SKYCITY ENTERTAINMENT GROUP LIMITED ANNUAL REPORT YEAR ENDED 30 JUNE 2015 WorldReginfo - 162e44d5-61a1-47a2-83ff-78cfc59b7c77 CONTENTS GENERAL ANNUAL MEETING Chairman and Chief Executive Officer’s Review 4 The 2015 annual meeting of SKYCITY Entertainment Group Limited will be held on Friday 13 November 2015 in the Brand Campaign 12 SKYCITY Theatre, Level 3, SKYCITY Auckland, Corner of Sponsorship Highlights 13 Wellesley and Hobson Streets, Auckland, commencing at 10.00am (New Zealand time). New Zealand International Convention Centre 14 This report is dated 25 September 2015 and is signed on behalf SKYCITY – An Award-Winning Business 16 of the board of directors of SKYCITY Entertainment Group Corporate Social Responsibility 17 Limited by: Our Board 22 FINANCIAL STATEMENTS Chris Moller Bruce Carter Independent Auditors’ Report 26 Chairman Deputy Chairman Income Statement 28 Statement of Comprehensive Income 29 Balance Sheet 30 Statement of Changes in Equity 31 Statement of Cash Flows 32 Notes to the Financial Statements 33 Reconciliation of Normalised Results to Reported Results 67 CORPORATE GOVERNANCE STATEMENT AND OTHER DISCLOSURES Corporate Governance Statement 70 Shareholder Information 82 Director and Employee Remuneration 84 Directors’ Disclosures 85 Company Disclosures 88 Other Information 89 Directory 91 Unless otherwise stated, all dollar amounts in this annual report are expressed in New Zealand dollars. An electronic copy of this annual report is available in the Investor Centre section of the company’s website at www.skycityentertainmentgroup.com. 2 ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 WorldReginfo - 162e44d5-61a1-47a2-83ff-78cfc59b7c77 CONTENTS SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM 3 WorldReginfo - 162e44d5-61a1-47a2-83ff-78cfc59b7c77 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW MOMENTUM GROWING FOLLOWING INVESTMENT OF PAST FIVE YEARS 4 ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 WorldReginfo - 162e44d5-61a1-47a2-83ff-78cfc59b7c77 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW Momentum building, following five years of solid investment, laying the foundations for further growth. The 2015 financial year has been a Business of 1.36% in line with the positive one for SKYCITY – a year that theoretical win rate has seen excellent results in most parts of the business following five years of • Dividend policy maintained careful planning and solid, strategic with an annual total dividend of investment in business initiatives, 20 cents per share capital projects and tourism infrastructure. Normalised revenue (including gaming GST) was $1,007.7 million and The main highlights include: normalised EBITDA (earnings before interest, taxes, depreciation and • Record revenue for the Group amortisation) was $304.9 million. exceeding $1 billion for the first time in the Company’s history The full year results for 2015 are very pleasing (with the exception of • SKYCITY Auckland was an Adelaide) with strong and sustained outstanding performer in the momentum across the core businesses. Group once again We have continued to achieve strong • Another very strong year for growth across our New Zealand International Business across the properties and International Business Group – normalised revenue up and have delivered record revenues 42.6% exceeding $1 billion for the first time. • SKYCITY Hamilton and our This reflects the significant investment two Queenstown properties in our underlying businesses, particularly returned to growth Auckland, over the past few years and it is exciting to see the returns now being • Significant progress made on the achieved. New Zealand International Convention Centre project, Auckland continued its positive with construction expected to momentum exhibited over recent start before the end of the year times, delivering record results with strong growth across all business • Normalised NPAT (net profit after segments. The ongoing success of tax) of $134.1 million was up 8.8% SKYCITY’s widely-lauded Federal on the previous corresponding Street restaurants, high average period occupancies in both the SKYCITY Hotel and SKYCITY Grand Hotel, • Reported NPAT for the full year growth in Sky Tower visitation and was $128.7 million, up 30.7% on Convention Centre bookings and the previous period, reflecting an the enhancements made to our improved win rate in International international ‘Horizon’ and domestic SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM 5 WorldReginfo - 162e44d5-61a1-47a2-83ff-78cfc59b7c77 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW Convention Centre (NZICC) and it is our expectation to commence construction of this landmark Auckland tourism facility this year. Following SKYCITY and the Crown agreeing on the preliminary design for the NZICC in May 2015, the Auckland Council announced that our resource consent application has been approved. The approval enables SKYCITY to now seek the amendments necessary to incorporate the preliminary design changes that were agreed with the Crown. This is excellent news for the project and allows SKYCITY to move ahead with selecting a construction partner. Plans to activate various gaming concessions are well advanced and will come into effect once the building contract is signed. The 32,000 square metre building will be capable of hosting meetings of up to 3,150 people, two concurrent events of 1,200 delegates each and one-off events of NIGEL MORRISON up to 4,200 people. The NZICC will be the MANAGING DIRECTOR largest purpose-built convention centre in AND CHIEF EXECUTIVE OFFICER the country. SKYCITY plans to construct a new laneway VIP gaming offerings have all contributed to that will provide Aucklanders and visitors Auckland’s very pleasing results. with a new public space featuring shops, cafés, bars and quality signature restaurants like MOMENTUM As observed in our interim results, the those on nearby Federal Street. CONTINUES TO BUILD disruption to trading from the redevelopment of the Adelaide Casino over the period was SKYCITY has also committed to building a ON THE NZICC PROJECT, significant, with the A$50 million new 5-star, 300 room hotel on Hobson Street, BRINGING JOBS, redevelopment of the existing property only adjacent to the NZICC. Currently we are GROWTH AND MUCH- being completed in January this year. While exploring partnering options with various Adelaide Casino achieved modest revenue external investors for the development and NEEDED ECONOMIC growth for the full year, with normalised ownership of the hotel. revenue up 4.8% to A$174.1 million, INVESTMENT IN the disruption and unsatisfactory cost Momentum continues to build on the AUCKLAND'S CBD. management over the period delivered a NZICC project, bringing jobs, growth disappointing EBITDA result - down 19.2% and much-needed economic investment to A$27.3 million. Management has been in Auckland’s CBD. firmly focused on addressing the issues and looks forward to delivering significantly AUCKLAND improved results this year, notwithstanding SKYCITY Auckland continues as the standout the challenging economic environment in performer across the Group, following the South Australia. successful business initiatives and capital investments over the past five years. NEW ZEALAND INTERNATIONAL CONVENTION CENTRE Record results at the property saw normalised We have made very pleasing progress in revenue up 13.0% to $602.6 million relation to the New Zealand International and normalised EBITDA up 13.7% to 6 ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 WorldReginfo - 162e44d5-61a1-47a2-83ff-78cfc59b7c77 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW $247.8 million over the period. International FIFA during the Under 20 Football World Business normalised revenues at SKYCITY Cup, reinforcing our position as the premier Auckland were up 38.7% to $81.3 million, entertainment destination in New Zealand. reflecting the quality of SKYCITY’s international offering and Auckland’s strong The strong growth in Auckland is a result appeal as an international destination. of continued good management under the Auckland has now delivered six consecutive leadership of Chief Operating Officer quarters of EBITDA growth – an outstanding New Zealand and General Manager result. SKYCITY Auckland John Mortensen, Assistant General Manager SKYCITY Both revenue and EBITDA growth were Auckland Matt Ballesty and their team, the achieved across all business activities with investments we have made in the property notable improvements achieved in the and the precinct, and positive external and SKYCITY AUCKLAND international and domestic gaming business, economic factors. particularly within table games, underpinned CONTINUES AS THE by improved customer segmentation and HAMILTON STANDOUT PERFORMER experiences and the continued success of our Our Hamilton property has delivered solid Federal Street restaurants. Gaming machines results, and we are starting to see some ACROSS THE GROUP, also delivered a robust performance, despite encouraging growth, under the leadership FOLLOWING THE a relatively strong comparative period. of General Manager Michelle Baillie who SUCCESSFUL BUSINESS moved to SKYCITY Hamilton from SKYCITY Auckland’s Federal Street dining SKYCITY Queenstown in April 2014. INITIATIVES AND CAPITAL precinct continues to deliver fantastic results, Normalised revenue was up 4.5% to INVESTMENTS OVER THE with Depot winning Metro Magazine’s $50.6 million and normalised EBITDA was Restaurant of the Year 2015 – a great PAST FIVE YEARS. accolade following on from MASU winning the