The health and safety of Chinese contractors working for the NZX and ASX-listed giant SkyCity Entertainment Group is of concern to the Auckland-headquartered company which said recent Macau arrests were "likely to be adverse" to its business in the short to medium term.
At today's annual meeting, the issue was raised following the arrest of key Crown Resorts executives by Chinese authorities in Macau late last week.
"SkyCity is closely monitoring recent events concerning Crown employees being detained by Chinese authorities. SkyCity does not have an office in China or any China-based employees but does engage independent contractors in China who help manage customer relationships from time to time," a trading update out today said.
"SkyCity is confident that its contractors comply with all relevant laws and regulations in China," SkyCity said.
Crown Resorts, just under half owned by Australian billionaire James Packer, said it believed its executive vice president VIP international, Jason O'Connor, was one of 18 Crown employees detained by Chinese authorities in Macau.
Australian media said Chinese authorities had not confirmed the arrests but they come amid a crack-down on corruption and money laundering in the former Portuguese colony.
While not directly linked to Crown, SkyCity often emphasises its high end VIP market, with many high rollers coming from China where gambling - aside from Macau - is illegal.
Matthew Goodson, managing director of Salt Funds Management, said this week that much of SkyCity's future growth rested on that high-end business.
"Clearly the arrest of Crown executives is a potential risk," Goodson said.
SkyCity's update today said none of its contractors had been questioned or detained as part of Chinese investigations.
"Financial impact of this situation remains highly uncertain but is likely to be adverse over the short to medium term," the statement said.
John Mortensen, SkyCity interim chief executive after Nigel Morrison's resignation, said more about the Chinese contractors working for the business in his AGM speech to shareholders today.
"We have been in contact with these contractors over the weekend. Like other Australasian casino operators, SkyCity is continuing to monitor developments closely. The impact of recent events in China remains uncertain.
He played down China's impact on SkyCity.
"However, and as previously outlined to the market, I think it is important to highlight that whilst international business is an important part of SkyCity's overall business activities, we operate entertainment destination which provide activities for the benefit of our local populations," Mortensen said.
International business is about 15 per cent of normalised group revenue and 10 per cent of normalised EBITDA, he said.
About 50 per cent of SkyCity's international business comes from China.
"Accordingly we consider ourselves to be a relatively small player relative to our peers and to have less exposure to economic conditions or changes of policy in China and broader Asia which may impact our international business," Mortensen said.
A shareholder asked the board how it planned to diversify business away from China and get more high-roller gamers from Singapore, Indonesia and Vietnam. He also wanted to know what arrangements were being made with airlines coming to New Zealand. Crown was in the spotlight, the shareholder said.
Mortensen assured the shareholder that the business had diversification plans.
"That's already in place and already activated. The international business is not all Chinese. We do attract high-rollers from Singapore, Vietnam, Malaysia and we have sales people in those regions and successfully bring people in. The airline association is pretty strong," Mortensen said, pointing to a SkyCity director on Auckland International Airport's board.
"Richard Didsbury is a director of Auckland International Airport and we work very closely with Auckland International Airport," Mortensen said.