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
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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 $138.5 million, area into the destination for offerings that The growth achieved during the year, I believe, up 12.6 percent on last year. The net result excite diners, draw visitors and thrill players shows we are getting it right for shareholders, was that investors saw a 2.6 cent increase within walking distance of each other, by making customers, local economies and the wider in earnings per share to 24.0 cents per share. the very most of the real estate available to us in community in somewhat challenging trading the area. The launch of our new Premier Rewards environments. The result should also serve to A flourishing precinct loyalty programme brings these offerings even reassure investors, governments and other The runaway success of our Federal Street closer together by providing multiple rewards interested parties that our plans to fund the restaurants has not only seen us collect a clutch and discounts. NZICC and the redevelopment of the Adelaide of prestigious awards this year, it’s also drawn Should we ultimately proceed with the Casino are well considered, responsible and over 300,000 diners to the area and set development of the NZICC, SKYCITY’s capable of delivering transformative and wide- the stage for further development. Food and activities will span three blocks of downtown reaching change. However, whilst we believe beverage returns were up a very healthy Auckland. We remain focused on successfully in the significant potential of these major 24 percent year on year, reinforcing again the negotiating the rights to develop, deliver and investment projects, shareholders should be wisdom of investing in quality. With more operate this iconic International Convention
PAGE 9 CHIEF EXECUTIVE’S REPORT
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10.7$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
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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
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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