATMs
to monitor for potential indicators
of problem gambling
“I get to connect with a range of community
groups that support our communities through
the SkyCity New Zealand Community Trusts.
The needs of our communities are varied,
and I am privileged to sit and talk with many
community organisations and hear how they
see their communities and their needs and
aspirations.
Project Nikau, SkyCity’s youth employment
programme for rangatahi Māori and Pasifika,
has grown immensely this year. It’s exciting
to be part of this journey as we support
young people on their employment journey
at SkyCity.”
Raewynne Jacobs
General Manager, Community Operations
SkyCity Community Trusts and Project Nikau
8.8% reduction
in waste sent to landfill by SkyCity since 2015
Over
202 tonnes
of food waste from our Auckland kitchens sent
to be commercially composted
* The increase in exclusion orders issued, exclusion-related breaches and carbon emissions in FY23 reflects a return to a full year of operations.
In FY22, SkyCity's land-based casinos were significantly impacted by COVID-19 closures and operating restrictions.
17
GENERAL Performance
FY23 Highlights
SkyCity delivered a solid financial performance for the financial year ended 30 June 2023 marked by the recovery of
SkyCity’s core casino operations as the business returned to a full year of operation.
In the prior comparable period, SkyCity’s result was significantly impacted by the COVID-19 pandemic - 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, 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, SkyCity’s properties
operated with significant operational constraints due to restrictions on mass gatherings and physical distancing
requirements during much of the period.
REVENUE
$926.2 million
REPORTED
44.9%
$966.7 million
NORMALISED
53.1%
FY22 - $639.0 million
FY22 - $631.5 million
EBITDA
$165.9 million
REPORTED
71.1%
$310.3 million
NORMALISED
125.0%
FY22 - $96.9 million
FY22 - $137.9 million
NPAT
$8.0 million
REPORTED
FY22 - ($33.6) million
EARNINGS PER SHARE
123.7%
$138.8 million
NORMALISED
1331.6%
FY22 - $9.7 million
1.1
REPORTED
cents per share
123.7%
18.3
NORMALISED
cents per share
1331.6%
FY22 - (4.4) cents per share
FY22 - 1.3 cents per share
DIVIDENDS PER SHARE
12.0
cents per share
12.0 cents
FY22 - 0.0 cents per share
18
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Our Performance History
GROUP REVENUE
FY23
FY22
FY21
FY20
FY19
926
952
639
1,125
822
967
631
NORMALISED
(including gaming GST)
822
REPORTED
780
1,119
1,200
1,000
800
600
400
200
0
200
400
600
800
1,000
1,200
$million
GROUP EBITDA
FY23
FY22
FY21
FY20
FY19
314
348
298
166
97
138
310
REPORTED
249
NORMALISED
201
343
350
300
250
200
150
100
50
0
50
100
150
200
250
300
350
$million
EARNINGS PER SHARE (EPS) AND DIVIDENDS PER SHARE (DPS)
FY23
FY22
-4.4
1.1
1.3
0.0
FY21
FY20
FY19
18.3
12.0
7.0
11.9
10.0
10.0
20.6
21.4
20.0
NORMALISED EPS
REPORTED EPS
DECLARED DPS
35.4
25.6
-5.0
0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
cents per share
ENTERPRISE VALUE
FY23
FY22
FY21
FY20
FY19
485
633
590
541
488
2,218
2,845
3,258
2,308
3,036
NET DEBT*
EQUITY VALUE
2,212
2,668
1,733
1,767
2,548
1000
500
0
500
1000
$million
1500
2,000
2,500
3,000
* Net debt is calculated as Group debt less cash in bank.
19
GENERAL Contributing to
Our Communities
Our SkyCity Community Trusts
Since 1996, SkyCity has awarded more than 5,100 grants
totalling over $71.5 million to various community groups
and organisations in New Zealand through the SkyCity
Community Trusts.
A record $5.3 million in grants was approved by
the SkyCity Community Trusts to 122 community
organisations over the financial year ended 30 June
2023 - see page 89 of this annual report for details of
the community groups and organisations who received
grants over the last financial year.
Award-winning Experiences
•
joint winner of the Outdoor or Non-Enclosed Facility
- Metropolitan category (for Sôl Rooftop bar) at the
2022 Australian Hotels Association SA Hotel Industry
Awards for Excellence.
SkyCity Adelaide was named winner of the Business
Event Venues category at the 2022 South Australian
Tourism Awards.
Sky Tower, Eos by SkyCity, and The Grand by SkyCity
were each awarded a 2023 Travellers’ Choice Award
by Tripadvisor – in recognition of accommodation,
attractions and restaurants that consistently earn great
reviews from travellers and are ranked within the top 10%
of properties on Tripadvisor.
We are immensely proud that our businesses have again
been recognised for delivering excellence over the period.
Supporting those Impacted by Cyclone
Gabrielle
Eos by SkyCity was named:
•
•
•
joint winner of the Luxury Hotel category at the
2022 Hotel Management Awards for Hotel and
Accommodation Excellence;
winner of the 5 Star Luxury Accommodation category
at the 2022 South Australian Tourism Awards;
winner of the Deluxe Hotel Accommodation,
Best Overall Hotel, and Environmental & Energy
Efficiency Practice categories at the 2022 Australian
Hotels Association SA Hotel Industry Awards for
Excellence; and
In February 2023, New Zealand was significantly
impacted by Cyclone Gabrielle. To assist those affected,
SkyCity donated $50,000 to the BBM Programme and
$50,000 to the Vision West Community Trust to support
their relief efforts in their local communities. SkyCity
also donated a total of $60,000, being the proceeds of all
Sky Tower ticket sales and all game fees from Bowl and
Social (the tenpin bowling alley at SkyCity Hamilton) on
26 February 2023, to the New Zealand Red Cross and lit
up the Sky Tower red that evening to raise awareness for
the New Zealand Red Cross' Disaster Fund. The proceeds
of all food sales at SkyCity Queenstown's Wild Thyme Bar
20
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL We are committed
to creating vibrant
experiences and precincts
for our customers and
positively contributing to
the communities in the
places where we operate –
both directly and through
the New Zealand SkyCity
Community Trusts.
& Kitchen on 24 February 2023 (around $1,900) was also
donated to the Hawke's Bay Disaster Relief Trust.
The SkyCity Auckland Community Trust also established
an Awhi Emergency Response Fund for community
groups supporting those impacted by the extreme
weather events in the Tāmaki Makaurau and Te Tai
Tokerau regions – with a total of $103,100 in grants
distributed to 13 organisations.
On 20 March 2023, several of our SkyCity Auckland
and Hamilton food and beverage outlets joined other
outlets across New Zealand in the 'Cooking up a Storm'
fundraising event with all proceeds from the evening
being distributed to the Emergency Mayoral Funds or
held for distribution to impacted hospitality businesses.
Our SkyCity outlets provided food and labour (at no cost)
and helped to raise around $50,000 for the event.
Supporting Good Causes
Throughout the year, SkyCity lights the Sky Tower, one
of New Zealand's most recognisable landmarks, to show
support for organisations and special events, including
charities and community initiatives, that SkyCity supports
financially or to mark national holidays, milestones,
other celebrations or significant events, or as a symbol of
respect or solidarity.
The SkyCity Adelaide building is also lit up by SkyCity
throughout the year to show support.
Over the last financial year, the Sky Tower
was lit up to support over 40 campaigns
and causes, including:
New Zealand Red
Cross' Disaster Fund
Earth Hour
Trans Awareness
Week
Rugby World Cup 2021
(playing in 2022)
Te Matatini National
Kapa Haka Festival
Child Cancer
Foundation
Pasifika Festival
Coronation of
King Charles
The SkyCity Adelaide building was also
lit up to support a variety of campaigns
and causes, including:
National Epilepsy
Awareness Day
AFL Gather Round
The Big Freeze Motor Neurone
Disease Awareness Day
National Road
Safety Week
National SES Volunteers Day
21
GENERAL Group Strategy
PURPOSE
We are trusted to create vibrant places for gaming, entertainment and
hospitality in New Zealand and Australia
Operational excellence
at our core
Sustainable operations
Complete major projects
and optimise portfolio
Create vibrant places
Pursue the omnichannel
opportunity
Responsible growth
Implementation Principles
Commitment
to responsibility
Shareholder
value creation
Culture of
compliance
Financial and capital settings to deliver objectives
In June 2022, we adopted a new corporate purpose
statement and integrated business strategy that
incorporates environmental, social, and governance
considerations into our 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.
Our integrated business strategy supports the long
term value proposition for attractive sustainable
shareholder returns, generated through earnings
growth with diversification, efficient capital allocation
and long term sustainability.
Our three strategic pillars - sustainable operations,
creating vibrant places and responsible growth - are
premised on financial and capital settings and guided by
three implementation principles:
•
•
•
commitment to responsibility - emphasising the
commitment to ethical business practices and
responsible hosting, anti-money laundering, and
‘doing what’s right’;
stakeholder value creation – recognising that the
organisation depends on stakeholders to create
value, and in turn the organisation can create (or
destroy) value for others. This principle emphasises
the importance of these dependencies with
employees, suppliers, customers, investors, the
government/regulators, the community, and the
environment; and
culture of compliance - creating a culture of
compliance in pursuit of continuous improvement –
by maintaining best practice systems, robust policies,
employee training, and monitoring.
22
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Our Strategic Priorities
Continuous improvement in
operational performance
and efficiency
Monetise omnichannel to
consolidate New Zealand leadership
position in gaming
Reliable and consistent free
cash flow generation and capital
distribution
Protect and enhance
social licence to operate
Successful completion and
integration of major capital projects
Highest standards of corporate
governance and compliance
frameworks
SkyCity remains focused 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.
SkyCity’s capital allocation framework supports the
Group’s strategic objectives by ensuring the structure for
prioritising the key sources and uses of capital is relevant
for the operating environment and investor expectations,
and is aligned with the key financial settings of the Group.
Online Casino Strategy
We 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 continues
to grow absent regulation) and the unique opportunity
SkyCity has to offer an integrated offline and online
experience to customers.
We continue to explore strategic opportunities, including
an online operation in Ontario, Canada, with international
iGaming company Gaming Innovation Group Inc, who
operates the SkyCity Online Casino on behalf of SkyCity
Malta Limited (an independently operated subsidiary of
the SkyCity Entertainment Group).
Major Projects
The New Zealand International Convention Centre
and Horizon Hotel project remains complex post the
significant fire in October 2019, but the reinstatement and
building works are progressing and we now expect the
Horizon Hotel and New Zealand International Convention
Centre to be delivered in 2024 and 2025 respectively.
SkyCity continues to remain comfortable with its
contractual position in relation to the project and
is actively considering steps to recover further
compensation for costs and losses due to the fire and
project delays. SkyCity's expected total project costs
remain unchanged (around $750 million), of which
around $130 million is still to be spent (as at 30 June 2023)
net of recoveries and reinstatement costs which are
funded via insurance responding on the project.
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.
23
GENERAL Diversity Snapshot
SkyCity employs a diverse range of people at all skill levels and
aims 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 make up of SkyCity’s workforce as at 30 June 2023 and, where relevant, as a comparison
against our workforce as at 30 June 2022:
staff
4,559
70% of our workforce
are 42 years old
and under
36 years
(full-time, part-time and casual)
(full-time, part-time and casual)
average age of our workforce
FY22 - 3,923
FY22 - 64%
FY22 - 37 years
80 years
age of our oldest staff member
6%
identify as being a member of the
LGBTTI+ community
41%
of leadership roles held by women
FY22 - 80 years
FY22 - 6%
FY22 - 49%
0.5%
gender diverse
48.5%
women
51%
men
FY22 - 0.3%
FY22 - 49.3%
FY22 - 50.4%
1%
60 languages
identify as having a disability
spoken and/or written by staff
Top 3 non-English
languages
1. Mandarin 2. Tagalog (Philippines)
3. Hindi and Cantonese
FY22 - 1%
FY22 - 60
FY22 - 1. Mandarin 2. Tagalog 3. Hindi
24
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL AGE BREAKDOWN
7.8%
Baby Boomers
(59–77 years)
FY22 - 9.4%
22.3%
Generation X
(43–58 years)
FY22 - 26.0%
FY23
TOP 10 ETHNICITIES STAFF IDENTIFY WITH
3%
Samoan
FY22 - 4%
5%
Other South East Asian
FY22 - 4%
6%
Māori
FY22 - 5%
8%
Other Asian
FY22 - 7%
8%
Filipino
FY22 - 7%
FY23
0.1%
Veterans
(78+ years)
FY22 - 0.1%
26.6%
Generation Z
(<27 years)
FY22 - 19.9%
43.2%
Millennials
(27–42 years)
FY22 - 44.6%
3%
European
FY22 - 3%
17%
Chinese
FY22 - 15%
13%
New Zealander
FY22 - 13%
10%
Australian
FY22 - 14%
8%
Indian
FY22 - 7%
non-English
languages
Given as a percentage of those staff members who provided details about their ethnicity and those who elected "prefer not to say”.
SkyCity Adelaide Pty Limited (the operator of the SkyCity Adelaide casino) has submitted its annual report to the
Australian Workplace Gender Equality Agency in accordance with the Workplace Gender Equality Act 2012 (Cth) which
outlines its policies, strategies, and actions on gender equality, its workplace profile (including workforce composition,
and salaries and remuneration), and its workforce management statistics (including employee appointments,
promotions, resignations, and parental leave). A copy of the public report is available to shareholders on request.
25
GENERAL About SkyCity
SkyCity is New Zealand’s largest tourism, leisure and
entertainment company and is listed on the New Zealand
and Australian stock exchanges.
Our History at a Glance
1994
Construction of the SkyCity
Auckland complex commences
1997
Sky Tower opens in
Auckland
1996
SkyCity opens its flagship SkyCity
Auckland complex with Harrah’s
Entertainment (now Caesars
Entertainment), the largest casino
entertainment operator in the
United States, as the operator
SkyCity lists on the New Zealand
stock exchange
1998
Harrah’s management contract
ends and SkyCity becomes a
New Zealand-managed operation
1999
SkyCity lists on the
Australian stock exchange
2000
SkyCity Queenstown opens
SkyCity acquires SkyCity Adelaide
2002
SkyCity Hamilton opens
2004
SkyCity acquires SkyCity Darwin
2005
SkyCity acquires full
ownership of SkyCity Hamilton
1990s
2000s
26
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL SkyCity operates integrated entertainment
complexes in New Zealand (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,
the SkyCity Online Casino (based out of Malta)
offers New Zealanders an online gaming
experience.
properties across
New Zealand and Australia
5^
3 hotels
$1,530
$1,761
$1.7 billion**
1 online casino
million*
in net assets
million*
in property assets
total market capitalisation
Our History at a Glance
Over
15,000 shareholders**
NZX and ASX listed***
* As at 30 June 2023.
** As at 1 August 2023.
*** S kyCity has a ‘Foreign Exempt Listing’ status on the ASX.
^ Includes the SkyCity Wharf Casino in Queenstown which has
remained closed since March 2020 at the commencement of
the first COVID-19 lockdown in New Zealand.
2012
SkyCity acquires full
ownership of SkyCity
Queenstown
2013
SkyCity acquires
SkyCity Wharf in
Queenstown
2016
The first sod was turned
on the New Zealand
International Convention
Centre/Horizon Hotel site
2018
Construction commences on the
SkyCity Adelaide expansion project
2020
SkyCity Adelaide expansion project
officially opens
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)
2021
SkyCity Auckland celebrates its
25th anniversary
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
2010s
2020s
27
GENERAL IMAGE: Award-winning Indian restaurant, Cassia, by
Chef Sid Sahrawat, opened its doors in the vibrant
Federal Street dining precinct in May 2023.
Auckland
PROPERTY
SKYCITY AUCKLAND, NEW ZEALAND
Property Manager
Callum Mallett, Chief Operating Officer New Zealand
Opened
1996
Casino Venue Licence
Runs until 2048*
Facilities
• Casino
• Hotels
• Conventions
• Food and beverage
• Entertainment and attractions
• Day spa
• Car parking
• Sky Tower
• Theatre
• Telecommunications and broadcasting facilities
• Office/retail space
Licensed Gaming Product
• 1,877 electronic gaming machines **
• 150 table games **
• 240 automated table games ***
Workforce
~ 2,900 staff
FY23 Revenue
$511.2 million^ (reported)
$568.9 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.
28
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Auckland
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 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.
Federal Street, the gateway to the SkyCity Auckland
precinct, features some of Auckland City’s best eateries,
including award-winning restaurants Masu by Nic Watt,
The Sugar Club, Huami, Depot, Federal Delicatessen
and Cassia - 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 – however, due to delays by the contractor and
the significant fire that broke out at the New Zealand
International Convention Centre (under construction)
in October 2019, 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 largest 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 to enjoy.
IMAGE: Award-winning chef
Michael Meredith will open a
new Pacific inspired restaurant,
Metita, at SkyCity Auckland in
October 2023.
IMAGE: Sky Bar, New Zealand's
highest bar, opened at the top
of the Sky Tower in June 2023 in
partnership with Moët & Chandon.
FY23 PERFORMANCE
The Auckland business delivered normalised revenue of
$568.9 million, and normalised EBITDA of $252.6 million
(up 150% from the previous comparable period). This
result reflects a full year of operations uninterrupted by
the impact of site closures with earnings back to a level in
excess of those achieved pre COVID-19.
Strong revenue growth across gaming was driven by
a robust mass-market electronic gaming machines
performance – this is the core of our customer base and is
proving resilient in the face of variable VIP play. Electronic
gaming machines revenue in the second half of FY23 was
down slightly on the first half as the pent-up demand
and constraints seen in the first half of the year were
released and due to adverse weather events in Auckland.
Table games performance recovered through the year
with a stronger second half due to increased operating
hours once more staff were available. Food and beverage
performance was supported by increased opening hours
and unconstrained resourcing while other non-gaming
revenue received a boost from the increase in tourism,
which was particularly evident in Sky Tower visitation.
The Auckland hospitality offering was revamped with the
opening of Cassia and Sky Bar, and a new Michael Meredith
restaurant is due to open in the first half of FY24.
29
GENERAL Adelaide
PROPERTY
SKYCITY ADELAIDE, AUSTRALIA
Property Manager
David Christian, Chief Operating Officer Australia
Opened
2000
Casino Venue Licence
Runs until 2085*
Facilities
• Casino
• Hotel
• Conventions
• Food and beverage
• Entertainment
• Car parking
• Wellness centre
Licensed Gaming Product
• 1,080 electronic gaming machines (allowance for 1,500)
• 116 table games (allowance for 200)**
• 138 automated table games (allowance for 300)
Workforce
~ 1,400 staff
FY23 Revenue
A$220.8 million (reported)
A$236.2 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.
30
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Adelaide
Located in and around the historic Railway Station
building on the banks of the River Torrens, 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, The Guardsman,
iTL, the immersive rooftop destination Sôl Rooftop, and
The District at SkyCity - Australia’s first fully functional
microbrewery within a casino (operated in partnership
with Pirate Life).
Eos by SkyCity is Adelaide’s most luxurious hotel. Since
opening in December 2020, Eos by SkyCity has won a
number of prestigious awards, including being 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.
FY23 PERFORMANCE
The Adelaide property also benefited from a full
uninterrupted year of operations with normalised revenue
of A$236.2 million (up 28% from the previous comparable
period) and normalised EBITDA of A$34.9 million (up 70%).
The electronic gaming machines business is the largest
contributor in Adelaide and had a positive year
– outperforming the market and ending the year with
11% market share.
Table games revenue was also up year on year albeit lower
than pre COVID-19 levels due to lower levels of visitation.
Both Eos by SkyCity and the food and beverage outlets
were positively impacted by some notable events
throughout the second half of year – the AFL Gather Round
and LIV Golf bringing significant visitors from other states,
which supported VIP play. This highlights the potential of
our Adelaide business when there are major activations in
the city centre.
Improvement in EBITDA margin was constrained by some
significant cost pressures - large labour cost increases,
food and beverage input costs and higher electricity prices
due to instability in the national network. SkyCity remains
focused on offsetting these inflationary pressures by
driving price increases wherever possible.
Of note was the legal and compliance costs of
A$8 million incurred in FY23 relating to SkyCity Adelaide's
response to the AUSTRAC and CBS matters and
implementing the Adelaide AML/CFT Enhancement
Programme.
31
GENERAL Hamilton
PROPERTY
SKYCITY HAMILTON, NEW ZEALAND
Property Manager
Michelle Baillie, General Manager Hamilton
Opened
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**
• 23 table games**
Workforce
~ 300 staff
FY23 Revenue
$66.3 million (reported)
$74.9 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 venue 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 some of Hamilton’s favourite eating and drinking destinations right in the
heart of Hamilton’s CBD, including The Local Taphouse and Eat Burger.
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 the opening of a new Chinese restaurant (tenancy),
Shanghai Restaurant, in May 2023. Product and layout optimisation within the casino remains a key focus to ensure
SkyCity Hamilton maintains its market leader position and to manage high demand for electronic gaming machines
(which continue to remain capacity constrained at peak times).
SkyCity Hamilton is a proud member and supporter of the local community, and celebrated 20 years of entertaining in
the Waikato region in September 2022.
32
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Hamilton
FY23 PERFORMANCE
The Hamilton business achieved normalised EBITDA
of $35.2 million. This was a record result driven by
very strong gaming machine performance, reflecting
the sentiment of the local economy which is more
domestic focused with less reliance on tourism. There
was strong growth on the prior comparable period due
to COVID-19 restrictions and closures in that period,
with SkyCity Hamilton closed for 65 days and operating
under various restrictions for an additional 122 days.
The first half of FY23 was particularly strong with
increased gaming visitation and premium play across
all categories and strong non-gaming contribution,
including higher patronage at Bowl and Social offset
by changes in outlet operating hours due to lower
staffing levels. The second half of FY23 was quieter,
reflecting changes in the economic environment with
lower visitation and spend compared to the first half.
SkyCity Hamilton is working to ensure it provides a
broad entertainment proposition by refreshing and
expanding its food and beverage offering. This will lead
to some upfront costs along with the impact of staff
numbers returning to more normal levels. However, it
is expected that this will also support the maintenance
of industry leading EBITDA margins which are now
back to pre COVID-19 levels.
33
GENERAL Queenstown
PROPERTY
SKYCITY QUEENSTOWN AND SKYCITY WHARF, NEW ZEALAND
Property Manager
Jono Browne, General Manager Queenstown
Opened
Opened Queenstown in 2000 and increased ownership from 60% to 100% in 2012
Acquired Wharf in 2013
Casino Venue Licence
Runs until 2025* for Queenstown
Runs until 2024* for Wharf
Facilities
Licensed Gaming Product
• Casino, including VIP gaming facilities
• Food and beverage
• Entertainment
• Conventions
• 86 electronic gaming machines (Queenstown)**
• 12 table games (Queenstown)**
• 74 electronic gaming machines (Wharf)**
• 6 table games (Wharf)**
Workforce
~ 50 staff
FY23 Revenue
$10.9 million (reported)
$12.3 million (normalised)
* The casino venue licence can be renewed for a further period of 15 years pursuant to sections 134–138 of the New Zealand Gambling Act 2003.
** This allowance may be alternatively utilised to enable automated table game terminals.
34
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL 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.
The SkyCity Wharf property is unlikely to be reopened.
FY23 PERFORMANCE
SkyCity Queenstown benefited from a full year
of uninterrupted operations in FY23, increasing
its normalised revenues by 21% to $12.3 million.
Normalised EBITDA of $4.1 million was 36%
higher than the previous comparable period and
represented a record year.
The Queenstown business has been hampered by
the availability of staff predominantly due to the lack
of accommodation in the region, which in turn has
impacted table games opening hours. SkyCity has worked
actively to find suitable accommodation for its staff.
Having consolidated to one site, SkyCity Queenstown
will benefit as more international tourism returns to
the Southern Lakes region and grow above pre COVID-19
levels.
SkyCity has commenced the renewal process in respect
of the SkyCity Queenstown casino venue licence, which
currently runs until December 2025.
SkyCity continues to pursue a sale of the development
land at 633 Frankton Road in Queenstown.
35
GENERAL Online
BUSINESS
SKYCITY ONLINE CASINO, MALTA
Manager
Steve Salmon, Managing Director SkyCity Malta
Launched
2019
Facilities
Online casino
FY23 Revenue
$15.3 million (reported)
$15.3 million (normalised)
The SkyCity Online Casino provides New Zealanders with an offshore online casino platform, featuring over 2,450
online games, ever increasing personalisation, a mobile first user experience and continually enhanced player safety
features and tools.
The 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.
36
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL 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 2023, SkyCity holds a 10% shareholding in GiG
and has a representative director on the GiG Board.
The online gaming market continues to grow globally
with numerous international jurisdictions regulating
online gaming (or intending to do so) to address the
transition from physical to online entertainment.
The New Zealand online gaming market continues
to grow significantly with recent estimates indicating
a market between $400 and $500 million in gross
gaming revenue per annum. This market is expected
to continue to grow with offshore operators targeting
unregulated markets, like New Zealand, as they find
themselves squeezed out of the increasing number of
jurisdictions adopting regulatory models.
New Zealand is now one of the last OECD countries to
not yet regulate online gambling and is increasingly
being aggressively targeted by offshore operators.
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, which 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 continues
to prepare for a regulated industry to deliver on the
omnichannel opportunity for the Group.
FY23 PERFORMANCE
The SkyCity Online Casino business generated
$15.3 million of normalised revenue, down 9% from the
prior comparable period. Normalised EBITDA of
$10.7 million was 17% lower due to lower revenue
and increased costs.
Online earnings declined as the New Zealand online
market has been aggressively targeted by offshore
operators who are not adhering to local marketing
restrictions. The SkyCity Online Casino’s market share has
also declined.
SkyCity’s 10% equity stake in GIG has increased in value
by 20% (as at 30 June 2023) since the shares were issued
to SkyCity in April 2022. SkyCity continues to enjoy the
strategic benefits of being associated with GiG.
The SkyCity Online Casino offering continues to be
enhanced with new content, with bingo to be launched
in the year ahead. The investment in the business is
reflected in a lower margin in FY23.
SkyCity continues to explore an online opportunity in
Ontario, Canada. This would provide some valuable
insights into operating in a regulated market and
enable SkyCity to potentially leverage the resources and
capability in its New Zealand operations in a regulated
New Zealand market.
37
GENERAL Risk
Management
SkyCity operates in a dynamic, highly
regulated and challenging environment
with risks and opportunities.
The SkyCity Board is ultimately responsible for the
governance of the Group’s risk management, which
includes approval and oversight of the Group’s risk
management framework and risk appetite, and
ensuring that organisational culture supports effective
risk management. Recognising the importance of the
governance of risk management, the SkyCity Board
established a Risk and Compliance Committee in August
2022 whose primary objective is to assist the SkyCity
Board in fulfilling its responsibilities relating to risk
management and compliance, including in respect of the
Group’s key compliance obligations, casino licensing, host
responsibility, anti-money laundering, and health and
safety matters.
•
•
•
formally adopting a three lines of defence model
to identify and manage key risks and to provide
assurance over SkyCity’s controls in managing those
risks;
the appointment of a Chief Risk Officer, Carolyn
Kidd (an experienced risk executive with an
extensive career in the financial services sector),
from 1 April 2023 who is responsible for SkyCity’s risk
management effectiveness and SkyCity’s risk,
anti-money laundering and counter-terrorism
financing, and host responsibility functions; and
commencement of a programme of work to enhance
and further mature SkyCity’s risk management
framework and approach.
In light of the heightened regulatory focus on the casino
industry over recent years, SkyCity has taken further
significant steps to enhance its risk management and
compliance frameworks over the past financial year,
including:
•
•
continuing to drive improvement and uplift in
the Group’s approach to host responsibility and
anti-money laundering;
committing further additional resources to, and
investment in, SkyCity’s anti-money laundering and
host responsibility functions;
38
The SkyCity Board and management recognise that
a positive culture is fundamental to effective risk
management 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).
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL SkyCity maintains a risk management framework for the
identification, assessment, monitoring and management
of risk to the Group’s business:
•
•
SkyCity will progressively embed the three lines of
defence approach to risk management with defined
roles and responsibilities across end-to-end risk
management and assurance;
the Group Risk function evaluates and reports on
risks and 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 monitors the Group’s culture for
indications on the risk culture and to identify any
potential areas for improvement; and
• Management reports to the SkyCity Board and the
Risk and Compliance Committee on the effectiveness
of the Group’s management of its material business
risks at least annually.
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 operate within risk appetite. 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 following table. Some risks are
affected by factors external to, and beyond the control
of, SkyCity.
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 90-101 of this
annual report.
39
GENERAL 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. 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 also been continued focus on
regulatory oversight of land-based casino operators in New Zealand
and Australia, particularly in respect of anti-money laundering and
host responsibility obligations – see below for more details.
In the case of any alleged wrongdoing, a regulator may initiate action
against SkyCity, including a formal warning or, where the matter
relates to SkyCity's casino operations, an application to suspend and/or
cancel the relevant casino licence under the New Zealand Gambling
Act 2003, South Australian Casino Act 1997 and/or South Australian
Gambling Administration Act 2019 as applicable.
AML/CFT Compliance and Host Responsibility
SkyCity operates in an industry that presents high money-laundering
risks. As a reporting entity under applicable anti-money laundering
and countering financing of terrorism (AML/CFT) legislation, SkyCity is
required to detect, deter, manage and mitigate money laundering and
the financing of terrorism risks.
SkyCity is also required to provide its gambling offerings in a
responsible manner in accordance with its Host Responsibility
Programmes, relevant responsible gambling and advertising codes
and legislation, and regulatory and community expectations.
A failure to comply with SkyCity’s AML/CFT or host responsibility
obligations could expose SkyCity to significant penalties and
remediation costs and have an adverse impact on SkyCity’s
operational and financial performance and reputation.
SkyCity Adelaide Pty Limited (SkyCity Adelaide), the operator of
the SkyCity Adelaide casino, is currently the subject of civil penalty
proceedings filed in the Federal Court of Australia by AUSTRAC on
7 December 2022 for alleged serious and systemic non-compliance
with the Australian Anti-Money Laundering and Counter-Terrorism
Financing Act 2006. Should the proceedings result in a determination
of non-compliance, SkyCity Adelaide could face significant penalties.
SkyCity Adelaide is also the subject of an independent review by
Consumer and Business Services (CBS), the South Australian gaming
regulator. In July 2022, CBS announced that it had appointed the
Honourable Brian Martin AO KC 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. The
review was placed on hold in February 2023 pending the conclusion
of the AUSTRAC civil penalty proceedings. Whilst the independent
review remains on hold and at CBS’ direction, an independent expert
will be appointed to review SkyCity Adelaide’s AML/CFT and host
responsibility enhancement programmes and, if required, make
amendments to those programmes, monitor the implementation
of those programmes by SkyCity Adelaide and SkyCity Adelaide’s
compliance with its AML/CFT and gambling harm minimisation
obligations, and report to the Commissioner in relation to the above
matters.
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 supports a robust compliance
culture and practices to ensure maintenance
of licence conditions and adherence to
applicable legislation and regulations.
In respect of SkyCity’s land-based casinos,
an AML/CFT Programme is in place in New
Zealand and in Adelaide that includes
procedures to detect, deter, manage and
mitigate the risks of money laundering
and the financing of terrorism. A Host
Responsibility Programme is also in place
at each of these casinos to prevent and
minimise harm from problem gambling. In
addition, specialist Financial Crime and Host
Responsibility teams are located within the
business.
The SkyCity Online Casino is operated from
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 risks. Through rigid
processes and industry leading software, GiG
ensures that it adheres to relevant AML/CFT
and host responsibility regulation and best
practice.
In addition to periodic regulator audits,
internal and external assurance activities and
audits are conducted on a regular basis to
assess the effectiveness of SkyCity’s AML/CFT
and host responsibility controls and processes.
SkyCity continues to invest in and enhance the
Group's AML/CFT and host responsibility risk
management capabilities, including through
uplift programmes, aligned resourcing and
dedicated IT systems development and new
technologies.
See pages 68-81 of this annual report for
further details on the Group’s approach to
AML/CFT and host responsibility.
40
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL MATERIAL EXPOSURE
RISK MANAGEMENT
Liquidity and Solvency Risk
SkyCity’s ability to achieve its business objectives is dependent
on it being able to effectively manage its liquidity and solvency
throughout a period of no and/or significantly diminished
revenue and earnings.
There is significant complexity related to managing those
matters, including as a consequence of a number of matters
being outside of SkyCity's control. Such unexpected matters
could result in SkyCity's financial position and future
performance being adversely impacted.
SkyCity’s ability to demonstrate fiscal resilience during these
times is critical to maintaining long term investor and regulatory
confidence.
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 the
ongoing regulatory focus, SkyCity continues
to adopt a conservative approach to capital
management.
Loss of Casino Licence
SkyCity’s Auckland property contributes a significant portion of
SkyCity’s EBITDA. This concentration of earnings means that the
performance of SkyCity is heavily dependent upon the Auckland
property.
A significant disruption to SkyCity’s Auckland operations, which
may arise through the suspension, cancellation or expiry of
the Auckland casino licence, would have a significant negative
impact on SkyCity. The suspension, cancellation or expiry of any
of SkyCity’s other casino licences would also have a negative
impact on SkyCity.
Where appropriate, a regulator may take action to suspend
and/or cancel the relevant casino licence under the New
Zealand Gambling Act 2003, South Australian Casino Act 1997
and/or South Australian Gambling Administration Act 2019 as
applicable.
Economic and Business Volatility
SkyCity has mitigated this risk by securing an
extension to the Auckland casino licence to
30 June 2048 and an extension to the Adelaide
casino licence to 30 June 2085. Extensions to the
Hamilton and Queenstown casino licences can be
sought in accordance with the renewal provisions
in the Gambling Act 2003 (New Zealand).
In addition, SkyCity mitigates this risk by
maintaining a robust compliance culture and
practices 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.
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 economic landscape, and has a
robust liquidity management framework.
SkyCity also continually reviews the optimal
mix for its business activities to ensure it has a
balanced portfolio reflecting its risk appetite.
Development and Project Risk (including Return from Major Projects)
SkyCity has a significant project underway in Auckland
comprising the New Zealand International Convention Centre
and Horizon Hotel development. Potential project risks include
project delays, supply chain constraints and project cost
overruns.
Horizon Hotel is expected to be completed during 2024 and
the New Zealand International Convention Centre and adjacent
laneway are expected to be completed in 2025.
It is possible that adequate returns are not generated from the
financial capital invested in capital projects.
SkyCity seeks to mitigate project 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.
SkyCity markets and promotes its precincts
and offerings to maximise the level of customer
patronage required to deliver the expected
returns on investment.
41
GENERAL MATERIAL EXPOSURE
RISK MANAGEMENT
Technology and Data Security Risk
Technology is critical to SkyCity’s business for facilitating/enabling
its operations, 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.
SkyCity also holds confidential customer and commercially
sensitive data. A leak or the unauthorised use of confidential
customer and commercially sensitive data may have an adverse
impact on SkyCity’s operational and financial performance and
reputation.
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 and to keep abreast of the
latest risks.
SkyCity has a dedicated ICT security function
that conducts regular exercises to assess 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.
Across the business, SkyCity has a range of
measures in place to manage cyber risk, including
policies and procedures, cybersecurity capabilities,
continuous threat monitoring and event-detection
capabilities. In particular:
•
•
•
to ensure staff have the requisite knowledge
and skills to combat cyber threats, staff are
required to complete cybersecurity training;
a Data Breach Response team has been
established, and a framework is in place, to
respond to data breach incidents; and
over the last financial year, a cyber
preparedness simulation exercise has uplifted
internal capability and preparedness.
SkyCity has a range of measures in place across its
business to mitigate against a leak or unauthorised
use of confidential customer and commercially
sensitive data, including policies and procedures,
event-detection capabilities, confidentiality
provisions in employee and contractor agreements,
and privacy training and awareness.
In relation to the SkyCity Online Casino, GiG
implements strict vulnerability management
processes for its products, services and
infrastructure, including:
•
•
•
•
•
GiG’s information security processes are tested
against international standards (ISO 27001:2013
audit);
penetration testing is conducted to identify
any vulnerabilities;
security engineers are consulted at the
design phase of a product to minimise any
vulnerabilities within the design of a product;
the security posture of each supplier is
assessed to minimise supply chain attacks; and
a specialist team monitors GiG’s systems on a
24/7 basis to identify any malicious activity that
could lead to a breach.
42
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL MATERIAL EXPOSURE
RISK MANAGEMENT
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.
SkyCity’s critical risks include working at heights, confined
spaces, electrical, violence, moving plant, fire and explosion.
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.
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.
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.
Following the completion of a Group-wide
independent health and safety review in the last
financial year, SkyCity is currently developing and
implementing a revised health and safety critical
risk framework, which focuses on substantially
higher risk activities (critical risks) associated with
hospitality, facilities and maintenance, projects,
logistics, events, and gaming management.
Ongoing safety assurance activities seek to
assess the effectiveness of controls and, where
appropriate, strengthen critical risk controls
ensuring SkyCity keeps its people and visitors safe.
SkyCity also 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 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.
To ensure SkyCity remains relevant to its
customers, key strategic projects are currently
being progressed, with a focus on emerging
industry trends and opportunities for leveraging
new technology and demographic changes.
Master planning also continues to be progressed
for each of the SkyCity sites to explore
opportunities for new food and beverage, gaming
and entertainment offerings.
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.
Business disruption risk is also mitigated through
the Group’s insurance cover.
43
GENERAL Our Board
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
Appointed a director of SkyCity
Adelaide in October 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, Winton Land Limited
and Deakin TopCo Pty Limited and holds a
Master of Finance from Victoria University
and a Master of Science from the University
of Waikato.
SUE SUCKLING
Director*
Member of the Risk and
Compliance Committee
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, Rubix Limited,
Jade Software Corporation Limited, Taska
Prosthetics Limited and Boulcott Hospital.
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 announced her intention to retire from the SkyCity Board in August 2022. Sue will remain a non-executive director on the SkyCity Board until
Donna Cooper’s appointment to the SkyCity Board is formalised.
44
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL CHAD BARTON
Director
Chair of the Audit 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
KATE HUGHES
Director
Chair of the Risk and Compliance
Committee
Member of the Audit Committee
Member of the Governance and
Nominations Committee
Appointed a director of SkyCity in
September 2022
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
the former 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.
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.
45
GENERAL GLENN DAVIS
Director
Member of the Risk and
Compliance Committee
Member of the Governance and
Nominations Committee
Appointed a director of SkyCity
in September 2022
Appointed a director of SkyCity
Adelaide and Chair of the
SkyCity Adelaide Board in
September 2022
Resides in Australia
DAVID
ATTENBOROUGH
Director
Member of the Audit
Committee
Member of the People and
Culture Committee
Member of the Governance and
Nominations Committee
Appointed a director of SkyCity
in March 2023
Resides in Australia
DONNA COOPER
Director-Elect
Appointment remains subject
to obtaining regulatory
approvals
Resides in New Zealand
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.
David Attenborough has strong gaming
experience with over 12 years’ experience at
ASX-listed Tabcorp Holdings Limited as Chief
Executive Officer and Managing Director.
Prior to joining Tabcorp, he was Chief
Executive Officer (South Africa) of Phumelela
Gaming and Leisure in South Africa and
previously held senior roles with a variety of
casino and racing organisations.
David is currently a director of Host-Plus
Pty Limited, an Australian-based
superannuation fund.
David holds an MBA from Henley Business
School and a Bachelor of Science (Honours)
from the University of Exeter and is a
graduate of the Australian Institute of
Company Directors.
Donna Cooper has over 25 years’ experience in
the financial services industry, most recently
as Chief Executive Officer of TSB Bank Limited.
Prior to this, she was Chief Executive Officer of
The Warehouse Financial Services Group and
Managing Director and General Manager New
Zealand of Baycorp (NZ) Limited. She has also
held a number of senior executive roles with
American Express International over a 10-year
period in New Zealand, Australia, India and the
United Kingdom.
Donna is currently a member of the New
Zealand Institute of Directors and a member
of the Global Women’s Leadership Network.
She was previously, up until 28 July 2023,
the Chair of the NZ Bankers’ Association’s
Domestic Banks Group and a member of the
NZ Bankers’ Association’s Governing Council.
Donna holds a Master of Arts in International
Business from the Rennes School of Business,
France, and a Bachelor of Business from the
Auckland University of Technology.
46
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Our Senior
Leadership Team
Michael was appointed Chief Executive Officer in November 2020 after
initially joining SkyCity in December 2017 as Group Chief Operating Officer.
In 2019 he oversaw the establishment of the SkyCity Online Casino after
leading SkyCity’s online gaming strategy. Michael’s priority and focus as
Chief Executive Officer has been the post COVID-19 recovery of the Group
along with the transformational uplift of the host responsibility, anti-money
laundering and counter-terrorism financing, and risk and compliance
capabilities across the business.
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 (now Flutter), as
well as Aristocrat and Tabcorp.
Michael is a qualified accountant and holds a Master of Business
Administration from the University of Technology, Sydney.
Julie joined SkyCity as Chief Financial Officer in May 2021 and is responsible
for the financial management of SkyCity, including reporting, capital markets,
treasury, and corporate development. She also oversees SkyCity’s investor
relations and internal assurance functions 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.
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. He also oversees
SkyCity’s information and communications technology function.
Callum has significant gaming and hospitality experience having held
a number of senior roles at SkyCity since joining in 2006, including as
General Manager SkyCity Darwin, General Manager SkyCity Auckland
Hotels, Convention Centre and Sky Tower, and Executive General Manager
of Hospitality for SkyCity Auckland. Prior to joining SkyCity, Callum held
numerous senior leadership roles across the hospitality, retail and financial
investment sectors.
Callum 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.
47
MICHAEL AHEARNE
Chief Executive Officer
JULIE AMEY
Chief Financial Officer
CALLUM MALLETT
Chief Operating Officer
New Zealand
GENERAL 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.
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, and regulatory affairs functions and is
designated as SkyCity’s Chief Privacy Officer.
Jo has 25 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.
Carolyn joined SkyCity as Chief Risk Officer in April 2023 and is responsible for
SkyCity’s risk management effectiveness and the risk, anti-money laundering
and counter-terrorism financing, and host responsibility functions.
Carolyn is an experienced risk executive with an extensive career in the banking
and finance industry across Australia and New Zealand. Prior to joining SkyCity,
she held a number of senior risk roles, including Chief Risk Officer at Westpac
New Zealand, Chief Risk Officer at Bankwest (Commonwealth Bank of Australia),
Chief Risk Officer at Sovereign Assurance, and Chief Credit Officer, Acting Chief
Risk Officer and Head of Credit Risk Management at ASB Bank Limited.
Carolyn is currently a director and Senior Fellow of the Financial Services
Institute of Australasia and holds a Bachelor of Arts from the University of
Auckland and a Diploma of Banking from Massey University.
DAVID CHRISTIAN
Chief Operating Officer
Australia
JO WONG
General Counsel and
Company Secretary
CAROLYN KIDD
Chief Risk Officer
48
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Simon oversees the development of SkyCity’s New Zealand International
Convention Centre and Horizon Hotel project in Auckland. He also oversees
SkyCity’s health and safety function and SkyCity’s development projects in
New Zealand.
Simon has held a number of senior roles across the business since joining
SkyCity in September 2007, including General Manager SkyCity Adelaide,
General Manager Hotels SkyCity Auckland and Acting General Manager
SkyCity Auckland.
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.
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
(Phil Goff) and was responsible for running the Mayor’s office and executing
his political priorities. Prior to this, she ran Mayor 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 Chair of its Membership and Stakeholders Committee,
and a member of the Heart of the City Auckland’s Executive Committee
(representing SkyCity). She holds a Bachelor of Laws and Bachelor of Health
Science from the University of Auckland.
Steve joined SkyCity in February 2019 in the newly created role of SkyCity
Online Director and was appointed Managing Director SkyCity Malta
in February 2021. Based in the United Kingdom, Steve is responsible for
launching, developing and leading SkyCity’s online gaming strategy, including
overseeing the operations of the SkyCity Online Casino.
Steve has extensive global senior leadership experience in the online gaming
industry with a successful record of achievement driving growth and
profitability within established listed corporate entities and entrepreneurial
start-up consumer brands. Steve has led across all industry verticals (including
sports betting, social gaming, business-to-business and business-to-
customer), been a driver of thinking in the omnichannel space, and pioneered
many of the industry's key innovations.
Steve qualified as a member of the Chartered Institute of Management
Accountants and has a post graduate qualification from the Cranfield School
of Management.
SIMON JAMIESON
Group General Manager -
NZICC Development
and Tourism
NIRUPA GEORGE
Chief Corporate Affairs Officer
STEVE SALMON
Managing Director
SkyCity Malta
49
GENERAL Greg joined SkyCity in 2017 and was appointed Chief Information Officer
in March 2023. He is responsible for all aspects of SkyCity’s technology
strategy, including the development and execution of digital transformation
initiatives, and for leveraging emerging technologies to transform
business processes, drive operational efficiency and enhance the customer
experience.
Greg has over 25 years’ experience in New Zealand, throughout Europe,
the United Kingdom and North America. Prior to joining SkyCity, Greg held
senior technology leadership positions across a range of sectors, including
banking, insurance, local government, and telecommunications. He has
worked in a venture incubator and experimented with commercialising
concepts through technology start up to bring new products to market.
Greg holds a Bachelor of Science (Hons) from Leeds Beckett University,
United Kingdom, and a New Zealand Certificate of Engineering from the
Central Institute of Technology.
Shaun joined SkyCity as Chief People and Culture Officer in August 2023
and is responsible for leading the development and implementation of best
practice people and culture strategy across the SkyCity Group.
Shaun is a senior human resources executive with expertise in supporting
leadership and culture transformation, innovation and business execution
strategies across the telecommunications, financial services, and
infrastructure sectors. Prior to joining SkyCity, Shaun held senior leadership
roles across Australia and New Zealand, including Chief People Officer
at Chorus New Zealand Limited and Executive General Manager Human
Resources at AMP New Zealand.
Shaun has a Bachelor of Commerce from the University of Auckland and is
a graduate of executive management programmes at the Harvard Business
School and the London Business School.
GREG WHEELER
Chief Information Officer
SHAUN PHILP
Chief People
and Culture Officer
IMAGE: SkyCity Auckland
50
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL 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 102-113 of this annual report. SkyCity’s constitution and relevant charters and policies are available in the
Governance section of the company’s website at www.skycityentertainmentgroup.com.
SkyCity Board
Standing Board Committees
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
Chief Operating
Officer
New Zealand
Chief Operating
Officer
Australia
General Counsel
and Company
Secretary
Julie Amey
Callum Mallett
David Christian
Jo Wong
Chief
Risk Officer
Carolyn Kidd
Group General
Manager - NZICC
Development
and Tourism
Simon Jamieson
Chief Corporate
Affairs Officer
Managing
Director
SkyCity Malta
Chief
Information
Officer
Chief People
and Culture
Officer
Nirupa George
Steve Salmon
Greg Wheeler
Shaun Philp
51
GENERAL Our Workforce
As a major employer with over 4,500 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 of what we do,
ensuring that our staff can work safely, are motivated, can 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.
78%
of our staff participated in SkyCity’s biennial
employee engagement survey (MyVoice)
in May 2023, including 84% of all permanent
employees (full and part-time)
89% feel their manager will act if
they identify a risk or safety issue
78%
overall engagement score of
favourable achieved
88% feel safe when
they are at work
82% proud to work
for SkyCity
79%
would recommend SkyCity
as a great place to work
52
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Health, Safety and Wellbeing
The SkyCity Group Health, Safety and Wellbeing Strategy
(FY22 – FY25) focuses on a number of key themes to
continue SkyCity’s improvement journey, including
effective risk management, strong leadership and better
engagement, resources to support improvement, and
healthier people.
Healthcare – by fully subsidising 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.
Over the last financial year, these strategic goals have
been successfully delivered through a FY23 Health, Safety
and Wellbeing Roadmap with the introduction of:
•
•
•
•
a critical risk framework for identifying and managing
our most critical health and safety risks;
a Group-wide wellness programme (an exercise
challenge) for improving employee wellbeing;
a leadership safety observation and training
programme; and
an employee consultation and participation
framework which included the introduction of around
100 trained Health and Safety Ambassadors across
our properties.
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
each year. As healthcare can be expensive and sometimes
difficult to access, SkyCity also offers its permanent,
full-time employees across its New Zealand sites health
insurance via healthcare provider Southern Cross
A range of services are also in place to assist employees
who may need a helping hand. SkyCity offers confidential
help and advice (for both work related issues and
situations outside of work) for employees at its Auckland
and Hamilton sites through the ‘Connect’ employee
advocacy team. A Group-wide Employee Assistance
Programme (delivered via EAP Services) also offers
supportive and confidential assistance to SkyCity
employees with support available 24 hours a day, seven
days a week from trained professional counsellors.
SkyCity also provides emergency financial assistance
for employees suffering financial hardship, including
budgeting advice and last resort financial help through
a ‘SMILE’ loan to New Zealand-based staff who qualify
for support.
SkyCity also offers a range of meal options across its
land-based casinos for staff during working hours – at no
cost to employees in Adelaide while on shift and at heavily
subsidised costs in New Zealand.
Leveraging its bulk buying power, SkyCity opened an
in-house ‘convenience store’ within its Auckland staff café
during the last financial year which offers basic household
items, such as bread, milk, butter and eggs, to employees
at cost prices.
FY23 Health and Safety Scorecard
INDICATOR
TARGET
FY23 PERFORMANCE
Safety Success Indicator 1
Zero fatalities or life altering injuries
Safety Success Indicator 2
Safety Success Indicator 3
Total Recordable Incident Frequency Rate
(TRIFR) target of 24.3 across the Group
(Adelaide and New Zealand)
Complete and record 600 health and safety
observations across the Group (Adelaide and
New Zealand)
Achieved – no fatalities or life
altering injuries
Achieved – TRIFR of 11.3 recorded
Achieved – 1,835 health and safety
observations completed by staff
In FY23, our Auckland employees purchased
244,075
buffet meals (starting from $1.20 per meal)
9,419
cartons of eggs
6,805
loaves of bread
9,474
two-litre bottles of milk
53
GENERAL Developing Meaningful
Career Pathways
Our vision is to be a centre of expertise that delivers high
value learning and development opportunities for staff which
contribute to the achievement of our business priorities.
In addition to our core, enterprise-wide online e-learning
training programme for our employees (including host
responsibility, AML/CFT, privacy and cyber security
modules), we have a number of tailored development
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. The SkyCity Strategic
Talent Management Programme is designed to identify,
develop and retain individuals who have potential for
future leadership roles or are able to fulfil business critical
roles – leveraging and growing existing high potential
talent through clarity on career pathways, delivering
impactful and relevant development solutions and
reducing the need to recruit leadership roles externally.
To ensure our 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.
Future chefs
SkyCity is New Zealand’s largest and most diverse
hospitality employer with around 300 chefs working
across over 20 kitchens in its restaurants and production
kitchens – the perfect environment for a future chef to
learn from the best chefs in the industry across a broad
range of cuisines, techniques and styles.
11 trainees joined the SkyCity Chef Apprenticeship
Programme at SkyCity Auckland in March 2023 –
a two-year programme for future chefs to hone their
culinary skills and gain a recognised qualification.
54
Project Nikau is SkyCity’s award-winning youth
employment programme in New Zealand with a focus
on developing work-ready skills (see page 88 of this
annual report for further details):
73
rangatahi
(young people)
joined the Project Nikau programme during
the last financial year
99
recruits
have enrolled in the Project Nikau programme
since it was launched in June 2019
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Diversity and Inclusion
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.
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.
Diversity and Inclusion Policy
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. At the end of each financial year, these
objectives are reviewed along with the company’s
progress in achieving them.
The measurable objectives set by the Board for the
financial year ending 30 June 2024 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;
continue to advance SkyCity’s indigenous pathway
strategy;
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 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 awareness, education and capability
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.
55
GENERAL SkyCity performed well against the measurable objectives set by the Board to promote
diversity and inclusion for the financial year ended 30 June 2023.
OBJECTIVE
PROGRESS MADE
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)
Recruitment briefs for the Board and senior executive recruitment
processes during the past financial year explicitly specified that SkyCity
required female candidates to be identified whenever possible.
During the past financial year, there were three new appointments to the
executive leadership team and two resignations, resulting in 45% female
representation and 55% male representation in the executive leadership
team as at 30 June 2023.
Maintain a gender balance across the
SkyCity employee population and at
each tier of the organisation hierarchy
Gender balance has been maintained across the organisation with 48.5%
of employees being female, 51% being male and 0.5% being gender
diverse as at 30 June 2023.
Continue to review gender and
ethnic pay equality and deliver an
organisation-wide programme that
removes any risk of bias or inequality
Within the top four levels of the organisation hierarchy, 48% of employees
were female and 52% of employees were male as at 30 June 2023,
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 has identified no 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 overall New Zealand gender pay gap decreased to 4.4%
(at 30 June 2023) from 6.8% (at 30 June 2022).
SkyCity’s overall Australian gender pay gap has remained at 3.5%
(at 30 June 2023).
Leverage and grow diverse talent
pools to develop a more ethnically
diverse leadership population
Several initiatives were delivered during the past financial year with the
objective of developing a more ethnically diverse leadership population.
SkyCity:
•
•
•
•
commenced a programme of works with Hybridges, a cultural
intelligence consultancy, to address barriers to Pasifika success;
continued as a major partner of TupuToa in New Zealand, hosting
three interns within the corporate business;
continued its partnership with Career Trackers in Adelaide, hosting an
Indigenous intern within the corporate business; and
initiated a new partnership with Te Tari Consultants to begin a pilot
programme of te reo Māori learning.
Intentional and targeted learning and development programmes
have resulted in a positive shift in female ‘Developing Top Talent’ in
leadership pipelines.
SkyCity achieved ‘Gender Tick Advanced’ status for the first time for its
New Zealand site and has expanded its support of rainbow inclusion and
diversity by committing to the higher ‘Gold Level’ Pride Pledge in New
Zealand.
Our Adelaide site maintained its Pride in Diversity membership.
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
56
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL OBJECTIVE
PROGRESS MADE
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
Continue to provide support and
education to employees and
managers to promote mental health
awareness and wellbeing
SkyCity launched several bespoke enterprise leadership initiatives,
including flagship development programmes for rising leaders and senior
leaders that take a holistic, sustainable and culturally diverse approach to
leadership development.
Rainbow Awareness training was delivered to our Security teams and an
updated Rainbow e-Learning was delivered by our partner organisations.
An English as a second language (ESOL) sub-committee was established
to support development plans to address barriers for ESOL team
members.
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 a new youth focused
Employee Resource Group ‘Elevate’, there are now six core groups
represented in New Zealand - Winning Women, NZ Asian Leaders, SkyCity
Pride, Pasifika Village and Te Roopū Māori o SkyCity.
SkyCity Adelaide's Inclusion Council, which replicates the model already
established in New Zealand, is still in its formative stages, with core groups
represented being Women’s Voice, LGBTTIQA+, Life Stages, Aboriginal,
and Disability/Ability.
Several specialists were engaged to provide perspectives and guidance to
both management and the SkyCity Inclusion Council Employee Resource
Groups with a focus on building cultural understanding and competence.
SkyCity’s relationship with mana whenua Ngāti Whātua Ōrākei in
Auckland continues to mature.
An ESOL sub-committee, reporting into the Inclusion Council, was
established to provide a governance lens for development programmes
specifically for ESOL team members.
A SkyCity Wellbeing Alliance Group has been formed, comprising
employees from across the Group, to reframe SkyCity’s wellbeing strategy.
The purpose of this group is to ensure a healthy working environment
and deliver a united front for supporting and creating a healthy working
environment for the betterment of our people’s wellbeing and wellness
at work.
SkyCity introduced a Menopause Toolkit on International Women’s Day
2023. The toolkit provides education on the menopausal transition and
information regarding support for female SkyCity employees who are
impacted by menopausal symptoms.
To encourage men to discuss their mental health, a mental health
workshop was held at SkyCity Auckland in collaboration with ‘Soften up,
bro’ and Te Roopū Māori o SkyCity during Mental Health Awareness week.
A psychological safety programme, comprising workshops and coaching
sessions, was delivered at SkyCity Adelaide in partnership with Diversity
Inclusion Australia.
Preventing burnout coaching was rolled out to targeted individuals across
the Group, focusing on equipping employees with coping mechanisms
and better ways of working.
57
GENERAL 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
across SkyCity’s New Zealand properties - Winning
Women, NZ Asian Leaders, SkyCity Pride, Pasifika Village,
Te Roopū Māori o SkyCity and Elevate (representing
SkyCity’s young talent) - and five core Employee Resource
Groups at SkyCity Adelaide – Women’s Voice, LGBTTIQA+,
Disability/Ability, Aboriginal and Life Stages.
Supporting Our Rainbow Community
In New Zealand, SkyCity was one of the first signatories
to commit to the Pride Pledge when it first launched
in June 2018. The Pride Pledge is a values-based
commitment that organisations and individuals can
take to demonstrate their dedication to the safety,
visibility and inclusion of the rainbow members of their
community and workforce. Over the last financial year,
SkyCity has expanded its support of rainbow inclusion
and diversity by committing to the higher ‘Gold
Level’ Pride Pledge – reflecting SkyCity’s growth and
development in LGBTTQIP+ initiatives.
Our Adelaide site has been a member of Pride in Diversity
since 2018. Pride in Diversity is Australia’s first and only
national not-for-profit employer support program for all
aspects of LGBTQ workplace inclusion, providing training
and consulting services to assist organisations with all
aspects of LGBTQ workplace inclusion.
SkyCity Queenstown is also a Platinum Naming Sponsor
for the annual Queenstown Winter Pride Festival
and SkyCity Auckland has been the sponsor of the
Community and Advocacy category of the New
Zealand Rainbow Excellence Awards since the Awards
commenced in 2018.
Gender Tick
SkyCity was awarded the Gender Tick in 2019 in
recognition of its commitment to providing a fair
workplace for all employees and this status has been
reconfirmed each year since – most recently in April 2023
(achieving accreditation at the ‘Advanced’ level).
Created in 2018, Gender Tick is a New Zealand-based
accreditation for businesses to demonstrate their
commitment to gender equality in the workplace. The
programme assesses organisations across five key
indicators, including gender inclusive culture, flexibility
and leave, women in leadership, gender pay equality and
ensuring a safe workplace.
Pay Equality
SkyCity continues to monitor and report on remuneration
outcomes by gender to ensure pay equality. In the last
financial year, SkyCity again conducted gender pay
equality analysis for like positions (being positions with
similar degrees of know-how, problem solving and
accountability). This analysis identified that there are no
indications of gender bias across similar positions.
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 five years
to lift the hourly wage rate of SkyCity’s lowest paid staff,
have contributed to a meaningful reduction to SkyCity’s
gender pay gap in New Zealand.
58
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL 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.
Gender Pay Gap
The following table illustrates the SkyCity gender pay gap as at 30 June 2023 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)
National
Gender Pay Gap
SkyCity Gender
Pay Gap*
(as at 30 June)
National
Gender Pay Gap
4.4%
6.8%
6.9%
7.5%
8.2%
9.2%
(August 2022)
9.1%
(August 2021)
9.5%
(August 2020)
9.3%
(August 2019)
9.2%
(August 2018)
3.5%
3.5%
6.1%
1.5%
1.5%
13.3%%
(November 2022)
13.8%
(November 2021)
13.4%
(November 2020)
13.9%
(November 2019)
14.1%
(November 2018)
2023
2022
2021
2020
2019
* The percentage difference between the median hourly rate for women compared to the median hourly rate for men as at 30 June in the relevant
year (including permanent and temporary employees).
59
GENERAL Ethnic Pay Gap
The following table illustrates SkyCity's ethnic pay gap as at 30 June 2023 and, by way of comparison, as at 30 June 2022:
NEW ZEALAND
SkyCity Ethnic Pay Gap as compared to
Pakeha Men (as at 30 June 2023)
SkyCity Ethnic Pay Gap as compared to
Pakeha Men (as at 30 June 2022)
Pakeha Women
Māori Women
Pacific Women
Asian Women
2.9%
10.3%
7.9%
6.0%
AUSTRALIA
6.8%
14.0%
13.8%
10.9%
SkyCity Ethnic Pay Gap as compared to
European Men (as at 30 June 2023)
SkyCity Ethnic Pay Gap as compared to
European Men (as at 30 June 2022)
European Women
Asian Women
0%
13.2%
0%
13.4%
60
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Gender Composition
The gender composition of SkyCity’s directors, officers, senior executives and total workforce as at 30 June 2023 and,
comparatively as at 30 June 2022, is set out below:
2023
FEMALE
MALE
Directors
Officers
Senior Executives
Number
2
4
5
Total Workforce
2,207
%
33%
40%
45%
49%
Number
4
6
6
2,325
%
67%
60%
55%
51%
2022
FEMALE
MALE
Directors
Officers
Senior Executives
Number
3
4
5
Total Workforce
1,933
In the above tables:
%
60%
44%
56%
49%
Number
2
5
4
1,977
%
40%
56%
44%
51%
Total
6
10
11
4,532
Total
5
9
9
3,923
•
•
•
‘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.
No directors or officers self-identified as gender diverse as at 30 June 2022 or 30 June 2023.
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.
61
GENERAL Our Staff Numbers
Worked Full-Time Equivalent (FTE)* by Site
NUMBER OF
EMPLOYEES
%
Site
FY23
FY22
FY23
FY22
Adelaide
925
843
Auckland
2,165
1,830
Hamilton
Queenstown
229
44
204
41
28%
64%
7%
1%
29%
63%
7%
1%
Total
3,363
2,918
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
NUMBER OF
EMPLOYEES
%
Site
FY23
FY22
FY23
FY22
Adelaide
1,375
1,297
Auckland
2,829
2,309
Hamilton
Queenstown
302
53
268
49
30%
62%
7%
1%
33%
59%
7%
1%
Group Total
4,559
3,923
100%
100%
Employment Contract Type for Group
NUMBER OF
EMPLOYEES
%
Contract Type
FY23
FY22
FY23
FY22
Permanent
4,076
3,496
Temporary
483
427
89%
11%
89%
11%
Group Total
4,559
3,923
100%
100%
62
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023GENERAL Employment Contract Type by Gender for Group
FEMALE
GENDER
DIVERSE
MALE
GROUP
TOTAL
Contract Type
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
Permanent
90%
89%
82%
80%
89%
89%
89%
89%
Temporary
10%
11%
18%
20%
11%
11%
11%
11%
Employment Type by Gender for Group
FEMALE
GENDER
DIVERSE
MALE
GROUP
TOTAL
Contract Type
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
Full-Time
On Demand
Part -Time
52%
18%
30%
50%
22%
28%
50%
36%
14%
30%
60%
10%
60%
16%
24%
61%
18%
21%
56%
17%
27%
56%
20%
24%
Employment Contract Type by Site
ADELAIDE
AUCKLAND
HAMILTON
QUEENSTOWN
Contract Type
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
Permanent
70%
68%
97%
100%
100%
100%
94%
100%
Temporary*
30%
32%
3%
0%
0%
0%
6%
0%
*Adelaide defines casual employees as temporary whereas the New Zealand sites define employees with a fixed end date as temporary.
Employees in Collective Agreements by Site
ADELAIDE
AUCKLAND
HAMILTON QUEENSTOWN
GROUP
TOTAL
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
77%
77%
23%
21%
2%
3%
0%
0%
38%
38%
23%
23%
77%
79%
98%
97%
100%
100%
62%
62%
Yes
No
*Group total percentages are weighted proportionately based on site worked FTE.
63
GENERAL Sustainability
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.
SkyCity is committed to maintaining the highest levels of
sustainability objectives and practices. 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.
Given the considerable external and internal change
in relation to sustainability practices, perspectives and
64
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY At SkyCity, we recognise that
sustainability is critical to all levels
of our business and operations.
IMAGE: SkyCity Adelaide precinct
operating context, we commenced a review of SkyCity’s
sustainability framework and strategy in early 2022
- 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
SkyCity’s sustainability activity was aligned to
organisational purpose and strategy and reflective of
the operating context. Following the review, we adopted
a new integrated business strategy from 1 July 2022
that integrates environmental, social, and governance
considerations into our current business strategy – as
further detailed in the Group Strategy section of this
annual report.
In mid-2022, SkyCity 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. The areas identified as priority issues are those
considered highly material for SkyCity’s business and for
our stakeholders. We continue to focus on embedding
our sustainability framework and strategy into all levels of
the organisation and in the way SkyCity operates.
What Matters Most
We undertake a materiality assessment on a regular
basis to prioritise the issues that are most important to
our business and key stakeholders in the short, medium,
and long term. The materiality assessment determines
issues critical to SkyCity’s financial performance and its
broad set of stakeholders, including investors, employees,
customers, wider society and the environment.
In May 2023, we conducted a materiality assessment with
key stakeholders with the assistance of an independent
consultant. Stakeholders were asked to identify and
score SkyCity’s most material topics from a shortlist
of potentially material issues identified by the SkyCity
Senior Leadership Team and expert advice using the
International Framework’s definition of materiality.
The shortlist was derived from a longer list of relevant
matters identified via desktop research, a scan of media
and industry best practices, insights from the SkyCity
Senior Leadership Team and Board, the review of SkyCity’s
sustainability framework and strategy in early 2022, and
a review of SkyCity’s most recent materiality assessment
process in 2020.
65
SUSTAINABILITY Our Material Issues
Taking into account feedback from all stakeholders, the material issues were grouped into three priority categories as
summarised in the table below. These priority categories will inform how we develop our integrated business strategy,
our sustainability activity, and our reporting going forward:
CATEGORY DESCRIPTION
MATERIAL TOPICS
Imperative to value creation in the short,
medium, and long term for SkyCity
(alternatively, they present a serious risk
to value creation if they are not managed
well and can cause the immediate
erosion of value)
Essential to value creation in the short-
medium term for SkyCity (alternatively,
they present a risk to value creation if
they are not managed well in the short to
medium term)
Contribute to value creation in important
ways over a slightly longer time horizon
(alternatively, they present some risk to
value creation if they are not managed
well)
•
•
•
•
•
•
•
•
•
•
•
•
Hosting responsibly
Financial crime prevention
Sustainable business performance
Destinations and experiences
Employee health and safety
Operational excellence and business
continuity
Engaged, inclusive, and capable workforce
Governance, ethics, and transparency
Community investment
Iwi and indigenous peoples
Climate change
Sustainable value chain
Our Priority Areas
The following pages outline our priorities, focus areas, activities and targets for each of the pillars in our FY23 – FY25
sustainability implementation plan – ‘Customers’, ‘Community’, and ‘Environment’, and summarise the activities
undertaken and achievements against our priorities for the financial year ended 30 June 2023.
IMAGE: SkyCity Auckland
66
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY SkyCity Sustainability
Implementation Plan FY23 – FY25
PRIORITIES
CUSTOMERS
COMMUNITY
ENVIRONMENT
Implementation
Principles
(a) Stakeholder
value creation
(b) Commitment to
responsibility
(c) Culture of
compliance
(a) Creating vibrant experiences for
(a) Building and operating vibrant
(a) Respecting, protecting, and
SkyCity customers and exceeding
their expectations
(b) Ensuring customer experiences are
provided safely and responsibly
(c) Commitment to continuous
improvement and having the
systems and processes necessary
to deliver vibrant experiences,
responsibly
destinations in the places where
we operate. Contributing back to
local communities
enhancing the environment in
the places where we operate
(b) Responsible use of natural
(b) Exceeding the expectations of
a responsible business in the
communities in the places where
we operate
(c) Commitment to continuous
resources and a commitment
to minimise our impact and,
where possible, enhancing the
environment in the places where
we operate
improvement and having the
systems and processes necessary
to deliver vibrant experiences,
responsibly
(c) Dedicated focus on complying
with all relevant environmental
regulations, including
climate-related risk disclosures
Focus Areas
• Host responsibility
• Prevention of financial crime
•
Creating vibrant customer
experiences, delivered responsibly
by our people
Activities
• Host responsibility programme
•
•
Financial crime programme
Employee retention, training and
development
• Customer experience programme
Our Targets
•
•
•
•
•
•
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
•
Customer satisfaction score
improvement year on year
•
•
•
•
•
•
•
•
•
•
•
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 to, 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
67
SUSTAINABILITY Our
Customers
We are committed to ensuring that we
provide entertaining and profitable, yet
safe and responsible, experiences and
environments.
68
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY We take our responsibilities to minimise risk and
harm from problem gambling and to detect and
deter money laundering and terrorism financing
very seriously.
PRIORITY
KEY STAKEHOLDERS
•
•
•
•
•
•
•
•
•
•
•
Customers
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
AUSTRAC
Police
Local councils
•
Providing our customers vibrant
experiences, responsibly
IMPLEMENTATION PRINCIPLES
•
•
•
Ensuring customer experiences are provided
safely and responsibly
Commitment to continuous improvement
and having the systems and processes
necessary to deliver vibrant experiences,
responsibly
Creating vibrant experiences for SkyCity
customers and exceeding their expectations
FOCUS AREAS
•
•
•
Host responsibility
Prevention of financial crime
Creating vibrant customer experiences,
delivered responsibly by our people
ACTIVITIES
•
•
•
•
Host responsibility programme
Financial crime programme
Employee retention, training and
development
Customer experience programme
69
SUSTAINABILITY FY23 – FY25 TARGETS
FY23 PERFORMANCE AGAINST TARGETS
•
•
•
•
•
•
•
Compliant prevention of financial crime
programme as evidenced by delivery of the
Group AML Enhancement Programme
Compliant host responsibility programme
as evidenced by internal/external audit
processes and mystery shopper exercises
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 anti-money
laundering/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
Customer satisfaction score - improvement
year on year
•
•
•
•
•
•
•
•
•
Continued to roll out comprehensive AML/CFT enhancement
programmes in Adelaide and New Zealand.
AUSTRAC filed civil penalty proceedings against SkyCity
Adelaide Pty Limited, the operator of the SkyCity Adelaide
casino, in the Federal Court of Australia on 7 December 2022
alleging serious and systemic non-compliance with the
Australian Anti-Money Laundering and Counter-Terrorism
Financing Act 2006. The proceedings remain in progress at
the date of this annual report.
The Department of Internal Affairs conducted audits of the
SkyCity Auckland and SkyCity Hamilton cage and cashiering
procedures (focusing on the security of funds, surveillance
and monitoring of cash and chip handling procedures, and
host responsibility training for cashiering staff) and found that
SkyCity has processes in place that follow the requirements
of the Minimum Operating Standards and the Gambling Act
2003 in all areas assessed. There were no adverse findings.
An overall engagement score of 78% was achieved in
SkyCity's biennial engagement survey (MyVoice) in May 2023,
indicating a good level of employee engagement. While direct
comparisons to the 2021 engagement score of 85% cannot be
made due to a change in methodology, significant increases
in the key driver areas suggest that employee engagement
has improved.
As at 30 June 2023, all eligible employees across the Group
had either completed their mandatory training or had been
assigned relevant compliance training with appropriate
due dates.
~25% of roles across the Group were filled internally in FY23.
New capability established within the internal recruitment
team (with a focus on internal careers and mobility) will assist
to drive internal recruitment going forward.
Voluntary learning and development opportunities are
promoted via a fortnightly staff newsletter. All people leaders
can also access courses at any time from an online content
library in the company’s Learning Management System.
High satisfaction scores maintained against industry
standards with:
› improved GRI scores for Eos by SkyCity and SkyCity Hotel; and
› The Grand by SkyCity and SkyCity Hotel maintaining their
#1 rating against the comp set.
Improved overall year on year scores across food and beverage
outlets (SevenRooms data).
FY23 KEY CHALLENGES
FY24 FOCUS AREAS
•
•
The continued focus on land-based casino
operators in New Zealand and Australia
(particularly in respect of AML/CFT and host
responsibility obligations) and on SkyCity’s
‘social licence’ to operate.
•
•
SkyCity has continued to explore
opportunities to enhance its AML/CFT and
host responsibility technology and processes.
• Maintaining best practice AML/CFT and host
responsibility programmes as practices and
regulator expectations continue to evolve.
70
Ongoing recruitment, retention and development of our people
in a tight labour market.
Continuing to enhance our AML/CFT processes, practices
and technology to reflect best practice and meet stakeholder
expectations, including the delivery of the Adelaide AML
Enhancement Programme (see pages 78-81 of this annual
report for further details).
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY This section largely focuses on SkyCity’s approach to host
responsibility and AML/CFT across its land-based casinos as,
due to constraints in the New Zealand Gambling Act 2003,
SkyCity’s online gaming business, the SkyCity Online Casino,
is operated from Malta in partnership with international
iGaming company Gaming Innovation Group Inc (GiG).
GiG provides SkyCity with a full-suite online casino solution,
which includes a technical platform, gaming content,
managed services, front-end development and
best-in-class host responsibility and AML/CFT 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/CFT regulation and best practice is strictly adhered to.
Further details of the SkyCity Online Casino’s host
responsibility practices are available at
www.skycityentertainmentgroup.com/our-commitment/
responsible-gambling.
Creating Vibrant Precincts and Experiences
As New Zealand’s largest tourism, leisure and
entertainment company, we are focused on creating
vibrant experiences for our customers, delivered
responsibly, and exceeding our customers’ expectations.
To ensure our existing precincts remain relevant to
customer demand and we maximise the opportunities
that our existing precincts present, we continue to
explore opportunities for new food and beverage,
gaming and entertainment offerings across our
precincts. Ongoing refurbishment and investment in new
gaming product, product management and changes
to floor layout also remain key focuses for the business.
Over the last financial year, three new food and beverage
offerings opened across the New Zealand properties – Cassia
and Sky Bar in Auckland and Shanghai Restaurant
(a restaurant tenancy) in Hamilton. Award-winning
chef Michael Meredith will open a new Pacific inspired
restaurant, Metita, at SkyCity Auckland in October 2023.
Following the completion of the A$330 million expansion
of the SkyCity Adelaide property in December 2020, we
remain focused on completing and delivering the New
Zealand International Convention Centre in Auckland and
the adjacent infrastructure (a total investment of around
$750 million for SkyCity), including a laneway, over 1,250
additional car parking spaces and the Horizon Hotel – a
new 300-room, 5-star hotel. Horizon Hotel is 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 largest convention centre enabling New
Zealand to attract major international conferences as
well as having capability for sporting events, theatre and
musical performances.
The SkyCity Auckland property, SkyCity’s largest and
busiest property, spans the majority of three blocks in
the Auckland CBD (~3.5 hectares) with ~295,000sqm
of gross floor area. Significant long term option value
remains embedded in the Auckland precinct (including
968sqm of land able to be further developed). In addition,
the City Rail Link, a new 3.45 kilometre twin-tunnel
underground rail system being constructed by the New
Zealand Government and Auckland Council below the
Auckland CBD, will provide greater connectivity to the
SkyCity Auckland precinct when completed in 2026 with
the new Te Waihorotiu Station near Wellesley and Victoria
Streets expected to be New Zealand’s busiest train station.
Entrances to Te Waihorotiu Station, a 300 metre long
underground mid-town station, will be located on Victoria
and Wellesley Streets – conveniently located adjacent to
the SkyCity Auckland precinct.
SkyCity is also cognisant of the strategic need to remain
abreast of developments in the online and digital space
and, where appropriate, to ensure that we take up
opportunities that will ensure we continue to offer a
relevant form of entertainment. In response to this, we
continue to consider evolving customer demographics
and preferences in both our gaming and non-gaming
operations, including new offerings, technologies and
innovation. In recent years, we have made good progress
in ICT investment and our digital capability and continue
to focus on initiatives to enhance the customer experience,
centred around web and mobile, customer relationship
management and data analytics.
We also continue to explore online gaming opportunities
to complement the SkyCity Online Casino - an offshore
online casino (based in Malta) launched in August 2019 that
provides New Zealanders an online casino experience.
The SkyCity Online Casino has grown rapidly since its
launch in August 2019 despite legislative constraints,
with significant growth in its customer base over the
period – with over 174,000 customer registrations as at
1 August 2023. While ultimately a regulated online gaming
market in New Zealand remains the preferred solution for
SkyCity, the launch of the SkyCity Online Casino was an
important step on the journey of pursuing opportunities
to grow and diversify earnings, addressing a fast growing
industry which is highly complementary to our land-based
activities and offering customers a multi-channel gaming
experience.
IMAGE: Eos by SkyCity, Adelaide
71
SUSTAINABILITY Host
Responsibility
Gambling can be a fun and enjoyable entertainment
activity. However, it can also have harmful effects on
some individuals, their families and their communities.
Our challenge is therefore to ensure that our business
provides entertaining and profitable, yet safe and
responsible, experiences and environments.
Commitment to Host Responsibility
At SkyCity, we place great importance on host
responsibility throughout every part of the organisation.
All SkyCity Board members and staff receive training in
problem gambling awareness.
The Board's Risk and Compliance Committee is
responsible for overseeing and monitoring the company’s
host responsibility and responsible gambling programme
and initiatives and monitoring licensing and regulatory
compliance, and assists the SkyCity Board in fulfilling
its responsibilities relating to risk management and
compliance.
A senior 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 key objectives of the Governance Group are to:
•
•
•
•
provide collective guidance to SkyCity management
on host responsibility matters of interest;
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 dedicated team of experienced host responsibility
specialists is employed at each of SkyCity’s land-based
casinos and, through our partnership with GiG, an
experienced harm minimisation team is in place for the
SkyCity Online Casino.
Over the last financial year, 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
72
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY IMAGE: SkyCity Auckland casino
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 approaching and interacting
with customers as required;
assisting with the actioning of continuous play
system alerts;
assisting with the actioning of continuous presence
system alerts; and
acting as a visible point of contact for customers
that would like to know more about SkyCity’s host
responsibility practices.
A robust Host Responsibility Programme is in place at
each of our physical sites, and within the SkyCity Online
Casino, to prevent and minimise harm from problem
gambling.
An outline of SkyCity’s commitment to host responsibility
and detailed individual site-related information, including
the Host Responsibility Programme for each site and the
SkyCity Online Casino, are available at
www.skycityentertainmentgroup.com/our-commitment/
responsible-gambling.
Best Practice Host Responsibility
We are immensely proud of the culture of care we have
developed within our casinos and continue to focus on
ways to ensure that this culture of care is maintained and
that we have the highest standard of host responsibility
best practice.
Over the past financial year, we implemented additional
host responsibility measures to improve our ability to
prevent and minimise harm from problem gambling,
including:
•
•
•
adapting and enhancing our facial recognition
technology at the SkyCity Auckland and SkyCity
Hamilton properties to monitor continuous play
periods. The alerts generated by this system are
actioned by a team of Responsible Gambling Hosts;
updating the predictive algorithm at the SkyCity
Auckland property to include the latest customer
survey data specific to that property (see page 74 of
this annual report for further details of the predictive
algorithm);
proactively working with the Department of Internal
Affairs and Ministry of Health on the review of SkyCity’s
New Zealand Host Responsibility Programmes;
73
SUSTAINABILITY •
•
opening a new resource room at the SkyCity
Auckland property – the purpose of which is to
provide patrons with a quiet break area away from
the gaming floor where information is available on
gaming rules, counselling services and responsible
gambling tools; and
trialling the use of facial recognition technology to
monitor repeat withdrawals and multiple declined
transactions at certain ATMs located at the SkyCity
Auckland property for indicators of problem
gambling. We are progressing the rollout of this
technology at the SkyCity Auckland and SkyCity
Hamilton properties initially.
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.
Embracing Technology
Since 2014, SkyCity has operated a predictive algorithm
risk model created by Focal Research at SkyCity 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 (an automated alert
is triggered notifying SkyCity personnel when an individual
is identified within the casino for an extended period)
– with the enhanced technology being implemented at
the SkyCity Hamilton casino in 2020 and at the SkyCity
Auckland casino in 2021. Subject to obtaining regulatory
approval, we also intend to implement this technology at
the SkyCity Adelaide casino.
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 where possible.
74
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY Customer Experience and Engagement
Community Knowledge
SkyCity promotes a range of tools to support responsible
gambling. Exclusion is an important host responsibility
offering for those that 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, a dedicated team of Responsible Gambling Hosts
in Auckland and Hamilton was introduced. Their 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.
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.
75
SUSTAINABILITY 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 2019–2023 financial years:
FY23
FY22
FY21
FY20
FY19
737
111
43
196
1,087
391
107 55 76 629
940
226
148 59 1,373
1,410
182 56
109
1,759
703
81 33 57
874
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200 1,300 1,400 1,500 1,600 1,700 1,800
1,900 2,000
AUCKLAND
HAMILTON
QUEENSTOWN
ADELAIDE
During FY20, a facial recognition technology solution was implemented across SkyCity's land-based casinos to assist in
identifying excluded customers. The reduction in the number of exclusion-related breaches from FY20 to FY22 is likely due
to changes in excluded patron behaviour following the introduction of this technology and COVID-19 closures/restrictions.
The increase in the number of exclusion-related breaches from FY22 to FY23 is likely due to the business returning to
normal operations following the lifting of COVID-19 restrictions.
Exclusions at SkyCity Properties
The following graph summarises the number of exclusion orders issued by each of the SkyCity properties over the
2019–2023 financial years:
FY23
FY22
FY21
FY20
FY19
683
85 40
480
1,288
386
81 43
391 901
678
124
58
217 1,077
766
112 61
189
1,128
620
61 44
169 894
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200 1,300 1,400 1,500 1,600 1,700 1,800
1,900 2,000
AUCKLAND
HAMILTON
QUEENSTOWN
ADELAIDE
The number of exclusion orders issued in FY22 was likely impacted by COVID-19 closures/restrictions.
The increase in the number of exclusion orders issued from FY22 to FY23 is likely due to the business returning to normal
operations following the lifting of COVID-19 restrictions.
CCTV Cameras
A network of CCTV cameras, including facial recognition cameras, is in place across our land-based casinos to support
SkyCity's operations.
~3,000 cameras
AUCKLAND
~1,700 cameras
ADELAIDE
76
~290 cameras
HAMILTON
~180 cameras
QUEENSTOWN
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY Harm Minimisation Framework
Senior Management
Governance
& Oversight
• A Host Responsibility
Governance Group
meets regularly
to discuss host
responsibility matters
Board Governance
& Oversight
Host Responsibility
Programmes
Host Responsibility
Roles & Duties
• SkyCity Board and
Risk and Compliance
Committee governance
and oversight of
performance of
harm minimisation
framework
• Site-specific
programmes
outlining SkyCity’s
host responsibility
obligations (approved
by the regulator)
• Roles and activities
focused on customer
care and host
responsibility
monitoring
Software and
Algorithms to Monitor
Gaming Machine Play
Independent
Assurance
iTrak Monitoring
& Reporting
Learning &
Development
Framework
• A record management
• A suite of host
tool for host
responsibility incidents
and assessments,
including reports for
ongoing oversight
responsibility modules
for staff, including online
courses, in-person
courses, and annual
refresher courses
• Blended software for
analysis and insight
into player behaviour
and spend/visitation
traits, including real
time monitoring of
continuous use of
gaming machines
• 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
Facial Recognition
Technology
Communications
& Brand
Reports to the
Regulator
Stakeholder
Engagement
• Use of facial recognition
and alert technology to
detect excluded patrons
• An internal brand
communications
campaign to promote
awareness of host
responsibility
• Annual reporting to
the regulator on the
effectiveness of SkyCity’s
Host Responsibility
Programmes
• Regular engagement
with community gaming
organisations and
academics
77
SUSTAINABILITY Financial Crime
At SkyCity, we take our anti-money laundering and
countering financing of terrorism (AML/CFT) obligations
very seriously and are committed to ensuring that
we provide entertaining and profitable, yet safe and
responsible, experiences and environments.
The New Zealand and Australian AML/CFT 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. 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 AUSTRAC (as applicable);
and
•
regular internal and external audits and reviews of
AML/CFT compliance.
Over the past financial year, there has been continued
media and regulator focus on the casino industry
in Australia. Consequently, there are heightened
expectations on SkyCity around its AML/CFT obligations,
including monitoring cash and third-party transactions,
and undertaking enhanced due diligence checks on
higher risk customers.
Commitment to Tackling Financial Crime
The SkyCity Board’s Risk and Compliance Committee
discusses, as a standing agenda item at each scheduled
meeting, matters relating to the Group’s AML/CFT
obligations and other key compliance obligations.
Within the business, a specialist Financial Crime team
in New Zealand oversees SkyCity’s compliance with
AML/CFT requirements in New Zealand and a specialist
Financial Crime team in Adelaide oversees SkyCity’s
compliance with AML/CFT requirements in Australia.
SkyCity senior managers and employees engaged in
AML/CFT related duties also receive training on AML/CFT
matters.
78
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY SkyCity’s online gaming site, the SkyCity Online Casino,
is operated from 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 within GiG
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.
Assurance and Audit
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.
AUSTRAC Civil Proceedings against
SkyCity Adelaide
In June 2021, SkyCity was informed by AUSTRAC’s
Regulatory Operations Team that it had identified potential
serious and systemic non-compliance by SkyCity Adelaide
Pty Limited (SkyCity Adelaide) with the Australian
Anti-Money Laundering and Counter-Terrorism Financing
Act 2006 (Cth) (Act) and Anti-Money Laundering and
Counter-Terrorism Financing Rules Instrument 2007
(No. 1) (Rules). The matter was referred to AUSTRAC’s
Enforcement Team which initiated a formal enforcement
investigation into SkyCity Adelaide’s compliance with the
Act and Rules. The concerns relating to SkyCity Adelaide’s
compliance with its AML/CFT obligations 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 politically exposed persons.
Following the investigation, on 7 December 2022, AUSTRAC
commenced civil penalty proceedings in the Federal Court
of Australia (Court) against SkyCity Adelaide for alleged
serious and systemic non-compliance with the Act and
Rules. AUSTRAC’s allegations are extensive and include
that SkyCity Adelaide:
•
•
failed to appropriately assess the money laundering
and terrorism financing risks it faced, including the
likelihood and impact of those risks, and to identify
and respond to changes in risk over time;
did not include in its AML/CFT Programmes
appropriate risk based systems and controls to
mitigate and manage the risks to which SkyCity
Adelaide was reasonably exposed;
79
SUSTAINABILITY •
•
•
•
•
•
•
failed to establish an appropriate framework for
Board and senior management oversight of the
AML/CFT Programmes;
did not have a transaction monitoring programme
to monitor transactions and identify suspicious
activity that was appropriately risk based or
appropriate to the nature, size and complexity of
SkyCity Adelaide;
did not have an appropriate enhanced customer
due diligence programme to carry out additional
checks on higher risk customers;
did not have appropriate systems and controls
designed to ensure that reports required under
Part 3 of the Act were given to AUSTRAC, namely
suspicious matter reports, threshold transaction
reports and international funds transfer
instructions;
did not have an appropriate enhanced customer
due diligence programme that applied to
customers who posed a higher money laundering
or terrorism finance risk;
did not include appropriate risk-based systems
and controls in its Part B AML/CFT Programmes
to enable SkyCity Adelaide to appropriately verify
and collect know your customer (KYC) information,
or consider whether additional KYC information
was required to be collected or verified from a
customer; and
did not conduct appropriate ongoing customer
due diligence on a range of customers who
presented higher money laundering risks.
AUSTRAC alleges that SkyCity Adelaide contravened
section 81 of the Act (which relates to the requirement
to adopt and maintain an AML/CFT Programme) on an
innumerable number of occasions on and from
7 December 2016 and section 36 of the Act (which relates to
the requirement to undertake customer due diligence) on
124 occasions in the period on and from 7 December 2016.
The proceedings remain in progress at the date of this
annual report. SkyCity will continue to cooperate with
AUSTRAC in relation to the proceedings.
The SkyCity Board and management team took the
concerns raised by AUSTRAC in June 2021 very seriously and
took immediate steps to investigate and seek to address
AUSTRAC's concerns. Those steps included establishing
a Steering Committee to oversee SkyCity Adelaide's
engagement with AUSTRAC throughout the investigation
process and its response to addressing the concerns
raised by AUSTRAC and engaging an independent expert
to conduct a comprehensive review of SkyCity Adelaide’s
AML/CFT Programme and broader AML function to assist
SkyCity where appropriate to enhance and improve the
AML/CFT Programme and AML function. These reviews
have not been limited to matters specifically raised by
AUSTRAC - they have also been directed to identifying
areas where SkyCity Adelaide’s AML/CFT Programme
and AML function could be enhanced or uplifted more
generally.
Uplift Programmes
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/CFT 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/CFT Programme and broader AML
function across certain key areas over a two-year period.
As part of the AML Enhancement Programme, we have
significantly enhanced and invested in our internal AML
resourcing and capability, processes and systems.
We have also developed and been implementing an AML
uplift programme in New Zealand with enhancements
made to our business processes and transactional
monitoring capabilities and a focus on strengthening our
ongoing customer due diligence activity. This activity has
taken into account the concerns raised by AUSTRAC with
respect to SkyCity Adelaide and relevant international
reports that have identified specific issues relating to the
casino sector and leveraged some of the uplift activity
underway at SkyCity Adelaide.
In June 2023, the New Zealand Government introduced
changes to regulations in the New Zealand Anti-Money
Laundering and Countering Financing of Terrorism Act
2009 following a Ministry of Justice-led review of that Act
between July 2021 and 30 June 2022. The new regulations
come into force in three stages from 31 July 2023 to 1
June 2025. These changes, together with our ongoing
enhancement activities, will require continued investment
in capability and technology enhancements to further
strengthen our AML/CFT controls.
80
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY AML/CFT Control Framework
Senior Management
Governance & Oversight
Board Governance &
Oversight
AML Programmes
• SkyCity Board and Risk and
Compliance Committee
oversight of AML/CFT
compliance
• An AML Senior Management
Group meets to discuss AML/CFT
issues relevant to the Group
• An Adelaide AML Senior
Management Committee
oversees AML/CFT issues specific
to the Adelaide operations
• A management steering
committee oversees the
implementation of the Adelaide
AML Enhancement Programme
• AML Programmes established
in New Zealand and Adelaide
outlining SkyCity’s AML/CFT
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
External Advisors
Independent Assurance
• AML/CFT training programmes
• Assisted by experienced
• An independent review is carried
for staff
external AML/CFT advisors
out every 2–3 years in New
Zealand and Adelaide to monitor
compliance with the AML/CFT
Programmes
AML/CFT Roles & Duties
AML/CFT Risk Assessment
IT Systems
• A specialist Financial Crime
team (including designated AML
Compliance Officers) within the
business oversees the Group’s
ongoing day-to-day compliance
with AML/CFT requirements
• Each AML/CFT 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
• Internal IT systems (Bally and
iTrak) used for AML/CFT record
keeping
• An external specialist AML/CFT
system (Jade ThirdEye) used to
facilitate customer screening and
reporting
81
SUSTAINABILITY Our Community
Our aim is to create value in our business and
in the communities in which we operate.
PRIORITY
ACTIVITIES
•
Positively contributing to vibrant communities in
the places where we operate
IMPLEMENTATION PRINCIPLES
•
•
•
Building and operating vibrant destinations in the
places where we operate. Contributing back to
local communities
Exceeding the expectations of a responsible
business in the communities in the places where
we operate
Commitment to continuous improvement and
having the systems and processes necessary to
deliver vibrant experiences, responsibly
FOCUS AREAS
•
•
•
•
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
KEY STAKEHOLDERS
•
•
•
•
•
Community groups
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
•
•
•
TupuToa
First Foundation
Indigenous Growth Limited
82
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY 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.
83
SUSTAINABILITY FY23 – FY25 TARGETS
FY23 PERFORMANCE AGAINST TARGETS
•
300 Project Nikau recruits by 2025
•
•
•
Project Nikau retention rate equivalent to,
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
•
•
•
•
In progress – 73 rangatahi (young people) onboarded
during FY23 and 90 rangatahi anticipated to be
onboarded in FY24.
Achieved - the Project Nikau retention rate* was
equivalent to the retention rate for SkyCity employees
with the same demographics (age, ethnicity, employment
type and department).
Achieved – grants approved for 122 community
organisations totalling $5.3 million. All grant recipients
are required to report back on outcomes, impacts and
benefits.
In progress – as at 30 June 2023, 0.51% of Adelaide
employees identify as Aboriginal or Torres Strait Islander.
FY23 KEY CHALLENGES
FY24 FOCUS AREAS
•
•
There were challenges in sourcing work-ready
rangatahi and sourcing sufficient and the “right
fit” SkyCity employment opportunities for the
rangatahi during the first year that the Project
Nikau programme was piloted as an academy
model.
•
•
Bedding in new funding strategies for each of
the SkyCity Community Trusts, which required
messaging to charities who might not be eligible
to apply for future funding.
• Meeting new service performance reporting
obligations for the SkyCity Community Trusts
(as registered charities).
Embed the Project Nikau programme into SkyCity’s
recruitment and employment placement strategy and
continue to focus on sourcing rangatahi for SkyCity’s
future workforce.
Ensure the SkyCity Community Trusts are effectively
governed and continue to approve funding in a
responsible way in accordance with the Trusts’ funding
strategies.
* Calculated based on the number of hires and terminations during FY23.
84
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY 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 therefore 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.
We are proud to have partnered
with great organisations in our
local communities over the last
financial year:
ASB Classic Tennis
Basketball NZ
Auckland Storm
International
Comedy Festival
New Zealand Breakers
Northern Mystics
Supercars
Variety
Leukaemia & Blood Cancer New Zealand
Bee The Change
Women’s Rugby
World Cup
Adelaide
Festival Centre
Breakthrough Mental Health
Research Foundation
Little Heroes Foundation
SkyCity Hamilton Waikato Cup
Chiefs Manawa
Balloons over Waikato
85
SUSTAINABILITY LEUKAEMIA &
BLOOD CANCER
NEW ZEALAND
Each year, SkyCity supports fundraising efforts for
Leukaemia & Blood Cancer New Zealand (the national
charity dedicated to supporting patients and their
families living with blood cancers and related blood
conditions) via the annual Firefighter Sky Tower Stair
Challenge and Step Up Challenge. Through both of these
events, SkyCity has helped Leukaemia & Blood Cancer
New Zealand raise $1.7 million over the last financial year
and in excess of $16.6 million over the partnership period.
In the Firefighter Sky Tower Stair Challenge, firefighters
from communities across New Zealand join forces to
raise money, with each participant climbing the 1,103
steps of the Sky Tower wearing 25 kilograms of gear.
A record $1.5 million was raised through this event over
the last financial year, bringing the total raised to over
$13.8 million during the 19-year partnership with SkyCity.
In the Step Up Challenge, teams, organisations and
individuals come together to climb the Sky Tower.
$260,000 was raised over the last financial year though
this event, with over $2.8 million raised over the 9-year
partnership with SkyCity.
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.
Working with Variety – The
Children’s Charity, SkyCity
has helped to raise more
than $150,000 over the last
financial year and in excess of
$4.9 million over the 23-year
partnership.
BEE THE CHANGE
SkyCity Queenstown has
partnered with local organisation
Bee the Change to help facilitate
thriving bee colonies in and
around the Queenstown region
through beehive sponsorship.
Bee the Change places branded
hives in high profile strategic
locations in the region enabling
environmental education and
pollination initiatives for local
communities.
The honey produced and
harvested through SkyCity
Queenstown’s sponsorship has
been gifted to SkyCity customers
and staff and used in the Wild
Thyme Bar & Kitchen at SkyCity
Queenstown.
86
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY 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.
Our secondary focus is procuring local products and
produce from businesses that are geographically close to
our businesses.
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.
In the financial year ended 30 June 2023, SkyCity spent
approximately $281 million on operational goods and
services, the bulk of which was spent with local suppliers
– with over $47 million on food and beverage items across
New Zealand and Australia. We 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.
TOP 100 SUPPLIERS
PER SITE
(AS AT 30 JUNE 2023)
SAME
COUNTRY
LOCALLY
BASED
MAJORITY
LOCALLY
OWNED
Auckland
Adelaide
Hamilton
Queenstown
88%
93%
95%
96%
72%
72%
26%
36%
60%
71%
76%
65%
CATEGORIES
DEFINITION
SUPPLIERS
Same country
Locally based
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)
Majority locally owned
Products procured from businesses with greater than 50% local ownership
PRODUCTS
Locally manufactured
Products manufactured locally, but from imported products
Locally produced and/or manufactured
Entire product is manufactured from locally sourced products
87
SUSTAINABILITY 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. The programme was modified due to COVID-19
and fully resumed in August 2022 with 7 rangatahi
(young people) joining the programme during FY22 and
73 joining in FY23. To date, 99 rangatahi have enrolled in
Project Nikau.
SkyCity has designed and implemented 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.
SkyCity also continues to be a major partner of
TupuToa and the TupuToa Internship Programme,
an employment pathway that provides professional
opportunities for Māori and Pacific tertiary students in
corporate, government and community organisations. In
the last financial year, we provided a 12-week corporate
pathway placement at SkyCity for three TupuToa interns.
88
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY 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 $4.5 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 2023, with a record $5.3 million in grants being
approved by the SkyCity Community Trusts to
122 community organisations over the period.
Since establishing the first SkyCity Auckland Community
Trust in 1996, SkyCity has awarded more than 5,100 grants
totalling over $71.5 million to various community groups
and organisations in New Zealand, large and small,
through the four SkyCity Community Trusts.
SkyCity Community Trust Recipients in FY23
SkyCity Auckland Community
Trust Recipients
Affirming Works Limited
Auckland Sexual Abuse Help Foundation
Charitable Trust
Auckland Young Women's Christian
Association (YWCA) Incorporated
Birkdale Beach Haven Community Project
Incorporated
Blue Light Ventures Incorporated
Brainwave Trust Aotearoa
CAPS Northland Inc (trading as Jigsaw North
Manaaki Whanau Services)
Coast Youth Community Trust Incorporated
Dayspring Trust
Family Success Matters
Penina Health Trust
PHAB Association (Auckland)
Incorporated
Pillars Ka Pou Whakahou
Project Employ Limited
Pro-Pare Athlete Management Trust
Rainbow Youth Incorporated
Rape Prevention Education Whakatu
Mauri Trust
Recreate NZ
Friendship House (Huntly) Community
Charitable Trust
Graeme Dingle Foundation Waikato
Hamilton Christian Nightshelter Trust
Hamilton Combined Christian Foodbank Trust
Hamilton Methodist Social Services Trust (trading
as Methodist City Action)
Hospice Waikato Trust
Kids in Need Waikato
Loving Arms Charitable Trust
Refugees As Survivors New Zealand Trust
Male Support Services Waikato
Sau E Siva
Student Volunteer Army
Sunday Blessings
McKenzie Centre Trust
Mental Health Solutions Limited (Here to help u)
Rainbow Hub Waikato
Te Ara Poutama AEC Charitable Trust
Rakau Humarie Trust
Far North Safer Community Council Society
Incorporated
Te Ara Rangatahi Charitable Trust
Refugee Orientation Centre Trust
Te Karanga Charitable Trust
Shama Ethnic Women's Trust
Fiji Girmit Foundation
First Foundation
Te Kowhai Print Trust
Te Matarau Education Trust
Glass Ceiling Arts Collective Limited
Te Pou Theatre Trust
Great Potentials Foundation
Te Tiriti O Waitangi Marae Charitable Trust
Grief Support and Education Charitable Trust
Te Whāngai Trust
Habitat for Humanity Northern Region
The Cause Collective
Hāpai Tūhono - Charitable Trust
The Crescendo Trust of Aotearoa
I Love Avondale
The Friendship House Trust
InZone Education Foundation
The Raukatauri Music Therapy Trust
Island Base Trust
The Rising Foundation Trust
Kidz Need Dadz Charitable Trust NZ
Kindness Collective Foundation
Kindred Family Services
Know Your Status Community Trust
Love Somebody Charitable Trust
The TYLA Trust
The UMMA Trust
Toi Ngāpuhi Limited
Vahefonua Tonga Methodist Mission
Charitable Trust
Many Streams of Our Community Trust
(trading as I am Māngere)
Waikowhai Community Trust
Waitakere Indian Association
Massey Community Trust
Migrant Action Trust
Mountains to Sea Conservation Trust
MPHS Community Trust
National Youth Theatre Trust
New Settlers Family and Community Trust
New Zealand Islamic Cultural Trust
Ngaa Hau E Whaa Marae O Pukekohe
Nurturing Families (formally known as
Mummys in Need)
NZ Ethnic Women Incorporated
One Double Five Whare Āwhina
Oturei Marae
Outwest Youth Community Trust
West Auckland Youth Development Trust
What Hope Community Trust
YES Disability Resource Centre Services
Trust
Youth Arts New Zealand
Youth in Transition Charitable Trust
Zeal Education Trust
SkyCity Hamilton Community
Trust Recipients
Arts For Health Community Trust
Big Buddy Mentoring Trust
Community Link Trust
Diversity Counselling New Zealand
Dress for Success Hamilton Trust
South East Kirikiriroa Community Association
Incorporated
St Vincent De Paul Hamilton
Te Po ki te Ao Marama Tihei Mauriora
Te Tamawai Trust
Te Whakaruruhau 2013 Incorporated
The Serve
The Te Kauwhata & Districts Information &
Support Centre Inc
Thrive Ōtorohanga Youth Trust
Waikato Environment Centre Trust
Waikato Ethnic Family services Trust
Waikato Family Centre Trust
Waikato Refugee Forum Incorporated
Young Women's Christian Association of
Hamilton Incorporated
Youthline Auckland Charitable Trust
Zeal Education Trust
SkyCity Queenstown Community
Trust Recipients
Alpine Community Development Trust
operating as Community Networks/LINK
Head Light Trust
Kahu Youth Trust
Kiwi Kit Community Trust
Mīharo Murihiku Trust
Mint Charitable Trust
Queenstown Harvest Community Gardens
RockFormation Charitable Trust
Whakatipu Youth Trust
89
SUSTAINABILITY Our Environment
PRIORITY
ACTIVITIES
•
Protecting and enhancing the environment in the
places where we operate
• Mitigation: measure emissions, set targets
according to science and reduce emissions
IMPLEMENTATION PRINCIPLES
•
•
•
Respecting, protecting, and enhancing the
environment in the places where we operate
Responsible use of natural resources and a
commitment to minimise our impact and, where
possible, enhancing the environment in the places
where we operate
Dedicated focus on complying with all relevant
environmental regulations, including
climate-related risk disclosures
FOCUS AREAS
•
•
•
•
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
•
•
•
•
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
KEY STAKEHOLDERS
•
•
•
•
•
•
Toitū Envirocare
Climate Leaders Coalition
Energy Efficiency and Conservation Authority
REMONDIS (formerly SUEZ-ResourceCo)
Beca
Sustainable Business Council
90
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY We are committed to growing in a sustainable
manner with a commitment to protecting
and enhancing the environment in the places
where we operate.
91
SUSTAINABILITY FY23 – FY25 TARGETS
FY23 PERFORMANCE AGAINST TARGETS
•
•
•
•
•
•
•
•
Recalibrate climate change action plan by end
of FY23
Climate risk assessment and reporting (TCFD)
completed for FY24
•
•
Achieved
In progress – a Climate Change Working Group has
been established to oversee SkyCity’s TCFD reporting
requirements and outputs.
Emissions reduction of 25% by 2025
(38% reduction in Scope 1 and 2 by 2030 and
73% by 2050)
•
In progress
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
•
•
•
•
Not achieved – however all key contracts renegotiated
during FY23 involved emission measurements awareness.
Not achieved due to business closures in FY22 distorting
waste volumes.
Not achieved due to business closures in FY22 distorting
volumes – however, SkyCity has achieved a 19% reduction
over the last two years.
Achieved - a new staff bike/scooter park (including
charging stations and change facilities) was opened at
the Auckland property to encourage sustainable travel
options to work, and staff have been encouraged to
reduce electronic waste to landfill with the provision of
e-waste bins across our properties.
By FY25, SkyCity’s EcoVadis score is at or above
the benchmark score of 55
•
In progress
FY23 KEY CHALLENGES
FY24 FOCUS AREAS
•
•
New Zealand waste management tender to
divert more waste from landfill.
Contracting of key suppliers to assist SkyCity with
its sustainability implementation targets.
• Managing the balance between commercial and
sustainable procurement outcomes.
•
•
•
•
Develop a Scope 3 reductions initiative and continue
to build awareness, capability, and capacity within
our employees, customers, and communities to drive
reductions in their Scope 3 emissions.
Undertake a climate risk deep dive (including
development of mitigations).
Continued focus on reducing carbon emissions across the
Group by 25% by 2025 (63% reduction in Scope 1 and 2 by
2030 and 90-95% by 2050).
Continued focus on waste diversion from landfills
- partnering with businesses to help repurpose and
recycle waste.
•
Preparation for TCFD reporting (commencing in FY24).
92
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY 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 Auckland sent over 202 tonnes
of food waste to be commercially composted - bringing
the total amount collected and composted since the
programme began in April 2017 to over 1,300 tonnes.
SkyCity’s focus on reducing food wastage has resulted
in a reduction of food waste being composted each year
since the programme began.
Eliminate Waste to Landfill
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.
Since 2015, SkyCity has reduced its waste sent to landfill
by 8.8%, in part due to the mandated property closures
during FY20-22 (in response to the COVID-19 pandemic).
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).
In October 2022, SkyCity Hamilton partnered with Kaipaki
Milk and installed milk taps and refillable milk pails in
three of its five food and beverage outlets. Reusable glass
milk bottles are used throughout the rest of the site. This
initiative has significantly reduced the use of plastics
at the SkyCity Hamilton site – with 6,390 two-litre milk
bottles being saved from production between October
2022 and June 2023.
In Adelaide, SkyCity partners with REMONDIS to assist
in achieving zero waste to landfill. REMONDIS offers
recycling and commercial food composting solutions
with the remaining dry general waste being diverted
to a facility that 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%.
93
SUSTAINABILITY Ethical and Sustainable Sourcing
Practices
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.
As a major purchaser of goods and services (we spent
over $56 million with a vast array of suppliers of goods
and services in the financial year ended 30 June 2023),
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.
10.3%
ICT
FY22 - 12.4%
14.3%
Professional Fees & Insurance
FY22 - 14.0%
1.7%
Travel & Entertainment
FY22 - 1.4%
4.5%
Operating Consumables
FY22 - 3.4%
13.2%
Utilities, Rates & Rent
FY22 - 14.3%
SkyCity has around 570 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 $56 million in the financial year ended
30 June 2023 relating to operational goods and services
(a breakdown of which is shown in the chart below),
over $48 million was spent on food, beverage and retail
procurement:
2.7%
Other Expenses
FY22 - 4.6%
34.7%
Food, Beverage & Retail
FY22 - 30.4%
13.1%
Marketing
FY22 - 12.4%
5.5%
Repairs & Maintenance
FY22 - 7.1%
FY23
94
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY 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 2023, 76 of our key active New Zealand and
Adelaide suppliers, representing over $44 million (16%) of
our total annual procurement spend, had completed the
EcoVadis assessment/audit process. Of SkyCity’s
$48 million food, beverage and retail procurement spend
across the Group in the last financial year, $27 million (56%)
was captured under the EcoVadis 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, localised family businesses to
global multinationals. In some cases, our suppliers are very
small operators and they have few resources to provide
detailed information about their policies and sustainability
and governance approaches. In other cases, we have
had long-standing agreements with suppliers, but have
not engaged 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.
95
SUSTAINABILITY Modern Slavery
In Australia, the Modern Slavery Act 2018 (Cth) 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 has several policies, practices and procedures in place to assist in conducting supply chain due diligence
which, in turn, enables SkyCity to take significant measures to mitigate the risks of modern slavery. SkyCity 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. Over the past financial year, SkyCity has engaged Moody’s Analytics to enable
proactive monitoring of our main suppliers and better due diligence on prospective new suppliers.
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–FY22 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 by offsetting its carbon footprint
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 2022 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 international renewable
energy infrastructure and assist with other energy efficiency initiatives.
In June 2023, SkyCity determined to move away from the practice of offsetting its carbon footprint through the
purchase of carbon credits – refocusing its strategy instead on reducing its carbon emissions across its own footprint
in line with the position advocated by the Science-Based Targets initiative (SBTi) who has encouraged companies to
progress real emissions reductions instead of purchasing carbon offsets.
Toitū Envirocare helps organisations to accurately measure their greenhouse gas
emissions, and put in place strategies to manage and reduce impacts.
SkyCity (including its Auckland, Hamilton, Queenstown and Adelaide properties)
was certified by Toitū Envirocare as a carbonreduce organisation on 1 August 2023.
Being carbonreduce certified means that SkyCity is measuring its emissions to
ISO 14064-1:2018 and Toitū requirements and managing and reducing its emissions
against Toitū requirements.
To maintain carbonreduce certification, organisations are independently verified
by Toitū Envirocare annually in accordance with ISO 14064-1 or ISO 14067.
96
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY In 2019, the external lights on
the Sky Tower were switched to
LED, supporting SkyCity’s climate
change commitment to reduce
carbon emissions. Following the
upgrade, the number of external
lights on the Sky Tower doubled
with 60 LED lights at the top of
the Sky Tower and 96 LED lights
at the base – truly lighting up
Auckland’s skyline.
In January 2023, the Sky Tower was awarded a Qualmark Gold
Award. A Gold Award recognises the best sustainable tourism
businesses in New Zealand and identifies businesses leading
the way in making the New Zealand tourism industry a world
class sustainable visitor destination.
97
SUSTAINABILITY The key tenants of SkyCity’s new emissions reduction
strategy are summarised below:
•
•
•
Scope 1 emissions (direct emissions from sources
owned or controlled by SkyCity) - to drive reductions
in Scope 1 emissions, SkyCity will focus on future
infrastructure investments and introduce a carbon
cost to investment decisions. The primary focus is on
energy efficiency, phasing out gas, shifting to less
harmful refrigerants, and focusing on the end-of-life
processes for assets;
Scope 2 emissions (indirect emissions from electricity
purchased by SkyCity) – in the long term, SkyCity will
benefit from the New Zealand and South Australian
Governments’ commitment to 100% renewable
electricity generation by 2030 - however, in the
meantime, SkyCity will investigate the purchase
of renewable energy credits through its partner
electricity providers; and
Scope 3 emissions (indirect emissions from sources
not owned or controlled by SkyCity but resulting
from SkyCity's activities) – SkyCity will continue to
build awareness, capability, and capacity within its
employees, customers, and communities to drive
reductions in SkyCity’s Scope 3 emissions and its
stakeholders’ emissions.
The focus will be on activities that:
•
reduce environmental impacts;
• may relate to impacting lifestyle choices outside of the
work environment, benefit the wider community and
contribute to SkyCity’s social licence; and
•
build sustainability capability and awareness for all
staff and other stakeholders.
Whilst SkyCity’s new emissions reduction strategy covers
a reduction in Scope 1, 2 and 3 emissions, the majority
of SkyCity’s reduction initiatives will focus on reducing
SkyCity’s Scope 1 and 2 emissions. Many of the reduction
initiatives are currently being implemented across SkyCity,
but further improvements can be made.
SkyCity will continue to conduct an annual audit of its
carbon footprint to measure and track its progress to its
science-based targets.
Climate Change Governance and Risks
The Financial Sector (Climate-related Disclosures and
Other Matters) Amendment Act 2021 was passed into
legislation in October 2021 in New Zealand and requires
certain organisations (including SkyCity) to make
climate-related disclosures from financial years
commencing on or after 1 January 2023, in accordance
with climate standards published by the External
Reporting Board based on the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD).
SkyCity is 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. 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. 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:
• measure 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.
SkyCity has currently committed to reduce absolute Scope
1 and 2 Green House Gas emissions by 63% by 2030 and by
90-95% by 2050 (from a 2014-2015 base year).
98
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY SkyCity's Top Climate Change Related Risks
PHYSICAL RISKS
IMPACT
TRANSITIONAL RISKS
IMPACT
•
Increased costs
• Decreased
visitation
The inability of business
owners to successfully run
profitable operations
•
Increased costs
Increase in extreme
weather events
Property damage, lost revenue,
unusable water, gas leaks,
power outages, greater reliance
on backup generators, a
decline in visitor and tourist
numbers, and the need for
new infrastructure that is more
durable and resistant.
A rise in global temperature
•
Increased costs
Increased load on air
conditioning, increased power
outages, increased reliance on
generators, increased fire risk
in Adelaide, and a reduced ski
season in Queenstown.
• Decreased
visitation
• Decreased
visitation
Failure to keep Australasia
appealing as a travel
destination
Several factors, including
rising sea levels, greater lake
pollution, the disappearance of
famous landscapes, and shifting
seasonal patterns, could make
it difficult to keep Australasia a
popular tourist destination.
Inability to reach destinations
and attractions
• Decreased
visitation
Access to precincts and site
locations can be lost due to the
destruction of infrastructure,
rising temperatures, and an
increase in harsh weather.
Fewer operating days
Operating days may be
restricted as a result of
increased drought, higher
temperatures, less predictable
weather, and infrastructure
damage.
• Decreased
visitation
Higher complexity in accessing
capital, increased cost of
insurance, increase in price
flexibility among customers and
rise in the cost of access/use of
facilities.
Decreasing satisfaction among
customers/visitors towards
Australasia
Customer/visitor desire towards
travel to and within Australasia
may decline as a result of
global sustainability trends,
decreased perceptions of safety,
operational disruptions from
physical climate risks, or views of
inaction on climate change.
Increased regulatory
requirements put a strain
on the tourism sector and
customers/visitors
Climate-related requirements
such as carbon zero
certification, cost of carbon,
carbon tax, climate-related
disclosures, and climate change
policies could increase financial
pressure on tourism sector
participants and, as a result,
customers/visitors spend less
discretionary pay.
• Decreased
visitation
•
Increased costs
• Decreased
visitation
Rising prices
•
Increased costs
• Decreased
visitation
•
Increased costs
• Decreased
visitation
The costs of utilities used
day-to-day to run the business
could rise. Electricity, fossil fuels,
waste and recycling levies,
waste-water treatment, and
water restrictions could all affect
the profitability of the business.
Increased frequency or
severity of dangerous weather
conditions
Insurance costs may rise,
resources and precinct damage
can occur, and frequent power
and water outages. This may
affect the ability of suppliers to
deliver goods or services, and
customers may be unable to
visit our precincts.
99
SUSTAINABILITY Environmental Performance
SkyCity conducts an annual audit of its carbon footprint to measure and track its progress.
The following graphs summarise SkyCity's key environmental performance data for FY15–FY23. The New Zealand
Ministry for the Environment issued an updated Measuring Emissions Guide in August 2022, which included revised
electricity emission factors that have impacted the calculation of prior periods.
The total carbon footprint for the Group for FY23 was 17,107 tonnes C02e (FY22: 16,144 tonnes CO2e).
SkyCity has continued efforts to reduce its carbon footprint – with Scope 1 and 2 emissions combined reducing by
14.7% since FY15 and emissions from waste reducing by 51.9%.
FY23 Carbon Footprint Inventory
19.8%
Other
FY22 - 16.9%
4.0%
Waste
FY22 - 1.8%
2.4%
Flights
FY22 - 0.8%
24.0%
Gas
FY22 - 23.5%
49.8%
Electricity
FY22 - 57%
FY23
Total Emissions (Scope 1, 2 and 3) (Tonnes CO2e) – by Site
12,000
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
100
9,168
7,290
8287
8,096
7,859
5,158
8,800
6,166
8,541
7,139
999
286
730
310
927
663
807
246
799
208
FY15
(Baseline)
FY20
FY21
FY22
FY23
ADELAIDE
AUCKLAND
HAMILTON
QUEENSTOWN
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023SUSTAINABILITY Scope 1 and 2 Emissions (Tonnes CO2e) - Group
17,500
15,000
12,500
10,000
7,500
5,000
2,500
0
17,333
12,207
5,126
FY15
(Baseline)
13,691
8,955
4,736
16,010
11,556
13,849
13,873
9,355
8,512
4,454
4,514
5,361
FY20
FY21
FY22
FY23
SCOPE 1
SCOPE 2
SCOPE 1 & 2
Scope 3 Emissions (Tonnes CO2e) - Group
2,000
1,500
1,000
500
0
1,477
1,425
1,520
653
674
684
420
112
277
106
FY15
(Baseline)
FY20
FY21
FY22
FY23
WASTE
FLIGHTS
Scope Definitions
Through the Toitū carbonreduce certification 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).
101
SUSTAINABILITY 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 (1 April 2023 edition) 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 2023. 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;
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;
102
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE Corporate
•
•
•
approval of, and monitoring of actual results against,
the annual business plan and budget (including the
capital expenditure plan);
review and ratification of the company’s systems
of risk management and internal compliance and
control, codes of conduct and legal compliance; and
approval and monitoring of the progress of capital
expenditures, capital management initiatives,
acquisitions and divestments.
The Board has responsibility for the affairs and activities
of the company, which in practice is achieved through
delegation to the Chief Executive Officer and others
(including SkyCity appointed directors on subsidiary
company boards) who are charged with the day-to-day
leadership and management of the company. The Board
maintains a formal set of delegated authorities that
details the extent to which employees can commit the
company. These delegated authorities are approved by
the Board and are subject to annual review by the Board.
The Chief Executive Officer also has the responsibility
to manage and oversee the interfaces between the
company and the public and to act as the principal
representative of the company.
Each director and senior executive has a written
agreement with the company setting out their terms of
appointment and responsibilities.
2
Structure the Board
to Add Value
Board effectiveness requires the efficient discharge
of the duties imposed on the directors by law and the
addition of value to the company. To achieve this, the
SkyCity Board is structured to:
•
•
•
have a sound understanding of, and competence
to deal with, the current and emerging issues of the
business;
effectively review and challenge the performance
of management and exercise independent
judgement; and
assist in the selection of candidates to stand for
election by shareholders at annual meetings.
Board Composition and Skills Matrix
The Board ensures that it is of an effective
composition and size to adequately discharge its
responsibilities and duties and to add value to the
company’s decision-making. In order to meet these
requirements, the Board membership comprises a
range of skills and experience to ensure that it has
a proper understanding of and competence to deal
with the current and emerging issues of the business,
to effectively review and challenge the performance
of management, and to exercise independent
judgement.
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 and finance
legal
property and real estate
corporate finance and capital markets
shareholder and investment relationships
public relations and media
government and regulatory
• marketing
•
•
•
•
•
•
•
•
sustainability
customer insight
hospitality and tourism
digital and new markets
gaming industry
risk management
listed company experience
business strategy and leadership
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.
103
CORPORATE In July 2023, 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 following graph – 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.
Health and Safety
People and Culture
Accounting/Finance
Legal
Property/Real Estate
Corporate Finance/Capital Markets
Shareholder/Investment Relationship
Public Relations/Media
Government/Regulatory
Marketing
Sustainability
Customer Insight
Hospitality/Tourism/Entertainment
Digital/New Markets (including online)
Gaming Industry
Risk Management
Listed Company Experience
Business Strategy and Leadership
3.83
3.83
3.67
3.67
3.83
4.00
4.00
3.83
3.67
4.00
4.50
4.33
3.50
3.33
3.50
4.17
4.67
4.50
0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Average Rating
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.
104
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE Director Independence
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
People and Culture Committee and the Governance
and Nominations Committee. The members of
each of these committees are non-executive directors
and the non-executive directors of the Board appoint
the chair of each committee.
Each of 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
authority as the Board may elect to delegate to that
sub-committee.
The Board Charter and the company’s constitution
require that the Board contains a majority of its number
who are independent directors. SkyCity also supports
the separation of the role of Board chair from the Chief
Executive Officer position. The Board Charter requires the
Board chair and (where appointed) deputy chair to be
independent directors and prohibits the company’s Chief
Executive Officer from filling either of these roles.
Directors are required to ensure all relationships and
appointments bearing on their independence are
disclosed to the Governance and Nominations
Committee on a timely basis. In determining the
independence of directors, the Board has adopted the
definition of independence set out in the NZX Main
Board Listing Rules and has taken into account the
independence guidelines as recommended in the ASX
Corporate Governance Council’s Corporate Governance
Principles and Recommendations (Fourth Edition)
(ASX Independence Guidelines).
At its June 2023 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.
105
CORPORATE 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 and summarises the role and key responsibilities of each committee.
Biographical details of individual directors, and their respective qualifications and experience, are set out on pages
44-46 of this annual report.
BOARD
Members
MEMBERS
APPOINTMENT TO OFFICE
•
•
•
•
•
•
Julian Cook (Chair)
Sue Suckling
Chad Barton
Kate Hughes
Glenn Davis
David Attenborough
8 June 2021
9 May 2011
8 June 2021
8 September 2022
8 September 2022
3 March 2023
AUDIT COMMITTEE
Role
Key
Responsibilities
Members
•
•
•
•
•
•
•
•
•
•
•
•
•
Assists the Board in fulfilling its responsibilities relating to financial accounting and
reporting, external and internal audit, tax planning and compliance, and treasury matters.
Financial statements and reports
Compliance with generally accepted accounting principles
Tax planning and compliance
Internal and external audit
Accounting policies and procedures
Expenditure authorities
Treasury policy and operations
Dividend policy
Chad Barton (Chair)
Julian Cook
Kate Hughes
David Attenborough
RISK AND COMPLIANCE COMMITTEE
Role
Key
Responsibilities
•
•
•
Assists the Board in fulfilling its responsibilities relating to risk assessment, management and
monitoring, and ongoing regulatory and other legal compliance.
Risk management
Business resilience, including business continuity, crisis management and disaster recovery
• Workplace health and safety and other critical safety and staff wellbeing issues
•
•
•
•
•
•
•
•
Anti-money laundering compliance
Host responsibility and responsible gaming
Gaming regulatory compliance and casino licensing
Insurance coverage
Kate Hughes (Chair)
Julian Cook
Sue Suckling
Glenn Davis
Members
106
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE PEOPLE AND CULTURE COMMITTEE
Role
Key
Responsibilities
Members
•
•
•
•
•
•
•
•
Oversees the management of the human resource activities of the company, the
organisational culture, the senior management structure, senior executive performance,
remuneration and incentivisation, and succession planning.
Human resource matters
Performance and remuneration
Senior personnel structure and effectiveness
Senior executive succession planning
Julian Cook (Chair)
Chad Barton
David Attenborough
GOVERNANCE AND NOMINATIONS COMMITTEE
Role
Key
Responsibilities
Members
• Monitors the overall governance of the business, Board and committee composition and
performance, director independence, conflicts of interest, statutory compliance, and the
identification of and planning for emerging issues.
•
•
•
•
•
•
•
•
•
•
•
Board structure and performance
Board succession planning
Appointment and removal of directors
Performance evaluation of the Board and its committees
Corporate governance best practice
Julian Cook (Chair)
Sue Suckling
Chad Barton
Kate Hughes
Glenn Davis
David Attenborough
107
CORPORATE 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 2023:
BOARD
AUDIT AND
RISK/AUDIT(1)
RISK AND
COMPLIANCE
PEOPLE AND
CULTURE
GOVERNANCE AND
NOMINATIONS
Total Number of
Meetings
Julian Cook
Sue Suckling(2)
Chad Barton(3)
Kate Hughes(4)
Glenn Davis(2)(4)
David
Attenborough(5)
Silvana
Schenone(6)
Jennifer Owen(7)
10
10
6
10
6
6
2
8
5
6
6
–
6
4
–
1
–
2
5
5
3
1
5
3
–
–
–
5
5
–
5
–
–
2
3
–
1
1
1
1
1
1
–
1
–
(1) The Audit and Risk Committee was renamed the Audit Committee with effect from 26 August 2022.
(2) Sue Suckling and Glenn Davis were appointed members of the Risk and Compliance Committee effective from 28 October 2022.
(3) Chad Barton was a member of the Risk and Compliance Committee from 26 August 2022 to 28 October 2022 (inclusive) only.
(4) Kate Hughes and Glenn Davis were appointed as directors effective from 8 September 2022.
(5) David Attenborough was appointed as a director effective from 3 March 2023.
(6) Silvana Schenone resigned as a director effective from 31 March 2023.
(7) Jennifer Owen resigned as a director effective from 28 October 2022.
108
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE 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 2023.
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.
109
CORPORATE 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 has responsibility for oversight
of the quality, reliability, and accuracy of the company’s
internal and external financial statements, the quality
of the company’s external result presentations, 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.
Fees paid to PricewaterhouseCoopers during the
financial year ended 30 June 2023 are set out in note
8 to the financial statements. Fees for audit and other
assurance work for the financial year ended 30 June 2023
represented 93% 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.
110
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE 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 the 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.
111
CORPORATE 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 Audit Committee approves the assurance plan, with
results and performance of the organisation’s risk and
controls regularly reviewed by the Audit 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 2023.
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 38-43 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 from December
2022 to January 2023, with the results discussed by the
Board at a meeting in February 2023.
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.
112
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE 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. 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.
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.
113
CORPORATE Remuneration
Report
I am pleased to present the remuneration report for
the financial year ended 30 June 2023, 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 2023.
Over the last financial year, the People and Culture
Committee has continued to review SkyCity’s employee
incentive plans to ensure that they are appropriately
designed around robust risk and compliance settings
within the business, particularly in the areas of AML, host
responsibility and health and safety, as well as provide
suitable reward and retention for executives and other
participants in the plans. The changes made to these
plans over the last financial year are detailed in this
remuneration report. The Committee will continue to
review these incentive plans over the coming year with
a particular focus on the executive long term incentive
plan. Details of the various incentive plans are detailed in
this remuneration report and the Remuneration Policy
Statement available in the Governance section of the
company’s website at www.skycityentertainmentgroup.com.
Detailed in this remuneration report are the employment
and remuneration arrangements for the Chief Executive
Officer. Mr Ahearne’s remuneration package for the
financial year ended 30 June 2023 included a short term
incentive component with a target of $750,000, replacing
his annual share entitlement – noting Mr Ahearne did not
receive a long term incentive grant in the financial year.
For the financial year ended 30 June 2024, Mr Ahearne’s
remuneration package includes a short term incentive
component with a target of $750,000, again replacing his
annual share entitlement.
In determining Mr Ahearne’s outcome for the short term
incentive for the financial year ended 30 June 2023, the
Board assessed the company’s financial performance
and performance against key strategic objectives and key
compliance goals (including in relation to AML, health
and safety and host responsibility matters). Mr Ahearne
recommended to the Board that he, along with senior
executives and other participants in the company’s Short
Term Incentive Plan and Performance Incentive Plan,
should have a reduction of 25% applied to the outcomes
under the Plans to reflect the AUSTRAC enforcement
action and the independent review conducted by
Consumer and Business Services (the South Australian
gaming regulator) in respect of SkyCity Adelaide. The
Board agreed and, accordingly, exercised its discretion
allowed under the Plans and applied a 25% reduction
to Mr Ahearne’s short term incentive outcome and the
short term incentive and deferred short term incentive
outcomes for senior executives and other participants
in the Plans – 458 participants in total. Further details
of the short term incentive outcome for Mr Ahearne
and other participants in the Plans are provided in this
remuneration report.
For the financial year ended 30 June 2023, the company’s
Short Term Incentive Plan and Performance Incentive
Plan have been amended to include:
•
a clearer balanced scorecard for participants
whereby the achievement of incentives is calculated
by reference to three specific goals each having a
set percentage weighting – being financial goals,
individual key performance indicators (KPIs) and
company-wide compliance goals:
›
›
the financial and individual KPI components of
the Plans account for 80% of the overall goals;
and
the company-wide compliance goals account for
the remaining 20% of the goals; and
•
a new company compliance gateway and a revised
financial gateway have been put in place;
›
›
the new company compliance gateway requires
acceptable achievement of the company-wide
compliance goals, as determined by the Board;
and
the revised financial gateway requires
SkyCity’s normalised Group net profit after
tax (Normalised Group NPAT) for the relevant
financial year to exceed 90% of the budgeted
Normalised Group NPAT for that year, alongside
the individual non-financial gateway.
114
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE These amendments to the Plans, in addition to the
inclusion of malus provisions in all SkyCity employee
incentive plans in FY22, ensure that our incentives are
responsive to any compliance breaches and that any
underperformance in compliance has consequences for
participants.
Amendments were also made to the company’s long
term incentive plan, the Executive Long Term Incentive
Restricted Share Rights Plan, for the financial year
ended 30 June 2023 - with a grant being made to senior
executives (excluding the Chief Executive Officer) in
September 2022. Material enhancements made to this
Plan included:
•
•
•
•
a change in the structure of the Plan, moving from a
loan and issue of bonus conditional shares to an issue
of restricted share rights which removes significant
complexity and administrative burden;
removal of a competitor comparator tranche;
the introduction of a positive total shareholder return
gate; and
enhancements to Board discretion prior to vesting
in relation to consideration of regulatory, risk and
compliance objectives.
Further details of the enhancements to the Executive
Long Term Incentive Restricted Share Rights Plan for the
financial year ended 30 June 2023 are detailed in this
remuneration report.
The Chief Executive Officer did not receive a salary
increase for the financial year ended 30 June 2023,
however selected senior executives received salary
increases effective from 1 July 2022. These increases
followed an independent review of salary movements
for executives in the markets in which we operate.
This remuneration review also included all salaried
employees, and was the first remuneration review for
salaried employees since October 2019. For the financial
year ending 30 June 2024, the People and Culture
Committee has reviewed relevant market information
provided by independent remuneration consultants
and determined that, select senior executives, excluding
the Chief Executive Officer, will receive salary increases
effective from 1 October 2023. The Committee intends
to undertake a full review of executive remuneration in
the current financial year to ensure the balance of fixed,
short term and long term remuneration components
align to the market and our ability to continue to reward,
retain and attract high calibre executives. This review may
involve further increases to some senior executives’ fixed
remuneration during the 2024 financial year as well as
modifications to target incentive percentages under the
Performance Incentive Plan and the Executive Long Term
Incentive Restricted Share Rights Plan.
I am delighted that our overall New Zealand gender
pay gap has decreased to 4.4%, from 6.8% last year and
8.2% when we first started publicising our pay gap in
2019. This is a testament to the effort and involvement of
the entire business in making SkyCity an inclusive and
diverse place to work, where our people can thrive and
have excellent opportunities.
The Board intends to seek an increase to the
non-executive directors’ fee pool at the upcoming 2023
SkyCity Annual Meeting. This increase will provide the
Board with sufficient headroom to appoint a seventh
director over the coming year and to meet the fees
payable to the independent non-executive directors on
the separate SkyCity Adelaide Board and any ad-hoc
Committee fees. It will not be used to increase the
existing non-executive director fees as outlined on page
116 of this annual report.
Base non-executive director fees were last increased
by 2% in 2018. Since then, the CPI has increased by
more than 18% and the median fees across comparator
companies have increased by up to 16%. The workload,
risk and skill requirements at the Board have increased
significantly over recent years reflecting the heightened
regulatory focus. The Board has also been fully
refreshed over the last two years in order to meet the
governance needs of the company today and going
forward. Payment of an appropriate level of fees is
important to attract and retain suitable directors.
However, the Board has determined not to increase the
existing per director fees this year given the ongoing
AUSTRAC proceedings against SkyCity Adelaide. The
Board currently intends to seek shareholder approval
for an increase to the non-executive directors’ fee
pool at the 2024 SkyCity Annual Meeting to permit an
appropriate increase in per director fees.
Julian Cook
Chair
People and Culture
Committee
115
CORPORATE Non-Executive Directors Fees
This section details the fees paid to non-executive directors.
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 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 for the purpose of driving value and maintaining the highest standards of corporate governance on
behalf of shareholders. The guiding principles that underpin the Policy are that:
•
•
non-executive director remuneration will be regularly benchmarked against external comparator markets to ensure
it is broadly in line with that payable in other large publicly-listed companies in Australasia; and
the incremental accountability and commitment that accompanies specific roles will be recognised in the
company’s non-executive director remuneration structure.
The People and Culture Committee is responsible for making recommendations to the Board annually on non-executive
director remuneration changes. In turn, the Board seeks shareholder approval for any proposed increase to the total
remuneration pool under the Policy on Non-Executive Director Remuneration.
During the past financial year, the Board reviewed SkyCity’s current total non-executive director remuneration pool
and Board and Committee fees against a comparator group and available data on board fee movements in both New
Zealand and Australia. Following this review, the Board has resolved to seek shareholder approval at the company’s
upcoming 2023 Annual Meeting in October 2023 for an increase to the total remuneration pool effective from
1 July 2023 to provide the Board with sufficient headroom to appoint an additional non-executive director during the
current financial year and to meet the fees payable to the independent non-executive directors on the separate SkyCity
Adelaide Board and any ad-hoc Committee fees – full details of which will be set out in the company’s 2023 Notice of
Meeting. The Board will not increase the existing per director fees this year (as outlined in the table below), but intends
to seek shareholder approval to increase the non-executive directors’ fee pool at the 2024 SkyCity Annual Meeting to
ensure fees remain appropriate.
The following table outlines the non-executive directors’ fees (exclusive of GST, if any) for the Board and its Committees
as at 30 June 2023:
BOARD/COMMITTEE
Board
Audit Committee
Risk and Compliance Committee
People and Culture Committee
POSITION
Chair
Non-Executive Director
Chair
Member
Chair
Member
Chair
Member
FEES
(per financial year)
$280,000
$128,500
$35,000
$15,000
$35,000
$15,000
$35,000
$15,000
Governance and Nominations
Committee
All non-executive directors are members of this 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.
Fees payable to non-executive directors of SkyCity’s subsidiary companies are detailed on page 134 of this annual report.
116
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE Non-Executive Director Fees for the Year Ended
30 June 2023
Remuneration paid to, and other benefits received by, non-executive directors for services in their capacity as directors
of the company or any subsidiary company during the financial year ended 30 June 2023 and, comparatively during the
financial year ended 30 June 2022, are listed in the table below:
DIRECTOR
Julian Cook
Sue Suckling
Chad Barton
Kate Hughes(4)
Glenn Davis(4)
David Attenborough(6)
Silvana Schenone(8)
Jennifer Owen(9)
FINANCIAL
YEAR
SKYCITY
ENTERTAINMENT
GROUP BOARD AND
COMMITTEE FEES
OTHER
BENEFITS
TOTAL
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
$300,000.00(1)
$32,500.00 (2)
$332,500.00
$234,250.00
$144,074.20
$163,500.00
$174,699.77
$158,500.00
–
$234,250.00
$5,148.75(3)
$4,475.95(3)
–
–
$149,222.95
$167,975.95
$174,699.77
$158,500.00
$142,963.93
$29,315.06(5)
$172,278.99
–
–
–
$114,372.60
$75,955.40(2)
$28,164.38(5)
$218,492.38
–
–
–
$49,834.59
$704.11(7)
$50,538.70
–
$109,943.49
$158,500.00
$53,417.47
$167,250.00
–
$109,943.49
$158,500.00
$53,417.47
$167,250.00
–
–
–
The figures shown are gross amounts and exclude GST where applicable.
(1) Includes $20,000 for additional services provided to the People and Culture Committee.
(2) Being fees payable as a director of the Board of SkyCity Adelaide Pty Limited.
(3) 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).
(4) Kate Hughes and Glenn Davis were appointed as directors effective from 8 September 2022.
(5) Being fees payable for consultancy services provided to the company for the period from 20 June 2022 to 7 September 2022 (inclusive) prior to
his/her appointment as a director on 8 September 2022. 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.
(6) David Attenborough was appointed as a director effective from 3 March 2023.
(7) Being fees payable for consultancy services provided to the company for the period from 1 to 2 March 2023 (inclusive) prior to his appointment
as a director on 3 March 2023. 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.
(8) Silvana Schenone retired as a director effective from 31 March 2023.
(9) Jennifer Owen retired as a director effective from 28 October 2022.
117
CORPORATE 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 shares as at 30 June 2023:
DIRECTOR
Julian Cook
Sue Suckling
Chad Barton
Kate Hughes
Glenn Davis(4)
David Attenborough (4)
SHARES
BENEFICIALLY
HELD
PERCENTAGE OF BASE
FEE RETAINED IN SHARES
(Based on the value at the
relevant purchase date)
PERCENTAGE OF BASE
FEE RETAINED IN SHARES
(Based on the value at
30 June 2023)(5)
100,000(1)
60,949(2)
60,000(3)
8,300
–
–
123%
163%
135%
16%
–
–
82%
109%
107%
15%
–
–
(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
Casheaw Super Fund.
(4) Glenn Davis and David Attenborough
were restricted from acquiring shares
in SkyCity during FY23 as a result of
restrictions in the SkyCity Securities
Trading Policy.
(5) Based on a closing price on 30 June
2023 of $2.29 per share.
118
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE Remuneration of Employees
This section details the company’s approach to
remuneration frameworks, outcomes and performance of
SkyCity’s Chief Executive Officer, other Group executives
and employees for the financial year ended 30 June 2023.
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 123-124 of 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, the 2018 SkyCity Executive Long Term
Incentive Plan and/or the Executive Long Term Incentive
Restricted Share Rights 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 2023 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 2023.
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.
Variable Remuneration
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 120% of the target award (previously 150%).
Deferred STI Scheme 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 Conduct,
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).
119
CORPORATE 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.
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 2023
For the financial year ended 30 June 2023, offers made under the PIP included company risk goals as part of a balanced
scorecard, which also included individual financial and non-financial goals. The company risk goals accounted for 20% of
the target outcome with the individual financial and non-financial goals comprising in aggregate 80% of target.
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
WEIGHTING
Financial
Achievement of company NPAT target
Non-Financial
A number of non-financial objectives specific to the
individual concerned based on the strategic priorities for
the Group
Compliance
Goals specifically relating to anti-money laundering,
host responsibility, and health and safety
50%
30%
20%
For the financial year ended 30 June 2023, the Board exercised its discretion under the PIP and STI plan by
implementing a modifier to the outcomes for the Chief Executive Officer, Group executives and other participants in
the incentive plans. The modifier was a reduction of 25% across all balanced scorecard elements of the plans. The Board
determined that the company compliance gateway, being acceptable achievement of the company compliance goals,
was met, and further determined that the company compliance scorecard (which includes goals and measurements of
SkyCity’s performance against health and safety, anti-money laundering and host responsibility targets) received a score
in aggregate of 11.7 out of 20 (58%).
For the financial year ending 30 June 2024, 390 employees will be invited to participate in the STI plan and a further
97 employees will be invited to participate in the PIP.
120
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE Long Term Incentive Remuneration
In the financial year ended 30 June 2023, grants were
made to Group executives (excluding the Chief Executive
Officer) under the Executive Long Term Incentive
Restricted Share Rights Plan.
During the financial year ended 30 June 2023, the
following vesting calculations were completed in relation
to allocations made to participants in August 2019 under
the 2018 SkyCity Executive Long Term Incentive Plan as
follows:
•
August 2019 allocation: the first (and final) test was
completed and resulted in 16.7% of the shares vesting
to participants in respect of the 2019 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 2023, the Public Trust held a total
of 2,087,978 shares – 648,818 of which were allocated
and held on behalf of eligible participants and 1,439,160
of which were unallocated and held on behalf of future
participants in the company’s employee incentive plans.
Executive Long Term Incentive Restricted Share
Rights Plan
The Executive Long Term Incentive Restricted Share
Rights Plan (Long Term RSR Plan) was introduced
in 2022 to replace the 2018 SkyCity Executive Long
Term Incentive Plan (as detailed below). The following
enhancements were included in the Long Term RSR Plan:
•
•
•
•
introduction of a total shareholder return gate -
the Long Term RSR Plan requires that SkyCity’s
total shareholder return be greater than zero over
the restrictive period in order for any shares to
vest in respect of the ‘Absolute TSR Tranche’, ‘NZX
Comparator Group Tranche’ and ‘ASX Comparator
Group Tranche’;
removal of the competitor comparator group tranche
– following the delisting of Crown Resorts Limited
from the ASX, the Board reviewed this hurdle and
determined that, due to limited suitable competitors
being available on the ASX or NZX, this tranche
should be removed from the Plan;
enhancement to Board discretion – invitation letters
to Group executives include explicit mention of the
ability for the Board to exercise its discretion prior
to vesting (regardless of performance conditions)
if it is appropriate to do so to reflect the company’s
performance or non-performance in meeting its
regulatory, risk and compliance obligations; and
change in plan vehicle – the Long Term RSR Plan is
a share-based performance incentive which delivers
potential rewards utilising restricted share rights
(RSRs). RSRs issued to participants will only vest if
that participant remains an employee throughout
the restrictive period and the relevant performance
hurdles are achieved. Upon the vesting criteria being
met, participants will be allocated one ordinary
SkyCity share for each RSR that vests.
The Long Term RSR Plan is similar to the 2018 SkyCity
Long Term Incentive Plan in that it aligns remuneration
with the creation of shareholder value over the long term
through absolute and relative total shareholder return
(TSR) measures:
•
•
•
50% of the shares are allocated to an absolute 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 and an
ASX 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; and
for the ASX comparator group tranche, a comparison
of SkyCity’s TSR over the restrictive period against the
TSR of each of the constituent entities of the ASX 200
index (as at the grant date, other than SkyCity) over
the same period.
The maximum award under the Long Term RSR 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 Long Term RSR Plan,
including where the company’s or a third party’s financial
statements are subsequently required to be restated, the
Board may seek to recover from a participant the value of
any shares erroneously determined to have vested to that
participant.
Until the restrictive period for the relevant shares has
ended a participant may not sell the RSRs or use them as
security for any loan.
121
CORPORATE 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.
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 2023, a total of 648,818 shares were issued
under the 2018 SkyCity Executive Long Term Incentive Plan
and held by the Public Trust on behalf of seven 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.
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 TSR
tranche which includes a cost of equity premium;
the remaining 50% of the shares are allocated equally
to each of an NZX comparator group tranche, an
ASX comparator group tranche and a competitor
comparator group tranche; and
performance is assessed three years after the issue of
the shares, with no retesting dates in the event the
performance hurdles are not satisfied as at that date.
In order to determine whether any shares will vest in a
participant following the three-year restrictive period
for those shares, each tranche is measured against the
performance hurdle for that tranche on the performance
testing date for those shares, where the performance
hurdle for each of the tranches is:
•
•
•
•
for the absolute TSR tranche, a comparison of
SkyCity’s TSR over the restrictive period against
the cost of equity for the SkyCity Group over the
restrictive period as determined by the Board;
for the NZX comparator group tranche, a comparison
of SkyCity’s TSR over the restrictive period against the
TSR of each of the constituent entities of the NZX 50
index (as at the grant date, other than SkyCity) over
the same period;
for the ASX comparator group tranche, a comparison
of SkyCity’s TSR over the restrictive period against the
TSR of each of the constituent entities of the ASX 200
index (as at the grant date, other than SkyCity) over
the same period; and
for the competitor comparator group tranche, a
comparison of SkyCity’s TSR over the restrictive
period against the TSR of each of Crown Resorts
Limited and The Star Entertainment Group Limited
over the same period. 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
122
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE 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 for the financial
years ended 30 June 2021, 30 June 2022 and 30 June 2023 is outlined in the following table:
PERIOD
FY23
FY22
FY21(6)
Base salary
$1,500,000
$1,463,488
$912,994
KiwiSaver
Benefits
Other Payments
Nil
$5,800
$955(1)
Nil
$29,680
$4,533
$11,620(1)
$2,783
Nil
Subtotal
$1,506,755
$1,479,961
$945,457
STI Outcome
$585,563 (2)
Nil
Nil
Annual Share Entitlement
LTI Grant
Annualised Value of
Retention LTI Grant
Nil
Nil
$500,000(4)
$500,000(5)
$875,000(3)
$875,000(3)
Nil
Nil
Nil
Subtotal
$1,460,563
$1,375,000
$500,000
Total Remuneration
$2,967,318
$2,854,961
$1,445,457
D
N
A
Y
R
A
L
A
S
S
T
I
F
E
N
E
B
M
R
E
T
T
R
O
H
S
S
E
V
I
T
N
E
C
N
I
D
E
S
A
B
Y
T
I
U
Q
E
N
O
I
T
A
R
E
N
U
M
E
R
L
A
T
O
T
(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) Reflects the short term incentives earned in FY23, but not paid until September 2023.
(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.
(4) 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 vested on 16 November 2022.
(5) 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.
(6) Covers the period from 16 November to 30 June 2021.
The graphs below show the mix of remuneration that was earned by Mr Ahearne for his performance over the financial
year ended 30 June 2023 for his position as Chief Executive Officer, alongside graphs illustrating the target and
maximum remuneration mixes.
FY23 ACTUAL
REMUNERATION
FY23 TARGET
REMUNERATION
FY23 MAXIMUM
REMUNERATION
28%
33%
37%
72%
67%
63%
FIXED REMUNERATION
SHORT TERM INCENTIVES
123
CORPORATE
STI Outcome for FY23
Mr Ahearne’s STI outcome for the year ended 30 June 2023 was determined by the Board giving consideration to his
and the Group’s achievement of the balanced scorecard objectives, being the company NPAT target, the non-financial
objectives based on the strategic priorities for the Group, and a set of goals specifically relating to anti-money laundering,
host responsibility and health and safety. As described in the ‘Group Executive STI Remuneration for the Financial Year
ended 30 June 2023’ section earlier, a modifier, being a reduction of 25% across all balanced scorecard elements, was
applied to Mr Ahearne’s STI outcome. This will result in a cash payment of $585,563, to be made in September 2023,
representing 78% of the STI target amount and 65% of the STI maximum.
The following equity-based incentives vested to Mr Ahearne in the financial year ended 30 June 2023:
PLAN
GRANT
YEAR
VESTING
DATE
SECURITIES
PERFORMANCE
PERIOD
VESTING
MEASURE
VESTING
OUTCOME
SHARES
VESTED
VALUE ON
VESTING
2018 SkyCity
Executive Long
Term Incentive
Plan
SkyCity
Performance
Incentive Plan
Annual Share
Entitlement
FY20
29 August 2022
LTI
Performance
Shares
28 August 2019 to
28 August 2022
Absolute and
relative TSR
measures
16.7% vested
8,770
$25,258(1)
FY20 7 September 2022
Restricted
Share Rights
1 July 2019 to
30 June 2020
Financial and
non-financial
objectives
100% vested
13,648
$37,396(2)
FY21 17 November 2022 SkyCity Shares
16 November 2021 to
16 November 2022
Ongoing
employment
100% vested
157,347 $446,865(2)
(1) Determined by multiplying the number of ordinary SkyCity shares transferred to Mr Ahearne by the closing price on 29 August 2022
(being $2.88 per share).
(2) Determined by multiplying the number of ordinary SkyCity shares transferred to Mr Ahearne by the closing price on 7 September 2022
(being $2.74 per share).
(3) Determined by multiplying the number of ordinary SkyCity shares transferred to Mr Ahearne by the closing price on 17 November 2022
(being $2.84 per share).
Pay Gap
Mr Ahearne’s base salary remuneration ratio to the median annualised employee base salary is 25.
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).
124
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE FY23 Employee
Remuneration
The numbers of employees or former employees of
the company and its subsidiaries, not being directors
of the company, who received remuneration and
other benefits in their capacity as employees, the
value of which was in excess of $100,000 and was paid
to those employees during the financial year ended
30 June 2023, 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
2022 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 2018 SkyCity
Executive Long Term Incentive Plan and the
Executive Long Term Restricted Share Rights Plan;
(f) the value of commencement shares expensed
during the year;
(g) sign-on cash payments; and
(h) settlement payments and payments in lieu of
notice with respect to certain employees upon
their departure from the company.
REMUNERATION
NUMBER OF
EMPLOYEES
$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
$350,000–$359,999
$370,000–$379,999
$380,000-$389,999
$390,000-$399,999
$410,000-$419,999
$420,000-$429,999
$430,000-$439,999
$450,000-$459,999
$480,000-$489,999
$550,000-$559,999
$580,000-$589,999
$630,000-$639,999
$690,000-$699,999
$720,000-$729,999
$750,000-$759,999
$910,000-$919,999
$1,020,000-$1,029,999
$1,220,000-$1,229,999
$1,270,000-$1,279,999
$2,620,000-$2,629,999
121
71
62
31
31
20
22
20
11
12
13
6
9
7
4
3
4
3
8
2
3
2
1
3
1
3
1
1
2
1
1
1
1
1
1
1
1
2
1
1
1
1
1
TOTAL
492
125
CORPORATE Twenty Largest Registered Shareholders
as at 1 August 2023
NUMBER
OF SHARES
% OF
SHARES
Citicorp Nominees Pty Limited
JP Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Accident Compensation Corporation - NZCSD
104,406,406
98,839,760
80,659,846
46,411,325
HSBC Nominees A/C NZ Superannuation Fund Nominees Limited - NZCSD
30,799,717
HSBC Nominees (New Zealand) Limited - NZCSD
Citibank Nominees (New Zealand) Limited – NZCSD
BNP Paribas Nominees (NZ) Limited - NZCSD
HSBC Nominees (New Zealand) Limited A/C State Street -NZCSD
29,710,923
26,473,499
23,203,640
20,805,427
JPMorgan Chase Bank NA NZ Branch - Segregated Clients Acct - NZCSD
20,639,056
BNP Paribas Noms Pty Limited
National Nominees Limited
New Zealand Depository Nominee Limited
ANZ Custodial Services New Zealand Limited - NZCSD
ANZ Wholesale Australasian Share Fund - NZCSD
Citicorp Nominees Pty Limited
Forsyth Barr Custodians Limited
FNZ Custodians Limited
BNP Paribas Nominees (NZ) Limited - NZCSD
13.73
13.00
10.61
6.11
4.05
3.91
3.48
3.05
2.74
2.72
2.13
2.04
1.94
1.68
1.40
1.36
1.14
0.99
0.90
0.76
16,202,031
15,512,623
14,757,199
12,752,012
10,658,216
10,328,703
8,681,836
7,547,227
6,846,067
5,809,313
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
TEA Custodians Limited Client Property Trust Account - NZCSD
TOTAL
591,044,826
77.75
Total ordinary shares on issue as at 1 August 2023 were 760,205,209 of which 2,087,978 were held in aggregate by the
Public Trust on behalf of eligible and future participants pursuant to the SkyCity Senior Executive Long Term Incentive
Plan and 2018 SkyCity Executive Long Term Incentive Plan.
The ordinary shares are quoted on both the NZX Main Board and ASX under the ticker code ‘SKC’.
No shares were held by the company directly as treasury stock (ie. where SkyCity is the registered owner).
126
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE Distribution of Ordinary Shares and
Registered Shareholdings as at 1 August 2023
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
4,441
5,889
2,331
2,505
165
15,331
1,640,629
16,214,350
16,822,875
62,055,632
663,471,723
760,205,209
0.22
2.13
2.21
8.16
87.28
100
As at 1 August 2023, there were 1,977 shareholders (with a total of 179,176 shares) holding less than a marketable parcel of
shares under the ASX Listing Rules, based on the closing share price of A$2.08.
The ASX Listing Rules define a marketable parcel of shares as a parcel of shares of not less than A$500.
Substantial Product Holders
The following persons had given notice as at 30 June 2023, in accordance with subpart 5 of Part 5 of the New Zealand
Financial Markets Conduct Act 2013, that they were substantial product holders in the company and held a relevant
interest in the number of ordinary shares shown below:
DATE OF
SUBSTANTIAL
PRODUCT
HOLDER NOTICE
RELEVANT
INTEREST IN
NUMBER OF
SHARES
% OF SHARES
HELD AT
DATE OF
NOTICE
Allan Gray Group
Accident Compensation Corporation
Investors Mutual Limited
AustralianSuper Pty Ltd
7 June 2023
1 June 2023
7 June 2022
10 May 2022
80,672,334
49,450,227
38,436,546
55,229,888
Commonwealth Bank of Australia
2 December 2021
46,598,778
Sumitomo Mitsui Trust Holdings, Inc.
23 August 2021
70,963,067
10.612%
6.505%
5.06%
7.27%
6.130%
9.33%
Yarra Management Nominees Pty Ltd and
TA Universal Investment Holdings Ltd
14 April 2021
65,593,783
8.6284%
Substantial product holder notices received since 30 June 2023 can be viewed at www.nzx.com/companies/SKC/
announcements.
The total number of listed voting shares of SkyCity Entertainment Group Limited as at 30 June 2023 was 760,205,209.
127
CORPORATE Twenty Largest Registered Bondholders
as at 1 August 2023
NUMBER OF
BONDS
% OF
BONDS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Forsyth Barr Custodians Limited
Custodial Services Limited
FNZ Custodians Limited
Hobson Wealth Custodian Limited
Investment Custodial Services Limited
Forsyth Barr Custodians Limited
BNP Paribas Nominees (NZ) Limited - NZCSD
47,135,000
31,684,000
25,264,000
15,009,000
5,765,000
5,434,000
5,150,000
Westpac Banking Corporate NZ Financial Markets Group - NZCSD
4,602,000
JBWere (NZ) Nominees Limited
FNZ Custodians Limited
Forsyth Barr Custodians Limited
Forsyth Barr Custodians Limited
FNZ Custodians Limited
Woolf Fisher Trust Incorporated
Hobson Wealth Custodian Limited
ANZ Custodial Services New Zealand Limited - NZCSD
Falstaff Investments Limited
Richard Barton Adams & Allison Ruth Adams
BNP Paribas Nominees (NZ) Limited - NZCSD
2,587,000
2,227,000
1,312,000
1,249,000
1,025,000
815,000
805,000
792,000
770,000
750,000
600,000
600,000
26.93
18.11
14.44
8.58
3.29
3.11
2.94
2.63
1.48
1.27
0.75
0.71
0.59
0.47
0.46
0.45
0.44
0.43
0.34
0.34
20
Public Trust RIF Nominees Limited - NZCSD
TOTAL
153,575,000
87.76
On 21 May 2021, SkyCity 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’.
Distribution of Bonds and Registered Holdings
as at 1 August 2023
NUMBER OF
BONDHOLDERS
NUMBER OF
BONDS
% OF TOTAL
BONDS ISSUED
32
127
400
51
610
160,000
1,218,000
12,903,000
160,719,000
175,000,000
0.09
0.70
7.37
91.84
100
1,000–5,000
5,001–10,000
10,001–100,000
> 100,000
TOTAL
128
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE 129
CORPORATE 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 section 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 2023 (notices given by directors
during the financial year ended 30 June 2023 are marked with an asterisk):
JULIAN COOK
Deakin TopCo Pty Limited
Motutapu Investments Limited
WEL Networks Limited
Winton Land Limited
SUE SUCKLING
5th Element Limited
Boulcott Hospital
Insurance & Financial Services
Ombudsman Scheme Commission
Jacobsen Holdings Limited
Jade Software Corporation Limited
Director*
Director
Director
Director
Chair
Chair*
Chair
Chair
Chair
NZ Healthcare Investments Limited
Director*
Rubix Limited
Sue Suckling Holdings Limited
Taska Prosthetics Limited
Chair
Managing
Director
Chair
KATE HUGHES
Australian Prudential Regulation
Authority
Comcare (Australia)
Department of Health (VIC)
Lower Murray Water
SuniTAFE
GLENN DAVIS
Chair of Audit
and Risk
Committee*
Chair of Audit
and Risk
Committee*
Chair of Audit
and Risk
Committee*
Director*
Director*
A Raptis & Sons Group
Director*
Adrad Holdings Ltd
Beach Energy Ltd
DMAW Lawyers Pty Ltd
iTech Minerals Ltd
Mitolo Family Farms
Mort & Co Holdings Ltd
Stratco Group
Chair*
Chair*
Chair*
Chair*
Chair*
Director*
Chair*
Director*
Director*
Trustee*
CHAD BARTON
Casheaw Pty Limited
Nuix Holding Pty Limited
Nuix Ireland Limited
Nuix Limited
Chair and
Shareholder
Director
Director
Chief Operating
Officer and Chief
Financial Officer
DAVID ATTENBOROUGH
DRAMLA Pty Ltd
Host-Plus Pty Limited
JJJ Family Trust
Nuix North America Inc
Nuix Philippines ROHQ
(Branch of Nuix Holding Pty Limited)
Nuix Pte. Ltd
Nuix SaleCo Limited
Nuix Technology UK Limited
Nuix USG Inc
Director
Director
Director
Director
Director
Director
The following details included in the Interests Register as at 30 June 2022, or entered during the financial year ended
30 June 2023, have been removed during the financial year ended 30 June 2023:
Sue Suckling is no longer the Chair of Eat My Lunch Limited;
Kate Hughes is no longer the Chair of the Audit and Risk Committee of the Department of Justice (VIC); and
Kate Hughes is no longer a member of the Audit and Risk Committee of the Department of Transport (VIC).
•
•
•
130
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE 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 2023:
DIRECTOR
NATURE OF
RELEVANT
INTEREST
NATURE OF
SECURITY
DATE OF
TRANSACTION
DURING PERIOD
CONSIDERATION
(PER SECURITY)
ACQUIRED/
(DISPOSED)
Kate Hughes
Beneficially owned
Shares
28 September 2022
$2.35
8,300
Details of the directors’ relevant interests in SkyCity securities as at 30 June 2023 are outlined on page 118 of this
annual report.
131
CORPORATE 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 NZX Limited due to certain restrictions
in the company’s constitution. In particular, the constitution places restrictions on the transfer of shares in the company in
certain circumstances and provides that votes and other rights attached to shares may be disregarded and shares may be
sold if these restrictions are breached, as more particularly described on pages 134-135 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 2023:
DIRECTOR
Julian Cook (Chair)
Sue Suckling
Chad Barton
Kate Hughes
Glenn Davis
David Attenborough
APPOINTMENT TO OFFICE
8 June 2021
9 May 2011
8 June 2021
8 September 2022
8 September 2022
3 March 2023
Jennifer Owen ceased to hold office as a director of SkyCity Entertainment Group Limited effective from 28 October 2022
and Silvana Schenone ceased to hold office as a director of SkyCity Entertainment Group Limited effective from
31 March 2023.
On 20 July 2023, the SkyCity Board announced its intention to appoint Donna Cooper as non-executive director 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.
132
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE Subsidiary Companies
The following persons held office as directors of subsidiaries of SkyCity Entertainment Group Limited as at 30 June 2023:
New Zealand Subsidiaries
Directors
Companies
Michael Ahearne, Jo Wong
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
Michael Ahearne, Jo Wong
Horizon Tourism Limited
SkyCity Investment Holdings Limited
Michael Ahearne, Jo Wong, David Christian
SkyCity Australia Finance Pty Limited
SkyCity Australia Pty Limited
SkyCity Treasury Australia Pty Limited
Glenn Davis, Julian Cook, David Christian
SkyCity Adelaide Pty Limited
Steve Salmon, Joe Borg
SkyCity Malta Limited
Steve Salmon, WH Management Limited
SkyCity Malta Holdings Limited
Steve Salmon, Michael Ahearne
SkyCity Management (UK) Limited
133
Overseas Subsidiaries
Directors
Companies
Directors
Companies
Directors
Company
Directors
Company
Directors
Company
Directors
Company
CORPORATE For the financial year ended 30 June 2023, SkyCity paid
director’s fees of:
Limitations on Acquisitions of
Ordinary Shares
•
•
€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.
Other than:
•
•
director’s fees paid to Glenn Davis in his capacity
as the Chair of the Board of SkyCity Adelaide Pty
Limited; and
director’s fees payable to Julian Cook in his
capacity as a director of the Board of SkyCity
Adelaide Pty Limited,
(as detailed on page 117 of this annual report), no
director’s fees were paid to, or received by, any other
director of a subsidiary company during the financial year
ended 30 June 2023.
Waivers from the New Zealand and
Australian Stock Exchanges
The following waiver from the NZX and/or ASX Listing
Rules was 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.
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
134
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023CORPORATE The New Zealand Overseas Investment Act 2005 and the
Overseas Investment Regulations 2005 regulate certain
investments in New Zealand by overseas persons. In
general terms, the consent of the New Zealand Overseas
Investment Office is likely to be required when an
‘overseas person’ acquires shares or an interest in shares
in SkyCity Entertainment Group Limited that amount to
25% or more of the shares issued by the company or, if the
overseas person already holds 25% or more, the acquisition
increases that holding.
The New Zealand Commerce Act 1986 is likely to prevent a
person from acquiring shares in SkyCity if the acquisition
would have, or would be likely to have, the effect of
substantially lessening competition in a market.
Escrow and Buy Back Arrangements
SkyCity Entertainment Group Limited has no securities
subject to an escrow arrangement.
From time to time, Public Trust acquires shares in the
company on-market for the purposes of the company's
employee incentive plans as detailed in the Remuneration
Report in this annual report. In addition, SkyCity (or a
nominee or agent of SkyCity) may, from time to time,
acquire existing shares in the company to satisfy its
obligations to participating shareholders under the
company’s Dividend Reinvestment Plan established in
February 2011.
Credit Rating
As at the date of this annual report, SkyCity Entertainment
Group Limited has a BBB– rating (stable outlook) from
S&P Global Ratings.
•
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 casino 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 2023, the Board
considered all such transfers and was satisfied in each
case that the registration of the relevant transfer would
not prejudice any casino licence.
Donations
Donations of $115,266.38 were made by the company
during the financial year ended 30 June 2023 ($3,308.35
during the financial year ended 30 June 2022).
SkyCity also provides a range of in-kind donations
and contributions, directly and through the SkyCity
Community Trusts, to a variety of community
organisations as outlined elsewhere in this annual report.
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.
135
CORPORATE Financial
Statements
and Notes
for the year ended 30 June 2023
These financial statements were signed on
22 August 2023 on behalf of the Board of directors
of SkyCity Entertainment Group Limited by:
Julian Cook
Chair of the SkyCity Board
Chad Barton
Chair of the Audit Committee
136
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 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 2023, 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 2023;
● the income statement for the year then ended;
● the statement of comprehensive income for the year then ended;
● the statement of changes in equity for the year then ended;
● the statement of cash flows for the year then ended; and
● the notes to the financial statements, which include significant accounting policies and other
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 levels, specified reporting to the Supervisor of the
Group’s retail bond 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 Shareholder Meeting and the testing
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
137
Description of the key audit matter
Provisions and contingent liabilities relating to
regulatory matters
The Group operates in a highly regulated environment
and given the extent of scrutiny 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.
SkyCity Adelaide has been 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). On 7 December 2022, following the
conclusion of their investigation, AUSTRAC filed civil
penalty proceedings against SkyCity Adelaide in the
Federal Court of Australia.
The proceedings remain at a relatively early stage with
AUSTRAC and SkyCity Adelaide currently working
toward agreeing facts and potential admissions before
the Court identifies a process for any remaining
disputed issues and potential penalty to be determined.
Management, in consultation with their external legal
advisors, have taken into account a wide range of
factors and estimated the potential exposure to
penalties and associated legal costs that may arise as a
result of the civil penalty proceedings, and a provision
of A$45.0 million (NZ$49.0 million) has been
recognised (refer to Note 30 of the financial
statements). As the provision amount remains highly
uncertain, involves significant judgement and estimation
uncertainty and is susceptible to material change, this
represents a key judgement applied by the directors.
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. CBS advised on 6 February
2023 that they would be placing the review on hold,
pending the finalisation of the AUSTRAC proceedings
outlined above. Due to the uncertainty associated with
the potential outcome of the CBS review, the Group has
disclosed the matter as a contingent liability in Note 38
of the financial statements.
Due to 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 and considered to be a key
audit matter.
How our audit addressed the key audit
matter
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 the Group’s
external legal counsel, where applicable,
to corroborate the information provided by
management;
● Read correspondence between the
Group and the applicable regulatory
bodies;
● Evaluated management’s assessment of
whether the civil penalty proceedings filed
by AUSTRAC should be recognised as a
provision, against the criteria in NZ IAS
37 Provisions, contingent liabilities and
contingent assets;
● Performed the following procedures in
relation to the measurement of the
provision recognised for potential
AUSTRAC penalties and associated legal
costs:
⎼ Assessed management’s estimation
of the provision, with reference to
external data and other similar
AUSTRAC proceedings and
settlements, and challenged key
assumptions;
⎼ Considered the external legal advice
received and discussed the process
for estimating the provision and key
assumptions applied directly with
external legal counsel;
⎼ Assessed the professional
competence, independence and
objectivity of management’s external
legal counsel; and
● Assessed the appropriateness of the
associated disclosures in the financial
statements.
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138
2
Description of the key audit matter
How our audit addressed the key audit
matter
Provisions and contingent liabilities relating to
regulatory matters
The Group operates in a highly regulated environment
and given the extent of scrutiny by regulators in
Australia, and the general nature of casino operations
across both New Zealand and Australia, there remains
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;
a high degree of risk in respect of legal and regulatory
● Assessed our obligations under auditing
compliance.
SkyCity Adelaide has been 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). On 7 December 2022, following the
conclusion of their investigation, AUSTRAC filed civil
penalty proceedings against SkyCity Adelaide in the
Federal Court of Australia.
The proceedings remain at a relatively early stage with
AUSTRAC and SkyCity Adelaide currently working
toward agreeing facts and potential admissions before
the Court identifies a process for any remaining
disputed issues and potential penalty to be determined.
Management, in consultation with their external legal
advisors, have taken into account a wide range of
factors and estimated the potential exposure to
penalties and associated legal costs that may arise as a
result of the civil penalty proceedings, and a provision
of A$45.0 million (NZ$49.0 million) has been
recognised (refer to Note 30 of the financial
statements). As the provision amount remains highly
uncertain, involves significant judgement and estimation
uncertainty and is susceptible to material change, this
represents a key judgement applied by the directors.
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. CBS advised on 6 February
2023 that they would be placing the review on hold,
pending the finalisation of the AUSTRAC proceedings
outlined above. Due to the uncertainty associated with
the potential outcome of the CBS review, the Group has
disclosed the matter as a contingent liability in Note 38
of the financial statements.
Due to 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 and considered to be a key
audit matter.
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 the Group’s
external legal counsel, where applicable,
to corroborate the information provided by
management;
● Read correspondence between the
Group and the applicable regulatory
bodies;
● Evaluated management’s assessment of
whether the civil penalty proceedings filed
by AUSTRAC should be recognised as a
provision, against the criteria in NZ IAS
37 Provisions, contingent liabilities and
contingent assets;
● Performed the following procedures in
relation to the measurement of the
provision recognised for potential
AUSTRAC penalties and associated legal
costs:
⎼ Assessed management’s estimation
of the provision, with reference to
external data and other similar
AUSTRAC proceedings and
settlements, and challenged key
assumptions;
⎼ Considered the external legal advice
received and discussed the process
for estimating the provision and key
assumptions applied directly with
external legal counsel;
⎼ Assessed the professional
competence, independence and
objectivity of management’s external
legal counsel; and
● Assessed the appropriateness of the
associated disclosures in the financial
statements.
Description of the key audit matter
Impairment considerations in respect of the SkyCity
Adelaide casino license
As set out in Note 25 of the financial statements, at 30
June 2023, the carrying amount of the SkyCity Adelaide
casino license is $87.2 million (30 June 2022: $141.9
million). This is after an impairment charge of $49.7
million that has been recorded during the year (30 June
2022: nil impairment).
The SkyCity Adelaide casino license has a finite useful
life and, as such, accounting standards require the
Group to assess at the end of each reporting period
whether there is any indication that it may be impaired.
An impairment assessment was prepared in relation to
the Adelaide cash generating unit (CGU) which includes
the SkyCity Adelaide casino licence. This was prepared
as the Group considered there to be indications that the
CGU may be impaired, including the impact of the
ongoing regulatory matters on the business. The Group
engaged an external valuations expert to calculate
impairment using the fair value less cost of disposal
(FVLCOD) method for the Adelaide CGU.
Management and their external valuations expert made
a number of key assumptions that impact the CGU’s
recoverable value. As described in Note 25, this
includes the compound annual EBITDA growth rate of
6%, terminal growth rate of 2.5%, and post-tax discount
rate of 12%.
This is a key focus of our audit and considered to be a
key audit matter due to the inherent estimation
uncertainties and significant judgement involved in
assessing impairment, including the impact of
heightened regulatory scrutiny on the assumptions that
the Group's assessment is based on.
An impairment of $49.7 million was recorded, which
represents the difference between the midpoint of the
valuation range (determined by management’s
valuation expert under the FVLCOD method and
adopted by the Directors) and the Adelaide CGU
carrying value at 30 June 2023.
How our audit addressed the key audit
matter
Our procedures included the following:
● Understood the process undertaken by
management to prepare the forecast cash
flows;
● Compared the forecast cash flows used
for the year ended 30 June 2024 to the
Board approved business plan;
● Considered the five-year forecast cash
flows included in management’s expert’s
valuation, as adopted by the Board;
● Considered the forecast accuracy of the
Board approved forecasts by comparing
historical performance against previous
budgets;
● Considered and challenged key
assumptions in the cash flow forecasts
including the impacts of heightened
regulatory scrutiny, and the key drivers of
EBITDA growth and overall business
performance, with reference to external
evidence where possible;
● Engaged our auditor’s valuation expert to:
⎼ Review and challenge key
assumptions, including the post-tax
discount and terminal growth rates
based on their experience and
external market evidence;
⎼ Assess the reasonableness of the
cost of disposal assumption applied
under the FVLCOD method based on
their experience and industry
knowledge; and
⎼ Evaluate the final conclusions
reached with reference to external
market evidence;
In conjunction with our auditor’s valuation
expert, we assessed the valuation report
prepared by management's valuation
expert and considered key sensitivities
over the model. In doing so, we met with
management’s valuation experts to
understand and challenge their approach
and assumptions;
●
● Assessed the professional competence,
independence and objectivity of
management's valuation expert; and
● Assessed the appropriateness of
disclosures made in the financial
statements including those for key
assumptions and sensitivities.
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3
139
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 judgments by
performing, amongst others, 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;
● Challenging management on the
judgements applied in relation to the
virtual certainty assessment for insurance
recoveries; and
● Evaluating the settlement of the
insurance contract and assessing the
judgements applied by management in
determining how the settlement payments
should be accounted for.
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;
● Assessed the estimates and judgements
applied in apportioning costs between
capital expenditure and fire-related costs;
and
● Considered the adequacy of the related
financial statement disclosures.
Description of the key audit matter
Accounting for the NZICC fire
As disclosed in Note 7 to the financial statements, there
continues to be complex accounting considerations
inherent in accounting for the 2019 fire at the New
Zealand International Convention Centre (NZICC)
construction site. As outlined below, the degree of
uncertainty and estimation has reduced relative to
previous periods, however there remains a sufficient
degree of complexity for this to be considered a key
audit matter for the purposes of our audit, particularly
due to the material nature of the balances involved.
The extent of damage pertaining to the NZICC and
adjacent Horizon Hotel 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 has now been completed, and
accordingly, the estimates provided by RLB are
considered to be final. During the year, the estimate for
the extent of damage has been reduced and $52.7
million of previously derecognised capitalised work in
progress has been recapitalised, offset by the
re-recognition of deferred licence value liability of $42.4
million.
As at 30 June 2023, the total insurance income
recognised since the date of the fire of $657.1 million
represents what the Group has determined to be
virtually certain under the insurance policy. During the
current year, a significant portion of the insurance policy
was settled following an agreement reached between
the Group and their insurers, which has resulted in the
majority of claimable insurance funds being received by
the Group and a significant decrease in the associated
insurance recovery receivable. The accounting
treatment of the settlement funds as they flow between
the Group, the insurers and the Contractor has required
management judgement to be applied.
The most significant assumptions, and associated risk
to the estimates provided, relate to the timeline for
remediation, ongoing insurer policy responses and the
apportionment of costs between capitalisation and
expenditure. Any changes to these and other
assumptions can significantly impact the amounts
recorded. There remains a degree of 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.
PwC
140
4
Our audit approach
Overview
Overall group materiality: $7,610,000, which represents
approximately 5% of profit before tax excluding NZICC fire related
income, NZICC fire related expenses, impairment of Adelaide
intangible assets and regulatory penalties.
We chose profit before tax, which is a generally accepted
benchmark, as the 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 adjust this benchmark 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 three key audit matters, being:
● Provisions and contingent liabilities relating to regulatory matters
● Impairment considerations in respect of the SkyCity Adelaide
casino license
● Accounting for the NZICC fire
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.
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.
PwC
5
141
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.
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142
6
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
22 August 2023
Auckland
PwC
7
143
Income Statement
For the year ended 30 June 2023
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
Regulatory penalties
Community contributions, sponsorships and donations
Fair value losses on investment properties
Share of profits from associates
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
Profit/(Loss) Before Income Tax
Income tax expense
NOTES
2023
$'000
2022
$'000
5
6
7,a
7,b
8
8
30
16
26
8
11
12
18
855,785
553,543
7,449
61,882
32,969
52,483
(63,828)
(88,849)
(303,067)
(254,778)
(50,856)
(7,293)
(134,884)
(92,550)
(1,198)
(1,070)
(52,833)
(37,438)
(59,514)
(34,143)
(22,730)
(15,440)
(49,009)
(10,110)
(12,252)
1,064
–
(5,098)
(5,400)
–
165,899
96,936
(84,363)
(88,692)
(6,309)
75,227
(5,968)
2,276
(23,492)
(35,044)
51,735
(32,768)
(43,760)
(827)
Profit/(Loss) for the Year Attributable to Shareholders of the Company
7,975
(33,595)
EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE
TO THE SHAREHOLDERS OF THE COMPANY
CENTS
CENTS
Basic and diluted earnings/(loss) per share
9
1.1
(4.4)
The above income statement should be read in conjunction with the accompanying notes.
144
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS Statement of Comprehensive Income
For the year ended 30 June 2023
Profit/(Loss) for the Year
7,975
(33,595)
NOTES
2023
$'000
2022
$'000
Other Comprehensive Income
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
32
32
32
(4,877)
10,681
(10,734)
12,408
(469)
(3,913)
694
901
(5,990)
13,777
(3,369)
(2,914)
37
462
(140)
18,534
Total Comprehensive Income for the Year
1,985
(15,061)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
145
FINANCIAL STATEMENTS Balance Sheet
As at 30 June 2023
ASSETS
Current Assets
Cash and cash equivalents
Receivables and prepayments
Inventories
Derivative financial instruments
Current tax receivables
NZICC fire recoveries
Other current assets
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
2023
$'000
2022
$'000
28
27
33
7,c
29
7,d
19
33
26
16
24
25
11
245,013
50,833
8,582
489
12
11,613
2,000
48,698
25,826
7,528
363
4,431
212,475
–
–
26,646
318,542
325,967
–
25,465
13,978
–
11,943
43,200
17,183
19,372
12,737
2,000
11,598
42,136
108,803
119,720
1,652,476
1,442,680
566,553
623,897
122,538
126,412
2,544,956
2,417,735
2,863,498
2,743,702
The above balance sheet should be read in conjunction with the accompanying notes.
146
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS LIABILITIES
Current Liabilities
Payables and provisions
Interest bearing liabilities
Current tax liabilities
Derivative financial instruments
Lease income in advance
Lease liabilities
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
2023
$'000
2022
$'000
30
14
33
22
11
13
23
33
20
11
17
31
32
215,997
45,814
42,849
17
39,815
3,045
187,199
78,000
94
12
–
3,576
347,537
268,881
525,666
451,372
19,097
–
5,617
56,100
116,840
24,557
29,501
–
60,591
117,530
262,444
219,996
985,764
903,547
1,333,301
1,172,428
1,530,197
1,571,274
1,343,027
1,340,556
(10,435)
197,605
(4,445)
235,163
1,530,197
1,571,274
The above balance sheet should be read in conjunction with the accompanying notes.
147
FINANCIAL STATEMENTS Statement of Changes in Equity
For the year ended 30 June 2023
Balance as at 1 July 2021
1,338,223
(22,979)
321,840
1,637,084
SHARE
CAPITAL
$'000
RESERVES
$'000
RETAINED
EARNINGS
$'000
TOTAL
EQUITY
$'000
NOTES
Total comprehensive income
Dividends paid
Shares issued under employee share schemes
Net movement in treasury shares
Balance as at 30 June 2022
Balance as at 1 July 2022
Total comprehensive income
Dividends paid
Shares issued under employee share schemes
Net movement in treasury shares
–
–
2,292
41
18,534
(33,595)
(15,061)
–
–
–
(53,082)
(53,082)
–
–
2,292
41
1,340,556
(4,445)
235,163
1,571,274
1,340,556
(4,445)
235,163
1,571,274
–
–
2,446
25
(5,990)
7,975
1,985
–
–
–
(45,533)
(45,533)
–
–
2,446
25
10
31
31
10
31
31
Balance as at 30 June 2023
1,343,027
(10,435)
197,605
1,530,197
The above statement of changes in equity should be read in conjunction with the accompanying notes.
148
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS Statement of Cash Flows
For the year ended 30 June 2023
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Government grants received
Other insurance income received
Gaming taxes and levies paid
Income taxes paid
Net Cash Inflow from Operating Activities
Cash Flows from Investing Activities
Acquisition of associate
Purchases of property, plant and equipment
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
Cash flows associated with net derivatives
Proceeds from borrowings
Repayment of borrowings
Movement in treasury shares
NOTES
2023
$'000
2022
$'000
40
26
29
859,631
554,816
(528,466)
(414,543)
560
1,744
7,476
10,749
(46,338)
(41,698)
(7,034)
(25,679)
280,097
91,121
–
(42,136)
(254,746)
(100,065)
(8,113)
7,812
299,067
(11,411)
3,250
231,177
(95,456)
(112,494)
(51,436)
(31,679)
632
(2,531)
148,999
224,429
(98,000)
(194,460)
25
41
Dividends paid to company shareholders
10
(45,533)
(53,082)
Interest paid
Lease interest paid
Repayment of lease liabilities
(28,362)
(25,735)
(6,378)
(3,729)
(6,169)
(3,177)
Net Cash Outflow from Financing Activities
(32,346)
(60,684)
Net Increase/(Decrease) in Cash and Cash Equivalents
Cash and cash equivalents at the beginning of the year
Cash and Cash Equivalents at the End of the Year
15
28
196,315
48,698
245,013
(1,242)
49,940
48,698
The above statement of cash flows should be read in conjunction with the accompanying notes.
149
FINANCIAL STATEMENTS Contents
of the Notes to the Financial Statements
151
151
152
154
157
158
159
159
160
161
161
162
164
164
165
166
167
168
169
170
171
172
173
1
2
3
4
5
6
7
a
b
c
d
8
9
General Information
Basis of Preparation
Summary of Significant
Accounting Policies
Segment Information
Revenue
Other Income
NZICC Fire
Income
Expenses
Current Assets
Non-current Assets
Expenses
Earnings per Share
10
Dividends
11
12
13
14
15
16
17
18
19
Leases - SkyCity as the Lessee
Net Finance Costs
Non-current Liabilities - Interest
Bearing Liabilities
Current Liabilities - Interest
Bearing Liabilities
Net Debt Reconciliation
Investment Properties
Deferred Licence Value
Income Tax Expense
Deferred Tax Assets
174
175
175
175
176
178
183
184
184
185
186
188
189
190
192
194
199
200
201
203
20
Deferred Tax Liabilities
21
22
23
Imputation and Franking Credits
Lease Income in Advance
- Current
Lease Income in Advance
- Non-current
24
Property, Plant and Equipment
25
Intangible Assets
26
Investments in Associates
27
Receivables and Prepayments
28
Cash and Cash Equivalents
29
Assets Held for Sale
30
Payables and Provisions
31
32
33
Share Capital
Reserves
Derivative Financial Instruments
34
Financial Risk Management
35
Share-Based Payments
36
Related Party Transactions
37
Subsidiaries
38
Contingencies
39
Commitments
204
40
Reconciliation of Profit after
Income Tax to Net Cash Inflow
from Operating Activities
205
41
Events Occurring after the
Reporting Date
150
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 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 financial year ended 30 June 2022, the Group
incurred a loss of $33.6 million. This loss arose substantially
as a result of the ongoing trading restrictions imposed
on businesses by the New Zealand and South Australian
Governments in response to the COVID-19 pandemic
as outlined below. In the current financial year, no such
COVID-19 related trading restrictions were in place in New
Zealand or South Australia.
SkyCity has prepared cash flow forecasts to support its
going concern assessment. These forecasts consider
a range of possible scenarios, including in relation to
provisions (note 30), contingent liabilities (note 38) and
the receipt of a notice of termination of the April 2019
concession agreement with MPF Parking NZ Limited
(Macquarie), 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 New Zealand International Convention Centre
(NZICC) site in return for consideration of $220 million
(Car Park Concession Agreement) (note 39). These
scenarios have been informed by recent trading
performance and assume there are no further COVID-19
trading restrictions imposed in New Zealand or South
Australia. 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 its operations,
remain compliant with its financial obligations and meet
any future challenges that may arise from the termination
of the Car Park Concession Agreement (note 39) and the
regulatory matters discussed in the notes on provisions
(note 30) and contingent liabilities (note 38).
The Company's directors have therefore concluded that
there are no material uncertainties related to the Group
being a going concern and, accordingly, these financial
statements are prepared on a going concern basis.
1
General Information
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 22 August 2023.
For the purposes of complying with generally accepted
accounting practice in New Zealand (GAAP), the Group
is a for-profit entity.
2
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 2023 and the results of all subsidiaries for the
year then ended.
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.
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
151
FINANCIAL STATEMENTS 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 25;
the SkyCity Adelaide Pty Limited (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, which
resulted in the recognition of additional impairment
(note 25(c));
as reported in the Group’s 30 June 2020 financial
statements, in October 2019 there was a significant
fire at the NZICC construction site. 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 7;
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 16;
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. Where a provision
is recognised, estimation of the value at which
it will be recognised is required. Information on
the Group's provisions is provided in note 30 and
information on the Group's contingent liabilities is
provided in note 38; and
judgement and estimation is required when
determining the amount of deferred tax assets to
be recognised. Further information is provided in
note 19.
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’s operations were closed from time to time and
subject to other trading restrictions when open during
the financial years ended 30 June 2020, 30 June 2021
and 30 June 2022.
During the financial year ended 30 June 2022:
•
•
•
•
•
•
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 Wharf site was closed for the duration of
the financial year;
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 6).
In the current financial year, the Group's operations were
not impacted by COVID-19 related trading restrictions.
3
Summary of Significant
Accounting Policies
The principal accounting policies adopted in the
preparation of these financial statements are set out
below and in the notes to the financial statements.
These policies have been consistently applied to all
periods presented, unless otherwise stated.
(a)
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.
152
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS (b)
Foreign Currency Translation
(d)
Statement of Cash Flows
(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
through other comprehensive income are included in the
Statement of Comprehensive Income.
(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.
Cash flows associated with derivatives that are part of
a hedging relationship are off-set against cash flows
associated with the hedged item.
(e)
Impairment of Non-Financial 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 and
casino licences are allocated to cash generating units for
the purpose of impairment testing.
Intangible assets that have a finite useful life, items
of property, plant and equipment and investments in
associates 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 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.
(f)
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).
(c)
Goods and Services Tax (GST)
(g)
The Income Statement, 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.
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 2023 that would have a material impact on the
Group’s financial statements.
153
FINANCIAL STATEMENTS 4
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
TOTAL
$'000
646,164
15,354
201,317
7,449
61,882
–
–
54
411
–
1,064
1,064
–
66
–
–
–
2023
SKYCITY
AUCKLAND
$'000
OTHER
OPERATIONS
$'000
SKYCITY
ADELAIDE
$'000
INTERNATIONAL
BUSINESS
$'000
CORPORATE
/GROUP
$'000
Gaming revenue
387,227
66,490
169,784
22,663
Online revenue
–
15,354
–
Non-gaming revenue
121,607
10,689
68,901
Other income
NZICC fire income
Share of profit of associate
Total income
Expenses
Impairment
NZICC fire expenses
4,123
61,882
–
31
–
–
2,884
–
–
574,839
92,564
241,569
22,729
1,529
933,230
(296,841)
(41,873)
(252,381)
(26,475)
(35,077)
(652,647)
1,056
(63,828)
–
–
(49,662)
–
–
–
–
(2,250)
(50,856)
–
(63,828)
(13,630)
(90,672)
Depreciation and amortisation
(38,025)
(5,393)
(33,624)
Segment profit/(loss) (EBIT)
177,201
45,298
(94,098)
(3,746)
(49,428)
75,227
Net finance costs
Profit before income tax
(23,492)
51,735
Segment assets
1,836,354
97,491
509,797
1,049
418,807
2,863,498
Net additions to non-current
assets (other than financial
assets and deferred tax)
226,285
3,485
10,991
–
13,051
253,812
154
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS TOTAL
$'000
430,467
16,928
–
–
448
109,901
3,231
32,969
–
52,483
–
42
–
–
2022
SKYCITY
AUCKLAND
$'000
OTHER
OPERATIONS
$'000
SKYCITY
ADELAIDE
$'000
INTERNATIONAL
BUSINESS
$'000
CORPORATE
/GROUP
$'000
Gaming revenue
226,640
50,367
134,129
19,331
Online revenue
–
16,928
–
Non-gaming revenue
52,990
6,926
49,495
27,960
52,483
1,682
–
96
–
Other income
NZICC fire income
Total income
Expenses
Impairment
360,073
75,903
183,720
19,373
3,679
642,748
(209,923)
(35,697)
(161,808)
(15,664)
(26,578)
(449,670)
NZICC fire expenses
(88,849)
–
(1,057)
(4,390)
–
–
Depreciation and amortisation
(42,450)
(5,923)
(33,055)
–
–
–
(1,846)
(7,293)
–
(88,849)
(13,232)
(94,660)
Segment profit/(loss) (EBIT)
17,794
29,893
(11,143)
3,709
(37,977)
2,276
Net finance costs
Loss before income tax
(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)
116,930
4,587
6,781
–
55,319
183,617
The gaming revenue shown above has not been adjusted for International Business rebates. Note 5 shows gaming
revenue adjusted for International Business rebates, which is consistent with the manner in which revenue is
presented in the Income Statement.
155
FINANCIAL STATEMENTS (b)
Secondary Reporting Format - Geographical Segments
New Zealand
Australia
TOTAL REVENUE
NON-CURRENT ASSETS
EXCLUDING FINANCIAL
INSTRUMENTS AND
DEFERRED TAX ASSETS
2023
$'000
2022
$'000
2023
$'000
2022
$'000
682,850
445,868
2,019,291
1,816,631
250,380
196,880
488,257
570,135
933,230
642,748
2,507,548
2,386,766
(c)
Description of Segments
SkyCity Adelaide
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 Operations
This segment consists of the Group's operations at
SkyCity Hamilton, SkyCity Queenstown and SkyCity
Wharf, and online gaming. This segment does not
include International Business operations.
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 rebates and
complimentary play. At the end of the current financial
year, the Group restructured to reflect its decision to
materially reduce SkyCity’s international activities.
Corporate/Group
This segment includes head office functions, funding
entities and the Group's investment in its associate
Gaming Innovation Group Inc. (GiG) (note 26). It is not
considered an operating segment.
156
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 5
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 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
2023
$'000
639,114
201,317
15,354
855,785
2022
$'000
426,714
109,901
16,928
553,543
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 $21.4 million (2022: $13.3 million).
Reconciliation to the segment note
Total revenue
Other income
Share of profit of associate
NZICC fire income
Total income as per Income Statement
International Business rebates
Total income as per segment note
NOTES
5
6
26
7
2023
$'000
855,785
7,449
1,064
61,882
926,180
7,050
933,230
2022
$'000
553,543
32,969
–
52,483
638,995
3,753
642,748
157
FINANCIAL STATEMENTS 6
Other Income
Gain on disposal of property, plant and equipment
Dividend income
Rental income from investment properties
Government grants
Other insurance income
Total other income
2023
$'000
108
5
2,153
560
4,623
7,449
2022
$'000
2,413
2
2,323
17,482
10,749
32,969
Government Grants
Other Insurance Income
As part of its COVID-19 response, the New Zealand
Government introduced wage subsidy schemes to enable
businesses to retain employees. In the current financial
year, the Group received $0.1 million (2022: $17.3 million)
of wage subsidies from these schemes. The New Zealand
Government also provides wage subsidies to assist
people into employment. SkyCity received $0.4 million
of subsidies for the current financial year under those
schemes (2022: $0.1 million).
As outlined in note 7, 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
Macquarie for car parks that are not available under the
Car Park Concession Agreement. 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.
In the current year, insurance income has also been
recognised in relation to legal fees incurred in respect of
the regulatory investigations of SkyCity Adelaide
(note 30).
158
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 7
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 Insurance 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 Fletcher Construction Company Limited (FCC or the
Contractor) 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 following the fire. SkyCity expects to complete the NZICC before this date.
In accounting for the impact of the fire, significant judgements and estimates have been made. The most significant
assumptions, and associated risk to the estimates provided, relate to 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.
(a)
Income
Contract works insurance recovery
(remediation and pre-remediation costs)
Total income
2023
$'000
61,882
61,882
2022
$'000
52,483
52,483
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
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;
insurance premium increases; and
project costs for additional periods due to
construction delays.
Pre-remediation costs relating to site preparation, and
including demolition and clearing costs paid to the
Contractor and associated costs incurred by SkyCity,
are recognised as expenses when they are incurred.
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.
Insurers have confirmed that SkyCity's Contracts Works
Insurance policy will respond in relation to the damage
caused by the fire, and, in the current period, have
confirmed a significant portion of the policy. However, the
final insurance recovery will be dependent on the final
view of the insurers as claims are presented. 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.
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
is 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.
159
FINANCIAL STATEMENTS (b)
Expenses
Add back of NZICC and Horizon Hotel capitalised work-in-progress
Reversal of release from deferred licence value liability
Site preparation, demolition and other costs
Total expenses
2023
$'000
(52,752)
42,449
74,131
63,828
2022
$'000
(34,270)
12,559
110,560
88,849
Write-off of NZICC and Horizon Hotel Capitalised Work-in-Progress
The fire led to 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 is expensed.
In the current financial year, final damage assessments for the NZICC and Horizon Hotel have been provided by
quantity surveyor Rider Levett Bucknall Auckland Limited (RLB). As a result, 37.3% (2022: 51%) of the NZICC and 11.5%
(30 June 2022: 13%) of the Horizon Hotel construction work that had been completed to the date of the fire has been
written off. In addition, the Group estimates that 21% (2022: 28%) of the associated 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 $141.6 million of costs capitalised as work-in-progress prior to
the fire in property, plant and equipment have been written off (2022: $194.3 million). This has resulted in a decrease of
$52.8 million in the current financial year to the impairment expense recognised in relation to the fire (2022: decrease of
$34.3 million) (note 24).
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.
Reversal of Release from Deferred Licence Value Liability
The agreement between SkyCity and the Crown under which the NZICC is being built provides SkyCity with casino
licence enhancements in return for SkyCity building the NZICC.
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, this amount was to be
accounted for as a reduction in the carrying value of the NZICC upon completion. 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 deferred licence value
release at 30 June 2023 is $118.3 million (2022: $160.8 million), which represents 31.1% (2022: 42.2%) of the remaining
deferred licence value liability (the NZICC was estimated to be 83% complete prior to the fire). A $42.4 million increase
of the deferred licence value liability has been recognised in the current financial year (2022: increase of $12.6 million)
(note 17).
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.
160
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS (c)
Current Assets
Insurance recoveries for damages to the NZICC and Horizon Hotel
Payments received from the insurers
Payments reclassified as income in advance
Reclassification to non-current receivables (refer note below)
Total current assets
These assets relate to:
2023
$'000
657,074
(664,601)
19,140
–
11,613
2022
$'000
595,191
(365,533)
–
(17,183)
212,475
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.
Payments Received from the Insurers
In the current year, insurers have settled a portion of the Contracts Works Insurance policy. To date the Group has
received payment from the insurers of $664.6 million (2022: $365.5 million) towards pre-remediation (site preparation
and clearing) costs and the cost of remediation. Of this amount, $19.1 million has been recorded as income in advance.
(d)
Non-current Assets
Insurance recoveries for damages to the NZICC and Horizon Hotel
Total non-current assets
2023
$'000
–
–
2022
$'000
17,183
17,183
The split between current and non-current assets is based on the timing of receipt of funds from insurers. All receivables
are now classified as current.
161
FINANCIAL STATEMENTS 8
Expenses
Other Expenses
Utilities, insurance and rates
Other property expenses
ICT related expenses
Professional fees
Reinstatement of lease income in advance (note 39)
Other items
Expenses relating to short term leases
Impairment of receivables
Total other expenses
Depreciation and Amortisation (excluding right-of-use assets)
Depreciation (note 24)
Casino licence amortisation (Adelaide) (note 25)
Computer software amortisation (note 25)
Gaming machine entitlements amortisation (note 25)
Total depreciation and amortisation
Impairment
Impairment of property, plant and equipment (note 24)
Impairment of intangible assets (note 25)
Total impairments
2023
$'000
31,515
18,262
19,746
18,279
13,734
32,529
554
265
134,884
71,034
2,712
10,490
127
84,363
1,194
49,662
50,856
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
2,903
4,390
7,293
162
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 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 engages 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 Auditor 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 market survey data for the purposes
of executive remuneration benchmarking.
(A) ASSURANCE AND AGREED-UPON
PROCEDURE SERVICES
Audit and review of financial statements
PwC also undertook:
•
•
agreed-upon procedures in relation to the
Group's allocation of revenue from the SkyCity
Community Trusts, assessment of the normalised
results disclosed in the annual report, verification
procedures in relation to share-based payments, and
procedures in relation to the vote count at the annual
meeting; and
other assurance, agreed-upon procedure
engagements and specified reporting in relation to
compliance with banking and debt covenants.
2023
$'000
2022
$'000
PwC New Zealand
PwC Hong Kong
PwC Malta
Total remuneration for audit services
Performed by PwC New Zealand
Other assurance services
Specified reporting to retail bond supervisor
Agreed-upon procedures
Total remuneration for other assurance services
Total remuneration for assurance services
and agreed-upon procedures
(B) OTHER SERVICES
Performed by PwC New Zealand
Provision of market survey data relating to executive
remuneration levels
Performed by PwC Australia
Tax compliance services
Total remuneration for other services
1,264
31
65
1,360
–
9
64
73
1,433
57
58
115
1,035
29
51
1,115
8
8
50
66
1,181
59
60
119
Total fees expense
1,548
1,300
163
FINANCIAL STATEMENTS 9
Earnings per Share
Accounting Policy
(i)
Basic Earnings per Share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the
weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.
(ii)
Diluted Earnings per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares,
and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive
potential ordinary shares.
There are no dilutive potential ordinary shares and therefore basic and diluted earnings per share are the same.
Weighted average number of ordinary shares used as the
denominator in calculating basic and diluted earnings per share
2023
758,117,231
2022
757,507,871
Profit/(loss) attributable to ordinary equity holders of the Company
used in calculating basic and diluted earnings per share
7,965,000
(33,595,000)
Basic and diluted earnings (cents) per share
1.1
(4.4)
10
Dividends
Accounting Policy
Dividends are recognised when declared.
DIVIDENDS PAID
CENTS PER SHARE
2021 final
2022 interim
30 June 2022
2022 final
2023 interim
30 June 2023
7.0
–
7.0
–
6.0
6.0
$'000
53,082
–
53,082
–
45,533
45,533
During the current year, a supplementary dividend of $4.98 million (1.06 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 declared a final dividend of 6.0 cents per share in respect of the 30 June 2023 financial year (note 41).
164
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 11
Leases - SkyCity as the Lessee
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 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.
Lease Arrangements
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.
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 5.3% (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.
165
FINANCIAL STATEMENTS The Balance Sheet shows the following amounts relating to leases:
Right-of-use assets net book value
SkyCity Auckland subsoil
SkyCity Auckland airbridges
SkyCity Queenstown - Stratton House
SkyCity Adelaide - Railway Building and extension
SkyCity Adelaide - car park
Total right-of-use assets
Lease liabilities
Current
Non-current
Total lease liabilities
The Income Statement shows the following amounts relating to leases:
Depreciation of right-of-use assets
Interest expense on lease liabilities (part of net finance costs)
12
Net Finance Costs
Finance costs
Foreign exchange gains
Interest income
Capitalised interest (note 24)
Total net finance costs
166
2023
$'000
3,085
3,020
1,750
58,381
56,302
122,538
3,045
116,840
119,885
2023
$'000
6,309
6,378
2023
$'000
36,881
(291)
(6,165)
(6,933)
23,492
2022
$'000
3,089
3,117
1,660
57,202
61,344
126,412
3,576
117,530
121,106
2022
$'000
5,968
6,169
2022
$'000
38,743
(594)
(1,901)
(1,204)
35,044
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 13
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
and February 2030 are 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
2023
$'000
–
353,812
175,000
(3,146)
525,666
2022
$'000
49,195
229,872
175,000
(2,695)
451,372
(a)
USPP Notes
(b)
Syndicated Bank Facility
As at 30 June 2023, SkyCity had outstanding:
•
•
•
US$100.0 million maturing on 17 March 2025;
A$65.4 million maturing on 15 March 2028; and
US$75.0 million maturing on 28 February 2030.
Movements in the carrying value of the outstanding
balance in the current year relate to movements in
exchange rates, interest rates and additional debt.
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 33).
Fair value of USPP debt is estimated at NZ$375.5 million
(2022: NZ$236.7 million) compared to a carrying value of
NZ$353.8 million (2022: NZ$229.9 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 2023.
The unsecured syndicated banking facility is provided by
ANZ (New Zealand and Australia), Commonwealth Bank
of Australia, Bank of New Zealand, National Australia Bank
and Westpac (New Zealand and Australia).
As at 30 June 2023, SkyCity had in place revolving credit
facilities of:
•
•
•
NZ$135.0 million maturing on 15 June 2024
(undrawn at the reporting date);
NZ$175.0 million maturing on 15 June 2025
(undrawn at the reporting date); and
NZ$80.0 million maturing on 15 June 2026
(undrawn at the reporting date).
(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 2023,
the closing price was $0.8671 (2022: $0.8981) per $1 bond.
The bonds are carried at amortised cost. The total fair
value is $151.7 million (2022: $157.2 million) which is a level
1 valuation in the fair value hierarchy as they are listed
securities.
167
FINANCIAL STATEMENTS (d)
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. All requirements of the negative pledge deeds have been met as at 30 June 2023.
(e) Weighted Average Interest Rate
2023
%
2023
$'000
2022
%
2022
$'000
Interest bearing liabilities
5.31%
694,511
4.51%
652,554
The weighted average debt interest rate includes lease liabilities and the impact of interest rate and foreign currency
hedging.
14
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
Car park concession (main site nested car parks)
Total current interest bearing borrowings
2023
$'000
–
45,814
45,814
2022
$'000
78,000
–
78,000
Refer note 13(b) for details concerning the syndicated bank facility.
As detailed in note 39, a portion of the sale of the Car Park Concession Agreement (note 2) related to 450 car parks for
the exclusive use of SkyCity. This portion is accounted for as an interest bearing financial liability.
The $220 million received for the sale of the Car Park Concession Agreement was allocated between the 450 nested
car parks and the unnested remaining car parks based on their respective fair values. As a result, at 19 August 2019,
$45.8 million was allocated to the nested car parks and was recognised as the initial financial liability. From that date,
interest expense has been recognised as an addition to this liability on a yield to maturity basis and payments for the
use of the nested car parks have been deducted. Due to Macquarie having served a notice of termination of the Car Park
Concession Agreement (note 39), this liability, which was classified as non-current at 30 June 2022 (note 13), is classified
as current at 30 June 2023. In addition, this liability is now recognised at the estimated amount that will be paid to settle
the obligation when the termination occurs.
168
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 15
Net Debt Reconciliation
CASH AND
BANK
BALANCES
$'000
BORROWINGS
DUE WITHIN
1 YEAR
$'000
BORROWINGS
DUE AFTER
1 YEAR
$'000
TOTAL
$'000
Net debt as at 1 July 2021
Movement in cash and cash equivalents
Recognition of 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
Movement in cash and cash equivalents
Movement in car park concession liability
Revaluation of USPP notes
Movement in USPP notes
Amortisation of deferred funding expenses
Net movement in bank drawings
Movement in lease liabilities
(49,940)
1,242
–
–
–
–
–
(48,698)
(196,315)
–
–
–
–
–
–
Net debt as at 30 June 2023
(245,013)
51,045
556,756
557,861
–
–
–
–
29,969
562
81,576
–
45,814
–
–
–
(78,000)
(531)
48,859
–
2,028
8,061
319
–
1,242
2,028
8,061
319
29,969
1,737
2,299
568,901
601,779
–
(196,315)
(49,195)
(3,381)
(5,058)
(5,058)
128,999
128.999
(451)
(451)
–
(78,000)
(690)
(1,221)
642,506
446,352
169
FINANCIAL STATEMENTS 16
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.
Balance at the beginning of the year
Additions
Net loss from fair value adjustment
Transfer from property, plant and equipment - NZICC car parks
Closing balance at 30 June
2023
$'000
119,720
220
(12,252)
1,115
108,803
(a)
Amounts Recognised in Profit or Loss for Investment Property
Rental income
Direct operating expenses from property that generated
rental income
Net loss from fair value adjustment
Total recognised in profit or loss
2023
$'000
2,153
(2,230)
(12,252)
(12,329)
2022
$'000
124,368
752
(5,400)
–
119,720
2022
$'000
2,323
(2,485)
(5,400)
(5,562)
(b)
Investment Properties held at 30 June 2023
With the exception of the NZICC car park (which is referred to below), investment properties were revalued to fair
value on 30 June 2022 and 30 June 2023 by CBRE, a registered valuer and member of the New Zealand Institute of
Valuers and the Property Institute of New Zealand that has recent experience in the location and category of the
property being valued.
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%.
At 30 June 2023, the fair value of these investment properties (other than the NZICC car park) was $78.3 million.
The significant assumptions used in the valuation were:
•
•
capitalisation rate – range from 5.0% to 7.0%; and
passing yield (calculated as net rent divided by fair value) – range from 2.74% to 6.77%.
The 30 June 2022 and 30 June 2023 valuations are sensitive to movements in estimated capitalisation rate. If the
assumed capitalisation rate increased, then fair value would decrease.
170
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS (c)
NZICC Car Park
As outlined in notes 2 and 39, 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,
624 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 7), delivery of those car parks was
delayed, with the consequence that the Car Park
Concession Agreement in relation to those car parks
was accounted for as an operating lease, with the
underlying car parks classified as investment property.
The payment received from Macquarie in relation to
those car parks (which was determined by allocation of
the payment received from Macquarie in relation to the
17
Deferred Licence Value
2023
Opening balance
Impact of NZICC fire (note 7)
Closing balance
2022
Opening balance
Impact of NZICC fire (note 7)
Closing balance
Car Park Concession Agreement between the various
car parks that Macquarie was granted a concession to,
based on their respective fair values) was recognised
as lease income in advance (notes 22 and 23). On
the reclassification of the lease, $27.1 million of costs
associated with those 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 7). In the current year,
following final NZICC damage assessments on the car
parks by RLB (note 7), a further $1.1 million was transferred
from property, plant and equipment to investment
properties.
Macquarie has now served a notice of termination in
relation to the Car Park Concession Agreement
(note 39). When SkyCity regains operating control of the
car park, those car parks will be classified as property,
plant and equipment.
TOTAL
$'000
219,996
42,448
262,444
207,436
12,560
219,996
As outlined in note 7, in 2016 SkyCity’s accounting for the granting of the NZICC Auckland casino licence enhancements
resulted in the recognition of a deferred licence value liability of $405.0 million. Based on the Group’s accounting policy,
this amount was to be accounted for as a reduction in the carrying value of the NZICC upon completion. Following the
NZICC fire, the damaged portion of the NZICC was disposed of for financial reporting purposes (note 7). As a result of
this disposal and the estimates detailed in note 7, $165.8 million of the deferred licence value 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 prior financial year, as a result of the damage assessments prepared by RLB (note 7), $12.6 million of the above
$173.3 million adjustment was reversed, taking the total adjustment to $160.8 million.
In the current year, as a result of the final damage assessment prepared by RLB (note 7), $42.4 million of the above
$160.8 million adjustment was reversed, taking the total adjustment to $118.3 million.
171
FINANCIAL STATEMENTS 18
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
Income tax expense
2023
$'000
54,232
(10,472)
43,760
2022
$'000
4,645
(3,818)
827
(b)
Numerical Reconciliation of Income Tax Expense to Prima Facie Tax Payable/(Receivable)
Profit/(loss) 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 net expenses
Non-assessable gain on sale
Impairment adjustments
Fair value adjustments
Non-deductible regulatory penalties provision
Controlled foreign company regime
Other
Total income tax expense
172
51,735
14,486
3,093
(4,723)
(4,981)
(503)
3
545
–
15,531
2,788
14,703
2,806
12
43,760
(32,768)
(9,175)
2,287
(3,150)
(3,581)
(499)
322
10,182
(498)
1,746
935
–
3,006
(748)
827
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS (b)
Numerical Reconciliation of Income Tax Expense to Prima Facie Tax Payable/(Receivable)
The weighted average applicable tax rate was 84.6% (2022: -2.5%). The weighted average tax rate has been significantly
impacted by:
•
•
•
•
•
NZICC fire capital (income)/expenses;
impairment adjustments;
fair value adjustments;
sale of Lets Play Live Media Limited; and
non-deductible regulatory penalty provision.
Excluding these items, the weighted average tax rate would have been 27.4% (2022: 17.5%).
19
Deferred Tax Assets
The balance comprises temporary differences attributable to:
Provisions and accruals
Depreciation
Foreign exchange variances
Cash flow hedges
Lease accounting
Tax losses
Net deferred tax assets
Movements:
Balance at beginning of the year
Foreign exchange differences
Charged to the Income Statement (note 18)
Tax debited directly to other comprehensive income (note 32)
Closing balance at 30 June
2023
$'000
6,299
(12,785)
4
80
1,261
30,606
25,465
19,372
(321)
6,414
–
25,465
2022
$'000
6,999
(13,607)
4
80
489
25,407
19,372
9,740
263
9,742
(373)
19,372
Deferred tax assets relate to the Australian and other foreign operations (excluding Malta).
The Group has recognised a deferred tax asset on tax losses of A$93.7 million (2022: A$76.5 million) in relation to Australia.
The tax losses have predominantly arisen as a result of the COVID-19 pandemic impacting SkyCity Adelaide’s operations
and South Australian tourism, with the expanded SkyCity Adelaide property largely not able to operate at full capacity for
the majority of time since opening in December 2020. In addition, accelerated tax depreciation on the Adelaide property
expansion and expenditure incurred in relation to ongoing SkyCity Adelaide regulatory reviews have also contributed to the
tax loss position. It is possible to carry forward Australian tax losses indefinitely and these losses do not have an expiry date.
The Group has determined it is probable that taxable profits will be derived in future periods in addition to profits arising
from the reversal of existing taxable temporary differences against which the tax losses can be utilised. As noted in note 25,
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 differences can be utilised. It is anticipated based on the five-year forecast that tax losses will be fully utilised
by the year ended 30 June 2028. The Group reviews future loss utilisation at each reporting date.
173
FINANCIAL STATEMENTS 20
Deferred Tax Liabilities
The balance comprises temporary differences attributable to:
Provisions and accruals
Depreciation
Lease accounting
Cash flow hedges
Asset revaluation reserve
Net deferred tax liabilities
Movements:
Balance at the beginning of the year
(Credited)/charged to the Income Statement (note 18)
Tax (credited)/debited directly to other comprehensive income
(note 32)
Transfer out for discontinued operations
Closing balance at 30 June
Deferred tax liabilities relate to the New Zealand and Malta operations.
2023
$'000
(7,633)
64,166
(172)
(2,182)
1,921
56,100
60,591
(4,059)
(432)
–
56,100
2022
$'000
(3,676)
64,314
(219)
(1,749)
1,921
60,591
51,975
5,924
2,681
11
60,591
174
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 21
Imputation and Franking Credits
Balances available for use in subsequent reporting periods
Imputation credit account (New Zealand)
Franking credit account (Australia) (A$)
2023
$'000
71,487
13,951
As required by the Income Tax Act 2007, the imputation credit account had a credit balance as at 31 March 2023.
22
Lease Income in Advance - Current
Lease income in advance
Total lease income in advance
Refer to note 23 for details.
2023
$'000
39,815
39,815
23
Lease Income in Advance - Non-current
Lease income in advance
Total lease income in advance
2023
$'000
–
–
2022
$'000
40,292
13,951
2022
$'000
–
–
2022
$'000
29,501
29,501
As detailed in note 16, the 624 further NZICC car parks that were to have been delivered as part of the Car Park
Concession Agreement are accounted for as an operating lease, with the underlying car parks classified as investment
property and the payment received from Macquarie in relation to those car parks (determined by allocating the
amount paid by Macquarie under the Car Park Concession Agreement between the various car parks that Macquarie
was granted a concession to, based on their respective fair values) recognised as lease income in advance. Macquarie
has now served a notice of termination in relation to the Car Park Concession Agreement (note 39). As payment for
termination of the Car Park Concession Agreement is expected in the next 12 months (note 39), lease income in advance
is now classified as a current liability (note 22).
175
FINANCIAL STATEMENTS 24
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 fitout
Plant, equipment and motor vehicles
Fixtures and fittings
5-75 years
2-75 years
3-20 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
AT 1 JULY 2021
BUILDINGS
AND
FITOUT
$'000
PLANT,
EQUIPMENT
AND MOTOR
VEHICLES
$'000
LAND
$'000
FIXTURES
AND
FITTINGS
$'000
CAPITAL
WORK IN
PROGRESS
$'000
TOTAL
$'000
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
YEAR ENDED
30 JUNE 2022
Opening net book amount
185,968
648,942
123,913
52,523
359,416
1,370,762
Exchange differences
Net additions/transfers/disposals
Adelaide expansion
Transfer of Adelaide
deferred licence
–
–
–
–
7,308
1,770
1,446
(1,093)
Impairment (note 8)
(1,846)
(1,057)
Assets held for sale (note 29)
(16,370)
NZICC fire adjustment (note 7)
Depreciation charge
–
–
–
–
1,441
18,339
1,832
(891)
–
–
–
788
1,290
473
(264)
–
–
–
441
9,978
102,163
123,562
(3,751)
–
–
–
(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
176
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS YEAR ENDED
30 JUNE 2023
BUILDINGS
AND
FITOUT
$'000
PLANT,
EQUIPMENT
AND MOTOR
VEHICLES
$'000
LAND
$'000
FIXTURES
AND
FITTINGS
$'000
CAPITAL
WORK IN
PROGRESS
$'000
TOTAL
$'000
Opening net book amount
167,752
628,421
108,134
44,714
493,659
1,442,680
Exchange differences
Net additions/transfers/disposals
Transfer to NZICC obligation
(note 30)
(Impairment)/reversal of
impairment (note 8)
Transfer to investment properties
- NZICC car parks (notes 7 and 16)
Transfer from assets held for sale
(note 29)
NZICC fire adjustment (note 7)
Depreciation charge
(2,250)
1,056
–
–
–
–
14,100
–
–
(3,850)
(694)
(374)
(366)
(5,284)
6,039
23,650
1,341
209,090
240,120
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(19,699)
(19,699)
–
(1,194)
(1,115)
(1,115)
1,150
15,250
52,752
52,752
(28,704)
(33,317)
(9,013)
–
(71,034)
Closing net book amount
179,602
602,962
97,773
36,668
735,471
1,652,476
AT 30 JUNE 2023
Cost
179,602
999,241
420,326
147,236
735,471
2,481,876
Accumulated depreciation and
impairment
–
(396,279)
(322,553)
(110,568)
–
(829,400)
Net book amount
179,602
602,962
97,773
36,668
735,471
1,652,476
(a)
Capitalised Borrowing Costs
Borrowing costs of $6.9 million have been capitalised in the current year relating to capital projects (2022: $1.2 million)
using the Group's weighted average cost of debt of 5.31% across the year (2022: 4.51%).
(b)
Impairment
Queenstown Land
At 30 June 2023, the Queenstown land was reclassified to property, plant and equipment from assets held for sale (note 29), as
a sale is no longer expected within the next year. At 30 June 2023, the land was revalued to fair value, which has resulted
in impairment of property, plant and equipment of $2.25 million being recognised in the Income Statement.
177
FINANCIAL STATEMENTS (c)
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 subsoil 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 subsoil 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), 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.
25
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 (other than that licensed
under a software as a service arrangement) is capitalised
at cost (which includes acquisition cost and any costs
incurred in bringing the software into use). Subsequent
to initial recognition, it is 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.
178
SkyCity Adelaide’s GMEs are carried at cost less
accumulated amortisation and impairment losses.
They are amortised over the term of the exclusivity
period (which is the period over which SkyCity Adelaide
is exclusively permitted to provide casino gaming,
except for interactive gaming, in South Australia), 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 and included
within the value of casino licences. 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.
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.
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS (v)
Impairment of Intangible Assets
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 prior 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.
AT 1 JULY 2021
Cost
GOODWILL
$'000
CASINO
LICENCES
$'000
COMPUTER
SOFTWARE
$'000
35,786
778,303
135,611
Accumulated amortisation and
impairment
–
(228,642)
(95,743)
GAMING
MACHINE
ENTITLEMENTS
$'000
1,823
(73)
TOTAL
$'000
951,523
(324,458)
Net book amount
35,786
549,661
39,868
1,750
627,065
MOVEMENTS IN THE YEAR
ENDED 30 JUNE 2022
Exchange differences
Additions
Transfer of Adelaide deferred
licence
Adelaide expansion
Impairment charge
Amortisation charge
–
–
–
–
–
–
4,238
–
–
–
(4,390)
235
9,822
95
(16)
–
(2,622)
(10,455)
Closing net book amount
35,786
546,887
39,549
AT 30 JUNE 2022
Cost
35,786
785,310
132,656
Accumulated amortisation and
impairment
–
(238,423)
(93,107)
49
–
–
–
–
(124)
1,675
1,879
(204)
4,522
9,822
95
(16)
(4,390)
(13,201)
623,897
955,631
(331,734)
Net book amount
35,786
546,887
39,549
1,675
623,897
MOVEMENTS IN THE YEAR
ENDED 30 JUNE 2023
Exchange differences
Additions
Impairment charge
Amortisation charge
–
–
–
–
(2,322)
–
(49,662)
(103)
8,099
–
(2,712)
(10,490)
Closing net book amount
35,786
492,191
37,055
AT 30 JUNE 2023
Cost
35,786
779,055
140,450
Accumulated amortisation and
impairment
–
(286,864)
(103,395)
(27)
(2,452)
–
–
(127)
1,521
1,848
(327)
8,099
(49,662)
(13,329)
566,553
957,139
(390,586)
Net book amount
35,786
492,191
37,055
1,521
566,553
179
FINANCIAL STATEMENTS 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 cash flow 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 (2022: $405.0 million).
The casino and associated operations are carried out by SkyCity Adelaide Pty Limited
under a casino licence (the Approved Licensing Agreement (ALA)) dated October 1999 (as
amended). Unless terminated earlier, the expiry date of the ALA is 30 June 2085. The term of
the ALA can be renewed for a further fixed term pursuant to section 9 of the Casino Act 1997
(SA). The carrying value of the casino licence is amortised over the life of the ALA.
The casino licence and associated regulatory reforms asset are amortised over 20 years or
71 years depending on whether the incremental benefit is associated with the exclusivity
period (which is to 30 June 2035 and is the period over which SkyCity Adelaide is exclusively
permitted to provide casino gaming, except for interactive gaming, in South Australia) or
the full licence period.
The carrying value of the casino licence is A$80.1 million (2022: A$128.1 million) (NZ$87.2
million and NZ$141.9 million respectively).
SkyCity Adelaide Casino
(finite useful life)
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 (2022: $0.0 million).
180
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS (a)
Impairment Tests for Intangibles Assets with Indefinite Useful 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.
2023
Goodwill
Casino licence
Total
2022
Goodwill
Casino licence
Total
SKYCITY
AUCKLAND
$'000
SKYCITY
HAMILTON *
$'000
–
405,000
405,000
–
405,000
405,000
35,786
–
35,786
35,786
–
35,786
TOTAL
$'000
35,786
405,000
440,786
35,786
405,000
440,786
* SkyCity Hamilton is included within the "Other Operations" segment in note 4.
These intangible assets are tested for impairment in the cash generating unit (CGU) to which they belong. The
recoverable amount of each CGU is determined on the basis of value in use. These calculations use cash flow projections
using updated five-year forecasts for each site. For all of these assets, the calculated value in use significantly exceeds
carrying value.
The entire Auckland precinct is treated as a single CGU due to the close and interconnected relationship of the cash
flows across all of SkyCity’s Auckland businesses.
(b)
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
2023
2022
2023
2022
2023
2022
43.4%
29.7%
47.0%
43.5%
2.5%
2.5%
2.5%
2.5%
14.2%
13.9%
14.2%
13.9%
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 CGU.
For each CGU, there is sufficient headroom between the value in use of the CGU and the carrying value of the related
CGU assets that significant changes in the assumptions used would not require an impairment.
181
FINANCIAL STATEMENTS (c)
Impairment Review of the Adelaide
Casino Licence
impairment assessment is sensitive to changes in EBITDA
and information on this sensitivity is provided below.
During the financial year ended 30 June 2020, the Group
engaged Deloitte to independently determine the
recoverable amount of the Adelaide CGU for the purpose
of determining whether the SkyCity Adelaide casino
licence was impaired, which resulted in a A$150 million
(NZ$160.6 million) impairment of the SkyCity Adelaide
casino licence. Additional independent valuations were
obtained from Deloitte in 2021 and 2022, but these did
not result in the recognition of further impairment, or the
reversal of any previously recognised impairment.
In the current financial year, Deloitte was again engaged
to independently determine the recoverable amount
of the Adelaide CGU for the purpose of determining
whether the SkyCity Adelaide casino licence was
impaired. A key input for Deloitte's assessment was the
updated Board approved five-year forecast for SkyCity
Adelaide. The recoverable amount for the current
financial year was determined using the fair value less
costs of disposal approach (with the valuation being a
level 3 measurement in the fair value hierarchy). The
valuation resulted in a range. Taking the midpoint of the
range implies an increase in impairment of A$45.6 million
(NZ$49.7 million), taking the low end of the range implies
an increase in impairment of A$60.4 million (NZ$65.8
million) and taking the high end of the range implies an
increase in impairment of A$29.2 million (NZ$31.8 million).
As a result of this valuation, a further impairment of
A$45.6 million (NZ$49.7 million), at the midpoint of the
valuation range, has been recognised at 30 June 2023.
The 2023 independent valuation was based on the
following key estimates:
•
•
•
compound annual EBITDA growth rate from 2024 to
2028 = 6.0% (2022: 2023 to 2027 = 10.2%);
terminal growth rate = 2.5 % (2022: 2.5%); and
post-tax discount rate = 12.0% (2022: 11.0%).
EBITDA Growth
Determining an appropriate growth rate has been
made difficult by the impact of COVID-19 on the results
of prior periods, which has meant that the expanded
Adelaide property has not been able to operate at full
capacity for the majority of the time since opening in
December 2020. In addition, the unknown future impact
of regulatory matters and customer responses to ongoing
enhancements to SkyCity Adelaide’s anti-money laundering
and countering the financing of terrorism (AML/CFT)
practices create a heightened level of uncertainty that
makes forecasting challenging. The valuation performed
at 30 June 2023 assumes an initial EBITDA uplift from
current performance over the financial years ending
30 June 2024 and 30 June 2025, 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
and an expected increase in visitors to the SkyCity
Adelaide property due to ongoing developments in the
surrounding precinct. However, growth expectations
are lower than they were at 30 June 2022, due to the
decision made at the end of the current financial year to
materially reduce SkyCity’s international activities. The
Discount Rate
The discount rate, which has been independently
calculated by Deloitte, is post-tax. It reflects the current
market assessment of the increased uncertainty in the
Australian casino industry and risks specific to SkyCity
Adelaide, taking into account the time value of money
and individual risks of the underlying assets, including
those arising from regulatory reviews, that have not been
incorporated into the cash flow estimates. The impairment
assessment is sensitive to changes in this discount rate and
information on this sensitivity is provided below.
Valuation Sensitivities
The valuation of the CGU is highly sensitive to changes in
the key estimates on which it is based. Small changes in
assumptions could lead to an increase or decrease in the
impairment of the CGU.
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$21.7 million/NZ$23.6 million (2022: an
EBITDA increase/decrease of 5.0% would have led to an
increase/decrease in enterprise value of approximately
A$23.0 million/NZ$25.5 million);
a 0.5% increase in terminal growth rate (to 3.0%)
would lead to an increase in the enterprise value of
approximately A$14.6 million/NZ$15.9 million (2022:
a 0.5% increase in terminal growth rate to 3.0%
would have led to an increase in enterprise value of
approximately A$20.0 million/NZ$22.1 million);
a decrease in terminal growth rate of 0.5% (to 2.0%)
would lead to a decrease in the enterprise value of
approximately A$13.2 million/NZ$14.4 million (2022: a
0.5% decrease in terminal growth rate to 2.0% would
have decreased the enterprise value by approximately
A$18.0 million/NZ$19.9 million);
a 0.5% increase in the post-tax discount rate (to 12.5%)
would lead to a decrease in the enterprise value of
approximately A$15.1 million/NZ$16.4 million (2022:
a 0.5% increase in the post-tax discount rate to 11.5%
would have led to an approximately A$21.0
million/NZ$23.3 million decrease in the enterprise
value); and
a decrease in the post-tax discount rate of 0.5% (to
11.5%) would lead to an increase in the enterprise value
of approximately A$16.7 million/NZ$18.2 million (2022:
a 0.5% decrease in the post-tax discount rate to 10.5%
would have led to an approximately A$23.0
million/NZ$25.5 million increase in enterprise value).
Annual Impairment Review
The Group will continue to complete annual impairment
reviews of the SkyCity Adelaide casino licence. Increases in
the fair value less costs of disposal could result in a partial
reversal of impairment recognised to date. Decreases in the
fair value less costs of disposal may result in the recognition
of an additional impairment charge.
182
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 26
Investments in Associates
An associate is an entity over which the Group is able to exert significant influence. Investments in associates are
equity accounted.
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. At the time of issue, these shares represented approximately 11.0% of GiG’s
equity and voting rights. In the current financial year, GiG issued additional shares. SkyCity did not acquire additional
shares and consequently its shareholding now represents approximately 10.46% 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 appointed a director to GiG on 4 April 2022. That director resigned in January 2023 and was
replaced by another SkyCity appointed director in May 2023.
Although the Group holds less than 20% of the equity shares of GiG, the Group exercises significant influence by virtue
of its appointment of 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 5, 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).
The carrying value of SkyCity's investment in GiG is:
2023
$'000
43,200
2022
$'000
42,136
Investment in associates
(cost of acquisition plus share of profits)
For the 12-months ended 31 March 2023, GiG had:
•
•
total revenue of €116.5 million; and
total net profit/(loss) after tax of €5.7 million.
As at 31 March 2023, GiG had:
•
•
•
•
total current assets of €33.3 million (31 March 2022: €35.7 million);
total non-current assets of €189.2 million (31 March 2022: €60.6 million):
total current liabilities of €46.9 million (31 March 2022: €25.9 million); and
total non-current liabilities of €96.3 million (31 March 2022: €57.2 million).
As at 30 June 2023, the fair value of the Group's interest in GiG, which is listed on the Oslo Stock Exchange, was
€28.3 million (NZ$50.4 million) (2022: €21.1 million NZ$35.5 million).
183
FINANCIAL STATEMENTS 27
Receivables and Prepayments
Accounting Policy
Trade receivables are recognised initially at transaction value and subsequently measured at amortised cost less
impairment.
Trade receivables (gross)
Impairment
Trade receivables (net)
Sundry receivables
Prepayments
Total receivables and prepayments
2023
$'000
8,867
(876)
7,991
5,230
37,612
50,833
2022
$'000
10,827
(4,543)
6,284
1,776
17,766
25,826
Due to the short term nature of these receivables, and the fact that they are assessed for impairment, their carrying
value approximates fair value.
Included in prepayments is $27.1 million paid to FCC as a result of the settlement of a portion of the Contracts Works
Insurance policy for the fire at the NZICC construction site (note 7).
28
Cash and Cash Equivalents
Cash at bank
Cash in house
Total cash and cash equivalents
2023
$'000
202,965
42,048
245,013
2022
$'000
8,779
39,919
48,698
184
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 29
Assets Held for Sale
Accounting Policy
Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally
through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and
fair value less costs to sell.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
Land
Buildings
Plant and equipment
Total assets held for sale
2023
$'000
–
–
–
–
2022
$'000
24,492
2,151
3
26,646
There are no assets held for sale at 30 June 2023. At 30 June 2022, the assets held for sale were the Little Mindil site in
Darwin and development land in Queenstown.
At the prior 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. In the current year, the balance of the purchase price was received, title
was transferred to the purchaser and the asset was derecognised.
At 30 June 2023, the Queenstown land was reclassified to property, plant and equipment (note 24), as a sale is no longer
expected within the next year. At 30 June 2023, the land was revalued to fair value on a comparable sales basis by Bower
Valuations Limited, which has recent experience in the location and category of the property being valued. The fair
value of the land at 30 June 2023 is $2.25 million lower than it was at 30 June 2022, which has resulted in impairment of
property, plant and equipment of $2.25 million being recognised in the Income Statement.
185
FINANCIAL STATEMENTS 30
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.
Trade payables
Deferred income
Accrued expenses
Employee benefits
NZICC obligation
Provisions
Regulatory penalties provision
Total payables and provisions
2023
$'000
23,639
36,671
36,226
51,686
10,788
7,978
49,009
215,997
2022
$'000
21,128
21,899
67,733
45,227
30,487
725
–
187,199
186
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS The carrying amounts of trade and other payables
approximates their fair value, due to their short term
nature.
Provisions
Provisions are recognised in relation to a number of
matters, including the obligation to complete the car
park associated with the Car Park Concession Agreement
(note 39), the onerous contract for the Queenstown
Wharf, a workers’ compensation claim in Adelaide
and the civil penalty proceedings commenced by the
Australian Transaction Reports and Analysis Centre
(AUSTRAC) against SkyCity Adelaide.
NZICC Obligation
The Group has recognised a liability to reconstruct the
assets associated with the initial 600 NZICC car parks
that were transferred to Macquarie under the Car Park
Concession Agreement (note 39) but subsequently
damaged in the NZICC fire (note 7). The Group has
estimated the liability for the remaining works to be
$10.8 million (2022: $30.5 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.
This liability is reduced as remediation occurs and will
be extinguished when the termination of the Car Park
Concession Agreement is completed (note 39).
AUSTRAC Proceedings
In June 2021, SkyCity Adelaide was notified by AUSTRAC
that it had identified potential serious non-compliance
by SkyCity Adelaide with the Australian Anti-Money
Laundering and Counter Terrorism Financing Act 2006
(Act) and Anti-Money Laundering and Counter Terrorism
Financing Rules Instrument 2007 (No. 1). The potential
serious non-compliance noted by AUSTRAC included
concerns relating to ongoing customer due diligence and
adopting and maintaining an anti-money laundering and
counter terrorism financing (AML/CTF) programme in
compliance with the Act.
Following an investigation, on 7 December 2022 AUSTRAC
commenced civil penalty proceedings in the Federal
Court of Australia (Court) against SkyCity Adelaide for
alleged serious and systemic non-compliance with the
Act. AUSTRAC alleges the following specific breaches of
the Act:
•
•
that SkyCity Adelaide contravened section 81 of
the Act (which relates to the requirement to adopt
and maintain an AML/CTF programme) on an
innumerable number of occasions on and from
7 December 2016; and
that SkyCity Adelaide contravened section 36 of the
Act (which relates to the requirement to undertake
customer due diligence) on 124 occasions in the
period on and from 7 December 2016.
Each of the alleged contraventions referred to above
attracts a maximum civil penalty of between A$18 million
and A$22.2 million per contravention. As AUSTRAC alleges
that SkyCity Adelaide contravened section 81 of the Act
on an innumerable number of occasions, it is not possible
to determine a theoretical maximum penalty for the
alleged breaches.
The proceedings remain at a relatively early stage with
AUSTRAC and SkyCity Adelaide currently working toward
agreeing facts and potential admissions before the Court
identifies a process for any remaining disputed issues
(if any) and potential penalty to be determined.
At 30 June 2023, SkyCity has recognised a provision
of A$45.0 million (NZ$49.0 million) in relation to the
proceedings. This provision is for an estimate of the
potential exposure to penalties and legal costs arising
from the proceedings and has had regard to a wide
range of factors relevant to the determination of any
penalty that may ultimately become payable by SkyCity
Adelaide. SkyCity and SkyCity Adelaide have also obtained
external legal advice on the issue. Estimating the
potential exposure for SkyCity Adelaide to penalties in the
proceedings at this stage of that process remains highly
dependent on a range of factors which are not yet known
and, as such, the size of any penalty SkyCity Adelaide
is exposed to could vary materially from the amount
of the provision recognised. In particular, significant
uncertainties remain as to:
•
•
•
the nature and characterisation of any
contraventions that will inform the Court’s decision
as to appropriate penalty;
the attitude and approach that AUSTRAC will take to
the questions of the seriousness, nature and extent
of SkyCity Adelaide’s alleged contraventions and the
amount of any penalty it will submit SkyCity Adelaide
should be ordered to pay; and
the attitude and approach of the Court to
the seriousness of SkyCity Adelaide’s alleged
contraventions, comparisons with the positions of
Crown Melbourne Limited and Burswood Nominees
Limited (trading as Crown Perth) (together, Crown),
The Star Pty Limited and The Star Entertainment
QLD Limited and, ultimately, the level of any penalty
it may order SkyCity Adelaide to pay.
Judgments in civil penalty proceedings brought
by AUSTRAC to date demonstrate that the Court’s
determination of the appropriate penalty (where
contraventions are admitted or established) is very
specific to the facts in each case and that 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.
Any eventual civil penalty applied to SkyCity Adelaide in
relation to the proceedings may be significantly higher
or lower than the provision recognised in these financial
statements. The timing of any civil penalty payable by
SkyCity Adelaide is also uncertain.
187
FINANCIAL STATEMENTS 31
Share Capital
2023
SHARES
2022
SHARES
2023
$'000
2022
$'000
Opening balance of ordinary shares issued
760,205,209
760,205,209
1,340,556
1,338,223
Shares issued under employee share schemes
Net issue of treasury shares
–
–
–
–
2,446
25
2,292
41
760,205,209
760,205,209
1,343,027
1,340,556
All ordinary shares rank equally, carry one vote per share and carry the right to dividends.
Included within the number of shares is 2,087,978 treasury shares (2022: 2,697,338) held by a third party in connection
with the Company's employee share schemes. The movement in treasury shares during the year related to the issuance
of shares under the employee incentive plans, purchases of shares by the external trustee company in relation to
employee incentive plans and the exercise of share rights/options.
188
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 32
Reserves
Asset revaluation reserve
Hedging reserve - cash flow hedges
Foreign currency translation reserve
Cost of hedging reserve
Total reserves
MOVEMENTS
Asset Revaluation Reserve
Opening balance
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
2023
$'000
12,770
(3,359)
(16,674)
(3,172)
(10,435)
12,770
12,770
(4,564)
(10,734)
12,408
(469)
(3,359)
(11,797)
(4,877)
(16,674)
(854)
(3,913)
694
901
(3,172)
2022
$'000
12,770
(4,564)
(11,797)
(854)
(4,445)
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)
189
FINANCIAL STATEMENTS 33
Derivative Financial Instruments
Accounting Policy
Cash Flow Hedge
Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and are
subsequently re-measured at their fair value. The method
of recognising the resulting gain or loss depends on
whether the derivative is designated as a hedging
instrument and, if so, the nature of the item being
hedged. The Group designates certain derivatives as
either:
(1) hedges of the fair value of recognised assets or
liabilities or a firm commitment (fair value hedge); or
(2) hedges of exposures to variability in cash flows
associated with recognised assets or liabilities
or highly probable forecast transactions (cash flow
hedges).
Fair Value Hedge
Changes in the fair value of derivatives that are designated
and qualify as fair value hedges are recognised in the
Income Statement, together with any changes in the fair
value of the hedged asset or liability that are attributable
to the hedged risk.
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow
hedges is recognised 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.
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.
190
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS CURRENT ASSETS
2023
$'000
NOTIONAL
VALUE
2022
$'000
NOTIONAL
VALUE
2023
$'000
FAIR VALUE
2022
$'000
FAIR VALUE
Interest rate swaps - cash flow hedges
–
50,000
Forward foreign exchange contracts
Total current derivative financial instrument assets
40,371
40,371
20,946
70,946
NON-CURRENT ASSETS
Interest rate swaps - cash flow hedges
80,000
80,000
Cross currency interest rate swaps - cash flow hedges*
146,630
160,927
Total non-current derivative financial instrument assets
226,630
240,927
Total derivative financial instrument assets
CURRENT LIABILITIES
Forward foreign currency contracts
Total current derivative financial instrument liabilities
NON-CURRENT LIABILITIES
5,352
5,352
Cross currency interest rate swaps - cash flow hedges*
128,999
Total non-current derivative financial instrument liabilities
128,999
Total derivative financial instrument liabilities
Total net derivative financial instruments
51,943
51,943
–
–
–
489
489
2,407
9,536
11,943
12,432
17
17
5,617
5,617
5,634
6,798
200
163
363
1,134
10,464
11,598
11,961
12
12
–
–
12
11,949
* A component of the interest margin in US$175.0 million of these cross currency interest rate swaps (CCIRS) is treated as a fair value hedge.
191
FINANCIAL STATEMENTS 34
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 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, and credit risk.
(a)
(i)
Market Risk
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.
(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 those that relate to
International Business which are discussed below) that
potentially create a credit exposure can only be entered
into with counterparties that are explicitly approved by
the Board.
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 impairment.
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.
Exposure to the US dollar arises from USPP funding
denominated in that currency.
(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.
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 13) has been fully hedged by way
of cross currency interest rate swaps (CCIRS), hedging
US dollar exposure on both principal and interest. The
CCIRS correspond in amount and maturity to the US
dollar borrowings with no residual US dollar exposure.
(ii)
Interest Rate Risk
The Group's interest rate risk arises from long term
borrowings.
Interest rate swaps (IRS) and CCIRS are utilised to
modify the interest repricing profile of the Group’s debt
to match the profile required by the Treasury Policy. All
IRS and CCIRS are in designated hedging relationships
that are highly effective.
As the Group has no significant interest bearing assets,
the Group’s income is substantially independent of
changes in market interest rates.
192
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS Maturities of Committed Funding Facilities
Debt maturities are detailed in note 13.
30 JUNE 2023
Bank facility
USPP
New Zealand bonds
LESS
THAN
6 MONTHS
$'000
6 - 12
MONTHS
$'000
BETWEEN
1 AND 2
YEARS
$'000
BETWEEN
2 AND 5
YEARS
$'000
OVER
5 YEARS
$'000
TOTAL
–
–
–
135,000
175,000
80,000
–
390,000
–
–
–
156,112
71,210
126,490
353,812
–
–
175,000
–
–
–
175,000
45,814
Car park concession liability
45,814
Lease liabilities
1,119
3,045
4,416
12,481
98,824
119,885
Total committed debt facilities
46,933
138,045
335,528
338,691
225,314
1,084,511
Total drawn debt
46,933
3,045
160,528
258,691
225,314
694,511
Future contracted interest on drawn debt
12,024
23,918
39,408
62,374
14,190
151,914
Future interest of lease liabilities
Future contracted interest on CCIRS/IRS
3,160
3,134
3,135
6,155
17,302
312,179
341,931
6,234
8,979
15,154
5,043
38,544
Total drawn debt and derivatives
65,251
36,332
215,070
353,521
556,726
1,226,900
30 JUNE 2022
Bank facility
USPP
New Zealand bonds
Car park concession liability
–
–
–
–
160,730
115,000
115,000
–
390,730
–
–
–
–
–
–
157,471
72,401
229,872
175,000
–
175,000
–
49,195
49,195
Lease liabilities
1,764
1,812
3,947
14,444
99,139
121,106
Total committed debt facilities
1,764
162,542
118,947
461,915
220,735
965,903
Total drawn debt
1,751
79,798
3,917
346,809
220,278
652,553
Future contracted interest on drawn debt
8,043
7,562
15,291
30,704
2,594
64,194
Future interest of lease liabilities
Future contracted interest on CCIRS/IRS
3,155
427
3,133
522
6,142
1,053
17,171
300,966
330,567
560
–
2,562
Total drawn debt and derivatives
13,376
91,015
26,403
395,244
523,838
1,049,876
193
FINANCIAL STATEMENTS (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 33.
(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).
Normalised EBITDA is a non-GAAP measure used to report to the market. It is based on EBITDA as shown in the Income
Statement with adjustments to eliminate fair value movements, impairments and impacts of unusual events such as
the fire at the NZICC construction site.
The primary ratios were as follows at 30 June:
Gearing ratio
Interest cover ratio
2023
1.6x
10.1x
2022
4.6 x
3.8 x
Ratios for 2022 were significantly distorted due to the impact of COVID-19 on 2022 EBITDA due to closures.
35
Share-Based Payments
Accounting Policy
Current Plans
SkyCity operates equity-settled, share-based
compensation plans. 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.
Executive Long Term Incentive Restricted
Share Rights Plan (LTI RSR Plan)
Under the LTI RSR Plan, certain senior executives are
granted with restricted share rights (RSRs). The grant is
subject to the rules of the SkyCity Restricted Share Rights
Long Term Incentive Plan (FY23). Each RSR granted confers
a right to receive one ordinary share in the Company, which
will only vest if the relevant employee remains continuously
employed by the Company (or a company within the
Group) from the date of issue until the relevant vesting
date and provided that certain performance measures are
met. Performance measures for FY23 relate to the total
shareholder return relative to the cost of equity for the
Group and other comparable companies. If those vesting
conditions are not met, the RSRs will lapse and no shares will
be awarded to the participating executives. No dividends will
be paid on the RSRs.
194
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 2021 Chief Executive Officer Incentive
Shares (CEO Plan)
Under the terms of his employment agreement, the CEO
was issued 157,347 ordinary shares of the Company on
16 November 2022. There were no performance targets
associated with these shares (other than continued
employment during the period from his commencement
date to November 2022). The CEO also received 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)
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:
On 21 December 2021, a one-off issue of 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.
•
•
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.
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
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.
Long Term Incentive Retention Restricted
Share Rights (LTI Retention RSRs)
On 30 November 2022, a one-off issue of RSRs was
granted to the New Zealand Chief Operating Officer in
lieu of an entitlement to LTI RSRs. The grant is subject
to the rules of the SkyCity Restricted Share Rights Long
Term Incentive Plan (FY23), as amended by the specific
terms of the LTI Retention RSRs 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 LTI
Retention RSRs grant (other than continued employment
by the Company at the respective vesting dates being):
•
•
8 September 2025 in respect of 50% of the RSRs;
and
8 September 2026 in respect of the remaining
50% of the RSRs.
Each vested RSR may be exercised on or before the
termination date (being 8 September 2027) by paying
the exercise price of $2.85657 per RSR, as reduced by the
aggregate cash amount per share of any dividends paid
by the Company between 8 September 2022 and the
relevant date of exercise of the RSR. No dividends will be
paid on 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 the Company's
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.
Executive Long Term Incentive Plan
(LTI Plan)
A prior plan, the LTI Plan, was replaced with the
LTI RSR plan for 2023. Under the LTI Plan, executives
purchased ordinary shares of the Company 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 pays 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 measures relate to the total
shareholder return relative to the cost of equity for the
Group and other comparable companies.
At 30 June 2023, the interest-free loans relating to the LTI
Plan total $1,883,607 (2022: $3,889,982).
195
FINANCIAL STATEMENTS Outstanding Share Rights
Movements in the number of RSRs outstanding are as follows:
EXPIRY
DATE
BALANCE
AT START OF
THE YEAR
GRANTED
DURING
THE YEAR
EXERCISED
DURING
THE YEAR
EXPIRED
DURING
THE YEAR
BALANCE
AT END OF
THE YEAR
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
GRANT
DATE
2023
LTI PLAN
28/08/19
17/09/20
08/09/21
28/08/22
420,418
17/09/23
556,986
08/09/24
233,805
LTI RSR PLAN
08/09/22
08/09/25
–
–
CEO PLAN
16/11/21
16/11/22
157,347
CEO RSR
GRANT
08/09/21
08/09/26
3,947,368
LTI
RETENTION
RSRs
08/09/22
08/09/27
–
–
07/09/22
390,044
07/09/23
379,550
21/09/23
21/09/24
–
–
–
–
–
–
198,596
–
–
–
675,676
–
–
262,027
109,017
(70,070)
(350,348)
-
–
–
–
–
(157,347)
–
–
–
(58,858)
498,128
(83,115)
150,690
–
–
(61,786)
136,810
–
–
–
–
–
3,947,368
-
675,676
(381,943)
(8,101)
–
–
–
–
(63,261)
316,289
(43,169)
218,858
(21,477)
87,540
6,085,518
1,245,316
(609,360)
(690,115)
6,031,359
PIP
07/09/21
07/09/21
21/09/22
21/09/22
Total
196
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS GRANT
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
CEO RSR
GRANT
08/09/21
PIP
06/09/19
10/09/19
07/09/21
07/09/21
Total
EXPIRY
DATE
BALANCE
AT START OF
THE YEAR
GRANTED
DURING
THE YEAR
EXERCISED
DURING
THE YEAR
EXPIRED
DURING
THE YEAR
BALANCE
AT END OF
THE YEAR
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
23/08/21
750,883
22/08/21
376,019
28/08/22
420,418
17/09/23
556,986
–
–
–
–
08/09/24
–
233,805
–
(750,883)
(62,670)
(313,349)
–
–
–
16/11/21
166,003
–
(166,003)
16/11/22
08/09/26
–
–
06/09/21
459,327
10/09/21
8,720
07/09/22
07/09/23
–
–
157,347
3,947,368
–
–
416,587
404,815
–
–
(459,327)
(8,720)
–
–
2,738,356
5,159,922
(696,720)
(1,116,040)
6,085,518
(26,543)
390,044
(25,265)
379,550
–
–
420,418
556,986
233,805
–
157,347
3,947,368
–
–
–
–
–
–
–
–
–
–
The weighted average remaining contractual life of rights outstanding at the end of the period was 2.66 years
(2022: 3.00 years).
197
FINANCIAL STATEMENTS Fair Values
Fair Value of Share Rights Granted (LTI RSR Plan)
The assessed fair value at grant date of the rights granted on 8 September 2022 was $0.78. 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 2022 included:
(a) rights are granted for no cash consideration;
(b) exercise price: nil; and
(c) share price at grant date: $2.79.
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 LTI Retention Restricted Share Rights (LTI Retention RSRs)
The assessed fair value at grant date of the rights granted on 30 November 2022 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 30 November 2022 included:
•
•
•
rights are granted for no consideration;
exercise price: $2.86 per RSR pre-adjustments for cash dividends paid throughout the period; and
share price at grant date: $2.79.
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 2022 right was determined by Ernst & Young Transaction Advisory Services Limited. RSRs
vesting one year after year-end were valued at $2.65 (2022: $2.84) and RSRs vesting two years after-year end were valued
at $2.35 (2022: $2.57).
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
2023
$'000
2,446
2022
$'000
2,292
198
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 36
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.
2023
2022
SHORT-TERM
BENEFITS
$'000
SHARE-BASED
PAYMENTS
$'000
10,156
8,087
1,958
2,132
TOTAL
$'000
12,114
10,219
(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 $49,022 (2022: $8,769) were paid to incoming directors, for the period from 1
July to 7 September 2022 and from 1 March to 2 March 2023 (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 (2022: Nil).
(c)
Subsidiaries
Interests in subsidiaries are set out in note 37.
(d)
Associates
As outlined in note 26, the Group acquired an associate, GiG, on 1 April 2022. As outlined in note 5, the Group also earns
revenue from online gaming under a gaming licence held by GiG. For the year ended 30 June 2023, the Group earned
revenue of €9.0 million (NZ$15.4 million) (2022: 1 April 2022 to 30 June 2022 €2.4 million (NZ$4.0 million)) from online
gaming under the gaming licence held by GiG. At 30 June 2023, the Group has a receivable of €0.8 million
(NZ$1.3 million 30 June 2022: €1.4 million (NZ$2.3 million) from GiG in relation to online gaming.
199
FINANCIAL STATEMENTS 37
Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 3(a):
NAME OF ENTITY
PRINCIPAL
PLACE OF
BUSINESS
CLASS OF
SHARES
EQUITY HOLDING
Cashel Asset Management Limited
New Zealand
Ordinary
Horizon Tourism New Zealand Limited
(formerly SkyCity Wellington Limited)
New Zealand International Convention
Centre Limited
New Zealand
Ordinary
New Zealand
Ordinary
Otago Casinos Limited
New Zealand
Ordinary
Queenstown Casinos Limited
New Zealand
Ordinary
Sky Tower Limited
New Zealand
Ordinary
SkyCity Action Management Limited
New Zealand
Ordinary
SkyCity Auckland Holdings Limited
New Zealand
Ordinary
SkyCity Auckland Limited
New Zealand
Ordinary
SkyCity Casino Management Limited
New Zealand
Ordinary
SkyCity Development Limited
New Zealand
Ordinary
SkyCity Enterprises Limited
New Zealand
Ordinary
SkyCity Hamilton Limited
New Zealand
Ordinary
SkyCity Holdings Limited
New Zealand
Ordinary
SkyCity International Holdings Limited
New Zealand
Ordinary
SkyCity Investments Australia Limited
New Zealand
Ordinary
SkyCity Investments Queenstown Limited
New Zealand
Ordinary
SkyCity Management Limited
New Zealand
Ordinary
SkyCity Precinct Limited
New Zealand
Ordinary
SkyCity Projects Limited
New Zealand
Ordinary
SkyCity Properties Limited
New Zealand
Ordinary
SkyCity Properties Albert St Limited
New Zealand
Ordinary
SkyCity Properties Victoria St Limited
New Zealand
Ordinary
SkyCity Ventures Limited
New Zealand
Ordinary
2023
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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%
200
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS NAME OF ENTITY
PRINCIPAL
PLACE OF
BUSINESS
CLASS OF
SHARES
EQUITY HOLDING
2023
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2022
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
SkyCity Adelaide Pty Limited
Australia
Ordinary
SkyCity Australia Finance Pty Limited
Australia
Ordinary
SkyCity Australian Limited Partnership
Australia
Ordinary
SkyCity Australia Pty Limited
Australia
Ordinary
SkyCity Treasury Australia Pty Limited
Australia
Ordinary
Horizon Tourism Limited
Hong Kong
Ordinary
SkyCity Investment Holdings Limited
Hong Kong
Ordinary
SkyCity Malta Holdings Limited
SkyCity Malta Limited
Malta
Malta
Ordinary
Ordinary
SkyCity Management (UK) Limited
United Kingdom
Ordinary
All subsidiaries have balance dates of 30 June.
38
Contingencies
(a)
Contingent Liabilities
SkyCity operates in a highly regulated industry. During
the current financial year, there has been continued focus
on the casino industry in both New Zealand and Australia.
SkyCity takes its regulatory obligations seriously and
continues to engage proactively with its regulators and
respond to their inquiries.
(i)
Independent Review
On 1 July 2022, the Company and SkyCity Adelaide
were advised by Consumer and Business Services
(CBS) (the South Australian gaming regulator) that the
South Australian Liquor and Gambling Commissioner
(Commissioner) had appointed the Honourable Brian
Martin AO KC to undertake an independent review of
SkyCity Adelaide in accordance with Part 3 of the Casino
Act 1997 (SA).
In its media release dated 1 July 2022, CBS 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 was asked to
consider, amongst other things, whether SkyCity Adelaide
is a suitable person to continue to hold the casino licence
in South Australia, whether the Company is a suitable
person to continue to be a close associate of SkyCity
Adelaide, and, if SkyCity Adelaide or the Company is not
a suitable person, what changes (if any) are required for
that party to become a suitable person. Mr Martin was
due to report back to the Commissioner by 1 February
2023. However, as at 30 June 2023, Mr Martin had not
delivered his report to the Commissioner.
201
FINANCIAL STATEMENTS 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.
On 9 September 2022, SkyCity Adelaide filed a Statement
of Claim in the Supreme Court of South Australia seeking
relief in the nature of declarations relating to the dispute.
On 16 November 2022, the Crown Solicitor's Office filed a
cross claim which formulates Revenue South Australia’s
claim for the unpaid duty and interest in the event that
Revenue South Australia’s position on SkyCity’s main
claim is accepted.
The parties subsequently agreed that it would be
appropriate to refer the questions of law to the Court of
Appeal of South Australia and sought the approval of
the Supreme Court to reserve the questions of law to
the Court of Appeal. At directions hearings on 26 May
2023 and 9 June 2023, the Supreme Court considered
and agreed to the parties’ request for the questions of
law to be heard directly by the Court of Appeal given the
complexity of the issues involved and the likelihood of
appeal from the Supreme Court. The proceedings have
been listed for a hearing in the Court of Appeal on
13 October 2023.
There are a range of potential outcomes of the Court of
Appeal’s decision including an unfavourable ruling that
would result in additional casino duty being payable by
SkyCity Adelaide. However, no present obligation exists
in connection with the dispute at 30 June 2023 and,
consequently, the Group has not recognised a provision.
(iii) Other Regulatory Matters
In addition to the matters outlined above and in note
30, the Group receives correspondence from and
engages with its regulators from time to time as required
regarding the Group’s business operations, including in
relation to regulator audits/reviews, adverse media about
the Group’s operations, and complaints made about the
Group’s business operations. In relation to these matters,
the Group engages with the relevant regulator and
responds to requests for information and documents as
they arise.
In the case of any alleged wrongdoing by the Group, the
appropriate regulatory response or action by a regulator
(where contraventions are admitted or established) is
very specific to the facts in each case and may include no
action, a formal warning or, where the matter relates to
the Group’s casino operations, an application to suspend
and/or cancel the relevant casino licence under the New
Zealand Gambling Act 2003, South Australian Casino Act
1997 and/or South Australian Gambling Administration
Act 2019 as applicable. Provisions are recognised in
relation to such matters only where an obligation exists at
the reporting date.
On 6 February 2023, CBS advised the Company and
SkyCity Adelaide that:
• Mr Martin had formed the view that, until the
resolution of the civil penalty proceedings filed by
AUSTRAC against SkyCity Adelaide on 7 December
2022, it was not possible to reliably determine the
question of suitability; and
•
on that basis, the Commissioner had decided to put
the independent review on hold and had extended
the timeframe for the provision of a written report of
the findings of the independent review until after the
conclusion of those civil penalty proceedings.
The Commissioner also advised that he was considering
his options regarding any action he should take whilst the
independent review was on hold, including whether he
will seek that SkyCity Adelaide undertake any actions in
the interim.
SkyCity Adelaide continues a constructive dialogue with
the Commissioner.
On 26 May 2023, the Commissioner issued a direction
notice to SkyCity Adelaide under section 10 of the
Gambling Administration Act 2019 (SA), requiring SkyCity
Adelaide to appoint a suitably qualified independent
expert approved by the Commissioner to:
•
review SkyCity Adelaide’s AML/CTF and host
responsibility enhancement programmes and, if
required, make amendments to those enhancement
programmes;
• monitor the implementation of those enhancement
programmes by SkyCity Adelaide and SkyCity
Adelaide’s compliance with its AML/CTF and
gambling harm minimisation obligations; and
•
report to the Commissioner in relation to the above
matters.
The Commissioner advised that the appointment of
an independent expert would provide an independent
perspective of SkyCity Adelaide’s AML/CTF and host
responsibility enhancement programmes and an
additional layer of assurance. SkyCity Adelaide is working
with the Commissioner to finalise the appointment of the
independent expert.
Prior to any findings being made or a final report being
provided by Mr Martin, it is not possible to determine
what regulatory action, if any, might be applied to
SkyCity Adelaide as a result of the independent review.
Consequently, at the reporting date there is no present
obligation and a provision has not been recognised.
The Company and SkyCity Adelaide will continue
to cooperate with CBS and any further requests for
information and documents.
(ii) Casino Duty
SkyCity Adelaide 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.
202
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS (b)
Contingent Assets
The Group will 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 $55.8 million (2022: $68.7 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.
39
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
2023
$'000
296,377
2022
$'000
296,575
Capital commitments largely comprise estimations for NZICC and Horizon Hotel construction completion, the sale and
purchase agreement for 15% of the AA Building and the termination of the Car Park Concession Agreement.
Car Parks
As outlined in note 2, in April 2019 SkyCity entered into the Car Park Concession Agreement with Macquarie. The Car
Park Concession Agreement allowed Macquarie to operate car parks at the SkyCity Auckland main site and the under
construction NZICC site until 2048 for consideration of $220 million.
Under the Car Park Concession Agreement:
•
•
•
SkyCity retained exclusive access to 450 car parks for VIP customers and non-exclusive access to further car parks at
the SkyCity Auckland main site at agreed rates;
600 car parks at the NZICC site were transferred to Macquarie; and
an additional 624 car parks at the NZICC site were to be made available to Macquarie by 31 December 2020.
Following the October 2019 fire at the NZICC site (note 7), the 600 car parks at the NZICC site that had been made
available to Macquarie were no longer able to be accessed by Macquarie and the additional 624 car parks at the NZICC
site were not able to be made available to Macquarie by 31 December 2020. Under the terms of the Car Park Concession
Agreement, the Group undertook to remediate the damage to the car parks, with Macquarie able to terminate the Car
Park Concession Agreement if access to the car parks was not made available by 22 October 2022.
The Group was unable to provide access to the car parks within the required timeframe and Macquarie served a
notice of termination of the Car Park Concession Agreement on 27 October 2022. As a result, the Group will take
back the operation of all of the car parks that were the subject of the Car Park Concession Agreement, in return for a
consideration determined by a methodology and process detailed in the Car Park Concession Agreement. At 30 June
2023, the amount of consideration to be transferred had not been determined.
The termination of the Car Park Concession Agreement will be accounted for when the Group has taken back the
operation of all of the car parks that were the subject of the Car Park Concession Agreement and paid the associated
consideration. As this is expected to occur within the next year, at 30 June 2023 all liabilities associated with the Car Park
Concession Agreement are classified as current. As a result, the liability for lease income in advance (notes 22 and 23),
which had been decreased by the regular payment made to Macquarie as compensation for the non-availability of the
associated car parks, has been increased to the amount initially recognised resulting in $13.7 million being recognised
as an other expense in the current period. In addition, the interest bearing liability for the nested car parks which was
classified as non-current at 30 June 2022, has been revalued and is classified as current at 30 June 2023 (note 14). The
finance lease receivable is considered to be an executory contract and has not been revalued.
203
FINANCIAL STATEMENTS 40
Reconciliation of Profit After Income Tax to Net Cash
Inflow from Operating Activities
2023
$'000
7,975
90,672
23,492
2,446
(108)
12,252
(61,882)
63,828
50,856
(1,064)
(25,007)
(1,054)
(6,093)
28,798
(4,491)
4,419
(5,460)
42,755
57,763
280,097
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
Profit/(loss) for the year
Depreciation and amortisation
Net finance costs
Current period employee share expense
Gain on sale of fixed assets
Fair value losses to investment property
NZICC fire related income
NZICC fire related costs
Asset impairment
Share of profits of associates
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
204
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023FINANCIAL STATEMENTS 41
Events Occurring after the Reporting Date
Dividend
On 22 August 2023, the directors resolved to provide for a final dividend to be paid in respect of the year ended
30 June 2023. The fully imputed, unfranked dividend of 6.0 cents per share will be paid on 22 September 2023 to all
shareholders on the Company's register at the close of business on 8 September 2023.
205
FINANCIAL STATEMENTS 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 the inherent volatility, or “luck” factor,
from International Business, which has variable
turnover and actual win % from period to period; and
eliminating structural differences in the business
between periods.
SkyCity believes that making these adjustments enables
users of the financial information to better 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
Reporting Policy and is reviewed by the Board at each
reporting period. Application of SkyCity’s Non-GAAP
Financial Information Reporting Policy is consistent with
the approach adopted in FY22.
FY23
FY22
REVENUE
$m
EBITDA
$m
EBIT
$m
NPAT
$m
REVENUE
$m
EBITDA
$m
EBIT
$m
NPAT
$m
Reported
926.2
165.9
75.2
8.0
639.0
96.9
2.3
(33.6)
IB revenue adjustment
Gaming GST
IB at theoretical win rate
7.0
87.5
9.6
NZICC fire impacts
(63.6)
Asset impairment
Property revaluation
Labour restructure
Regulatory penalties
–
–
–
–
–
–
8.5
22.8
50.8
12.3
1.0
–
–
8.5
22.8
50.8
12.3
1.0
–
–
6.0
12.3
50.8
12.0
0.7
49.0
49.0
49.0
3.8
57.1
–
–
–
–
(5.2)
(3.8)
(3.8)
(63.2)
–
–
–
–
32.1
7.3
5.4
–
–
32.1
7.3
5.4
–
–
–
–
(2.7)
33.3
7.3
5.4
–
–
Normalised
966.7
310.3
219.6
138.8
631.5
137.9
43.3
9.7
206
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023 ADJUSTMENT
DISCUSSION
Treat IB rebates as an
expense rather than
reduction in revenue,
which reduces both
reported revenue and
operating expenses within
IB (by $7.0 million in FY23
and $3.8 million in FY22)
Add gaming GST to
reported revenue
(increasing reported
revenue by $87.5 million in
FY23 and $57.1m in FY22)
Apply theoretical win rate
of 1.35% for IB vs. actual win
rate of 0.98% (FY23) and
1.77% (FY22)
Eliminate net loss
($12.3 million post-tax)
arising from impacts
of NZICC fire, which
includes recoveries of
compensation payments
made to Macquarie for car
parks compromised by
reinstatement of
NZICC/Horizon Hotel
($33.3 million loss in FY22)
and to eliminate the impact
of accounting adjustments
made as a result of
Macquarie issuing a notice
of termination in relation
to the Car Park Concession
Agreement
Reverse impact of
revaluation (decrease of
$12.0 million post-tax)
of Auckland investment
properties (FY22: decrease
of $5.4 million)
•
•
•
•
•
•
•
•
•
•
•
•
•
•
This adjustment adds back International Business rebates (treated as a reduction
from revenue in the reported results) and increases both revenue and expenses.
This adjustment does not impact EBITDA, EBIT or NPAT. This adjustment has been
made to maintain the relationship between turnover and the theoretical win rate
of 1.35% when determining normalised revenue.
Reported revenue included within the financial statements of the Group excludes
gaming GST, because including gaming GST within reported revenue is not
consistent with GAAP.
This adjustment adds back GST associated with gaming, so that normalised
revenue equals the amount bet by gaming customers.
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”.
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
NZICC in Auckland. This fire has 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 the Contractor.
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 in 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 final damage assessment for the NZICC/Horizon Hotel, the
expected insurance recovery relating to the asset has increased and is required
to be recognised as income as SkyCity is 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 FY23 result with the prior year.
SkyCity has a number of investment properties in Auckland. In accordance with
the appropriate accounting standard, these investment properties will be revalued
by an independent expert every year and the carrying value adjusted within the
Group’s financial statements.
This adjustment reverses the recognised 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.
207
ADJUSTMENT
DISCUSSION
AA Building (SkyCity HQ)
impairment (decrease of
$1.1 million FY22: increase
of $1.1 million)
SkyCity Queenstown land
impairment (decrease of
$2.3 million FY22: decrease
of $1.8 million)
AA Building
•
In FY22, the Group impaired the AA Building by $1.1 million following valuation by
an independent expert; this impairment has been reversed in FY23 to meet the
requirements of applicable accounting standards.
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. The land was
consequently marketed for sale in FY22 and reclassified as held for sale
(with a $1.8 million downwards revaluation recognised). In FY23, SkyCity concluded
that sale was no longer probable within a year and reclassified the land as
property, plant and equipment. An impairment of $2.3 million was recognised at
the time of the reclassification to property, plant and equipment.
SkyCity Adelaide licence
impairment (decrease of
A$45.6 million FY22: SkyCity
Wharf licence decrease of
$4.4 million)
Adelaide Licence
•
At 30 June 2023, a valuation of SkyCity Adelaide resulted in a A$45.6 million
(NZ $49.7 million) impairment of the casino licence.
Wharf Licence
•
•
•
•
In FY22, SkyCity decided to not reopen the Queenstown Wharf casino in the
foreseeable future (it had been closed since 23 March 2020, which was the
commencement of the first COVID-19 lockdown in New Zealand) and fully
impaired the casino licence, which resulted in the recognition of an impairment
loss of $4.4 million.
These adjustments eliminate these non-cash expenses, which are unrelated to
the operations of the Group.
At the end of the current year, a decision was made to materially reduce
SkyCity’s international activities. As a result, the International Business team was
restructured, resulting in redundancy payments being made. These payments are
eliminated to allow comparability between FY23 and prior years.
This adjustment removes the provision recognised in relation to regulatory
penalties and associated legal costs. This has been eliminated to allow
comparability between FY23 and prior years.
Eliminate labour restructure
costs $0.7 million post-tax
Eliminate regulatory
penalties $49.0 million
208
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023 GRI Content Index
General Standard Disclosures (2016 Standards)
SECTION
ASPECT/GRI
DISCLOSURE DESCRIPTION
PUBLICATION
PAGE(S)
LIMITATIONS
Organisational
Profile
102-1
Name of organisation
Annual Report 2023:
Company Disclosures
102-2
Activities, brands, products
and services
Annual Report 2023:
About SkyCity
102-3
Location of headquarters
102-4
Location of operations
102-5
Ownership and legal form
Annual Report 2023:
About SkyCity
Annual Report 2023:
Directory
Annual Report 2023:
About SkyCity
Annual Report 2023:
Directory
Annual Report 2023:
Notes to the Financial Statements
Annual Report 2023:
Shareholder and Bondholder
Information
102-6
Markets served
Annual Report 2023:
About SkyCity
102-7
Scale of organisation
i. Total number of
employees
Annual Report 2023:
Diversity Snapshot
Annual Report 2023:
Our Workforce
ii. Total number of
operations
Annual Report 2023:
Creating Value
iii. Net sales
iv. Total capitalisation
Annual Report 2023:
About SkyCity
Annual Report 2023:
Income Statement
Annual Report 2023:
Balance Sheet
v. Quantity of products
and services provided
Annual Report 2023:
Creating Value
Annual Report 2023:
About SkyCity
Additional information
Annual Report 2023:
102-8
Information on employees and
other workers
Annual Report 2023:
Our Workforce
102-9
Supply chain
Annual Report 2023:
Our Community
Our Environment
102-10
102-11
Significant changes to the
organisation and its
supply chain
Annual Report 2023:
Chair's Review,
Chief Executive Officer's Review and
Group Strategy
Precautionary principle
or approach
SkyCity Ethical
Sourcing Code
8
26-37
28
213
26-37
213
151
126-128
26-37
24
61-63
12-13
27
144
146
12-13
27
12-19
52-63
87
94-96
4-7
22-23
94-95
Note 1
209
64-67
52-63
90-101
4-7
22-23
64-67
150-205
8-9
64-67
64-67
SECTION
Organisational
Profile
ASPECT/GRI
DISCLOSURE DESCRIPTION
102-12
External initiatives
PUBLICATION
PAGE(S)
LIMITATIONS
Annual Report 2023:
Sustainability
Annual Report 2023:
Our Workforce
Annual Report 2023:
Our Environment
Strategy
102-14
Statement from senior
decision-maker
Annual Report 2023:
Chair's Review,
Chief Executive Officer's Review and
Group Strategy
Ethics and
Integrity
102-16
Values, principles, standards
and norms of behaviour
SkyCity Code of Conduct
www.skycityentertainmentgroup.com
Governance
102-18
Governance structure Annual Report 2023:
47-50
Our Senior
Leadership Team
Annual Report 2023:
Corporate Governance
Statement and Other Disclosures
102-135
Stakeholder
Engagement
102-40
List of stakeholder groups
Annual Report 2023:
Our Sustainability
www.skycityentertainmentgroup.com
Collective bargaining
agreements
Annual Report 2023:
Our People
52-63
Identifying and selecting
stakeholders
Approach to stakeholder
engagement
SkyCity Code of Conduct
www.skycityentertainmentgroup.com
SkyCity Code of Conduct
www.skycityentertainmentgroup.com
102-41
102-42
102-43
102-44
102-45
102-46
Reporting
Practice
Key topics and
concerns raised
Annual Report 2023:
Sustainability
Entities included in the
consolidated financial
statements
Annual Report 2023:
Notes to the Financial Statements
Defining report content and
topic boundaries
Annual Report 2023:
About this Annual Report
102-47
List of material topics
Annual Report 2023:
Sustainability
Annual Report 2023:
Sustainability
Reporting
Practice
102-48
Restatements of information Not applicable
102-49
Changes in reporting
Annual Report 2023:
Notes to the Financial Statements
151-153
102-50
Reporting period
Annual Report 2023:
Cover page
102-51
Date of most recent report
Annual Report 2023:
About this Annual Report
8
102-52
Reporting cycle
Annual Report 2023:
Cover page
102-53
Contact point for questions
regarding the report
Annual Report 2023:
Sustainability
Annual Report 2023:
Directory
9
213
210
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023
SECTION
Reporting
Practice
ASPECT/GRI
DISCLOSURE DESCRIPTION
102-54
Claims of reporting in
accordance with the
GRI standards
PUBLICATION
PAGE(S)
LIMITATIONS
Annual Report 2023:
About this Annual Report
8
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 (2016 Standards)
SECTION
ASPECT/GRI
DISCLOSURE DESCRIPTION
PUBLICATION
PAGE(S)
LIMITATIONS
Conserve the
Environment
GRI 103
Energy management
approach
Annual Report 2023:
Our Environment
GRI 302-3
Energy intensity
Annual Report 2023:
Our Environment
GRI 103
Emissions management
approach
Annual Report 2023:
Our Environment
GRI 305-4
GHG emissions intensity
Source
Ethically and
Responsibly
GRI 103
Ethical and sustainable
procurement management
approach
Annual Report 2023:
Our Environment
Annual Report 2023:
Our Community
Our Environment
Inspire Our
People
GRI 103
Health and safety
management approach
Annual Report 2023:
Risk Management
GRI 403-2
Types and rates of injury
Annual Report 2023:
Health, Safety and Wellbeing
Annual Report 2023:
Risk Management
Annual Report 2023:
Health, Safety and Wellbeing
GRI 103
Employee engagement
management approach
Annual Report 2023:
Our Workforce
GRI 404-2
Employee programmes
GRI 103
Diversity, inclusion and
belonging management
approach
Annual Report 2023:
Our Workforce
Annual Report 2023:
Our Workforce
GRI 405-1
Governance and employee
diversity
Annual Report 2023:
Our Workforce
90-101
90-101
90-101
90-101
87
94-96
38-43
53
38-43
53
52-63
52-63
52-63
52-63
SkyCity Diversity and Inclusion Policy
www.skycityentertainmentgroup.com
Host
Responsibly
GRI 103
Customer health and safety
management approach
Annual Report 2023:
Risk Management
Annual Report 2023:
Our Customers
GRI 416-1
Assessment of health and
safety of products and
services
Annual Report 2023:
Our Risk Profile and Management
GRI 416-2
GRI 103
GRI 419-1
Non-compliance incidents
related to health and safety
of products and services
Annual Report 2023:
Our Customers
Annual Report 2023:
Our Customers
Socio-economic compliance
management approach
Annual Report 2023:
Our Customers
Non-compliance with
socio-economic laws and
regulations
Annual Report 2023:
Our Customers
38-43
68-81
38-43
68-81
68-81
68-81
68-81
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.
211
Glossary
Casino Win
the amount lost or spent by players, calculated as Turnover minus amounts
awarded to players
EBIT
earnings before interest and tax
EBITDA
earnings before interest, tax, depreciation and amortisation
GAAP
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
revenue per available room
Turnover
total amount wagered by players
212
SKYCITY ENTERTAINMENT GROUP ANNUAL REPORT YEAR ENDED 30 JUNE 2023
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
213
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