17 September 2012
Listed Company Relations NZX Limited Level 2, NZX Centre 11 Cable Street WELLINGTON
Dear Sir/Madam
RE: SKYCITY ENTERTAINMENT GROUP LIMITED (SKC) NOTICE OF MEETING, ANNUAL REPORT AND RELATED DOCUMENTS
In accordance with NZX Listing Rule 10.8.2, please find attached the following documents relating to SKYCITY Entertainment Group Limited’s (“SKYCITY”) upcoming Annual Meeting of shareholders, which will be mailed to security holders today: (a) Notice of Meeting; (b) Attendance Card and Proxy Form; (c) Shareholder Review for the year ended 30 June 2012; (d) Notice to SKYCITY shareholders pursuant to NZX Listing Rule 10.5.4(b); (e) Letter to SKYCITY shareholders; and (f) Letter to SKYCITY capital noteholders.
SKYCITY’s Annual Meeting will be held at 10.00am (New Zealand time) on Friday 19 October 2012 in the New Zealand Room at SKYCITY Auckland Convention Centre, 88-96 Federal Street, Auckland.
In addition, in accordance with NZX Listing Rule 10.5.1(a), please find attached SKYCITY’s Annual Report for the year ended 30 June 2012, which will be available from SKYCITY’s website later today.
Yours faithfully
Peter Treacy Company Secretary
SKYCITY ENTERTAINMENT GROUP LIMITED
NOTICE OF MEETING 19 OCTOBER 2012 NOTICE OF ANNUAL MEETING
The 2012 Annual Meeting of Shareholders will be held in the New Zealand Room, Level 5, SKYCITY Auckland Convention Centre, 88–96 Federal Street, Auckland, on Friday 19 October 2012 commencing at 10.00am (New Zealand time).
AGENDA 1. TO RE-ELECT RETIRING DIRECTOR Rod McGeoch retires from office at the Annual Meeting and, being eligible, offers himself for re-election.
2. TO RE-ELECT RETIRING DIRECTOR Peter Cullinane retires from office at the Annual Meeting and, being eligible, offers himself for re-election.
3. TO ELECT RETIRING DIRECTOR Richard Didsbury retires from office at the Annual Meeting and, being eligible, offers himself for election.
4. TO AUTHORISE THE DIRECTORS TO FIX THE FEES AND EXPENSES OF THE AUDITOR OF THE COMPANY
EXPLANATORY NOTES Explanatory Notes on the directors offering themselves for re-election and election and the fixing of the auditor’s fees and expenses are attached to and form part of this Notice of Annual Meeting. ATTENDANCE All shareholders are entitled to attend and vote at the Annual Meeting or to appoint a proxy or representative (in the case of a corporate shareholder) to attend and vote on their behalf. The notice appointing a proxy or representative must be received not later than 10.00am on Wednesday 17 October 2012 (New Zealand time) at Computershare Investor Services Limited, Level 2, 159 Hurstmere Road, Takapuna, Private Bag 92119, Auckland 1142. PROXIES A proxy need not be a shareholder, and may be appointed by completing the form accompanying this Notice of Annual Meeting. The appointment of a proxy or representative does not preclude a shareholder from attending and voting at the Annual Meeting. You may appoint the chairperson of the Annual Meeting as your proxy. However, please note that your proxy will not be able to vote at the Annual Meeting unless you have provided a voting direction or discretion.
PETER TREACY COMPANY SECRETARY AUCKLAND, NEW ZEALAND 17 SEPTEMBER 2012 LETTER FROM THE CHAIRMAN
Dear Shareholder and/or Capital Noteholder
I am pleased to invite you to the 2012 Annual Meeting of SKYCITY Entertainment Group Limited to be held on Friday 19 October 2012 commencing at 10.00am (New Zealand time). The Annual Meeting will be held in the New Zealand Room on Level 5 of the SKYCITY Auckland Convention Centre, located at 88–96 Federal Street, Auckland. Shareholders attending the Annual Meeting may park free of charge in the SKYCITY main car park. Please take a ticket on entry into our car park and we will replace your ticket with a prepaid one at the Annual Meeting. As in previous years, shareholders and capital noteholders are invited to attend the Annual Meeting and to ask questions about the operations and management of the business. Capital noteholders who are not also shareholders are reminded that only shareholders (or the proxies or corporative representatives of shareholders) are entitled to vote on the resolutions which are included on the agenda for the Annual Meeting. If you wish to vote by appointing a proxy to vote on your behalf, you may direct your proxy to vote for or against a resolution, to abstain from voting, or to exercise their discretion as to how to vote. SKYCITY’s Chief Executive Officer, Nigel Morrison, and I will summarise SKYCITY’s performance during the 2011/12 financial year and provide an update on current trading. Shareholders and capital noteholders will then be invited to ask questions relating to the operations and management of the business before we move to the resolutions as set out in the agenda. Agenda items for the Annual Meeting relate to the re-election and election of directors and authorisation for directors to fix the fees and expenses of the external auditor. Peter Cullinane and I are standing for re-election, and Richard Didsbury is standing for election, as directors at the Annual Meeting. The board has determined that each of myself, Mr Cullinane and Mr Didsbury is independent and eligible for election, and unanimously endorses their re-election and election. Brief biographical notes for each director are included in the accompanying Explanatory Notes. The board recommends shareholders vote in favour of all resolutions. Shareholders and capital noteholders are invited to submit questions prior to the Annual Meeting by post (PO Box 6443, Wellesley Street, Auckland) or by email ([email protected]). We will aggregate the main themes of the questions asked and respond to them at the Annual Meeting. For those shareholders attending the Annual Meeting, please bring the combined attendance card, proxy form and voting paper with you to assist with your registration and for voting purposes. Capital noteholders who are not also shareholders have not been sent the proxy form/voting paper but are entitled to attend the Annual Meeting. However, as referred earlier, capital noteholders who are not also shareholders cannot vote on the resolutions being put to the Annual Meeting. Voting at the Annual Meeting will be, as has been the practice in the past, by way of poll. If you are not intending to attend the Annual Meeting, please complete and lodge the proxy form so that it reaches Computershare Investor Services Limited not later than 10.00am on Wednesday 17 October 2012 (New Zealand time), being 48 hours prior to the Annual Meeting. Please remember to state your voting instructions on the proxy form. A live recording of the Annual Meeting will be broadcast on our website, commencing at 10.00am on Friday 19 October 2012 (New Zealand time). A test page is currently available on the website so that you can visit prior to the Annual Meeting to ensure that you will be able to view and hear the broadcast. The recording will also be available on our website following the Annual Meeting. Copies of the presentations made at the Annual Meeting and the results of voting will be posted on the company’s website (www.skycityentertainmentgroup.com) following the conclusion of the Annual Meeting and finalisation of the voting results. I look forward to seeing you at SKYCITY’s 2012 Annual Meeting. Yours faithfully
ROD MCGEOCH CHAIRMAN EXPLANATORY NOTES
AGENDA ITEM 1 AGENDA ITEM 3 RE-ELECTION OF ROD MCGEOCH ELECTION OF RICHARD DIDSBURY Rod McGeoch retires by rotation at the Annual Meeting and Richard Didsbury, having been appointed to the board by offers himself for re-election. directors on 20 July 2012, retires at the Annual Meeting and offers himself for election. Mr McGeoch is Chairman of the Governance and Nominations Committee of the board, a member of the Audit and Risk Mr Didsbury is a member of the Corporate Social Responsibility Committee of the board, a member of the Human Resources Committee of the board and a member of the Governance and Committee of the board and a member of the Corporate Social Nominations Committee of the board. Responsibility Committee of the board. Mr Didsbury is a founding shareholder and director of the Mr McGeoch was appointed as the Chairman of the board manager of Kiwi Income Property Trust (KIPT), which is now in April 2004, but retires as Chairman at this year’s Annual the largest property vehicle listed on the NZX. Within KIPT, Meeting. Subject to his re-election at the Annual Meeting, he was the Chair of the Sylvia Park Project Control Group he will resume his role as a director of the company. which successfully completed New Zealand’s biggest retail development. Mr Didsbury has enjoyed a distinguished career Based in Sydney, Australia, Mr McGeoch is a director of in property development. He is well known for his work on Ramsay Health Care Limited. He is also Chairman of Vantage the Property Council of New Zealand and is a director of Private Equity Growth Limited and has been appointed to Committee for Auckland Limited. He is a director of Auckland the BGP Holdings plc (Malta) and BGP Investment s.à.r.l International Airport Limited and the Hobsonville Land (Luxembourg) boards. He is the Honorary Chairman of the Trans- Company Limited which is developing a major new waterfront Tasman Business Circle and the Co-Chairman of the Australia community in Auckland’s north-west. His previous governance New Zealand Leadership Forum. roles have included being a director of Infrastructure Auckland. The board considers Mr McGeoch to be an independent The board considers Mr Didsbury to be an independent director director and unanimously recommends that shareholders vote and unanimously recommends that shareholders vote in favour in favour of his re-election. of his election.
AGENDA ITEM 2 AGENDA ITEM 4 RE-ELECTION OF PETER CULLINANE REMUNERATION OF AUDITOR Peter Cullinane retires by rotation at the Annual Meeting and Section 200 of the New Zealand Companies Act 1993 provides offers himself for re-election. that a company’s auditor is automatically re-appointed unless Mr Cullinane is Chairman of the Corporate Social Responsibility there is a resolution or other reason for the auditor not to be Committee of the board and a member of the Governance and re-appointed. The company wishes PricewaterhouseCoopers to Nominations Committee of the board. continue as the company’s auditor and PricewaterhouseCoopers has indicated its willingness to do so. Mr Cullinane has led the development of some of New Zealand’s most iconic brands, applying strategic and creative thinking Section 197(a) of the Companies Act 1993 provides that the both locally and internationally, which led to his appointment fees and expenses of PricewaterhouseCoopers as auditor are as Chief Operating Officer, Saatchi & Saatchi Worldwide. to be fixed in such a manner as the company determines at Since returning to New Zealand and establishing Assignment the Annual Meeting. The board proposes that, consistent with Group, Peter has specialised in strategic advice to a wide range commercial practice, the auditor’s fees should be fixed by the of New Zealand and international clients. He is a director of directors. STW Communications Group Limited, one of Australasia’s Authority for the directors to fix the fees and expenses of the largest marketing communications groups, and Chair of auditor is a resolution at each Annual Meeting of shareholders The Antipodes Water Company Limited. of the company. The board considers Mr Cullinane to be an independent director and unanimously recommends that shareholders vote in favour of his re-election. SKYCITY ENTERTAINMENT GROUP LIMITED 2012 ANNUAL MEETING OF SHAREHOLDERS At 10.00am (New Zealand time), Friday 19 October 2012, New Zealand Room, SKYCITY Auckland Convention Centre, 88–96 Federal Street, Auckland, New Zealand A. ATTENDANCE CARD
If you plan TO ATTEND the meeting: Bring this entire form with you intact. If you DO NOT PLAN TO ATTEND the meeting but wish to be represented by proxy: Detach the Attendance Card (this Part A), complete and sign the Proxy Form and Voting Instructions/Ballot Paper (Parts B, C and D below), then fold where indicated, seal and mail the Proxy Form and Voting Instructions/Ballot Paper (Parts B, C and D below) so that they are received by the share registrar no later than 10.00am (New Zealand time) on Wednesday 17 October 2012. Alternatively, you may deliver or fax them to the share registrar. Please refer to the notes and mailing/delivery instructions on the reverse. Shareholder Number:
B. PROXY FORM PERF Complete this Part B if you are NOT ATTENDING THE MEETING and wish to appoint a proxy to attend and vote on your behalf. If you appoint PERF a proxy, you must also complete Parts C and D below. Please refer to the notes on the reverse. The chairperson of the meeting is willing to act as proxy for any shareholder who wishes to appoint him/her for that purpose. To appoint the chairperson as proxy, enter ‘the Chairperson’ in the space allocated below for the proxy’s name. If you appoint the chairperson as proxy and have marked the ‘proxy discretion’ box in relation to (a) resolution one, the chairperson will abstain from voting on that resolution; or (b) any of resolutions two to four (inclusive), the chairperson will vote for that resolution.
I/We ______being shareholder/s of SKYCITY Entertainment Group Limited, appoint:
______of ______
(full name of proxy) (full address) or failing that person:
______of ______
(full name of proxy) (full address) as my/our proxy to attend and vote for me/us on my/our behalf in accordance with my/our directions at the Annual Meeting of the company to be held on Friday 19 October 2012 at 10.00am (New Zealand time), and at any adjournment of that meeting. In the event that I/we have not expressed any intention or the intention is unclear, my/our direction is to abstain.
C. VOTING INSTRUCTIONS/BALLOT PAPER Complete this Part C either (a) at the meeting as a ballot paper in order to cast your votes; or (b) if you have appointed a proxy under Part B above. For each resolution below you must tick one box. If a box relating to a resolution is not ticked, the direction on that resolution is to abstain.
Proxy Matters of Business (Tick one box for each resolution.) For Against Discretion(a) Abstain(b) FOLD HERE FOLD HERE FOLD
1. To re-elect Rod McGeoch as a director 2. To re-elect Peter Cullinane as a director 3. To elect Richard Didsbury as a director 4. To authorise the directors to fix the auditor’s remuneration
(a) If you mark the ‘proxy discretion’ box for a particular resolution, you are directing your proxy to decide on how to vote on that resolution on your behalf. However, if your proxy is excluded from voting on the relevant resolution, and you mark the ‘proxy discretion’ box, they will not be able to vote on the resolution on your behalf. (b) If you mark the ‘abstain’ box for a particular resolution, you are directing your proxy NOT to vote on that resolution. If a proxy is directed not to vote on your behalf on a resolution, your vote will not be counted when calculating a majority for that resolution.
D. SIGNATURE(S) Signed this day of______2012 Signature(s) Shareholder Number: No. of Voting Securities C. notes about how to vote 1. Appointing a proxy: A shareholder of the company who is If you appoint the chairperson as proxy and have marked the entitled to attend and vote is entitled to appoint a proxy to attend ‘proxy discretion’ box in relation to (a) resolution one, the and vote instead of him/her. A proxy need not be a SKYCITY chairperson will abstain from voting on that resolution; or shareholder. If you appoint a proxy, you must either direct the (b) any of resolutions two to four (inclusive), the chairperson proxy how to vote by marking the ‘for’, ‘against’ or ‘abstain’ box will vote for that resolution. in respect of each resolution OR mark the ‘proxy discretion’ box 3. Due date for appointing a proxy: Proxies must be received in respect of each resolution. A shareholder can direct the proxy at the office of the company’s share registrar, Computershare holder in respect of one or more resolutions and give the proxy Investor Services Limited, not later than 10.00am (New Zealand holder discretion in respect of other resolutions. If a shareholder time) on Wednesday 17 October 2012. You may mail, fax or does not tick any boxes in respect of a resolution then the deliver this proxy form to Computershare. For mailing/delivery direction to the proxy is to abstain. instructions please refer below. 2. Appointing the chairperson as your proxy: The chairperson 4. Only authorised persons can be proxies: A proxy granted by of the meeting is willing to act as proxy for any shareholder who a company must be signed by a duly authorised officer or attorney. appoints him/her for that purpose. In appointing the chairperson Persons who sign on behalf of a company must be acting with that as your proxy, if you do tick the ‘proxy discretion’ box, you company’s express or implied authority. acknowledge that the chairperson may be excluded from voting on a resolution because he/she has an interest in the outcome of 5. Joint holders: Joint shareholders must all sign this proxy form. that resolution, and that votes cast by the chairperson for that 6. Power of attorney: When an attorney signs this proxy form, the resolution, other than as proxy holder according to instructions power of attorney under which it is signed, if it has not previously from the shareholder, will be disregarded because of that interest. been produced to SKYCITY, and a completed certificate of If you do not mark one of the boxes, the chairperson will not cast non-revocation of authority, must accompany this proxy form. your votes on the relevant resolution and your votes will not be counted in calculating the required majority for that resolution. PERF PERF
FreePost Authority Number 2888
SHARE REGISTRAR NO POSTAGE REQUIRED IF POSTED IN NEW ZEALAND Computershare Investor Services Limited Private Bag 92119 Auckland 1142
MAILING/DELIVERY INSTRUCTIONS 1. If mailing this form from within New Zealand: Use this form 3. If mailing this form from outside New Zealand: Place this form as a reply paid envelope by following the directions below: in an envelope and affix the necessary postage from the country • Detach the Attendance Card (Part A) of mailing. Address to: SKYCITY Entertainment Group Limited • Fold along the lines where indicated c/- Computershare Investor Services Limited • Seal with tape where indicated Private Bag 92119 Auckland 1142 • Mail (no stamp required) NEW ZEALAND 2. If you wish to deliver or courier this form: Deliver or courier to: Computershare Investor Services Limited 4. If you are faxing this form: Fax to +64 9 488 8787 Level 2, 159 Hurstmere Road Takapuna Auckland New Zealand
PLEASE TAPE ALL SIDES SKYCITY ENTERTAINMENT GROUP LIMITED
shareholder review YEAR ENDED 30 JUNE 2012 CHIEF EXECUTIVE’S REPORT
CONTINUED
contents
Financial Highlights 04 Chairman’s Report 05 CEO’s Report 08 Group Summary at a Glance 14 Recent Developments 16 Board of Directors 18 Executive Team 20 a place for people 23 Responsible citizens 26 Directory IBC
SKYCITYSKYCITY ENTERTAINMENTENTERTAINMENT GROUP LIMITEDLIMITED
ENJOYMENT + BUILDING INFRASTRUCTURE
Federal street restaurants earn top New Lagoon Resort is Darwin’s only industry awards and draw over luxury 5-star beachfront resort 300,000 diners to the Auckland complex Continuing to negotiate with the New restaurants scheduled Government about the New Zealand for Federal Street, including International Convention Centre (NZICC) a new offering from Nic Watt Purchased land adjacent to Auckland Largest food and beverage site in good faith this year operator in Auckland In talks with State Government about New Horizon VIP facilities redevelopment of Adelaide Casino as in Auckland and Darwin part of the significant development of the Torrens Riverbank EIGHT and Diamond Room cater for local VIPs in Auckland Consents received for 4.5-star Hamilton hotel
Awaiting approvals to co-invest $10 million to transform Federal THE GRILL – AWARDED RESTAURANT OF THE YEAR Street into an impressive pedestrian/ AND BEST NEW RESTAURANT alfresco streetscape (New Zealand) Depot was the Winner of the supreme award Finalising plans to improve the (Auckland) Sky Tower experience Entertainer, Employer, Partner, Value Creator, Ratepayer, Operator, Contributor, Taxpayer...
INTernational VISITORS VISIT SKY TOWER
Leading world-class casinos
Award-winning restaurants and bars
SkyCity Auckland judged “Australasia’s leading casino resort” in 2009 World Travel Awards in London
One of the most stringent host responsibility programmes in the world for casinos
International Business generating export earnings but also bringing wealthy visitors from Asia Biggest private sector ratepayer to New Zealand in Auckland ($4.3M in 2012, including water rates) EXPERT
SIGNIFICANT
PAGE 2 BUILDING COMMUNITIES INVOLVED
The largest single-site employer in SKYCITY Breakers Auckland and a major employer in all the cities in which we operate Vodafone Warriors
Inaugural signatory to the The Blues Women's Empowerment Principles Auckland Rugby Inaugural participant in the Leukaemia and Blood Cancer BEST Pasifika Programme New Zealand A diverse workforce, with Prostate Cancer Foundation over 60 ethnicities employed of New Zealand in Auckland Variety The Children’s Charity Over 111,000 people registered with us as job seekers Middlemore Health Foundation (Kidz First Children’s Hospital) We estimate the NZICC would generate up to 1,000 more jobs during the Sky Tower Firefighter Climb construction phase, and around 800 jobs once the NZICC Is up Chinese New Year Festival and running and Market Day Entertainer, Employer, Partner, Value Creator, Ratepayer, Operator, Contributor, Taxpayer...
Since 1996, the SkyCity Auckland Community Trust has donated over $27M to more than 1,300 organisations
In FY12 $2.5M+ donated to 234 organisations in Auckland
Over $560,000 donated to 102 organisations in Hamilton TO New Zealand GOVERNMENT Over $95,000 donated to 39 organisations in Queenstown
TO COMMUNITIES $145m+ to NEW ZEALAND Government through income tax, gaming duty, GST, PAYE, ACC levies and other statutory charges from nEW zEALAND operations
NEW ZEALAND
information correct as at 1 september 2012
PAGE 3 THE YEAR THAT WAS
CONTINUED
THINGS WE ARE MOST PROUD OF
A sound result, thanks to growth in core Auckland normalised revenues of Our goals Auckland business, International $527.4 million, up $66.2 million, boosted & objectives Business, Hamilton and the return to by the opening of Horizon, EIGHT, growth of Darwin. Diamond Room and the resounding SKYCITY continues to be success of our new Federal Street Successful completion of major capital award-winning restaurants. a top performer in terms investment (capex) including the transformational projects at the Auckland New Horizon international VIP facilities of total shareholder property, the Darwin Lagoon Resort and in Auckland delivered a 95 percent increase returns. We remain the new Bally gaming system in Auckland. in normalised revenues to $50.7 million. focused on maximising Rugby World Cup 2011 provided a Strong cash generation along with ample value for our shareholders $11.5 million one-off boost to revenue, debt headroom provide capacity to fund with EBITDA of $6.5 million and NPAT our major growth projects in Auckland while providing a safe of $4.7 million. and in Adelaide. entertainment environment Standard & Poors reaffirmed for all our customers. SKYCITY's Investment Grade rating (BBB-), Stable outlook.
Record underlying Reported net Normalised normalised net profit after tax of revenue profit after tax of $m141.4 $m138.5 $m950.7
Normalised Net tangible Net debt : normalised EBITDA asset backing per EBITDA ordinary share $m310.6 69.1cents 2.1 : 1
Normalised Full year Weighted average earnings dividends debt maturity per share
YEARS cents cents per per 24.5 share 17.0 share 4.9
PAGE 4 CHAIRMAN’S REPORT
OF WHAT WE PROUD BRING
It is my pleasure, on behalf of the Board, to report another strong result for SKYCITY this year. Normalised net profit after tax (NPAT) for the year to the end of June 2012 of $141.4 million was up 8.0 percent on last year. Reported NPAT of $138.5 million represents an increase of 12.6 percent on last year.
Rod Mcgeoch / Chairman On behalf of the SKYCITY Board
ncome in Auckland was very strong in the first half, as the management team executed our Rugby World Cup strategy. That growth continued in the second half in local gaming revenues, food and beverage and International Business in Auckland. The year end result was an 8.4 percent increase overall in normalised total Group revenue to $950.7 million (including Gaming GST). Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) of $310.6 million were up 6.8 percent. Those earnings included what we made from the Rugby World Cup. Even putting the Rugby World Cup earnings aside, these were healthy returns in a challenging trading environment, with Group normalised revenue of $939.2 million up 7.1 percent on last year. Whilst there is no such thing as the perfect result, and there is always a wish to do better, I do note that the company has never achieved these levels of revenue or profit before.
PAGE 5 CHAIRMAN’S REPORT
CONTINUED
Kicking off a new era Extended potential The biggest event in world rugby loomed large. The extent of the changes that gaming companies Having set our minds to making the most of can bring to an economy is worthy of reminder. all the Rugby World Cup could offer, our The clear message from the successes of Macau preparations not only ensured we were a key and Singapore is that major gaming venues centre of attention, we actually used the have a crucial role to play in integrated tourism Rugby World Cup to reposition SKYCITY for infrastructure. When highly attractive sites are the future. The conversion of Federal Street and combined with efficiencies around movement, the new EIGHT and Horizon offerings were such as good airlift and streamlined visa emblematic of what visitors expect in a significant processing, they stimulate international tourism, city and the hospitality that needs to accompany justify public infrastructure and come with an international event of this magnitude. entertainment options that dramatically lift As the crowds left, we retained a broad new range foot-traffic. People don’t just come to these of assets that have continued to bring business destinations to game. They come to dine, to our way in Auckland, and will do so for many celebrate, to shop… these sites become venues years to come: a bustling restaurant precinct, for life’s big events, personal and national. now filled with award-winning restaurants, that The success of our investments during and after still has extraordinary development potential; the Rugby World Cup bears that out – and, in the an exciting International Business offering; and Board’s mind, those are the opportunities as well a revitalised local VIP gaming facility that has for the NZICC, for the Adelaide redevelopment breathed new life into a vital part of our offering. and also for the Hamilton hotel. SKYCITY is an important participant in the Good timing economy and the community. We take Host In Australia, bold initiatives like the new Responsibility very seriously and continually Lagoon Resort in Darwin and our plans for strive to improve our work in that area SKYCITY is an important a luxury development in Adelaide provide so we provide all our customers with a safe new opportunities for our host cities as entertainment environment. We enable participant in the economy Australia looks to leverage its position on the developments, we employ and train a lot of and the community. edge of Asia. Once again, our run seems well- people, we pay significant tax, we support the timed. Our preparedness to invest in the future community and activities in communities on We enable developments, of Darwin has certainly not been lost on a range of fronts. Gaming doesn’t just entertain. we employ and train The Northern Territory Government – and It can help cities become more competitive as this when a greater military presence in the area travel and event options. It can support and a lot of people, we pay and major investments such as the $32 billion help grow significant infrastructure. However, significant tax, we support Inpex Ichthys LNG project imply that significant capital can only go where it gets a return, and economic growth is imminent. Equally, in it’s those reassurances we need before we can the community and South Australia, we are working closely with commit to investing more. activities in communities the Government to realise our plans to develop a world-class integrated entertainment complex on a range of fronts. as part of a significant development of the Torrens Riverbank. The Government has Rod mcgeoch committed close to $1 billion towards infrastructural developments on the Riverbank. And of course, we are still hopeful about progressing negotiations with the New Zealand Government over the NZICC in Auckland.
PAGE 6 8.0CENTS 5.9% Per share final Annualised gross dividend for 2012 dividend yield
Final dividend for the year Thanks The final dividend for the 2012 year is 8.0 cents My thanks to Nigel Morrison and his Executive per share, taking the total dividend for 2012 Management team for another year of strong to 17.0 cents per share. This pay-out is at the and deliberate leadership. Achieving this year’s top end of our policy range. The final dividend result in such uneasy economic conditions speaks Having set our minds to will be paid in cash on 5 October 2012 to those volumes for his guidance and for the abilities making the most of all the shareholders on the register as at 28 September and tenacity of the team that Nigel has put 2012. The final dividend is 60 percent imputed around him. Thanks also to everyone who works Rugby World Cup could at the company’s tax rate of 28 percent and at SKYCITY. Whether you have come to our offer, our preparations 60 percent franked for Australian purposes. business for a career or to gain skills that provide The dividend reinvestment plan will not apply you with a ‘ticket to travel’, the hours and not only ensured we were to the final dividend for the year. the effort you have put in this year have reaped a key centre of attention, results that we can all be proud of. we actually used the Handing over the reins I look forward to sharing my thoughts with As most of you will be aware, this is my final shareholders on our first quarter’s performance Rugby World Cup to year as Chair. It has been an enjoyable and and on the company’s outlook at our reposition SKYCITY very interesting role and I have relished the forthcoming Annual Meeting on Friday opportunity to work alongside my fellow 19 October 2012. for the future… Directors in taking the business forward. I wish to thank all of you for your commitment and energy during my tenure. Now I will return to the ranks as a Director and Chris Moller will take over as Chairman, with Bruce Carter as his Deputy Chairman. I leave the role knowing that we are in good hands. Both individuals As the crowds left, we are highly experienced, and, as I observed last retained a broad new year, their appointments mean we have people at the helm with very practical understanding range of assets that have of our markets, landscapes and regulators and Rod McGeoch / ChAIRMAN continued to bring who are geographically located to represent SKYCITY on a range of occasions. business our way It is my pleasure to welcome Richard Didsbury in Auckland, and will do to the Board. This company is now an extensive so for many years to come. property owner, so it makes complete sense for us to introduce to SKYCITY’s governance structure someone with extensive expertise Rod mcgeoch and working knowledge of that sector. Richard is also on the Board of Auckland International Airport with whom we work increasingly closely these days, and, as the Auckland Council’s nominee on that Board, we know that he is someone the Council trusts and who has a strong understanding of their priorities.
PAGE 7 CONTRIBUTING IN SO MANY WAYS
This year, decisions we made, some of them several years ago, proved their worth and reinforced the value not only of consistently pursuing a strong and integrated vision but of investing counter-cyclically in assets that will promote the long term health and prosperity of the whole business.
7.4% 12.6% 24% Increase in increase in reported NPAT Increase in auckland Normalised revenue food & beverage returns in the second half
PAGE 8 CHIEF EXECUTIVE’S REPORT
…transforming Federal Street and the surrounding area into the destination for offerings that excite diners, draw visitors and thrill players within walking distance of each other…
NIGEL MORRISON / MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
The success of Federal Street, the clear uptake assured that we won’t be investing your money outlets destined to open in the next 12 months, in business resulting from our investments in until we are satisfied that the final details of the including an exciting project by renowned EIGHT, Horizon and the Diamond Room and proposed transactions will deliver appropriate New Zealand chef, Nick Watt of Roka and the excitement that we’re seeing already from returns and that they represent the best use of Zuma fame, we await approvals from Auckland our extensive investment in Darwin – all point shareholders’ resources. Council to co-invest $10 million with them to pleasing returns on investment, and reaffirm The Rugby World Cup generated healthy to transform Federal Street into an impressive that investing capital responsibly in projects that EBITDA, particularly for our hotels, and pedestrian/alfresco streetscape. There is real move the business forward is absolutely the best we delivered record first half results. This was momentum for this area to become the way to encourage more people to visit more of followed by a flatter third quarter and a final entertainment precinct destination in the our offerings, more often. The returns (in terms quarter that picked up across the business Super City. Currently, we are finalising plans of the growth in International Business gaming towards year end. Normalised revenue in the to improve the Sky Tower experience to attract revenues and food and beverage) we are now second half of $461.7 million was 7.4 percent even more tourists and visitors. generating from the $50 million capital up on last year. Normalised EBITDA was This deliberate diversification strategy is about expenditure on our Auckland property last year, $145.1 million up 4.0 percent, year on year. transforming Federal Street and the surrounding demonstrate that this money was very well spent. Overall, reported NPAT was $138.5 million, area into the destination for offerings that The growth achieved during the year, I believe, up 12.6 percent on last year. The net result excite diners, draw visitors and thrill players shows we are getting it right for shareholders, was that investors saw a 2.6 cent increase within walking distance of each other, by making customers, local economies and the wider in earnings per share to 24.0 cents per share. the very most of the real estate available to us in community in somewhat challenging trading the area. The launch of our new Premier Rewards environments. The result should also serve to A flourishing precinct loyalty programme brings these offerings even reassure investors, governments and other The runaway success of our Federal Street closer together by providing multiple rewards interested parties that our plans to fund the restaurants has not only seen us collect a clutch and discounts. NZICC and the redevelopment of the Adelaide of prestigious awards this year, it’s also drawn Should we ultimately proceed with the Casino are well considered, responsible and over 300,000 diners to the area and set development of the NZICC, SKYCITY’s capable of delivering transformative and wide- the stage for further development. Food and activities will span three blocks of downtown reaching change. However, whilst we believe beverage returns were up a very healthy Auckland. We remain focused on successfully in the significant potential of these major 24 percent year on year, reinforcing again the negotiating the rights to develop, deliver and investment projects, shareholders should be wisdom of investing in quality. With more operate this iconic International Convention
PAGE 9 CHIEF EXECUTIVE’S REPORT
CONTINUED
10.7$M REVENUE – AUCKLAND RWC 2011
Centre. This year, in good faith, we invested Auckland some $30 million to acquire additional land, The significant investments made in the Auckland increasing the size of our Convention Centre property over the past year ensure we now have In terms of wider economic development site to facilitate a development of a destination befitting a Super City. As Auckland the scale demanded by the Government. This itself invests in infrastructure around us, we have activity, the NZICC has site is directly opposite our main Auckland site. delivered capital projects that not only ensured the potential to deliver The $350 million Convention Centre investment visitors and VIPs enjoyed a superlative would add significantly to Auckland’s tourism Rugby World Cup stay but have also brought the GDP equivalent of infrastructure and to New Zealand’s attractiveness international and local players alike back to our staging a Rugby World Cup generally as an events and convention destination. facilities to enjoy gaming in surroundings that far Experts estimate that the facility could attract surpass anything that’s ever been available in tournament every two years more than 350,000 conference delegates every New Zealand. Revenues of $527.4 million were yet would not require year. In terms of wider economic activity, the up $66.2 million, or 14.4 percent year on year. NZICC has the potential to deliver the GDP The Rugby World Cup itself brought in public funds. equivalent of staging a Rugby World Cup $10.7 million in revenue and EBITDA of tournament every two years yet would not $6.0 million. NIGEL MORRISON require public funds. In return for our Our hotels more than justified the money spent involvement, we are asking for an early renewal on their upgrades, planning and executing of the Auckland casino licence beyond 2021, an strategies that capitalised on the Rugby World increase in gaming products to meet current Cup and lifted occupancy rates and yields year and future demand, and changes to the gaming on year. The quality and consistency of the regulations to increase the efficiency and experiences on offer ensured that our attractiveness of our customer offerings. properties brimmed with media and VIPs from The NZICC would also generate much needed the sporting and business worlds. SKYCITY additional jobs in Auckland: some 1,000 more Grand Hotel revenue increased by 29 percent, jobs, we estimate, during the construction with an occupancy of 88 percent for the year. phase, with around 800 jobs once the NZICC SKYCITY Hotel revenue grew by 27 percent, was up and running. with occupancy of 94 percent for the year. At year end, the Auditor-General is reviewing The exciting new EIGHT and Diamond the Government’s expressions of interest Room offerings brought the crucial local process. While this review is focused on how VIP market back to our facilities. Strong The $350 million In return for our the Government sought and assessed proposals, performances in machines in the first half, investment would add involvement, we are we support the enquiry. Once the Auditor- particularly amongst our Platinum tier, slowed significantly to Auckland’s asking for an early General has released its report, we hope to in the second half but were still up 10 percent tourism infrastructure and renewal of the Auckland re-engage with the Government and conclude year on year. Table game revenues also staged to New Zealand’s casino licence beyond something of a revival this year as customers attractiveness generally as 2021, an increase in negotiations. Shareholders can be assured that an events and convention gaming products to meet the development will only proceed on the basis responded enthusiastically to the mood set at destination. It is estimated current and future that an acceptable return on capital can be EIGHT, with spend for the year lifting by that the facility could demand, and changes delivered from the total project. 2.7 percent, mostly in the second half. attract 350,000–400,000 to the gaming regulations conferencing delegates to increase the efficiency While EBITDA margin was down slightly due every year. and attractiveness of our Systematic improvements to significantly larger International Business, customer offerings. Behind the scenes, the launch of our Bally the diversity of income growth and, in gaming system in Auckland at year end will particular, the high levels of growth in areas deliver reward and recognition opportunities where we had invested in the environment and enhance the customer experience to show that interest has lifted right across the bring our gaming experiences more into line property. We are a much more attractive with those experienced at the sites of our entertainment destination today than we were Australasian competitors. just over 12 months ago. In conjunction with our Premier Rewards loyalty programme, it will also enhance the relationships SKYCITY has with customers. Bally is up and running in Adelaide and will be in Hamilton and Queenstown by September 2012. With Darwin already up to date with its own IGT system installed this year, SKYCITY will be fully refreshed systems-wise by the end of the first half FY13.
PAGE 10 16$M TO 51$M Normalised revenue trebles in auckland international business FY10–FY12
Horizon both linked to Asian cities with business Our International Business continued to go from class quality airlift. Clearly, the opportunity exists strength to strength. Turnover increased from to extend the Horizon brand to Adelaide $1.2 billion in FY10 to $3.8 billion this year as assuming the redevelopment of that property players from China and across South East Asia goes ahead. came to Auckland to experience our exciting Given the increasing competition developing new Horizon offering. Normalised revenue for the VIP dollar across the region, a luxury has trebled over the last three years, from brand offering is vital if we are to hold our own $16 million to $51 million as high-end players against high-spending competitors. The success took up opportunities to play in our four of Horizon to date shows that while smart Horizon private gaming salons and to stay in investment and powerful and attractive one of our seven Presidential Suites (including branding are crucial, co-ordination of all the three new Presidential Suites at the SKYCITY other elements - accommodation, airlift, Grand Hotel). Reactions to the new luxury streamlined visa processing and expanded offerings have been unanimously enthusiastic, marketing - are also key components. We’re with a 30 percent increase in new International The international gaming very confident that Horizon will continue to VIP customers. clientele who visit us deliver growth and do very well. Our International Business in Auckland has trebled since FY2010. The international gaming from China, Hong Kong, Darwin clientele who visit us from China, Hong Kong, Singapore, Thailand and Darwin is rebounding from the smoking bans Singapore, Thailand and Malaysia bring valuable introduced two years ago. While construction foreign earnings to Auckland and New Zealand. Malaysia bring valuable of the new resort took most of the year and They visit attractions around Auckland, Rotorua foreign earnings to Auckland impacted on stays, the rest of the business and Queenstown, demonstrating the further experienced growth thanks to a sustained focus potential of New Zealand as an international and New Zealand. They on repositioning of the property, presentation and tourist destination for high spending Chinese visit attractions around upgrading of two of our signature restaurants. and Asian tourists. Total revenue was up 3.8 percent for the year, This significant growth in volumes and Auckland, Rotorua and largely on the back of a second half that improved earnings has been driven by a number of Queenstown, demonstrating by over 8 percent. Pleasingly our gaming revenues factors. Firstly, the new environments were up along with Keno, again particularly in the themselves mean that our Horizon branded the further potential of second half, and that’s continued into the new offerings now match the expectations of high New Zealand as an year. Non-gaming revenues were up 2.7 percent end Asian players and provide them with real international tourist on the previous year. reasons to look beyond Macau, Singapore, or The new Lagoon Resort, Darwin’s only luxury the east coast of Australia. Secondly, we have destination for high 5-star beachfront resort, opened on 27 July 2012, delivered better reach into the Asian markets spending Chinese and with first guests welcomed from 1 August 2012. themselves by expanding our sales teams in The acclaimed development is beautiful. Malaysia, China and Australia. Thirdly, our new Asian tourists. It features 2 International VIP hotel villas capacity (four private gaming salons instead of and adjoining gaming salons, 32 generous just one) provides more opportunities to invite NIGEL MORRISON standard villas, a 3 million litre heated lagoon a lot more players and to deliver gaming at swimming pool (with the surface area of nine peak demand times. Finally, the opening of tennis courts), a white sandy beach made from China Southern Airlines services between 400 tonnes of white sand, a swim up bar Auckland and Guangzhou, and our successful and much more. With its new luxury amenities partnership with Auckland International and close proximity to Asia, we’re confident Airport to offer airside clearance, have made that this development is nothing short of coming to Auckland to play more comfortable game-changing. It comes at a time when the and less complicated. We are now working with $32 billion Inpex Ichthys liquid natural gas Auckland International Airport to develop plant and pipeline project is about to begin further strategies to encourage more Chinese and as Silk Air opens business class connections visitors to come to New Zealand. from Singapore to Darwin. Horizon itself has become our international Not only is SKYCITY a significant employer VIP brand, allowing us to market to players in the city, but the development of the new across the Asian region with a marque that resort would be amongst the biggest property represents luxury gaming and hotels. Two brand investments yet in the State. This new resort new Horizon hotel villas in Darwin mean we complements the existing 120-room hotel and now have two destinations for high end players, cements SKYCITY Darwin’s position as the
PAGE 11 CHIEF EXECUTIVE’S REPORT
CONTINUED
8.5% 8% 50% ADELAIDE hamilton Queenstown REVENUE GROWTH EBITDA growth EBITDA growTH
leading integrated resort in Northern Australia. grade credit rating, shareholders can be assured Our view is that our redeveloped SKYCITY that we will not proceed with any investment property will only add to a city that’s about to until we are certain of appropriate returns. enjoy new levels of profile. Hamilton With Darwin poised Adelaide Hamilton had another good year with revenue up to be part of a flourishing A soft economy caught up with Adelaide in the 8.8 percent thanks to new product, an improved Northern Territory, second half of this year. Good progress in the first layout and main gaming floor refurbishment as half of the year was followed by declines in the well as better food and beverage offerings. Adelaide well positioned second half until June, when volumes and hold Gaming revenues grew well with non gaming to be part of that State’s rebounded. They have been more buoyant since. revenue up 16.7 percent. EBITDA was up Main table games experienced good growth, 8 percent on the previous year. Another solid most exciting development although this was tempered by VIP numbers, performance endorses our proposal to construct in decades and the but machines were up overall, with 8.5 percent a 135-bedroom, 4.5-star hotel in the city. The revenue growth, and in fact enjoyed their best $35 million investment is already consented and opportunities that we year ever. For the first time, Adelaide Casino had we expect to open in early FY2015. The design know the NZICC could over 8 percent of the total gaming machines process will now be completed with the tendering market share by revenue in South Australia. process commencing shortly thereafter. bring, there’s certainly As you will all be aware, we have exciting room for optimism development plans for Adelaide, including, South Island potentially, a stunning boutique 6-star hotel, Queenstown did very well with revenue up about our medium world-class signature restaurants and a 12 percent and a 50 percent growth in EBITDA to long term pipeline. VIP gaming precinct to be set amidst the to $1.5 million thanks to higher numbers of proposed Torrens Riverbank arts, sporting Chinese and Asian visitors, a successful Chinese and entertainment precinct redevelopment. New Year, strong gaming revenues and sound NIGEL MORRISON Discussions and negotiations with the South cost management. This is the highest EBITDA Australian Government’s Casino Task Force result since the Queenstown Casino opened. about the future tax and regulatory framework In Christchurch, our jointly owned casino is for the Adelaide Casino are continuing. There’s open but the operating environment there been very good progress recently, and I’m remains challenging. With the Government looking to update shareholders further when having now issued its Christchurch Central we meet at the Annual Meeting. Recovery Plan, there is now greater clarity The Government is investing $1 billion around around the rebuild for the city, and in particular us in key infrastructure like the Adelaide Oval, the location of the planned convention centre the two-phase Convention Centre expansion and other civic buildings within proximity of and for the Torrens footbridge that links our our site. We’ll continue to move forward together property directly with the Adelaide Oval. This with our partners Skyline. would mean that most of the 30,000–50,000 people visiting the Oval for games and AFL Healthy position means no need for additional funding This new Resort Our redeveloped football matches would literally come past our complements the SKYCITY property doors. On the other side of our facility, the This year’s strong result provides the headroom existing 120-room hotel will add to a city that’s Government is keen to develop a 1,300 plus to further support the business case for growth. and cements SKYCITY about to enjoy new space carpark with a major civic plaza above it. Following repayment of $250 million USPP debt Darwin’s position as the levels of profile and leading integrated resort strong growth. Given that we have no carparks at Adelaide in March 2012, we now have no debt due to in Northern Australia. Casino, such an amenity would be highly mature until the second half of 2015. Net debt advantageous for us and we are keen to be part at year end stands at $659 million. Our Capital of the solution. Once again, as in Darwin, we Notes comprise $56 million issued on the NZX find ourselves well positioned to capitalise on and a further $94 million available but unissued developments happening around us. In the case in Treasury Stock. In May this year, Standard of Adelaide, there’s huge impetus for the & Poor’s reiterated their BBB- Investment Grade Riverbank development and when it goes ahead, rating, with a stable outlook. we foresee a real upturn for both the city and With a financing structure that is conservatively the State. If we can get the reassurances we need, geared, $340 million in committed undrawn we’re ready to make a significant investment. facilities (plus an available $94 million of While we certainly have access to the funding Capital Notes currently held as Treasury Stock), we judge would be required to deliver such an strong operating cash flows and good investment without jeopardising our investment relationships with local lending banks and
PAGE 12 We'll be looking to make the most of what we've done in Darwin, to conclude negotiations on the NZICC, and to facilitate the transformation of our Adelaide Casino.
USPP providers, we are well placed to fund our Horizon and EIGHT, and to bring additional operating expenses and ongoing investments, new restaurants to Federal Street that position including the major capital projects of the it even more strongly as the leading restaurant proposed NZICC and the Adelaide Casino and entertainment precinct in Auckland. Redevelopment, should they materialise, from With Darwin poised to be part of a flourishing our existing facilities without any requirement Northern Territory, Adelaide well positioned to to ask for additional funding from shareholders. be part of that State’s most exciting development Capex this year totalled $165 million, up from in decades and the opportunities that we know $77 million last year, and included the the NZICC could bring, there’s certainly room completion of the Auckland projects, the spend for optimism about our medium to long term on the Darwin Resort, the implementation of pipeline. We’ll be looking to make the most Bally, land acquisition in Auckland and other of what we’ve done in Darwin, to conclude development capex. We expect maintenance negotiations with the New Zealand Government capex for the year ahead to be broadly in line on the NZICC and to work with the South with this year’s spend, around $50 million. Australian Government and Casino Task Force to finalise our plans for the transformation of Thanks our Adelaide Casino. We’ll also be looking to The businesses we operate fundamentally centre progress development of the Hamilton Casino on the experiences that customers receive. Hotel project. Once again this year, our people have worked More immediately, success will depend on us hard to deliver a fantastic result, and they have continuing to deliver compelling reasons for done so through demanding events and people to keep staying, dining and playing at our disruptive construction schedules. My thanks properties. That will require us to continue to to each of you, wherever you work, for your refresh what we do, improve how we do it, and enthusiasm, commitment and skill. add to what people can expect from us. Our new I’d like to take this opportunity to thank my Bally gaming system will help with that. fellow Directors for their guidance and advice This year, we once again showed we have the through the year. In particular, I’d like to thank mix of judgment and daring to successfully our retiring Chairman Rod McGeoch, who first expand what people know us for. The first few brought me to SKYCITY four years ago and weeks of the new year have begun well with whose support and insights I continue to value. normalised revenues up 5 percent on last year. A warm welcome too to our incoming Chairman, I look forward to updating you on our progress Chris Moller. Chris is one of New Zealand’s through the first quarter at the Annual Meeting most admired Board directors, and it seems on Friday 19 October 2012. only fitting for him to take over the leadership reins for this iconic New Zealand company. Finally, my thanks to the Executive Team who once again have successfully helped steer this business through challenging economic conditions. Well done.
Outlook This time last year I was confident that the economy had finally turned a corner. Twelve months on, I’m a lot more cautious about the Nigel Morrison / Chief Executive macro-economic climate. Business confidence appears volatile, employment statistics have slipped and retail activity has not rallied as much as expected. The business backdrop seems much more prone to modest growth. I’m confident we can outperform the conditions and deliver solid progress across our businesses. Certainly, the real advances we’ve made with Federal Street and the significant growth in International business are all very exciting. We’ll be looking to capitalise on the investments we’ve made in Auckland, particularly
PAGE 13 GROUPCHIEF SUMMARYEXECUTIVE’S AT AREPORT GLANCE SO MUCH TO OFFER
This year we launched our premium We continued to develop our VIP brand, Horizon, targeted Federal Street restaurant hub, with specifically at international players. award-winning Depot and The Grill Our four world-class Horizon suites joining the offering. More top quality and gaming salons in Auckland have restaurants are on the way. already delivered a 600 percent increase in occupancy. The SKYCITY Grand now features three stunning Presidential Suites.
Our new resort opened in Darwin on 27 July 2012. It features 2 large hotel villas that make up Horizon Darwin, plus 32 standard rooms wrapped around a huge 3 million litre swimming pool, The fully refurbished Fortuna Restaurant The Diamond Room is proving very a sand beach made from 400 tonnes offers all day, buffet-style dining in a popular with local players. of white sand, swim up bar, bars and luxurious new setting. restaurants and much, much more.
$3.17M
EIGHT opened across two new floors on top of the SKYCITY Hotel at the end of August 2011. The new venue has brought local VIP premium table customers back to our Auckland site to play in a spacious and attractive setting with premium food and beverage offerings, an extensive entertaining Our new Premier Rewards card adds $3.17 million paid out to 375 organisations deck and balconies and wonderful views to the excitement of playing in the community through our across the Auckland CBD and the Harbour. with popular new rewards. SKYCITY Community Trusts
PAGE 14 NEW ZEALAND
1 AUCKLAND 3 CHRISTCHURCH
restaurants/bars/cafes 27 restaurants/bars/cafes 5 HOTEL Rooms 635 gaming machines 500 1 gaming machines 1,647 gaming tables 36
2 gaming tables 110 employees 419 employees 2,829
2 HAMILTON 4 QUEENSTOWN
restaurants/bars/cafes 7 restaurants/bars/cafes 2 gaming machines 339 gaming machines 86 gaming tables 23 gaming tables 12 3 employees 372 employees 64
4
AUSTRALIA 5 5 DARWIN 6 ADELAIDE
restaurants/bars/cafes 10 restaurants/bars/cafes 9 HOTEL ROOMs 120 gaming machines 990 Resort rooms 32 gaming tables 90 gaming machines 750 employees 1,054 gaming tables 33
* 6 employees 1,047 * varies seasonally from 506/1,047
2 012 ACROSS 4,422,590 235,000 412,034 2,976,726 6,654 people came people came people came to see people came to us people came THE to play to stay the Sky Tower. for a drink to work GROUP on our tables at one of Of those 12,496 and/or a meal or machines our hotels dared to do a SkyWalk or a SkyJump.
Maps | Visible Earth / NASA PAGE 15 Recent developments
BIG WINS BIG BIGPLANS
BIG WINS BIG PLANS It has been a highly successful year for our Federal Street restaurants. Together, we estimate they’ve drawn over 300,000 people to the area, Nic Watt set setting the stage for further development including the introduction of an exciting new to light up restaurant offering by Nic Watt. Federal Street Our confidence in the quality of what’s on THE GRILL offer has been endorsed by a host of awards. – RESTAURANT OF THE YEAR – World-renowned New Zealand chef, Nic Watt – BEST NEW RESTAURANT – Depot won the supreme award in the is returning home from London to open a Metro/Audi Restaurant of the Year Awards Japanese Robatayaki (“Robata”) style restaurant 2012. Depot also took out Best New Restaurant in Federal Street. Nic’s extraordinary credentials and Best Casual Bistro. Restaurateur and include time at the Kozue and New York Grill Chef Al Brown was awarded Audi Progressive restaurants at the Park Hyatt Tokyo, Chef de Restaurateur of the Year. Partie at the Michelin-starred Nobu, Chef de SKYCITY Auckland was awarded an Award of Cuisine at The Rib Room and Oyster Bar at The Grill by Sean Connolly took top honours Merit for Depot, The Grill by Sean Connolly the Park Hyatt Hotel in London, Executive in the prestigious Cuisine magazine Restaurant and Red Hummingbird in the Retail Property Chef at Huka Lodge, and, since 2004, Head of the Year Awards 2012. As well as the overall Industry category. The company also received Chef at Roka in London. We can’t wait to see Restaurant of the Year award, The Grill was An Award of Excellence for EIGHT and what he’ll bring to Auckland’s fastest growing also named Best New Restaurant. Depot Horizon in the Tourism and Leisure Category integrated entertainment precinct. was awarded joint runner up in the Best New at the Property Council of New Zealand Restaurant section. Industry Awards. The Grill by Sean Connolly, dine by Peter Gordon Depot was a finalist in the Interior Magazine and Depot were all listed in Metro Magazine’s Awards – Hospitality category. Top 50 Restaurants List. Depot and The Grill by Sean Connolly were named in the Cuisine Top 50 Restaurants in New Zealand. Depot was awarded Best New Auckland Venue in the 2012 Lewisham Foundation Awards.
PAGE 16 IN DISCUSSION
Progress on the NZICC expertise and the funding in place to make it An exciting new hotel for Hamilton happen without further assistance. We continue While confirmation on whether construction We have already been granted consents for a to work with the Government in good faith. of the NZICC will proceed is taking longer 135 bedroom 4.5-star hotel above our property than expected, it’s important to remember A new world-class integrated in Hamilton. The $35 million hotel will further why we believe this is a good project for entertainment complex for Adelaide enhance our investment in the Waikato region SKYCITY to invest in. and bring new hospitality opportunities to the The Adelaide Riverbank Precinct has the city. The hotel will include 8 luxury duplex For investors, the NZICC offers multiple potential to be a truly outstanding world-class components for return, including: the potential suites for our premium customers, 16 large suites sporting, arts and entertainment destination. with river facing balconies, 111 standard rooms, operating return from running the Centre itself; We’re continuing to talk with the South the opportunities to use the venue for other a swimming pool, sauna and gym. The new Australian Government about transforming the hotel is due for completion in early FY2015. events such as sports, shows and as an Adelaide Casino into an iconic entertainment entertainment venue; the opportunity for complex that will complement the $1 billion onspend at our other facilities in the area, such investment being made by the Government as entertainment, hotels and restaurants; and that includes development of the nearby additional carparking on the site, which would Adelaide Oval, the Convention Centre reduce the overcrowding of our existing expansion and the redevelopment of the carpark at peak times. neighbouring Festival Centre. $M Approval of NZICC would hinge on some The transformed Adelaide Casino will be alterations to the strict regulatory framework a destination in its own right, featuring an 35 under which we operate and opportunities to extraordinary 6-star hotel, signature restaurants, HAMILTON HOTEL increase the number of gaming tables and great bars and live entertainment venues, machines at our facilities. With this would a destinational rooftop pool, international VIP come some redevelopment of the wider Horizon villas and private gaming salons and Auckland property. new contemporary and vibrant gaming lounges For investors, the NZICC The NZICC will also be of significant benefit and facilities. The investment would be the to New Zealand and in particular Auckland, largest single private sector investment in offers multiple components we believe, because it will attract major Adelaide in many years. for return… The NZICC international conferences that New Zealand Good progress has also been made with the will also be of significant currently misses out on due to a lack of venue South Australian Government Casino Task of the needed scale. These conferences will Force about ensuring a regulatory, operational benefit to New Zealand bring high-spending delegates, boosting and tax environment can be put in place that tourism around New Zealand and generating matches what gaming facilities in other and in particular Auckland. approximately $90 million a year in new Australasian jurisdictions and internationally visitor spending. receive. Such a framework will give us the We were selected originally as the preferred confidence we need of delivering an developer because of our existing capabilities appropriate rate of return to shareholders for and expertise in operating large conventions, such a major investment. event and food and beverage businesses, because of our well positioned development site in the heart of the CBD and because we have the
PAGE 17 the board
1 2
New Zealand Dairy Board and subsequently 1 Rod McGeoch Fonterra, when he also held the position of THE Retiring Chairman Deputy Chief Executive of Fonterra. His early Chairman of the Governance and Nominations career was in the finance and banking sectors. board Committee, Member of the Audit and Risk Committee, Member of the Human Resources 3 Bruce Carter Committee, Member of the Corporate Social Deputy Chairman Responsibility Committee, appointed Director Member of the Audit and Risk Committee in September 2002 and Chairman of the and Member of the Governance and Board in April 2004. Retires as Chairman at Nominations Committee, appointed Director this year’s Annual Meeting to resume his role in October 2010. as a director of the company. Based in Sydney, Australia, Rod is a director Bruce Carter is a Consultant to Ferrier of Ramsay Health Care Limited. He is also Hodgson in Adelaide and was one of the Chairman of Vantage Private Equity Growth founding partners of the Adelaide practice in Limited and has been appointed to the BGP 1992. He was formerly a partner at Ernst & Holdings plc (Malta) and BGP Investment s.à.r.l Young and has more than 30 years’ experience (Luxembourg) Boards. He is the Honorary in corporate restructuring and insolvency. Chairman of the Trans-Tasman Business Circle Bruce is a director of ASC Pty Ltd (Australian and the Co-Chairman of the Australia Submarine Corporation) and a director/chair New Zealand Leadership Forum. of a number of private companies and government bodies. He is a Fellow of the 2 Chris Moller Institute of Chartered Accountants. Incoming Chairman 4 Brent Harman Chairman of the Audit and Risk Committee, Director Member of the Governance and Nominations Committee, appointed Director in Chairman of the Human Resources December 2008. Committee and Member of the Governance and Nominations Committee, appointed Chris Moller is currently Chairman of Meridian Director in December 2008. Energy Limited. He is a director of NZX Limited, Westpac New Zealand Ltd, Rugby Brent Harman is an experienced broadcaster New Zealand 2011 Limited and he was and company director with a background in appointed as Chairman of the New Zealand managing publicly listed companies in Australia Transport Agency and of New Zealand Cricket and the United Kingdom. He is presently a Inc in 2010. In his previous role as CEO of the director of GR Media Holdings Limited and a New Zealand Rugby Union, Chris jointly led director of Metlifecare Limited. Prior to this, New Zealand’s successful bid to host the 2011 he held senior positions in the broadcast and Rugby World Cup. Chris’ career has included new media industries in New Zealand, the senior posts with the New Zealand Dairy United Kingdom and Australia. Board, including global Chief Financial Officer and Managing Director of NZMP, the international ingredients business of the
PAGE 18 3 4 5
6 7 8
5 Peter Cullinane 7 Richard Didsbury 8 Nigel Morrison Director Director Managing Director Chairman of the Corporate Social Responsibility Member of the Corporate Social Responsibility Nigel Morrison joined SKYCITY as Managing Committee and Member of the Governance and Committee and Member of the Governance Director and Chief Executive having had over Nominations Committee, appointed Director in and Nominations Committee, appointed 18 years’ experience in the gaming industry March 2008. Director in July 2012. throughout Australasia and Asia. Prior to being Peter Cullinane has led the development Richard Didsbury is a founding shareholder and appointed Chief Executive Officer of of some of New Zealand’s most iconic brands, director of the manager of Kiwi Income SKYCITY, Nigel was the Group Chief Financial applying strategic and creative thinking both Property Trust (KIPT), which is now the largest Officer of Galaxy Entertainment Group, a locally and internationally, which led to his property vehicle listed on the NZX. Within KIPT, leading publicly-listed Hong Kong-based group appointment as Chief Operating Officer, Richard was the Chair of the Sylvia Park Project operating and developing casinos in Macau. He Saatchi & Saatchi Worldwide. Since returning Control Group which successfully completed has also held positions as CEO of the Federal to New Zealand and establishing Assignment New Zealand’s biggest retail development. Group, Australia’s largest private gaming group Group, Peter has specialised in strategic advice Richard has enjoyed a distinguished career in and Chief Operating Officer of Crown to a wide range of New Zealand and international property development. He is well known for his Limited. Before embarking on a career in clients. He is a director of STW Communications work on the Property Council of New Zealand casinos in 1993, Nigel was a Corporate Finance Group Limited, one of Australasia’s largest and is a director of Committee for Auckland Partner with Ernst & Young in Melbourne, marketing communications groups, and Chair Limited. He is a director of Auckland specialising in the gaming industry. In 2009, of The Antipodes Water Company Limited. International Airport Limited and the Nigel was awarded professional accountancy Hobsonville Land Company Limited which is organisation CPA Australia’s highest 6 Sue Suckling developing a major new waterfront community acknowledgment for career achievement. Director in Auckland’s north-west. His previous governance roles have included being a director Member of the Human Resources of Infrastructure Auckland. Committee and Member of the Governance and Nominations Committee, appointed Director in May 2011. Sue Suckling is a director and consultant with over 25 years’ experience in corporate governance and was appointed as a SKYCITY director in 2011. Sue is currently the Chair of the New Zealand Qualifications Authority, Barker Fruit Processors Limited and ECL Group Limited. She is a director of Restaurant Brands NZ Limited and a member of the NZ Takeovers Panel. Previous governance roles included chairing NIWA, AgriQuality Limited, and as a director of Westpac Investments Limited and the NZ Dairy Board. In 1996, she was awarded an OBE for her contribution to New Zealand business. Sue is a Fellow of the New Zealand Institute of Directors and a Companion of the Royal Society of New Zealand.
PAGE 19 CHIEFEXECUTIVE EXECUTIVE’S team REPORT
2 4
1 3 5
2 James Burrell 4 Peter Treacy THE Chief Financial Officer General Counsel and Company Secretary James was appointed Chief Financial Officer in Peter Treacy was appointed General Counsel EXECUTIVE July 2011. As Group CFO, James is responsible and Company Secretary in May 2008. for all financial matters including financial Peter is responsible for SKYCITY’s government reporting, group treasury and internal audit. relations, legal, regulatory and company TEAM Prior to joining SKYCITY, James was based in the secretarial functions. Peter has extensive Hong Kong office of international private equity experience in major international financing and firm Permira, where he helped establish the corporate transactions, with many years company’s office for the Greater China region. international experience, including eight years 1 Nigel Morrison James has had a successful career in creating as partner with international law firm Managing Director shareholder value and identifying, evaluating and Linklaters in London, Hong Kong and Bangkok. Nigel Morrison joined SKYCITY as Managing financing a range of businesses acquired by Director and Chief Executive having had over Permira, including the US$840 million investment 5 Aaron Morrison 18 years’ experience in the gaming industry in Hong Kong listed Macau-based casino group General Manager – Business Development throughout Australasia and Asia. Prior to being Galaxy Entertainment Group in 2007. James is a and Investor Relations chartered accountant originally from the United appointed Chief Executive Officer of Aaron Morrison is responsible for overseeing Kingdom, where he trained with Arthur Andersen SKYCITY, Nigel was the Group Chief Financial and pursuing corporate business development in audit and transaction advisory services. Officer of Galaxy Entertainment Group, a and strategic growth opportunities, as well as leading publicly-listed Hong Kong-based group managing investor and corporate stakeholder 3 Gráinne Troute operating and developing casinos in Macau. He relations on behalf of the SKYCITY Group. General Manager Group Services has also held positions as CEO of the Federal Aaron has over 17 years’ experience in the and Human Resources Group, Australia’s largest private gaming group casino and entertainment industry with and Chief Operating Officer of Crown Gráinne was appointed General Manager various corporate and operational roles. Limited. Before embarking on a career in Group Services and Human Resources in Prior to joining SKYCITY in 2010, Aaron was casinos in 1993, Nigel was a Corporate Finance May 2008. Gráinne was previously Managing SVP International Business Development Partner with Ernst & Young in Melbourne, Director of HR consultancy Right Management, for Crown Limited, where he was responsible specialising in the gaming industry. In 2009, and prior to that, Managing Director of for managing and executing a range of Nigel was awarded professional accountancy McDonald’s Restaurants (New Zealand) strategic corporate growth opportunities and organisation CPA Australia’s highest Limited responsible for over 5,000 transactions, across different international acknowledgment for career achievement. employees. She joined McDonald’s in the early jurisdictions. 1990s establishing the Human Resources function, progressing through to Executive Vice-President, and then to Managing Director. Prior to this, she led the HR function for Coopers and Lybrand Auckland (now PwC). In addition to her extensive HR expertise, Gráinne has had wide experience in Board and charitable trust governance roles in New Zealand including having been Chair of Ronald McDonald House Charities New Zealand for five years.
PAGE 20 6 8 10
7 9 11
6 Ejaaz Dean 8 Brad Morgan 10 Mike Clarke President-International Business General Manager – Darwin Chief Information Officer As President International Business, Ejaaz is Brad Morgan joined the company in October Having commenced with SKYCITY as a responsible for the overall management of 2010 and is directly responsible for the Consultant in March 2008, Mike was SKYCITY’s International Business operations operations and performance of SKYCITY appointed to the role of Chief Information for all SKYCITY casinos. Ejaaz has more than Darwin, as well as development plans for the Officer for SKYCITY in July 2008. Mike has 24 years’ experience in the casino industry, property. Brad brings significant Australian wide experience in IT Management having having previously held key management club industry experience, having managed previously held roles such as Regional Director positions at Burswood Casino in Perth, several of Queensland’s largest and most with Lotus IBM Asia Pacific based in Star City in Sydney and Crown Casino in successful clubs, including the Brisbane Singapore, and Managing Director for 3Com in Melbourne. His most recent role was as Broncos Leagues Club. In 2006, he Australia and New Zealand before moving into Chief Operating Officer – Gaming at transitioned into the casino industry as the a consulting career. Mike is responsible for the Burswood Casino, where he was responsible Chief Operating Officer, Casino Division of the planning, implementation and management of for Table Games, Gaming Machines and Lasseters Group, which is listed on the SKYCITY Information Technology Systems and International Business. Ejaaz joined SKYCITY Singapore Stock Exchange. As Chief Operating is focussed on delivering systems to improve Auckland in May 2008. Officer, Brad was the most senior executive of business effectiveness and customer Lasseters in Australasia. Prior to joining the experience. 7 David Christian hospitality industry, Brad spent a decade in the General Manager – Adelaide Casino finance industry with one of Australia’s largest 11 Gordon Jon (GJ) Thompson financial institutions. General Manager – Corporate David Christian was appointed SKYCITY Communications Adelaide General Manager in April 2008. He 9 Simon Jamieson has held several significant positions within the GJ joined SKYCITY in August 2012 and is Acting General Manager – Auckland SKYCITY business including time as General responsible for SKYCITY's media and public Manager of both the SKYCITY Auckland and Simon Jamieson joined SKYCITY in September profile and corporate reputation. He has the SKYCITY Hamilton businesses. David has 2007 and was promoted to the role of General extensive experience in issues management more than 20 years’ experience in hospitality, Manager SKYCITY Hotels Group Auckland in and media management as a press secretary to hotel and casino management including May 2008. He took on responsibility for several government ministers and to former working in several Australian states and in Facilities Development for the New Zealand Prime Minister Helen Clark. He was also Chief Singapore. David was previously General sites in February 2010 and since April 2012 has Press Secretary and then Chief of Staff to Manager of the Wrest Point Hotel Casino and been acting General Manager – Auckland with former Labour Leader Phil Goff. He started his General Manager Operations of the Country responsibility for all operations of the Auckland career as a journalist, including time with the Club Casino, both in Tasmania. property including gaming, restaurants and bars, Waikato Times and The Dominion Post. hotels and conventions. With more than 25 years’ experience in large-scale hospitality businesses, Simon brings a wealth of commercial and global tourism experience to the SKYCITY business. Having held several international general management and director roles, Simon is presently a director of the New Zealand Tourism Association.
PAGE 21 CHIEF EXECUTIVE’S REPORT skycity as an employer
a place for People This year SKYCITY made commitments on a number of fronts that show our heartfelt and ongoing commitment to fulfilling our responsibilities as a Group, as hosts, as employers and, above all, as members of the community.
ur commitment to fairness, Host responsibility Our first priority is social responsibility and Our first priority is Host Responsibility. We are highly ethical work practices totally committed to providing safe gambling Host Responsibility. is now being driven directly venues with a focus on harm prevention and We are totally committed from a governance level. safety of our customers and staff. We have established a We operate specialist, destinational and highly to providing safe gambling sub-committee of the SKYCITY Board supervised casinos with internationally venues with a focus on specifically to focus on corporate social recognised Host Responsibility programmes. responsibility. It’s further recognition of our We have dedicated Host Responsibility harm prevention and safety determination to be fair and just, and to ensure personnel and extensive security and that, to the greatest extent possible, at an surveillance resources to manage day-to-day of our customers and staff. executive level, operationally, and through Host Responsibility obligations. our governance processes, we do everything It’s important to recognise that SKYCITY we can to ensure our impacts on the already has one of the most stringent Host community are positive. Responsibility programmes in the world for Our Corporate Social Responsibility charter casinos. It should be remembered too that we addresses six areas in which we show have never been sanctioned or disciplined by commitment to the highest levels of corporate the regulator for any breaches of the rules under and social responsibility. These are: responsible which we operate - that’s because we take our gaming; the environment; human rights; responsibilities in this area very seriously. fair operating practices; labour practices We know that there is always room for (including diversity); and community improvement. That’s why we keep looking involvement and development. We do this for ways to welcome people to our premises by integrating social responsibility across our and to entertain them whilst doing our best decisions and outcomes. to safeguard them from harm.
PAGE 23 skycity as an employer
CONTINUED
Our new Bally system brings with it the Leadership opportunity opportunity to incorporate enhanced Host This year we were also an inaugural Responsibility capabilities. Customers with participant in the BEST Pasifika Programme – Premier Rewards cards will soon be able to a programme that recognises that Pasifika pre-select time and money limits before they people occupy low numbers in workforce play, which means SKYCITY will soon have management and seeks to find ways to change a voluntary pre-commitment system in place. that. Two SKYCITY staff members – Tavalea We’re also working with Focal Research on a Seagaiga and Vita Sa Fia – will shortly graduate pioneering detailed analytical application that from the programme, and we are looking looks at play patterns to predict those who forward to sponsoring other SKYCITY might be at risk of harm. This analysis will help employees through the programme next year. us to identify people to monitor, and to check In fact, leadership development was a major their suitability to keep playing. No other focus over the year. We have an excellent and commercial casino in the world is using this stable Executive Team, but like all evolving tool. The product is currently in testing. organisations it’s important that we have appropriate succession models in place and we Diversity and equality certainly strengthened our capabilities in that One of SKYCITY’s great strengths is that we regard. We also focused on building and 60+ are a diversified employer. Partly that stems upskilling our wider SKYCITY leadership ETHNICITIES MAKE UP OUR WORKING COMMUNITY from being the largest single-site employer in team and developing leadership models for IN AUCKLAND Auckland and indeed a major employer in the those with leadership potential. cities in which we operate. Our working community in Auckland alone is made up of people from over 60 ethnicities, and we welcome that diversity because we believe it We have a strong brings greater understanding and cultural depth reputation as a good to our interaction with customers and our integration into communities. employer. In particular, This year, we were an inaugural signatory we are known for to the Women's Empowerment Principles which were formally launched in New Zealand early in supporting our people 2012. The principles, which embrace the concept and for offering them of “equality means business”, are a partnership initiative of United Nations Women and the UN work opportunities that Women National Committee for New Zealand, the New Zealand Federation of Business and may be more flexible Professional Women and the Equal Opportunities than they would be Commissioner from the New Zealand Human Rights Commission. Internationally, CEOs are offered elsewhere. being encouraged to support the Women's Empowerment Principles with a statement of support that signals their intention to integrate and implement the principles in the boardroom, the workplace, and along the supply chain to the community. The Principles themselves are a voluntary expression of values and provide guidance for action in seven areas including leadership, equality, health and safety, education and training, supply chain elements, community leadership and transparency.
PAGE 24 Training 6,600 people is a sizeable community in its INCREASING talent pool Training people to make the most of their own right. Such a large and diversified talents and to work alongside others to make workforce needs not only work that excites and our businesses productive has always been a challenges them, they also need to know that priority at SKYCITY. We believe in talent, and they are safe doing that work and that we are committed to maintaining their health and 111,000+ we believe in opportunity. Training is about more than teaching someone how to do a job. wellbeing. We continue to improve our health PEOPLE ARE REGISTERED as seeking It’s about encouraging them to shine at what and safety record which once again this year employment WITH SKYCITY ACROSS they do. Everything we do depends not just on saw a reduction in lost time injuries through AUSTRALIA AND NEW ZEALAND excellence but on consistency. Training, a combination of hazard reduction and the mentoring and skills development are all vital implementation of return to work programmes components in helping more people to progress across all our sites. Our staff counselling and Until now, our strong sense their careers and assisting them to help us be a support programme in Auckland, “Connect”, of social responsibility has high-performing business. which is an integrated initiative designed to ensure that people feel good and stay well was This year, we continued our e-learning largely gone undeclared. recognised by the Human Resources Institute initiatives to enable staff and prospective staff to this year in their Annual Awards. This year, we made complete their training online at a pace that works for them, delivers efficiencies in Behaving ethically and responsibly makes good groundbreaking changes classroom time and fitting training around shifts business sense. It always has. All our businesses and customer-facing responsibilities. In terms focus on people and our revenues depend on in terms of articulating our of apprentices, our successes at the Auckland making people feel good in their interactions beliefs and being seen to Regional World Skills event in May and the with us. Our view is that SKYCITY must cooking section of the New Zealand Youth always mirror that focus in its own dealings act on them, providing Skills Competition in July show just how with staff and with the wider community. clear reference points valuable SKYCITY continues to be as a Until now, our strong sense of social training ground for chefs. responsibility has largely gone undeclared. This internally and in year, we made groundbreaking changes in the community for Employer of choice terms of articulating our beliefs and being seen We have a strong reputation as a good to act on them, providing clear reference points SKYCITY’s intentions. employer. In particular, we are known for internally and in the community for supporting our people and for offering them SKYCITY’s intentions. work opportunities that may be more flexible than they would be offered elsewhere. As we continue to search for the very best people we can find, our careers website remains our single most important recruiting channel. In fact, we now recruit for almost all positions from our very own talent base, supplemented by further recruitment through a full range of social media. The strongest sign that we are doing this well, and that our reputation as an employer is indeed as good as we think it is, is that the numbers in our talent base continue to rise. We now have over 111,000 people registered with us for New Zealand and Australia combined. 71,000 of those are in New Zealand, and 65,000 of them are looking for work in Auckland. It shows we are well on track to being the employer of choice across all the employment paths available at SKYCITY.
PAGE 25 SKYCITY in the COMMUNITY
C HA M PI o n S (AGAIN)
We also continued our proud tradition of sponsoring sports teams and events. This year, we once again offered our support to the SKYCITY Breakers, Vodafone Warriors, Auckland Blues and the New Zealand International Comedy Festival.
RESPONSIBLE CITIZENS Every year we give millions of dollars in grants to community causes. This year we helped fund new research that provided insights on how to achieve even better outcomes.
Insightful research • Young people are more likely to take Auckland Communities Foundation (ACF) risks around water, yet almost half of those is a fully independent, not-for-profit, who drown in Auckland are over 45 years incorporated charitable trust, which enables • Children’s health outcomes differ generous individuals, families, groups or dramatically across Auckland, yet perceptions corporations to establish a charitable fund of health by parents across all three of the – in their own name or in any name they city’s DHBs are virtually the same choose. This year, SKYCITY helped sponsor • Pacific Island students remain in school for the Foundation’s Macro Auckland report, a longer than average, yet their tertiary landmark document which provides startling enrolment rates are still low new insights into the city’s social issues, and • The majority of Aucklanders say they take sets out a framework for the mobilisation of action to save energy all or most of the time, philanthropic funding. yet the city’s energy consumption is The report looks at Auckland’s social issues increasing rapidly and opportunities, bringing together information, • There are stereotypes about unemployed research and data from more than 200 sources. Aucklanders choosing to be beneficiaries, It raises the profile of issues which need yet when a new supermarket opened in priority support, and highlights a number South Auckland in 2010 more than of interesting paradoxes: 2,500 people lined up for the 150 jobs. Tom Abercrombie • Auckland’s overall crime rate is decreasing, According to the report, “Despite extensive yet Aucklanders feel less safe government and community work to make • Boarding houses for ‘rough sleepers’ have Auckland a great place to live, work and play, available beds, yet homeless Aucklanders are there is still plenty to do to enable existing sleeping on the street community agencies to continue their work
• Increasing numbers of Aucklanders are and to create innovative solutions for swingman attending cultural events of other ethnic meaningful change.” groups, yet only half of Aucklanders consider The authors, ACF analyst Deb Schwarz and the city’s increasing diversity a good thing Professor Charles Crothers of Auckland
PAGE 26 (AGAIN) AUCKLAND $2.5M+ Across 234 organisations FOR NEW ZEALAND
HAMILTON A Specifically, to ensure $ H our decision making 568,128 was objective and To 102 organisations robust, we appraised QUEENSTOWN applications on how well they helped the $95,809 communities in which To 39 organisations Q we operate and whether they met our stated desire to assist families Organisations that are financially AUCKLAND disadvantaged. HAMILTON TOTAL GRANTS AWARDED QUEENSTOWN $3,174,185 for a full list of grants visit www.skycity.co.nz/grants
University of Technology, have also identified Grants MACRO AUCKLAND that Aucklanders support causes related to place Again this year, we have looked to disperse The Macro Auckland findings have (geographical area), people (demographic the money we have available through grants played an important role in helping us groups), issues they care about, and a to a full range of community causes and events. set our community strategy. combination of the above. In Auckland, we shared $2,510,482 across The Macro Auckland findings have played an 234 organisations. We continued to work You can download the summary important role in helping set community alongside our charitable partners: Leukaemia and report and other information at strategy. Every year, we are overwhelmed by the Blood Cancer, Prostate Cancer Foundation of www.macroauckland.org.nz numbers of applications we receive for grants, New Zealand; Middlemore Health Foundation all of them for worthy causes. This makes it (Kidz First Children’s Hospital); and Variety increasingly difficult for the SKYCITY the Children’s Charity. While the average Auckland Community Trust to allocate funds grant in the region was $10,800, three grants of to one organisation at the expense of another, $50,000 each were made to the Sir John Walker without a clear understanding of what they Leadership Programme, Vision West and should be prioritising. The Trust sees the Kidz First. You’ll find the full list of grants project as a key way to ensure they are making at www.skycity.co.nz/grants. good decisions in terms of allocating funds into In Hamilton, 102 recipients shared $568,128. the community. In fact, the Trust rated every They included Habitat for Community, application received based on this Hamilton Rowing Club, Miomo Charitable research. They examined how long the benefits Trust and the Rauawaawa Kaumatua would last, the scale of the project, the Charitable Trust. reputation of the group running that project, In Queenstown, $95,809 was shared between and what each group has been doing to assist 39 recipients. They included the Arrowtown themselves. Specifically, to ensure their decision Volunteer Fire Brigade, The Upper Clutha making was objective and robust, the Trust Women’s Support Group, Snow Sports appraised applications on how well they helped New Zealand and Wakatipu Victim Support. the communities in which we operate and whether they met the strategic desire to assist $10,800 families that are financially disadvantaged. AVERAGE GRANT
PAGE 27 SKYCITY in the COMMUNITY
CONTINUED Diversity of causes across communities
Here are just a few examples of where our grants went:
HELPING HELPING HELPING YOUNG PEOPLE THE DISABLED THE DISABLED
The Auckland War Memorial Museum Elevator Group provides specialised The YES Disability Resource Centre is received a grant for UrbanLife, an innovative recruitment consultancy to assist disabled the lead agency to deliver information, innovation outreach programme designed to take the Aucklanders to get into their career of choice. and support for people living with disabilities Museum and its collections out into the The funds provided will help Elevator, which is and their families in the Waitemata region. One community in order to connect with Auckland’s a division of Workforce Auckland, to grow their of the programmes that the Centre facilitates is youth. The programme will use the Museum’s Transitional Support Programme. This Programme Carabiner Mentoring, a unique mentoring pictorial collections for inspiration, and young provides intense and individualised help for programme to support youth with disabilities. people will work with cultural and performance disabled students in their final year of school. Funds will be used to assist with salaries. artists to address and respond to the nine issues outlined in the Macro Auckland report.
HELPING HELPING HELPING YOUNG PEOPLE CHILDREN YOUNG PEOPLE
The Choice Foundation PILLARS is a community-based organisation that Zeal Education Trust looks to advance Charitable Trust. CHOICE (Children supports the children of prisoners to break the young people in the creative arts, leadership Have Opportunities In Careers and Education) cycle of intergenerational criminality. Funds and education. The Trust has been awarded a provides children with the opportunity to will contribute to a pilot scheme that will see a grant to set up a screen-printing press that will enjoy brighter futures through the StandTall PILLARS worker working with members of the then allow the Trust to offer courses, training programme. This programme helps children medical community to better assist these children. and internships by way of helping young with great potential who would otherwise have people to gain employment. limited chances to fulfil their potential. Our funding will expand the programme into more low-decile schools.
HELPING HELPING YOUNG PEOPLE REFUGEES
John Walker Find Your Field of Dreams Refugee Services Aotearoa Foundation is based on the belief that the New Zealand is New Zealand’s leading pursuit of a more active lifestyle can create a refugee settlement agency providing social and fitter, healthier and more caring community. practical support to 750 refugees who, every The Foundation received a $50,000 grant to year, arrive here through the UNHCR programme. The money from the SKYCITY support their youth sport programmes based HELPING DIVERSE COMMUNITIES in South Auckland. Auckland Community Trust will be used to help pay for a worker to facilitate a Pathways to Employment programme. Under the Grants have been Programme, a Pathway to Employment plan HELPING will be created for each refugee and they will used to help members FAMILIES receive help with CV preparation, job searching and interview skills. of New Zealand’s DePaul House provides emergency housing European, Maori, Dutch, and social work support for families in the North Shore/Rodney area. Funding will go Indian, Korean, African, towards the organisation’s Learning Centre, which runs courses for families, and the playgroup. Pacific, Tamil, Somali, Chinese, and Tongan communities.
PAGE 28 Directory
REGISTERED OFFICE Minter Ellison AUSTRALIA Rudd Watts Computershare SKYCITY Lumley Centre Investor Services Entertainment 88 Shortland Street Pty Limited Group Limited PO Box 3798 Level 3 Level 6 Auckland 60 Carrington Street Federal House Sydney NSW 2000 86 Federal Street Bell Gully GPO Box 7045 PO Box 6443 Vero Centre Sydney NSW 2000 Wellesley Street 48 Shortland Street Auckland PO Box 4199 Telephone: New Zealand Auckland +61 2 8234 5000 Facsimile: Telephone: Finlaysons +61 2 8235 8150 +64 9 363 6000 81 Flinders Street Facsimile: GPO Box 1244 +64 9 363 6140 Adelaide BANKERS Email: [email protected] South Australia ANZ National Bank www.skycityentertainmentgroup.com Commonwealth Bank of Australia AUDITOR Registered Office in Australia Bank of New Zealand PricewaterhouseCoopers c/o Finlaysons Westpac New Zealand 81 Flinders Street 188 Quay Street Auckland GPO Box 1244 CAPITAL NOTES TRUSTEE Adelaide Private Bag 92162 South Australia Auckland The New Zealand Guardian Trust Telephone: Company Limited +61 8 8235 7400 REGISTRARS Vero Centre Facsimile: NEW ZEALAND 48 Shortland Street +61 8 8232 2944 Computershare PO Box 1934 Investor Services Auckland SOLICITORS Limited Level 2 Telephone: Russell McVeagh +64 9 377 7300 Vero Centre 159 Hurstmere Road Takapuna Facsimile: 48 Shortland Street +64 9 377 7470 PO Box 8 Private Bag 92119 Auckland Auckland Telephone: +64 9 488 8700 Facsimile: +64 9 488 8787 SKYC204 09/12 SKYC204 designedby insight .com
We would like to thank the following SKYCITY staff members for their time and use of their images within this year’s Shareholder Review: Rebekah Bird, Phil Horne, Eugene Yan, Faailoga Tuifao, Nava Fedaeff, Edwin Naidu, Ane Mahe, Clyde Pereira, Nick Snow, Alice Dwyer, Yi Jin (Aileen) Zhu, Carl Maunder, Sifa Taumoepeau, Jim Tully, Raine Liu, Brodie Stewart, Liam Mundt, Manuel Amberg, Hamish MacKenzie, Jared Holt, Brooke Campbell, Sharon Kim, Warren Bias, Stacey Conner, James Laird, Thomas Schalk, Ishan Bhatnagar, William Surya, Sarah Johns, Peter Toomalatai www.skycity.co.nz RECEIVING SHAREHOLDER COMMUNICATIONS
17 September 2012 SKYCITY Entertainment Group Limited Federal House 86 Federal Street PO Box 6443 Wellesley Street Auckland New Zealand Telephone +64 9 363 6141 Facsimile +64 9 363 6140 www.skycityentertainment.com
Dear Shareholder
As a SKYCITY Entertainment Group Limited shareholder you receive a number of communications from us. Enclosed is the 2012 Shareholder Review, which provides summary information about the company’s business activities and performance (including summary financial information) for the year ended 30 June 2012.
SKYCITY also prepares annual and half year reports that contain the company’s full financial statements, governance information and other statutory disclosures. The 2012 Annual Report for the year ended 30 June 2012 is now available on our website and the Half Year Report for the six months ending 31 December 2012 will be available on the website in March 2013. You can view and download these reports from the Investor Centre section of the company’s website at www.skycityentertainmentgroup.com.
Notwithstanding that these reports are available electronically, you have the right to receive upon request, free of charge, printed copies of the 2012 Annual Report and (when available) Half Year Report.
If you have previously elected to receive printed copies of the Annual Report and Half Year Report, you do not need to request printed copies of the 2012 Annual Report and (when available) Half Year Report. Otherwise, to receive printed copies of the 2012 Annual Report and (when available) Half Year Report, please tick the box below, fold this letter where indicated and return it by mail or fax to +64 (9) 488 8787 within 15 working days of receiving this notice. We recommend that, unless you require the extensive detail included in the financial statements, you consider not electing to receive printed copies of the 2012 Annual Report and Half Year Report.
I wish to receive a printed copy of the company’s 2012 Annual Report and (when available) Half Year Report.
Please note that your request will be treated as a request to send you printed copies of the Annual Report and Half Year Report each year until your request is revoked by notice in writing. Please also note the board of the company has not prepared a concise annual report for the year ended 30 June 2012.
SUBSTANTIAL SECURITY HOLDERS It is a requirement of the Securities Markets Act 1988 that the following information be provided in printed form. As you may decide not to receive a printed copy of the 2012 Annual Report, the required information as at 15 August 2012 is set out below:
Substantial Security Holder Number of Listed Voting Securities Accident Compensation Corporation 34,673,549 Investors Mutual Limited 28,927,533
The total number of listed voting securities of SKYCITY Entertainment Group Limited as at 15 August 2012 was 576,958,340.
PLEASE FOLD WHERE INDICATED, WITH MAILING ADDRESS FACING OUT, SEAL WITH TAPE AND POST AT ANY NEW ZEALAND POSTBOX (NO STAMP REQUIRED WITHIN NEW ZEALAND) OR FAX TO +64 9 488 8787. FOLD HERE FOLD HERE
FreePost Authority Number 2888
SHARE REGISTRAR NO POSTAGE REQUIRED IF POSTED IN NEW ZEALAND SKYCITY Entertainment Group Limited c/- Computershare Investor Services Limited Private Bag 92119 Auckland 1142
FOLD HERE FOLD HERE 17 September 2012 SKYCITY Entertainment Group Limited Federal House 86 Federal Street PO Box 6443 Wellesley Street Auckland New Zealand Telephone +64 9 363 6141 Facsimile +64 9 363 6140 www.skycityentertainment.com
Dear Shareholder
Please find enclosed the following documents:
(a) the SKYCITY 2012 Shareholder Review, which provides a summary of SKYCITY Entertainment Group Limited’s business activities during the financial year ended 30 June 2012;
(b) an election notice (titled “Receiving Shareholder Communications”) relating to the company’s 2012 Annual Report (for the financial year ended 30 June 2012) and Half Year Report (for the financial half year ending 31 December 2012); and
(c) the Notice of Annual Meeting and Attendance Card/Proxy Form for SKYCITY’s annual meeting of shareholders to be held on Friday 19 October 2012 commencing at 10.00am (New Zealand time) in the New Zealand Room, SKYCITY Auckland Convention Centre, 88-96 Federal Street, Auckland.
SKYCITY has also prepared a 2012 Annual Report that contains the company’s full financial statements, governance information and other required disclosures. The 2012 Annual Report may be viewed at, or downloaded from, the Investor Centre section of the company’s website at www.skycityentertainmentgroup.com.
We believe that the information most shareholders are looking for is contained in the 2012 Shareholder Review. Notwithstanding, if you wish to also receive printed copies of the 2012 Annual Report and, when available, Half Year Report, then you should (if applicable) complete and return the election notice to the company.
Yours faithfully
Peter Treacy Company Secretary 17 September 2012 SKYCITY Entertainment Group Limited Federal House 86 Federal Street PO Box 6443 Wellesley Street Auckland New Zealand Telephone +64 9 363 6141 Facsimile +64 9 363 6140 www.skycityentertainment.com
Dear Noteholder
As a SKYCITY Entertainment Group Limited noteholder you are entitled to receive a number of communications from us.
Accordingly, please find enclosed the SKYCITY 2012 Shareholder Review, which provides a summary of the company’s business activities during the financial year ended 30 June 2012.
SKYCITY has also prepared a 2012 Annual Report that contains the company’s full financial statements, governance information and other required disclosures. The 2012 Annual Report may be viewed at, or downloaded from, the Investor Centre section of the company’s website at www.skycityentertainmentgroup.com.
We believe the information most shareholders and noteholders are looking for is contained in the 2012 Shareholder Review. Notwithstanding, if you wish to also receive printed copies of the 2012 Annual Report and (when available for the financial half year ending 31 December 2012) Half Year Report, please tick the box below and return this letter to Computershare Investor Services Limited within 15 working days of receiving this letter: (a) by mail to Private Bag 92119, Auckland 1142; or (b) by fax to +64 (9) 488 8787.
I wish to receive a printed copy of the company’s 2012 Annual Report and (when available) Half Year Report.
Please also find enclosed the Notice of Annual Meeting for SKYCITY’s annual meeting of shareholders to be held on Friday 19 October 2012 commencing at 10.00am (New Zealand time) in the New Zealand Room, SKYCITY Auckland Convention Centre, 88-96 Federal Street, Auckland. You are welcome to attend the meeting in person, but unless you are a shareholder you will not be able to vote. Alternatively, the meeting will be broadcast from the company’s website at www.skycityentertainmentgroup.com from 10.00am (New Zealand time) on Friday 19 October 2012 so you can view the broadcast online.
Yours faithfully
Peter Treacy Company Secretary SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT YEAR ENDED 30 JUNE 2012 SKYCITY Entertainment Group Limited annual report 2012
CONTENTS
FINANCIAL STATEMENTS ANNUAL MEETING Independent Auditors’ Report 2 The 2012 annual meeting of SKYCITY Entertainment Group Limited will be held in the New Zealand Room, SKYCITY Income Statements 4 Auckland Convention Centre, 88 Federal Street, Auckland, on Statements of Comprehensive5 Friday 19 October 2012,Income commencing at 10.00am. Balance Sheets This report is dated 17 September 2012 and is signed on behalf 6 of the board of directors of SKYCITY Entertainment Group Statements of 7 Changes in Equity Limited by: Statements of Cash Flows 8 Notes to the9 Financial Statements
CORPORATE GOVERNANCE Rod McGeoch Chris Moller AND OTHER DISCLOSURES Chairman Director Corporate Governance 48 Shareholder Information 56 Director and Employee58 Remuneration Directors’ Disclosures 59 Noteholder Information 61 Company Disclosures 62 Other Information 63 Directory IBC
For further information on the business operations and performance of SKYCITY Entertainment Group during the year ended 30 June 2012, please refer to the SKYCITY Shareholder Review which has been sent to shareholders and is available in the Investor Centre section of the company’s website at www.skycityentertainmentgroup.com. SKYCITY Entertainment Group Limited annual report 2012
Financial Statements and notes FOR THE YEAR ENDED 30 JUNE 2012
pg 1 Independent auditors’ report
to the shareholders of SKYCITY Entertainment Group Limited
Report on the Financial Statements We have audited the financial statements of SKYCITY Entertainment Group Limited (“the Company”) on pages 4 to 46, which comprise the balance sheets as at 30 June 2012, the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes to the financial statements that include a summary of significant accounting policies and other explanatory information for both the Company and the Group. The Group comprises the Company and the entities it controlled at 30 June 2012 or from time to time during the financial year. Directors’ Responsibility for the Financial Statements The Directors are responsible for the preparation of these financial statements in accordance with generally accepted accounting practice in New Zealand and that give a true and fair view of the matters to which they relate and for such internal controls as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand) and International Standards on Auditing. These standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider the internal controls relevant to the Company and Group’s preparation of financial statements that give a true and fair view of the matters to which they relate, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company and the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. We have no relationship with, or interests in, SKYCITY Entertainment Group Limited or any of its subsidiaries other than in our capacities as auditors and providers of accounting, tax, other assurance and advisory services. These services have not impaired our independence as auditors of the Company and the Group.
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
pg 2 Independent auditors’ report CONTINUED
Opinion In our opinion, the financial statements on pages 4–46: (i) comply with generally accepted accounting practice in New Zealand; (ii) comply with International Financial Reporting Standards; and (iii) give a true and fair view of the financial position of the Company and the Group as at 30 June 2012, and their financial performance and cash flows for the year then ended. Report on Other Legal and Regulatory Requirements We also report in accordance with Sections 16(1)(d) and 16(1)(e) of the Financial Reporting Act 1993. In relation to our audit of the financial statements for the year ended 30 June 2012: (i) we have obtained all the information and explanations that we have required; and (ii) in our opinion, proper accounting records have been kept by the Company as far as appears from an examination of those records. Restriction on Distribution or Use This report is made solely to the Company’s shareholders, as a body, in accordance with Section 205(1) of the Companies Act 1993. Our audit work has been undertaken so that we might state to the Company’s shareholders those matters which we are required to state to them in an auditors’ 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.
Chartered Accountants Auckland 15 August 2012
pg 3 SKYCITY Entertainment Group Limited annual report 2012
Income Statements
CONSolidated Parent
2�12 2�11 2�12 2�11 For the year ended 30 June 2012 NOTES $’��� $’��� $’��� $’���
Total receipts including GST 3 960,203 902,381 – – Less non‑gaming GST 3 (26,398) (22,562) – –
Gaming win plus non‑gaming revenue3 933,805 879,819 – – Less gaming GST 3 (82,275) (76,674) – –
Revenue 3 851,530 803,145 – –
Revenue 3 851,530 803,145 – – Other income 4 1,928 1,261 110,178 100,133 Shares of net profits of 5,447associates 5,976 – – Employee benefits expense (276,642) (260,676) (22,117) (18,458) Other expenses 5 (100,354) (92,623) (3,782) (6,391) Direct consumables (62,190) (52,607) – – Gaming taxes and levies (64,039) (61,275) – – Marketing and communications (49,909) (44,886) (441) (1,197) Directors’ fees (1,034) (741) (1,034) (741) Depreciation and amortisation expense 5 (72,770) (69,710) (5,561) (5,958) Restructuring costs 5 (4,274) (3,298) (2,093) – Finance costs – net 6 (48,861) (43,772) (4,171) (3,908) Impairment of Christchurch Casino 15 – (15,000) – –
Profit before income tax 178,832 165,794 70,979 63,480
Tax expense pre 2010 Government7 (39,962)Budget (48,226) changes – –
Profit for the year before tax expense relating to 2010 Government Budget changes 138,870 70,979117,568 63,480
Tax expense relating to 2010 Government Budget changes – 5,435 – –
Profit for the year 138,870 123,003 70,979 63,480
Income tax expense (39,962) (42,791) – –
Attributable to: Profit attributable to shareholders of the company 138,534 122,960 70,979 63,480 Non controlling interest 336 24 43 – –
138,870 123,003 70,979 63,480
NOTES Cents Cents
Earnings per share for profit attributable to the shareholders of the company: Basic earnings per share 8 24.0 21.4 Diluted earnings per share 8 23.8 20.9
The above income statements should be read in conjunction with the accompanying notes.
pg 4 SKYCITY Entertainment Group Limited annual report 2012
Statements of comprehensive income
CONSolidated Parent
2�12 2�11 2�12 2�11 For the year ended 30 June 2012 NOTES $’��� $’��� $’��� $’���
Profit for the year 138,870 123,003 70,979 63,480
Other comprehensive income Exchange differences on translation of overseas subsidiaries23 (4,517) 5,397 – – Movement in cash flow hedges (1,375) (13,733) 593 23 (593) Income tax relating to components of 360 other4,133 comprehensive(166) 166 income 23
Other comprehensive income for the year (5,532) (4,203) 427 (427)
Total comprehensive income for the year, net of tax 133,338 118,800 71,406 63,053
Total comprehensive income for the year is attributable to: Shareholders of the company 133,002 118,757 Non controlling interest 336 24 43
133,338 118,800
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
pg 5 SKYCITY Entertainment Group Limited annual report 2012
balance sheetS
CONSolidated Parent
2�12 2�11 2�12 2�11 As at 30 June 2012 NOTES $’��� $’��� $’��� $’���
ASSETS
Current assets Cash and bank balances 9 41,400 104,577 1 1 Receivables and prepayments 26,974 1030,900 153,629 87,376 Inventories 6,876 6,970 – – Tax prepayment 11 35,503 36,637 – – Derivative financial instruments 480 12 272 – –
Total current assets 111,233 179,356 153,630 87,377
Non‑current assets Tax prepayment 11 31,550 27,789 – – Property, plant and equipment 1,064,418 991,331 13 7,532 7,054 Investment in subsidiaries – 30 – 618,775 618,775 Intangible assets 14 410,645 410,412 10,031 10,696 Investments in associates 75,266 1573,782 – – Derivative financial instruments 23,154 12 – – –
Total non‑current assets 1,605,033 1,503,314 636,338 636,525
Total assets 1,716,266 1,682,670 789,968 723,902
LIABILITIES
Current liabilities Payables 16 107,186 110,851 344,768 250,997 Interest bearing liabilities – 247,26717 – – Current tax liabilities 11 7,972 5,349 – – Derivative financial instruments 664 1210,102 – 113
Total current liabilities 115,822 373,569 344,768 251,110
Non‑current liabilities Interest bearing liabilities 18 604,902 – 350,202 – Subordinated debt ‑ capital notes 56,414 56,400 56,414 19 56,400 Deferred tax liabilities 20 84,571 94,290 – – Derivative financial instruments 45,415 1233,393 – –
Total non‑current liabilities 791,302 534,285 56,414 56,400
Total liabilities 907,124 907,854 401,182 307,510
Net assets 809,142 774,816 388,786 416,392
EQUITY
Share capital 22 727,598 728,616 727,598 728,616 Reserves 23(a) (1,850) 3,682 – (427) Retained profits/(losses) 23(b) 81,690 41,150 (338,812) (311,797)
Parent entity interest 807,438 773,448 388,786 416,392
Non controlling interest 1,704 241,368 – –
Total equity 809,142 774,816 388,786 416,392
The above balance sheets should be read in conjunction with the accompanying notes.
pg 6 SKYCITY Entertainment Group Limited annual report 2012
Statements of changes in equity
Foreign currency Share Hedging translation Retained Minority Total capital reserves reserve profits interest equity For the year ended 30 June 2012 Notes $’��� $’��� $’��� $’��� $’��� $’���
Consolidated
Balance as at 1 July 2010 732,910 (2,740) 10,625 17,397 1,325 759,517
Total comprehensive income/(expense) – (9,600) 5,397 122,960 43 118,800 Dividends 25 – – – (99,207) – (99,207) Shares issued under dividend22 6,101 reinvestment– –plan – – 6,101 Share rights issued for 22 employee1,047 – services – – – 1,047 Net purchase of treasury22 (11,442)shares – – – – (11,442)
Balance as at 30 June 2011 728,616 (12,340) 16,022 41,150 1,368 774,816
Balance as at 1 July 2011 728,616 (12,340) 16,022 41,150 1,368 774,816
Total comprehensive income/(expense) – (1,015) (4,517) 138,534 336 133,338 Dividends 25 – – – (97,994) – (97,994) Shares issued under dividend22 4,736 reinvestment– –plan – – 4,736 Share rights issued for 22 employee1,426 – services – – – 1,426 Net purchase of treasury22 (7,180)shares – – – – (7,180)
Balance as at 30 June 2012 727,598 (13,355) 11,505 81,690 1,704 809,142
Share Hedging Retained Total capital reserves losses equity For the year ended 30 June 2012 Notes $’��� $’��� $’��� $’���
Parent
Balance as at 1 July 2010 732,910 – (276,070) 456,840
Total comprehensive income/(expense) – (427) 63,480 63,053 Shares issued under dividend22 6,101 reinvestment– plan – 6,101 Dividends 25 – – (99,207) (99,207) Share rights issued for 22 employee1,047 – services – 1,047 Net purchase of treasury shares 22 (11,442) – – (11,442)
Balance as at 30 June 2011 728,616 (427) (311,797) 416,392
Balance as at 1 July 2011 728,616 (427) (311,797) 416,392
Total comprehensive income/(expense) – 427 70,979 71,406 Shares issued under dividend22 4,736 reinvestment– plan – 4,736 Dividends 25 – – (97,994) (97,994) Share rights issued for 22 employee1,426 – services – 1,426 Net purchase of treasury shares 22 (7,180) – – (7,180)
Balance as at 30 June 2012 727,598 ‑ (338,812) 388,786
The above statements of changes in equity should be read in conjunction with the accompanying notes.
pg 7 SKYCITY Entertainment Group Limited annual report 2012
statements of cash flows
CONSolidated Parent 2�12 2�11 2�12 2�11 for the year ended 30 june 2012 NOTES $’��� $’��� $’��� $’���
Cash flows from operating activities Receipts from customers 854,348 795,231 – – Payments to suppliers and employees (490,574) (469,413) (25,785) (26,204)
363,774 325,818 (25,785) (26,204)
Dividends received 3,968 747 – – Interest received 167 192 – – Gaming tax paid (56,841) (54,896) – – Income taxes paid (49,325) (62,496) – –
Net cash inflow / (outflow) from operating activities 33 261,743 209,365 (25,785) (26,204)
Cash flows from investing activities Purchase of/proceeds from property, plant and equipment(153,689) (74,822) – – Payments for intangible assets (11,008) (1,893) – – Loan repayment from Christchurch Hotels1,110 194Limited – – Dividend from subsidiaries – – 110,178 100,133
Net cash (outflow) / inflow from investing activities (163,587) (76,521) 110,178 100,133
Cash flows from financing activities Cash flows associated with derivatives12 11,283 (20,884) – – Repayment of borrowings (264,450) (362,359) – – New borrowings 241,314 401,799 – 9,408 Advances from subsidiaries – 29 – 19,700 25,547 Net purchase of treasury shares (7,180) (11,442) (7,180) 22 (11,442) Dividends paid to company shareholders (93,258) (93,106) (93,258) (93,106) Interest paid (49,042) (44,781) (3,655) (4,336)
Net cash (outflows) from financing activities (161,333) (130,773) (84,393) (73,929)
Net (decrease) / increase in cash and bank balances (63,177) 2,071 – – Cash and bank balances at the104,577 beginning102,506 of 1 the 1 year
Cash and cash equivalents at end of year 9 41,400 104,577 1 1
The above statements of cash flows should be read in conjunction with the accompanying notes.
pg 8 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements
1 GENERAL INFORMATION
SKYCITY Entertainment Group Limited (SKYCITY or the SKYCITY is a limited liability company incorporated and company and its subsidiaries or the Group) operates in the domiciled in New Zealand. The address of its registered office is gaming/entertainment, hotel and convention, hospitality, Federal House, 86 Federal Street, Auckland. The company is recreation, and tourism sectors. The Group has operations in dual‑listed on the New Zealand and Australian stock exchanges. New Zealand and Australia. These financial statements have been approved for issue by the board of directors on 15 August 2012.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These general purpose financial statements for the year ended These financial statements have been prepared in accordance 30 June 2012 have been prepared in accordance with with the requirements of the Financial Reporting Act 1993 New Zealand generally accepted accounting practice (NZ (New Zealand) and the Companies Act 1993 (New Zealand). GAAP). They comply with New Zealand equivalents to Measurement Basis International Financial Reporting Standards (NZ IFRS) and other These financial statements have been prepared under the applicable New Zealand Financial Reporting Standards. historical cost convention, as modified by the revaluation financial (a) Basis of Preparation assets and liabilities (including derivative instruments) at fair The principal accounting policies adopted in the preparation of value through profit or loss. this financial report are set out below. These policies have been Critical Accounting Estimates and Judgements consistently applied to all the periods presented, unless The preparation of financial statements requires the use of otherwise stated. certain critical accounting estimates. It also requires the company Compliance with IFRS to exercise its judgement in the process of applying the Group’s The separate and consolidated financial statements of accounting policies. Estimates are used in the following areas: SKYCITY also comply with International Financial Reporting impairment testing of goodwill, indefinite life casino licences and Standards (IFRS). assessing the probability of utilisation of unused tax losses. Entities Reporting The Group tests annually whether goodwill and indefinite The consolidated financial statements incorporate the assets licences have suffered any impairment, in accordance with the and liabilities of all subsidiaries of the Group as at 30 June 2012 accounting policy stated in note 2(i). The recoverable amounts of and the results of all subsidiaries and associates for the year cash‑generating units have been determined based on value in then ended. use calculations. These calculations require the use of estimates (refer note 14). The financial statements of the ‘Parent’ are for the company as a separate legal entity. There is significant headroom between the value in use calculations and the carrying value of the remaining assets such The Parent company and the Group are designated as that reasonably possible changes in the assumptions used would profit‑oriented entities for financial reporting purposes. not result in an impairment. The Parent company has a negative net working capital balance. Deferred tax assets are recognised for deductible temporary The Parent’s subsidiaries will continue to support it as required. differences and unused tax losses only if it is probable that future The Group has a small negative working capital balance. The taxable amounts will be available to utilise those temporary Group has significant available undrawn banking facilities totalling differences and losses (refer note 20). Certain judgements are $340 million as at 30 June 2012 (refer to note 18) and has the made in calculating these temporary differences. ability to fully pay all debts as they fall due. (b) Principles of Consolidation Statutory Base (i) Subsidiaries SKYCITY is a company registered under the New Zealand Subsidiaries are all those entities (including special purpose entities) Companies Act 1993 and is an issuer in terms of the Securities over which the company has the power to govern the financial Act 1978 (New Zealand). and operating policies to obtain benefits generally accompanying a shareholding of more than one half of the voting rights.
pg 9 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
Subsidiaries are fully consolidated from the date on which after initially being recognised at cost. The Group’s investment in control is transferred to the Group and are not consolidated associates includes goodwill (net of any accumulated impairment from the date that control ceases. loss) identified on acquisition. The Group financial statements consolidate the financial The Group’s share of its associates’ post acquisition profits or statements of subsidiaries, using the acquisition method. losses is recognised in the Income Statement and its share of post acquisition movements in reserves is recognised in reserves. The acquisition method of accounting is used to account for The cumulative post acquisition movements are adjusted against the acquisition of subsidiaries and businesses by the Group. the carrying amount of the investment. The consideration transferred in a business is measured at fair When the Group’s share of losses in an associate equals or value, which is calculated as the sum of the acquisition‑date fair exceeds its interest in the associate, including any other value of the assets transferred by the acquirer, the liabilities unsecured receivables, the Group does not recognise further incurred by the acquirer to former owners of the acquiree and losses unless it has incurred obligations or made payments on the equity interest issued by the acquirer. It includes any asset behalf of the associate. or liability arising from a contingent consideration arrangement. Acquisition related costs are expensed as incurred. Each Unrealised gains on transactions between the Group and its identifiable asset and liability is generally measured at its associates are eliminated to the extent of the Group’s interest acquisition‑date fair value except if an NZ IFRS requires another in the associates. Unrealised losses are also eliminated unless measurement basis. The excess of the consideration transferred the transaction provides evidence of an impairment of the asset over the Group’s share of the net of the acquisition‑date amounts transferred. Accounting policies of associates have been changed of the identifiable assets acquired and the liabilities assumed is where necessary to ensure consistency with the policies adopted recognised as goodwill. If the consideration transferred is less by the Group. than the acquisition‑date fair value of identifiable assets (c) Segment Reporting acquired and liabilities assumed, a gain is recognised directly in profit or loss. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operation decision Inter‑company transactions, balances and unrealised gains on maker. The chief operating decision maker has been identified transactions between Group companies are eliminated. as the Chief Executive Officer/Managing Director. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. (d) Foreign Currency Translation Accounting policies of subsidiaries have been changed where (i) Functional and resentationP Currency necessary to ensure consistency with the policies adopted by Items included in the financial statements of each of the the company. company’s operations are measured using the currency of the primary economic environment in which the entity operates Non controlling interests in the results and equity of subsidiaries (‘functional currency’). The consolidated and parent financial are shown separately in the consolidated Income Statement and statements are presented in New Zealand dollars, which is the Balance Sheet respectively. company’s functional and the Group’s presentation currency. Subsidiaries are accounted for at cost less any impairment (ii) Transactions and Balances within the parent entity financial statements. Foreign currency transactions are translated into the functional (ii) Transactions with non‑controlling interests currency using the exchange rates prevailing at the dates of the The Group treats transactions with non‑controlling interests transactions. Foreign exchange gains and losses resulting from as transactions with equity owners of the Group. For purchases the settlement of such transactions and from the translation at from non‑controlling interests, the differences between year end exchange rates of monetary assets and liabilities consideration paid and the relevant share acquired of the denominated in foreign currencies are recognised in the Income carrying value of net assets of the subsidiary is recorded in Statement, except when deferred in equity as qualifying cash equity. Gains or losses on disposals to non‑controlling flow hedges and qualifying net investment hedges. interests are also recorded in equity. Translation differences on non‑monetary items, such as (iii) Associates equities held at fair value through profit or loss, are reported Associates are all entities over which the Group has significant as part of the fair value gain or loss. Translation differences influence but not control, generally evidenced by holdings of on non‑monetary items, such as equities classified as available between 20% and 50% of the voting rights. Investments in for sale financial assets, are included in the fair value reserve associates are accounted for in the parent entity’s financial in equity. statements using the cost method and in the consolidated financial statements using the equity method of accounting,
pg 10 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
(iii) Foreign Operations Deferred tax assets and liabilities are recognised for temporary The results and financial position of foreign entities (none of differences at the tax rates expected to apply when the assets which has the currency of a hyperinflationary economy) that have are recovered or liabilities are settled, based on those tax rates a functional currency different from the presentation currency which are enacted or substantively enacted for each jurisdiction. are translated into the presentation currency below: The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the • assetsand liabilities for each Balance Sheet presented deferred tax asset or liability. An exception is made for certain are translated at the closing rate at the date of that temporary differences arising from the initial recognition of an balance sheet; asset or a liability. No deferred tax asset or liability is recognised • incomeand expenses for each Income Statement are in relation to these temporary differences if they arose in a translated at average exchange rates; and transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or • allresulting exchange differences are recognised taxable profit or loss. as a separate component of equity. Deferred tax assets are recognised for deductible temporary Exchange differences arising from the translation of any net differences and unused tax losses only if it is probable that future investment in foreign entities, and of borrowings and other taxable amounts will be available to utilise those temporary currency instruments designated as hedges of such investments, differences and losses. are taken to shareholders’ equity. Deferred tax liabilities and assets are not recognised for Goodwill and fair value adjustments arising on the acquisition temporary differences between the carrying amount and tax of a foreign operation are treated as assets and liabilities of the bases of investments in foreign operations where the company foreign operation and translated at the closing rate. is able to control the timing of the reversal of the temporary (e) Revenue Recognition differences and it is probable that the differences will not reverse Revenue is recognised as summarised below. in the foreseeable future. (i) Operating evenueR Current and deferred tax balances attributable to amounts Operating revenues include casino, hotel, food and beverage, recognised directly in equity are also recognised directly in convention centre, tower admissions and other revenues. Gaming equity. revenues represent the net gaming win to the casino from gaming (g) Goods and Services Tax (GST) activities, being the difference between amounts wagered and The Income Statement, Cash Flow Statement and Statement amounts won by casino patrons. of Changes in Equity have been prepared so that all components Revenues exclude the retail value of rooms, food, beverage and are stated exclusive of GST. All items in the Balance Sheet are other promotional allowances provided on a complimentary basis stated net of GST, with the exception of receivables and to customers. payables, which include GST invoiced. (ii) Interest Income (h) Leases Interest income is recognised on a time proportion basis using (i) The Group is esseethe L the effective interest method. Leases in which a significant portion of the risks and rewards of (iii) Dividend Income ownership are retained by the lessor are classified as operating Dividend income is recognised when the right to receive payment leases. Payments made under operating leases (net of any is established. incentives received from the lessor) are charged to the Income Statement on a straight‑line basis over the period of the lease. (iv) Loyalty Programme A portion of revenue is allocated to the loyalty points scheme (ii) The Group is theessor L and is recognised when customers redeem their loyalty points. Assets leased to third parties under operating leases are included in property, plant and equipment in the Balance Sheet. (f) Income Tax They are depreciated over their expected useful lives on a basis The income tax expense for the period is the tax payable on consistent with similar owned property, plant and equipment. the current period’s taxable income, based on the income tax Rental income (net of any incentives given to lessees) is rate for each jurisdiction. This is then adjusted by changes recognised on a straight‑line basis over the lease term. in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and (i) Impairment of Non‑Current Assets their carrying amounts in the financial statements and changes Goodwill and Intangible Assets that have an indefinite useful in unused tax losses. life are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or
pg 11 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
amortisation (property, plant and equipment and intangibles that through profit or loss on initial recognition. A financial asset is have a finite useful life) are reviewed for impairment whenever classified as held for trading if acquired principally for the events or changes in circumstances indicate that the carrying purpose of selling in the short term. Derivatives are also classified amount exceeds its recoverable amount. An impairment loss is as held for trading unless they are designated as hedges. The recognised for the amount by which the asset’s carrying amount Group does not hold any assets that are designated as at fair exceeds its recoverable amount. The recoverable amount is the value on initial recognition. Financial assets at fair value through higher of an asset’s fair value less costs to sell and value in use. profit or loss are classified as current assets if they are either held For the purposes of assessing impairment, assets are grouped at for trading or are expected to be realised within 12 months of the the lowest levels for which there are separately identifiable cash balance sheet date. flows (cash generating units). (ii) Loans and eceivablesR (j) Cash and Bank Balances Loans and receivables are non‑derivative financial assets with Cash and bank balances include cash on hand, deposits held at fixed or determinable payments that are not quoted in an active call with financial institutions, other short‑term, highly liquid market. They arise when the Group provides money, goods or investments with original maturities of three months or less that services directly to a debtor with no intention of selling the are readily convertible to known amounts of cash and which are receivable. They are included in current assets, except for those subject to an insignificant risk of changes in value, and bank with maturities greater than 12 months after the balance sheet overdrafts. Bank overdrafts are shown within borrowings in date which are classified as non‑current assets. Loans and current liabilities on the Balance Sheet. receivables are included in receivables in the Balance Sheet. (k) Trade Receivables (n) Derivatives Trade receivables are recognised initially at fair value and Derivatives are initially recognised at fair value on the date a subsequently measured at amortised cost, less provision for derivative contract is entered into and are subsequently doubtful debts. remeasured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is Collectibility of trade receivables is reviewed on an ongoing designated as a hedging instrument and, if so, the nature of the basis. Debts which are known to be uncollectible are written off. item being hedged. The Group designates certain derivatives as A provision for doubtful debts is established when there is either hedges of the fair value of recognised assets or liabilities or objective evidence that the Group will not be able to collect all a firm commitment (fair value hedges) or hedges of exposures to amounts due according to the original terms of those receivables. variability in cash flows associated with recognised assets or (l) Inventories liabilities or highly probable forecast transactions (cash flow hedges). Inventories, all of which are finished goods, are stated at the lower of cost and net realisable value determined on a first in, At the inception of the transaction, SKYCITY documents the first out basis. relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for (m) Investments and Other Financial Assets undertaking various hedge transactions. The Group also The Group classifies its investments in the following categories: documents its assessment, both at hedge inception and on an financial assets at fair value through profit or loss and loans and ongoing basis, of whether the derivatives that are used in hedging receivables. The classification depends on the purpose for which transactions have been and will continue to be highly effective in the investments were acquired. The company determines the offsetting changes in fair values or cash flows of hedged items. classification of its investments at initial recognition and re‑evaluates this designation at each reporting date. (i) Fair alueV edgeH Changes in the fair value of derivatives that are designated and Investments are initially recognised at fair value plus transactions qualify as fair value hedges are recognised in the Income costs for all financial assets not carried at fair value through profit Statement together with any changes in the fair value of the or loss. Financial assets carried at fair value through profit or loss hedged asset or liability that are attributable to the hedged risk. are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are (ii) Cash Flow edgeH derecognised when the rights to receive cash flows from the The effective portion of changes in the fair value of derivatives investments have expired or have been transferred and the that are designated and qualify as cash flow hedges is recognised Group has transferred substantially all risks and rewards of in equity in the hedging reserve. The gain or loss relating to the ownership. ineffective portion is recognised immediately in the Income Statement. (i) Financial ssetsA at Fairalue V hroughT rofitP oross L This category has two sub‑categories: financial assets classified as Amounts accumulated in equity are recycled in the Income held for trading and financial assets designated as at fair value Statement in the periods when the hedged item will affect profit
pg 12 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
or loss (for instance when the forecast sale that is hedged takes (p) Intangible Assets place). However, when the forecast transaction that is hedged (i) Goodwill results in the recognition of a non‑financial asset (for example, Goodwill represents the excess of the cost of an acquisition over inventory) or a non‑financial liability, the gains and losses the fair value of the Group’s share of the net identifiable assets of previously deferred in equity are transferred from equity and the acquired business/associate at the date of acquisition. included in the measurement of the initial cost or carrying Goodwill on acquisitions of businesses is included in intangible amount of the asset or liability. assets. Goodwill on acquisitions of associates is included in When a hedging instrument expires or is sold or terminated, or investments in associates. Goodwill is tested for impairment when a hedge no longer meets the criteria for hedge accounting, annually or more frequently if events or changes in circumstances any cumulative gain or loss existing in equity at that time remains indicate that it might be impaired, and is carried at cost less in equity and is recognised in the Income Statement when the accumulated impairment losses. Gains and losses on the disposal forecast transaction is ultimately recognised in the Income of an entity include the carrying amount of goodwill relating to Statement. When a forecast transaction is no longer expected to the entity sold. occur, the cumulative gain or loss that was reported in equity is Goodwill is allocated to cash generating units for the purpose of transferred to the Income Statement. impairment testing. (iii) Derivatives that do not qualify foredge H Accounting (ii) Casino Licences Changes in the fair value of any derivative instrument that does The casino licences that have a finite useful life are carried at cost not qualify for hedge accounting are recognised in the Income less accumulated amortisation. Amortisation of these casino Statement. licences is calculated on a straight line basis so as to expense the (o) Property, Plant and Equipment cost of the licences over their legal life. Property, plant and equipment is stated at historical cost less The casino licences that have been determined to have an depreciation. Historical cost includes expenditure that is directly indefinite useful life are not amortised but rather are tested for attributable to the acquisition of the items. Cost may also include impairment annually or more frequently if events or changes in transfers from equity of any gains/losses on qualifying cash flow circumstances indicate that they might be impaired, and are hedges of foreign currency purchases of property, plant and carried at cost less accumulated impairment losses. equipment. (iii) Acquired Software Subsequent costs are included in the asset’s carrying amount or Acquired computer software licences are capitalised on the basis recognised as a separate asset, as appropriate, only when it is of the costs incurred to acquire and bring to use the specific probable that future economic benefits associated with the item software. These costs are amortised over their estimated useful will flow to the Group and the cost of the item can be measured lives (three to seven years). reliably. All other repairs and maintenance are charged to the (q) Payables Income Statement during the financial period in which they are incurred. Payables are stated at fair value or estimated liability where accrued. Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost, (r) Borrowings net of their residual values, over their estimated useful lives, as Borrowings, including capital notes and the Group’s Adjustable below: Coupon Exchangeable Securities (SKYCITY ACES ‑ now redeemed), are initially recognised at fair value, net of transaction • Buildings and fit‑out 5–75 years costs incurred. Borrowings are subsequently measured at • Plant and equipment 2–75 years amortised cost unless part of an effective hedging relationship. • Motor vehicles 3 years Any difference between the proceeds (net of transaction costs) • Fixtures and fittings 3–20 years and the redemption amount is recognised in the Income Statement over the period of the borrowings using the effective Assets’ residual values and useful lives are reviewed, and interest method. adjusted if appropriate, at each balance sheet date. Borrowings are classified as current liabilities unless the Group An asset’s carrying amount is written down immediately to its has an unconditional right to defer settlement of the liability for recoverable amount if the asset’s carrying amount is greater than at least 12 months after the balance sheet date. its estimated recoverable amount (note 2(i)). (s) Borrowing Costs Gains and losses on disposals are determined by comparing Borrowing costs are expensed, except for costs incurred for the proceeds with carrying amount. construction of any qualifying asset which are capitalised during
pg 13 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
the period of time that is required to complete and prepare the shares and the weighted average number of shares assumed asset for its intended use or sale. to have been issued for no consideration in relation to dilutive potential ordinary shares. (t) Employee Benefits (i) Wages, Salaries and Annualeave L (x) Statement of Cash Flows Liabilities for wages and salaries, including non‑monetary benefits Cash flows associated with derivatives that are part of a hedging and annual leave expected to be settled within 12 months of the relationship are off‑set against cash flows associated with the reporting date, are recognised in other payables in respect of hedged item. employees’ services up to the reporting date and are measured (y) Standards, amendments and interpretations to existing at the amounts expected to be paid when the liabilities are standards that are not yet effective settled. Certain new standards, amendments and interpretations to (ii) Share‑Based Payments existing standards have been published that are mandatory for SKYCITY operates an equity settled, share‑based compensation the Group’s accounting periods beginning on or after 1 July 2012 plan. The fair value of the employee services received in or later periods, but which the Group has not early adopted. The exchange for the grant of the share rights or shares is recognised significant items are: as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the share • NZ IFRS 9, Financial Instruments (effective from annual rights or shares granted, excluding the impact of any non‑market periods beginning on or after 1 January 2015). This standard vesting conditions (for example, profitability and sales growth replaces the parts of IAS 39 Financial Instruments: targets). Non‑market vesting conditions are included in Recognition and Measurement that relates to the assumptions about the number of share rights or shares that are classification and measurement of financial instruments. expected to be distributed. At each balance sheet date, the All financial assets are required to be classified into two entity revises its estimates of the number of shares expected to measurement categories: at fair value and at amortised cost. be distributed. It recognises the impact of the revision of original The determination is based on the entity’s business model estimates, if any, in the Income Statement, and a corresponding for managing the financial assets and the contractual cash adjustment to equity over the remaining vesting period. flow characteristics of the financial asset. (u) Share Capital For financial liabilities, the standard retains most of the IAS Ordinary shares are classified as equity. 39 requirements. An additional presentational requirement has been added for liabilities designated at fair value through Incremental costs directly attributable to the issue of new shares profit and loss. Where the fair value option is taken, the part are shown in equity as a deduction, net of tax, from the proceeds. of a fair value change due to an entity’s own credit risk is Where any Group company purchases the company’s equity recorded in other comprehensive income. share capital, the consideration paid, including any directly This standard is not expected to significantly impact attributable incremental costs (net of income taxes), is deducted the Group. from equity attributable to the company’s equity holders. • NZ IFRS 13, Fair value measurement (effective from annual (v) Dividends periods beginning on or after 1 January 2013). NZ IFRS 13 Provision is made for the amount of any dividend declared on replaces the fair value measurement guidance contained in or before the end of the financial year but not distributed at individual NZ IFRSs with a single source of fair value balance date. measurement guidance. It defines fair value, establishes a (w) Earnings Per Share framework for measuring fair value and sets out disclosure requirements for fair value measurements. It explains how to (i) Basic Earnings erP Share measure fair value when it is required or permitted by other Basic earnings per share is calculated by dividing the profit NZ IFRSs. It does not introduce new requirements to attributable to equity holders of the company by the weighted measure assets or liabilities at fair value, nor does it eliminate average number of ordinary shares outstanding during the the practicability exceptions to fair value measurements that financial year, adjusted for bonus elements in ordinary shares currently exist in certain standards. This standard is not issued during the year. expected to significantly impact the Group. (ii) Diluted Earnings erP Share (z) New Accounting Standards Adopted in theear Y Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into There have been no significant changes in accounting policies account the after income tax effect of interest and other during the current year. Accounting policies have been applied financing costs associated with dilutive potential ordinary on a basis consistent with prior year.
pg 14 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
3 REVENUE
CONSolidated Parent
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
Total receipts including GST 960,203 902,381 – – Less non‑gaming GST (26,398) (22,562) – –
Gaming win plus non‑gaming revenue 933,805 879,819 – – Less gaming GST (82,275) (76,674) – –
Total revenue 851,530 803,145 – –
Gaming 658,713 628,051 – – Non‑gaming 192,817 175,094 – –
Total revenue 851,530 803,145 – –
Non‑gaming revenue includes revenues from hotels, food and beverage, convention centre, car parking, property rentals, Sky Tower, and other non‑gaming activities. Included within consolidated gaming revenue is revenue relating to loyalty action points of $11,621,000 (30 June 2011: $10,486,000). Included within consolidated non‑gaming revenue is revenue relating to loyalty action points of $266,000 (30 June 2011: $306,000). Gaming win represents the gross cash inflows associated with gaming activities. “Total receipts including GST” and “Gaming win plus non‑gaming revenue” do not represent revenue as defined by NZ IAS 18 Revenue. The Group has decided to disclose these amounts as they give shareholders and interested parties a better appreciation for the scope of the Group’s gaming activities and is consistent with industry practice adopted by casino operations in Australia.
4 OTHER INCOME
CONSolidated Parent
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
Net gain on disposal of property, 1,756plant 1,065and equipment– – Interest income ‑ Christchurch Hotels Limited 167 192 – – Dividend income 5 4 – – Dividends from wholly‑owned entities – – 110,178 100,133
1,928 1,261 110,178 100,133
pg 15 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
5 EXPENSES
CONSolidated Parent
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
Profit before income tax includes the following specific expenses: Depreciation Buildings 24,777 24,198 – – Plant and equipment 34,215 31,402 2,593 2,125 Fixtures and fittings 7,366 6,834 – – Motor vehicles 400 404 – –
Total depreciation 66,758 62,838 2,593 2,125
Amortisation Casino licences (Adelaide) 2,682 2,736 – – Computer software 3,330 4,136 2,968 3,833
Total amortisation 6,012 6,872 2,968 3,833
Total depreciation and amortisation 72,770 69,710 5,561 5,958
Other expenses includes: Utilities, insurance and rates 21,683 19,616 99 106 Community Trust donations 3,143 3,185 – – Minimum lease payments relating to operating leases 4,535 4,408 – – Other property expenses 16,045 15,302 – – Other items (including International commissions) 54,905 50,031 3,683 6,285 Provision for bad and doubtful debts 43 81 – –
100,354 92,623 3,782 6,391
Restructuring costs Redundancy and other staff payments 2,581 2,471 2,093 – Other restructuring costs 1,693 827 – –
4,274 3,298 2,093 –
Auditors’ fees During the year the following fees were paid or are payable for services provided by the auditor of the parent entity, its related practices and non‑related audit firms. (a) Assurance services Audit services PricewaterhouseCoopers Audit of Group financial statements 418 400 418 400 Audit of subsidiary financial statements 92 94 – – Half year review 84 80 84 80
Total remuneration for audit services 594 574 502 480
Other assurance services provided by PricewaterhouseCoopers Accounting advice and assistance 85 75 85 75 Systems assurance 75 – – – Tax compliance services 91 73 40 45
Total remuneration for other assurance services 251 148 125 120
Total remuneration for assurance services 845 722 627 600
pg 16 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
CONSolidated Parent
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
(b) Other services PricewaterhouseCoopers Taxation and other advisory services 266 318 169 168
Total remuneration for taxation services 266 318 169 168
Total fees paid or payable to 1,111 auditors 1,040 796 768
The Group employs PricewaterhouseCoopers on assignments additional to their statutory audit duties where PricewaterhouseCoopers’ expertise and experience with the Group are important and auditor independence is not impaired. These assignments are principally tax advice. For other work, the company’s External Audit Independence Policy requires that advisers other than PricewaterhouseCoopers are engaged, unless otherwise approved by the Board’s Audit and Risk Committee.
6 FINANCE COSTS – NET
CONSolidated Parent
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
Finance costs Interest and finance charges 53,167 50,280 4,171 3,908 Exchange gains (582) (2,105) – – Interest income (3,724) (2,783) – – Gain on funding reorganisation (note 18) – (1,620) – –
Total finance costs 48,861 43,772 4,171 3,908
7 INCOME TAX EXPENSE
CONSolidated Parent
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
(a) Income Tax Expense Current tax 49,176 39,570 – – Deferred tax (9,214) 3,221 – –
39,962 42,791 – –
Deferred tax (note 20) Origination and reversal of temporary(9,214) 8,656differences – – Change in New Zealand corporate tax– (5,435)rate –and –building depreciation
Total deferred tax (9,214) 3,221 – –
pg 17 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
7 INCOME TAX EXPENSE (continued)
CONSolidated Parent
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
(b) Numerical Reconciliation of Income Tax Expense to Prima Facie Tax Payable Profit from continuing operations before income tax expense 178,832 165,794 70,979 63,480
Tax at the New Zealand tax 50,073rate 49,738of 19,87428% 19,044(2011: 30%) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Inter‑company eliminations – – 10,830 10,909 Net non‑deductible items 1,491 1,427 146 87 Share of net profit of associates (1,525) (1,793) – – Impairment of Christchurch Casino – 4,500 – – Foreign exchange rate differences 1,336 1,591 – – Exempt dividends received – – (30,850) (30,040) Share of partnership expenditure (7,071) (7,180) – – Tax losses not previously recognised (284) (27) – – Differences in overseas tax rates 773 – – – Over provision in prior years (4,831) (30) – –
Tax expense pre Government Budget changes 39,962 48,226 – – Change in New Zealand tax building depreciation – (5,522) – – Change in New Zealand corporate tax rate – 87 – –
Tax expense relating to Government Budget– (5,435)changes – –
Income tax expense 39,962 42,791 – –
The weighted average applicable tax rate was 22.3% (2011: 25.8%) (excluding the impact of building tax depreciation changes and Christchurch Casinos impairment 22.3% (2011: 26.7%)). The New Zealand corporate tax rate reduced from 30% to 28% and tax depreciation for buildings with an estimated life of 50 or more years was disallowed. Both of these changes were effective for the Group from 1 July 2011. The initial impact of these changes ($39,700,000) was included within the 2010 results. A $5,435,000 partial reversal in 2011 relates to adjustments to the 2010 estimated impact.
pg 18 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
8 EARNINGS PER SHARE
CONSolidated
2�12 2�11 Cents cents
Basic earnings per share Profit for the year before tax expense relating to Government Budget changes and Christchurch Casino impairment 24.0 23.0 Profit attributable to the ordinary equity 24.0 holders21.4 of the company Diluted earnings per share
Profit attributable to the ordinary equity 23.8 holders20.9 of the company
(a) Reconciliations of Earnings used in calculating Earnings Per Share
CONSolidated
2�12 2�11 $’��� $’���
Basic earnings per share Profit from continuing operations 138,870 123,003 Profit attributable to minority interests (336) (43)
Profit attributable to the ordinary equity holders of the company used 138,534in calculating122,960 basic earnings per share
Diluted earnings per share Profit attributable to the ordinary equity holders of the company used 138,534in calculating122,960 basic earnings per share Interest savings on capital notes 4,160 3,837 Interest savings on SKYCITY ACES – 4,476 Tax on the above (1,165) (2,494)
Profit attributable to the ordinary equity holders of the company used in calculating 141,529diluted earnings128,779 per share
(b) Weighted Average number of shares used as the denominator
CONSolidated
2�12 2�11 NUMBER NUMBER
Weighted average number of ordinary shares used as the denominator 576,958,340in calculating 575,574,000 basic earnings per share Adjustments for calculation of diluted earnings per share: SKYCITY ACES – 25,622,391 Capital notes 16,592,208 14,501,611
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share593,550,548 615,698,002
(c) Information concerning the classification of Securities
(i) SKYCITY CAES The SKYCITY ACES were considered to be potential ordinary shares in 2011 and were therefore included in the determination of diluted earnings per share.
(ii) Capital Notes Capital notes are considered to be potential ordinary shares and are therefore included in the determination of diluted earnings per share from their date of issue. The capital notes have not been included in the determination of basic earnings per share. Details relating to the capital notes are set out in note 19.
pg 19 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
9 CASH ANDANK B ALANCESB
CONSolidated Parent
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
Cash at bank 2,538 55,690 1 1 Cash in house 38,862 48,887 – –
41,400 104,577 1 1
10 RECEIVABLES AND PREPAYMENTS
CONSolidated Parent
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
Trade receivables 13,551 9,285 – – Advance to Christchurch Hotels Limited5,125 6,235(note –29) – Sundry receivables 4,864 11,244 227 112 Prepayments 3,434 4,136 1,193 2,041 Amounts due from subsidiaries (note 30) – – 152,209 85,223
26,974 30,900 153,629 87,376
There are no significant receivables past due date or impaired.
11 NET TAX RECEIVABLES
CONSolidated Parent
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
Tax prepayment – current 35,503 36,637 – – Tax prepayment– non current 31,550 27,789 – – Current tax liabilities (7,972) (5,349) – –
59,081 59,077 – –
Tax is typically paid in advance in New Zealand to ensure the Group has positive imputation credits as at 31 March of each year.
pg 20 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
12 DERIVATIVE FINANCIAL INSTRUMENTS
Fair value Notional principal
2�12 2�11 2�12 2�11 $’��� $’��� $’��� $’���
Current assets Forward foreign currency contracts 480 272 50,576 6,911
Total current derivative financial instrument480 272assets 50,576 6,911
Non-current assets Cross‑currency interest rate swaps – cash 23,154 flow hedges– 258,548 –
Total non‑current derivative financial instrument 23,154assets – 258,548 –
Current liabilities Cross‑currency interest rate swap – cash 519flow 4,981hedges* 31,876 83,227 Forward foreign currency contracts 145 113 13,018 5,785 Cross‑currency interest rate swaps – fair value– hedges*1,998 – 19,492 Interest rate swaps – cash flow hedges– 3,010 – 97,000
Total current derivative financial instrument 664 liabilities10,102 44,894 205,504
Non‑current liabilities Interest rate swaps – cash flow 42,877hedges 14,514 396,705 399,184 Cross‑currency interest rate swaps – cash flow2,538 hedges18,879 * 59,751 300,906
Total non‑current derivative financial instrument liabilities 45,415 33,393 456,456 700,090
During the year, $3,927,289 of losses (2011: $3,545,228 gains) on hedged items were offset in the Income Statement by $4,153,420 of gains (2011: $3,739,485 losses) on derivatives in fair value hedging relationships. There is no cash flow hedge ineffectiveness in either the current or prior year.
* The comparative period fair value amounts are net of collateral payments made of $11,283,153. When the fair value of the cross‑currency interest rate swaps exceeds certain levels, a payment is received from (if the CCIRS is an asset) or made to (if the CCIRS is a liability) the counter‑party. The collateral payment outstanding at 30 June 2011 was repaid during the current year, there are no collateral payments outstanding at 30 June 2012.
The parent has no derivatives at 30 June 2012 (2011: fair value of negative $113,000).
pg 21 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
13 PROPERTY, PLANT ANDQ EUIPMENT
Fixtures Capital Buildings Plant and and Motor work in Land and fitout equipment fittings vehicles progress Total $’��� $’��� $’��� $’��� $’��� $’��� $’���
CONSOLIDATED
At 30 June 2010 Cost 179,986 809,872 361,350 103,794 2,243 16,755 1,474,000 Accumulated depreciation – (176,884) (272,223) (70,455) (1,259) – (520,821)
Net book value 179,986 632,988 89,127 33,339 984 16,755 953,179
Movements in the year ended 30 June 2011 Opening net book value 179,986 632,988 89,127 33,339 984 16,755 953,179 Exchange differences 959 8,185 1,893 317 28 652 12,034 Net additions/transfers (992) 9,418 28,395 1,389 217 50,529 88,956 Depreciation charge – (24,198) (31,402) (6,834) (404) – (62,838)
Closing net book value 179,953 626,393 88,013 28,211 825 67,936 991,331
At 30 June 2011 Cost 179,953 826,639 390,080 102,810 2,520 67,936 1,569,938 Accumulated depreciation – (200,246) (302,067) (74,599) (1,695) – (578,607)
Net book value 179,953 626,393 88,013 28,211 825 67,936 991,331
Movements in the year ended 30 June 2012 Opening net 179,953 book626,393 88,013 value28,211 825 67,936 991,331 Exchange differences (255) (2,165) (493) (78) (7) (258) (3,256) Net additions/transfers 10,226 45,337 47,916 13,433 329 25,860 143,101 Depreciation charge – (24,777) (34,215) (7,366) (400) – (66,758)
Closing net 189,924 book644,788 101,221 34,200value 747 93,538 1,064,418
At 30 June 2012 Cost 189,924 864,635 350,639 98,191 2,697 93,538 1,599,624 Accumulated depreciation – (219,847) (249,418) (63,991) (1,950) – (535,206)
Net book 189,924 644,788 value101,221 34,200 747 93,538 1,064,418
pg 22 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
13 PROPERTY, PLANT ANDQ EUIPMENT (continued)
Capital Plant and work in equipment progress Total $’��� $’��� $’���
PARENT COMPANY
At 30 June 2010 Cost 28,171 2,655 30,826 Accumulated depreciation (23,564) – (23,564)
Net book value 4,607 2,655 7,262
Movements in the year ended 30 June 2011 Opening net book value 4,607 2,655 7,262 Net additions/transfers 3,839 (1,922) 1,917 Depreciation charge (2,125) – (2,125)
Closing net book value 6,321 733 7,054
At 30 June 2011 Cost 32,011 733 32,744 Accumulated depreciation (25,690) – (25,690)
Net book value 6,321 733 7,054
Movements in the year ended 30 June 2012 Opening net book value 6,321 733 7,054 Net additions/transfers 2,023 1,048 3,071 Depreciation charge (2,593) – (2,593)
Closing net book value 5,751 1,781 7,532
At 30 June 2012 Cost 27,496 1,781 29,277 Accumulated depreciation (21,745) – (21,745)
Net book value 5,751 1,781 7,532
Borrowing costs of $2,129,123 have been capitalised in the current year relating to the Auckland and Adelaide capital projects and Darwin resort (2011: $346,722) using the Group’s weighted average cost of debt. A memorandum of encumbrance is registered against the title of land for the Auckland casino in favour of Auckland City Council. Auckland City 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 the provision of public footpaths around the complex. A further encumbrance records the Council’s interest in relation to the sub‑soil areas under Federal and Hobson Streets used by SKYCITY as car parking and a vehicle tunnel. The encumbrance is to notify any transferee of the Council’s interest as lessor of the sub‑soil areas. The SKYCITY Hamilton site is subject to the normal rights that the Crown reserves in respect of minerals and mining in relation to the sub‑soil areas. The land title is subject to Section 27B of the State Owned Enterprises Act 1986 which does not provide for the owner of the land to be heard in relation to any recommendations of the Waitangi Tribunal for the resumption of the land. At balance date the company was not aware of any matters pertaining to the land under the State Owned Enterprises Act 1986. Drainage rights have been granted over parts of the land appurtenant to Lot 2 Plan 5.23789 (CT22C/1428). There is also a right of way granted over part of Lot 1 and part of Lot 2 DP580554.
pg 23 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
14 INTANGIBLE ASSETS
Casino Computer Goodwill Licences software Total $’000 $’��� $’��� $’���
CONSOLIDATED
At 30 June 2010 Cost 151,949 261,318 58,153 471,420 Accumulated amortisation – (29,468) (44,726) (74,194)
Net book amount 151,949 231,850 13,427 397,226
Movements in the year ended 30 June 2011 Opening net book amount 151,949 231,850 13,427 397,226 Exchange differences 6,048 12,101 16 18,165 Additions – – 1,893 1,893 Amortisation charge – (2,736) (4,136) (6,872)
Closing net book amount 157,997 241,215 11,200 410,412
At 30 June 2011 Cost 157,997 274,924 60,234 493,155 Accumulated amortisation – (33,709) (49,034) (82,743)
Net book amount 157,997 241,215 11,200 410,412
Movements in the year ended 30 June 2012 Opening net book amount 157,997 241,215 11,200 410,412 Exchange differences (1,605) (3,156) (3) (4,764) Additions – – 11,009 11,009 Amortisation charge – (2,682) (3,330) (6,012)
Closing net book amount 156,392 235,377 18,876 410,645
At 30 June 2012 Cost 156,392 271,314 60,027 487,733 Accumulated amortisation – (35,937) (41,151) (77,088)
Net book amount 156,392 235,377 18,876 410,645 Casino Licence Contract Term Darwin The casino and associated operations are carried out by SKYCITY Darwin under a casino licence/operator agreement (the Casino Operator’s Agreement) with the Northern Territory Government. The current licence term was extended in 2011 and now expires on 30 June 2031. The Casino Operator’s Agreement is subject to extension for a further 5 years once its period to maturity reaches 15 years. These licence extensions apply on a continuing five year basis so that, subject to certain criteria being met, the licence period is never less than 15 years. Adelaide The casino and associated operations are carried out by SKYCITY Adelaide under a casino licence (the Approved Licensing Agreement (“ALA”)) dated October 1999 (as amended). The expiry date of the ALA is 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 Adelaide licence is amortised over the life of the agreement. Auckland SKYCITY Auckland Limited holds a Casino Premises Licence for the Auckland premises. The Casino Premises Licence is for an initial 25 year term from 2 February 1996. The licence can be renewed for further periods of 15 years pursuant to s138 of the Gaming Act 2003 (NZ). As the licence was initially granted to the company for nil consideration there is no associated carrying value. Hamilton 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 s138 of the Gaming Act 2003 (NZ). As the licence was initially granted to the company for nil consideration there is no associated carrying value.
pg 24 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
14 INTANGIBLE ASSETS (continued)
Computer software Total $’��� $’���
PARENT COMPANY
At 30 June 2010 Cost 50,813 50,813 Accumulated amortisation (37,760) (37,760)
Net book amount 13,053 13,053
Movements in the year ended 30 June 2011 Opening net book amount 13,053 13,053 Additions 1,476 1,476 Amortisation charge (3,833) (3,833)
Closing net book amount 10,696 10,696
At 30 June 2011 Cost 52,289 52,289 Accumulated amortisation (41,593) (41,593)
Net book amount 10,696 10,696
Movements in the year ended 30 June 2012 Opening net book amount 10,696 10,696 Additions 2,303 2,303 Amortisation charge (2,968) (2,968)
Closing net book amount 10,031 10,031
At 30 June 2012 Cost 45,583 45,583 Accumulated amortisation (35,552) (35,552)
Net book amount 10,031 10,031
(a) Impairment Tests for Intangibles with Indefinite Lives Goodwill and licences with indefinite lives are allocated to the Group’s cash‑generating units (CGU’s) identified below.
SKYCITY SKYCITY Hamilton* Darwin Total $’000 $’��� $’���
2012 Goodwill 35,786 120,606 156,392 Casino Licence – 40,459 40,459
35,786 161,065 196,851
2011 Goodwill 35,786 122,211 157,997 Casino Licence – 40,997 40,997
35,786 163,208 198,994
The recoverable amount of a CGU is determined based on value in use calculations. These calculations use cash flow projections approved by directors covering a three year period. The growth rate does not exceed the long term average growth rate for the business in which the CGU operates. There is a surplus between the carrying values of indefinite life assets and value in use calculations.
* SKYCITY Hamilton is included within the “Rest of New Zealand” segment in note 27.
pg 25 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
14 INTANGIBLE ASSETS (continued)
(b) Key Assumptions used for Value in Use Calculations of Cash Generating Units
EBITDA margin Growth rate Discount rate
2012 2011 2012 2011 2012 2011 % % % % % %
SKYCITY Hamilton 41.8 42.6 2.0 2.0 10.0 10.0 SKYCITY Darwin 29.4 30.5 4.7 3.0 10.0 10.0
These assumptions are consistent with past experience adjusted for economic indicators. The discount rates are post‑tax and reflect specific risks relating to the relevant operating segment. The company does not expect a reasonably possible change in key assumptions would reduce recoverable amount below carrying amount.
15 INVESTMENTS IN ASSOCIATES
Carrying Amounts Information relating to associates is set out below.
Ownership interest Consolidated Parent
2012 2011 2012 2011 2012 2011 Name of company Principal activities % % $’000 $’000 $’000 $’000
ChristchurchCasinos Limited Group Casinooperator 50.0 50.0 75,266 73,782 – –
75,266 73,782 – –
Christchurch Casinos Limited Group (CCL) is incorporated in New Zealand and has a 31 March balance date. Following the Canterbury earthquakes in the prior year, a value in use impairment test was completed on the Group’s investment in Christchurch Casinos resulting in a $15 million impairment. The underlying assumptions used included an initial drop in earnings, returning to 2010 levels by 2014, a discount rate of 10% (post tax) and a terminal growth rate of 2.3%. No adjustment has been made to the impairment charge in the current year. Increasing or decreasing the underlying assumed growth rate by 5% would result in a $4.8 million reduction or increase in the current carrying value.
(a) Movements in carrying amounts
Consolidated
2012 2011 $’000 $’000
Balance at the beginning of the 73,782year 83,549 Share of profits after income tax 5,447 5,976 Dividends received/receivable (3,963) (743) Impairment – (15,000)
Balance at 30 June 75,266 73,782
(b) Impairment losses recognised in profit or loss Impairment losses in associates accounted for using the equity method in the income statement – 15,000
– 15,000
pg 26 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
15 INVESTMENTS IN ASSOCIATES (continued)
(c) Summarised financial information of associates
Group’s share of:
Assets Liabilities Revenues Profit $’000 $’000 $’000 $’000
2012 Christchurch Casinos Limited Group 14,428 1,982 18,570 4,200
14,428 1,982 18,570 4,200
2011 Christchurch Casinos Limited Group 1,691 14,852 14,867 3,269
14,852 1,691 14,867 3,269
The above are based on SKYCITY’s direct equity interest in Christchurch Casinos Limited of 33.3% (2011: 33.3%).
16 PAYABLES
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Trade payables 18,034 31,044 – – Deferred income 3,520 3,097 – – Accrued expenses 42,144 39,805 7,025 5,480 Employee benefits 43,488 36,905 – – Amounts due to subsidiaries (note 30) – – 337,743 245,517
107,186 110,851 344,768 250,997
17 CURRENT LIABILITIES – INTEREST BEARING LIABILITIES
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Unsecured United States Private Placement (USPP) – 247,267 – –
Total unsecured current interest bearing – borrowings247,267 – –
Fair value disclosures Details of the fair value of interest bearing liabilities for the Group are set out in note 18.
pg 27 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
18 NON‑CURRENT LIABILITIES – INTEREST BEARING LIABILITIES
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Refer to (note 17) for details of current portions of these liabilities.
Unsecured United States Private Placement (USPP) 365,848 350,202 – – Syndicated bank facility 240,627 – – – Deferred funding expenses (1,573) – – –
Total unsecured non‑current interest bearing borrowings604,902 350,202 – –
In 2011, a gain of $1,620,000 resulted from a reorganisation of funding structures and refinancing of SKYCITY ACES with USPP.
(a) United States Private Placement (USPP) On 15 March 2005, SKYCITY borrowed NZ$96,571,000, A$74,900,000 and US$274,500,000 with maturities between 2012 and 2020 from private investors (primarily US based) on an unsecured basis. The USPP fixed rate US dollar borrowings have been converted to New Zealand dollar floating rate borrowings by use of cross currency interest rate swaps to eliminate foreign exchange exposure within the Income Statement. In March 2011, additional US$175,000,000 of USPP debt was raised, US$100,000,000 with 10 year maturity and US$75,000,000 with 7 years. In March 2012, USPP borrowings of US$85,000,000, A$74,900,000 and NZ$47,275,000 matured and were repaid. Other movements in the USPP from 30 June 2011 relate to foreign exchange movements. The offsetting value of the cross currency interest rate swaps are included within derivative financial instruments in note 12.
(b) Syndicated Bank Facility At 30 June 2012, SKYCITY had in place a NZ$485,000,000 revolving credit (2011: NZ$400,000,000) and Australian $75,000,000 term facility (2011: nil) on an unsecured, negative pledge basis in two tranches of NZ$200,000,000 each maturing January 2015 and June 2016, and two tranches maturing March 2019 of NZ$85,000,000 and Australian $75,000,000 . The funding syndicate is comprised of ANZ National Bank Limited, Bank of New Zealand Limited, Commonwealth Bank of Australia and Westpac New Zealand Limited. The facility is a revolving credit facility with the exception of the Australian $75,000,000 tranche which is a term loan.
(c) Fair values Fair value of long term fixed rate USPP debt is estimated at $341 million (2011: $424 million) compared to a carrying value of $317 million (2011: $404 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. The carrying value of floating rate debt approximates its fair value.
pg 28 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
19 SUBORDINATED DEBT – CAPITAL NOTES
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Balance at the beginning of 56,451the 47,043year 56,451 47,043 Issued/(matured) during the year – 9,408 – 9,408 Balance at the end of 56,451the 56,451 year 56,451 56,451
Deferred expense 37 51 37 51
Net capital notes at the end of 56,414 the 56,400year 56,414 56,400
In May 2010, the capital notes were renewed for a new term of five years to 15 May 2015. The notes were reissued on the same terms and conditions except at a lower interest rate of 7.25% (previously 8.0%). In October 2010, 9,408,000 capital notes were sold from treasury stock. Prior to the next election date (15 May 2015), the company will notify holders of the proportion of their capital notes it will redeem (if any) and, if applicable, the new conditions (including as to interest rate, interest dates, new election date, and other modifications to the existing conditions) that will apply to the capital notes from the election date. Holders may then choose either to retain some or all of their capital notes on the new terms, and/or to convert some or all of their capital notes into SKYCITY ordinary shares. The company may elect to redeem or purchase some or all of the capital notes that holders have elected to convert, at an amount equal to the principal amount plus any accrued but unpaid interest. If capital notes are converted, holders will receive ordinary shares equal in value to the aggregate of the principal amount of the notes plus any accrued but unpaid interest. The value of the shares is determined on the basis of 95% of the weighted average sale price of a SKYCITY ordinary share on the New Zealand stock exchange during the 15 trading days prior to the election dates. The capital notes do not carry voting rights. Capital noteholders are not entitled to any distributions made by SKYCITY in respect of its ordinary shares prior to the conversion date of the capital notes and do not participate in any change in value of SKYCITY’s issued shares. As at 30 June 2012, there were 150,000,000 (2011: 150,000,000) capital notes on issue, of which 93,549,500 (2011: 93,549,500) are held as treasury stock by the company. The capital notes are listed on the NZX. As at 30 June 2012, the closing price was $1.0425 per $1 note (2011: $1.0182). The capital notes are carried at amortised cost.
pg 29 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
20 DEFERRED TAX LIABILITIES
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
The balance comprises temporary differences attributable to: Prepayments and receivables 529 47 – – Provision and accruals (14,174) (9,799) – – Depreciation 97,622 96,231 – – Foreign exchange differences 6,903 14,378 – – Tax losses (1,486) (2,263) – – Other 605 613 – – Cash flow hedges (5,428) (4,917) – –
Net deferred tax liabilities 84,571 94,290 – –
Movements: Balance at the beginning of 94,290the 95,347year – – (Credited)/charged to the Income Statement (9,214)(note 8,656 7) – – Debited to equity reserves (360) (4,133) – – Change in New Zealand corporate tax rate and building depreciation– (5,435)(note 7) – – Foreign exchange differences (145) (145) – –
Closing balance at 30 June 84,571 94,290 – –
Within 12 months (15,512) (8,979) – – In excess of 12 months 100,083 103,269 – –
84,571 94,290 – –
The Group has not recognised deferred tax assets of $1.3 million (2011: $1.6 million) in respect of losses that can be carried forward against future taxable income.
21 IMPUTATION CREDITS (New Zealand)
Consolidated
2012 2011 $’000 $’000
Balance at the beginning of the (7,708)year (6,260) Tax payments, net of refunds 26,284 32,327 Credits attached to dividends paid (18,069) (33,797) Credits attached to dividends received 1,672 22
Balance at end of year 2,179 (7,708)
Imputation credits available directly and indirectly to shareholders of the parent company, through: Parent company 2,179 (7,708) Subsidiaries – –
Balance at end of year 2,179 (7,708) As required by relevant tax legislation, the imputation credit account had a credit balance as at 31 March 2012.
pg 30 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
22 SHARE CAPITAL
2012 2011 2012 2011 shares shares $’000 $’000
Opening balance of ordinary shares issued 576,958,340 575,114,687 728,616 732,910 Share rights issued for employee services – – 1,426 1,047 Employee share entitlements issued 674,251 275,034 – – Treasury shares issued (2,092,762) (275,034) – – Net purchase of treasury shares – – (7,180) (11,442) Shares issued under dividend reinvestment plan 1,418,511 1,843,653 4,736 6,101
576,958,340 576,958,340 727,598 728,616
All ordinary shares rank equally with one vote attached to each fully‑paid ordinary share. Included within the number of shares is treasury shares of 4,517,313 (2011: 4,351,766) held by the company. The movement in treasury shares during the year related to the issuance of shares under the employee incentive plans and purchases of shares by an external trustee as part of the new executive long term incentive plan (refer note 28). Treasury shares may be used to issue shares under the company’s employee incentive plans or upon the exercise of share rights/options.
23 RESERVES AND RETAINED PROFITS/(LOSSES)
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
(a) Reserves Hedging reserve – cash flow (13,355)hedges (12,340) – (427) Foreign currency translation reserve 11,505 16,022 – –
(1,850) 3,682 – (427)
Hedging reserve – cash flow hedges Balance at the beginning of the year (12,340) (2,740) (427) – Revaluation 16,635 (77,025) – (593) Transfer to net profit (18,010) 63,292 593 – Deferred tax 360 4,133 (166) 166
Balance 30 June (13,355) (12,340) – (427)
Foreign currency translation reserve Balance at the beginning of the year 16,022 10,625 – – Exchange difference on translation of overseas subsidiaries (4,517) 5,397 – –
Balance 30 June 11,505 16,022 – –
(i) Hedging eserveR – Cash Flowedges H The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in equity, as described in note 2(n). Amounts are recognised in the Income Statement when the associated hedged transaction affects the Income Statement.
(ii) Foreign Currency ranslationT Reserve Exchange differences arising on translation of foreign controlled entities are taken to the foreign currency translation reserve, as described in note 2(d). The reserve is recognised in the Income Statement when the net investment is disposed of.
pg 31 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
23 RESERVES AND RETAINED PROFITS/(LOSSES) (continued)
(b) Retained Profit/(Losses)
Movements in retained profits were as follows:
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Balance at the beginning of the41,150 year17,397 (311,797) (276,070) Profit attributable to shareholders 138,534of 122,960the 70,979company 63,480 Dividends (97,994) (99,207) (97,994) (99,207)
Balance at the end of 81,690the 41,150 year (338,812) (311,797)
24 NON CONTROLLING INTEREST
Consolidated
2012 2011 $’000 $’000
Balance at the beginning of 1,368the 1,325year Share of surpluses/(deficit) of subsidiaries 336 43
Balance at the end of 1,704the 1,368year
The non controlling interest relates to the 40% of Queenstown Casinos Limited which is not owned by SKYCITY.
25 DIVIDENDS
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Prior year final dividend 46,079 53,198 46,079 53,198 Current year interim dividend 51,915 46,009 51,915 46,009
Total dividends provided for or 97,994paid 99,207 97,994 99,207
Prior year final dividend (per 8.00¢share) 9.25¢ 8.00¢ 9.25¢ Current year interim dividend (per share) 9.00¢ 8.00¢ 9.00¢ 8.00¢
On 14 August 2012, the directors resolved to declare a final dividend of 8 cents per share in respect of the year ended 30 June 2012 (refer to note 34 for further details).
pg 32 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
26 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risks (interest rate, currency and electricity price), liquidity risk, and credit risk. The Group’s overall risk management programme recognises the nature of these risks and seeks to minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out by a central treasury department under a formal Treasury Policy approved annually by the board of directors. Treasury policy sets out written principles for overall risk management, as well as policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non‑derivative financial instruments, and investment of excess funds. The Treasury Policy sets conservative limits for allowable risk exposures which are formally reviewed at least annually.
(a) Market Risk (i) Currency iskR 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 net investment in its Australian operations. Exposure to the US dollar arises from funding denominated in that currency. The Group utilises natural hedges wherever possible (i.e. Australian dollar funding is used to partially hedge the net investment in Australian operations) with forward foreign exchange contracts used to manage any significant residual risk to the Income Statement. The Group’s exposure to the US dollar (refer to US dollar US Private Placement debt detailed in notes 17 and 18) 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. Movement in exchange rates will have very limited impact on the parent accounts as there are minimal currency exposures in that entity.
(ii) Interest ateR iskR The Group’s interest rate exposures arise from long‑term borrowings. Interest rate swaps (IRS) and CCIRS are utilised to modify the interest repricing profile of the Group’s debt to match the profile required by Treasury Policy. All IRS and CCIRS are in designated hedging relationships that are highly effective. As the Group has no significant interest‑bearing assets, the Group’s revenue is substantially independent of changes in market interest rates. The following table sets out the Group’s exposure to interest rate risk, including the contractual repricing dates and the effective weighted average interest rate.
pg 33 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
26 FINANCIAL RISK MANAGEMENT (continued)
Principal – Interest Rate Repricing
1 year or Over 5 less 1–2 years 2–3 years 3–4 years 4–5 years years Total % $’��� $’��� $’��� $’��� $’��� $’��� $’���
2012 Cash and deposits 2.50 2,538 – – – – – 2,538 Advance to Christchurch Hotels 2.90 5,125 – – – – – 5,125
Bank facility 4.99 (240,627) – – – – – (240,627) US Private Placement 5.06 (49,296) – (59,751) – (34,325) (222,476) (365,848) Capital notes (NZ) 7.25 – – (56,451) – – – (56,451) IRS/CCIRS* 80,153 (31,876) (4,599) (35,500) (3,675) (4,503) –
(202,107) (31,876) (120,801) (35,500) (38,000) (226,979) (655,263)
Weighted average debt interest rate 6.97%
2011 Cash and deposits 2.50 55,690 – – – – – 55,690 Advance to Christchurch2.68 6,235Hotels – – – – – 6,235
US Private Placement 4.82 (296,563) – – (56,798) – (244,108) (597,469) Capital notes (NZ) 7.25 – – – (56,451) – – (56,451) IRS/CCIRS * 98,278 (32,300) – (7,552) (35,840) (22,586) –
(136,360) (32,300) – (120,801) (35,840) (266,694) (591,995)
Weighted average debt interest rate 7.36%
* Interest rate swaps and cross‑currency interest rate swaps, notional principal amounts.
For both 2012 and 2011 capital notes are the only interest‑bearing debt within the parent entity. The parent had no derivatives as at 30 June 2012 (2011: forward foreign exchange contract with fair value of negative $113,000).
(iii) Summarised sensitivity analysis The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk and foreign exchange risk. The sensitivity analysis considers reasonably possible changes in each risk with all other variables held constant, taking into account all underlying exposures and related hedges at the reporting date. The impact calculated is based on a full year impact of each change. Sensitivities have been selected based on the current level of interest rates and exchange rates, volatility observed on an historical basis and market expectations for future movements.
Interest rate risk Foreign exchange risk
–100bps +100bps –5% +5%
Profit Equity Profit Equity Profit Equity Profit Equity $’000 $’��� $’000 $’��� $’000 $’��� $’000 $’���
Consolidated
30 June 2012 NZD/AUD movements – – – – 78 17,951 (86) (16,241) NZ interest rate movement 1,331 (8,634) (1,331) 8,274 – – – – Australian interest rate movement 246 (7,325) (246) 6,816 – – – –
Total increase/ (decrease) 1,577 (15,959) (1,577) 15,090 78 17,951 (86) (16,241)
pg 34 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
26 FINANCIAL RISK MANAGEMENT (continued)
Interest rate risk Foreign exchange risk
–100bps +100bps –5% +5%
Profit Equity Profit Equity Profit Equity Profit Equity $’000 $’��� $’000 $’��� $’000 $’��� $’000 $’���
Consolidated
30 June 2011 NZD/AUD movements – – – – 558 10,030 (505) (9,075) NZ interest rate 645 movement(10,207) (645) 9,685 – – – – Australian interest rate 80 (7,086)movement (80) 6,586 – – – –
Total increase/ (decrease) 725 (17,293) (725) 16,271 558 10,030 (505) (9,075)
(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 International Business play. Financial instruments (other than International Business discussed below) that potentially create a credit exposure can only be entered into with counterparties that are explicitly approved by the board. Maximum credit limits for each of these parties are approved on the basis of long‑term credit rating (Standard and Poor’s or Moody’s). A minimum long‑term rating of A+ (S&P) or A1 (Moody’s) is required to approve individual counterparties. The maximum credit risk of any financial instrument at any time is the fair value where that instrument is an asset. All derivatives are carried at fair value in the balance sheet. Trade receivables are presented net of an allowance for estimated doubtful receivables. International players are managed in accordance with accepted industry practise. Settlement risk associated with international players is minimised through credit checking and a formal review and approval process. There are no significant concentrations of credit risk in the Group.
(c) Liquidity risk Liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of unutilised committed credit facilities. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and maintaining flexibility in funding by keeping committed credit lines available with a variety of counterparties and maturities. Maturities of Committed Funding Facilities The tables below analyse the Group’s maturity profile of committed funding. The bank facility revolving credit tranches of NZ$485 million (2011: NZ$400 million) were drawn down by NZ$145,000,000 as at 30 June 2012 (2011: nil drawn down). The bank facility term tranche of A$75 million was fully drawn.
Less than 6 6 – 12 Between 1 Between 2 Between 3 Over 5 Total months months and 2 years and 3 years and 5 years years facility $’000 $’��� $’��� $’��� $’��� $’��� $’���
Consolidated
At 30 June 2012 Bank facility – – – 200,000 200,000 180,627 580,627 Capital notes – – – 56,451 – – 56,451 US Private – Placement– – 87,920 34,325 243,603 365,848
Total debt facilities – – – 344,371 234,325 424,230 1,002,926
Payables 60,178 – – – – – 60,178 Total drawn – –debt – 289,371 34,325 339,230 662,926 Future contracted interest on 15,350drawn 14,576debt 29,152 27,342 40,715 42,495 169,630 Future contracted interest on 5,997CCIRS/IRS 5,878 11,621 10,849 16,331 17,399 68,075
pg 35 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
26 FINANCIAL RISK MANAGEMENT (continued)
Less than 6 6 – 12 Between 1 Between 2 Between 3 Over 5 Total months months and 2 years and 3 years and 5 years years facility $’000 $’��� $’��� $’��� $’��� $’��� $’���
Consolidated
At 30 June 2011 Bank facility – – – 200,000 200,000 – 400,000 Capital notes – – – – 56,451 – 56,451 US Private Placement – 247,267 – – 84,967 265,235 597,469
Total debt facilities – 247,267 – 200,000 341,418 265,235 1,053,920
Payables 73,669 – – – – – 73,669 Total drawn debt – 247,267 – – 141,418 265,235 653,920 Future contracted interest on drawn debt 17,775 13,951 22,567 22,567 156,79335,032 44,901 Future contracted interest on CCIRS/IRS8,063 6,952 12,340 12,232 20,686 28,146 88,419
(d) Fair value estimation The table below analyses for financial instruments that are measured in the balance sheet at fair value by level of the fair value measurement hierarchy: – Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). – Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). – Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
Total Level 1 Level 2 Level 3 balance $’000 $’000 $’000 $’000
Consolidated
At 30 June 2012 Assets Financial assets at fair value through profit or loss – Forward foreign currency contracts – 480 – 480 Derivatives used for hedging – 23,154 – 23,154
Total assets – 23,634 – 23,634
Liabilities Financial liabilities at fair value through profit or loss – Forward foreign currency contracts – 145 – 145 Derivatives used for hedging – 45,934 – 45,934
Total liabilities – 46,079 – 46,079
pg 36 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
26 FINANCIAL RISK MANAGEMENT (continued)
Total Level 1 Level 2 Level 3 balance $’000 $’000 $’000 $’000
Consolidated
At 30 June 2011 Assets Financial assets at fair value through profit or loss – Forward foreign currency contracts 272 – 272 –
Total assets – 272 – 272
Liabilities Financial liabilities at fair value through profit or loss – Forward foreign currency contracts 113 – 113 – Derivatives used for hedging 43,382 – 43,382–
Total liabilities – 43,495 – 43,495
Further details on derivatives are provided in note 12. The fair value of financial instruments that are not traded in an active market (for example, over‑the‑counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Specific valuation techniques used to value financial instruments include: – The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves. – The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value. – Other techniques, such as discounted cash flow analyses, are used to determine fair value for the remaining financial instruments. At year end the parent company has no derivatives (2011: $113,000 liability).
pg 37 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
26 FINANCIAL RISK MANAGEMENT (continued)
(e) Financial instruments by category
Assets / (Liabilities) at fair value through the Derivatives Liabilities at Loans and Income used for Amortised Receivables Statement Hedging Cost $’000 $’000 $’000 $’000
Consolidated
At 30 June 2012 Cash and bank balances 41,400 – – – Trade receivables 13,551 – – – Advance to Christchurch Hotels Limited 5,125 – – – Sundry receivables 4,864 – – – Derivative financial instruments (net) – 335 (22,780) – Interest‑bearing liabilities – – – (604,902) Capital notes – – – (56,414) Payables – – – (60,178)
64,940 335 (22,780) (721,494)
At 30 June 2011 Cash and bank balances 104,577 – – – Trade receivables 9,288 – – – Advance to Christchurch Hotels Limited6,235 – – – Sundry receivables 11,244 – – – Derivative financial instruments (net) – 159 (43,382) – Interest‑bearing liabilities – – (597,469)– Capital notes – – – (56,400) Payables – – – (70,849)
131,344 159 (43,382) (724,718)
(f) 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 ratios measured on the basis of net debt to EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) and interest coverage (EBITDA relative to net interest cost). The primary ratios were as follows at 30 June:
2012 2011
Gearing ratio 2.1 x 2.0 x Interest coverage 6.3 x 6.2 x
These types of ratios are consistent with the financial covenants in the Group’s various funding facilities. Actual gearing as at 30 June 2012 was within covenant limits on funding facilities. Although the New Zealand capital notes include the right for SKYCITY to convert them to equity they are treated as debt for capital management and financial reporting purposes. The Group does not have any externally‑imposed capital requirements.
pg 38 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
27 SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer/Managing Director that are used to assess performance and allocate resources. The Group is organised into the following main operating segments:
SKYCITY Auckland SKYCITY Auckland includes casino operations, hotels and convention, food and beverage, carparking and Sky Tower and a number of other related activities.
Rest of New Zealand Rest of New Zealand includes the Group’s interest in SKYCITY Hamilton, SKYCITY Queenstown Casino and Christchurch Casino.
SKYCITY Adelaide SKYCITY Adelaide includes casino operations and food and beverage.
SKYCITY Darwin SKYCITY Darwin includes casino operations, food and beverage and hotel.
International Business International Business includes commission and complimentary play. The international business segment is made up of customers sourced mainly from Asia, and the rest of the world. The revenue is generated at SKYCITY’s Auckland, Darwin, Adelaide and Queenstown locations.
Corporate / Group Head office functions including legal and regulatory, group finance, human resources and information technology, the Chief Executive’s office and directors.
INTER ‑ SKYCITY REST OF NEW SKYCITY SKYCITY NATIONAL CORPORATE / AUCKLAND ZEALAND ADELAIDE DARWIN BUSINESS GROUP TOTAL $’000 $’000 $’000 $’000 $’000 $’000 $’000
2012 Revenue from external customers and other income 433,648 53,929 182,043 140,021 43,817 – 853,458 Shares of net profits– 5,447 of – associates– – – 5,447 Less Expenses (228,335) (30,609) (137,182) (95,275) (35,294) (31,747) (558,442) Depreciation and (39,868)amortisation (5,284) (10,678) (11,358) – (5,582) (72,770)
Segment profit/EBIT 165,445 23,483 34,183 33,388 8,523 (37,329) 227,693
Finance costs (48,861)
Profit before income tax 178,832
Segment assets 720,271 136,039 269,973 382,648 – 207,335 1,716,266
Investment in –associates 75,266 – – – – 75,266
Net additions to non‑current assets (other than financial assets and deferred91,805 tax) 5,295 9,749 42,320 – 4,940 154,109
pg 39 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
27 SEGMENT INFORMATION (continued)
INTER ‑ SKYCITY REST OF NEW SKYCITY SKYCITY NATIONAL CORPORATE / AUCKLAND ZEALAND ADELAIDE DARWIN BUSINESS GROUP TOTAL $’000 $’000 $’000 $’000 $’000 $’000 $’000
2011 Revenue from external customers and 396,208other income49,652 180,436 136,539 41,571 – 804,406 Shares of net profits of 5,976 associates– – – – – 5,976 Less Expenses (205,522) (28,343) (135,629) (91,840) (25,356) (29,416) (516,106) Impairment of Christchurch Casino(15,000) – – – – – (15,000) Depreciation and amortisation (35,089) (5,619) (10,976) (12,030) – (5,996) (69,710)
Segment profit/EBIT 155,597 6,666 33,831 32,669 16,215 (35,412) 209,566
Finance costs (43,772)
Profit before income tax 165,794
Segment assets 676,827 134,885 290,570 373,840 – 206,549 1,682,671
Investment in associates – 73,782 – – – – 73,782
Net additions to non‑current assets (other than financial assets and62,036 deferred3,456 tax)7,464 17,552 – 4,140 94,648
Breakdown of the revenue from all services is as follows:
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Revenue – products and services Local gaming 615,246 586,480 – – International business 43,817 41,571 – – Non gaming 192,467 175,094 – –
Total revenue 851,530 803,145 – –
Revenue – geographic New Zealand 520,081 479,958 – – Australia 331,449 323,187 – –
Total revenue 851,530 803,145 – –
Non‑current asset additions – geographic New Zealand 102,040 69,632 – – Australia 52,069 25,016 – –
Total non‑current asset additions 154,109 94,648 – –
Non‑current assets excluding financial instruments – geographic New Zealand 947,867 910,978 – – Australia 634,012 611,927 – –
Total non‑current assets excluding financial instruments 1,581,879 1,522,905 – –
pg 40 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
28 SHARE‑BASED PAYMENTS
Executive Share Rights Plan 2005 The Executive Share Rights Plan (Rights Plan) was approved by directors in December 2004 and commenced on 1 July 2005. Share rights issued under the Rights Plan are exercisable after the third anniversary of their date of issue provided the terms and conditions of the Plan are met, and lapse if not exercised within five years. The exercise price of the share rights is the base exercise price adjusted for the company’s estimated cost of equity and dividends/distributions between the issue date and the exercise date of the rights.
Chief Executive Officer Long Term Incentive Plan 2008 The Chief Executive Officer Long Term Incentive Plan (CEO LTI) was approved by shareholders at the 31 October 2008 Annual Meeting. Share rights are granted under the CEO LTI and (if exercisable) may be exercised at no cost. If exercised each share right corresponds to one fully paid ordinary share in the company. Share rights only become exercisable when performance hurdles set by the board of directors are met. 491,132 rights were issued in the year ended 30 June 2009 of which 152,251 (2011: 275,034) have converted to shares in the current year.
Executive Long Term Incentive Plan 2008 The Executive Long Term Incentive Plan (Executive LTI) was approved by directors in December 2008. Share rights are granted under the Executive LTI and (if exercisable) may be exercised at no cost. If exercised each share right corresponds to one fully paid ordinary share in the company. Share rights only become exercisable when performance hurdles set by the board of directors are met.
Chief Executive Officer and Executive Long Term Incentive Plan 2009 During 2010, the Group implemented a new long term incentive plan for a limited number of senior executives (including the Chief Executive Officer). This plan replaced the share based Chief Executive Officer Long Term Incentive Plan 2008 and the Executive Long Term Incentive Plan 2008. Under the new plan, executives purchase SKYCITY shares funded by an interest free loan from the Group. The shares purchased by the executives are held by a trustee company with executives entitled to exercise the voting rights attached to the shares and receive dividends, the proceeds of which are used to repay the interest free loan. At the end of the restricted period (3 to 4 years), the Group will pay a bonus to each executive to the extent their performance targets have been met which is sufficient to repay the initial interest free loan associated with the shares which vest. The shares upon which performance targets have been met will then fully vest to the executives. The loan owing on shares upon which performance targets have not been met (the forfeited shares) will be novated from the executives to the trustee company and will be fully repaid by the transfer of the forfeited shares. Performance targets relate to total shareholder return. At 30 June 2012, the interest free loan on the CEO Long Term Incentive Plan is $5,582,817 (2011: $5,846,428) and on the Executive Long Term Incentive Plan totals $6,996,545 (2011: $5,300,645).
pg 41 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
28 SHARE‑BASED PAYMENTS (continued)
Movements in the number of share rights outstanding are as follows:
Exercised / Balance at Granted converted Exercisable at start of the during the during the Expired during Balance at end end of the year year year the year of the year year Grant Date Expiry date Exercise price Number Number Number Number Number Number
Consolidated and parent – 2012
04/09/06 04/09/11 333,000 - - (333,000) - - 01/03/08 01/03/12 216,098 ‑ (152,251) (63,847) ‑ ‑ 01/07/08 01/07/12 600,000 ‑ (522,000) ‑ 78,000 78,000 02/09/09 02/09/13 902,425 - - - 902,425 - 31/08/10 31/08/14 1,216,195 - - (50,250) 1,165,945 - 02/03/11 02/03/15 1,544,291 - - (150,000) 1,394,291 - 31/08/11 31/08/15 ‑ 790,200 - (30,000) 760,200 -
Tot al 4,812,009 790,200 (674,251) (627,097) 4,300,861 78,000
Consolidated and parent – 2011
05/09/05 05/09/10 $4.81 231,000 - - (231,000) - - 04/09/06 04/09/11 $5.15 333,000 - - - 333,000 333,000 01/03/08 01/03/12 491,132 ‑ (275,034) ‑ 216,098 216,098 01/07/08 01/07/12 600,000 - - - 600,000 - 02/09/09 02/09/13 960,175 - - (57,750) 902,425 - 31/08/10 31/08/14 ‑ 1,266,445 - (50,250) 1,216,195 - 02/03/11 02/03/15 ‑ 1,544,291 - - 1,544,291 -
Tot al 2,615,307 2,810,736 (275,034) (339,000) 4,812,009 549,098
Exercise price The rights granted from 2008 onwards do not have an exercise price. The weighted average remaining contractual life of options and rights outstanding at the end of the period was 2.26 years (2011: 2.55 years).
Fair value of share rights granted The assessed fair value at grant date of the rights granted 31 August 2011 is $1.17 (31 August 2010 is 96.0 cents).
The valuation inputs for the rights granted 31 August 2011 included: (a) rights are granted for no consideration (b) exercise price: nil (2011: nil) (c) grant date: 31 August 2011 (2011: 31 August 2010) (d) expiry date: 31 August 2015 (2011: 31 August 2014) (e) share price at valuation date $3.42 (2011: $2.87) The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the term of the right.
pg 42 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
28 SHARE‑BASED PAYMENTS (continued)
The assessed fair value at grant date of the rights granted 2 March 2011 is $1.11.
The valuation inputs for the rights granted 2 March 2011 included: (a) rights are granted for no consideration (b) exercise price: nil (c) grant date: 2 March 2011 (d) expiry date: 2 March 2015 (e) share price at valuation date: $3.34 The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the term of the right.
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 below.
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Rights issued under Share Rights Plans 1,426 1,047 1,426 1,047
1,426 1,047 1,426 1,047
29 RELATED PARTY TRANSACTIONS
There are no bad or doubtful debts associated with any related party of the Group or parent entity (2011: nil).
(a) Key Management and Personnel Compensation Key management compensation for the years ended 30 June 2012 and 2011 is set out below. The key management personnel are all the directors of the company, the Chief Executive Officer and the direct reports to the Chief Executive Officer.
Short‑term Share‑based benefits payments Total $’000 $’000 $’000
2012 10,532 1,192 11,724 2011 8,242 835 9,077 (b) Other transactions with key management personnel or entities related to them Information on transactions with key management personnel or entities related to them, other than compensation, is set out over page. Certain directors 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. Any transactions undertaken with these entities have been entered into on an arms‑length commercial basis.
pg 43 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
29 RELATED PARTY TRANSACTIONS (continued)
(c) Subsidiaries Interests in subsidiaries are set out in note 30.
(d) Parent The majority of the parent entity’s transactions are with its subsidiaries including the payment of dividends of $110.2 million (2011: $100.1 million) and provision of employee services of $22.1 million (2011: $18.5 million) on normal commercial terms. Advances to and from subsidiaries are repayable on demand and are on normal commercial terms within a group and are disclosed in the relevant asset or liability note.
(e) Associates The Group has loaned Christchurch Hotels Limited $5,125,251 (2011: $6,235,251) as set out in note 10 on normal commercial terms.
30 SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2(b). All wholly‑owned subsidiary companies and significant partly‑owned subsidiaries have balance dates of 30 June.
Equity holding
Country of Class of 2012 2011 Name of entity incorporation shares % %
Queenstown Casinos Limited New Zealand Ordinary 60 60 SKYCITY Action Management Limited New Zealand Ordinary 100 100 SKYCITY Auckland Holdings Limited New Zealand Ordinary 100 100 SKYCITY Auckland Limited New Zealand Ordinary 100 100 SKYCITY Casino Management Limited New Zealand Ordinary 100 100 SKYCITY Hamilton Limited New Zealand Ordinary 100 100 SKYCITY International Holdings Limited New Zealand Ordinary 100 100 SKYCITY Investments Australia Limited New Zealand Ordinary 100 100 SKYCITY Investments Christchurch Limited New Zealand Ordinary 100 100 SKYCITY Investments Queenstown Limited New Zealand Ordinary 100 100 SKYCITY Management Limited New Zealand Ordinary 100 100 SKYCITY Metro Limited New Zealand Ordinary 100 100 SKYCITY Wellington Limited New Zealand Ordinary 100 100 Sky Tower Limited New Zealand Ordinary 100 100 Toptown Nominees Limited New Zealand Ordinary 100 100 SKYCITY Adelaide Pty Limited Australia Ordinary 100 100 SKYCITY Australia Finance Pty Limited Australia Ordinary 100 100 SKYCITY Australia Limited Partnership Australia Ordinary 100 100 SKYCITY Australia Pty Limited Australia Ordinary 100 100 SKYCITY Australia Treasury Pty Limited Australia Ordinary 100 100 SKYCITY Darwin Pty Limited Australia Ordinary 100 100
pg 44 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
31 CONTINGENCIES
There are no significant contingencies at year end (2011: nil).
32 COMMITMENTS
Capital Commitments Capital expenditure contracted for at the reporting date but not recognised as liabilities is as set out below.
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Property, plant and equipment 27,268 59,695 – – Operating Lease Commitments The Group leases various offices and other premises under non‑cancellable operating leases. These leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Commitments for minimum lease payments in relation to non‑cancellable operating leases are payable as follows:
Within one year 6,974 5,482 – – Later than one year but not later than five years 18,074 13,419 – – Later than five years 322,136 318,673 – –
Commitments not recognised in the financial 347,184statements 337,574 – –
The above operating lease summary includes a large number of leases, the most significant of which are: SKYCITY Auckland – Hobson and Federal Streets sub soil lease. This lease is for a period of 999 years from 31 January 1996 with rent reviews every five years. SKYCITY Adelaide – Casino building lease. The initial lease term is until 3 March 2025 with 3 further rights of renewal for 20 years each and annual rent reviews.
pg 45 SKYCITY Entertainment Group Limited annual report 2012
Notes to the financial statements CONTINUED
33 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASHW INFLO FROM OPERATING ACTIVITIES
Consolidated Parent
2012 2011 2012 2011 $’000 $’000 $’000 $’000
Profit for the year 138,534 122,960 70,979 63,480 Non‑controlling interest 336 43 – – Depreciation and amortisation 72,770 69,710 5,561 5,958 Finance costs net 48,861 43,772 4,171 3,908 Current period employee share entitlement – – – – Current period share options expense 1,426 1,047 1,426 1,047 Gain on sale of fixed (1,756)assets (1,065) – – Dividend from subsidiary – – (110,178) (100,133) Impairment of Christchurch Casino – 15,000 – – Share of profits of associates not received(1,484) as(5,233) dividends – – Change in operating assets and liabilities Decrease/(increase) in receivables and prepayments 3,928 (7,720) (66,253) 7,621 Decrease/(increase) in inventories 94 192 – – (Decrease)/increase in payables and accruals (3,666) 9,052 91,708 20,779 (Decrease)/increase in deferred tax liability (9,719) (1,057) – – (Increase) in tax receivable (4) (22,781) – – Capital items included in working 12,423capital (14,555)movements – – Subsidiary funding transactions – – (23,199) (28,864)
Net cash inflow from operating activities 261,743 209,365 (25,785) (26,204)
34 EVENTS OCCURRING AFTER THEALANCE B SHEET DATE
Dividend On 14 August 2012, the directors resolved to provide for a final dividend to be paid in respect of the year ended 30 June 2012. The partially (60%) imputed, partially franked (60%) dividend of 8 cents per share will be paid on 5 October 2012 to all shareholders on the company’s register at the close of business on 28 September 2012.
pg 46 SKYCITY Entertainment Group Limited annual report 2012
CORPORATE GOVERNANCE and OTHER DISCLOSURES FOR THE YEAR ENDED 30 JUNE 2012
pg 47 SKYCITY Entertainment Group Limited annual report 2012
Corporate governance
SKYCITY Entertainment Group Limited is committed to maintaining The board maintains a formal set of delegated authorities that the highest standards of corporate behaviour and responsibility, defines the responsibilities which are delegated to the Chief and has adopted governance policies and procedures reflecting this. Executive Officer and management and those which are retained by the board. These delegated authorities are approved by the In establishing its governance policies and procedures, the board and are subject to annual review by the board. SKYCITY board has adopted ten governance parameters as the cornerstone principles of its corporate governance charter. As a New Zealand company listed on the Australian and New Zealand 2. STRUCTURE THE BOARD TO ADD VALUE stock exchanges, these cornerstone principles, set out below and Board effectiveness requires the efficient discharge of the duties on the following pages, reflect the Listing Rules and Corporate imposed by law on the directors and addition of value to the Governance Best Practice Code of NZX Limited (NZX), the company. To achieve this, the SKYCITY board is structured to: Listing Rules of ASX Limited (ASX), the Corporate Governance • have a sound understanding of, and competence to deal Principles and Recommendations of the ASX Corporate with, the current and emerging issues of the business; Governance Council, and the New Zealand Securities Commission’s Governance Principles and Guidelines. • effectively review and challenge the performance of management and exercise independent judgement; and SKYCITY’s corporate governance framework is fully detailed in the Investor Centre section of the company’s website at • assist in the selection of candidates to stand for election by www.skycityentertainmentgroup.com. shareholders at annual meetings. Board Composition 1. ROLES AND RESPONSIBILITIES OF THE BOARD ANDThe board ensures that it is of an effective composition and size MANAGEMENT to adequately discharge its responsibilities and duties and to add SKYCITY’s procedures are designed to: value to the company’s decision-making. • enable the board to provide strategic guidance for the In order to meet these requirements, the board membership company and effective oversight of management; comprises a range of skills and experience to ensure that it has a • clarify the respective roles and responsibilities of board proper understanding of and competence to deal with the members and senior executives in order to facilitate board current and emerging issues of the business, to effectively review and management accountability to both the company and its and challenge the performance of management, and to exercise shareholders; and independent judgement. As at 30 June 2012, the board comprised six non-executive directors and a managing director. • ensure a balance of authority so that no single individual has As at 30 June 2012, the board had also approved the unfettered powers. appointment of one further non-executive director subject to The board establishes the company’s objectives, the major approval by regulatory authorities in each of the jurisdictions in strategies for achieving those objectives and the overall policy which the company operates its gaming activities. These framework within which the business of the company is approvals were obtained subsequent to the end of the conducted, and monitors management’s performance with 2011/2012 year. Biographical details of individual directors are respect to these matters. set out in the company’s 2012 Shareholder Review. The board is also responsible for ensuring that the company’s Directors are appointed under the company’s Terms of assets are maintained under effective stewardship, that decision Appointment and Terms of Reference for Directors and Board making authorities within the organisation are clearly defined, Charter for a term of three years and are subject to re-election that the letter and intent of all applicable company and casino by shareholders in accordance with the rotation requirements of law and regulation are complied with, and that the company is the NZX and the ASX. well managed for the benefit of its shareholders and other The board has established the Governance and Nominations stakeholders. The board also oversees management’s risk Committee to make recommendations on the board’s size, profiling and business continuity plans. selection and removal of directors, on appropriate procedures The board has responsibility for the affairs and activities of the for director and board evaluation and performance review, the company, which in practice is achieved through delegation to the induction, orientation and training of new directors in the Chief Executive Officer and others (including SKYCITY appointed company’s operations and the gaming/entertainment sector directors on subsidiary company boards) who are charged with the generally, and on the board’s succession planning. day-to-day leadership and management of the company. The company’s constitution also requires all potential directors The Chief Executive Officer also has responsibility to manage to have satisfied the extensive probity requirements of each and oversee the interfaces between the company and the public jurisdiction in which the company holds gaming licences. and to act as the principal representative of the company.
pg 48 SKYCITY Entertainment Group Limited annual report 2012
Corporate governance CONTINUED
Director Independence Directors are entitled to obtain independent professional The Board Charter requires that the board contains a majority advice (at the expense of the company) on any matter relating of its number who are independent directors. SKYCITY also to their responsibilities as a director or with respect to any supports the separation of the role of board chairperson from aspect of the company’s affairs, provided they have previously the Chief Executive Officer position. Directors are required to notified the board chairperson of their intention to do so. ensure all relationships and appointments bearing on their Indemnities and Insurance independence are disclosed to the Governance and Nominations The company provides a deed of indemnity in favour Committee on a timely basis. In determining the independence of of each director and senior management personnel and directors, the board has adopted the definition of independence provides professional indemnity insurance cover for directors set out in the NZX Corporate Governance Best Practice Code and executives acting in good faith in the conduct of the and has taken into account the independence guidelines (ASX company’s affairs. Independence Guidelines) as recommended in the ASX Corporate Governance Council’s Corporate Governance Board Committees Principles and Recommendations. The board has four formally appointed committees, being At its 18 June 2012 meeting, the board reviewed the status of the Audit and Risk Committee, Governance and Nominations each director in accordance with the independence specification Committee, Human Resources Committee (formerly the of the NZX Code and taking into account the ASX Independence Remuneration Committee) and the recently established Corporate Social Responsibility Committee. The non-executive Guidelines and determined that all current non-executive directors of the board appoint the chairperson of each directors are independent. committee. Access to Information and Advice The current members and chairperson of each committee are New directors participate in an individual induction programme, set out in the company’s 2012 Shareholder Review and on the tailored to meet their particular information requirements. company’s website. Directors receive regular reports and comprehensive information Each committee operates under a charter document as on the company’s operations before each meeting and have agreed by the board. The charters, which are available on the unrestricted access to any other information they require. company’s website, set out the role and responsibilities Senior management is available at and outside each meeting to of each committee. Each committee charter and the address queries. Directors are expected to maintain an up-to-date performance of each committee are subject to formal review knowledge of the company’s business operations and of the industry by the board on an annual basis. sectors within which the company operates. Directors are provided Meeting Attendance with updates on industry developments, and undertake regular visits The following table shows attendances at board and committee to the company’s key operations. The board also undertakes meetings by directors during the year ended 30 June 2012. periodic educational trips to observe and receive briefings from other companies in the gaming and entertainment industries. Nine board meetings were scheduled during the year.
GOVERNANCE Corporate APPOINTMENT BOARD BOARD BOARD AUDIT AND Social TO OFFICE SCHEDULED UNSCHEDULED TOTAL AND RISKREMUNERATION(4) NOMINATIONS Responsibility
NUMBER OF MEETINGS HELD 9 1 10 3 4 1 0 R H McGeoch20 September 8 2002 1 9 2 3 1 ‑ P D Cullinane(1) 26 March 9 2008 1 10 ‑ 2 1 ‑ P B Harman18 December 9 2008 1 10 ‑ 4 1 ‑ C J D 18 MollerDecember 9 2008 1 10 3 ‑ 1 ‑ N B Morrison18 December 9 2008 1 10 ‑ ‑ 1 ‑ Sir Dryden Spring(2) 31 October 2 2003 ‑ 2 1 1 ‑ ‑ B J Carter12 October 9 2010 1 10 3 ‑ 1 ‑ S H Suckling(3) 9 May 8 2011 1 9 2 3 1 ‑
(1) PD Cullinane retired as a member of the Remuneration Committee on 20 April 2012 and was appointed a member of the Corporate Social Responsibility Committee on 20 April 2012. (2) Sir Dryden Spring retired as a director on 30 September 2011. (3) S H Suckling retired as a member of the Audit and Risk Committee on 20 April 2012. (4) The Remuneration Committee was renamed the Human Resources Committee in August 2012.
pg 49 SKYCITY Entertainment Group Limited annual report 2012
Corporate governance CONTINUED
3. INTEGRITY, ETHICAL BEHAVIOUR AND DIVERSITY The board has set the following measurable objectives to ensure SKYCITY actively promotes ethical and responsible behaviour SKYCITY’s commitment to diversity is maintained: and decision-making by: • reference and celebrate SKYCITY’s commitment to diversity • clarifying and promoting observance of its guiding values; in the company’s recruitment materials, staff policies, induction and leadership development programmes; • clarifying the standards of ethical behaviour required of company directors and key executives (that is, officers and • increase the company’s talent pool of diverse qualified employees who have the opportunity to materially influence candidates for executive and senior management roles by the integrity, strategy and operations of the business and its providing career mentoring and skills-development financial performance) and encouraging the observance of programmes for women and staff in underrepresented groups those standards; and – these programmes being specifically tailored to the needs of these groups; • communicating the requirements relating to trading in the company’s securities by directors and employees. • develop career plans for identified high potential staff in these groups that provide pathways into senior management The Governance and Nominations Committee is responsible for and executive roles; and monitoring the organisational integrity of business operations to ensure the maintenance of a high standard of ethical behaviour. • source best practice diversity representation benchmarks This includes ensuring that SKYCITY operates in compliance with and strive to achieve top quartile performance against its Code of Business Practice, which sets out the guiding principles appropriate peer comparator companies. of its relationships with stakeholder groups such as regulators, As at 30 June 2012, the proportion of women at SKYCITY shareholders, suppliers, customers, community groups and (including amongst directors and officers) was as follows: employees. All senior managers are required annually to provide a confirmation to the company that to the best of their knowledge Total workforce Senior Executive Directors the company has complied with the Code of Business Practice 47% 18% 14% and all other ethical responsibilities during the financial year. The company maintains a Securities Trading Policy for directors 4. SAFEGUARD THE INTEGRITY OF THE COMPANY’S and employees that sets out guidelines in respect of trading in, FINANCIAL REPORTING or giving recommendations concerning, the company’s securities. The board is responsible for ensuring that effective policies and In addition, prior consent must be obtained from the company procedures are in place to provide confidence in the integrity of secretary before directors and certain employees who may have the company’s financial reporting. access to material information undertake any trading in the The Audit and Risk Committee has responsibility for oversight of company’s securities. the quality, reliability, and accuracy of the company’s internal and Details of any securities trading by directors or executives who external financial statements, the quality of the company’s are subject to the company’s Securities Trading Policy are external result presentations, its internal control environment notified to the board. and risk management programmes, and for its relationships with its internal and external auditors. Officers of the company must formally disclose their SKYCITY shareholdings and other securities holdings to the NZX within five The Audit and Risk Committee and the board undertake business days of any change in their holding of such securities. sufficient inquiry of the company’s management and the company’s internal and external auditors in order to enable them Directors and employees are not permitted to participate in any to be satisfied as to the validity and accuracy of the company’s gaming or wagering activity at SKYCITY operated properties or financial reporting. The Chief Executive Officer and the Chief at a related property, including Christchurch Casino. Financial Officer are required to confirm in writing to the Audit SKYCITY believes that diversity contributes to competitive and Risk Committee that the annual and interim financial advantage and sustainable business success. The company is statements present a true and fair view of the company’s financial committed to an inclusive workplace that fosters and promotes condition and results of operations, and comply with relevant workplace diversity at all levels. accounting standards. The company recognises that to deliver outstanding service and The Committee oversees the independence of the company’s breakthrough solutions to its diverse customer community, it too internal and external auditors and monitors the scope and must be diverse. SKYCITY values and respects the contributions, quantum of work undertaken and fees paid to the auditors for ideas and experiences of people from all backgrounds. other than audit work. The Committee has adopted an External Audit Independence Policy that sets out the framework for assessing and maintaining audit independence.
pg 50 SKYCITY Entertainment Group Limited annual report 2012
Corporate governance CONTINUED
The Committee has formally reviewed the independence status invited to attend the company’s annual meeting to answer any of PricewaterhouseCoopers and is satisfied that its objectivity shareholder questions concerning their audit and external audit and independence is not compromised as a consequence of report. As for last year, this year the company has also provided non-audit work undertaken for the company. all shareholders with a Shareholder Review, which contains much PricewaterhouseCoopers has confirmed to the Committee that it of the information previously included in the annual report in a is not aware of any matters that could affect its independence in more accessible document. performing its duties as auditor of the company. Fees paid to PricewaterhouseCoopers during the 2011/12 year 7. RECOGNISE AND MANAGE RISK are set out in note 5 to the financial statements. Fees for audit The company maintains a programme for the identification, and tax compliance work in the 2011/12 year represent 62% of assessment, monitoring and management of risk to the company’s total PricewaterhouseCoopers fees. business. The risk management programme is approved and overseen by the Audit and Risk Committee. 5. TIMELY AND ALANCEDB DISCLOSURE SKYCITY maintains an independent, centrally-managed internal The board is committed to ensuring timely and balanced audit function which evaluates and reports on financial, disclosure of all material matters concerning the company to operational and management controls across the Group. ensure compliance with the letter and intent of NZX and ASX Management is required to report to the Audit and Risk Listing Rules such that: Committee on the effectiveness of the company’s management of its material business risks, with the most recent report being • all investors have equal and timely access to material provided in June 2012. information concerning the company, including its financial situation, performance, ownership and governance; and The Audit and Risk Committee approves the internal audit programme, with results and performance of the control • company announcements are factual and comprehensive. environments regularly reviewed by both the committee and the The company is committed to presenting its financial and key external auditors. The Chief Executive Officer and the Chief operational performance results in a clear, effective, balanced Financial Officer are required to confirm in writing to the Audit and timely manner to the stock exchanges on which the and Risk Committee that the statement in respect of the integrity company’s securities are listed, and to its shareholders, analysts of the company’s financial statements referred to above is and other market commentators, and ensures that such founded on a sound system of risk management and internal information is available on the company’s website. compliance and control which implements the policies of the board, and that the company’s risk management and internal Peter Treacy, General Counsel, is Company Secretary and the compliance and control systems are operating efficiently and Disclosure Officer for SKYCITY Entertainment Group Limited effectively in all material respects. The most recent confirmations and is responsible for bringing to the attention of the board any were provided by the Chief Executive Officer and the Chief matter relevant to the company’s disclosure obligations. Financial Officer in August 2012.
6. RESPECT AND FACILITATE THE RIGHTS OF The company maintains business continuity, material damage and SHAREHOLDERS liability insurance covers to ensure that the earnings of the The company’s shareholder communications strategy is designed business are well protected from adverse circumstances. to facilitate the effective exercise of shareholder rights by: 8. PERFORMANCE EVALUATION • communicating effectively with shareholders; The board and committee charters require an evaluation of the • providing shareholders with ready access to balanced and board and the committee performance on an annual basis. The understandable information about the company and Governance and Nominations Committee determines and corporate proposals; and oversees the process for evaluation which includes assessment • facilitating participation by shareholders in general meetings of the role and responsibilities, performance, composition, of the company. structure, training, and membership requirements of the board and its committees. The company achieves this by ensuring that information about the company is available to all shareholders by means of personal The performance review of the board for 2011 was conducted and/or website communication and through encouraging by the chairman of the board (Rod McGeoch) and completed in shareholders to attend general meetings of the company and February 2012. The review involved a formal response/feedback making appropriate time available at such meetings for process with a one-on-one meeting involving the chairman and shareholders to ask questions of directors and management. each director individually. Representatives of the company’s external auditors are also
pg 51 SKYCITY Entertainment Group Limited annual report 2012
Corporate governance CONTINUED
The board undertakes the performance review of the Chief For those directors who were in office on or before 1 May 2004, Executive Officer and those reporting directly to that position in SKYCITY’s constitution permits the company, at the discretion of accordance with the company’s performance review procedures, the board, to make a retirement payment to a director (or to his with the last review conducted in August 2012. or her dependants), provided that the total amount of the payment does not exceed the total remuneration of the director 9. REMUNERATE FAIRLY AND RESPONSIYBL in his or her capacity as a director in any three years chosen by the company. Retirement allowances for SKYCITY directors were The board-approved Remuneration Policy (which is available in discontinued at 30 June 2004 with retirement allowances accrued the Investor Centre section of the company’s website at www. to that date frozen as to amount. Sir Dryden Spring retired on skycityentertainmentgroup.com) recognises that to achieve 30 September 2011 and received a retirement allowance of business objectives SKYCITY needs high quality, committed $3,350.93. Rod McGeoch is now the only director eligible for people and the aim of the Policy is, therefore, to attract, retain the retirement allowance, currently $22,913.24. Retirement and motivate high-calibre executives capable of achieving the allowances accrued as at 30 June 2004 do not carry any interest objectives of the company and encourage superior performance entitlement between 1 July 2004 and the date of payment. and creation of shareholder value. SKYCITY’s policy on non-executive director remuneration The guiding principles that underpin SKYCITY’s remuneration was developed in 2011 by the Remuneration Committee (now policies are: renamed the Human Resources Committee) and subsequently • to be market-competitive at all levels to ensure the company approved by the board. It is available in the Investor Centre of can attract and retain the best available talent; the company’s website at www.skycityentertainmentgroup.com. • to be performance-oriented so that remuneration practices Chief Executive Officer Remuneration recognise and reward high levels of performance and to Employment Agreement avoid an entitlement culture; Nigel Morrison has an employment agreement (which is available • to provide a significant at-risk component of total in the Investor Centre section of the company’s website at remuneration which drives performance to achieve company www.skycityentertainment.com) as Chief Executive Officer that goals and strategy; commenced on 1 March 2008. The agreement is not a fixed term contract. The terms of the agreement reflect standard conditions • to manage remuneration within levels of cost efficiency and that are appropriate for a senior executive of a listed affordability; and Australasian company. • to align remuneration for senior executives with the interests Mr Morrison’s remuneration package is a combination of fixed of shareholders. salary plus incentive payments for short and long term performance. A range of benchmark reports and other market data is used The short term incentive (STI) payments are determined by the to ensure market relativity, including a report commissioned company’s financial performance against budget as well as a by the Human Resources Committee and produced by number of specific strategic, non-financial performance targets. PricewaterhouseCoopers regarding the relativity of SKYCITY’s An outline of the STI is included in the company’s Remuneration key executive remuneration, by role, in respect to a key Policy and Mr Morrison’s employment agreement, both of which comparator group. are available in the Investor Centre of the company’s website. Non-Executive Director Remuneration Mr Morrison may resign at any time giving six months’ notice. Shareholders at the annual meeting determine the total SKYCITY may terminate Mr Morrison’s employment with twelve remuneration available to non-executive directors. months’ notice (or make a payment of the total base At the 2011 annual meeting, shareholders approved, effective remuneration he would have received during such period in lieu from 1 July 2011, a total remuneration amount for non-executive of such notice). directors of $1,300,000 per annum (plus GST, if any). The agreement may be terminated by Mr Morrison on three Current annual fees are $250,000 for the chairperson of the months’ notice if there is a fundamental change so that there is a board, $150,000 for the deputy chairperson and $120,000 each substantial diminution of his role, status and responsibility, for other non-executive directors. In addition, each ordinary including where he is no longer the Chief Executive Officer of a member of the Audit and Risk, Human Resources and Corporate listed public company, and he will be entitled to receive payment Social Responsibility Committees receives $15,000 per annum. as if SKYCITY had terminated his employment with notice as set The chairperson of the Audit and Risk Committee receives out above. $35,000 per annum and the chairperson of each of the Human If SKYCITY terminates Mr Morrison’s employment on notice, or Resources Committee and the Corporate Social Responsibility his employment terminates in the event of a fundamental change Committee receives $25,000 per annum. noted above, entitlements under the Long Term Incentive (LTI)
pg 52 SKYCITY Entertainment Group Limited annual report 2012
Corporate governance CONTINUED
Plan referred to below that would otherwise be eligible to vest Remuneration during the notice period will vest subject to satisfaction of the Mr Morrison’s base salary and STI in respect of the year ended 30 applicable performance hurdles. June 2012 was $2,947,535 comprising base salary of $1,712,000 plus a performance-related STI payment of $1,235,535 relating to In the event of termination of Mr Morrison’s employment for the 2011/12 financial year (being 72% of his base salary as per serious misconduct or a serious breach of his employment the formula set by the board at the commencement of the agreement, no notice period will apply and Mr Morrison will 2011/12 financial year) which was paid in August 2012. The not be eligible to receive any entitlements other than base amount of the STI payment was determined by assessing the remuneration then due, any accrued holiday pay, any accrued or company’s NPAT financial performance over the 2011/12 vested STI which has been awarded but not yet paid, and any LTI financial year against budget and Mr Morrison’s achievement where the vesting conditions have been satisfied but not yet tested. against a number of specific strategic, non-financial performance Except as set out above, any additional entitlement to STI or LTI targets, which had been set by the board at the start of the on the termination of employment is at the discretion of the financial year. board, subject to the rules for those schemes. During the year, Mr Morrison was also paid a performance- There is no redundancy entitlement under the agreement. related STI of $1,108,800 relating to the prior 2010/2011 financial year (being 69% of his then applicable base salary), Long Term Incentive Plan which reflected the board’s assessment of his achievement The company operates a Long Term Incentive (LTI) Plan in favour against the STI criteria set for the 2010/2011 financial year. of Mr Morrison. Under the Chief Executive Officer Long Term Incentive Plan approved by shareholders at the company’s 2009 Mr Morrison was previously issued 491,132 share rights under annual meeting, Mr Morrison is provided with financial assistance the Chief Executive Officer Long Term Incentive Plan 2008 by way of an interest-free loan by a subsidiary of the company to approved by shareholders at the company’s 2008 annual meeting. acquire shares in the company. A trustee holds legal title to the Share rights become exercisable when performance hurdles set relevant shares on behalf of Mr Morrison for a restrictive period of by the board are met and, if exercised, each share right at least three years until certain performance hurdles are met. The corresponds to one SKYCITY share. On 16 March 2011, 275,034 performance hurdles involve comparison of the total shareholder share rights converted to 275,034 SKYCITY shares. On 23 return (TSR) achieved by SKYCITY against the shareholder returns September 2011, a further 88,404 share rights converted to achieved by a group of comparable Australasian companies 88,404 shares. On 15 March 2012, a further 63,847 share rights (comparator group), and by the companies whose securities are in converted to 63,847 shares and the balance of 63,847 share the NZSX50 index (index group). rights lapsed in accordance with the terms of the Plan. For the shares to vest in Mr Morrison, the company must achieve Mr Morrison’s shareholding in the company and LTI entitlements a TSR equal to or greater than the average of the comparator and are detailed on pages 60 and 63 of this annual report. index groups’ TSRs. The number of shares that will vest depend SKYCITY Employee Remuneration on where the SKYCITY TSR is relative to the Average Medium TSR (at which point 50% of the shares vest) and the average of All salaried roles within SKYCITY are job-sized using a recognised the TSRs representing the 75th percentiles of the TSRs achieved methodology to measure the impact, accountability, and by the comparator group and the index group (at which point complexity of each role as it contributes to the organisation. 100% of the shares vest). In addition, the board has discretion to Remuneration data is obtained from a number of sources to determine that up to 25% of the shares will vest if the company’s determine remuneration ranges by job band or level to ensure TSR for the relevant period does not exceed the Average Median competitiveness at both base salary and total remuneration levels. TSR, but exceeds one or other of the TSRs representing the 50th Individual remuneration is set within the appropriate range taking percentile of TSRs of the members of the comparator group and into account such matters as individual performance, scarcity/ of the index group. availability of resource/skill, internal relativities and specific business needs. This process ensures internal equity between Performance will be assessed three years after the issue of the roles and allows comparison with the overall market. Remuneration shares, and (provided the shares have not lapsed and all ranges are reviewed annually to reflect market movements. performance hurdles have not been satisfied) after a further six and twelve months. Special assessment may occur in the event of a The Human Resources Committee approves remuneration takeover offer, amalgamation or scheme of arrangement involving increases for the senior executive group. the company. Shares which have not previously been vested will lapse to the extent performance hurdles have not been fully satisfied in respect of the period to the fourth anniversary of the issue date.
pg 53 SKYCITY Entertainment Group Limited annual report 2012
Corporate governance CONTINUED
Short Term Incentive Arrangements The LTI Plan 2009 differs from the Rights Plan 2008 in two key Salaried Incentive Plans respects. Firstly, it includes the provision of financial assistance Senior Executive STI to selected senior executives by way of an interest-free loan by a To drive outstanding company and individual performance, subsidiary of the company and, secondly, it includes the SKYCITY operates a Short Term Incentive (STI) Plan for the immediate issue, or acquisition on-market, of shares in the senior executive group. For each individual, 80% of their STI company by such participants rather than the issue of share target is linked to the achievement of company financial targets rights (being rights to acquire ordinary shares in the company). with the remaining component dependent on the achievement of A trustee holds legal title to the relevant shares on behalf of such individual, largely non-financial strategic objectives. participants for a restrictive period until certain performance hurdles are met. In all other material respects, the LTI Plan 2009 For the year ended 30 June 2012, a total of $1,556,804 was paid is unchanged from the Rights Plan 2008. under the Senior Executive STI Plan to ten executives – an amount equivalent to 32% of combined base salary for this group. Details of the shares issued under the LTI Plan 2009 and outstanding as at 10 September 2012 are set out on page 63 of Salaried Employee STI and Individual Bonus Plan this annual report. To drive outstanding company and individual performance, SKYCITY operates a Short Term Incentive (STI) Plan for selected Executive Share Rights Plan 2008 senior salaried employees and those with operational The Long Term Incentive Plan (Rights Plan 2008) for senior accountability for a department or business unit. For each executives was introduced in respect of the 2008/09 financial individual, a minimum of 60% of their STI target is linked to the year, which was similar to the Long Term Incentive Plan approved achievement of minimum financial targets with the remaining for the Chief Executive Officer at the annual meeting in 2008. percentage dependent on the achievement of individual, Under the Rights Plan 2008, selected senior executives were role-specific targets. issued share rights entitling them to receive shares based on Payments under the Salaried STI Plan have a minimum trigger point the company’s achievement of designated performance hurdles. based on company and business unit financial targets and increase The performance hurdles involved comparison of the total according to the degree by which the company performs relative shareholder return (TSR) achieved by SKYCITY against the to these financial targets. For the year ended 30 June 2012, shareholder returns achieved by a group of comparable 284 salaried staff participated in the Salaried STI Plan. Based on Australasian companies (comparator group), and by the companies achievement of individual and financial targets, 283 staff received whose securities are in the NZSX50 index (index group). an average STI payment of 13% of their fixed salaries. In accordance with the terms of the Rights Plan 2008, performance All other permanent salaried employees who were not eligible to was assessed on 1 July 2011, 1 January 2012 and, finally, on 1 July participate in the Salaried STI Plan participated in a discretionary 2012. All remaining rights under the Rights Plan 2008 which had not bonus plan known as the Individual Bonus (IB) Plan. Under this previously become exercisable lapsed following the final performance plan, bonuses were awarded to those outstanding staff that testing date of 1 July 2012 on the basis that the relevant performance consistently exceeded the key performance indicators that were hurdles had not been fully satisfied. Accordingly, no share rights set for them at the commencement of the financial year. are currently issued and outstanding under the Rights Plan 2008. In total, 142 SKYCITY salaried personnel were paid incentives 10. RECOGNISE THE OBLIGATIONS TO ALL STAKEHOLDERS totalling $340,000 under the Salaried STI and IB Plans. SKYCITY acknowledges legal and other obligations to non- The board has approved the continuation of the Senior shareholder stakeholders such as employees, suppliers, Executive and Salaried STI Plans and the IB Plan for 2012/13 customers, regulators, and the community as a whole. with minimal changes. The SKYCITY Code of Business Practice sets out the company’s Long Term Incentive Arrangements commitment to the community and the standards of behaviour Executive Share Plan 2009 that can be expected by all stakeholders, including employees A new Long Term Incentive Plan (LTI Plan 2009) for senior and shareholders. executives was introduced in 2009, which is similar to the Long SKYCITY is aware that its business may be associated with Term Incentive Plan approved for the Chief Executive Officer at gambling and alcohol-related harm for some customers. Effective the annual meeting in 2009. and pro-active customer care are the cornerstone principles of The LTI Plan 2009 replaced the Rights Plan 2008 referred to SKYCITY’s approach to host responsibility. below with effect from 1 July 2009 for the 2009/10 financial year and subsequent years.
pg 54 SKYCITY Entertainment Group Limited annual report 2012
Corporate governance CONTINUED
COMPLIANCE WITH NZX BEST PRACTICE CODE AND ASX CORPORATE GOVERNANCE COUNCIL PRINCIPLES AND RECOMMENDATIONS SKYCITY confirms that other than as set out below it has complied with the NZX Corporate Governance Best Practice Code and the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations during the 2011/12 year: • The company has not included the biographical details of its current directors, or details of current members and chairpersons of its board committees, in this annual report. Their details are contained in the company’s 2012 Shareholder Review and are available at all times on the company’s website. • The company does not make available to external parties certain internal policies and procedures. SKYCITY believes that the board charter and the comprehensive references to governance in this annual report and on the company’s website provide good disclosure of the company’s internal processes and mechanisms and that the underlying intention of the ASX Corporate Governance Council’s recommendations on reporting of internal mechanisms have been met. • Shareholders have not approved the SKYCITY senior executive rights and share plans. The Executive Share Rights Plan 2008 was approved by the board in December 2008. As noted above, on 1 July 2012, all remaining rights under this Plan which had not become exercisable lapsed. The Executive Share Rights Plan 2008 was similar to the Long Term Incentive Plan approved for the Chief Executive Officer at the annual meeting in 2008. The Executive Share Rights Plan 2008 set out a remuneration structure for senior executives entitling them to receive shares based on the company’s achievement of designated performance hurdles, which involved comparison of the total shareholder return achieved by SKYCITY against the shareholder returns achieved by a group of comparable Australasian companies, and by the companies whose securities were in the NZSX50 index. The Executive Share Rights Plan 2008 imposed a three year restriction before benefits could be realised by participants. The Executive Share Plan 2009 (which replaced the Executive Share Rights Plan 2008) was approved by the board in September 2009 in respect of the 2009/10 financial year and subsequent years and, other than the two key differences detailed above, the terms remain unchanged from the Executive Share Rights Plan 2008.
pg 55 SKYCITY Entertainment Group Limited annual report 2012
Shareholder information
TWENTY LARGEST SHAREHOLDERS AS AT 15 AUGUST 2012
number of % shares of shares
1. HSBC Nominees (New Zealand) Limited A/C State 38,424,447Street 6.66% 2. JP Morgan Chase Bank NA 35,262,840 6.11% 3. Accident Compensation Corporation 32,650,213 5.66% 4. National Nominees Limited 27,683,960 4.80% 5. HSBC Nominees (New Zealand) Limited 27,522,161 4.77% 6. National Nominees New Zealand Limited 27,412,465 4.75% 7. JP Morgan Nominees Australia Limited 24,645,190 4.27% 8. Citibank Nominees (New Zealand) Limited 21,729,736 3.77% 9. RBC Investor Services Australia Nominees Pty Limited18,680,198 3.24% 10. New Zealand Superannuation Fund Nominees Limited 17,726,279 3.07% 11. HSBC Custody Nominees (Australia) Limited 16,964,551 2.94% 12. Premier Nominees Limited – Onepath Wholesale Australasian11,253,730 Shr 1.95% Fund 13. BNP Paribas Nominees (NZ) Limited 9,728,928 1.69% 14. AMP Investments Strategic Equity Growth Fund 7,088,705 1.23% 15. NZGT Nominees Limited – AIF Equity Fund 6,920,608 1.20% 16. Private Nominees Limited 6,463,208 1.12% 17. TEA Custodians Limited 5,796,988 1.00% 18. Westpac NZ Shares 2002 Wholesale Trust 5,561,753 0.96% 19. FNZ Custodians Limited 5,303,093 0.92% 20. BNP Paribas Noms Pty Ltd 5,269,253 0.91%
Tot al 352,088,306 61.02%
Total shares on issue as at 15 August 2012 were 576,958,340 of which 4,517,313 were held by Public Trust on behalf of eligible and future participants pursuant to the Chief Executive Officer Long Term Incentive Plan 2009 and the Executive Long Term Incentive Plan 2009. No shares were held by the company directly as treasury stock.
pg 56 SKYCITY Entertainment Group Limited annual report 2012
Shareholder information CONTINUED
DISTRIBUTION OF ORDINARY SHARES AND REGISTERED SHAREHOLDINGS AS AT 15 AUGUST 2012
number of Number shareholders of shares
1 – 1,000 3,562 1,397,126 1,001 – 5,000 9,381 25,981,893 5,001 – 10,000 3,603 25,556,641 10,001 – 100,000 3,235 72,809,489 > 100,000 179 451,213,191
Tot al 19,960 576,958,340
As at 15 August 2012, there were 1,259 shareholders (with a total of 88,440 shares) holding less than a marketable parcel of shares under the ASX Listing Rules, based on the closing share price of A$2.74. The ASX Listing Rules define a marketable parcel of shares as a parcel of shares of not less than A$500.
SUBSTANTIAL SECURITY HOLDERS In accordance with section 26(1) of the Securities Markets Act 1988, the following persons had given notice as at 15 August 2012 that they were substantial security holders in the company and held a relevant interest in the number of ordinary shares shown below.
Date of Relevant % of shares substantial interest in held at security number of date of notice shares notice
Accident Compensation Corporation 2 July 2012 34,673,549 6.01%
Investors Mutual Limited 8 August 2012 28,927,533 5.01%
No further substantial security holder notices had been received as at 10 September 2012.
pg 57 SKYCITY Entertainment Group Limited annual report 2012
DIRECTOR AND EMPLOYEE REMUNERATION
REMUNERATION OF DIRECTORS EMPLOYEE REMUNERATION Non-Executive Directors The numbers of employees or former employees of the company Remuneration paid to directors for services in their capacity as and its subsidiaries, not being directors of the company, who directors of SKYCITY Entertainment Group Limited during the received remuneration and other benefits in their capacity as year ended 30 June 2012 is as listed below: employees, the value of which was in excess of $100,000 and was paid to those employees during the financial year ended 30 June R H $250,000McGeoch2012, are listed below. (Chairman) P D Cullinane $136,972 P B $145,000 Remuneration includesHarman salary, incentive payments under the C J $155,000 SKYCITY performanceD pay incentive plan and short term cash Moller Sir Dryden Spring (1) $37,500 bonuses and, where applicable, the value of executive share B J options, rights and sharesCarter expensed during the year ended 30 $162,339 S H $147,042 June 2012. RemunerationSuckling shown below also includes settlement payments and payments in lieu of notice with respect to certain (1) Sir Dryden Spring retired as a director on 30 September 2011. In addition employees upon their departure from the company. to remuneration paid for services in his capacity as a director, he was paid $3,350.93 as a retirement payment in October 2011 following retirement from the board. REMUNERATION EMPLOYEES Richard Didsbury received total remuneration of $86,625 during the 2011/12 year. Richard Didsbury was appointed a director of $100,000–$109,999 46 the company following the end of the 2011/2012 year on 20 July $110,000–$119,999 29 2012. From 20 July 2012, remuneration payable to Richard $120,000–$129,999 24 Didsbury will be in respect of services provided in his capacity as $130,000–$139,999 20 a director. Prior to his appointment as a director, Richard $140,000–$149,999 12 Didsbury provided consultancy services to the Group and $150,000–$159,999 10 remuneration paid was in respect of consultancy services. $160,000–$169,999 5 $170,000–$179,999 4 No other non-executive director of the Group or parent company $180,000–$189,999 7 has, since the end of the financial year, received or become $190,000–$199,999 6 entitled to receive a benefit other than director’s fees for the $200,000–$209,999 4 2011/2012 financial year or reimbursement of expenses incurred $220,000–$229,999 3 in relation to company matters, or as is disclosed elsewhere in $230,000–$239,999 3 this annual report. $240,000–$249,999 3 Other Directorships $250,000–$259,999 2 $260,000–$269,999 1 Christchurch Casinos Limited, in which SKYCITY has a 50% $270,000–$279,999 1 interest, paid director’s fees of $40,000 each for A B Ryan and $290,000–$299,999 1 N B Morrison. These fees were paid to SKYCITY and were not $300,000–$309,999 1 received personally by either Messrs Ryan or Morrison. $380,000–$389,999 2 Queenstown Casinos Limited, in which SKYCITY has a 60% $390,000–$399,999 1 interest, paid director’s fees of $7,500 each for A B Ryan and P A $400,000–$409,999 2 Treacy. These fees were paid to SKYCITY and were not received $410,000–$419,999 1 personally by either Messrs Ryan or Treacy. $560,000–$569,999 1 $620,000–$629,999 1 $640,000–$649,999 1 $660,000–$669,999 1 $690,000–$699,999 1 $710,000–$719,999 2 $770,000–$779,999 1 $800,000–$809,999 1 $1,120,000–$1,129,999 1 Total 198
pg 58 SKYCITY Entertainment Group Limited annual report 2012
DIRECTORS’ DISCLOSURES
INTERESTS REGISTER P B Harman Disclosure of Directors’ Interests G R Media Holdings Limited and certain subsidiaries Director Section 140(1) of the New Zealand Companies Act 1993 requires Harman Consulting Limited Director and a director of a company to disclose certain interests. Under Shareholder subsection (2) a director can make disclosure by giving a general Harman Investments Limited Director and notice in writing to the company of a position held by a director in Shareholder another named company or entity. The following are particulars Metlifecare Limited Director included in the company’s Interests Register as at 30 June 2012 (notices given by directors during the year ended 30 June 2012 are marked with an asterisk): C J D Moller ICC Development (International) Limited Director R H McGeoch International Cricket Council Director Meridian Energy Limited Chair BGP Holdings plc (Malta) Director New Zealand Cricket (Inc.) Chair BGP Investments S.a.r.l (Luxembourg) Director New Zealand Transport Agency Chair Destination New South Wales Limited Director* NZX Limited Director McGeoch Holdings Pty Limited Chair Rugby New Zealand 2011 Limited Director Ramsay Health Care Limited Director Victoria University of Wellington Foundation Trustee Sydney Cricket and Sports Ground Trust Trustee Westpac New Zealand Limited Director Vantage Private Equity Growth Limited Chair Westpac Regional Stadium Trust Trustee B J Carter S H Suckling ASC Pty Limited Director Acemark Holding Limited Managing Badge Management Pty Limited Director Director* Cobbadah Pty Limited Director Barker Fruit Processors and certain subsidiaries Chair Eudunda Farmers Limited Director ECL Group Limited Chair Ferrier Hodgson Partner HSR Governance Limited Managing Genesee & Wyoming Australia Pty Limited Director Director* RSC Nominees PtyNew ZealandLimited Qualifications Director Authority Chair Territory Insurance OxfordOffice Clinic Chair Hospital Limited Director Oxford Health Group Limited Director P D Cullinane Restaurant Brands New Zealand Limited Director Assignment Group New Zealand Limited Director Takeovers Panel Member Low Flying Kiwis Limited Director and Shareholder The following details included in the Interests Register as at 30 STW Communications Group JuneLimited 2011, or entered duringDirector the year ended 30 Juneand 2012, have Shareholder been removed during the year ended 30 June 2012: The Antipodes Water Company • R H McGeochLimited is no longer a Directordirector of Events Newand South Shareholder Wales Pty Limited or a member of the NSW Board of Advice for Aon New Zealand. • S H Suckling is no longer chairperson of Stretton Publishing Company Limited, acting chairperson of Basketball New Zealand or a director of Stretton Clothing Company Limited and Carter Price Rennie Limited.
pg 59 SKYCITY Entertainment Group Limited annual report 2012
DIRECTORS’ DISCLOSURES CONTINUED
DIRECTORS’ AND OFFICERS’ INDEMNITIES Indemnities have been given to directors and senior managers of the company and its subsidiaries to cover acts or omissions of those persons in carrying out their duties and responsibilities as directors and senior managers.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARE TRANSACTIONS Directors disclosed, pursuant to section 148 of the New Zealand Companies Act 1993, the following acquisitions and disposals of relevant interests in SKYCITY shares during the period to 30 June 2012:
DATE OF ACQUISITION/ SHARES DISPOSAL ACQUIRED/ DURING PERIOD CONSIDERATION (DISPOSED)
B J (1) NZ$2,309.41 692Carter 7 October 2011 N B Morrison 23 September (2) 2011(88,404) Nil 23 September (2) 201188,404 Nil 15 March (2) 2012(127,694) (3) Nil 15 March (2) 201263,847 Nil
(1) Shares held by Tarquay Pty Limited on trust for Tarquay Superannuation Fund. (2) Share rights converted to shares under the Chief Executive Officer Long Term Incentive Plan 2008. (3) 63,847 share rights converted to shares and balance of 63,847 share rights lapsed in accordance with the terms of the Chief Executive Officer Long Term Incentive Plan 2008.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARES, OPTIONS AND CAPITAL NOTES Directors disclosed the following relevant interests in SKYCITY shares as at 30 June 2012:
SHARES BENEFICIALLY HELD
R H 69,091(1) McGeoch B J 31,418(2) Carter P D 17,250 Cullinane P B 22,273(3) Harman 10,000(4) C J 26,915(5) D Moller N B 627,285 Morrison 82,233(6) 1,876,536(7) (1) Shares held by McGeoch Holdings Pty Limited. (2) Shares held by Tarquay Pty Limited on trust for Tarquay Superannuation Fund. (3) Shares held by Forbar Nominees Limited. (4) Shares held by Investment Custodial Services Limited. (5) Shares held by First NZ Capital Limited. (6) Shares held by Perpetual Limited. (7) Shares acquired under the Chief Executive Officer Long Term Incentive Plan 2009 and held by Public Trust.
S H Suckling did not have any relevant interest in SKYCITY shares as at 30 June 2012.
pg 60 SKYCITY Entertainment Group Limited annual report 2012
NOTeholder information
CAPITAL NOTES In May 2000, SKYCITY Entertainment Group Limited issued 150 million unsecured subordinated capital notes for a five year term at an issue price of $1.00. In May 2005, the capital notes were reissued for a new term of five years at a fixed interest rate of 8.0% per annum. In May 2010, the capital notes were reissued for a further term of five years at a fixed interest rate of 7.25% per annum. For further information refer note 19 of the financial statements. As at 15 August 2012, SKYCITY was the holder of 93,549,500 capital notes as treasury stock. The capital notes held by SKYCITY are not included in the table below.
TWENTY LARGEST CAPITAL NOTEHOLDERS AS AT 15 AUGUST 2012
NUMBER OF % OF CAPITAL NOTES CAPITAL NOTES
1. FNZ Custodians Limited 4,063,000 2.71% 2. Investment Custodial Services Limited – A/C C 1,589,000 1.06% 3. Custodial Services Limited – A/C 3 997,000 0.66% 4. FNZ Custodians Limited – DRP NZ A/C 892,000 0.59% 5. Invercargill Licensing Trust 500,000 0.33% 6. Custodial Services Limited – A/C 4 484,000 0.32% 7. Custodial Services Limited – A/C 2 370,000 0.25% 8. Forsyth Barr Custodians Limited – 1–17.5 316,000 0.21% 9. Hugh McCracken Ensor & Vivienne Margaret Ensor - HMVE Family A/C 300,000 0.20% 10. Frimley Foundation 300,000 0.20% 11. H B Williams Turanga Trust – HB Williams Turanga A/C 300,000 0.20% 12. Resolution Investments Ltd 300,000 0.20% 13. Forsyth Barr Custodians Limited – 1–30 275,000 0.18% 14. Forsyth Barr Custodians Limited – 1–33 246,000 0.16% 15. Custodial Services Limited – A/C 6 240,000 0.16% 16. John Archer & Pearl Archer 200,000 0.13% 17. Fraser Smith Holdings Limited 200,000 0.13% 18. JBWere (NZ) Nominees Limited – A/C 31873 200,000 0.13% 19. Kings College Foundation 200,000 0.13% 20. John Richard Matthews & Rosemary Jennifer Matthews & Bruce Redvers Perkins - Matthews A/C 200,000 0.13%
Tot al 12,172,000 8.08%
DISTRIBUTION OF CAPITAL NOTE HOLDINGS AS AT 15 AUGUST 2012
Number of Number of NOTeholders capital notes
1– 1,000 1 250 1,001– 5,000 232 1,160,000 5,001– 10,000 447 4,181,500 10,001– 100,000 1,080 35,645,750 >100,000 43 109,012,500
Tot al 1,803 150,000,000
pg 61 SKYCITY Entertainment Group Limited annual report 2012
Company disclosures
STOCK EXCHANGE LISTINGS • Directors: D D Christian, N B Morrison, P A Treacy and R H SKYCITY Entertainment Group Limited is listed on both the McGeoch: New Zealand and Australian stock exchanges. SKYCITY Adelaide Pty Limited SKYCITY Entertainment Group Limited has been designated as SKYCITY Australia Finance Pty Limited ‘Non-Standard’ by the NZX due to the nature of the company’s SKYCITY Australia Pty Limited constitution. In particular, the constitution places restrictions on • Directors: N B Morrison, P A Treacy and R H McGeoch: the transfer of shares in the company in certain circumstances and provides that votes and other rights attached to shares may SKYCITY Treasury Australia Pty Limited be disregarded and shares may be sold if these restrictions are • Directors: N B Morrison, P A Treacy and B K Morgan: breached, as more particularly described on pages 63 and 64 of this annual report. SKYCITY Darwin Pty Limited Changes to Non-Wholly Owned Company Directorships SKYCITY ENTERTAINMENT GROUP LIMITED The changes to SKYCITY executives on the boards of non-wholly The following persons held office as directors of SKYCITY owned subsidiaries in the 12 month period ended 30 June 2012 Entertainment Group Limited as at the end of the 2011/2012 are set out below: financial year, being 30 June 2012: R H McGeoch, B J Carter, • A B Ryan resigned as a director of the following companies P D Cullinane, P B Harman, C J D Moller, S H Suckling and on 30 June 2012: N B Morrison. Christchurch Casinos Limited Sir Dryden Spring retired as a director of SKYCITY Christchurch Hotels Limited Entertainment Group Limited on 30 September 2011. Premier Hotels (Christchurch) Limited Queenstown Casinos Limited SUBSIDIARY COMPANIES • P A Treacy was appointed as a director of the following Subsidiary Company Directorships companies on 30 June 2012: The following persons held office as directors of subsidiaries of SKYCITY Entertainment Group Limited as at the end of the Christchurch Casinos Limited 2011/2012 financial year, being 30 June 2012: Christchurch Hotels Limited Premier Hotels (Christchurch) Limited • Directors: N B Morrison and P A Treacy: • N B Morrison was appointed as a director of Queenstown Planet Hollywood (Civic Centre) Limited Casinos Limited on 30 June 2012. SKYCITY Action Management Limited SKYCITY Auckland Holdings Limited Non-wholly Owned Company Directorships SKYCITY Auckland Limited At 30 June 2012, SKYCITY also had an interest in, and was SKYCITY Casino Management Limited represented by SKYCITY executives on the boards of, the SKYCITY Hamilton Limited companies listed below: SKYCITY International Holdings Limited • SKYCITY representatives on the board – N B Morrison and P SKYCITY Investments Australia Limited A Treacy: SKYCITY Investments Christchurch Limited SKYCITY Investments Queenstown Limited Christchurch Casinos Limited SKYCITY Management Limited Christchurch Hotels Limited SKYCITY Metro Limited Premier Hotels (Christchurch) Limited SKYCITY Wellington Limited Queenstown Casinos Limited Sky Tower Limited • SKYCITY representative on the board – N B Morrison: Toptown Nominees Limited Force Location Limited
pg 62 SKYCITY Entertainment Group Limited annual report 2012
OTHer information
WAIVERS FROM THE NEW ZEALAND AND AUSTRALIAN SKYCITY needs to ensure when it participates in gaming STOCK EXCHANGES activities that: No waivers were sought from either of the NZX or ASX Listing • it has the power under its constitution to take such action as Rules within the 12 month period preceding the date two months may be necessary to ensure that its suitability to do so in a before the date of this annual report. For the same period the particular jurisdiction is not affected by the identity or company relied upon the following waiver: actions (including share dealings) of a shareholder; and • on 9 February 2011, NZX granted a waiver from LR 7.11.1 • there are appropriate protections to ensure that persons (relating to the requirement for allotment to occur within five do not gain positions of significant influence or control over business days following the latest date on which applications SKYCITY or its business activities without obtaining any for securities close) in relation to the allotment of shares necessary statutory or regulatory approvals in those pursuant to the company’s dividend reinvestment plan. jurisdictions. All other waivers granted prior to the 12 month period preceding Accordingly, the constitution contains the following provisions the date two months before the date of this annual report had restricting the acquisition of shares in the company to achieve this. ceased to have effect or were not relied upon during the period. TRANSFER OF SHARES SHARE AND SHARE RIGHTS HOLDERS Clause 12.11 of the constitution provides that if a transfer of As at 10 September 2012, shares and share rights on issue were shares results in the transferee, and the persons associated with as detailed below: that transferee: • 1,876,536 shares issued under the Chief Executive Officer • holding more than 5% of the shares in SKYCITY; or Long Term Incentive Plan approved by shareholders at the 2009 annual meeting, held by Public Trust on behalf of the • increasing their combined holding further beyond 5% if: Chief Executive Officer. The shares have been purchased by – they already hold more than 5% of the shares in Mr Morrison under the Chief Executive Officer Long Term SKYCITY; and Incentive Plan with the assistance of interest-free loans and are held on behalf of Mr Morrison by Public Trust for a – the transferee has not been approved by the relevant restrictive period. The shares vest in Mr Morrison only when regulatory authority as an associated casino person of performance hurdles set by the board of directors are met; any casino licence holder, and • then the votes attaching to all shares held by the transferee • 2,217,325 shares issued under the Executive Long Term and the persons associated with that transferee are Incentive Plan approved by directors in September 2009, suspended unless and until either: held by Public Trust on behalf of 18 participants. The shares • each regulatory authority advises that approval is not have been purchased by the participants under the needed; or Executive Long Term Incentive Plan with the assistance of • any regulatory authority which determines that its approval is interest-free loans and are held on behalf of the participants required approves the transferee, together with the persons by Public Trust for a restrictive period. The relevant shares associated with that transferee, as an associated casino vest in a participant only when performance hurdles set by person of any applicable casino licence holder; or the board of directors are met. • the board of the company is satisfied that registration of the LIMITATIONS ON ACQUISITION OF ORDINARY SHARES proposed transfer will not prejudice any casino licence; or The company’s constitution contains various provisions which are • the transferee and the persons associated with that included to take into account the application of: transferee dispose of such number of SKYCITY shares as will • the Gambling Act 2003 (New Zealand); result in their combined holding falling below 5% or, if the regulatory authorities approve in respect of the transferee • the Casino Act 1997 (South Australia); and the persons associated with that transferee a higher • the Gaming Control Act (Northern Territory); and percentage, the lowest such percentage approved by the regulatory authorities. • the 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.
pg 63 SKYCITY Entertainment Group Limited annual report 2012
OTHer information CONTINUED
If a regulatory authority does not grant its approval to the OTHER DISCLOSURES proposed transfer, SKYCITY may sell such number of the shares SKYCITY Entertainment Group Limited has no securities subject held by the transferee and by any persons associated with that to an escrow arrangement. transferee, as may be necessary to reduce their combined shareholding to a level that will not result in the transferee and From time to time, the Public Trust acquires shares in the the persons associated with that transferee being an associated company on-market for the purposes of the Chief Executive person of that casino licence holder. Officer Long Term Incentive Plan 2009 and Executive Long Term Incentive Plan 2009 as referred to above. In addition, SKYCITY The power of sale can only be exercised if SKYCITY has given (or a nominee or agent of SKYCITY) may, from time to time, one month’s notice to the transferee of its intention to exercise acquire existing shares in the company to satisfy its obligations that power and the transferee has not, during that one month to participating shareholders under the company’s Dividend period, transferred the requisite number of shares in SKYCITY Reinvestment Plan established in February 2011. As at to a person who is not associated with the transferees. 17 September 2012, the company does not have in place an on-market share buy-back programme. DONATIONS SKYCITY Entertainment Group Limited is incorporated in Donations of $33,522 were made by the company during the New Zealand and is not subject to Chapters 6, 6A, 6B and 6C 12 month period ended 30 June 2012 ($1,035,664 during the of the Corporations Act (Australia). 12 months ended 30 June 2011). There are no material differences between NZX Appendix 1 and ASX Appendix 4E issued by SKYCITY Entertainment OTHER LEGISLATION/REQUIREMENTS Group Limited on 15 August 2012 in respect of the year ended General limitations on the acquisition of the securities imposed 30 June 2012 and this annual report. by the jurisdiction in which SKYCITY is incorporated (i.e. New Zealand law) are outlined in the following paragraphs. As at the date of this annual report, SKYCITY Entertainment Group Limited has a Standard & Poor’s BBB– rating with a Other than the provisions noted on pages 63 and 64, the only stable outlook. significant restrictions or limitations in relation to the acquisition of securities are those imposed by New Zealand laws relating to takeover, overseas investment and competition. The New Zealand Takeovers Code creates a general rule under which the acquisition of more than 20% of the voting rights in SKYCITY, or the increase of an existing holding of 20% or more of the voting rights in SKYCITY, can only occur in certain permitted ways. These include a full takeover offer in accordance with the Takeovers Code, a partial takeover offer in accordance with the Takeovers Code, an acquisition approved by an ordinary resolution, an allotment approved by an ordinary resolution, a creeping acquisition (in certain circumstances), or compulsory acquisition if a shareholder holds 90% or more of the shares in the company. The New Zealand Overseas Investment Act 2005 and the Overseas Investment Regulations 2005 regulate certain investments in New Zealand by overseas persons. In general terms, the consent of the New Zealand Overseas Investment Office is likely to be required when an ‘overseas person’ acquires shares or an interest in shares in SKYCITY Entertainment Group Limited that amount to 25% or more of the shares issued by the company, or if the overseas person already holds 25% or more, the acquisition increases that holding. The New Zealand Commerce Act 1986 is likely to prevent a person from acquiring shares in SKYCITY if the acquisition would have, or would be likely to have, the effect of substantially lessening competition in a market.
pg 64 SKYCITY Entertainment Group Limited annual report 2012
DIRECTORY
REGISTERED OFFICE Minter Ellison AUSTRALIA SKYCITY Rudd Watts Computershare Entertainment Lumley Centre Investor Services Group Limited 88 Shortland Street Pty Limited Level 6 PO Box 3798 Level 3 Federal House Auckland 60 Carrington Street 86 Federal Street Sydney NSW 2000 Bell Gully PO Box 6443 GPO Box 7045 Vero Centre Wellesley Street Sydney NSW 2000 48 Shortland Street Auckland PO Box 4199 New Zealand Telephone: Auckland +61 2 8234 5000 Telephone: Facsimile: Finlaysons +64 9 363 6000 +61 2 8235 8150 81 Flinders Street Facsimile: GPO Box 1244 +64 9 363 6140 Adelaide BANKERS Email: [email protected] South Australia www.skycityentertainmentgroup.com ANZ National Bank Commonwealth Bank of Australia Registered Office inA ustralia AUDITOR c/o Finlaysons Bank of New Zealand PricewaterhouseCoopers 81 Flinders Street Westpac New Zealand GPO Box 1244 188 Quay Street Adelaide Auckland City South Australia Private Bag 92162 CAPITAL NOTES TRUSTEE Auckland The New Zealand Telephone: Guardian Trust +61 8 8235 7400 REGISTRARS Company Limited Facsimile: NEW ZEALAND Vero Centre +61 8 8232 2944 48 Shortland Street Computershare PO Box 1934 Investor Services SOLICITORS Auckland Limited Russell McVeagh Level 2 Telephone: Vero Centre 159 Hurstmere Road +64 9 377 7300 48 Shortland Street Takapuna Facsimile: PO Box 8 Private Bag 92119 +64 9 377 7470 Auckland Auckland
Telephone: +64 9 488 8700 Facsimile: +64 9 488 8787 SKYC205 09/12 SKYC205 designedby insight .com
We would like to thank the following SKYCITY staff members for their time and use of their images within this year’s Annual Report: Nava Fedaeff, Eugene Yan, Liam Mundt, Carl Maunder, Jim Tully, Yi Jun (Aileen) Zhu, Raine Liu, Jared Holt, Rebekah Bird. www.skycity.co.nz