THE STAR ENTERTAINMENT GROUP For personal use only ANNUAL REPORT 2017 THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 CONTENTS OUR VISION 2 OUR FOOTPRINT 3 OUR HIGHLIGHTS 4 MESSAGES 6 Chairman’s Message 6 CEO’s Message 8 BOARD AND EXECUTIVE 10 Board of Directors 10 Executive Team 12 GROUP PERFORMANCE 14 KEY PROJECTS 18 SUSTAINABILITY 24 Sustainability Strategy 26 Delivering World Class Properties 28 Leading Company 31 Guest Wellbeing 38 Talented Teams 39 DIRECTORS’, REMUNERATION AND FINANCIAL REPORT 44 Directors’ Report 45 Remuneration Report 59 Financial Report 78 ADDITIONAL INFORMATION 133 Shareholder Information 133 Corporate Governance Statement Details 135 Annual General Meeting Details 135 Company Directory 136 Key Dates for FY2017/18 136 2017 has seen The Star Entertainment Group continue to mature as a business, with steady operating results reflecting a year of consolidation as focus sharpens on executing our strategic agenda. The pipeline of development and capital guests, and are expected to work hard for improvements of our properties, with the Group in 2018, as the loyalty platform partners Chow Tai Fook Enterprises Limited begins to scale up, and The Star Gold Coast and Far East Consortium International fully leverages its status as a major partner Limited, has grown this year, and is of the 2018 Commonwealth Games. progressing strongly to meet increasing The Sydney and Brisbane Festivals, the tourism demand, as well as our evolving Queensland Maroons, and NSW Blues State local markets. Our international VIP of Origin rugby league teams, along with business has adjusted effectively to changing racing in Sydney were amongst other key For personal use only circumstances in North Asia, accelerating its partnerships that further reinforced our existing diversification strategy. properties’ integral relationships with their The Group’s master brand roll-out took cities and communities during the 2017 important steps, with the launch of a new financial year. Eighteen months of emphasis ‘The Star Club’ branded loyalty program on service excellence has also begun to in November 2016, and the rebranding of pay dividends, with The Darling Hotel at Jupiters Hotel & Casino to The Star Gold The Star Sydney being recognised with a Coast in March 2017. Both initiatives have prestigious Forbes Five Star rating – the first been well received by our members and and only one in Sydney. The newly refurbished hotel at The Star Gold Coast displaying ‘The Star’ logo. The property rebranded in March 2017. 1 THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 OUR VISION OUR FOOTPRINT TREASURY THE STAR THE STAR BRISBANE GOLD COAST SYDNEY 1,500+ 2,000+ 4,500+ Team members Team members Team members TO BE AUSTRALIA’S LEADING INTEGRATED 4MILLION 3.4MILLION 10.4MILLION Guests in FY2017 Guests in FY2017 Guests in FY2017 RESORT COMPANY BY FULLY HARNESSING OUR UNIQUE OPPORTUNITIES IN EACH PROPERTY, TO PROVIDE THE 11 14 35 MOST THRILLING GUEST Restaurants Restaurants Restaurants EXPERIENCES IN WAYS THAT and bars and bars and bars TRULY REFLECT THE UNIQUE CHARACTER OF OUR CITIES. 127 596 606 Hotel rooms Hotel rooms Hotel rooms BRAND PRIORITIES VALUES SERVICE PILLARS COMMITMENTS Thrilling experiences Shareholder Value Ownership Live it Be Human PROPERTY INVESTMENTS For personal use only Accessible luxury World Class Properties True Teamwork Bring it Local spirit Leadership in Loyalty Welcoming Be Your Best Self Excellence in City Pride Own it UP TO UP TO Guest Service Be a Star Player $3BN $850M $1BN Redevelopment Potential investment in Potential investment at Talented Teams Deliver it of Queen’s Wharf Brisbane The Star Gold Coast The Star Sydney* Be the Perfect Host *Subject to all approvals. Investments include contributions from joint venture partners. 2 3 THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 OUR HIGHLIGHTS 62% $13m+ $895m #1 AWARDS OF PRE-TAX PROFITS CONTRIBUTION ESTIMATED SPEND ‘GLOBAL LEADER’ PAID TO ALL LEVELS TO CHARITIES, ON 4,000+ SUPPLIERS CASINO AND GAMING OF GOVERNMENT COMMUNITY GROUPS AUSTRALIA WIDE INDUSTRY MEMBER AWARDED Dow Jones Sustainability Index 2016 RobecoSAM Sustainability Award AND PARTNERSHIPS Dow Jones Sustainability Index (DJSI) Industry Mover 2016 assessment 2016 (Dow Jones Sustainability Index assessment) $2,432m $264m 32.0¢ 16.0¢ AWARDED CONSTITUENT ACTUAL GROSS STATUTORY BASIC EARNINGS DIVIDEND RobecoSAM Sustainability Award The Star Entertainment Group Gold Class 2016 remains a constituent of the REVENUE NPAT PER SHARE PER SHARE (Dow Jones Sustainability Index assessment) FTSE4Good Index ($M) ($M) (CENTS) (CENTS) 2,432 2,358 264 32.0 16.0 FINALIST SILVER EMPLOYER 2,258 Australian HR Awards ‘Pride in Diversity’ (Employer of Choice, Diversity & Inclusion, Australian Workplace Equality Index 194 23.6 13.0 Reward & Recognition Program) for LGBTI Inclusion 169 20.5 11.0 FORBES 5 STAR RATING WINNER TAA AWARDS FOR EXCELLENCE FY15 FY16 FY17 The Darling Hotel at The Star Sydney Best Environmental Initiatives FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 is Sydney’s only luxury hotel to receive (Metropolitan Hotel) The Star Sydney the prestigious Forbes Five-Star rating Tourism Accommodation Australia NSW For personal use only BACKGROUND IMAGE IS A CONCEPT IMAGE ONLY. SUBJECT TO APPROVALS. 4 5 THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 CHAIRMAN’S MESSAGE Consistent with my messages in last the normalised win rate of 1.35%, the and Far East Consortium, on additional complex, will be open ahead of the Gold year’s Annual Report and Annual General full year NPAT result was $214.5 million, investment opportunities to expand Coast 2018 Commonwealth Games, of Meeting address, I am pleased to report down 11.1% on FY2016 impacted by and improve the value proposition which The Star is very proud to be an to shareholders that FY2017 saw The Star lower turnover in the International VIP of our properties on the Gold Coast Official Partner. Entertainment Group continue to mature Rebate business with disruption in the and in Sydney. On the Gold Coast, we On behalf of the Board, I congratulate as a business, with steady operating results North Asia market. received approval from the Queensland Matt Bekier and the management team reflecting a year of consolidation as our Government to construct a new Statutory earnings before interest, tax, on their continued drive to make The Star concentration sharpens on executing our 700 room hotel and apartment tower depreciation and amortisation (EBITDA) Entertainment Group Australia’s leading strategic agenda. Core to this was further costing approximately $400 million, increased 19.9% on last financial year to integrated resort company and return advancement in the company’s strategy which is the first stage in the master $586.2 million and normalised EBITDA value to shareholders by delivering upon of investing in key domestic assets and plan for the property announced in was down 7.4% to $515.1 million. strategic priorities while maintaining diversifying our international business. May 2016. In addition, our consortium momentum and efficiency in the existing With these results, the Board declared a purchased the iconic beachfront resort, In delivering against strategic priorities, business operations. final dividend of 8.5 cents per share (fully the Sheraton Grand Mirage Resort we have made significant progress in our franked), taking total dividends for the Gold Coast, complementing our South- I look forward to welcoming shareholders pursuit of the opportunities that exist year to 16 cents per share (fully franked), up East Queensland integrated resorts and and providing another update at the 2017 today and long-term for Australia in the 23.1% on FY2016 and representing growth enhancing their appeal to a broad range Annual General Meeting at The Star, Sydney. tourism sector. In a landscape where in dividends returned to shareholders over of domestic and international visitors. international visitation, most notably from Thank you for your ongoing support for each of the last five years. Asia, continues to rise substantially, we are In January 2017, a significant The Star Entertainment Group. expanding and enhancing our properties As highlighted, these results were achieved milestone was reached on the in the attractive destinations of Sydney, as transformational projects were carried Queen’s Wharf Brisbane integrated the Gold Coast and Brisbane. out and delivered across the properties. resort development project with the This included completion of refurbished Destination Brisbane Consortium taking With continued stable leadership across hotel rooms across Astral Towers at possession of the 13 hectare CBD site and the Board and executive management The Star Sydney and refurbishment commencing demolition works, which team, this concentration again delivered of all 596 hotel rooms at the newly are well underway and on schedule. sustained operating momentum and branded, The Star Gold Coast. These We expect to progress to foundations John O’Neill AO financial performance, earnings growth CHAIRMAN reinvigorated hotel assets along with new work commencing in early 2018. and returns to shareholders, despite food and beverage and entertainment some disruption from capital works The ongoing growth in our existing offerings reflect our ongoing commitment projects across the Sydney and Gold Coast business, long-term tourism forecasts and to delivering world-class tourism and properties as new and enhanced assets our drive to deliver world-class integrated entertainment destinations with wide- were completed and opened. resorts with authentic local spirit provide ranging offerings, coupled with excellence confidence in the scale and nature of Statutory net profit after tax (NPAT) for in guest service. The validation of this projects underway. the Group was $264.4 million, up 36% effort through The Darling at The Star on the prior year, supported by domestic Sydney receiving the first Forbes Travel In FY2018 we are looking forward to the revenue growth in the second half of the Guide Five-Star rating in New South Wales completion and unveiling of the new year along with ongoing effective cost was particularly pleasing.