CROW N L IMITED
CROW N L IMITED
ANN UAL REPORT 2008
ANNUAL REPORT 2008
CONTENTS
Executive Chairman’s Letter
Crown’s Gaming Portfolio
Chief Executive Officer’s Report
Australian Casinos
• Crown Melbourne
• Burswood
US Casino Acquisition
• Cannery Casino Resorts
Joint Venture Businesses
• Melco Crown Entertainment
• Gateway
• Aspinalls
• Betfair Australia
• Other US Investments
Community and the Environment
Corporate Governance Statement
Remuneration Report
Directors’ Statutory Report
Auditor’s Independence Declaration
Independent Auditor’s Report
Directors’ Declaration
Financial Report
Shareholder Information
Additional Information
Corporate Information
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Inside Back Cover
A NNUAL GENERAL MEETING
Tuesday 28th October, 11.00am River Room, Level 1, Crown Towers
8 Whiteman Street, Southbank Victoria 3006
FINA NC IA L CALENDAR
Payment of fi nal dividend
Annual General Meeting
2009 interim results
17 October 2008
28 October 2008
Second half of February 2009
Crown Limited ABN 39 125 709 953
Executive Chairman’s Letter
Dear fellow shareholder,
On behalf of your Board of Directors, I am pleased to present
Crown Limited’s inaugural annual report as a publicly listed
entity in its own right.
The year has marked an important milestone in Crown’s history
with the separation of PBL into two separately listed companies.
The move to a pure play gaming enterprise has allowed Crown
to focus on developing its business strategy which is underpinned
by high cash generating businesses in Australia, a conservative
financial structure and increasing geographical diversification.
J A M E S P A C K E R
E X E C U T I V E C H A I R M A N
Crown announced a full-year normalised net profit of $370.1 million for the financial
year ended 30 June 2008. The Group’s wholly-owned and operated businesses, Crown
Melbourne and Burswood, continue to perform well, delivering solid normalised
EBITDA growth of 8.2 percent.
In December 2007, Crown announced it had agreed to acquire 100 percent of
Cannery Casino Resorts in the United States, subject to regulatory approval. Cannery
has an attractive long-term growth profile which provides entry into the United States
“locals” casino market and will further diversify Crown’s portfolio.
Melco Crown Entertainment Limited (MPEL) has shown significant improvement
during the year. Crown Macau traded well in completing its first full year of operation.
MPEL’s next development, City of Dreams, is on track to open in the first half of 2009.
The acquisition of Gateway Casinos and Entertainment Inc (Gateway) in Canada
was completed under a 50:50 joint venture with Macquarie Bank in November 2007.
Gateway operates nine casinos across British Columbia and Alberta.
Since the end of the financial year, Crown has raised $1.0 billion of term debt which
has extended the maturity profile of Crown’s debt portfolio.
The Directors have announced a final dividend of 29 cents per ordinary share,
40 percent franked, which brings the total dividend for the year to 54 cents per share.
On behalf of the Board, I wish to thank the management and staff of Crown for their
contribution to a successful and historic year for Crown Limited. I wish also to thank
shareholders for their continued support.
p . 1
J A M E S P A C K E R
E X E C U T I V E C H A I R M A N
CROWN LIMITED ANNUA L REPORT 2 0 08
CROWN LIMITED ANNUA L REPORT 2 0 08
Crown’s Gaming Portfolio
MELBOURNE
AUSTRALIA
100% OWNED
(cid:129) 2,500 slot machines
(cid:129) 350 table games
(cid:129) Two hotels with 950 rooms
(cid:129) Third hotel under
construction (658 rooms)
(cid:129) The Palms 900 seat showroom
(cid:129) The Palladium 2000
seat ballroom
(cid:129) 50 restaurants and bars
(cid:129) International designer
boutiques
(cid:129) 13 cinemas
PERTH AUSTRALIA
100% OWNED
(cid:129) 1,750 slot machines
(cid:129) 170 table games
(cid:129) Two hotels with 693 rooms
(cid:129) 20,000 seat Burswood Dome
(cid:129) Burswood Theatre
& Convention Centre
(cid:129) 14 restaurants and bars
(cid:129) Retail outlets
p . 2
PITTSBURGH AND
LAS VEGAS USA. WILL BE
100% OWNED, SUBJECT TO
REGULATORY APPROVAL.
(cid:129) US “locals” casino operator
with one casino in Pittsburgh
and three in Las Vegas.
(cid:129) The Meadows permanent
facility in Pittsburgh is due
for completion in April 2009.
(cid:129) Eastside Cannery opened
in Las Vegas in August 2008.
(cid:129) Cannery will operate
approximately 9,000 slot
machines, 73 table games
and 514 hotel rooms on
completion of the Meadows
permanent facility.
Crown’s Gaming Portfolio
MACAU
37.9 %
INTEREST
Crown Macau
(cid:129) 240 slot machines
(cid:129) 240 table games
Mocha Clubs
(cid:129) A portfolio of gaming lounges
operating approximately
1,100 slot machines.
City of Dreams
(cid:129) Upon completion in 2009
it is expected to have
1,500 slot machines
and 550 table games.
CANADA
50% INTEREST
(cid:129) Operates nine casinos
in Western Canada.
(cid:129) Gateway will operate more
than 5,400 slot machines
and over 200 tables together
with 277 hotel rooms upon
completion of current
development projects.
p . 3
AUST & NZ
50% INTEREST
(cid:129) Betfair Australasia operates
a betting exchange for
customers who are residents
of Australia or New Zealand.
UK
50% INTEREST
(cid:129) Aspinalls operates four
casinos in the United
Kingdom with a total
of 200 slot machines
and 120 table games.
CROWN LIMITED ANNUA L REPORT 2 0 08
Chief Executive Officer’s Report
In December 2007, Crown began its journey as an independent
entity. Through its Australian experience at Crown Melbourne
and at Burswood, Crown has a strong track record in the
management and operation of world class casinos. This
includes expertise in product optimisation, loyalty programs,
effective direct marketing and key non-gaming activities.
Crown has also built an extensive database of VIP High Roller
players across the Asian region supported by an experienced
sales network. Over many years, Crown’s reputation for
high-level service and quality gaming facilities has earned
it significant loyalty from this market.
R O W E N C R A I G I E
C H I E F E X E C U T I V E O F F I C E R
For the 12 months to 30 June 2008, the Group reported a normalised net profit
after tax (NPAT) of $370.1 million. The year’s reported net profit of $3,563.2
million was impacted by the one-off results from discontinued operations and
net non-recurring gains and asset write downs.
For the year ended 30 June 2008
Operating revenue
Net operating expenses
Earning before interest, taxation, depreciation and amortisation (EBITDA)
Earning before interest and taxation (EBIT)
Net profi t after tax (NPAT)
*Normalised and excluding discontinued operations and non-recurring items
$million*
2,026.2
(1,437.4)
588.8
456.0
370.1
Operating cash flows generated were $570 million for the 12 months and net debt
at 30 June 2008 was $16.0 million.
Australian casinos
Crown Melbourne and Burswood continued to cement their leadership positions
in the Australian casino industry by posting another solid set of results, featuring
normalised EBITDA growth of 8.2 percent.
Crown Melbourne reported gains of 6.4 percent in normalised EBITDA to
$433.3 million. Reported EBITDA for the period was $444.1 million, reflecting
an above theoretical win rate of 1.41 percent. Normalised revenue increased
by 4.1 percent to $1,371.0 million, while reported revenue increased to
$1,383.3 million.
Normalised EBITDA from Burswood was $195.3 million, up 12.6 percent on
the prior year. Reported EBITDA for the period was $188.8 million, reflecting
a below theoretical win rate of 1.27 percent which generated a negative impact
of $6.5 million. Burswood’s normalised revenue increased by 14.2 percent over
the previous year to $655.2 million. Reported revenue increased to $647.7 million.
p . 4
Chief Executive Offi cer’s Report
Continued
Crown Melbourne has been a proven earnings generator over the last decade and
in the four years since its acquisition, EBITDA at Burswood has more than doubled
(see Figures 1 and 2).
FIGURE 1
CROWN MELBOURNE 10 YEAR NORMALISED REVENUE
AND EBITDA PERFORMANCE
FIGURE 2
BURSWOOD 10 YEAR NORMALISED REVENUE
AND EBITDA PERFORMANCE
Normalised Revenue
Normalised EBITDA
before Crown Ownership
Normalised EBITDA since
change in Ownership
Normalised Revenue
Normalised EBITDA
before Crown Ownership
Normalised EBITDA since
change in Ownership
500
450
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100
50
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Crown is committed to maintaining the leading positions of these Australian
operations and has a comprehensive capital expenditure program continuing over the
next three years to accelerate the growth of both properties.
Construction of a third hotel at Crown Melbourne is well underway and the upgrade
of Crown Towers in Melbourne has commenced. Refurbishments of the main casino
floors at both Crown Melbourne and Burswood are progressing steadily.
United States casino acquisition
In December 2007, Crown agreed to acquire Cannery Casino Resorts in the United
States (US) for US$1.75 billion on a cash and debt-free basis, subject to regulatory
approval. Cannery operates in the “locals” gaming markets of Pittsburgh and Las
Vegas, with a portfolio comprising the Meadows (temporary facility) in Pittsburgh,
Cannery North, Rampart Casino and Eastside Cannery in Las Vegas. In April 2009,
the Meadows permanent facility is due to open in Pittsburgh, in what is proving to
be a very strong market.
The licensing process in Nevada and Pennsylvania is progressing well and we are
hopeful of settling the Cannery acquisition in the coming months. It is expected
to be EPS and cash flow positive in the first full year of ownership, with an EBITDA
contribution of approximately US$200 million expected in 2009/10.
Joint venture businesses
Melco Crown Entertainment Limited
Melco Crown Entertainment Limited (MPEL) has shown significant improvement
during the year. Crown’s share of MPEL’s financial results for the period was a
net loss of $5.4 million which was a significant improvement from a loss of
$47.0 million reported in 2007.
CROWN LIMITED A NNUAL REPORT 2 008
p . 5
Chief Executive Offi cer’s Report
Continued
Crown Macau traded well in completing its first full year of operations. It reported
for the 2008 financial year an adjusted EBITDA1 of US$110.6 million, with trading
in the second half generating US$116.8 million of reported adjusted EBITDA.
The Macau market exhibited exceptional growth, with revenue up 49.2 percent for the
12 months to 30 June 2008. MPEL believes the recent announcements by the Central
Government of China on visa restrictions are aimed at moderating that strong growth.
The Chief Executive of the Macau SAR has recently announced that the government
intends capping the number of licensed casino operators “for the foreseeable future”
and is ceasing further land grants for casino developments. It has also indicated
a future regime which may cap both the number of tables and commission rates.
MPEL is supportive of these changes.
MPEL is on track to open City of Dreams in the first half of 2009. We are very
excited about this project and believe it will be a truly spectacular property.
During the year, MPEL issued an additional 37.5 million American Depository
Shares, raising approximately US$570 million. This diluted Crown’s holding
from 41.4 percent to 37.9 percent. In addition, MPEL closed a fully syndicated
US$1.75 billion debt facility, with recourse only to MPEL’s assets, of which
US$500 million was drawn at 30 June 2008.
Gateway
In November 2007, New World Gaming, a 50:50 joint venture between Crown and
Macquarie Bank, completed the transaction to buy Canadian casino operator Gateway
Casinos. The acquisition was completed with a total Crown outlay of $224 million,
structured as $75 million equity and $149 million of subordinated debt. To complete
the acquisition, New World Gaming secured seven year debt facilities of approximately
C$1.1 billion with recourse solely to the joint venture assets.
Gateway’s contribution to Crown’s earnings for the year comprises an equity accounted
loss of $6.0 million, offset by interest income of $9.2 million on subordinated debt,
giving a net contribution of $3.2 million. Performance is expected to improve over
the medium term following the implementation of operational improvements and
the completion of property expansions and upgrades.
Aspinalls
Crown’s share of Aspinalls’ reported loss was $9.1 million. The result was impacted
by the introduction of smoking bans from July 2007, increased casinos tax, a low
win rate at Aspinalls Club in London and pre-opening costs at Swansea and Newcastle.
Recent trading has improved with significantly higher VIP volumes at Aspinalls
Club and Newcastle has traded profitably in the second half.
p . 6
Betfair Australasia
Crown holds a 50 percent interest in Betfair Australasia under a joint venture with
The Sporting Exchange Limited, the world’s largest betting exchange. Betfair is the
only licensed betting exchange in Australia and has operated under licence from
the Tasmanian Government since February 2006.
Th e Betfair Australasia business continues to build critical mass and has recently achieved
cash break even. This is despite the negative impacts during the year of Equine
Influenza and the severe marketing restrictions imposed on the business by legislation
in various states. Betfair is in the process of challenging the legality of these restrictions.
(1) Adjusted EBITDA is earnings before interest, taxes, depreciation, amortisation, pre-opening costs, stock based
compensation cost and other non-operating income and expenses, as reported by MPEL.
Chief Executive Offi cer’s Report
Continued
Other US investments
Crown holds a 19.6 percent interest in Fontainebleau Resorts LLC, a United States
venture that is developing a major new casino resort and entertainment complex in
Las Vegas and redeveloping a hotel resort in Miami. In April 2008, Fontainebleau
diluted its interest in Fontainebleau Miami through the sale of a 50 percent interest
to Dubai-based Nakheel Hotels.
During the year, Crown purchased a 4.9 percent fully diluted stake in Station Casinos
and a 2.5 percent stake in Harrah’s Entertainment Inc.
Crown has completed a review of the carrying value of each of the above US casino
investments (categorised under Australian Accounting Standards as “Available for
Sale Financial Assets”). Th is review has seen the book value of these assets written down
to $462 million, with $181 million expensed and $77 million taken to foreign
exchange reserves. Crown remains comfortable with the long-term prospects of each
of these investments.
Crown has written off its $45 million investment in LVTI, a joint venture company
in which Crown held a 37.5 percent interest, following LVTI’s decision not to exercise
its option to acquire a 27 acre site in Las Vegas.
Debt refinancing
In August 2008, Crown announced it had raised $1.01 billion in new debt facilities.
These new facilities have been used to partly repay Crown’s existing $2.15 billion
Syndicated Loan Facility which is due to mature in August 2010.
Crown has commenced a program to fix interest rate exposure for more than
75 percent of its prospective net debt (post–Cannery settlement). Currently
approximately $1 billion of debt denominated in US dollars has been fixed for
between five and 12 years at a cost of approximately 5.9 percent per annum.
Outlook
Crown management’s focus over the coming twelve months will be on consolidating
the performance of recent international acquisitions, delivering forecast earnings and
managing the major capital expenditure programs at its existing Australian properties.
I would like to sincerely thank the Board, management and staff for their dedicated
contribution in 2008.
R O W E N C R A I G I E
C H I E F E X E C U T I V E O F F I C E R
More information
More information regarding calculations of normalised results is included in Crown’s
2008 Full Year Results Announcement, which is available on Crown’s website at:
www.crownlimited.com under the heading Investors – Presentations and Briefings.
p . 7
CROWN LIMITED ANNUA L REPORT 2 0 08
AUSTRALIAN CASINO PROPERT IES
Crown Melbourne
Melbourne’s premier entertainment complex is
recognised as one of the largest and most diverse
in the southern hemisphere, attracting more than
16 million visitors each year.
Overview
Crown Melbourne’s integrated facilities
feature Crown Casino; the Crown
Towers and Crown Promenade hotels;
the Palladium, which is Australia’s largest
ballroom; more than 50 restaurants
and bars; an extensive collection of
international designer boutiques and
13 cinemas. Crown Melbourne holds
a 99 year lease over the Crown Melbourne
site to 2092 and is licensed to operate
the casino to 2033.
Main floor gaming revenue for the year
grew 5.7 percent to $801.8 million.
This was in spite of the introduction
of full smoking bans in bars on the main
gaming floor and an increase in the
Victorian Government gaming machine
levy during the year.
VIP commission program play
decreased 3.5 percent (at theoretical)
to $289.3 million on slightly reduced
turnover of $21.4 billion. Non-gaming
revenue growth of 8.1 percent to
$279.9 million was driven by an
exceptionally strong result in both
hotels and food and beverage.
Operating margins increased from
30.9 percent to 31.6 percent during
the year, reflecting the strong growth
in higher margin businesses.
Crown Melbourne property update
The staged upgrade of the Crown
Melbourne complex continues. On the
gaming floor, the table games department
opened the first of a series of premium
gaming areas which follows on from the
opening of the Riverside Gaming Lounge
in December 2006. Sho Noodle bar,
Crown Melbourne’s newest and most
exciting gaming floor dining experience,
opened in August 2008. In addition,
Caffe Corso, Tia To and East2West are
the first of a series of new affordable
outlets which opened in the complex.
Crown Melbourne’s central food court
also completed its transformation and
is now open to the riverside, offering
diversity in snacks and meals. During the
year, world-class restaurants Nobu, Bistro
Guillaume and Giuseppe Arnaldo & Sons,
joined Rockpool Bar & Grill and Crown
Melbourne’s other renowned restaurants
to solidify its reputation as Melbourne’s
pre-eminent dining destination.
p . 8p . 8
View of Crown Melbourne looking south from the CBD with an artist’s impression of the third hotel (currently under construction)
CROWN LIMITED A NNUAL REPORT 2 008
CROWN LIMITED A NNUAL REPORT 2 008
AUSTRALIAN CASINO PROPERTIES CO N TINUED
Crown Melbourne
Continued
The upgrade of Crown Towers has
commenced and construction of a new
five star 658-room hotel is advancing
steadily, which will bring the total
rooms available at the complex to more
than 1,600.
These property upgrades will underpin
future revenue growth at Crown Melbourne.
Local gaming and Crown Club
The local table games business grew
strongly this year, supported by steady
growth in gaming machines. Poker
continues its strong growth in popularity.
Crown Melbourne is recognised as
operating Australia’s leading poker room
featuring one of the world’s largest and
most prestigious poker tournaments,
The Aussie Millions, which has become
a fixture on Melbourne’s calendar of
big events each January.
Crown Melbourne operates Crown Club,
the largest gaming loyalty program in
Australia, which promotes patronage
across all of Crown Melbourne’s facilities.
p . 10
Responsible gaming
Crown Melbourne is recognised by
government agencies and the gaming
industry as a world leader in responsible
gaming. Initiatives pioneered at
Crown Melbourne, such as its customer
support centre, have been adopted by
government agencies in Canada and
casino operators in Australia and
New Zealand because they are accepted
as proven measures to help problem
gamblers. The customer support
centre and its programs continue
to be developed, drawing on
professional counsellors, leading
academics and researchers.
A high priority is placed on employee
training in the areas of responsible
gaming and casino awareness. A
chaplaincy support service complements
these activities.
Members of Crown Club who use
gaming machines are encouraged to
participate in Crown Melbourne’s
responsible gaming program “Play Safe”,
where they can nominate predetermined
spending and time limits.
Crown Melbourne supports the
Victorian Responsible Gambling
Ministerial Advisory Council, which
was established in 2004 as a direct line
of advice to government on problem
gambling issues and research priorities.
It is represented on various working
groups of the Council. Crown
Melbourne is also a member of the
Australian Gaming Council and the
Australasian Casino Association.
AUSTRALIAN CASINO PROPERT IES CONT IN U ED
Crown Melbourne
Continued
awarded Top Hotel – Australia / Pacific
in the U.S. Conde Nast Traveller
Readers’ Choice Awards and the Best
Business Hotel in Australia, as judged
by readers of Business Asia Magazine.
At Crown Promenade, all market
segments recorded increases in room
night activity, with the property’s average
room rate achieving strong growth.
The Promenade Conference Centre
performed strongly, supported by the
combined 900 room inventory across
the two hotels. Crown Promenade won
both the Victorian and the Australian
2007 Tourism Awards for the Best
Deluxe Accommodation.
Crown Melbourne’s third hotel is on
track for completion mid-2010. It is
expected to leverage its prime position
next to the Melbourne Convention
and Exhibition Centre.
VIP commission program play
Crown Melbourne has one of the largest
single-site VIP gaming operations in the
world. The complex is strongly marketed
throughout Asia, a feature of which
is the promotion of Melbourne and
Victoria as attractive tourist destinations.
Along with major events that Melbourne
offers, Crown Melbourne hosts its own
attractions to stimulate international
VIP visitation. This covers activities like
concerts, golf and baccarat tournaments,
karaoke, gala balls and dinners with
world renowned chefs, lucky draws and
other competitions and promotions.
Sales resources have been expanded in
Greater China, including Hong Kong
and Macau to capitalise on emerging
opportunities. Select customers have
access to Crown Towers Villas, the
Crown corporate jet services, the
private golf course Capital, as well
as Crown Towers luxurious spa,
international standard shopping
and world class restaurants.
Hotels and conferences
Crown Towers maintained its leading
position in the luxury five-star hotel
segment and Crown Promenade has
cemented its position as Melbourne’s
leading four-and-a-half star hotel.
Hotel occupancy at Crown Towers was
90 percent with an average room rate
of $294 and at the Crown Promenade
94 percent and $203 respectively.
At Crown Towers, the corporate and
conferencing segments contributed the
most significant increases, and average
room rates also grew across all market
segments. This year, Crown Towers was
CROWN LIMITED ANNUA L REPORT 2 0 08
p . 11
AUSTRALIAN CASINO PROPERTIES CO N TINUED
Crown Melbourne
Continued
Restaurants and bars
Food and beverage operations at Crown
Melbourne achieved outstanding growth,
particularly from bars and banqueting.
At the 2008 Victorian Restaurant and
Catering Awards for Excellence, Crown
Melbourne’s Food and Beverage team
was inducted into the Hall of Fame
following its third consecutive award for
Excellence in Professional Development.
Since year-end, four of Crown Melbourne’s
high performing restaurants were awarded
the 2009 Age Good Food Guide’s coveted
chef ’s hats: Bistro Guillame, Rockpool Bar
& Grill, the brasserie by Philippe Mouchel
and Giuseppe Arnaldo & Sons. In addition,
Bistro Guillaume was named Best New
Restaurant and Giuseppe Arnaldo & Sons
won Best New Interior Design.
Crown Melbourne’s more established
restaurants continue to demonstrate the
quality and breadth of our offering.
Koko, Silks, Number 8 and the brasserie
by Philippe Mouchel were all recipients of
esteemed industry awards during the year.
Crown Melbourne’s new entertainment
venue, Fusion, opened in November
2007 and the well established Odeon
is currently undergoing refurbishment
and will reopen in November 2008.
Entertainment and events
Crown Melbourne presented a diverse
range of shows, events, festivals, attractions
and exhibitions. The Palladium ballroom
hosted a significant number of high
profile charity events including the ever
popular ‘Million Dollar Lunch’ and
‘Starry Starry Night’ with each event
attended by over 1,000 guests. It was also
venue of choice for the TV Week Logie
Awards, the AFL Brownlow Medal, the
Cricket Australia Allan Border Medal, the
Formula 1 Australian Grand Prix Ball and
a variety of Victoria Racing Club Spring
Carnival events including the Call of the
Card and the Oaks Club Ladies Lunch.
New for the 2007 Melbourne Cup Carnival
was Crown Melbourne’s “Live Site” at
Southbank, which attracted an estimated
80,000 people over the eight days and
featured all the racing action on a super
screen, live entertainment, celebrities,
fashion parades, roving performers,
press conferences and giveaways.
Other events included the Christmas
Spectacular in the Atrium, Chinese
New Year festivities on the riverside, as
well as the ‘My Last Supper’ photography
exhibition and associated dining hosted by
leading Crown Melbourne chefs as part of
the Melbourne Food and Wine Festival.
For the second consecutive year, Crown
Melbourne joined the State Government
of Victoria and the City of Melbourne as
a Venue Partner in the 2008 Melbourne
Jazz Festival. Celebrating its 10th
anniversary, the festival was an action-
packed six day program, featuring
legendary jazz performers playing in
some of Melbourne’s finest venues
including The Palms at Crown.
Our people
Crown Melbourne is Victoria’s largest
single-site employer. It is focused on
attracting and retaining staff, building
organisational capability and providing
a safe and rewarding workplace for all
employees. A key initiative this year
was the launch of the Leadership
Development Program to develop
supervisory and leadership skills for
employees in customer facing roles.
Crown Melbourne’s commitment to the
training and development of staff was
recognised by the 2008 Minister’s Award
for Excellence for Employers of Australian
Apprentices. Crown Melbourne’s Chef
Apprentices were also recognised in the
prestigious Capaldi Apprentice Challenge,
a competition which determines the best
apprentices in Victoria.
p . 12
AUSTRALIAN CASINO PROPERT IES CONT IN U ED
Burswood
Burswood Entertainment Complex is a major
Western Australian tourist attraction and
a significant tourist revenue earner with one
of the best performing casinos in the region.
Overview
Established in 1985 and acquired by PBL
in 2004, Burswood is the fastest growing
earnings contributor in Crown’s portfolio.
Located on the banks of the Swan River
in Perth, the complex features a casino;
InterContinental Perth Burswood and
Holiday Inn Burswood hotels; seven
restaurants; seven bars; a nightclub;
a world-class convention centre; a
2,300-seat theatre; a 20,000-seat capacity
indoor stadium; a day spa and retail
outlets. Burswood owns the land on
which the casino is built and is licensed
to operate the casino until at least 2060.
Burswood continues to build on its
diversifi ed entertainment credentials in the
local, national and international markets
through the development and expansion
of its total off er. Th e redevelopment and
upgrade of the main gaming fl oor will
continue over the next three years.
Main floor gaming revenue grew
11.5 percent to $370.4 million and
VIP commission program play was
up 23.2 percent to $125.6 million
on turnover of $9.3 billion, with the
new international gaming salons being
well received by patrons. Non-gaming
revenue growth of 14.2 percent to
$159.2 million was particularly strong.
CROWN LIMITED ANNUA L REPORT 2 0 08
p . 13
AUSTRALIAN CASINO PROPERTIES CO N TINUED
Burswood
Continued
Operating margins at Burswood
decreased slightly from 30.2 percent
to 29.8 percent, reflecting the tight
labour market in Perth which has
increased wage and overtime costs,
higher marketing costs and an increase
in lower margin VIP commission
program business.
in the national Responsible Gambling
Awareness Week, improvements to
the self-exclusion program and gaming
personnel training were successful
in promoting awareness. Work is
underway for a new Responsible
Service of Gambling Information
Centre for patrons of Burswood.
Local gaming and Club Burswood
VIP commission program play
Local gaming earnings continued to
grow, with solid contributions from
both table games and electronic games.
Underpinning performance was the
opening of the Riviera Room in July
2007 and the continuing refurbishment
of the main gaming floor.
Solid revenue growth was achieved
in international gaming through a
stronger sales and marketing campaign,
together with the introduction of two
new $4 million Infinity Suites at
InterContinental Perth Burswood
to high-end customers from Asia.
A comprehensive international event
schedule included a Passport to Golf
promotion featuring seven golf
tournaments, the annual Baccarat
Tournament, and elaborate Chinese
New Year festivities.
Hotel properties
InterContinental Perth Burswood
maintained its position as the leading
luxury hotel in Perth. The continued
integration of Holiday Inn Burswood
as the mid-scale accommodation offer
contributed also to increased leisure and
corporate spend. The extensive global
branding and guest loyalty program
from both hotels attracted guests to
the complex.
Electronic gaming continued its new
product growth, with approval for 10
new games in 2008. The table games
department expanded the Touchbet links,
introduced Texas Hold’Em Progressive and
installed a new Rapid Baccarat product
in the second half, which has shown
steady results. Membership of Burswood’s
loyalty program, Club Burswood,
grew strongly during the year. The
introduction of improved offers and
promotions proved successful.
Responsible gaming
Burswood is committed to providing
responsible gaming services through the
promotion of effective and responsible
gambling programs, information,
assistance and services. It has continued
to implement initiatives to reinforce this
commitment following the appointments
of a community relations manager and
an experienced adviser.
A new dedicated web site,
gambleresponsibly.com.au, was
developed and launched. Participation
p . 14
AUSTRALIAN CASINO PROPERT IES CONT IN U ED
Burswood
Continued
Hotel occupancy at InterContinental
Perth Burswood was 78 percent with
an average room rate of $223 and
at the Holiday Inn it was 89 percent
and $173 respectively. These solid levels
across both properties were assisted by
growth in city-wide market demand
driven by stronger than expected
corporate travel and an increase
in leisure arrivals by air.
Restaurants and bars
Burswood’s restaurants and bars portfolio
continued to deliver exceptional growth.
A continued focus on the delivery of
contemporary, innovative and diversified
product offerings underpinned the result,
highlighted by the opening of MINQ Bar
and Lounge in August 2007 and Carbon
Sports Bar in December 2007.
Effective advertising, additional traffic
generated from the main gaming floor
and a comprehensive marketing and
event programs in all key outlets have
contributed to the strong performance.
Established restaurants Yú, Victoria
Station, Atrium and (A)LURE were
all nominated for multiple AHA and
industry awards throughout the year.
A key initiative during the year was the
introduction of dedicated Responsible
Service of Alcohol Officers responsible
for patrolling the complex during peak
operating hours.
Entertainment and events
Major events presented at Burswood
included the opening and closing parties
for Miss Saigon, the launch of the Perth
Fashion Festival held in Sirocco Restaurant,
the (A)LURE Lawn party at Ascot’s
Spring Racing Carnival, the ‘Zestinations’
series in the Atrium, a two-day Hawker’s
Bazaar and a premium dining series
shared across the portfolio. Burswood also
hosted various high profile charity events
and record cover numbers were achieved
during the festive season.
Burswood Dome and Burswood
Theatre performed solidly, driven by
the strong West Australian economy
and high Australian dollar appealing
to promoters. Contributing to the
success was Burswood Dome’s unique
position as the only large capacity
concert venue with weather protection
in Perth, underpinned by comprehensive
technical and marketing support. The
accomplishments of the entertainment
team were recognised by its second
consecutive AHA Award for Excellence
in Live Entertainment.
Conventions and events saw strong
growth continue. The Astral, Burswood’s
refurbished ballroom, further added
to performance credentials in this
financial year recording increased
revenues significantly.
p . 15
CROWN LIMITED ANNUA L REPORT 2 0 08
US CASINO ACQ UISITION
Cannery
(pending – subject to regulatory approval)
Cannery Casino Resorts operates casinos in
Pennsylvania and Nevada in the United States,
catering to “locals” customers.
Overview
Crown agreed in December 2007 to
acquire 100 percent of Cannery Casino
Resorts on a cash and debt-free basis for
US$1,752 million plus acquisition
costs. This transaction is subject to
regulatory approval.
Cannery is a well established US “locals”
casino operator, operating the Meadows,
Pittsburgh (temporary facility), Cannery
North, Rampart (leased property) and
the recently opened Eastside Cannery
in Las Vegas. A permanent facility for the
Meadows is due to open in April 2009.
Current trading performance
Crown has not yet settled the acquisition
and has therefore not reported earnings from
Cannery. Th e existing Cannery management
have provided recent trading data.
Th e Meadows has continued to improve its
operating performance as the year has
progressed, with revenue in July 2008 up
18 percent on last July (the first available
year-on-year monthly comparison).
Cannery North and Rampart have
performed comparatively well in their
markets. Total revenue in the seven months
from January to July 2008 is less than
one percent below the previous corresponding
seven month period, despite the overall
Las Vegas “locals” market being down
approximately 5 percent in the six
months ended 30 June 2008.
Outlook
On completion of the Meadows
development, Cannery will operate
approximately 9,000 slot machines and
73 table games, together with 514 hotel
rooms. The market in Pennsylvania
remains an immature one and is expected
to continue to grow strongly in the
coming year.
Eastside Cannery is the first new property
in 10 years on the Boulder Strip,
Las Vegas and we expect it to perform
well in that market.
Crown is hopeful of receiving approvals
from the Nevada and Pennsylvania
Gaming Control Boards in the coming
months and finalising this acquisition
shortly thereafter. It is expected that the
Cannery acquisition will be EPS and
cash flow positive in the full first year
of ownership. Cannery EBITDA in
2009/10 is expected to be approximately
US$200 million.
p . 16
Melco Crown
Entertainment
Melco Crown Entertainment (NASDAQ:MPEL)
is an owner and developer of casino gaming and
entertainment resort facilities that are focused on
the rapidly expanding gaming market in Macau.
Macau is a Special Administrative Region
of the People’s Republic of China located
on the southeast coast approximately
60 kms from Hong Kong. As the only
Chinese territory where gaming is legal,
gaming revenue in Macau has grown
substantially. For the year to 30 June 2008
gaming revenue was up 49.2 percent,
with visitation to the region up 20.9 percent
to 29.3 million visitors. During the year
the Central Government of China
introduced a number of visa restrictions
aimed at moderating that strong growth.
The Chief Executive of the Macau
SAR has recently announced that the
government intends capping the number
of licensed casino operators “for the
foreseeable future” and is ceasing further
land grants for casino developments. It
has also indicated a future regime which
may cap both the number of tables and
commission rates. MPEL is supportive
of these changes.
p . 17
Overview
Crown currently holds a 37.9 percent
equity interest in Melco Crown
Entertainment (MPEL), a joint venture
between Crown and Melco International
Development Limited. MPEL was listed
on the NASDAQ in December 2006.
MPEL’s financial performance has
showed significant improvement
during the 2007/08 year. Crown’s share
of MPEL’s financial results was a loss
of $5.4 million, down from a loss of
$47.0 million reported in 2006/07.
Crown Macau traded well in completing
its first full year of operations.
CROWN LIMITED ANNUA L REPORT 2 0 08
Melco Crown
Entertainment
Continued
one and two have been let to
subcontractors and all four hotels have
topped out, with interior fit out work
well underway. Pre-opening costs of
approximately US$110 million is
expected to be incurred and expensed
by MPEL in Crown Limited’s 2008/09
financial year. These will have a one-off
adverse impact of approximately $45-50
million on Crown Limited’s result in
that year.
Macau Peninsula
MPEL has entered into a contract,
subject to conditions, to acquire a site
on the Macau Peninsula. MPEL
continues to review and develop its plans
for the development of the Macau
Peninsula project and has recently
negotiated an extension for its purchase.
This extension provides additional
flexibility in the timing for the closing
of the transaction and preserves the
company’s ability to complete the
transaction through July 2009, subject
to various closing conditions. MPEL
believes that the Macau government’s
recent policy announcements will not
aff ect this project.
Mocha Clubs
Mocha Clubs comprises a number of
gaming lounges in Macau operating
approximately 1,100 slot machines.
Crown Macau, Taipa
The first of MPEL’s casino properties is
the six-star Crown Macau, which opened
in May 2007. Reported adjusted EBITDA
for Crown Macau was US$110.6 million,
with trading in the second half generating
a pleasing US$116.8 million of reported
adjusted EBITDA.
City of Dreams, Cotai
MPEL is developing a second casino
property, City of Dreams, located on
the Cotai strip. The first phase of City
of Dreams is scheduled to open in the
first half of 2009. Over 90 percent of
the hard costs associated with phases
p . 18
Gateway
Gateway Casinos is one of the largest casino and
entertainment companies in Western Canada.
Overview
New developments
There are a number of projects in the
development pipeline: the new Burnaby
Grand Villa Casino, scheduled to open
in late 2008; the expanded Cascades
Casino, to be completed in late 2008;
the new Vernon Casino, opening
mid-2009; and expanded Kelowna
Casino and new Kamloops Casino,
both scheduled for completion in 2010.
On completion of these new developments,
Gateway will operate more than 5,400
slot machines and over 200 tables,
together with 277 hotel rooms.
Outlook
Crown expects to see improved
performance as additional capacity
comes on line from new properties
and expansions. Crown expects that
the Gateway business will be a
profitable long-term investment.
Crown holds a 50 percent equity
interest in Gateway Casinos following
its acquisition in November 2007
by New World Gaming, a 50:50
joint venture between Crown
and Macquarie Bank.
Gateway Casinos operates seven casinos
in British Columbia and two casinos
in Alberta. These are operated under
a unique business partnership model
required under Canadian law whereby
the Provincial Government owns the
slot machines and tables, while Gateway
collects an agreed share of gross gaming
revenue. Additional compensation
is received by Gateway in British
Columbia to reimburse capital
expenditure until the original amount
is recovered. This usually takes five
to eight years. Gateway retains
ownership of the asset.
Operating performance
Trading at Gateway over the seven
months since acquisition was negatively
impacted by the introduction of full
smoking bans in April 2008, the new
Starlight property (which opened
in December 2007) trading below
expectations and delays in
implementing previously identified
operational improvements.
CROWN LIMITED ANNUA L REPORT 2 0 08
p . 19
Aspinalls
Crown holds a 50 percent interest in Aspinalls
under a joint venture with the Aspinall Group,
Britain’s longest established gaming operator.
Aspinalls currently operates four casinos in
the United Kingdom: Aspinalls Club in
London’s Mayfair; and three regional casinos
in Newcastle, Swansea (opened in September
2007) and Northampton (opened in June
2008 under a joint venture with Kerzner UK).
Trading during the past year was impacted
by the introduction of smoking bans in
July 2007, an increase in the levels of casino
tax, a low win rate at Aspinalls Club and pre-
opening costs for Swansea and Northampton.
Recent trading has improved with
significantly higher VIP volumes at Aspinalls
Club and Newcastle has traded profitably in
the second half. Further revenue enhancing
strategies are being implemented in order
to improve performance.
Betfair Australasia
Crown holds a 50 percent interest in Betfair
Australasia under a joint venture with Th e
Sporting Exchange Limited, the world’s
largest betting exchange.
Betfair is the only licensed betting exchange in
Australia and has operated under licence from
the Tasmanian Government since February
2006. For the past 12 months, revenue grew
13 percent to $23.1 million despite some
signifi cant challenges. Th ese were the negative
impact of Equine Infl uenza on horse racing,
together with a ban on betting exchanges in
Western Australia which was unanimously
overturned by the High Court of Australia
in March 2008.
Betfair has subsequently reinstated its business
in Western Australia and has challenged
advertising restrictions in New South Wales
and Victoria.
Betfair is now experiencing strong underlying
growth, with registrations up 94 percent,
funded accounts up 62 percent and active
customers up 43 percent in June 2008.
Th e company also recently launched the
“Tote at Betfair” web interface and has
fi nalised agreements with all major sporting
and racing bodies in Australia. Betfair
employs 100 people in Hobart and Melbourne.
Other US Investments
Crown holds a 19.6 percent equity interest in
Fontainebleau Resorts, which is constructing a
casino resort on the strip in Las Vegas, scheduled
to open in late 2009. Fontainebleau also owns
a 50 percent interest in a resort hotel complex in
Miami, following the sale of 50 percent to Dubai-
based Nakheel Hotels for US$375 million in
April 2008. Fontainebleau Miami is undergoing
a major renovation and will open in late 2008.
Crown purchased a 4.9 percent fully diluted
stake in Station Casinos, which pioneered the
“locals” gaming market in
Las Vegas and caters primarily to local workers
and residents. The Station Casinos franchise
includes eight major gaming and entertainment
complexes and fi ve smaller casinos.
Crown also purchased a 2.5 percent stake
in Harrah’s Entertainment Inc. Harrah’s is
the world’s largest provider of branded casino
entertainment, owning or managing casino
resorts on four continents. Th e company’s
properties operate primarily under the
Harrah’s, Caesars and Horseshoe brand names.
p . 20
Community and the
Environment
The community
Crown is proud to support the local
communities in which it operates
through financial and in-kind donations,
participation and support of non-profit
events, employee volunteer contributions
and sponsorships.
Crown Melbourne
Crown Melbourne contributes to the
Victorian community through its
financial support of community
organisations and charities including
the Royal Children’s Hospital (including
the RCH 1000 and the Neonatal Unit
programs), the Heartwell Foundation,
Make-A-Wish and KOALA Foundation
(Kids Oncology and Leukaemia Action
Group), Open Family Australia,
Challenge, Kids Under Cover and the
A highlight this year included hosting
two of Australia’s largest and most
successful fundraising initiatives: the
KOALA Foundation’s annual Million
Dollar Lunch and the Ilhan Food
Allergies Foundation’s Rainbow Ball.
A combined total of over $3 million
dollars was raised to boost research, aid
and awareness nationally for both causes.
Crown Melbourne actively participates
in numerous community-based projects.
One project is the Victorian Safer
Communities Network and the
Australian Safer Communities
Foundation. This year it was a founding
member of the ReTALE Project which
identifies homeless youth to offer
opportunities for training and work
experience to enhance their employment
prospects for the future.
Neuroscience Foundation. Crown
Melbourne also assists hundreds of
community-based associations, from
schools and sporting clubs to fire
brigades, police units and ethnic groups,
by donating in-kind prizes, such as
accommodation, for fundraising activities.
p . 21
CROWN LIMITED ANNUA L REPORT 2 0 08
Community and the
Environment
Continued
Burswood
Burswood contributes to the Western
Australian community under its community
partnerships program, ‘A Brighter Future’.
With 80 percent of front line staff between
18 and 30 years of age, Burswood’s current
focus is on supporting this demographic,
with the aim of making a sustainable
difference to a group that is representative
of the future.
‘A Brighter Future’ targets a cross section
of issues and projects relevant to young
people. In 2008, Burswood launched
Young Artists With Artitude, part of
Telethon Speech and Hearing’s high
Funds, resources and services continue
to be donated to a range of community-
based projects, events and local charities.
Burswood supported many community
partners by hosting their annual gala
fund-raising events. This year’s highlights
were the annual Ronald McDonald House
Charities Ball and the annual Youth Focus
Ball, which raised funds to assist in the
prevention of youth suicide and
depression. This year, a record number
of staff participated in the annual ‘Walk
To Cure,’ in support of the Juvenile
Diabetes Research Foundation.
Burswood continues its sponsorship
program to support local businesses and
sporting organisations. These included
the West Coast Eagles and Fremantle
Dockers AFL clubs, the Western Force
Super 14 Rugby Union team and the
Western Australian Olympic Council
in the lead-up to the Beijing Olympic
Games. Burswood Dome also hosted
the 20th Hyundai Hopman Cup
tennis tournament.
profile Art exhibition held at Burswood
and giving local artists a high profile
platform to exhibit their work.
Burswood also sponsored STYLEAID
in 2008, a fashion fundraiser to benefit
the Western Australian Aids Council.
The WAAC provides a range of services
to the Western Australian community,
including care and support for HIV
positive people and educational programs.
p . 22
Community and the
Environment
Continued
The environment
Crown is committed to make meaningful
contributions toward reducing its
environmental impact by pursuing
sustainable energy, water and waste
practices in all of its operations. This
commitment is consistent with the
objectives to create memorable experiences
and enhance shareholder value.
Crown Melbourne
While the business experienced strong
operational growth, Crown Melbourne’s
water consumption remained steady
at 2007 levels, which were 20 percent
less than the previous year. Crown’s
updated and approved waterMAP plan
continues to improve efficiencies. New
initiatives during the year included the
introduction of rainwater harvesting
systems, which were commissioned to
further increase self-sufficiency and
meet landscaping and back-of-house
requirements. Employees participated
in a water-efficient shower head
exchange program that was run in
conjunction with South East Water.
Energy assessments were carried out
in accordance with the Commonwealth
Government’s Energy Efficiencies
Opportunities program and a number
of large-scale lighting projects made
an important contribution to energy
efficiency across the site. One of these
was the upgrade of all lights in the
3,400-bay multi-level car park to
energy efficient lamps.
Waste reduction efforts continued to
build momentum with almost 250
tonnes of food waste diverted to a
natural recovery (or composting) facility
instead of landfill. Crown Melbourne
also hosted a sustainability workshop
during the year facilitated by
PricewaterhouseCoopers. The
workshop generated more than
100 opportunities for energy efficiency
that are currently being evaluated.
Burswood
Reducing Burswood’s environmental
impact remained a core aim throughout
this period of significant investment
and construction.
Key focuses this year were lighting
projects to retrofit energy efficient
lighting in addition to the introduction
of a building management system to
monitor air-conditioning and electrical
energy usage across the property.
Water audits by an external agency were
conducted across the complex resulting
in significant water savings and an
increase in water efficiency scores.
In addition, a bore was installed which,
in conjunction with complex-wide water
saving initiatives, will provide a one
mega-litre reduction in scheme water
usage annually.
p . 23
CROWN LIMITED ANNUA L REPORT 2 0 08
Corporate Governance Statement
The Crown Limited Board is committed to the implementation and maintenance of good corporate
governance practices.
Crown was admitted to the official list of the ASX on 3 December 2007 (Listing) and has been
subject to the ASX Listing Rules since that time.
As a newly listed entity, Crown has taken the opportunity to establish structured corporate
governance practices appropriate to Crown and the industry in which it operates.
Th is Statement sets out the extent to which Crown Limited (Crown) has followed the best practice
recommendations set by the ASX Corporate Governance Council during the period commencing
from its Listing to 30 June 2008.
Crown has elected to report against the Corporate Governance Principles and Recommendations
(Revised Principles) released by the Council on 2 August 2007.
Principle 1
Lay solid foundations for management and oversight
Functions reserved for the Board
The Board is responsible for guiding and monitoring Crown on behalf of its shareholders.
In addition, the Board is responsible for identifying areas of significant business risk and
ensuring arrangements are in place to adequately manage those risks.
The Board has adopted a formal Board Charter which sets out a list of specific functions which
are reserved for the Board.
Functions delegated to Senior Management
Management has responsibility for matters which are not specifically reserved for the Board
(such as the day-to-day management of the operations and administration of Crown).
Process for evaluating performance of senior executives
Crown has established processes for evaluating the performance of its senior executives. In summary,
each senior executive is evaluated against the achievement of pre-agreed performance objectives.
The evaluation process is conducted annually and is followed by the determination of appropriate
remuneration of the relevant senior executive.
Detailed information regarding Crown’s remuneration practices is provided in the Remuneration Report,
commencing at page 33.
p . 24
Induction process for new senior executives
Crown senior executives are required to undertake formal induction training through Crown’s
on-site accredited training facility – Crown College.
The program involves training about:
• the history and development of the Crown brand and business;
• the main legal and regulatory obligations affecting the Crown business; and
• the rights and obligations of Crown employees.
As part of the induction program, senior executives are required to successfully complete a series
of online training modules and to pass the associated assessment.
More information
A full copy of the Crown Board Charter is available on its website at:
www.crownlimited.com under the heading Corporate Governance – Charters.
Principle 2
Structure the board to add value
Composition of the Board
As at the date of this Statement, the Board comprises the following eleven directors:
• James D Packer
Executive Chairman
• John H Alexander BA
Executive Deputy Chairman
• Christopher J Anderson BEc
Non-independent, non-executive Director
• Christopher D Corrigan
Independent, non-executive Director
• Rowen B Craigie BEc (Hons)
Chief Executive Officer and Managing Director
• Rowena Danziger BA, TC, MACE
Independent, non-executive Director
• Geoffrey J Dixon
Independent, non-executive Director
• Ashok P Jacob MBA
Non-independent, non-executive Director
• Michael R Johnston BEc, CA
Non-independent, non-executive Director
• David H Lowy AM, BCom
Independent, non-executive Director
• Richard W Turner AM, BEc, FCA
Independent, non-executive Director
Information about each director’s qualifications, experience and period in office is set out in the
Directors’ Statutory Report, commencing at page 56.
The roles of Chair and Chief Executive Officer are exercised by separate persons. James Packer acts
as Executive Chairman and Rowen Craigie as Chief Executive Officer and Managing Director.
CROWN LIMITED ANNUA L REPORT 2 0 08
p . 25
CORPORATE GOVERNANCE STATEMEN T CO NT INU ED
Relationships affecting independence
Of Crown’s eleven directors, five are independent directors. The independence of directors is assessed
against a list of criteria and materiality thresholds. Those criteria have been formally enshrined in the
Crown Board Charter. Each director who is listed as an independent director complies with the
relevant criteria for independence set out in the Crown Board Charter.
Departure from Recommendation 2.1: The Revised Principles recommend that a majority of the
Board should be independent directors. Crown does not comply with this recommendation. The
Board, however, considers that its shareholders are best served by ensuring that directors have
appropriate skills and experience to manage the business of Crown, notwithstanding that they may
not be characterised as independent. Almost half of Crown’s directors are, however, independent.
In addition, all directors have access to independent advice to assist in the discharge of their duties
(see further below).
Departure from Recommendation 2.2: The Revised Principles recommend that the chair of the
Board should be an independent director. Crown’s Chairman is not an independent director.
The Board believes that the interests of shareholders are best served by a Chairman who would
be sanctioned by shareholders and who would act in the best interests of shareholders as a whole.
As the Chairman has a significant relevant interest in Crown, he is well placed to act on behalf
of shareholders and in their best interests.
Procedure for selection and appointment of new directors
In the event that a new director appointment is required, the Board will adhere to procedures
including the following:
• the experience and skills appropriate for an appointee, having regard to those of the existing Board
members and likely changes to the Board will be considered;
• upon identifying a potential appointee, specific consideration will be given to that candidate’s:
• competencies and qualifications;
• independence;
• other directorships and time availability; and
• the effect that their appointment would have on the overall balance and composition of the
Board; and
• finally, all existing Board members must consent to the proposed appointment.
p . 26
Departure from Recommendation 2.4: The Revised Principles recommend that the Board should
establish a Nomination Committee. The Board has not established a Nomination Committee as it
does not consider that the process for determining potential directors would be made more efficient
by doing so. The appointment of new directors is a matter specifically reserved to the Board.
In appropriate circumstances, the Board may delegate some or all of this process to a relevant Committee.
Process for evaluating performance of the Board, its Committees and its members
A performance evaluation of the Board and of its Committees is undertaken annually, following completion
of each fi nancial year, by way of a questionnaire sent to each Board and Committee member.
The questionnaire covers the role, composition, procedure and practices of the Board and its
Committees. The individual responses to the questionnaire are confidential to each Board/Committee
member, with questionnaire responses to be provided to the Chairman of the Audit & Corporate
Governance Committee for his consideration and provision to the Executive Chairman of the Board.
Procedures for taking independent advice
To enable Crown’s Board to fulfil its role, each director may obtain independent advice on relevant
matters at Crown’s expense. In these circumstances, the director must notify the Executive Chairman
of the nature of the advice sought prior to obtaining that advice, so that the Executive Chairman can
take steps to ensure that the party from whom advice is sought has no material conflict of interest
with Crown. The Executive Chairman is also responsible for approving payment of invoices
in relation to the external advice.
In addition, each Board Committee has the full authority of the Board to:
• communicate and consult with external and internal persons and organisations concerning matters
delegated to the Committee; and
• appoint independent experts to provide advice on matters delegated to the Committee.
Crown Board Committees
To assist in carrying out its responsibilities, the Crown Board has established the following
Committees:
Committees
Current Members
Audit & Corporate Governance
Finance*
Investment*
Occupational
Health & Safety
Remuneration**
Risk Management
Richard Turner (Chair)
Michael Johnston
Rowena Danziger
Geoffrey Dixon (Chair)
Michael Johnston
Richard Turner
James Packer (Chair)
John Alexander
Ashok Jacob
Rowen Craigie
Rowena Danziger (Chair)
Michael Johnston
Rowen Craigie
James Packer (Chair)
John Alexander
Geoffrey Dixon
Geoffrey Dixon (Chair)
Rowena Danziger
Rowen Craigie
Meetings held
since Listing
19 February 2008
20 May 2008
Attended by
All members
13 March 2008
20 May 2008
All members
13 June 2008
All members
* Th e Investment Committee and the Finance Committee have not met since Listing.
** Th e primary role of the Remuneration Committee is to review non-executive director remuneration. Th e Committee meets once
a year to review performance for the previous year. Accordingly, the Committee has not met since Listing.
p . 27
Each Committee has adopted a formal Charter that outlines its duties and responsibilities.
More information
A full copy of each of Crown’s Committee Charters is available on its website at:
www.crownlimited.com under the heading Corporate Governance – Charters.
A description of the procedure for selection, appointment and re-election of directors is available
on the Crown website at: www.crownlimited.com under the heading Corporate Governance – Policies.
CROWN LIMITED ANNUA L REPORT 2 0 08
CORPORATE GOVERNANCE STATEMEN T CO NT INU ED
Principle 3
Promote ethical and responsible decision-making
Codes of conduct
Crown has established separate Codes of Conduct that outline the standard of ethical behaviour that
is expected of its Directors and of its employees at all times.
The Code of Conduct for Employees is a detailed statement of the:
• practices required by employees to maintain confidence in Crown’s integrity;
• the legal obligations of employees and the reasonable expectations of their stakeholders; and
• the responsibility and accountability of individuals for reporting and investigating reports
of unethical practices.
Policy concerning trading in company securities
Crown has adopted a formal Securities Trading Policy which details Crown’s policy concerning
trading in company securities by directors, senior executives and employees.
The Securities Trading Policy:
• includes a requirement that employees do not buy and sell Crown shares and securities within
a 12 month period (ie that they do not short trade);
• establishes formal “trading windows” during which Crown employees can and cannot trade
in Crown shares and securities;
• sets out Crown’s policy on entering into transactions in associated products which limit
economic risk; and
• summarises the application of the insider trading provisions of the Corporations Act and the
consequences of contravention thereof.
More information
Full copies of Crown’s Code of Conduct for Directors and Code of Conduct for Employees are
available on its website at: www.crownlimited.com under the heading Corporate Governance – Codes.
A full copy of Crown’s Securities Trading Policy is available on its website at:
www.crownlimited.com under the heading Corporate Governance – Policies.
p . 28
Principle 4
Safeguard integrity in financial reporting
Crown Audit Committee and Charter
As indicated above, Crown has established a formal Audit & Corporate Governance Committee
to review the integrity of Crown’s financial reporting and to oversee the independence of Crown’s
external auditors.
The members of the Audit & Corporate Governance Committee are Richard Turner (Chair), Rowena
Danziger and Michael Johnston. All members of the Committee are non-executive directors and
a majority of those Committee members are independent directors.
The Chairman of the Audit & Corporate Governance Committee, Mr Richard Turner is an
independent director who has extensive financial qualifications and experience, having been an audit
partner at Ernst & Young and having held the position of Chief Executive Officer of Ernst & Young
prior to his retirement in 1994.
Further information about each Committee member’s qualifications and experience is set out in the
Directors’ Statutory Report, commencing at page 56.
The Audit & Corporate Governance Committee has adopted a formal Charter that outlines its duties
and responsibilities.
The Charter includes information on the procedures for selection and appointment of the external
auditor of Crown and for the rotation of external audit engagement partners.
More information
A full copy of Crown’s Audit & Corporate Governance Committee Charter is available on its
website at: www.crownlimited.com under the heading Corporate Governance – Charters.
Principle 5
Make timely and balanced disclosure
Policy to ensure compliance with ASX Listing Rule disclosure requirements
Crown has a formal Continuous Disclosure Policy in place which is designed to ensure compliance
with ASX Listing Rule requirements. The Policy details processes for:
• ensuring material information is communicated to Crown’s Chief Executive Officer, its General
Counsel and Company Secretary or a member of the Audit & Corporate Governance Committee;
• the assessment of information and for the disclosure of Material Information to the market; and
• the broader publication of Material Information to Crown’s shareholders and the media.
More information
p . 29
A full copy of Crown’s Continuous Disclosure Policy is available on its website at:
www.crownlimited.com under the heading Corporate Governance – Policies.
CROWN LIMITED ANNUA L REPORT 2 0 08
CORPORATE GOVERNANCE STATEMEN T CO NT INU ED
Principle 6
Respect the rights of shareholders
Promotion of effective communication with shareholders
Crown has designed a Communications Policy which seeks to promote effective communication with
its shareholders. The Policy explains how information concerning Crown will be communicated to
shareholders. The communication channels include:
• Crown’s Full Financial Annual Report;
• disclosures made to ASX; and
• notices of meeting and other explanatory memoranda.
Crown has a dedicated corporate website which includes copies of all communications and other
company information.
More information
A full copy of Crown’s Communication Policy is available on its website at:
www.crownlimited.com under the heading Corporate Governance – Policies.
Principle 7
Recognise and manage risk
Policy for the oversight and management of material business risks
Crown has established policies for the oversight and management of material business risks and has
adopted a formal Risk Management Policy. Risk management is an integral part of the industry
in which Crown operates.
Design and implementation of risk management and internal control systems
The Board requires Crown’s management to devise and implement risk management systems and
to monitor the effectiveness of those systems. The Board convened Risk Management Committee
is charged with administering Crown’s Risk Management Policy.
The Policy sets out procedures which are designed to identify, assess, monitor and manage risk
at each of Crown’s controlled businesses and requires that the results of those procedures are
reported to the Crown Board.
The Board has received, and will continue to receive, periodic reports through the Risk Management
Committee, summarising the results of risk management initiatives at Crown.
Chief Executive Officer and Chief Financial Officer assurances
The Crown Board has received assurance from the Chief Executive Officer and the Chief Financial
Officer that the declaration provided in accordance with section 295A of the Corporations Act
is founded on a sound system of risk management and internal control and that the system
is operating effectively in all material respects in relation to financial reporting risks.
p . 30
More information
A full copy of Crown’s Risk Management Committee Charter is available on its website at:
www.crownlimited.com under the heading Corporate Governance – Charters.
A full copy of Crown’s Risk Management Policy is available on its website at:
www.crownlimited.com under the heading Corporate Governance – Policies.
Principle 8
Remunerate fairly and responsibly
Remuneration of Board members and Senior Executives
As indicated earlier, Crown has established a formal Remuneration Committee. The role of the
Remuneration Committee is to review and recommend appropriate Directors’ Fees to be paid to
non-executive Directors. At the discretion of the Crown Board, the role of this Committee may
be extended to the remuneration policies to be applied to executives, including any equity-based
remuneration plan that may be considered, subject to shareholder approval (where required).
The current members of the Remuneration Committee are James Packer (Chair), John Alexander
and Geoffrey Dixon.
Information about each Committee member’s qualifications and experience is set out in the
Directors’ Statutory Report, commencing at page 56.
The Remuneration Committee has adopted a formal Charter that outlines its duties and
responsibilities.
A summary of current remuneration arrangements is set out more fully in the Remuneration Report,
commencing at page 33.
The objective of Crown’s remuneration policy is to ensure that:
• senior executives are motivated to pursue the long-term growth and success of Crown; and
• there is a clear relationship between senior executives’ performance and remuneration.
Departure from Recommendation 8.1: The Revised Principles recommend that the Remuneration
Committee should be structured so that it consists of a majority of independent directors, is chaired
by an independent director and has at least three members.
Whilst the composition and responsibilities of the Committee are not consistent with the
recommendations in the Revised Principles, the Committee provides an effective and efficient
mechanism for consideration of appropriate remuneration policy for Crown, responsibility for which
ultimately lies with the Crown Board.
Policy on entering into transactions in associated products which limit economic risk
Crown’s policy on directors and employees entering into transactions in associated products which
limit economic risk is referred to in its Securities Trading Policy.
The Policy provides that in accordance with the Rules of the Executive Share Plan (ESP) operated
by Crown those “Directors and employees of the Crown Group” who hold Crown shares under the ESP
must not, without the prior consent in writing of Crown, sell, create a security interest in, or otherwise
dispose or deal with their Crown shares or any of their interests in any of those Crown shares.
More information
A full copy of Crown’s Remuneration Committee Charter is available on its website at:
www.crownlimited.com under the heading Corporate Governance – Charters.
A full copy of Crown’s Remuneration Policy is available on its website at:
www.crownlimited.com under the heading Corporate Governance – Policies.
p . 31
CROWN LIMITED ANNUA L REPORT 2 0 08
Remuneration Report
Introduction
Content of the Report
This Remuneration Report outlines the director and executive remuneration arrangements of Crown
in accordance with the requirements of the Corporations Act 2001 and its Regulations. It also
provides the remuneration disclosures required by AASB 124 Related Party Disclosures.
Structure of disclosures
As shareholders are aware, Crown acquired the majority of its gaming assets via two schemes of
arrangement between the then Publishing and Broadcasting Limited (PBL) (now Consolidated
Media Holdings Limited (CMH)), Crown and their respective shareholders. Under the first scheme,
the “PBL Scheme”, Crown acquired all of the shares in PBL. Under the second scheme, the
“Demerger Scheme”, the non gaming assets of PBL were demerged from the Crown group.
The disclosure document used in connection with the schemes of arrangement (the PBL Scheme
Booklet) is available on Crown’s website www.crownlimited.com. The PBL Scheme Booklet describes
in detail how the PBL Scheme and the Demerger Scheme were effected and provides useful context
and background to this Report.
Crown is principally a gaming and entertainment business managed by its Board and key gaming
executives. The application of Australian Accounting Standards, however, requires that this Report
provide information in relation to persons who at any time during the financial year were members
of the consolidated Crown group. Due to the way in which the two schemes were effected,
application of Australian Accounting Standards requires Crown to provide information in relation
to both “gaming” directors and executives as well as other ex PBL “media” executives who have not
participated in the gaming business of Crown during the year but have been part of the “Crown
consolidated group” during the year.
Crown has attempted to present the contents of this Report in a way which clearly distinguishes
between “gaming” directors and executives who have principally been involved in furthering the
business of Crown and “media” directors and executives, so as to provide meaningful and relevant
information to shareholders.
Persons to whom Report applies
The remuneration disclosures in this Report cover the following persons:
p . 32
Non-executive directors
• Christopher J Anderson
• Christopher D Corrigan
• Rowena Danziger
• Geoffrey J Dixon
• Ashok P Jacob
• Michael R Johnston
• David H Lowy
• Christopher J Mackay (resigned 7 March 2008)
• Richard W Turner
Executive directors
• James D Packer (Executive Chairman)
• John H Alexander (Executive Deputy Chairman)
• Rowen B Craigie (Managing Director and Chief Executive Officer)
Other company executives and key management personnel
• David G Courtney (Chief Executive Officer, Crown Melbourne Limited)
• Barry J Felstead (Chief Executive Officer, Burswood Limited)
• Geoffrey R Kleemann (Chief Financial Officer)
Media company executives and key management personnel
As mentioned above, due to the application of Australian Accounting Standards, this Report also sets
out remuneration disclosures in relation to:
• Martin P Dalgleish
• Guy Jalland
Mr Dalgleish and Mr Jalland held executive roles within the PBL group prior to the PBL Scheme.
Following implementation of the two schemes, Mr Dalgleish moved to a different position within the
CMH group. Mr Jalland ceased employment with the PBL group on 21 December 2007.
In this Report the group of persons comprised of the Executive Directors and the other company
executives and key management personnel (both gaming and media) are referred to as “Senior
Executives”. The Senior Executives above include the five most highly remunerated executives
of the Crown consolidated group.
Overview of remuneration policy
Philosophy
The performance of the Crown group is dependent upon the quality of its directors, senior executives
and employees. Crown seeks to attract, retain and motivate skilled directors and senior executives of
the highest calibre.
Crown’s remuneration philosophy is to ensure that remuneration packages properly reflect a person’s
duties and responsibilities, that remuneration is appropriate and competitive both internally and as
against comparable companies and that there is a direct link between remuneration and performance.
Crown has differing remuneration structures in place for non-executive directors and Senior Executives.
Non-executive directors
The process for determining remuneration of the non-executive directors has the objective of
ensuring maximum benefit for Crown by the retention of a high quality board.
The Remuneration Committee bears the responsibility of determining the appropriate remuneration
for non-executive directors. Non-executive directors’ fees are reviewed periodically by the
Remuneration Committee with reference taken to the fees paid to the non-executive directors
of comparable companies. The Remuneration Committee is subject to the direction and control
of the Board.
In forming a view of the appropriate level of Board fees to be paid to non-executive directors,
the Committee may also elect to receive advice from independent remuneration consultants if necessary.
p . 33
CROWN LIMITED ANNUA L REPORT 2 0 08
REMUNERATION REPORT CONTINUED
Details regarding the composition of the Committee and its main objectives are outlined in the
Corporate Governance Statement. The Board deems it appropriate that Mr James Packer, who is not
an independent director of Crown and does not receive remuneration from Crown, chair this Committee.
No performance based fees are paid to non-executive directors. Non-executive directors are not
entitled to participate in the Executive Share Plan.
Non-executive directors are not provided with retirement benefits other than statutory superannuation
at the rate prescribed under the Superannuation Guarantee legislation. Notwithstanding, the Executive
Chairman and Executive Deputy Chairman may consider making a payment to a retiring non-executive
director having regard to the length of service and contribution of the retiring non-executive director
and will consider the appropriateness and reasonableness of the amount in light of payments made
by comparable companies.
Senior Executives
The remuneration structure incorporates a mix of fixed and performance based remuneration.
The following section provides an overview of the relevant elements of executive remuneration.
Th e summary tables provided later in this Report indicate which elements apply to each Senior Executive.
Details of Senior Executive remuneration structure
Fixed remuneration
The objective of fixed remuneration is to provide a base level of remuneration which is appropriate
to the Senior Executive’s responsibilities, the geographic location of the Senior Executive and
competitive standing in the appropriate market.
Fixed remuneration is therefore determined with reference to available market data, the scope
and any unique aspects of an individual’s role and having regard to the calibre of the individual.
The company seeks a range of specialist advice to establish the competitive remuneration for its
Senior Executives.
Fixed remuneration typically includes base salary and superannuation at the rate prescribed under the
Superannuation Guarantee legislation and at the election of the Senior Executive, may include other
benefits such as a motor vehicle or motor vehicle allowance, car parking, mobile telephone costs and
club membership, aggregated with fringe benefits tax to represent the total employment cost (TEC)
of the relevant Senior Executive to Crown.
Fixed remuneration for the Senior Executives (except the Chief Executive Officer and Managing
Director) is reviewed annually by the Chief Executive Officer and Managing Director of Crown and
is approved by the Executive Chairman and Executive Deputy Chairman.
p . 34
The review process includes consideration of the performance of the Senior Executive as measured
by achievements against agreed Key Performance Indicators (see further below), performance of
Crown and the business in which the Senior Executive is employed, relevant comparative remuneration
in the market and external advice.
Fixed remuneration for the Chief Executive Officer and Managing Director is reviewed and set
annually following consideration by the Executive Chairman of the performance of the Chief
Executive Officer and Managing Director.
Any payments relating to redundancy or retirement are as specified in each relevant Senior Executive’s
contract of employment. For summaries of Senior Executive contracts of employment, see page 42.
Performance based remuneration
The performance based components of remuneration for Senior Executives seek to align the rewards
attainable by Senior Executives with the achievement of particular annual and long term objectives
of Crown and the creation of shareholder value over the short and long term. The performance based
components which applied during the year are as follows:
• Short Term Incentives (STIs);
• Long Term Incentives (LTIs); and
• An Executive Share Plan.
Short Term Incentives
The remuneration of the Senior Executives is linked to Crown’s short term annual performance
through a cash-based STI. Individuals may be paid an STI following an assessment of the
performance of the Crown group in the previous year and the performance of the individual against
agreed Key Performance Indicators (KPIs). The employment contracts of some Senior Executives
may specify an indicative STI subject to the Crown group’s performance and, if applicable, this
indicative STI is set out in the summary of their employment contract below.
The basis for payment of an STI is the achievement of the Senior Executive’s KPIs established at
the beginning of each financial year. The focus is on the achievement of the Crown group’s annual
business plan and budget.
Financial performance objectives (including performance against budgeted EBITDA) have been chosen as
Crown considers they are the best way to align performance outcomes with shareholder value.
Appropriate non-financial performance objectives (such as strategic goals, operational efficiencies
and people development) are also chosen where they are within a Senior Executive’s sphere of
influence and are relevant to the Senior Executive’s area of work, as these metrics are aligned with
the achievement of Crown’s business plan.
The performance of each Senior Executive against the financial and non-financial KPIs is reviewed
on an annual basis. Whether KPIs have been achieved is determined by the Chief Executive Officer
and Managing Director having regard to the operational performance of the business in which the
Senior Executive is involved and the Chief Executive Officer and Managing Director’s assessment
of the attainment of the individual’s KPIs.
Th e Chief Executive Offi cer and Managing Director reviews performance based remuneration
entitlements and determines the STI payments subject to fi nal approval by the Executive Chairman.
Th e Chief Executive Offi cer and Managing Director’s eligibility for an STI is determined by the Executive
Chairman on behalf of the Board.
As at the date of this Report, the approval process for STI payments for gaming Senior Executives for the
2008 fi nancial year has not been completed. Accordingly, the remuneration tables set out in this Report
do not disclose an STI payment for the 2008 fi nancial year. STI payments, if any, will therefore be
disclosed in Crown’s 2009 Annual Report.
p . 35
CROWN LIMITED ANNUA L REPORT 2 0 08
REMUNERATION REPORT CONTINUED
Long Term Incentive Plan (Gaming LTI)
This incentive was established in June 2005 whilst Crown’s principal gaming businesses were owned
by PBL. It was introduced following review of long term incentive plans operated by major
competitors of the gaming business and as a means of retaining and motivating selected executives.
The Gaming LTI was initially designed so that selected executives would be entitled to a cash bonus
where the then “PBL Gaming Division” comprising Crown Melbourne and Burswood achieved its
internal EBITDA targets in three, four and five years.
Selected participating Senior Executives may earn the maximum EBITDA cash bonus apportioned
over the financial years 2008, 2009 and 2010, subject to the achievement of relevant EBITDA targets.
If the EBITDA target is not reached in any financial year, the amount of the EBITDA Cash Bonus
for that year may be held over to the following year or until financial year 2010 and will be payable
if the total aggregate EBITDA for Crown Melbourne and Burswood for all three financial years
exceeds the aggregate sum of the EBITDA internal targets for financial years 2008, 2009 and 2010.
The Chief Executive Officer and Managing Director determines if the EBITDA target has been met
by reference to the audited financial reports of the Crown group and provides the data to the
Executive Chairman for his ratification.
Crown has achieved the aggregate EBITDA internal targets for Crown Melbourne and Burswood for
financial year 2008. A cash payment has therefore been made to participating executives referrable to
the 2008 financial year.
Of the Senior Executives named in this Report, three participate in the Gaming LTI. Details of potential
Gaming LTI cash bonuses are as follows:
Senior Executive
Rowen Craigie
David Courtney
Barry Felstead
Executive Share Plan
Maximum
Amount
30 June 2008
(30%)
30 June 2009
(20%)
30 June 2010
(50%)
$5,000,000
$1,500,000
$1,000,000
$2,500,000
$2,250,000
$1,000,000
$675,000
$300,000
$450,000
$200,000
$1,125,000
$500,000
Certain Crown executives participate in an Executive Share Plan (ESP) which was approved by PBL
Shareholders at the 1994 Annual General Meeting. A total of 1,190,000 ESP Shares (which includes
the issue to Mr Craigie on 23 November 2007 identified below) were issued to selected executives
in financial year 2008.
p . 36
Prior to the approval of the PBL Scheme, the executives participating in the ESP (ESP Participants)
held, in total, 10,680,000 PBL ESP shares (PBL ESP Shares), in respect of which there were
outstanding loans totalling $185,642,300 (PBL ESP Loans) due to PBL. This included a further
1,150,000 PBL ESP Shares issued to Mr Rowen Craigie on 23 November 2007. These additional
shares were subject to a PBL ESP Loan of $22,004,500.
Variations to the ESP and the key ESP terms: As disclosed in the PBL Scheme Booklet (at page 133),
the rules governing the operation of the ESP were varied to enable ESP Participants to participate
in the PBL Scheme (and continue to participate in the ESP) as follows:
Restrictions were lifted to permit ESP Participants to participate in the PBL Scheme:
The restrictions on transfer of the PBL ESP Shares were lifted to allow the PBL ESP Shares
to participate in the PBL Scheme in the same manner as all PBL shareholders. A total of 10,680,000
PBL ESP Shares participated in the PBL Scheme.
ESP Participants now hold Crown ESP shares and CMH ESP shares under the ESP: Subject
to the consideration election made by the ESP Participants under the PBL Scheme, ESP Participants
were issued with Crown shares under the PBL Scheme and they had CMH shares transferred to them
under the Demerger Scheme. ESP Participants no longer hold PBL ESP Shares.
ESP Participants receiving standard consideration saw a reduction in their PBL ESP Loan
by the cash consideration amount: For those ESP Participants electing the standard consideration
(1 Crown ESP share and $3 for each PBL ESP Share), the cash component of the PBL Scheme
consideration that ESP Participants received in respect of their PBL ESP Shares was applied to
reduce the PBL ESP Loan. ESP Participants that elected the maximum share consideration did not
receive cash consideration and accordingly there was no reduction of their PBL ESP Loan.
The PBL ESP Loans were then apportioned 75 percent to Crown and 25 percent to CMH:
The PBL ESP Loan for each ESP Participant was then apportioned 75 percent to Crown
(Crown ESP Loan) and 25 percent to CMH (CMH ESP Loan). Each of the Crown ESP Loan
and CMH ESP Loan is repayable the earlier of five years from the original date of issue of the
PBL ESP Shares (Expiry Date) or when the ESP Participant ceases employment. The loan funds
are on a limited recourse basis.
The Crown ESP Loan is applied against the Crown ESP shares: Where an ESP Participant sells
all or a portion of their Crown ESP shares, the proceeds of sale of those Crown shares must be
applied to repay the equivalent proportion of their outstanding Crown ESP Loan. When an ESP
Participant sells all or a portion of their CMH ESP shares, the proceeds of sale of those shares must
be applied to repay the equivalent proportion of the outstanding CMH ESP Loan. In each case, the
ESP Participant is entitled to retain the net proceeds of sale after the respective Crown ESP Loan
or CMH ESP Loan repayment.
The share price performance hurdle of seven percent was retained: The share price performance
hurdles requiring a compound share price appreciation of seven percent per annum based on the
issue price of the PBL ESP Shares were retained and substituted with equivalent performance hurdles
(seven percent compounding share price accumulation) imposed separately on the Crown shares and
the CMH shares.
A determination that hurdles have been achieved is provided to the Chief Executive Officer and
Managing Director by the Crown Company Secretary (for Crown) and to the Executive Chairman
by the CMH Company Secretary (for CMH), following a review by each Company Secretary of the
volume weighted average price (VWAP) of the Crown and the CMH shares for the 20 days up to
and including the anniversary of the issue date of the ESP Participant’s PBL ESP Shares.
p . 37
CROWN LIMITED ANNUA L REPORT 2 0 08
REMUNERATION REPORT CONTINUED
Remaining key terms: All other key terms of the ESP remain and apply to the Crown ESP shares
and the CMH ESP shares:
• The restrictions which permit only 25 percent of the PBL ESP shares to be released from vesting
conditions each year after issue will continue to apply to the Crown ESP shares and the CMH ESP
shares that ESP Participants received under the Demerger.
• Interest payable on the Crown ESP Loan and CMH ESP Loan is equal to dividends received on
the relevant Crown ESP shares and CMH ESP shares respectively from time to time.
• ESP Participants may only sell their vested Crown ESP shares and CMH ESP shares within a
period 28 days after the relevant company lodges its Appendix 4D or Appendix 4E with ASX.
ESP Participants may only sell their Crown ESP shares and CMH ESP shares during this time
if they are capable of repaying the equivalent proportion of their Crown ESP Loan or and CMH
ESP loan. Crown executives are also bound by the terms of the Crown Securities Trading Policy
when trading their Crown ESP shares.
• The total number of Crown ESP shares and CMH ESP shares issued under the ESP is limited
to a maximum of two percent of the issued capital of Crown, and a maximum of two percent
of the issued capital of CMH.
• An ESP Participant must not, without the prior written consent of Crown in writing, sell, create
a security interest in (for instance, create a lien, pledge, charge, mortgage or other encumbrance
of whatever nature) or otherwise dispose of their Crown ESP shares or any of the ESP Participant’s
interest in his or her Crown ESP shares. Should an ESP Participant wish to limit his or her
exposure to risk in relation to the Crown ESP shares, he or she must contact the Company
Secretary immediately, with consent in writing only provided following the assessment and
approval by the Board or a delegate of its choosing.
At the date of this Report, a total of 66 ESP Participants hold, in total, 11,449,826 Crown ESP
shares or 1.66 percent of Crown’s issued capital. There are outstanding Crown ESP Loans totalling
$125,751,938 due to Crown. It is not proposed that any further issues will be made under the ESP.
No Crown ESP Loans were repaid by the Senior Executives or lapsed this year. The Senior Executives
who have Crown ESP shares for which Crown ESP Loans are still outstanding are as follows:
p . 38
Issue
Price (per
share)
PBL ESP
Shares
issued 5
PBL ESP
Loan
PBL
Scheme
Election1
Crown
ESP
Shares
Crown
ESP Loan
(75 %)
A
B
C
Shares
sold
during
year
Loan
Expiry
Date
Senior
Executive
Issue Date
Gaming Senior Executives
John
Alexander
Chris
Anderson
Rowen
Craigie
30-Oct-06
$16.16
300,000
$4,848,000
Std
300,000
$2,961,000
$9.87
25
25
Nil
30-Oct-11
30-Oct-06
$17.82 1,000,000
$17,820,000
1,000,000
$11,115,000 $11.12
25
25
Nil
30-Oct-11
30-Oct-06
$16.16
300,000
$4,848,000
Std
300,000
$2,961,000
$9.87
25
25
Nil
30-Oct-11
30-Oct-06
$16.16
350,000
$5,656,000
Sh
409,694
$4,242,000 $10.35
25
25
Nil
30-Oct-11
30-Oct-06
$17.82
500,000
$8,910,000
585,276
$6,682,500 $11.42
25
25
Nil
30-Oct-11
23-Nov-073
$18.97
250,000
$4,742,500
292,638
$3,556,875 $12.15
23-Nov-073
$19.18
900,000
$17,262,000
1,053,494
$12,946,500 $12.29
0
0
0
0
Nil
23-Nov-12
Nil
23-Nov-12
David
23-Feb-06
$16.16
175,000
$2,828,000
Sh
204,847
$2,121,000 $10.35
25
50
Nil
23-Feb-11
Courtney
Geoff
Kleemann
Barry
Felstead
30-Aug-064
$17.82
225,000
$4,009,500
263,374
$3,007,125 $11.42
25
25
Nil
30-Aug-11
06-Mar-07
$18.97
150,000
$2,845,500
175,581
$2,134,125 $12.15
0
0
Nil
06-Mar-11
23-Feb-06
$16.16
240,000
$3,878,400
Std
240,000
$2,368,800
$9.87
25
50
Nil
23-Feb-11
30-Aug-064
$17.82
100,000
$1,782,000
06-Mar-07
$18.97
100,000
$1,897,000
Sh
Sh
117,055
$1,336,500 $11.42
25
25
Nil
30-Aug-11
117,055
$1,422,750 $12.15
0
0
Nil
06-Mar-12
Media Senior Executives
Martin
Dalgleish
Guy
Jalland
23-Feb-06
$16.16
240,000
$3,878,400
Std
240,000
$2,368,800
$9.87
25
50
Nil
23-Feb-11
23-Feb-06
$16.16
240,000
$3,878,400
Std
240,000
$2,368,800
$9.87
25
50
Nil
23-Feb-11
A. Min. share price required to sell Crown ESP shares (per share)2
B. Released from limitations during the year (%)
C. Total percentage of shares released from limitations under Plan Rules (%)
Notes:
1 Th is column provides detail on the consideration election of each executive under the PBL Scheme of Arrangement. “Std” means
the PBL Scheme Standard Consideration; “Sh” means the PBL Scheme Maximum Share Consideration.
2 Th e ESP Plan Rules require that, if an ESP Participant wishes to sell his or her Crown ESP shares during a trading window, he or
she must repay the equivalent proportion of the outstanding Crown ESP Loan. If the ESP Participant cannot repay the equivalent
proportion of the Crown ESP Loan, he or she cannot trade in his or her Crown ESP shares.
3 In accordance with ASX Listing Rule 10.14, PBL shareholders approved the issue of 1,150,000 PBL ESP Shares to Mr Rowen
Craigie at the PBL AGM on 23 November 2007, with those PBL ESP Shares issued to him following the AGM on that day.
p . 39
4 Th e executives issued shares on 30 August 2006 did not meet their share price performance hurdle at their second anniversary.
Th e consequence of this is the second 25 percent of their issued ESP Shares were not released from limitations under the Plan
Rules. Th ese ESP Shares shall remain subject to the limitations under the Plan Rules unless or until the share price performance
condition is satisfi ed on a subsequent anniversary and the executive remains an employee of the relevant company.
5 Th e fair value per Crown ESP share for each allotment date under the ESP is as follows: 23 February 2006: $1.92; 30 August
2006: $2.51; 6 March 2007: $3.72; 21 June 2007: $3.77. Th e relevant allotment dates for the shares subject to shareholder
approval in 2006: Mr Alexander’s 300,000 ESP Shares, Mr Anderson’s 300,000 ESP Shares and Mr Craigie’s 350,000 ESP Shares
is 23 February 2006; Mr Alexander’s 1,000,000 ESP Shares and Mr Craigie’s 500,000 ESP Shares, 30 August 2006. Th e relevant
allotment dates for the shares subject to shareholder approval in 2007: Mr Craigie’s 250,000 ESP Shares, 6 March 2007; Mr
Craigie’s 900,000 ESP Shares, 21 June 2007.
6 Th e revised Crown performance hurdles were calculated as follows: Revised Hurdle Price = [(Original Issue Price – $3 cash
consideration) * 75 percent] * 7 percent compounding share price accumulation.
CROWN LIMITED ANNUA L REPORT 2 0 08
REMUNERATION REPORT CONTINUED
As described above, all securities received by selected Senior Executives under the ESP are subject
to performance hurdles. There have been no issues of securities as part of remuneration that are not
subject to performance conditions.
Relationship between policy and performance
As detailed above, various elements of Crown’s remuneration policy are linked to company
performance, either by requiring the achievement of a predetermined share price or level of EBITDA.
In summary:
• An STI may be payable if Crown achieves its budgeted financial objectives and where an
individual achieves his or her KPIs, assessed using a combination of financial measures and
non-financial measures;
• The Gaming LTI may be payable where Crown Melbourne and Burswood achieves predetermined
EBITDA targets; and
• The terms of the ESP include share price performance hurdles.
This year, normalised EBITDA generated by Crown Melbourne and Burswood, Crown’s wholly
owned Australian casinos, grew by 8.2%. The compound average normalised EBITDA growth for
Crown’s wholly owned Australian casinos for the five year period commencing from financial year
2003 through to financial year 2008 was 15.8%. Please note that during financial years 2003 and
2004 Crown Melbourne was the only gaming asset of PBL. Burswood was acquired by PBL in
September 2004 and the impact of the Burswood acquisition on normalised EBITDA growth
is included within the five year number above.
Shareholder wealth, measured by earnings per Crown share (excluding the effect of discontinued
operations and specific items), grew during financial year 2008 by 9.2%. Prior to the PBL Scheme,
PBL operated a mix of gaming and media businesses. Crown is now a stand alone gaming and
entertainment business. A five year earnings per share comparison of the two different companies
would not produce a meaningful result.
Policy on entering into transactions in associated products which limit economic risk
Crown’s policy on directors and Senior Executives entering into transactions in associated products
which limit economic risk is described earlier in the Corporate Governance Statement.
Remuneration details for non-executive directors and Senior Executives
Non-executive directors
During the year the non-executive directors received a base fee of $100,000 per annum for acting as
a director of Crown.
p . 40
A non-executive director who acts on the Board of Crown Melbourne Limited received a further
Directors’ fee of $60,000 per annum.
In addition, non-executive directors of Crown are entitled:
• $20,000 per annum for acting as Chair of a Board Committee; or
• $10,000 per annum for acting as a member of a Board Committee.
In accordance with Crown’s constitution, non-executive directors’ fees are determined within
an aggregate non-executive directors’ fee cap of $1,000,000 per annum.
Senior Executives
Senior Executives are employed under service agreements with Crown or a business of the Crown
group. Common features to these service agreements include (unless noted otherwise):
• an annual review of the executive’s fixed remuneration, with any increases at the discretion of
the Chief Executive Officer and Managing Director or Executive Chairman and dependent on
Crown’s financial performance and the individual’s KPI performance and market changes;
• competitive performance based incentive payments annually and in the long term, dependent
upon Crown achieving its objectives and the Senior Executive achieving his or her KPIs;
• Crown may ask the executive to act as an officer of Crown or as an officer or director of a member
or associate of the Crown group for no additional remuneration;
• a prohibition from gambling at any property within the Crown group during the term of employment
and for three months following termination and a requirement that the executive maintain licences
required and issued by relevant regulatory authorities (such as the Victorian Commission for Gambling
Regulation and the Western Australian Gaming and Wagering Commission);
• where post-employment restraints apply, a restraint covering, amongst other things, competitive
activities to those of the Crown group. Restraint periods vary and have been noted in each instance;
• where an employment agreement is terminated by Crown, notice may be given in writing or
payment may be made (wholly or partly) in lieu of notice; and
• all contracts may be terminated without notice by Crown for serious misconduct.
Specific details of each Senior Executive’s contract of employment are summarised below. Where
a Senior Executive has had more than one contract of employment during the year the most recent
contract is listed and changes from the previous contract are noted. Where a key clause in a Senior
Executive’s contract has been updated (for instance, remuneration (TEC)) the change is noted.
The summaries should be read in conjunction with the Remuneration Policy above.
p . 41
CROWN LIMITED ANNUA L REPORT 2 0 08
REMUNERATION REPORT CONTINUED
Gaming Senior Executives
James D Packer
Position
Remuneration
John H Alexander
Current Position
Fixed Remuneration
– base salary
– superannuation
Executive Chairman
The Executive Chairman, Mr Packer does not receive any remuneration for his services
to Crown. Mr Packer acts as a director of Melco Crown Entertainment Ltd, a company
in which Crown has a significant investment. Mr Packer does not receive a fee from
Crown for these services.
Executive Deputy Chairman (commenced 1 December 2007): Mr Alexander currently
has a five year employment agreement with Crown Limited which is due to expire
in December 2012.
Mr Alexander was previously Chief Executive Officer and Managing Director for the
then PBL until 30 November 2007 when he resigned. This contract summary focuses on
the terms of Mr Alexander’s current contract and notes the material differences between
Mr Alexander’s current contract and his contract with PBL.
$1,486,871 per annum, from 1 December 2007 (previously $3,200,000 per annum).
Compulsory Superannuation Guarantee Contributions up to the maximum contribution
base, equating to $13,129 per annum (previously $28,800 per annum).
– non-monetary benefits and
other
Complimentary privileges at Crown’s facilities and mobile telephone. (Previously mobile
telephone, use of motor vehicle and driver and applicable fringe benefits tax).
Performance based
remuneration
Not applicable.
2008 Percentage breakdown
of remuneration
Post employment benefits
Post-employment
restraint
Termination
Fixed remuneration2
97%
Nil.
STI
0%
LTI
3%
Crown may impose a restraint for the five year term of Mr Alexander’s employment
agreement up to 30 November 2012. (Under Mr Alexander’s contract with PBL, PBL
could impose a restraint period of up to 12 months and if PBL did so, Mr Alexander
would have been entitled to be paid his net base salary and superannuation during the
restraint period).
– by the Senior Executive
12 months’ notice (previously 6 months’ notice).
– by Crown
p . 42
12 months’ notice without cause; one months’ notice for performance issues (following
three months’ notice to improve); three months’ notice due to incapacity. (Previously
12 months’ notice without cause; six months’ notice for performance issues without an
opportunity to improve provided; three months’ notice for performance issues where at
least three months’ opportunity to improve provided; one months’ notice for incapacity
where absent for 16 weeks in any 12-month period).
Termination benefits
Payments made prior
to commencement
Directors’ Fees
Nil.
Nil.
Nil.
Other
The terms of the Executive Share Plan to which Mr Alexander is a member have been
altered during the previous financial year. A summary of the amendments and details
of Mr Alexanders’s participation is set out on page 37.
Rowen B Craigie
Current Position
Fixed Remuneration
– base salary
– superannuation
Chief Executive Officer and Managing Director (commenced 1 December 2007):
Mr Craigie commenced employment with Crown Limited on 1 December 2007 on a five
year contract. He resigned as Chief Executive Officer, PBL Gaming on 30 November 2007.
He had previously been an executive Director of the then PBL since 9 January 2002.
This contract summary focuses on the terms of Mr Craigie’s current contract and notes
the material differences between Mr Craigie’s current contract and his contract with PBL.
$2,986,871 per annum (previously $2,186,871 per annum).
Compulsory Superannuation Guarantee Contributions up to the maximum contribution
base, equating to $13,129 per annum.
– non-monetary benefits and
other
Complimentary privileges at Crown Melbourne and Burswood facilities. Mobile
telephone, salary sacrifice arrangements for motor vehicle.
Performance based
remuneration
– STI
– LTI
2008 Percentage breakdown
of remuneration
Post employment benefits
Post-employment
restraint
Discretionary up to a maximum of $2,000,000 of which up to a maximum of
$1,000,000 is assessed by the Executive Chairman based on the achievement of KPIs.
A further $1,000,000 may be paid at the discretion of the Crown Board if Crown’s
performance substantially exceeds that set out in Crown’s business plan and represents
an exemplary outcome. (Previously, discretionary based on achievement of KPIs).
Subject to achieving internal EBITDA targets in FY08, FY09 and FY10, Mr Craigie
is eligible to receive up to $5,000,000 (30% for FY08, 20% for FY09 and 50% for
FY10). See further page 36.
On 1 July 2008, Mr Craigie received a deferred cash bonus of $1,475,000 under a
Notional Share Plan (NSA) put in place by Crown Melbourne in June 2005 (at which
time Crown Melbourne was a wholly owned subsidiary of PBL) and cancelled in 2006.
The payment is representative of the value which had accrued in the NSA to 30 August
2006. As explained to PBL shareholders as part of its 2006 Notice of Annual General
Meeting, it was agreed that the amount would crystallise and be paid to Mr Craigie on
1 July 2008, being the third anniversary of Mr Craigie’s participation in the NSA.
Crown has agreed to honour PBL’s obligations with respect to the NSA. As the payment
to Mr Craigie has been disclosed to shareholders in previous PBL Annual Reports as
remuneration referable to previous financial years, the payment is not included again
in this year’s remuneration tables.
Fixed remuneration
47%
Nil.
STI1
0%
LTI
53%
Crown may impose a restraint for various periods up to 36 months. Depending on the
circumstances, Mr Craigie may be entitled to an additional payment in consideration
for the restraint. Mr Craigie may also be paid an amount equivalent to his monthly fixed
remuneration for any period during which a restraint applies.
Termination
– by the Senior Executive
12 months’ notice.
p . 43
– by Crown
Termination benefits
12 month’s notice without cause; one month’s notice for performance issues (following
least three months’ notice to improve); three months’ notice for incapacity.
Provided that Mr Craigie complies with any restraints imposed on him: If Mr Craigie
terminates his employment with Crown or Crown terminates his employment for serious
misconduct, performance issues or incapacity, he will be entitled to any unpaid Crown
LTI. Thereafter, Mr Craigie will cease to be involved in the Crown LTI. If Crown
terminates Mr Craigie’s employment without cause, Mr Craigie will be entitled to any
unpaid LTI. Mr Craigie may also elect either to end his participation in the Crown LTI
and receive a payment of 24 months’ fixed remuneration at the date of termination or
continue a pro-rated participation (calculated by reference to the number of completed
months in the five year term) in the Crown LTI.
CROWN LIMITED ANNUA L REPORT 2 0 08
REMUNERATION REPORT CONTINUED
Payments made prior
to commencement
Directors’ Fees
Other
David G Courtney
Current Position
Fixed Remuneration
– base salary
– superannuation
Nil.
Nil.
The terms of the Executive Share Plan to which Mr Craigie is a member have been
altered during the previous financial year. A summary of the amendments and details
of Mr Craigie’s participation is set out on page 37.
Chief Executive Officer, Crown Melbourne Limited (from 6 March 2007): Mr
Courtney has been an executive Director of Crown Melbourne Limited since 6 March
2007 and an executive Director of Burswood Limited since 6 September 2004. His
current employment contract commenced on 6 March 2007 and expires 5 March 2012.
$1,236,871 per annum (from 6 March 2007).
Compulsory Superannuation Guarantee Contributions up to the maximum contribution
base, equating to $13,129 per annum.
– non-monetary benefits and
other
Complimentary privileges at Crown Melbourne and Burswood facilities. Mobile
telephone and salary sacrifice arrangements for motor vehicle.
Performance based
remuneration
– STI
– LTI
2008 Percentage breakdown
of remuneration
Post employment benefits
Post-employment
restraint
Discretionary STI based on the performance of Crown Limited, and the achievement
of KPIs.
Subject to achieving internal EBITDA targets in FY08, FY09 and FY10, Mr Courtney
is eligible to receive up to $2,250,000 (30% for FY08, 20% for FY09 and 50% for
FY10). See further page 36.
Fixed remuneration
52%
Nil.
STI1
0%
LTI
48%
Crown may impose various restraint periods up to a period of 36 months post
employment. Depending on the circumstances, Mr Courtney may be entitled to an
additional payment in consideration for the restraint. Mr Courtney may also be paid an
amount equivalent to his monthly total employment cost for any period during which
a restraint applies.
Termination
– by the Senior Executive
12 months’ notice.
– by Crown
12 months’ notice without cause; one months’ notice for performance issues (following
three months’ notice to improve); three months’ notice due to incapacity.
p . 44
Termination benefits
Provided that Mr Courtney complies with any restraints imposed on him: If Mr
Courtney terminates his employment with Crown Melbourne or Crown Melbourne
terminates his employment for serious misconduct, performance issues or incapacity, he
will be entitled to any unpaid Crown LTI. Thereafter, Mr Courtney will cease to be
involved in the Crown LTI. If Crown Melbourne terminates Mr Courtney’s employment
without cause, Mr Courtney will be entitled to any unpaid LTI. Mr Courtney may also
elect either to end his participation in the Crown LTI and receive a payment of 24
months’ total employment cost or continue a pro-rated participation (calculated by
reference to the number of completed months in the five year term) in the Crown LTI.
Payments made prior to
commencement
Directors’ Fees
Nil.
Nil.
Other
Barry J Felstead
Current Position
Fixed Remuneration
– base salary
– superannuation
The terms of the Executive Share Plan to which Mr Courtney is a member have been
altered during the previous financial year. A summary of the amendments and details
of Mr Courtney’s participation is set out on page 37.
Chief Executive Officer, Burswood Limited (from 6 March 2007): Mr Felstead has
been an executive Director of Burswood Limited since 6 March 2007 when he was
appointed Chief Executive Officer, Burswood Limited. His current employment contract
with Burswood commenced on 6 March 2007, and expires on 5 March 2012.
$686,871 per annum (from 6 March 2007).
Compulsory Superannuation Guarantee Contributions up to the maximum contribution
base, equating to $13,129 per annum.
– non-monetary benefits
and other
Complimentary privileges at Crown Melbourne and Burswood facilities. Mobile
telephone and salary sacrifice arrangements for motor vehicle.
Performance based
remuneration
– STI
– LTI
2008 Percentage breakdown
of remuneration
Post employment benefits
Post-employment
restraint
Discretionary STI based on the performance of Crown, and the achievement of KPIs.
Subject to achieving internal EBITDA targets in FY08, FY09 and FY10 Mr Felstead
is eligible to receive up to $1,000,000 (30% for FY08, 20% for FY09 and 50% for
FY10). See further page 36.
Fixed remuneration
60%
Nil.
STI1
0%
LTI
40%
Crown may impose various restraint periods up to a period of 36 months post
employment. Depending on the circumstances, Mr Felstead may be entitled to an
additional payment in consideration for the restraint. Mr Felstead may also be paid
an amount equivalent to his monthly Fixed Remuneration for any period during which
a restraint applies.
Termination
– by the Senior Executive
12 months’ notice.
– by Crown
Termination benefits
Payments made prior
to commencement
Directors’ Fees
Other
12 months’ notice without cause; one months’ notice for performance issues (following
three months’ notice to improve); three months’ notice due to incapacity.
Provided that Mr Felstead complies with any restraints imposed on him: If Mr Felstead
terminates his employment with Burswood or Burswood terminates his employment for
serious misconduct, performance issues or incapacity, he will be entitled to any unpaid
Crown LTI. Th ereafter, Mr Felstead will cease to be involved in the Crown LTI. If Burswood
terminates Mr Felstead’s employment without cause, Mr Felstead will be entitled to any
unpaid LTI. Mr Felstead may also elect either to end his participation in the Crown LTI and
receive a payment of 24 months’ fi xed remuneration or continue a pro-rated participation
(calculated by reference to the number of completed months in the fi ve year term) in the
Crown LTI.
p . 45
Nil.
Nil.
The terms of the Executive Share Plan to which Mr Felstead is a member have been
altered during the previous financial year. A summary of the amendments and details
of Mr Felstead’s participation is set out on page 37.
CROWN LIMITED ANNUA L REPORT 2 0 08
REMUNERATION REPORT CONTINUED
Geoffrey R Kleemann
Current Position
Fixed Remuneration
– base salary
– superannuation
Chief Financial Officer: Mr Kleemann joined Crown Limited on 21 January 2008 on
a one year contract. His previous appointment was Chief Financial Officer for the then
PBL until 21 December 2007.
With effect from 20 October 2008 Mr Kleemann will step down from the position of
Chief Financial Officer and has agreed to take on the role of head of Investor Relations
at Crown. The terms of his contract with Crown will remain unchanged until the
expiration of its one year term. Details of the terms of Mr Kleemann’s employment
with PBL may be obtained from the CMH Annual Report.
$686,871 per annum from 21 January 2008.
Compulsory Superannuation Guarantee Contributions up to the maximum contribution
base, equating to $13,129 per annum.
– non-monetary benefits and
other
Complimentary privileges at Crown’s facilities. Mobile telephone. $80,016 per annum
“Living Away from Home Allowance”.
Performance based
remuneration
– STI
– LTI
2008 Percentage breakdown
of remuneration
Post employment benefits
Post-employment
restraint
Discretionary STI based on the performance of Crown Limited, and the achievement
of KPIs.
Nil.
Fixed remuneration2
98%
Nil.
STI1
0%
LTI
2%
Crown may impose various restraint periods up to a period of 6 months post
employment. Depending on the circumstances, Mr Kleemann may be entitled to an
additional payment in consideration for the restraint. Mr Kleemann may also be paid
an amount equivalent to his monthly fixed remuneration for any period during which
a restraint applies.
Termination
– by the Senior Executive
3 months’ notice.
– by Crown
3 months’ notice without cause; one months’ notice for performance issues (following
three months’ notice to improve); three months’ notice due to incapacity.
Termination benefits
Payments made prior to
commencement
Nil.
Nil.
p . 46
Other
Notes:
The terms of the Executive Share Plan to which Mr Kleemann is a member have been
altered during the previous financial year. A summary of the amendments and details
of Mr Kleemann’s participation is set out on page 37.
1. As at the date of this Report, the approval process for STI payments for gaming Senior Executives for the 2008 fi nancial year has
not been completed.
2. Includes voluntary and compulsary superannuation, post employment and redundancy payments following approval of the
PBL Scheme.
Media Senior Executives
The following contract summaries for “media” Senior Executives have been provided to Crown for
inclusion in this Report by CMH. At no time during the financial year were Mr Dalgleish or Mr
Jalland employed by Crown or a current member of the Crown group.
Martin Dalgleish
CEO PBL New Media (to 30 November 2007)
Senior Executive CMH (part-time from 1 July 2008)
Position
Term
Fixed Remuneration
– Base Salary
Mr Dalgleish was employed by PBL as the Chief Executive Officer – PBL New Media
(ceased employment with PBL 30 November 2007). Mr Dalgleish was employed as an
Executive of CMH from December 2007 (part-time from 1 July 2008).
Until 30 December 2008 (amended by agreement 16 June 2008 from a previous term
of four years expiring 3 December 2011) and then ongoing.
$300,000 gross per annum (reduced from $600,000 per annum by agreement on 16 June
2008 and with effect 1 July 2008). When employed by PBL as Chief Executive Officer
PBL New Media, Mr Dalgleish had a Base Salary of $600,000 per annum.
– Superannuation
Nine percent of Base Salary and any STI.
– Other benefits
Mobile telephone. Use of car park. Applicable fringe benefits tax.
Performance based
Remuneration
– STI
– ESP
Termination
– By Mr Dalgleish
– By CMH
– Restraint
Mr Dalgleish received an STI of $100,000 on 15 July 2008 for his performance in FY08
(Mr Dalgleish had been eligible for an STI of up to $600,000 under his employment
arrangements with PBL). No ongoing contractual entitlement to STI.
Details of Mr Dalgleish’s participation in the ESP are outlined at section 3.3.3
of the CMH Annual Report.
Mr Dalgleish may terminate the Agreement with effect 30 December 2008 without
notice. From 1 January 2009 with one month’s notice.
One month’s notice without cause (from 1 January 2009); one month’s notice at any time
where certified unfit to continue working.
CMH may impose a restraint of up to six months. Mr Dalgleish is entitled to be paid
an amount to be agreed during the restraint period or, in the absence of agreement, his
monthly remuneration each month.
– Redundancy Payment
Following approval of the PBL Scheme of Arrangement, Mr Dalgleish was paid
$2,848,000 (less applicable taxes) upon termination of his employment as Chief
Executive Officer PBL New Media.
Senior Executives
Guy Jalland
Position
Term
Fixed Remuneration
Group General Counsel and Joint Company Secretary PBL
(ceased employment 21 December 2007)
Group General Counsel and Joint Company Secretary PBL.
Mr Jalland ceased employment with PBL on 21 December 2007.
p . 47
– Base Salary
$1,388,416 per annum.
– Superannuation
CMH contributed $11,584 per annum.
– Other benefits
Mobile telephone.
CROWN LIMITED ANNUA L REPORT 2 0 08
REMUNERATION REPORT CONTINUED
Performance based
Remuneration
– STI
– ESP
Termination
– By Mr Jalland
– By CMH
– Restraint
Discretionary STI based on the achievement of his KPIs. Mr Jalland received an STI
of $1,000,000 on 15 December 2007.
Details of Mr Jalland’s participation in the ESP are outlined at section 3.3.3 of the
CMH Annual Report.
Six months’ notice.
Six months’ notice without cause; three months’ notice for performance issues (following
three months’ notice to improve); one month’s notice due to incapacity.
CMH may impose a restraint period of up to 12 months. If CMH does so, Mr Jalland
is entitled to be paid his net Base Salary and superannuation during the restraint period.
CMH did not impose the restraint.
– Redundancy Payment
Following approval of the PBL Scheme of Arrangement, Mr Jalland was paid $4,275,000
(less applicable taxes) upon termination of his employment with PBL.
In addition, CMH has provided the following broad relative weightings between fixed and variable
components of remuneration of Mr Dalgleish and Mr Jalland. These are inclusive of termination
payments made by PBL under the approved PBL Scheme:
Media Senior Executive
Fixed
Martin Dalgleish
Guy Jalland
Notes:
17%
14%
STI
3%
15%
ESP
3%
2%
Post
employment
and redundancy
1
77%
69%
1. Post employment and redundancy payments includes redundancy payments to Mr Dalgleish and Mr Jalland following approval
of the PBL Scheme in December 2007. Th e fi gures also include superannuation contributions by CMH to the executive during
the year.
p . 48
Remuneration tables
As explained earlier Crown is required under Australian Accounting Standards to report a full
12 month period of remuneration of each Senior Executive, notwithstanding that Crown has only
traded since December 2007. To assist shareholders, disclosures have been split between remuneration
earned whilst a member of the PBL consolidated group (now CMH) and remuneration earned from
Crown. For comparative purposes, annual totals have been included.
The tables include lump sum payments as a result of contract variation or redundancy as a result
of the PBL Scheme and the Demerger Scheme.
1
Non-executive directors
Christopher
Anderson1
Non-executive
director
Christopher
Corrigan
Non-executive
director
Rowena4
Danziger
Non-executive
director
Geoff rey
Dixon
Non-executive
director
Ashok Jacob
Non-executive
director
Michael Johnston
Non-executive
director
David Lowy
Non-executive
director
Richard Turner4
Non-executive
director
Fin-
ancial
Year
Fees from CMH
(until 30 November 2007)
Fees from Crown
(from 1 December 2007)
Short Term Benefi ts
Salary &
Fees
Non –
Mon-
etary
Post-employment
Benefi ts
Term-
ination
Benefi ts
Super
572,200
8,784
45,000
5,000,000
33,334
–
30,250
–
2008 Annual Total
605,534
8,784
75,250
5,000,000
2007
1,200,000
5,164
108,000
Fees from CMH
(until 30 November 2007)
Fees from Crown
(from 1 December 2007)
2008 Annual Total
2007
Fees from CMH
(until 30 November 2007)
Fees from Crown
(from 1 December 2007)
2008 Annual Total
2007
Fees from CMH
(until 30 November 2007)
Fees from Crown
(from 1 December 2007)
2008 Annual Total
2007
2008
2007
2008
2007
Fees from CMH
(until 30 November 2007)
Fees from Crown
(from 1 December 2007)
2008 Annual Total
2007
Fees from CMH
(until 30 November 2007)
Fees from Crown
(from 1 December 2007)
2008 Annual Total
2007
46,110
58,333
104,443
110,000
83,836
105,000
188,836
200,000
50,301
74,311
124,612
127,391
–
–
–
–
46,110
68,478
114,588
117,391
79,644
105,000
184,644
190,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,150
4,500
8,650
9,900
3,521
2,700
6,221
–
4,806
5,733
10,539
11,465
–
–
–
–
8,579
6,163
14,742
10,565
–
1,350
1,350
–
CROWN LIMITED ANNUA L REPORT 2 0 08
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Share based
payments
Cash
Based
2
Equity
Based
3, 4
Other
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60,362
5,686,346
–
62,729
126,313
–
123,091 5,812,659
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
96,263
1,409,427
–
–
–
–
50,260
62,833
113,093
119,900
87,357
–
107,700
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
195,057
200,000
55,107
80,044
135,151
138,856
–
–
–
–
54,689
74,641
129,330
127,956
79,644
–
106,350
–
–
185,994
190,000
p . 49
REMUNERATION REPORT CONTINUED
Non-executive directors continues
Fin-
ancial
Year
Fees from CMH
(until 30 November 2007)
Fees from Crown
(from 1 December 2007
to 7 March 2008)
2008 Annual Total
2007
Short Term Benefi ts
Post-employment
Benefi ts
Share based
payments
Salary &
Fees
50,301
29,831
80,132
120,000
Non –
Mon-
etary
–
–
–
–
Super
4,527
2,685
7,212
10,800
Term-
ination
Benefi ts
Cash
Based
2
Equity
Based
3, 4
Other
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
54,828
32,516
87,344
130,800
Chris Mackay
Non-executive
director
Notes:
1. Mr Anderson was an executive director of PBL until 30 November 2007. He is currently a non-executive offi cer of Crown.
Remuneration disclosures made up to 30 November 2007 represent amounts earned in an executive capacity. Mr Anderson
receives a director’s fee from SEEK Limited. He was not required to reimburse CMH his net director’s fees from SEEK this
year ($32,372).
2. AASB 2 “Share-Based Payment” requires an entity to recognise the eff ects of modifi cations that increase the total fair value of the
share-based payment arrangement or are otherwise benefi cial to the employee. As the modifi cation to the ESP post Demerger
reduced the total fair value of the share-based payment arrangement, Crown continues to account for the services rendered as
consideration for the equity instruments granted as if the modifi cation had not occurred.
3. Th e allocation of the expenses for Equity Based Payments to the Senior Executives is consistent with the split of the PBL ESP
Loan as between CMH and Crown Limited (25 percent/75 percent). Mr Anderson: 100 percent of the ESP expense to 30
November 2007, 75 percent from 30 November 2007 (from 30 November 2007, 25 percent of the expense recorded by CMH).
4. Mrs Rowena Danziger and Mr Richard Turner each receive directors’ fees of $60,000 per annum and superannuation for their
participation on the Crown Melbourne Limited Board.
p . 50
Senior Executives
Short Term Benefi ts
Post Employment
Benefi ts
Share Based
Payments
James
Packer
Executive
Chairman
John
Alexander
Executive
Deputy
Chairman
Rowen
Craigie
Chief
Executive
Offi cer &
Managing
Director
David
Courtney
Chief
Executive
Offi cer
Crown
Melbourne
Limited
Barry
Felstead
Chief
Executive
Offi cer
Burswood
Limited
Geoff
Kleemann
Chief
Financial
Offi cer
Fin-
ancial
Year
2008
2007
Salary &
Fees
–
–
Non –
Mon-
etary
–
–
2,488,764
33,414
870,904
–
STI
1
–
–
–
–
Salary from CMH
(until 30
November 2007)
Salary from Crown
(from 1
December 2007)
% of
max
STI
–
–
Super
–
–
Term-
ination
Benefi ts Other
–
–
–
–
–
Cash
Based
2
Equity
Based
3, 4
Total
–
–
–
–
–
–
–
323,396 17,965,574
– 120,000 15,000,000
9,847
–
–
–
336,078
1,216,829
2008 Annual Total
3,359,668
33,414
–
– 129,847 15,000,000
–
–
659,474 19,182,403
2007
3,207,575
157,372
– 278,693
867,047
9,380
–
–
41,667
–
–
– 2,513,313
515,742
6,672,695
–
–
654,966
1,573,060
Salary from CMH
(until 30
November 2007)
Salary from Crown
(from 1
December 2007)
Salary from CMH
(until 11
December 2007)
Salary from Crown
(from 12
December 2007)
Salary from CMH
(until 11
December 2007)
Salary from Crown
(from 12
December 2007)
1,666,639
24,580
–
–
55,998
–
– 1,666,667
680,651
4,094,535
2008 Annual Total
2,533,686
33,960
–
–
97,665
2007
1,916,102
23,514 1,000,000
100
12,686
497,953
141
–
–
5,471
–
–
–
– 1,666,667 1,335,617
5,667,595
–
210,714
322,047
3,485,063
–
–
157,502
661,067
664,329
188
–
–
28,176
–
–
750,000
195,186
1,637,879
2008 Annual Total
1,162,282
329
–
–
33,646
2007
955,078
65,937
580,000
100
12,686
347,812
10,731
–
–
7,049
–
–
–
–
750,000
352,688
2,298,945
–
–
94,821
242,848
1,951,370
–
65,982
431,574
331,868
10,223
–
–
6,564
–
–
333,333
81,768
763,756
2008 Annual Total
679,680
20,954
–
–
13,613
–
–
333,333
147,750
1,195,330
2007
489,802
26,718
230,000
–
12,686
295,000
–
1,054,206
Salary from CMH
(until 21
December 2007)
Salary from Crown
(from 21 January
2008)
888,384
292,336
2008 Annual Total
1,180,720
–
–
–
–
–
82,986
3,975,000 176,796
–
54,917
5,178,083
p . 51
–
–
24,440
–
–
–
60,283
377,059
–
– 107,426
3,975,000 176,796
–
115,200
5,555,142
2007
1,146,398
16,085
200,000
60 171,960
–
–
–
115,200
1,649,643
CROWN LIMITED ANNUA L REPORT 2 0 08
REMUNERATION REPORT CONTINUED
Notes:
1. As at the date of this Report, the approval process for STI payments for gaming Senior Executives for the 2008 fi nancial year has
not been completed. Accordingly, no STI is able to be disclosed in the 2008 fi nancial year. STI payments, if any, will be disclosed
in Crown’s 2009 Annual Report.
2. Representing average PBL Gaming LTI cash bonus payments for FY08, FY09 and FY10.
3. Th e allocation of the expenses for Equity Based Payments to the Senior Executives is consistent with the split of the PBL ESP
Loan as between CMH and Crown Limited (25 percent/75 percent). Mr Alexander, Mr Craigie: 100 percent of the ESP expense
to 30 November 2007, 75 percent from 1 December 2007 (from 1 December 2007, 25 percent of the expense recorded by
CMH). Mr Kleemann: 100 percent of the ESP expense to the date he ceased employment with PBL (21 December 2007); then
100 percent recorded by Crown Limited to the end of the year. Mr Courtney, Mr Felstead 100 percent of the ESP expense to
11 December 2007; then 100 percent recorded by Crown Limited to the end of the year.
4. AASB 2 “Share-Based Payment” requires an entity to recognise the eff ects of modifi cations that increase the total fair value of the
share-based payment arrangement or are otherwise benefi cial to the employee. As the modifi cation to the ESP post Demerger
reduced the total fair value of the share-based payment arrangement, Crown continues to account for the services rendered
as consideration for the equity instruments granted as if the modifi cation had not occurred.
Media senior executives
Short Term Benefi ts
Post Employment
Benefi ts
Share Based
Payments
Fin-
ancial
Year
Salary
& Fees
Non –
Mon-
etary
% of max
STI
STI
Super
Term-
ination
Benefi ts
Other
Long Term
Benefi ts
Cash
Based
Equity
Based
1, 2
Total
2008
264,890
8,733
41,918
100
10,217
2,848,000
2007
649,900
5,164
200,000
50
112,500
–
–
–
–
48,289
3,222,048
–
115,200
1,082,764
903,346
–
1,000,000
100
12,868
4,275,000
211,471
–
115,200
6,517,885
2008
(until 21
Dec 07)
2007
1,351,777
–
–
–
12,868
–
–
–
115,200
1,479,845
Martin Dalgleish
Chief Executive
Offi cer, New
Media, PBL
Guy Jalland
PBL Group
General Counsel
and Company
Secretary
Notes:
1. Th e allocation of the expenses for Equity Based Payments to the Senior Executives is consistent with the split of the PBL ESP
Loan as between CMH and Crown Limited (25 percent/75 percent). Mr Dalgleish, Mr Jalland: 100 percent of the ESP
expense for the year (no expense recorded by Crown Limited).
2. AASB 2 “Share-Based Payment” requires an entity to recognise the eff ects of modifi cations that increase the total fair value of the
share-based payment arrangement or are otherwise benefi cial to the employee. As the modifi cation to the ESP post Demerger
reduced the total fair value of the share-based payment arrangement, CMH continues to account for the services rendered as
consideration for the equity instruments granted as if the modifi cation had not occurred.
p . 52
Directors’ Statutory Report
Crown Limited was incorporated on 31 May 2007. On incorporation, the company’s name was
Arterial Limited. The company changed its name to Crown Limited on 15 June 2007.
As previously mentioned, Crown was admitted to the official list of the ASX on 3 December 2007
(Listing) and has been subject to the ASX Listing Rules since that time. Accordingly, where the
Corporations Act requires this Report to include specific information for listed entities, that
information has been provided for Crown in respect of the period commencing from Listing.
Company Information
Review of operations
A review of operations of the Crown group for the financial year ended 30 June 2008 and the results
of those operations is detailed on pages 4 to 23.
The principal activity of the entities within the Crown group is gaming and entertainment.
Prior to the PBL Scheme Crown’s business operated within the PBL group of companies.
PBL’s activities extended to:
• television and broadcasting and program production;
• magazine publishing and distribution; and
• investment in the internet, subscription television and other media and entertainment sectors.
Significant changes in state of affairs
The PBL Scheme was effected on 10 December 2007. The gaming and entertainment activities of the
current Crown group have only traded since that time. In accordance with Australian Accounting
Standards and the Corporations Act, Crown’s 2008 Financial Report reflects the activities of the PBL
group until the date the scheme of arrangement was effected and the activities of the newly formed
Crown group from demerger until 30 June 2008. The results relating to the non gaming activities
have been disclosed as discontinued operations.
Accordingly, the following are some of the significant changes in the state of affairs of the
consolidated group since 1 July 2007:
• In September 2007, Melco Crown Entertainment Limited (MPEL) secured US$1.75 billion of
senior secured debt facilities to be utilised to finance construction of the City of Dreams project.
The facilities are non recourse to Crown. However, Crown and Melco International Development
Limited (which currently owns 37.9% of MPEL along with Crown) have each provided a Letter
of Credit for US$125 million which will be able to be used, if necessary, to support completion
of the City of Dreams should the facilities and MPEL’s internally generated cash flow be
insufficient to fund completion;
p . 53
• In November 2007, MPEL issued American Depositary Shares to the public, raising approximately
US$570 million for MPEL, and reducing Crown’s stake to 37.9%;
• In November 2007, Crown completed the acquisition of a 50% interest in Gateway Casinos and
Entertainment Inc in Canada, under a joint venture with Macquarie Bank;
CROWN LIMITED ANNUA L REPORT 2 0 08
DIRECTORS’ STAT UTORY REPORT CON TIN UED
• On 3 December 2007, Crown was admitted to the official list of the ASX;
• On 12 December 2007, the separation of PBL into two separately listed companies was completed
by way of two court ordered schemes of arrangement;
• In December 2007, Crown completed the sale of the PBL group’s interest in Hoyts. Beneficial
ownership was transferred to Crown as part of the PBL Scheme and gross proceeds of sale of
$150 million were received by Crown in mid December 2007. The equity profit and the loss on
sale (after costs associated with the sale) have been included in discontinued businesses;
• In December 2007, Crown announced, subject to regulatory approval, its agreement to purchase
100% of Cannery Casino Resorts in the United States; and
• In April 2008 Crown announced that it had sold its 25.4% stake in Monarchy Enterprise Holdings
B.V. (the owner of New Regency Productions) for US$189.4 million (including interest) which
will be paid in broadly equal instalments over five years with Crown having already received the
initial instalment.
Significant events after Balance Date
Subsequent to 30 June 2008, the directors of Crown announced a final dividend on ordinary shares
in respect of the year ending 30 June 2008. The total amount of the dividend is $196.7 million,
which represents 29 cents per share. The final dividend will be 40% franked and the unfranked
component of the dividend will be conduit foreign income. The dividend has not been provided
for in the 30 June 2008 financial statements.
On 13 August 2008, Crown announced that it had raised A$1.01 billion of new debt facilities.
The refinancing was undertaken so as to extend the maturity profile of Crown’s debt portfolio.
The new debt finance comprises the following new facilities:
A$600 million Syndicated
Loan Facility
A$200 million Bilateral
Loan Facility
Lender(s):
Fully syndicated among 11 Australian and International banks
Maturity:
5 years
Lender:
National Australia Bank
Maturity:
5 years
US$200 million
US Private Placement
Arrangers:
Bank of America and Royal Bank of Scotland as co lead arrangers with
Westpac and Commonwealth Bank as co agents
Maturity:
7, 10 and 12 years
Likely developments
Other than the developments described in this Report and the accompanying review of operations,
the directors are of the opinion that no other matter or circumstance will significantly affect the
operations and expected results for the Crown group.
p . 54
Environmental regulation
The Crown group is not subject to any particular or significant environmental regulation under
Australian law. Environmental issues are, however, important to Crown and it has taken a number
of initiatives in this regard. A description of those initiatives is set out on page 21.
Dividends and distributions
Interim Dividend: Crown paid an interim dividend of 25 cents per ordinary share on 18 April 2008.
The dividend was 40% franked and the unfranked component was conduit foreign income.
Final Dividend: The directors of Crown have announced a final dividend of 29 cents per ordinary
share to holders registered as at 10 October 2008. The final divided will be 40% franked and the
unfranked component of the dividend will be conduit foreign income.
In summary:
Interim Dividend paid
Final Dividend payable
Total
Dividend per share
25 cents per share
29 cents per share
$’000
$169,521
$196,687
$366,208
PBL paid shareholders a final dividend in respect of the 2007 financial year of $169.7 million.
Directors and Officers
Director details
Set out below are the names of each person who has been a director of Crown during or since year
end and the period for which they have been a director. There are eleven current directors.
Name
James Douglas Packer
John Henry Alexander
Christopher John Anderson
Christopher Darcy Corrigan
Rowen Bruce Craigie
Rowena Danziger
Geoffrey James Dixon
Ashok Peter Jacob
Michael Roy Johnston
Geoffrey Raymond Kleemann
David Hillel Lowy
Christopher John Mackay
Michael James Neilson
Richard Wallace Turner
Date Appointed
Date Ceased
6 July 2007
6 July 2007
6 July 2007
6 July 2007
31 May 2007
6 July 2007
6 July 2007
6 July 2007
6 July 2007
31 May 2007
6 July 2007
6 July 2007
31 May 2007
6 July 2007
–
–
–
–
–
–
–
–
–
6 July 2007
–
7 March 2008
6 July 2007
–
p . 55
The details of each of each director’s qualifications, experience and special responsibilities in office
as at the date of this Report are set out below. Details of all directorships of other listed companies held
in the three years before the end of the financial year have been included.
CROWN LIMITED ANNUA L REPORT 2 0 08
DIRECTORS’ STAT UTORY REPORT CON TIN UED
James D Packer, Executive Chairman
Mr Packer is also Executive Chairman of Consolidated Press Holdings Limited and Executive Deputy
Chairman of Consolidated Media Holdings Limited. Mr Packer is the Chairman of SEEK Limited
(appointed 31 October 2003). He is also a director of the Sunland Group Limited (appointed 20 July
2006), Crown Melbourne Limited (appointed 22 July 1999) and Ellerston Capital Limited (appointed
6 August 2004) and a director of Melco Crown Entertainment Limited.
Mr Packer was previously a director of Qantas Airways Limited until 31 August 2007.
Directorships of other listed companies held during the last three years:
• Challenger Financial Services Group Limited: from 6 November 2003 to current
• Consolidated Media Holdings Limited1: from 28 April 1992 to current
• Crown Melbourne Limited2: from 22 July 1999 to current
• Ellerston Capital Limited3: from 6 August 2004 to current
• Qantas Airways Limited: from 1 August 2000 to 31 August 2007
• SEEK Limited: from 31 October 2003 to current
• Sunland Group Limited: from 20 July 2006 to current
John Alexander BA, Executive Deputy Chairman
Mr Alexander became Executive Chairman of Consolidated Media Holdings Limited in November 2007.
Mr Alexander had previously been Chief Executive Offi cer and Managing Director of PBL since June 2004.
Mr Alexander joined ACP Magazines as Group Publisher in 1998 and was appointed Chief Executive
Offi cer of that division in March 1999, a position he held until April 2006. In January 2002, he was
appointed Chief Executive Offi cer of PBL’s media businesses which included ACP Magazines and Nine
Network – then owned by PBL. Prior to joining the PBL Group, Mr Alexander was the Editor-in-Chief,
Publisher & Editor of Th e Sydney Morning Herald, and Editor-in-Chief of Th e Australian Financial Review.
Mr Alexander is a director of various companies including Crown Melbourne Limited, Burswood
Limited, Melco Crown Entertainment Limited, Aspinalls Holdings (Jersey) Limited, FOXTEL
Management Pty Limited, PBL Media Holdings Pty Limited, Premier Media Group Pty Limited and
The International Federation of the Periodical Press Limited.
Directorships of other listed companies held during the last three years:
• Crown Melbourne Limited2: from 17 August 2004 to current
• Consolidated Media Holdings Limited1: from 16 December 1999 to current
Christopher J Anderson BEc, Non Independent, Non-Executive Director
Mr Anderson is also a non-executive director of Consolidated Media Holdings Limited. In this
capacity he monitors the performance of a number of CMH investments including FOXTEL,
Premier Media Group (Fox Sports), PBL Media, SEEK and Sky News.
p . 56
Mr Anderson was previously the Chief Executive Officer of Optus and stepped down from that
role in late 2004. Prior to joining Optus in 1997, Mr Anderson was the Group Chief Executive
of Television New Zealand Limited. Previously, he was the Managing Editor of the Australian
Broadcasting Corporation and was Chief Executive Officer & Editorial Director of John Fairfax
Limited Group. Mr Anderson was employed by John Fairfax Limited from 1966 to 1991 in various
editorial and magazine positions.
Directorships of other listed companies held during the last three years:
• SEEK Limited: from 25 November 2004 to current
• Consolidated Media Holdings Limited1: 9 June 2004 to current
Christopher D Corrigan, Independent, Non-Executive Director
Mr Corrigan was Managing Director of Patrick Corporation Limited, Australia’s largest stevedore
company with interests in rail transportation and aviation from March 1990 to May 2006. Prior
to that, he had a career with Bankers Trust spanning 20 years, including periods as Managing
Director of Bankers Trust in Australia and for the Asia-Pacific region.
Mr Corrigan sponsored the formation of a development capital business of A$220 million known
as Jamison Equity Limited in 1990, which became a wholly owned subsidiary, in December 1996,
of the then publicly listed company Patrick Corporation Limited.
Directorships of other listed companies held during the last three years:
• Consolidated Media Holdings Limited1: from 8 March 2006 to current
• Patrick Corporation Limited4: from 22 March 1990 to 11 May 2006
• Oriental Technologies Investments Limited5: from 26 July 2000 to 31 December 2005
• Virgin Blue Holdings Limited: from 27 May 2002 to 11 May 2006
• Webster Limited: from 30 November 2007 to current
Rowen B Craigie BEc (Hons), Chief Executive Officer and Managing Director
Mr Craigie is also a director of Crown Melbourne Limited, Burswood Limited, Melco Crown
Entertainment Limited, Aspinalls Holdings (Jersey) Limited, New World Gaming Partners Holdings
British Columbia Limited and Consolidated Media Holding Limited.
Mr Craigie previously served from 2007 to 2008 as the Chief Executive Officer, PBL Gaming and
from 2002 to 2007 as the Chief Executive Officer of Crown Melbourne Limited. Mr Craigie joined
Crown Melbourne Limited in 1993 and was appointed as the Executive General Manager of its
Gaming Machines department in 1996, and was promoted to Chief Operating Officer in 2000.
Prior to joining Crown Melbourne Limited, Mr Craigie was the Group General Manager for Gaming
at the TAB in Victoria from 1990 to 1993, and held senior economic policy positions in Treasury
and the Department of Industry in Victoria from 1984 to 1990.
Directorships of other listed companies held during the last three years:
• Crown Melbourne Limited2: from 9 January 2002 to current
• Consolidated Media Holdings Limited1: from 9 January 2002 to current
Rowena Danziger BA, TC, MACE, Independent, non-executive Director
Mrs Danziger’s professional experience spans over 30 years in various Australian and American
educational institutions. She was the Headmistress at Ascham School in Sydney from 1973 to 2003.
She is currently a director of Opera Australia and a board member of Sydney Writers’ Festival and
Chairperson of The Foundation of the Art Gallery of NSW.
Mrs Danziger is also a director of Consolidated Media Holdings Limited and Crown Melbourne Limited.
p . 57
Directorships of other listed companies held during the last three years:
• Consolidated Media Holdings Limited1: 17 September 1997 to current
• Crown Melbourne Limited2: 21 October 2003 to current
CROWN LIMITED ANNUA L REPORT 2 0 08
DIRECTORS’ STAT UTORY REPORT CON TIN UED
Geoffrey J Dixon, Independent, non-executive Director
Mr Dixon is the Managing Director and Chief Executive Officer of Qantas Airways Limited.
Mr Dixon joined Qantas in 1994 and has had responsibility at the airline for all commercial
activities. Mr Dixon is due to step down as Qantas CEO on 28 November 2008. Before joining
Qantas, Mr Dixon was Director of Marketing and Industry Sales at Ansett Australia Airlines
and General Manager Marketing and Corporate Affairs at Australian Airlines.
Mr Dixon is on the Governing Board of IATA. Prior to his career in the airline industry, Mr Dixon
worked for an arm of the Australian Government Overseas Service in Australia and on postings
to Australian Missions in The Hague, New York and San Francisco. He has also worked in the
mining and media sectors.
Directorships of other listed companies held during the last three years:
• Qantas Airways Limited: from 1 August 2000 to current
• Leighton Holdings Limited: from 19 August 1999 to 31 May 2006
• Consolidated Media Holdings Limited1: from 31 May 2006 to current
Ashok Peter Jacob MBA, Non-independent, non-executive Director
Mr Jacob is Chief Executive Officer of Consolidated Press Holdings Limited (CPH). Prior to joining
CPH in 1998, Mr Jacob was the Managing Director of the investment arm of the Pratt group
of companies.
Mr Jacob is a director of Consolidated Media Holdings Limited (appointed 9 November 1998),
Crown Melbourne Limited (appointed 22 July 1999) and Ellerston Capital Limited (appointed
6 August 2004).
Mr Jacob holds a Master of Business Administration from the Wharton School and a Bachelor
of Science from the University of Pennsylvania.
Directorships of other listed companies held during the last three years:
• Consolidated Media Holdings Limited1: from 9 November 1998 to current
• Challenger Financial Services Group Limited: from 6 November 2003 to current
• Crown Melbourne Limited2: from 22 July 1999 to current
• Ellerston Capital Limited3: from 6 August 2004 to current
Michael R Johnston BEc, CA, Non-independent, non-executive Director
Mr Johnston is the Finance Director of Consolidated Press Holdings Limited (CPH), having
previously been an advisor to the CPH group for 17 years. As Finance Director, he oversees a large
number of operational businesses within the CPH group and its controlled associates. Mr Johnston
was also the Chief Financial Officer of Ellerston Capital (a subsidiary of Consolidated Press
Holdings) until 30 June, 2008. He is currently on the Board of Consolidated Media Holdings
Limited. He is alternate director of Challenger Financial Services Group Limited.
p . 58
Prior to his appointment with the CPH group, he was a senior partner in the Australian member
firm of Ernst & Young. Mr Johnston was also on the Board of Partners of Ernst & Young, Australia.
Mr Johnston holds a Bachelor of Economics Degree from Sydney University and is an Associate
of the Institute of Chartered Accountants in Australia.
Directorships of other listed companies held during the last three years:
• Challenger Financial Services Group Limited6: from 24 February 2006 to current
• Ellerston Capital Limited3: from 6 August 2004 to current
• Consolidated Media Holdings Limited1: from 16 December 2005 to current
David H Lowy AM, BCom, Independent, non-executive Director
David Lowy is a principal of LFG Holdings, non-executive deputy chairman of Westfield Holdings
Limited and a Director of Consolidated Media Holdings Limited. He is also the Founder and
President of the Temora Aviation Museum and a director of The Lowy Institute for International
Policy. He holds a Bachelor of Commerce degree from the University of NSW.
Directorships of other listed companies held during the last three years:
• Westfield Group: from 5 July 2004 to current
• Westfield America Management Limited: from 13 July 2004 to current
• Consolidated Media Holdings Limited1: from 31 May 2006 to current
Richard W Turner AM, BEc, FCA, Independent, non-executive Director
Before his retirement in 1994, Mr Turner had been the Chief Executive Officer of Ernst & Young,
having had a successful 36 year career as an audit partner. Mr Turner is a Fellow of the Institute
of Chartered Accountants in Australia. He is a director of HBOS Australia Limited, Bankwest
Limited, Mirvac Ltd and its group companies. He was past President and director of The Smith
Family and past Chairman and a current director of the Institute of Pain Management Limited.
Mr Turner is also a director of Consolidated Media Holdings Limited, Crown Melbourne Limited,
and is Chairperson of Crown Limited’s Audit & Corporate Governance Committee.
Directorships of other listed companies held during the last three years:
• Crown Melbourne Limited2: from 21 October 2003 to current
• Consolidated Media Holdings Limited1: from 9 November 1998 to current
• The Mirvac Group: from 7 January 2005 to current
Notes:
1. Consolidated media Holdings Limited (previously Publishing and Broadcasting Limited, ASX Code: PBL).
2. Crown Melbourne Limited (previously Crown Limited, “Crown Melbourne”) was classifi ed as a listed company while it had
a series of unsecured notes (ASX Code: CROHB) quoted on the ASX. Th ese notes were redeemed on 15 August 2005 and
Crown Melbourne was removed from the ASX’s offi cial list on 2 September 2005.
3. Ellerston Capital Limited is the manager and responsible entity for the Ellerston Gems Fund (EGF), admitted to the
Offi cial List of ASX Limited on 29 June 2007.
4. Removed from the ASX’s offi cial list on 3 July 2006.
5. Removed from the ASX’s offi cial list on 17 March 2006.
6. Alternate director to Mr James Packer and Mr Ashok Jacob.
Company secretary details
Michael J Neilson BA, LLB: Mr Neilson is Crown’s General Counsel and Joint Company Secretary.
Prior to his appointment with Crown, he was General Counsel for Crown Melbourne Limited,
a position he held from 2004 to 2007.
p . 59
Prior to joining the Crown group, Mr Neilson spent 10 years in a commercial legal practice
in Melbourne before joining the Lend Lease Group in Sydney in 1997 as General Counsel for
Lend Lease Property Management.
In 1998, he was appointed General Counsel and Company Secretary of General Property Trust,
the position he held until joining Crown Melbourne Limited in 2004.
CROWN LIMITED ANNUA L REPORT 2 0 08
DIRECTORS’ STAT UTORY REPORT CON TIN UED
Mary Manos BCom, LLB (Hons): Ms Manos was appointed joint Company Secretary in April
2008. She commenced employment with the Crown Group in October 2007 just prior
to implementation of the PBL Scheme and the Demerger Scheme. Prior to joining Crown,
Ms Manos was a Senior Associate in a Melbourne law firm, specialising in mergers and acquisitions
and corporate law.
Other officer details
In addition to the above, Crown’s principal officers include:
• Geoffrey Kleemann
Chief Financial Officer
• David Courtney
Chief Executive Officer, Crown Melbourne Limited
• Barry Felstead
Chief Executive Officer, Burswood Limited
Relevant interests of directors
Details of relevant interests of current directors in Crown shares are as follows:
Director
John Alexander
Chris Anderson
Rowen Craigie
Rowena Danziger
David Lowy
James Packer
Richard Turner
Notes:
Total number
of ordinary Shares
1,827,1331
315,1942
2,341,1023
28,876
137,250
261,500,000
27,000
1. Of which 1,300,000 shares are Crown ESP shares.
2. Of which 300,000 shares are Crown ESP shares.
3. Comprised entirely of Crown ESP shares.
* For more information regarding Crown ESP shares, please see page 36 of the Remuneration Report.
None of Crown’s directors are party to any contract which would give that director the right to call
for the delivery of shares in Crown.
p . 60
Board and committee meetings
Set out below are details of the number of board meetings and committee meetings held by Crown since
Listing together with each director’s attendance details. The Crown Board held a number of meetings
prior to Listing, particularly in connection with the PBL Scheme and the Demerger Scheme.
Audit &
Corporate
Governance
Committee
Board
OH&S
Committee
Risk
Management
Committee
H*
A
H
A
H
A
H
A
James Packer
John Alexander
Christopher Anderson
Christopher Corrigan
Rowen Craigie
Rowena Danziger
Geoffrey Dixon
Ashok Jacob
Michael Johnston
David Lowy
Christopher Mackay**
Richard Turner
H Number of meetings held
A Number of meetings attended
4
4
4
4
4
4
4
4
4
4
2
4
4
4
4
3
4
4
2
3
4
4
2
3
2
2
2
2
2
2
1
1
1
1
1
1
2
2
2
2
2
2
* Two meetings were held shortly after Listing by a quorum of directors, primarily to deal with administrative matters of updating
the company’s registered address and offi cer details. No other substantive matters were considered. R Craigie and J Alexander
attended both meetings and A Jacob attended one.
** Resigned 7 March 2008.
The primary role of the Remuneration Committee is to review non-executive director remuneration.
The Committee meets once a year to review performance for the previous year. Accordingly,
the Committee has not met since Listing. The Investment Committee and the Finance Committee
also have not met since Listing.
Page 27 of the Corporate Governance Statement includes details on Board committee structure
and membership during the year.
p . 61
Under Crown’s Constitution, documents containing written resolutions assented to by directors
are to be taken as a minute of a meeting of directors. There were no additional written resolutions
assented to by the Board or a Committee this financial year.
CROWN LIMITED ANNUA L REPORT 2 0 08
DIRECTORS’ STAT UTORY REPORT CON TIN UED
Shares and Options
Crown has not granted any options over unissued shares. There are no unissued shares or interests under
option. No shares or interests have been issued during or since year end as a result of option exercise.
Indemnity and insurance of officers and auditors
Director and officer indemnities
Crown indemnifies certain persons as detailed in its Constitution in accordance with the terms of
the Crown Constitution.
D&O Insurance
During the year Crown has paid insurance premiums to insure officers of the Crown group against
certain liabilities.
The insurance contract prohibits disclosure of the nature of the insurance cover and the amount
of the insurance payable.
Auditor Information
Auditor details
Ernst & Young has been appointed Crown’s auditor.
Mr Brett Kallio is the Ernst & Young partner responsible for the audit of Crown’s accounts.
True and fair information
There is no additional true and fair information included in the financial report.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the year
by the auditor are outlined in Note 30.
The directors are satisfied that the non-audit services are compatible with the general standard
of independence for auditors imposed by the Corporations Act. The board considers that the nature
and scope of the services provided do not affect auditor independence.
Rounding
The amounts contained in the financial statements have been rounded off to the nearest thousand
dollars (where rounding is applicable) under the option available to Crown under ASIC Class Order
98/0100. Crown is an entity to which the Class Order applies.
Signed in accordance with a resolution of the Directors.
p . 62
J D Packer
Director
R B Craigie
Director
Melbourne, 17th day of September, 2008
p . 63
CROWN LIMITED ANNUA L REPORT 2 0 08
DIRECTORS’ STAT UTORY REPORT CON TIN UED
p . 64
p . 65
CROWN LIMITED ANNUA L REPORT 2 0 08
Directors’ Declaration
In accordance with a resolution of the directors, we declare as follows:
1.
In the directors’ opinion:
a)
b)
there are reasonable grounds to believe that Crown will be able to pay its debts as and
when they become due and payable; and
the financial statements and notes are in accordance with the Corporations Act,
including:
(i) Section 296 (compliance with accounting standards); and
(ii) Section 297 (true and fair view); and
2.
The directors have received declarations in relation to Crown’s financial statements for the
financial year ended 30 June 2008, by its Chief Executive Officer and its Chief Financial
Officer in accordance with section 295A of the Corporations Act.
In the opinion of Directors, at the date of this declaration, there are reasonable grounds to believe
that the members of the Closed Group identified in note 35 will be able to meet any obligations
or liabilities to which they are or may become subject to, by virtue of the Deed of Cross Guarantee.
On behalf of the Board
J D Packer
Director
R B Craigie
Director
Melbourne, 17th day of September, 2008
p . 66
Financial Report
CON TE NTS
Income Statement
Balance Sheet
Cash Flow Statement
Notes to the Financial Statements
68
69
70
72
M ORE I NFORMATION
More information regarding calculations of normalised results is included in Crown’s
2008 Full Year Results Announcement, which is available on Crown’s website at:
www.crownlimited.com under the heading Investors – Presentations and Briefings.
p . 6 7
CROWN LIMITED A NNUAL REPORT 2 008
ABN 39 12 5 7 09 953
Income Statement
for the year ended 30 June 2008
CONSOLIDATED
PA R ENT ENTIT Y
Note
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Continuing Operations
Revenues
Other income
Expenses
Share of profi ts of associate and joint
venture entities
Profi t/(loss) from continuing operations
before income tax and fi nance costs
Finance costs
Profi t /(loss) from continuing
operations before income tax
Income tax (expense)/benefi t
Profi t/(loss) from continuing operations
after income tax
Discontinued operations
Profi t/(loss) from discontinued operations
after income tax
3
3
3
2,215,930
2,016,604
175,000
701
164
–
(1,807,029)
(1,427,421)
(3,168,144)
2,11
(21,999)
(50,976)
–
387,603
538,371
(2,993,144)
2,3
(132,989)
(151,204)
–
254,614
387,167
(2,993,144)
2,5
(117,608)
(18,767)
462
137,006
368,400
(2,992,682)
2
3,426,213
1,611,831
–
Profi t/(loss) for the period
3,563,219
1,980,231
(2,992,682)
Attributable to minority interests
24
–
22,979
–
Attributable to members of the parent
3,563,219
1,957,252
(2,992,682)
–
–
–
–
–
–
–
–
–
–
–
–
–
Earnings per share (EPS)
Basic EPS*
Diluted EPS*
Dividends per share
Final dividend proposed
Current year interim dividend paid
2008
Cents
per share
2007
Cents
per share
517.00
517.00
285.87
285.87
29.0
25.0
25.0
30.0
31
4
p . 6 8
* Basic/diluted EPS excluding the eff ect of discontinued operations is 19.88 cps (2007: 42.46).
Basic/diluted EPS excluding the eff ect of discontinued operations and specifi c items is 54.58 cps (2007: 49.97).
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Balance Sheet
At 30 June 2008
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Other assets
Assets classifi ed as held for sale
Total current assets
Non-current assets
Receivables
Available-for-sale fi nancial assets
Other fi nancial assets
Investments in associates accounted for
using the equity method
Property, plant and equipment
Licences
Other intangible assets
Deferred tax assets
Prepaid casino tax
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Current income tax liabilities
Provisions
Liabilities directly associated with the assets
classifi ed as held for sale
Total current liabilities
Non-current liabilities
Other payables
Interest-bearing loans and borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Note
26(a)
7
8
9
10
7
12
13
11
14
15
16
5
9
18
19
20
21
18
19
5
20
2,362,964
146,524
11,835
11,253
70
2,532,646
–
2,227,657
104,956
9,722
12,729
108
2,355,172
447,435
2,532,646
2,802,607
–
–
–
–
–
–
–
–
443,202
507,489
–
1,130,164
1,854,977
666,868
189,301
136,573
71,106
90,101
398,013
–
178,160
–
8,628,413
915,211
1,831,060
674,339
210,469
184,052
73,840
–
–
–
–
13,870
–
4,999,680
4,377,085
8,820,443
7,532,326
7,179,692
8,820,443
255,108
20,000
37,178
105,750
234,821
20,046
22,670
137,836
13,408
–
–
–
–
78,619
–
418,036
493,992
13,408
24,059
2,359,234
394,709
38,157
114
309,144
477,331
33,827
–
2,224,936
–
–
2,816,159
820,416
2,224,936
3,234,195
1,314,408
2,238,344
4,298,131
5,865,284
6,582,099
Equity
Equity attributable to equity holders of the parent
Contributed equity
Reserves
Retained earnings/(accumulated losses)
Total equity
22
23
23
258,149
176,223
3,863,759
2,454,986
350,256
3,060,042
9,738,590
5,712
(3,162,203)
4,298,131
5,865,284
6,582,099
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
p . 6 9
Cash Flow Statement
For the year ended 30 June 2008
CONSOLIDATED
PA R ENT ENTIT Y
Note
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Cash fl ows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Borrowing costs
Income tax paid
2,072,949
3,868,967
(1,564,942)
(2,818,243)
66,659
191,725
29,828
117,672
(127,625)
(257,931)
(68,745)
(215,593)
Net cash fl ows from/(used in) operating activities
26
570,021
724,700
Cash fl ows from investing activities
Purchase of property, plant and equipment
(203,142)
(239,730)
Proceeds from sale of property, plant and equipment
3,486
13,036
Payment for purchases of equity investments
(233,072)
(617,343)
Payment for the acquisition of controlled entities
–
(309,357)
Purchase of available for sale fi nancial assets
Net proceeds from sale of equity investments
Net proceeds from sale of controlled entities
Net proceeds from sale of available for sale investments
(inc. held for sale)
Loans to associated entities
Repayment of loans to associated entities
Loans to other entities
Other (net)
(434,023)
828,972
–
–
12,591
897,811
35,832
–
(12,322)
(104,074)
–
–
(2,652)
31,716
(30,551)
(13,952)
Net cash fl ows from/(used in) investing activities
(16,921)
(359,853)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Cash fl ows from fi nancing activities
Issue of shares
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Payment of capital reduction
p . 7 0
Cash disposed from sale of group entities
–
3,473
2,070,000
3,685,660
2,238,576
(10,000)
(2,602,513)
–
(338,694)
(398,778)
(169,544)
(2,053,852)
(85,770)
–
–
Dividends/distributions paid to minority interests
–
(10,654)
Net cash fl ows from/(used in) fi nancing activities
(418,316)
677,188
Net increase/(decrease) in cash and cash equivalents
134,784
1,042,035
Cash and cash equivalents at the beginning
of the fi nancial year
Eff ect of exchange rate changes on cash
Cash and cash equivalents at the end of
the fi nancial year
2,227,657
1,185,135
523
487
26
2,362,964
2,227,657
(2,069,032)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Statement of Recognised Income and Expense
for the year ended 30 June 2008
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Foreign currency translation
Unrealised gain on investment in associates
Net income recognised directly in equity
(279,548)
947
110,624
341,701
(168,924)
342,648
–
–
–
Profi t/(loss) for the period
3,563,219
1,980,231
(2,992,682)
Total recognised income and expense for the period
3,394,295
2,322,879
(2,992,682)
Attributable to:
Equity holders of the parent
Minority interest
3,394,295
2,299,900
(2,992,682)
–
22,979
–
3,394,295
2,322,879
(2,992,682)
–
–
–
–
–
–
–
–
p . 7 1
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements
For the year ended 30 June 2008
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(a) Basis of preparation
Th is fi nancial report is a general-purpose fi nancial
report, which has been prepared in accordance with the
requirements of the Corporations Act 2001 and Australian
Accounting Standards. Th e fi nancial report has also been
prepared on a historical cost basis, except for derivative
fi nancial instruments and available-for-sale fi nancial assets
that have been measured at fair value and investments in
associates accounted for using the equity method. Th e
carrying values of recognised assets and liabilities that
are hedged with fair value hedges are adjusted to record
changes in the fair values attributable to the risks that
are being hedged.
Th e fi nancial report is presented in Australian dollars and
all values are rounded to the nearest thousand dollars
($’000) unless otherwise stated under the option available
to the Company under ASIC Class Order 98/100. Th e
Company is an entity to which the class order applies.
Th e fi nancial report of Crown Limited and its controlled
entities for the year ended 30 June 2008 was authorised
for issue in accordance with a resolution of directors on
18 August 2008 subject to fi nal approval by a sub committee
which approval was received on 17 September 2008.
(b) Statement of compliance
Th e fi nancial report complies with Australian Accounting
Standards as issued by the Australian Accounting Standards
Board and International Financial Reporting Standards
(IFRS) as issued by the International Accounting
Standards Board.
Australian Accounting Standards and Interpretations
that have recently been issued or amended but are not
yet eff ective have not been adopted by the Group for the
reporting period ending 30 June 2008. Th ese are
outlined in the table below.
Reference
Title
AASB Int. 13 Customer Loyalty
Programmes
Application date of
standard*
1 July
2008
AASB 8 and
AASB 2007-3
AASB 123
(Revised) and
AASB 2007-6
Operating Segments
and consequential
amendments to
other Australian
Accounting Standards
Borrowing Costs
and consequential
amendments to
other Australian
Accounting Standards
p . 7 2
AASB 101
(Revised) and
AASB 2007-8
Presentation of
Financial Statements
and consequential
amendments to other
Australian Accounting
Standards
1 January
2009
1 January
2009
1 January
2009
Impact on Group fi nancial report
Application
date for
Group*
1 July
2008
1 July
2009
1 July
2009
1 July
2009
Th e Group accounts for its customer
loyalty programmes in such a manner
that this standard is not expected to
have any material impact on the Group’s
fi nancial report.
AASB 8 is a disclosure standard so
therefore will have no direct impact on the
amounts included in the Group’s fi nancial
statements. In addition, the amendments
may have an impact on the Group’s
segment disclosures.
Th ese amendments to AASB 123 require
that all borrowing costs associated with
a qualifying asset be capitalised. Th e
Group already capitalises borrowing costs
associated with qualifying assets and as such
the amendments are not expected to have
any impact on the Group’s fi nancial report.
Th ese amendments are only expected
to aff ect the presentation of the Group’s
fi nancial report and will not have a
direct impact on the measurement and
recognition of amounts disclosed in
the fi nancial report. Th e Group has not
determined at this stage whether to present
a single statement of comprehensive
income or two separate statements.
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES continued
(b) Statement of compliance continued
Reference
AASB
2008-1
AASB
2008-2
AASB 3
(Revised)
Title
Amendments to
Australian Accounting
Standard – Share-based
Payments: Vesting
Conditions and
Cancellations
Amendments to
Australian Accounting
Standards – Puttable
Financial Instruments
and Obligations arising
on Liquidation
Business Combinations
AASB 127
(Revised)
Consolidated and
Separate Financial
Statements
AASB 2008-7 Cost of an Investment
in a Subsidiary, Jointly
Controlled Entity or
Associate
Application date of
standard*
1 January
2009
Impact on Group fi nancial report
Th e Group has share-based payment
arrangements that may be aff ected by
these amendments. However, the Group
has not yet determined the extent of the
impact, if any.
Application
date for
Group*
1 July
2009
1 January
2009
1 July
2009
1 July
2009
1 January
2009
Th ese amendments are not expected to
have any impact on the Group’s fi nancial
report as the Group does not have on
issue or expect to issue any puttable
fi nancial instruments as defi ned by
the amendments.
Th e Group may enter into some business
combinations during the next fi nancial
year and may therefore consider early
adopting the revised standard. Th e Group
has not yet assessed the impact of early
adoption, including which accounting
policy to adopt.
If the Group changes its ownership interest
in existing subsidiaries in the future, the
change will be accounted for as an equity
transaction. Th is will have no impact on
goodwill, nor will it give rise to a gain or a
loss in the Group’s income statement.
Recognising all dividends received from
subsidiaries, jointly controlled entities
and associates as income will likely give
rise to greater income being recognised
by the parent entity after adoption of
these amendments.
In addition, if the Group enters into any
group reorganisation establishing new
parent entities, an assessment will need to
be made to determine if the reorganisation
meets the conditions imposed to be
eff ectively accounted for on a ‘carry-over
basis’ rather than at fair value.
Th e Group has not yet determined
the extent of the impact of the
amendments, if any.
1 July
2009
1 July
2009
1 July
2007
1 July
2007
1 July
2009
p . 7 3
AASB 2008-5
and 2008-6
Improvements to IFRSs 1 January 2009 except
for amendments to IFRS
5, which are eff ective
from 1 July 2009.
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
(b) Statement of compliance continued
Application date of
standard*
1 January
2009
1 January
2008
Reference
IFRIC 16**
AASB Int. 12
and AASB
2007-2
Title
Hedges of a Net
Investment in a Foreign
Operation
Service Concession
Arrangements
and consequential
amendments to other
Australian Accounting
Standards
Application
date for
Group*
1 July
2009
1 July
2008
Impact on Group fi nancial report
Th e Interpretation is unlikely to have any
impact on the Group since it does not
signifi cantly restrict the hedged risk or
where the hedging instrument can be held.
Unless the Group enters into service
concession arrangements or public-private-
partnerships (PPP), the amendments are
not expected to have any impact on the
Group’s fi nancial report.
* Designates the beginning of the applicable annual reporting period unless otherwise stated
** Pronouncements that have been issued by the IASB and IFRIC but have not yet been issued by the AASB. Entities must disclose the impact
of these pronouncements in order to make the statement of compliance with IFRS under AASB 101.14.
Th e Group has adopted AASB 7 ‘Financial Instruments:
Disclosures’ and all consequential amendments which
became applicable on 1 July 2007. Th e adoption of this
standard has only impacted the disclosure in these fi nancial
statements. Th ere has been no impact on profi t and loss or
the fi nancial position of the entity.
(c) Basis of consolidation
Th e consolidated fi nancial statements are those of the
consolidated entity, comprising Crown Limited (the parent
entity) and all entities that Crown Limited controlled
from time to time during the year and at reporting date.
Information from the fi nancial statements of subsidiaries
is included from the date the parent entity obtains control
until such time as control ceases. Where there is loss of
control of a subsidiary, the consolidated fi nancial statements
include the results for the part of the reporting period during
which the parent entity has control.
Subsidiary acquisitions are accounted for using the
purchase method of accounting. Th e fi nancial statements
of subsidiaries are prepared for the same reporting period
as the parent entity, using consistent accounting policies.
Adjustments are made to bring into line any dissimilar
accounting policies that may exist.
Investments in subsidiaries, as recorded in the parent entity
(Crown Limited) accounts, are carried at cost.
All intercompany balances and transactions, including
unrealised profi ts arising from intra-group transactions,
have been eliminated in full. Unrealised losses are
eliminated unless costs cannot be recovered.
Th e accounting policies adopted have been applied
consistently throughout the two reporting periods.
p . 7 4
(d) Signifi cant accounting estimates and assumptions
Th e carrying amounts of certain assets and liabilities are
often determined based on estimates and assumptions
of future events. Th e key estimates and assumptions that
have a signifi cant risk of causing a material adjustment
to the carrying amounts of certain assets and liabilities
within the next annual reporting period are:
Impairment of goodwill and casino licences with
indefi nite useful lives
Th e Group determines whether goodwill and casino licences
with indefi nite useful lives are impaired at least on an
annual basis. Th is requires an estimation of the recoverable
amount of the cash-generating units to which the goodwill
and casino licences with indefi nite useful lives are allocated.
Th e assumptions used in this estimation of recoverable
amount and the carrying amount of goodwill and casino
licences with indefi nite useful lives are discussed in note 17.
Share-based payment transactions
Th e Group measures the cost of equity-settled transactions
with employees by reference to the fair value of the equity
instruments at the date at which they are granted. Th e fair
value is determined with the assistance of an external
valuer, using the assumptions detailed in note 28.
Specifi c Items
Management determines specifi c items based on the nature
and size.
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES continued
(e) Income tax
Current tax assets and liabilities for the current and
prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities based
on the current period’s taxable income. Th e tax rates and
tax laws used to compute the amount are those that are
enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided on all temporary
diff erences at the balance sheet date between the tax bases
of assets and liabilities and their carrying amounts for
fi nancial reporting purposes.
Deferred income tax liabilities are recognised for all taxable
temporary diff erences:
• except where the deferred income tax liability arises
from the initial recognition of an asset or liability in
a transaction that is not a business combination and,
at the time of the transaction, aff ects neither the
accounting profi t nor taxable profi t or loss; or
• in respect of taxable temporary diff erences associated
with investments in subsidiaries, associates and interests
in joint ventures, except where the timing of the reversal
of the temporary diff erences can be controlled and it is
probable that the temporary diff erences will not reverse
in the foreseeable future.
Deferred income tax assets are recognised for all deductible
temporary diff erences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that
taxable profi t will be available against which the deductible
temporary diff erences, and the carry-forward of unused tax
assets and unused tax losses can be utilised:
• except where the deferred income tax asset relating to
the deductible temporary diff erence arises from the
initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of
the transaction, aff ects neither the accounting profi t not
taxable profi t or loss; or
• in respect of deductible temporary diff erences associated
with investments in subsidiaries, associates and interests
in joint ventures, deferred tax assets are only recognised
to the extent that it is probable that the temporary
diff erences will reverse in the foreseeable future and
taxable profi t will be available against which the
temporary diff erences can be utilised.
Th e carrying amount of deferred income tax assets is
reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that suffi cient taxable
profi t will be available to allow all or part of the deferred
income tax asset to be utilised.
Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively
enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity
are recognised in equity and not in the income statement.
(f) Other taxes
Revenues, expenses and assets are recognised net of the
amount of GST except:
• where the GST incurred on a purchase of goods and
services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost
of acquisition of the asset or as part of the expense item
as applicable;
• Gaming revenues, due to the GST being off set
against casino taxes; and
• receivables and payables are stated with the amount
of GST included.
Th e net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the balance sheet.
Cash fl ows are included in the Cash Flow Statement on a
gross basis and the GST component of cash fl ows arising
from investing and fi nancing activities, which is recoverable
from, or payable to, the taxation authority are classifi ed
as operating cash fl ows.
Commitments and contingencies are disclosed net of the
amount of GST recoverable from, or payable to, the
taxation authority.
(g) Foreign currency translation
Both the functional and presentation currency of Crown
Limited and its Australian subsidiaries is Australian dollars
(A$). Each foreign entity in the Group determines its own
functional currency and items included in the fi nancial
statements of each foreign entity are measured using that
functional currency.
Transactions in foreign currencies are initially recorded
in the functional currency at the exchange rates ruling at
the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate
of exchange ruling at the balance sheet date. All diff erences
in the consolidated fi nancial report are taken to the
income statement.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair
value was determined.
p . 7 5
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES continued
(g) Foreign currency translation continued
As at the reporting date the assets and liabilities of overseas
subsidiaries are translated into the presentation currency
of Crown Limited at the rate of exchange ruling at the
balance sheet date and the income statements are translated
at the weighted average exchange rates for the period. Th e
exchange diff erences arising on the retranslation are taken
directly to a separate component of equity.
On disposal of a foreign entity, the deferred cumulative
amount recognised in equity relating to that particular
foreign operation is recognised in the income statement.
(h) Cash and cash equivalents
Cash and short term deposits in the balance sheet comprise
cash at bank and on hand, and short term deposits.
For the purposes of the Cash Flow Statement, cash and
cash equivalents consist of cash and cash equivalents as
defi ned above, net of outstanding bank overdrafts.
(i) Trade and other receivables
Trade receivables are recognised and carried at original invoice
amount less an allowance for any uncollectible amounts.
An estimate for doubtful debts is made when there is
objective evidence that the full amount may not be
collected. Bad debts are written off when identifi ed.
Receivables from associates and other related parties are
carried at amortised cost. Interest, when charged is taken
up as income on an accrual basis.
(j) Inventories
Inventories are valued at the lower of cost and net
realisable value.
Costs incurred in bringing each product to its present
location and condition are accounted for as follows:
Gaming inventories which include food, beverages and
general stores are costed on a weighted average basis.
Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion
and the estimated costs necessary to make the sale.
(k) Investments in associates
Th e Group’s investment in its associates are accounted for
under the equity method of accounting in the consolidated
fi nancial statements. Th ese are entities in which the Group
has signifi cant infl uence and which are not subsidiaries.
Th e fi nancial statements of the associates are used by the
Group to apply the equity method. Where associates apply
diff erent accounting policies to the Group, adjustments are
made upon application of the equity method.
Investments in the associates, as recorded in the parent
entity (Crown Limited) accounts, are carried at cost.
Th e investment in the associates is carried in the
consolidated balance sheet at cost plus post-acquisition
changes in the Group’s share of net assets of the associates,
less any impairment in value. Th e consolidated income
statement refl ects the Group’s share of the results of
operations of the associates.
Where there has been a change recognised directly in
the associates’ equity, the Group recognises its share of
any changes and discloses this, when applicable in the
consolidated statement of recognised income and expense.
(l) Investments
All investments are initially recognised at cost, being the fair
value of the consideration given and including acquisition
charges associated with the investment.
After initial recognition, investments, which are classifi ed
as available-for-sale, are measured at fair value. Gains or
losses on available-for-sale investments are recognised as a
separate component of equity until the investment is sold,
collected or otherwise disposed of, or until the investment
is determined to be impaired, at which time the cumulative
gain or loss previously reported in equity is included in the
income statement.
Non-derivative fi nancial assets with fi xed or determinable
payments and fi xed maturity are classifi ed as held-to-
maturity when the Group has the positive intention and
ability to hold to maturity. Investments intended to be held
for an undefi ned period are not included in this classifi cation.
Other long-term investments that are intended to be held-
to-maturity, such as bonds, are subsequently measured at
amortised cost using the eff ective interest method. Amortised
cost is calculated by taking into account any discount or
premium on acquisition, over the period to maturity.
For investments carried at amortised cost, gains and
losses are recognised in income when the investments
are derecognised or impaired, as well as through the
amortisation process.
For investments that are actively traded in organised fi nancial
markets, fair value is determined by reference to Stock
Exchange quoted market bid prices at the close of business
on the balance sheet date. For investments where there is no
quoted market price, fair value is determined by reference
to the current market value of another instrument which is
substantially the same or is calculated based on the expected
cash fl ows of the underlying net asset base of the investment.
(m) Property, plant and equipment
Property, plant and equipment is stated at cost less
accumulated depreciation and any impairment in value.
Depreciation and amortisation is calculated on a straight-
line basis over the estimated useful life of the asset as follows:
Freehold buildings – 40 to 75 years
Leasehold improvements – lease term
Plant and equipment – 2 to 15 years
p . 7 6
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES continued
(m) Property, plant and equipment continued
Impairment
Th e carrying values of property, plant and equipment are
reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be
recoverable. For an asset that does not generate largely
independent cash infl ows, the recoverable amount is
determined for the cash-generating unit to which the asset
belongs. If any such indication exists and where the carrying
values exceed the estimated recoverable amount, the assets
or cash-generating units are written down to their
recoverable amount.
Th e recoverable amount of property, plant and equipment
is the greater of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash fl ows are
discounted to their present value using a pre-tax discount
rate that refl ects current market assessments of the time
value of money and the risks specifi c to the asset.
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefi ts are
expected to arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset
(calculated as the diff erence between the net disposal
proceeds and the carrying amount of the item) is included in
the income statement in the period the item is derecognised.
(n) Intangible assets
Licences
Licences are carried at cost.
Th e directors regularly assess the carrying value of casino
licences so as to ensure they are not carried at a value greater
than their recoverable amount.
Th e casino licence premiums are carried at cost of
acquisition. Th e Crown Melbourne licence is being
amortised on a straight-line basis over the remaining life of
the licence from the time PBL acquired Crown Melbourne,
being 34 years. Th e Burswood licence is perpetual and, as
such, no amortisation is charged. Th e Burswood licence is
subject to an annual impairment assessment.
Goodwill
Goodwill on acquisition is initially measured at cost being
the excess of the cost of the business combination over the
acquirer’s interest in the net fair value of the identifi able
assets, liabilities and contingent liabilities. Following
initial recognition, goodwill is measured at cost less any
accumulated impairment losses. Goodwill is not amortised.
As at the acquisition date, any goodwill acquired is allocated
to each of the cash-generating units expected to benefi t from
the combination’s synergies.
Goodwill is reviewed for impairment, annually or more
frequently if events or changes in circumstances indicate
that the carrying value may be impaired. Impairment is
determined by assessing the recoverable amount of the cash
generating unit to which the goodwill relates. Where the
recoverable amount of the cash-generating unit is less than
the carrying amount, an impairment loss is recognised.
Where goodwill forms part of a cash-generating unit
and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is
included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured on
the basis of the relative values of the operation disposed of
and the portion of the cash-generating unit retained.
Development costs
Development expenditure incurred on an individual project
is carried forward when its future recoverability can
reasonably be regarded as assured.
Following the initial recognition of the development
expenditure, the cost model is applied requiring the asset
to be carried at cost less any accumulated amortisation and
accumulated impairment losses. Any expenditure carried
forward is amortised over the period of expected future sales
from the related project.
Th e carrying value of development costs is reviewed for
impairment annually when the asset is not yet in use, or more
frequently when an indicator of impairment arises during
the reporting year indicating that the carrying value may
not be recoverable.
Other intangible assets
Acquired both separately and from a business combination.
Intangible assets acquired separately are capitalised at cost
and from a business combination are capitalised at fair value
as at the date of acquisition. Following initial recognition,
the cost model is applied to the class of intangible assets.
Th e useful lives of these intangible assets are assessed to be
either fi nite or indefi nite. Where amortisation is charged
on assets with fi nite lives, this expense is taken to the
income statement.
Intangible assets, excluding development costs, created
within the business are not capitalised and expenditure is
charged against profi ts in the period in which the expenditure
is incurred.
Intangible assets are tested for impairment where an
indicator of impairment exists, and in the case of indefi nite
lived intangibles annually, either individually or at the cash
generating unit level. Useful lives are also examined on an
annual basis and adjustments, where applicable, are made
on a prospective basis.
Gains or losses arising from derecognition of an intangible
asset are measured as the diff erence between the net disposal
proceeds and the carrying amount of the asset and are
recognised in the income statement when the net asset
is derecognised.
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
p . 7 7
Notes to the Financial Statements continued
For the year ended 30 June 2008
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES continued
(o) Recoverable amount of assets
At each reporting date, the Group assesses whether there
is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes a formal
estimate of recoverable amount. Where the carrying amount
of an asset exceeds its recoverable amount the asset is
considered impaired and is written down to its
recoverable amount.
Recoverable amount is the greater of fair value less costs to
sell and value in use. It is determined for an individual asset,
unless the asset’s value in use cannot be estimated to be close
to its fair value less costs to sell and it does not generate cash
infl ows that are largely independent of those from other
assets or groups of assets, in which case, the recoverable
amount is determined for the cash-generating unit to which
the asset belongs. In assessing value in use, the estimated
future cash fl ows are discounted to their present value
using a pre-tax discount rate that refl ects current market
assessments of the time value of money and the risks specifi c
to the asset.
(p) Trade and other payables
Liabilities are brought to account for amounts payable in
relation to goods received and services rendered, whether
or not billed to the Group at reporting date. Th e Group
operates in a number of diverse markets, and accordingly
the terms of trade vary by business.
(q) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at cost,
being the fair value of the consideration received net of
issue costs associated with the borrowing.
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost
using the eff ective interest method. Amortised cost is
calculated by taking into account any issue costs, and any
discount or premium on settlement.
Gains and losses are recognised in the income statement
when the liabilities are derecognised and as well as
through the amortisation process.
Borrowing costs
Borrowing costs are capitalised on qualifying assets. Other
borrowing costs are recognised as an expense when incurred.
(r) Provisions
Provisions are recognised when the economic entity has a
legal or constructive obligation to make a future sacrifi ce
of economic benefi ts to other entities as a result of past
transactions or other events, it is probable that a future
sacrifi ce of economic benefi t will be required and a reliable
estimate can be made of the amount of the obligation.
If the eff ect of the time value of money is material,
provisions are discounted using a current pre-tax rate that
refl ects the risks specifi c to the liability. When discounting
is used, the increase in the provision due to the passage of
time is recognised as a borrowing cost.
A provision for dividends is not recognised as a liability
unless the dividends are declared, determined or publicly
recommended on or before the reporting date.
(s) Employee benefi ts
Provision is made for employee benefi ts accumulated as a
result of employees rendering services up to balance date
including related on-costs. Th e benefi ts include wages
and salaries, incentives, compensated absences and other
benefi ts, which are charged against profi ts in their respective
expense categories when services are provided or benefi ts
vest with the employee.
Th e provision for employee benefi ts is measured at the
remuneration rates expected to be paid when the liability is
settled. Benefi ts expected to be settled after twelve months
from the reporting date are measured at the present value
of the estimated future cash outfl ows to be made in respect
of services provided by employees up to the reporting date.
Th e liability for long service leave is recognised in the
provision for employee benefi ts and measured as the present
value of expected future payments to be made in respect
of services provided by employees up to the reporting date
using the projected unit credit method. Consideration is
given to expected future wage and salary levels, experience
of employee departures, and periods of service. Expected
future payments are discounted using market yields at the
reporting date on national government bonds with terms
to maturity and currencies that match, as closely as possible,
the estimated future cash outfl ows.
(t) Share-based payment transactions
Equity settled transactions
Th e Group provides benefi ts to senior executives in the form
of share-based payments, whereby executives render services
in exchange for shares or rights over shares (equity-settled
transactions).
Th e plan in place to provide these benefi ts is the Executive
Share Plan (ESP).
Th e cost of these equity-settled transactions with executives
is measured by reference to the fair value of the equity
instruments at the date which they are granted. Th e fair
value is determined by an external valuer using the Monte
Carlo model, further details of which are given in note 30.
In valuing equity-settled transactions, no account is taken of
any performance conditions, other than conditions linked to
the price of the shares of Crown Limited, further details of
which are given in note 28.
p . 7 8
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES continued
(t) Share-based payment transactions continued
Equity settled transactions continued
Th e cost of equity-settled transactions is recognised,
together with a corresponding increase in equity, over the
period in which the performance and/or service conditions
are fulfi lled, ending on the date on which the relevant
executives become fully entitled to the award (the
vesting period).
Th e cumulative expense recognised for equity-settled
transactions at each reporting date until vesting dates refl ects:
(i) the extent to which the vesting period has expired and
(ii) the Groups best estimate of the number of equity
instruments that will ultimately vest.
No adjustment is made for the likelihood of market
performance conditions being met as the eff ect of these
conditions is included in the determination of fair value at
grant date. Th e income statement charge or credit for a period
represents the movement in cumulative expense recognised as
at the beginning and end of that period.
(u) Leases
Finance leases, which transfer to the Group substantially all
the risks and benefi ts incidental to ownership of the leased
item, are capitalised at the inception of the lease at the fair
value of the leased property or, if lower, at the present value
of the minimum lease payments.
Lease payments are apportioned between the fi nance
charges and reduction of the leased liability so as to achieve
a constant rate of interest on the remaining balance of
the liability.
Operating lease payments are recognised as an expense
in the income statement on a straight-line basis over the
lease term.
(v) Derecognition of fi nancial instruments
Th e derecognition of a fi nancial instrument takes place
when the Group no longer controls the contractual rights
that comprise the fi nancial instrument, which is normally
the case when the instrument is sold, or all the cash fl ows
attributable to the instrument are passed through to an
independent third party.
(w) Derivative fi nancial instruments
Th e Group uses derivative fi nancial instruments such as
foreign currency contracts and interest rate swaps to hedge
its risks associated with interest rate and foreign currency
fl uctuations. Such derivative fi nancial instruments are stated
at fair value.
Th e fair value of forward exchange contracts is calculated
by reference to current forward exchange rates for contracts
with similar maturity profi les. Th e fair value of interest rate
swap contracts is determined by reference to market values
for similar instruments.
For the purposes of hedge accounting, hedges are classifi ed
as either fair value hedges when they hedge the exposure to
changes in the fair value of a recognised asset or liability; or
cash fl ow hedges where they hedge exposure to variability
in cash fl ows that is either attributable to a particular risk
associated with a recognised asset or liability or a
forecasted transaction.
In relation to fair value hedges (interest rate swaps) which
meet the conditions for special hedge accounting, any gain
or loss from remeasuring the hedging instrument at fair
value is recognised immediately in the income statement.
Any gain or loss attributable to the hedged risk on
remeasurement of the hedged item is adjusted against the
carrying amount of the hedged item and recognised in the
income statement. Where the adjustment is to the carrying
amount of a hedged interest-bearing fi nancial instrument,
the adjustment is amortised to the income statement such
that it is fully amortised by maturity.
In relation to cash fl ow hedges (forward foreign exchange
contracts) to hedge fi rm commitments which meet the
conditions for special hedge accounting, the portion of the
gain or loss on the hedging instrument that is determined
to be an eff ective hedge is recognised directly in equity
and the ineff ective portion is recognised in the income
statement. When the hedged fi rm commitment results in
the recognition of an asset or a liability, then, at the time the
asset or liability is recognised, the associated gains or losses
that had previously been recognised in equity are included
in the initial measurement of the acquisition cost or other
carrying amount of the asset or liability.
For all other cash fl ow hedges, the gains or losses that are
recognised in equity are transferred to the income statement
in the same year in which the hedged fi rm commitment
aff ects the net profi t and loss, for example when the future
sale actually occurs.
For derivatives that do not qualify for hedge accounting,
any gains or losses arising from changes in fair value are
taken directly to the income statement.
Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated or exercised, or
no longer qualifi es for hedge accounting. At that point in
time, any cumulative gain or loss on the hedging instrument
recognised in equity is kept in equity until the forecasted
transaction occurs. If a hedged transaction is no longer
expected to occur, the net cumulative gain or loss recognised
in equity is transferred to the income statement.
(x) Impairment of fi nancial assets
Th e Group assesses at each balance sheet date whether a
fi nancial asset or group of fi nancial assets is impaired.
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
p . 7 9
Notes to the Financial Statements continued
For the year ended 30 June 2008
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES continued
(x) Impairment of fi nancial assets continued
(i) Financial assets carried at amortised cost
If there is objective evidence that an impairment loss
on loans and receivables carried at amortised cost has
been incurred, the amount of the loss is measured as the
diff erence between the assets carrying amount and the
present value of estimated future cash fl ows (excluding
future credit losses that have not been incurred) discounted
at the fi nancial assets original eff ective interest rate (ie: the
eff ective interest rate computed at initial recognition). Th e
carrying amount of the asset is reduced either directly or
through use of an allowance account. Th e amount of the
loss is recognised in profi t or loss.
Th e Group fi rst assesses whether objective evidence of
impairment exists individually for fi nancial assets that are
individually signifi cant, and individually or collectively
for fi nancial assets that are not individually signifi cant.
If it is determined that no objective evidence of impairment
exists for an individually assessed fi nancial asset, whether
signifi cant or not, the asset is included in a group of
fi nancial assets with similar credit risk characteristics
and that group of fi nancial assets is collectively assessed
for impairment. Assets that are individually assessed
for impairment and for which an impairment loss is or
continues to be recognised are not included in a collective
assessment of impairment.
If, in a subsequent period, the amount of the impairment
loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised,
the previously recognised impairment loss is reversed. Any
subsequent reversal of an impairment loss is recognised in
profi t or loss, to the extent that the carrying value of the
asset does not exceed its amortised cost at the reversal date.
(ii) Financial assets carried at cost
If there is objective evidence that an impairment loss has
been incurred on an unquoted equity instrument that is
not carried at fair value (because its fair value cannot be
reliably measured), or on a derivative asset that is linked
to and must be settled by delivery of such an unquoted
equity instrument, the amount of the loss is measured as
the diff erence between the assets carrying amount and the
present value of estimated cash fl ows, discounted at the
current market rate of return for a similar fi nancial asset.
(iii) Available-for-sale investments
If there is objective evidence that an available-for-sale
investment is impaired, an amount comprising the
diff erence between its cost (net of any principal repayment
and amortisation) and its current fair value, less any
impairment loss previously recognised in profi t or loss, is
transferred from equity to the income statement. Reversals
of impairment losses for equity instruments classifi ed as
available-for-sale are not recognised in profi t. Reversals
of impairment losses for debt instruments are reversed
through profi t or loss if the increase in an instruments fair
value can be objectively related to an event occurring after
the impairment loss was recognised in profi t or loss.
(y) Contributed equity
Ordinary shares are classifi ed as equity. Issued capital is
recognised at the fair value of the consideration received
by the Company, less transaction costs.
(z) Revenue
Revenue is recognised to the extent that it is probable
that the economic benefi ts will fl ow to the Group and the
revenue can be reliably measured. Th e following specifi c
recognition criteria must also be met before revenue
is recognised:
Sale of goods
Revenue is recognised when the signifi cant risks and
rewards of ownership of the goods have passed to the
buyer and can be measured reliably. Risks and rewards are
considered passed to the buyer at the time of delivery
of the goods to the customer.
Rendering of services
Control of the right to be compensated for the services and
the stage of completion can be reliably measured.
Casino revenues are the net of gaming wins and losses.
Interest
Revenue is recognised as the interest accrues (using the
eff ective interest method, which is the rate that exactly
discounts estimated future cash receipts through the
expected life of the fi nancial instrument) to the net
carrying amount of the fi nancial asset.
Dividends
Revenue is recognised when the shareholders’ right to
receive the payment is established.
(aa) Earnings per share
Basic EPS is calculated as net profi t attributable to members
of the parent, adjusted to exclude any costs of servicing
equity (other than dividends) and preference share
dividends, divided by the weighted average number
of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profi t attributable to
members of the parent, adjusted for:
• costs of servicing equity (other than dividends) and
preference share dividends;
• the after tax eff ect of dividends and interest associated
with dilutive potential ordinary shares that have been
recognised as expenses; and
• other non-discretionary changes in revenues or expenses
during the period that would result from the dilution
of potential ordinary shares;
divided by the weighted average number of ordinary shares
and dilutive potential ordinary shares, adjusted for any
bonus element.
p . 8 0
2. SEGMENT INFORMATION
Crown operated one distinct segment, being:
• Gaming – operation of fully integrated gaming and entertainment facilities.
Intersegment trading, where appropriate, is eliminated on consolidation. Any such transactions are based on market values.
30 June 2008
(a) Industry segment
Operating revenue
Total
Intersegment
External customers
Other income
Interest revenue
Total revenue
Segment result
Earnings before interest, tax,
depreciation and amortisation
“EBITDA”
Note
Gaming
$’000
Un-
allocated
$’000
Less: Dis-
Crown
continued Continuing
Group Operations Operations
$’000
$’000
$’000
2,028,924
9,480
2,038,404
8,731
2,029,673
(2,233)
–
(2,233)
–
(2,233)
2,026,691
9,480
2,036,171
8,731
2,027,440
701
273,933
274,634
188,490
273,933
701
–
188,490
3
3
3
2,027,392
283,413
2,499,295
282,664
2,216,631
632,924
(50,907)
582,017
(11,068)
593,085
Depreciation and amortisation
3
(130,287)
(3,866)
(134,153)
(1,343)
(132,810)
Earnings before interest and tax
“EBIT”
Specifi c items
Equity accounted share of associates’
net profi t/(loss)
Net interest income/(expense)
Profi t from operating activities before
income tax and minority interests
Less: tax expense
Profi t after tax
3
11
3
5
502,637
(54,773)
447,864
(12,411)
460,275
–
3,112,400
3,112,400
3,351,563
(239,163)
(21,999)
57,470
35,471
55,501
57,470
–
(21,999)
55,501
480,638
3,115,097
3,651,236
3,396,622
254,614
(88,017)
29,591
(117,608)
480,638
3,115,097
3,563,219
3,426,213
137,006
Total assets employed ^
4,991,457
2,540,869
7,532,326
752,833
2,481,362
3,234,195
Total liabilities
Acquisition of
Non-current assets
Investments in associates
11
1,130,164
199,086
–
–
199,086
1,130,164
Non-cash (income)/expenses
(other than depn & amort)
–
239,163
239,163
^ Unallocated assets include unallocated cash on deposit of $2,215.2 million (2007: $2,086.2 million).
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
p . 8 1
–
–
–
–
–
7,532,326
3,234,195
199,086
1,130,164
239,163
Notes to the Financial Statements continued
For the year ended 30 June 2008
2. SEGMENT INFORMATION continued
30 June 2007
(a) Industry segment continued
Note
Gaming
$’000
Media
(Disc-
ontinued)
$’000
Un-
allocated
$’000
Less: Dis-
Crown
continued Continuing
Group Operations Operations
$’000
$’000
$’000
Operating revenue
Total
Intersegment
External customers
Other income
Interest revenue
Total revenue
Segment result
Earnings before interest,
tax, depreciation and
amortisation “EBITDA”
Depreciation and
amortisation
Earnings before interest
and tax “EBIT”
Specifi c items
Equity accounted
share of associates’
net profi t/(loss)
Net interest (expense)
Profi t from operating
activities before income
tax and minority interests
1,915,496
1,667,128
5,677
3,588,301
1,672,805
1,915,496
(6,953)
(10,878)
(4,460)
(22,291)
(15,338)
(6,953)
1,908,543
1,656,250
1,217
3,566,010
1,657,467
1,908,543
164
13,948
1,543,378
1,557,490
1,557,326
164
112,803
4,742
108,061
3
3
3
1,908,707
1,670,198
1,544,595
5,236,303
3,219,535
2,016,768
603,810
478,443
(76,431)
1,005,822
402,012
603,810
3
(120,053)
(37,580)
(7,284)
(164,917)
(42,393)
(122,524)
3
11
3
483,757
440,863
(83,715)
840,905
359,619
481,286
–
(62,100)
1,389,663
1,327,563
1,327,563
–
(50,976)
113,433
–
62,457
113,433
(150,284)
(107,141)
(50,976)
(43,143)
432,781
492,196
1,305,948
2,080,641
1,693,474
387,167
Less: tax expense
5
(100,410)
(81,643)
(18,767)
Profi t after tax
432,781
492,196
1,305,948
1,980,231
1,611,831
368,400
Total assets employed ^
4,684,385
103,248
2,392,059
7,179,692
550,683
6,629,009
849,632
78,619
386,157
1,314,408
202,996
1,111,412
Investments in associates 11
1,180,996
–
(122,785)
1,058,211
897,391
324,434
93,183
1,315,008
324,434
143,000
990,574
915,211
Non-cash (income)/ expenses
(other than depn & amort)
(b) Geographical segment
12,030
(8,098)
40,258
44,190
(8,098)
52,288
Th e consolidated entity operates principally within Australia.
p . 8 2
Total liabilities
Acquisition of
Non-current assets
3. REVENUE AND EXPENSES
Profi t before income tax expense includes the
following revenues and expenses:
(i) Revenue from continuing operations
Revenue from services
Revenue from sale of goods
Interest
Dividends
Other operating revenue
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
1,744,585
1,638,374
270,135
108,061
263,737
188,490
40
19,078
34
–
175,000
–
–
–
–
2,215,930
2,016,604
175,000
(ii) Other income from continuing operations
Profi t on disposal of non-current assets
701
164
(iii) Expenses from continuing operations
Cost of sales
Gaming activities
Specifi c Items
Other activities
Depreciation of non-current assets
(included in expenses above)
Buildings
Plant and equipment
Amortisation of non-current assets
(included in expenses above)
Casino licence fee and management agreement
Other assets
101,829
95,484
1,423,675
1,329,466
239,163
42,362
–
2,471
1,807,029
1,427,421
42,941
72,019
39,228
65,359
114,960
104,587
14,436
3,414
17,850
14,417
3,520
17,937
Total depreciation and amortisation expense
132,810
122,524
–
–
–
–
–
–
–
–
–
–
–
–
–
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
p . 8 3
Notes to the Financial Statements continued
For the year ended 30 June 2008
3. REVENUE AND EXPENSES continued
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
(iv) Specifi c items
Continuing operations
Write down of LVTI
Write down of available for sale assets – equity securities
Write down of deferred debt security
Impairment write down of non-current assets
Discontinued operations
Gain on demerger of CMH
44,699
181,330
13,134
–
239,163
(2,420,245)
–
–
–
–
–
–
Net profi t on disposal of investments
(948,318)
(1,530,896)
Impairment and write down of non-current assets
17,000
Restructuring costs
Other provisions
–
–
79,734
80,399
43,200
(3,351,563)
(1,327,563)
–
–
–
3,168,144
3,168,144
–
–
–
–
–
–
Total specifi c items
(3,112,400)
(1,327,563)
3,168,144
(v) Other income and expense disclosures
Finance costs expensed:
Debt facilities
Finance leases
Bad and doubtful debts – trade debtors
Rentals – operating leases
Defi ned benefi t superannuation plan expenses
Defi ned contribution plan expense
Other employee benefi ts expense
Executive share plan expenses
Net foreign currency gains/(losses)
p . 8 4
132,989
151,172
–
32
132,989
151,204
(11,185)
8,652
–
33,930
530,545
3,672
781
6,901
8,387
(575)
60,220
699,207
9,509
2,194
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4. DIVIDENDS PAID AND PROPOSED
(a) Dividends appropriated during the fi nancial year
Current year interim dividend (paid 18 April 2008)
Paid at 25 cents (2007: 30 cents) per share franked
at 40% (2007: fully franked) at the Australian tax
rate of 30% (2007: 30%)
Prior year fi nal dividend (paid 15 October 2007)
Paid at 25 cents (2006: 29 cents) per share and
fully franked (2006: fully franked) at the Australian
tax rate of 30% (2006: 30%)
Total dividends appropriated
(b) Dividends announced and not recognised as a liability
Current year fi nal dividend on ordinary shares
(expected to be paid 17 October 2008)
Announced at 29 cents (2007: 25 cents) per share and franked
at 40% (2007: fully franked) at the Australian tax rate
of 30% (2007: 30%)
(c) Franking credits
Th e tax rate at which the fi nal dividend will be franked is
30% (2007: 30%). Th e franking account disclosures have
been calculated using the franking rate applicable at
30 June 2008
Th e amount of franking credits available for the subsequent
fi nancial year:
Franking account balance as at the end of the fi nancial year
at 30% (2007: 30%)
Franking credits that will arise from the payment of income
taxes payable as at the end of the fi nancial year
Total franking credits
Th e amount of franking credits available for future
reporting periods:
Impact on the franking account of dividends announced
before the fi nancial report was authorised for issue but not
recognised as a distribution to equity holders during the
fi nancial year
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
169,521
202,669
169,521
169,736
339,257
196,474
399,143
–
169,521
196,687
169,718
196,687
9,445
49,049
9,445
22,554
31,999
22,670
71,719
22,554
31,999
(34,287)
(2,288)
(72,736)
(34,287)
(1,017)
(2,288)
–
–
–
–
–
–
–
–
–
p . 8 5
Th e company will pay tax instalments before the payment of the fi nal dividend to ensure the dividends can be franked to 40%.
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
5. INCOME TAX
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
(a) Income tax expense
Th e prima facie tax expense, using tax rates applicable
in the country of operation, on profi t diff ers from
income tax provided in the fi nancial statements as follows:
Profi t/(loss) before income tax
3,651,236
2,080,641
(2,993,144)
Prima facie income tax expense/(benefi t) on profi t/(loss)
at the Australian rate of 30% (2007: 30%)
1,095,371
624,192
(897,943)
Tax eff ect of:
Rebatable dividends
Non deductible depreciation and amortisation
Non taxable net capital loss/(gain)
Share of associates’ net (profi ts)
Tax losses previously not recognised now
brought to account
Dividends from associated entities
Other items – net
Impairment and write down of investments
Deferred income tax on temporary diff erences
Income tax (over)/under provided in prior years
Deferred tax adjustment
Income tax expense/(benefi t)
Income tax expense/(benefi t) comprises –
Current expense
Deferred expense/(benefi t)
Adjustments for current income tax of prior periods
(b) Deferred income taxes
Deferred income tax assets
Deferred income tax liabilities
p . 8 6
Net deferred income tax liabilities
–
1,506
(3,198)
2,584
(52,500)
–
(1,031,337)
(465,057)
950,443
(10,641)
(18,737)
–
–
(7,263)
71,739
(6,966)
675
(25,067)
(70,062)
8,500
(801)
23,920
338
(1,269)
–
–
–
–
–
–
(462)
–
–
88,017
100,410
(462)
94,308
(6,966)
675
101,341
338
(1,269)
88,017
100,410
–
(462)
–
(462)
136,573
394,709
184,052
477,331
13,870
–
(258,136)
(293,279)
13,870
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5. INCOME TAX continued
(c) Deferred income tax assets and liabilities
at the end of the fi nancial year
Doubtful debt provision
Employee benefi ts provision
Revenue losses carried forward
Other receivables
Other provisions
Revaluation to fair value of:
Investments
Prepaid casino tax
Licences, mastheads and intangibles
Land and buildings
Accelerated depreciation for tax purposes
Other
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
7,803
18,222
13,500
49,353
47,695
18,287
18,218
33,241
34,296
38,606
(155,490)
(224,857)
(563)
(22,152)
(149,797)
(145,384)
(86,960)
(3,764)
1,865
(45,179)
(10,650)
12,295
–
–
13,500
–
–
–
–
–
–
–
370
Net deferred income tax assets/(liabilities)
(258,136)
(293,279)
13,870
(d) Movements in deferred income tax assets and
liabilities during the fi nancial year, refl ected in
deferred income tax expense/(benefi t) –
Revaluation to fair value of:
Prepaid casino tax
Adjustment to the carrying value of assets
Net deferred income tax expense/(benefi t)
(e) Tax losses not brought to account, as the realisation
of the benefi ts represented by these balances is not
considered to be probable –
Th e Group has tax losses arising in Australia that are
available indefi nitely for off set against future capital gains
of the companies in which the losses arose.
Capital gains tax – no expiry date
Total tax losses not brought to account
Potential tax benefi t at respective tax rates
(f) Withholding taxes payable
(820)
(6,146)
(6,966)
(820)
1,158
338
–
(462)
(462)
199,000
1,344,492
199,000
1,344,492
59,700
403,348
199,000
199,000
59,700
At 30 June 2008, there is no recognised or unrecognised deferred income tax liability (2007: $nil) for taxes that would
be payable on the unremitted earnings of certain of the Group’s subsidiaries, associates or joint ventures, as the Group has
no liability for additional taxation should such amounts be remitted.
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
p . 8 7
Notes to the Financial Statements continued
For the year ended 30 June 2008
5. INCOME TAX continued
(g) Tax consolidation
Crown Limited and its 100% owned Australian resident subsidiaries have formed a tax consolidated group with eff ect from
1 July 2007. Crown Limited is the head entity of the tax consolidated group. Members of the group have entered into a tax
sharing arrangement with Crown Limited in order to allocate income tax expense between Crown Limited and the wholly
owned subsidiaries. In addition, the agreement provides for the allocation of income tax liabilities between the entities
should the head entity default on its tax payment obligations. At the balance date the possibility of default is remote.
(h) Tax eff ect accounting by members of the tax consolidated group
Members of the tax consolidated group have entered into a tax funding agreement. Th e tax funding agreement provides
for the allocation of current and deferred taxes to members of the tax consolidated group in accordance with their taxable
income for the period. Th e allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the
subsidiaries intercompany accounts with the tax consolidated group head company, Crown Limited.
6. DISCONTINUED OPERATIONS
(a) Details of discontinued operations
Demerger of CMH
On 12 December 2007, Crown disposed of its Media businesses by way of a demerger of Consolidated Media Holdings
Limited. Th e demerger was eff ected by returning 1 CMH share to shareholders for each Crown share held.
Th e net assets of CMH at the time of demerger were $131.6 million. Th e value of CMH at the demerger date was
$2,551.8 million. A gain of $2,420.2 million was therefore recorded on demerger. Th e $131.6 million has been recorded
as a reduction of capital in the consolidated accounts and the $2,420.2 million has been accounted for as an internal
distribution in the consolidated accounts.
As part of the demerger the following material entities were disposed:
– Consolidated Media Holdings Ltd (formally PBL)
– Windfyr Pty Ltd (and controlled entities)
– PBL Media Holdings Shareholder Pty Ltd (and controlled entities)
– PBL Pay TV Pty Ltd (and controlled entities)
PBL Media
On 10 September 2007 PBL disposed half of its 50% investment (25%) in PBL Media for proceeds of $526.4 million.
Th e cost base disposed by PBL relating to the share disposed was negative $347.3 million resulting in a profi t on disposal
of $873.7 million.
Ticketing and Events
On 17 July 2007, PBL sold its Ticketing and Events business to PBL Media for $210.0 million in cash. PBL’s cost base in
the Ticketing and Events business at the time of the sale was $50.5 million. At the time of the transaction PBL owned 50%
of PBL Media, therefore 50% of these net assets and 50% of the debt funding that PBL Media used for the acquisition
were transferred to PBL’s investment in PBL Media ($79.7 million). Th e residual 50% was disposed, resulting in a gain on
disposal of $79.7 million.
Th e material entities disposed as part of this transaction were:
– Ticketek Pty Limited
– Sydney Superdome Pty Limited; and
– Events Management Catering Pty Limited
p . 8 8
6. DISCONTINUED OPERATIONS continued
(a) Details of discontinued operations continued
Hoyts
On 5 December 2007 Crown sold its investment in Hoyts for $145.4 million. Costs of $3.2 million were incurred in
relation to the sale. At the time the carrying value of Hoyts was $147.3 million resulting in a loss on disposal of Hoyts
of $5.1 million.
Other Discontinued Operations
Other discontinued operations consists of equity accounted results of entities no longer part of the Crown Group, tax
adjustments, and corporate costs of businesses residing in CMH. Th e net profi t from these other discontinued operations
is $74.7 million.
Summary of Discontinued Operations
In summary, Crown’s gain from discontinued operations of $3,426.2 million consists of the following:
Gain on demerger of CMH
Gain on disposal of PBL Media
Gain on disposal of Ticketing & Events
Loss on disposal of Hoyts
New Regency write down
Other discontinued operations
$’000
2,420,245
873,721
79,743
(5,146)
(17,000)
74,650
3,426,213
(b) Cashfl ow information – discontinued operations
Th e net cash fl ows of discontinued operations for the period until disposal were as follows:
Operating activities
Investing activities
Financing activities
CONSOLIDATED
2008
$’000
2007
$’000
(3,641)
438,700
671,872
(299,853)
(2,139,622)
677,188
(1,471,391)
816,035
p . 8 9
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
6. DISCONTINUED OPERATIONS continued
(c) Assets and liabilities – held for sale operations
Th e major classes of assets and liabilities of Ticketek Pty Limited and Sydney Superdome Pty Limited at 30 June 2007
are as follows:
Ticketek
and Sydney
Superdome
$’000
63,069
27,715
915
4,556
6,992
103,247
71,967
6,652
78,619
24,628
Assets
Intangibles
Property, plant and equipment
Inventories
Trade and other receivables
Other assets
Assets classifi ed as held for sale
Liabilities
Trade and other payables
Other liabilities
Liabilities directly associated with assets classifi ed as held for sale
Net assets/liabilities attributable to discontinued operations
(d) Cashfl ow information – held for sale operations
Th e net cash fl ows of held for sale operations are as follows:
Ticketing
and Events
$’000
26,103
10,622
Hoyts
$’000
–
–
New
Regency
$’000
–
–
Total
$’000
26,103
10,622
Operating activities
Net cash infl ow
p . 9 0
7. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Provision for doubtful debts (a)
Loans to associated entities
Loans to directors
Other receivables
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
114,844
103,568
(13,983)
(44,242)
100,861
59,326
314
–
45,349
45,663
384
92
45,154
45,630
146,524
104,956
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(a) Allowance for Doubtful Debts
Trade debtors are non-interest bearing and are generally 30 day terms.
An allowance for doubtful debts is recognised when there is objective evidence that an individual trade debt is impaired.
Movements in the allowance for doubtful debts:
CONSOLIDATED
2008
$’000
2007
$’000
Allowance for doubtful debts at the beginning of the year
(44,242)
(41,412)
Discontinued Operations (Transferred Out)
Net doubtful debt (expense)/reversal for the year (i)
Amounts written off
(i) Amounts are included in other expenses
Ageing analysis of trade debtors
2008 – consolidated
Current
Past due not impaired
Considered impaired
2007 – consolidated
Current
Past due not impaired
Considered impaired
369
11,185
18,705
1,858
(6,901)
2,213
(13,983)
(44,242)
0–30 days
>30 days
62,049
–
1,184
63,233
36,884
–
563
37,447
–
38,812
12,799
51,611
–
22,442
43,679
66,121
Total
$’000
62,049
38,812
13,983
114,844
36,884
22,442
44,242
103,568
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
p . 9 1
Notes to the Financial Statements continued
For the year ended 30 June 2008
7. TRADE AND OTHER RECEIVABLES continued
Non Current
Loans to associated entities
Derivatives
Loans to controlled entities
Other receivables
Provision for doubtful debts
8. INVENTORIES
Current
Finished goods (at cost)
9. OTHER ASSETS
Current
Deposits
Non Current
Prepaid casino tax at cost
Accumulated amortisation
10. ASSETS CLASSIFIED AS HELD FOR SALE
Current
Ticketek and Sydney Superdome
Hoyts
New Regency
p . 9 2
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
248,079
11,200
–
188,923
(5,000)
73,339
–
–
21,762
(5,000)
–
–
178,160
–
–
443,202
90,101
178,160
11,835
11,835
9,722
9,722
70
70
108
108
100,800
100,800
(29,694)
(26,960)
71,106
73,840
–
–
–
–
103,247
143,000
201,188
447,435
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Non Current
Investments at equity accounted amount:
Associated entities – unlisted shares
Associated entities – listed shares
Total investments in associates
Fair value of listed investments:
SEEK Ltd
Melco Crown Entertainment Ltd
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
151,876
978,288
1,130,164
824,426
90,785
915,211
–
568,027
1,613,685
2,466,517
1,613,685
3,034,544
–
–
–
–
–
–
–
–
–
–
–
–
Investments in Associates Date
Principal Activity
Reporting
Country of
Incorporation
or Residence
% Interest 1
2008
2007
Melco Crown Entertainment 31 Dec 2
Ltd
Resort/Casino and
gaming machine operator
Macau
37.9
Sky Cable Pty Ltd
Premier Media Group
SEEK Ltd
Aspinalls
PBL Media
30 June
30 June
30 June
30 June
30 June
Investment in Pay TV
Pay TV sport service
Online job search service
Casino and gaming
machine operator
Magazine publishing
and broadcast services
Betfair Australasia Pty Ltd
30 April 2
Betting exchange
Gateway Casinos
31 Dec 2
Casino and gaming
machine operator
1 Th e proportion of ownership interest is equal to the proportion of voting power held.
2 Th e Group uses 30 June results to equity account for the investments.
Australia
Australia
Australia
U.K.
Australia
Australia
Canada
–
–
–
50.0
–
50.0
50.0
41.4
50.0
50.0
27.2
50.0
50.0
50.0
–
p . 9 3
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD continued
CONSOLIDATED
PA R ENT ENTIT Y
Note
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Share of associates’ revenue and profi ts
Share of associates’:
Revenue
Operating profi t before income tax
Income tax expense
Share of associates’ net profi t after income tax
2
Carrying amount of investments in associates
654,845
37,964
(2,493)
35,471
637,529
80,002
(17,545)
62,457
Balance at the beginning of the fi nancial year
915,211
1,026,325
Carrying amount of investments in associates
acquired during the year
Share of associates’ net profi t/(loss) for the year
Dividends received or receivable
Gain on issue of shares by associate
Impairment and fx write down of investments
Recognition of PBL Media on deconsolidation
Transfer to assets held for sale
Carrying amount of investments in associates disposed
of during the year
Carrying amount of investment in associates at the end
of the fi nancial year
Represented by:
Investments at equity accounted amount:
• Melco Crown Entertainment Ltd
• Aspinalls
• Betfair Australasia Pty Ltd
• Gateway
• Sky Cable Pty Ltd
• Premier Media Group
• SEEK Ltd
• PBL Media1
p . 9 4
79,586
35,471
340,249
62,457
(66,659)
(28,332)
158,035
488,145
(266,453)
(66,235)
–
–
(642,375)
(143,000)
274,973
(122,023)
1,130,164
915,211
978,287
1,052,642
85,489
16,948
49,440
–
–
–
–
109,923
18,430
–
138,757
117,930
90,785
(613,256)
1,130,164
915,211
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Th e negative carrying value of the investment in PBL Media refl ects 50% of the cost of net assets sold by PBL to PBL Media, off set by the 50% share
of PBL Media’s debt.
11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD continued
Th e consolidated entity’s share of the assets and liabilities
of associates in aggregate
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Retained profi ts/(accumulated losses) of the consolidated
entity attributable to associates
Balance at the beginning of the fi nancial year
Share of associates’ net profi ts/(losses)
Disposal of associated entities
Balance at the end of the fi nancial year
12. AVAILABLEFORSALE FINANCIAL ASSETS
At fair value
Shares – unlisted (Australia)
Shares – unlisted (US)
Shares – listed
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
377,684
617,632
2,102,728
4,969,001
(255,979)
(486,692)
(1,138,693)
(2,531,121)
1,085,740
2,568,820
79,641
35,471
58,656
62,457
(190,436)
(41,472)
(75,324)
79,641
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
37,014
470,475
–
37,014
359,757
1,242
507,489
398,013
–
–
–
–
–
–
–
–
Available-for-sale investments consist of investments in ordinary shares, and therefore have no fi xed maturity date
or coupon rate.
Th e fair value of the unlisted available-for-sale investments has been estimated using valuation techniques based on
assumptions that are not supported by observable market prices or rates. Management believes the estimated fair values
resulting from the valuation techniques and recorded in the balance sheet and the related changes in fair values recorded
in the income statement are reasonable and the most appropriate at the balance sheet date.
p . 9 5
13. OTHER FINANCIAL ASSETS
Non current
Unlisted shares in controlled entities
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
–
–
–
–
8,628,413
8,628,413
–
–
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
14. PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
Buildings
Freehold
land and
buildings
$’000
on Leasehold
leasehold
land
$’000
improve- Plant and
ments equipment
$’000
$’000
Construction Leased
work in plant and
progress equipment
$’000
$’000
PA R ENT
ENTIT Y
Total
property,
plant and
equipment Total
$’000 $’000
Year ended 30 June 2008
At 1 July 2007, net of
accumulated depreciation
and impairment
694,185
654,001
5,374
451,806
25,485
209
1,831,060
Additions
Disposals
Disposal of entities
7,187
43,103
(2,933)
(40,828)
–
–
–
–
46,274
102,522
(1,191)
–
–
–
199,086
(4,124)
(5,374)
(5,152)
(3,600)
(209)
(55,163)
Depreciation expense
(16,776)
(26,662)
Amortisation expense
–
Reclassifi cation/transfer
33,716
–
116
–
–
–
(72,444)
–
–
–
25,534
(59,366)
–
–
–
(115,882)
–
–
At 30 June 2008, net of
accumulated depreciation
and impairment
At 1 July 2007
Cost
(gross carrying amount)
Accumulated depreciation
and impairment
674,551
670,558
– 444,827
65,041
–
1,854,977
820,225
947,206
5,838 1,146,271
25,485
10,981
2,956,006
(126,040) (293,205)
(464) (694,465)
–
(10,772)
(1,124,946)
Net carrying amount
694,185
654,001
5,374 451,806
25,485
209
1,831,060
At 30 June 2008
Cost
(gross carrying amount)
Accumulated depreciation
and impairment
812,165
987,441
– 1,184,250
65,041
10,679
3,059,576
(137,614) (316,883)
–
(739,423)
–
(10,679)
(1,204,599)
Net carrying amount
674,551
670,558
– 444,827
65,041
–
1,854,977
–
–
–
–
–
–
–
–
–
–
–
–
–
–
p . 9 6
14. PROPERTY, PLANT AND EQUIPMENT continued
CONSOLIDATED
Buildings
Freehold
land and
buildings
$’000
on Leasehold
leasehold
land
$’000
improve- Plant and
ments equipment
$’000
$’000
Construction Leased
work in plant and
progress equipment
$’000
$’000
PA R ENT
ENTIT Y
Total
property,
plant and
equipment Total
$’000 $’000
Year ended 30 June 2007
At 1 July 2006, net of
accumulated depreciation
and impairment
Additions
Disposals
Disposal of entities
Transfer (to)/from assets
held for sales
At 30 June 2007, net of
accumulated depreciation
and impairment
At 1 July 2006
Cost
(gross carrying amount)
Accumulated depreciation
and impairment
Depreciation expense
(17,287)
(24,037)
–
(93,921)
Amortisation expense
–
Reclassifi cation/transfer
1,350
733,275
660,748
8,901
481,478
38,206
17,290
5,141
165,991
24,061
10,846
(493)
(1,246)
–
1,719
1,910,182
120
(24)
237,594
(2,146)
(383)
(60,976)
–
–
(6,290)
(71,544)
(9,306)
(1,295)
(149,411)
(1,885)
–
–
–
–
(135,245)
(311)
(2,196)
–
–
(1,234)
(116)
(27,718)
–
–
–
–
(27,718)
–
–
–
–
694,185
654,001
5,374 451,806
25,485
209
1,831,060
847,434
929,916
19,681 1,391,122
24,061
16,828
3,229,042
(114,159) (269,168)
(10,780) (909,644)
–
(15,109)
(1,318,860)
Net carrying amount
733,275
660,748
8,901 481,478
24,061
1,719
1,910,182
At 30 June 2007
Cost
(gross carrying amount)
Accumulated depreciation
and impairment
820,225
947,206
5,838 1,146,271
25,485
10,981
2,956,006
(126,040) (293,205)
(464) (694,465)
–
(10,772)
(1,124,946)
Net carrying amount
694,185
654,001
5,374 451,806
25,485
209
1,831,060
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
p . 9 7
Notes to the Financial Statements continued
For the year ended 30 June 2008
Television
licences 1
$’000
CONSOLIDATED
Casino Magazine
licence 1 Mastheads 1
$’000
$’000
PA R ENT
ENTIT Y
Total
$’000
Total
$’000
15. LICENCES
Year ended 30 June 2008
At 1 July 2007, net of accumulated
depreciation and impairment
Amortisation expense
At 30 June 2008, net of accumulated
amortisation and impairment
At 1 July 2007
Cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2008
Cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
Year ended 30 June 2007
At 1 July 2006, net of accumulated
depreciation and impairment
Acquisition of entities
Disposal of entities
Amortisation expense
At 30 June 2007, net of accumulated
amortisation and impairment
At 1 July 2006
Cost (gross carrying amount)
Accumulated depreciation and impairment
–
–
–
–
–
–
–
–
–
674,339
(7,471)
666,868
774,899
(100,560)
674,339
774,899
(108,031)
666,868
–
–
–
–
–
–
–
–
–
674,339
(7,471)
666,868
774,899
(100,560)
674,339
774,899
(108,031)
666,868
894,555
127,400
(1,021,955)
–
–
681,810
846,613
2,422,978
–
–
(7,471)
674,339
–
127,400
(846,613)
(1,868,568)
–
–
(7,471)
674,339
894,555
–
774,899
(93,089)
846,613
2,516,067
–
(93,089)
Net carrying amount
894,555
681,810
846,613
2,422,978
p . 9 8
At 30 June 2007
Cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
1 Purchased as part of a business combination
–
–
–
774,899
(100,560)
674,339
–
–
–
774,899
(100,560)
674,339
Th e casino licence premiums are carried at cost and amortised on a straight line basis over their useful lives. Th e Crown
licence is being amortised over 34 years. Th e Burswood licence is perpetual and no amortisation is charged.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16. OTHER INTANGIBLE ASSETS
CONSOLIDATED
Casino
management
agreement 1
$’000
Goodwill 1
$’000
Venue
ticketing
rights 2
$’000
PA R ENT
ENTIT Y
Total
$’000
Total
$’000
Year ended 30 June 2008
At 1 July 2007, net of accumulated
depreciation and impairment
Disposal of entities
Transfer to held for sale
Additions
Amortisation expense
At 30 June 2007, net of accumulated
amortisation and impairment
At 1 July 2007
Cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2008
Cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
Year ended 30 June 2007
At 1 July 2006, net of accumulated
depreciation and impairment
Disposal of entities
Transfer to held for sale
Additions
Amortisation expense
At 30 June 2007, net of accumulated
amortisation and impairment
At 1 July 2006
Cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2007
Cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
1 Purchased as part of a business combination
2 Asset purchase
27,043
(14,203)
–
–
183,426
–
–
–
–
(6,965)
12,840
176,461
27,043
–
27,043
12,840
–
12,840
413,969
(556,729)
–
169,803
–
245,279
(61,853)
183,426
245,279
(68,818)
176,461
190,372
–
–
–
(6,946)
–
–
–
–
–
–
–
–
–
–
–
–
210,469
(14,203)
–
–
(6,965)
189,301
272,322
(61,853)
210,469
258,119
(68,818)
189,301
12,271
–
(7,102)
–
(5,169)
616,612
(556,729)
(7,102)
169,803
(12,115)
27,043
183,426
–
210,469
413,969
–
413,969
27,043
–
27,043
245,279
(54,907)
190,372
245,279
(61,853)
183,426
30,136
(17,865)
689,384
(72,772)
12,271
616,612
–
–
–
272,322
(61,853)
210,469
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
p . 9 9
Goodwill is considered to have an indefi nite life and is tested annually for impairment (see note 17).
Th e useful life of the casino management agreement is 34 years, and is amortised on a straight line basis.
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
17. IMPAIRMENT TESTING OF GOODWILL AND CASINO LICENCES
Intangible assets deemed to have indefi nite lives are allocated to the Group’s cash generating units (CGU’s) identifi ed
according to business segment.
Th e recoverable amount of a CGU is determined based on fair value less costs to sell. Fair value less costs to sell is calculated
using a discounted cash fl ow methodology covering a specifi ed period, with an appropriate residual value at the end of that
period, for each segment. Th e methodology utilises cash fl ow forecasts that are based primarily on business plans presented
to and approved by the Board.
Th e following describes each key assumption on which management has based its cash fl ow projections to undertake
impairment testing of goodwill and casino licences.
(i) Cash fl ow forecasts
Cash fl ow forecasts are based on fi ve year fi nancial forecasts presented to and approved by the board.
(ii) Residual value
Residual value is calculated using a perpetuity growth formula based on the cash fl ow forecast using a weighted average
cost of capital (after tax) and forecast growth rate.
(iii) Forecast growth rates
Forecast growth rates are based on past performance and management’s expectations for future performance
in each segment.
(iv) Discount rates
Discount rates used are the weighted average cost of capital (after tax) for the Group in each segment, risk adjusted
where applicable.
Th e carrying value of goodwill is allocated to the following CGU’s or groups of CGU’s:
Gaming
Other
18. TRADE AND OTHER PAYABLES
p . 1 0 0
Current – unsecured
Trade and other payables
Deferred income
Non Current – unsecured
Other
Deferred Income
2008
$M
12.8
–
12.8
2007
$M
12.8
14.2
27.0
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
249,296
5,812
255,108
223,776
11,045
234,821
13,408
–
13,408
59
24,000
24,059
114
–
114
–
–
–
–
–
–
–
–
–
19. INTERESTBEARING LOANS AND BORROWINGS
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Note
25(b)
25(b)
Current – secured
Lease liabilities
Current – unsecured
Bank Loans – unsecured
Total current
Non Current – secured
Lease liabilities
Non Current – unsecured
Bank Loans – unsecured
Capital Markets Debt – unsecured
Derivatives
Loans from associated entities
Loans from controlled entities
Total non-current
Fair Value Disclosures
–
–
20,000
20,000
20,000
–
–
46
46
20,000
20,000
20,046
266
266
2,070,000
–
281,634
299,234
7,600
–
–
–
9,644
–
–
–
–
–
–
–
–
–
–
–
–
2,224,936
2,359,234
308,878
2,224,936
2,359,234
309,144
2,224,936
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Details of the fair value disclosures of the Group’s interest bearing liabilities are set out in note 1.
Financial Risk Management
Information about the Group’s exposure to interest rate and foreign currency changes is provided in note 36.
Financing and Credit Facilities:
Unsecured credit facilities are provided as part of the overall debt funding structure of the Crown Group as follows:
Facility Type
Facility
Amount
$’000
Drawn
Amount
$’000
Letters
of Credit
Issued
$’000
Available
$’000
Expiry Date
p . 1 0 1
Bilateral Multi Option Facility
20,000
20,000
Syndicated Multi Option Facility
2,150,000
2,070,000
–
–
– August 2009
80,000 August 2010
Bilateral Multi Option Facility
Medium Term Note
Syndicated Multi Option Facility
100,000
114,600
450,000
Syndicated Revolving and Term Loan Facility
600,000
–
38,680
61,320 October 2010
114,600
–
– May 2011
–
–
315,507
134,493 August 2010
–
–
600,000
June 2013
–
July 2036
Euro Medium Term Note
174,634
174,634
Total
3,609,234
2,379,234
354,187
875,813
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
19. INTERESTBEARING LOANS AND BORROWINGS continued
Th e syndicated facilities are provided on an unsecured basis by a syndicate of domestic and international banks with the
Australia New Zealand Banking Group acting as Agent.
Th e bilateral multi option facilities are provided on an unsecured basis by one of the syndicate banks.
Crown is able to make advances and issue letters of credit under the syndicated facilities and the bilateral facilities which
are multi option in nature. For details relating to letters of credit issued, refer to note 29.
Each of the above mentioned facilities is supported by a Group guarantee from Crown and certain of its subsidiaries and
impose various affi rmative covenants on Crown, including compliance with certain ratios and covenants, various negative
covenants, including restrictions on encumbrances, and customary events of default, including a payment default, breach
of covenants, cross-default and insolvency events.
CONSOLIDATED
PA R ENT ENTIT Y
Note
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Assets pledged as security
Th e carrying amounts of assets pledged as security
for interest bearing liabilities are:
Finance lease
Plant and equipment
Total assets pledged as security
14
–
–
209
209
–
–
–
–
20. PROVISIONS
Consolidated
At 1 July 2007
Disposal of entities
Arising during the year
Utilised during the year
Amount reversed during the year
p . 1 0 2
At 30 June 2008
Current 2008
Non-current 2008
Current 2007
Non-current 2007
Employee
entitlements
$’000
Restruct
-uring
$’000
Other
$’000
Total
$’000
62,219
(2,629)
35,566
(31,338)
–
63,818
57,171
6,647
63,818
54,664
7,555
62,219
51,583
(51,583)
–
–
–
–
–
–
–
51,583
–
51,583
57,861
171,663
(3,952)
(58,164)
52,018
87,584
(25,896)
(57,234)
58
58
80,089
143,907
48,579
31,510
80,089
31,589
26,272
57,861
105,750
38,157
143,907
137,836
33,827
171,663
20. PROVISIONS continued
Parent entity
Current 2008
Non-current 2008
Current 2007
Non-current 2007
Employee
entitlements
$’000
Restruct
-uring
$’000
Other
$’000
Total
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21. LIABILITIES DIRECTLY ASSOCIATED WITH THE ASSETS CLASSIFIED AS HELD
FOR SALE
Current
Ticketek
Sydney Superdome
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
–
–
–
59,372
19,247
78,619
–
–
–
–
–
–
p . 1 0 3
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
22. CONTRIBUTED EQUITY
Issued share capital
Ordinary shares fully paid
Movements in issued share capital
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
258,149
2,454,986
9,738,590
Carrying amount at the beginning of the fi nancial year
2,454,986
2,359,614
–
Issue of shares on acquisition of PBL
Issue of shares through Executive Share Plan*
Capital Reduction
Return of capital by way of CMH Demerger
Other
Issue of shares at $17.00 to CPH
(in relation to acquisition of Aspinalls)
–
3,250
(2,069,032)
(131,560)
505
–
14,345,281
3,572
–
–
–
–
(2,069,032)
(2,551,805)
14,146
–
91,800
–
Carrying amount at the end of the fi nancial year
258,149
2,454,986
9,738,590
CONSOLIDATED
PA R ENT ENTIT Y
2008
No.
2007
No.
2008
No.
2007
No.
Issued share capital
Ordinary shares fully paid
Movements in issued share capital
Initial share issue
689,676,925
688,486,925 689,676,925
–
–
Balance at the beginning of the fi nancial year
688,486,925
677,496,925
Issue of shares through Executive Share Plan*
1,190,000
5,590,000
Share buyback
Transfer on demerger
Issue of shares to CPH (in relation to acquisition of Aspinalls)
–
–
–
–
– 689,676,925
5,400,000
–
–
8
–
(8)
Balance at the end of the fi nancial year
689,676,925 688,486,925 689,676,925
*Shares issued through the Executive Share Plan are accounted for as share based payments. Refer to Note 28.
p . 1 0 4
Terms and Conditions of Contributed Equity
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding-up of the Company
in proportion to the number of shares held.
Th e voting rights attaching to ordinary shares provide that each ordinary shareholder present in person or by proxy
or attorney or being a corporation present by representative at a meeting shall have:
(a) on a show of hands, one vote only;
(b) on a poll, one vote for every fully paid ordinary share held.
Eff ective 1 July 1998, the Corporations Legislation in place abolished the concepts of authorised capital and par value shares.
Accordingly, the Parent entity does not have authorised capital nor par value in respect of its issued shares.
–
–
–
–
–
–
–
–
–
8
8
–
–
–
–
–
8
23. RESERVES AND RETAINED EARNINGS
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Foreign currency translation reserve
(280,576)
(388)
Asset revaluation reserve
Capital profi ts reserve
Employee equity benefi ts reserve
Net unrealised gains reserve
Cash fl ow hedge reserve
–
–
5,712
451,087
–
–
–
10,340
340,304
–
–
–
–
5,712
–
–
176,223
350,256
5,712
Foreign currency translation reserve
Th e foreign currency translation reserve is used to record
exchange diff erences arising from the translation of the
fi nancial statements of foreign operations.
Balance at the beginning of the fi nancial year
(388)
Net exchange diff erence on translation of foreign operations
(279,548)
Disposal of entities
Balance at the end of the fi nancial year
Asset revaluation reserve
Th e asset revaluation reserve is used to record increments and
decrements in the value of non-current assets. Th e reserve can
only be used to pay dividends in limited circumstances.
Balance at the beginning of the fi nancial year
Transfer to retained earnings
Disposal of entities
Balance at the end of the fi nancial year
Capital profi ts reserve
Th e capital profi ts reserve is able to be used to accumulate
realised capital profi ts. Th e reserve can be used to pay
dividends or issue bonus shares
Balance at the beginning of the fi nancial year
Disposal of entities
Balance at the end of the fi nancial year
(640)
(280,576)
–
–
–
–
–
–
–
(8,811)
8,423
–
(388)
10,338
(2,937)
(7,401)
–
405
(405)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
p . 1 0 5
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
23. RESERVES AND RETAINED EARNINGS continued
CONSOLIDATED
PA R ENT ENTIT Y
Note
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Employee equity benefi ts reserve
Th e employee equity benefi ts reserve is used to record
share based remuneration obligations to executives
in relation to ordinary shares
Balance at the beginning of the fi nancial year
Disposal of entities
Charged to the income statement
Transfer on demerger
Transfer to controlled entities
10,340
(8,300)
3,672
–
–
831
–
9,509
–
–
Balance at the end of the fi nancial year
5,712
10,340
Net unrealised gains reserve
Th e net unrealised gains reserve records the movement
in fair value of derivative fi nancial instruments
Balance at the beginning of the fi nancial year
Disposal of entities
Revaluation of equity accounted investments
due to change in associates equity
Movement in fair value of available-for-sale assets
Balance at the end of the fi nancial year
Cash fl ow hedge reserve
Th e cash fl ow hedge reserve records the portion of the
gain or loss on a hedging instrument in a cash fl ow
hedge that is determined to be an eff ective hedge
Balance at the beginning of the fi nancial year
Disposal of entities
Balance at the end of the fi nancial year
Retained earnings
340,304
159
3,236
(3,236)
110,624
340,304
–
–
451,087
340,304
–
–
–
3,221
(3,221)
–
Balance at the beginning of the fi nancial year
3,060,042
1,498,996
–
–
–
3,081
2,631
5,712
–
–
–
–
–
–
–
–
–
Net profi t attributable to members of Crown
3,563,219
1,957,252
(2,992,682)
p . 1 0 6
Total available for appropriation
6,623,261
3,456,248
(2,992,682)
Dividends provided for or paid
4
(339,257)
(399,143)
(169,521)
Transfer from reserves
Internal Demerger distribution
–
(2,420,245)
2,937
–
–
–
Balance at the end of the fi nancial year
3,863,759
3,060,042
(3,162,203)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24. MINORITY INTERESTS
Reconciliation of minority interests
Balance at the beginning of the fi nancial year
Share of operating profi t
Acquisition of minority interests
Less dividends/distributions
Less disposal of minority interests
Balance at the end of the fi nancial year
25. EXPENDITURE COMMITMENTS
(a) Capital expenditure commitments
Estimated capital expenditure contracted for
at balance date, but not provided for, payable:
• within one year
• after one year but not more than fi ve years
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
–
–
–
–
–
–
3,334
22,979
29,164
(12,362)
(43,115)
–
–
–
–
–
–
–
–
–
–
–
–
–
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
321,821
118,632
440,453
69,226
947
70,173
–
–
–
–
–
–
At 30 June 2008, the Group has capital expenditure commitments principally relating to funding various projects
at Burswood and Crown Melbourne casinos.
In December 2007, Crown entered an agreement to acquire Cannery Casino Resorts for US 1.7 billion plus costs.
Th e agreement is subject to a pre condition, namely, Crown obtaining regulatory approval to complete the acquisition.
For this reason, we have not included the agreement to acquire Cannery Casino Resorts in the table above.
p . 1 0 7
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
25. EXPENDITURE COMMITMENTS continued
(b) Lease expenditure commitments
(i) Finance lease commitments:
Future minimum lease payments under fi nance leases and hire purchase contracts together with the present value of the net
minimum lease payments are as follows:
Consolidated
• within one year
• after one year but not more than fi ve years
Total minimum lease payments
Less amounts representing fi nance charges
Present value of minimum lease payments
Parent Entity
• within one year
• after one year but not more than fi ve years
Total minimum lease payments
Less amounts representing fi nance charges
Present value of minimum lease payments
(ii) Non-cancellable operating lease commitments:
Payable within one year
Payable after one year but not more than fi ve years
Payable more than fi ve years
2008
Minimum
lease
payments
2007
2008
Present
value of Minimum
lease
payments
lease
payments
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
72
288
360
(48)
312
–
–
–
–
–
2007
Present
value of
lease
payments
46
266
312
–
312
–
–
–
–
–
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2,479
10,351
1,918
14,748
2007
$’000
6,787
29,011
25,204
61,002
2008
$’000
2007
$’000
–
–
–
–
–
–
–
–
p . 1 0 8
Th e Group has entered into non-cancellable operating leases. Th e leases vary in contract period depending on the asset
involved but generally have an average lease term of approximately 6 years (2007: 5 years). Operating leases include
telecommunications rental agreements and leases on assets including aircraft, motor vehicles, land and buildings and items
of plant and equipment. Renewal terms are included in certain contracts, whereby renewal is at the option of the specifi c
entity that holds the lease. On renewal, the terms of the leases are usually renegotiated. Th ere are no restrictions placed upon
the lessee by entering into these leases.
26. CASH FLOW STATEMENT RECONCILIATION
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
(a) Cash balance represents:
• cash on hand and at bank
• deposits at call
(b) Reconciliation of the profi t after tax to the net
cash fl ows from operating activities
Profi t/(loss) after tax
Depreciation and amortisation
• property, plant and equipment
• intangibles
Program rights amortisation and usage
Payments to program contract creditors
(Profi t)/loss on sale of property, plant and equipment
Unrealised foreign exchange (gain)/loss
Program related inventory write down
(Profi t)/loss on disposal of investments
Share of associates’ net (profi t)
134,419
158,271
2,228,545
2,069,386
2,362,964
2,227,657
–
–
–
3,563,219
1,980,231
(2,992,682)
115,882
18,271
–
–
2,229
(523)
–
137,441
27,476
159,700
(183,204)
(882)
(4,705)
2,244
(3,381,154)
(1,524,861)
(35,471)
(62,457)
–
–
–
–
–
–
–
–
Impairment and write down of investments
239,163
66,234
3,168,144
Investment distribution
Dividends received from associates
Executive Share Plan expense
Changes in assets and liabilities
–
66,659
2,692
909
29,794
9,613
–
–
–
(Increase)/decrease in trade and other receivables
(28,246)
(667)
(175,462)
(Increase)/decrease in doubtful debts
(Increase)/decrease in inventories
(Increase)/decrease in prepayments
(Increase)/decrease in development costs
(Increase)/decrease in deferred income tax asset
(Increase)/decrease in other assets
(Decrease)/increase in payables
(Decrease)/increase in current income tax liability
(Decrease)/increase in provisions for employee entitlements
(Decrease)/increase in other provisions
(Decrease)/increase in deferred income tax liability
Exchange rate charge on conversion of assets
and liabilities of overseas controlled entities
(3,359)
(2,773)
1,504
–
302
(3,517)
117,495
(37,191)
3,196
(69,287)
930
–
1,483
11,586
(2,970)
(1,500)
(29,471)
(1,688)
37,267
28,156
8,134
36,228
1,459
(850)
Net cash fl ows from operating activities
570,021
724,700
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
p . 1 0 9
Notes to the Financial Statements continued
For the year ended 30 June 2008
26. CASH FLOW STATEMENT RECONCILIATION continued
Bank Overdraft Facilities
Th e consolidated entity has bank overdraft facilities available as follows:
Bank
ANZ Banking Group Limited
Citibank NA
Th ere were no drawn down amounts at 30 June 2008.
2008
2007
A$10 million
A$10 million
US$10 million
US$10 million
27. EVENTS AFTER THE BALANCE SHEET DATE
Subsequent to 30 June 2008, the directors of Crown announced a fi nal dividend on ordinary shares in respect of the year
ended 30 June 2008. Th e total amount of the dividends is $196.7 million, which represents a 40% franked dividend
of 29 cents per share. Th e dividend has not been provided for in the 30 June 2008 fi nancial statements.
On 13 August 2008, Crown announced that it had raised A$1.01 billion of new debt facilities, so as to extend the maturity
profi le of Crown’s debt portfolio. Th e new debt comprises the following new facilities:
• A$600 million Syndicated Loan Facility
Lender(s):
Fully syndicated among 11 Australian and International banks
Maturity:
5 years
• A$200 million Bilateral Loan Facility
Lender:
National Australia Bank
Maturity:
5 years
• US$200 million US Private Placement
Arrangers:
Bank of America and Royal Bank of Scotland as co lead arrangers with
Westpac and Commonwealth Bank as co agents
Maturity:
7, 10 and 12 years
p . 1 1 0
28. EXECUTIVE SHARE PLAN
Crown operates an Executive Share Plan (ESP) which was approved at the 1994 Annual General Meeting. A total
of 1,190,000 ESP shares (which includes the issue to Mr Craigie on 23 November 2007 identifi ed below) were issued
to executives in the current fi nancial year.
Prior to the approval of the PBL Scheme, the executives participating in the ESP held, in total, 10,680,000 PBL ESP shares
in respect of which there were outstanding loans totalling $185,642,300 due to PBL. Th is included 1,150,000 ESP shares
issued to Mr Rowen Craigie on 23 November 2007. Th ese additional shares were subject to a PBL ESP loan of $22,004,500.
Th e terms of the ESP were varied during the year to enable ESP participants to participate in the PBL Scheme and
to continue to participate in the ESP. A full summary of the variations made to the ESP this year is provided in the
Remuneration Report.
Th e share price performance condition requiring a 7 percent compound share price appreciation on the issue price of the
PBL ESP shares was retained and substituted with equivalent performance hurdles (7 percent compounding share price
appreciation) imposed separately on the Consolidated Media Holdings Limited ESP shares and the Crown ESP shares.
At the date of this Report, a total of 66 ESP participants hold, in total, 11,449,826 Crown ESP shares or 1.66 percent of
Crown’s issued capital.
ESP share movement
Shares at the beginning of the fi nancial year
Granted (i.e. issued) during the year
Granted (i.e. issued) during the year as a consequence of PBL Scheme election
Forfeited
Vested (and sold) during the year
Shares on issue at the end of the fi nancial year
Loans to executives at the beginning of the fi nancial year
ESP loans issued during the year
Cash consideration paid under PBL scheme
Loan balance transferred to CMH
Loans repaid during the year
Loans forfeited
Loans to executives at year end
Methodology
2008
No.
2007
No.
9,655,000
4,380,000
1,190,000
5,590,000
958,469
–
(308,643)
(200,000)
(45,000)
(115,000)
11,449,826
9,655,000
$165,839,800 $70,621,050
$22,717,300 $99,815,800
($15,180,000)
($42,615,575)
–
–
($3,358,950)
($2,918,762)
($1,650,637)
($1,678,288)
$125,751,938 $165,839,800
External valuers have used a Monte Carlo simulation model combined with a Black Scholes option pricing model to value the
ESP this year. Th e value per share granted for each allotment incorporates the share price growth performance conditions.
Th e Monte Carlo simulation is a technique used to simulate future TSRs. Th e assumptions that underpin Black Scholes are
used in a Monte Carlo simulation. Th e key assumptions are:
– Share price movement conforms to a lognormal distribution
– Market effi ciency
– Risk neutral valuation
p . 1 1 1
Using an estimate of the future standard deviation (volatility) of returns and the risk neutral valuation assumption (allowing
the use of the risk free interest rate), the share price return distribution of a company at a future date is estimated. Th e Monte
Carlo simulation technique simulates possible share price returns conforming to that distribution. At each simulation, the
share price is also simulated, meaning an equity instrument can be valued at that date.
Th e share price simulated at one vesting date is used to simulate the share price at the next vesting date. If the target was not
met at the earlier date, the unvested portion is carried to the next vesting date in the simulation.
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
28. EXECUTIVE SHARE PLAN continued
Th e Monte Carlo simulation model uses the following inputs for the issuance on 23 November 2007.
Grant date
Issue price
Dividend yield
Risk from rate
Volatility
Expected life
23 November 2007
$18.97 & $19.18
3.17%
6.21%
23%
5 years
Non transferability of the plans
During the period from grant date to vesting, executives cannot sell their plan rights. However, no adjustment is made to
the fair values for this, as non-transferability is due to the executive having not yet earned the right to the plan (through the
provision of their services), rather than a restriction on the underlying value of the plan rights.
After vesting, the holders have until expiry to “exercise” the plan. Since the plan rights are not transferable, liquidity can only
be obtained by exercising the plan rights and selling the underlying shares. In the case of the ESP, given the seniority of the
holders and the benefi t of the limited recourse feature, it is assumed the ESP will be held until expiry.
Dilution
When an investor exercises an exchange traded option, there is no change in either the company’s assets or the number of
shares outstanding. However, when a company issued option is exercised, the number of shares outstanding will increase and
the underlying assets of the company will be increased by the amount of the exercise proceeds. Any dilution of the share price
of Crown which might arise on the issue of new shares following exercise of the ESP would be immaterial, given the number
of existing shares on issue. Accordingly, no adjustment to the value of the ESP has been made for potential dilution.
Other assumptions
– PBL’s share price was the loan amount per share as advised by management at the grant date for the ESP;
– Th e risk free rate is the yield on an Australian Government Bond with a life similar to the expected life at the
valuation date;
– Expected volatility was based on PBL’s historical share price movement preceding the valuation date and the implied
volatility on exchanged traded options;
– Th e dividend yield was calculated based on the consensus broker EPS forecast divided by PBL’s share price.
p . 1 1 2
29. CONTINGENT LIABILITIES AND RELATED MATTERS
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Unsecured
354,187
567,720
354,187
Contingent liabilities related primarily to the following:
Controlled Entities
(i)
Under the terms of a deed entered into in accordance
with the ASIC Class Order 98/1418, the parent entity
has undertaken to meet any shortfall which might arise
on the liquidation of controlled entities
which are party to the deed.
(ii) Th e consolidated entity and parent entity have issued
letters of credit to the State of Victoria in respect of
obligations of Crown Melbourne Limited
(iii) Th e consolidated entity and parent entity have made
guarantees in relation to commitments of certain
of its associated entities
(iv) Th e consolidated entity and parent entity have made
certain guarantees regarding contractual, performance
and other commitments
–
–
–
185,000
185,000
185,000
150,961
382,668
150,961
18,226
52
18,226
–
–
–
–
–
Th e probability of having to meet these contingent liabilities is remote, and therefore it is not practicable to disclose an
indication of the uncertainties relating to each amount or the timing of any outfl ows.
30. AUDITORS’ REMUNERATION
Amounts received, or due and receivable, by the auditor
of the parent entity for:
Auditing the accounts
Taxation services
Other services
• Assurance related
• Assurance services relating to restructuring
• Due diligence
Amounts received, or due and receivable, by other
member fi rms of Ernst & Young International for:
Auditing the accounts of controlled entities
Other services
• Taxation services
• Assurance Related
• Due Diligence
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
764
2,061
2
642
334
24
383
25
354
1,254
3,194
333
3,050
3,645
187
373
–
–
4,589
12,036
–
–
–
–
–
–
–
–
–
p . 1 1 3
–
–
–
–
–
–
–
–
–
–
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
31. EARNINGS PER SHARE EPS
Th e following refl ects the income and share data used in the calculations
of basic and diluted EPS:
Net profi t
Net (profi t) attributable to minority interests
Earnings used in calculating basic and diluted EPS
Weighted average number of ordinary shares used in calculating
basic and diluted EPS (‘000)
Th e following refl ects the income and share data used in the calculations
of basic and diluted EPS:
Excluding the eff ect of discontinued operations:
Net profi t attributable to members of the parent
Discontinued operations
Net profi t excluding discontinued operations and specifi c items
Earnings used in calculating basic and diluted EPS
Weighted average number of ordinary shares used in calculating basic
and diluted EPS (‘000)
Excluding the eff ect of discontinued operations and specifi c items:
Net profi t attributable to members of the parent
Discontinued operations
Specifi c items after tax
Net profi t excluding discontinued operations and specifi c items
Earnings used in calculating basic and diluted EPS
Weighted average number of ordinary shares used in calculating basic
and diluted EPS (‘000)
p . 1 1 4
CONSOLIDATED
2008
$’000
2007
$’000
3,563,219
1,980,231
–
(22,979)
3,563,219
1,957,252
689,206
684,666
3,563,219
1,957,252
3,426,213
1,666,522
137,006
137,006
290,730
290,730
689,206
684,666
3,563,219
1,957,252
3,426,213
1,666,522
(239,163)
(51,379)
376,169
376,169
342,109
342,109
689,206
684,666
32. KEY MANAGEMENT PERSONNEL DISCLOSURES
Th e Company has applied the exemption under Corporations Amendments Regulation 2006 which exempts listed
companies from providing remuneration in their annual report as required by paragraphs Aus 25.4 to Aus 25.7.2
of Accounting Standard AASB 124 Related Party Disclosures. Th ese remuneration disclosures have been transferred
to the remuneration report in pages 32 to 52, and have been audited.
(a) Details of key management personnel
(i) Directors
James D Packer
John H Alexander
Executive Chairman
Executive Deputy Chairman
Christopher J Anderson
Non Executive Director
Rowen B Craigie
Chief Executive Offi cer and Managing Director
Christopher D Corrigan
Non Executive Director
Rowena Danziger
Geoff rey J Dixon
Ashok P Jacob
Michael R Johnston
David H Lowy
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Christopher J Mackay
Non Executive Director (resigned 7 March 2008)
Richard W Turner
Non Executive Director
(ii) Executives
Geoff rey Kleemann
Chief Financial Offi cer – Crown Limited
Guy Jalland
Martin Dalgleish
David Courtney
Barry Felstead
PBL Group General Counsel and Joint Company Secretary (until 21 December 2007)
Chief Executive Offi cer, PBL New Media (until 30 November 2007)
Chief Executive Offi cer – Crown Melbourne Limited
Chief Executive Offi cer – Burswood Limited
(b) Remuneration of key management personnel
Total remuneration for key management personnel for the Group and Parent Entity during the fi nancial year
are set out below:
Remuneration by category
Short term
Post employment
Other long term
Termination
Share based payments
Further details are contained in the Remuneration Report.
2008
$
2007
$
11,223,580
27,672,994
405,282
388,267
850,401
249,004
26,098,000
1,500,000
5,524,218
5,063,239
43,639,347
35,335,638
p . 1 1 5
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
32. KEY MANAGEMENT PERSONNEL DISCLOSURES continued
(c) Shareholdings of key management personnel
2008
Ordinary shares held in Crown (directly and indirectly)
Directors
(Including directors who
left the Board during the year)
James D Packer
Christopher J Anderson
John H Alexander
Rowen B Craigie
Rowena Danziger
David H Lowy
Christopher J Mackay (resigned 7 March 2008)
Richard W Turner
Issued
under
Balance
1 July 2007
Executive
(PBL Shares) Share Plan
261,500,000
315,194 3
1,812,500 3
850,000 3
22,876
117,253
100
27,000
–
–
–
1,150,000
–
–
–
–
Directors not listed did not hold any Crown shares during the fi nancial year.
Executives
Geoff rey R Kleemann
Guy Jalland
Martin P Dalgleish
David G Courtney
Barry J Felstead
Issued
under
Balance
1 July 2007
Executive
(PBL Shares)4 Share Plan
350,000
240,000
240,000
550,000
200,000
–
–
–
–
–
Net
Change
Balance
30 June
2008
– 261,500,000
–
14,633 2
341,102 2
6,000 1
19,997 2
–
–
315,194
1,827,133
2,341,102
28,876
137,250
100
27,000
Net
Change
–
–
–
93,802 2
34,110 2
Balance
30 June
2008
350,000
240,000
240,000
643,802
234,110
1. Change is as a result of an on-market transaction.
2. Additional shares issued as a result of the shareholder electing the PBL Scheme Maximum Share Consideration under the PBL Scheme. Mr John
Alexander elected the PBL Scheme Maximum Share Consideration, in relation to only one parcel of shares (87,000).
3. 300,000 of Mr Chris Anderson’s shares are ESP shares, 1,300,000 of Mr John Alexander’s shares are ESP shares and all of Mr Rowen Craigie’s shares
are ESP shares.
4. All the Executives’ shares are ESP shares except for Mr Geoff Kleemann. 240,000 of Mr Kleemann’s shares are ESP shares.
Th e Company does not have any options on issue.
p . 1 1 6
32. KEY MANAGEMENT PERSONNEL DISCLOSURES continued
(c) Shareholdings of key management personnel continued
2007
Ordinary shares held in PBL (directly and indirectly)
Directors
(Including directors who
left the Board during the year)
James D Packer
Christopher J Anderson
John H Alexander
Rowen B Craigie
Rowena Danziger
David H Lowy
Christopher J Mackay
Richard W Turner
Balance
1 July 2006
Issued
under
Executive
Share Plan
Net
Change
Other
Balance
30 June
2007
258,782,250
–
2,717,750 261,500,000
15,194
300,000
512,500
1,300,000
–
850,000
22,876
117,253
100
27,000
–
–
–
–
–
–
–
–
–
–
–
315,194
1,812,500
850,000
22,876
117,253
100
27,000
Directors not listed did not hold any PBL shares during the fi nancial year.
Executives
Geoff rey R Kleemann
Guy Jalland
Martin P Dalgleish
David G Courtney
Issued
under
Executive
1 July 2006 1 Share Plan
Balance
Net
Change
Other
Balance
30 June
2007
350,000
240,000
240,000
175,000
–
–
–
375,000
–
–
–
–
350,000
240,000
240,000
550,000
1. All the Executives’ shares are ESP shares except for Mr Geoff Kleemann. 240,000 of Mr Kleemann’s shares are ESP shares.
All changes disclosed under “Other” are the result of on-market transactions.
Th e Company does not have any options on issue.
p . 1 1 7
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
32. KEY MANAGEMENT PERSONNEL DISCLOSURES continued
(d) Loans to key management personnel
Directors
Balance
as at
01-Jul-07
$
Net
Change
$
Interest
charged
$
Balance
as at
30-Jun-08
$
Highest
owing
in period
$
Christopher J Anderson
4,848,000
(1,887,000)
157,597
2,961,000
4,848,000
John H Alexander
Rowen B Craigie
Total directors
Executives
22,668,000
(8,592,000)
909,908
14,076,000
22,668,000
14,566,000
12,861,875
797,775
27,427,875
27,427,875
42,082,000
2,382,875
1,865,280
44,464,875
54,943,875
Balance
as at
01-Jul-07
$
Net
Change
$
Interest
charged
$
Balance
as at
30-Jun-08
$
Highest
owing
in period
$
Geoff rey Kleemann
3,878,400
(1,509,600)
175,000
2,368,800
3,878,400
Guy Jalland
Martin Dalgleish
David Courtney
Barry Felstead
Total executives
3,878,400
(1,509,600)
120,000
2,368,800
3,878,400
3,878,400
(1,509,600)
120,000
2,368,800
3,878,400
9,683,000
(2,420,750)
298,451
7,262,250
9,683,000
3,679,000
(919,750)
108,528
2,759,250
3,679,000
24,997,200
(7,869,300)
821,979
17,127,900
24,997,200
All loan amounts for directors and executives relate to monies advanced by PBL to purchase PBL shares issued under PBL’s
ESP. Th e conditions under which ESP issues are made are set out in the Remuneration Report. Interest is charged on
ESP loans and is equal to the dividends received on shares held from time to time. Th e reduction in loan balances in the
fi nancial year arose as a result of the application of the PBL Scheme Consideration, in accordance with the amended terms
of the executive share plan as detailed in the Remuneration Report.
(e) Other transactions with director, key management personnel and their personally related entities
Consolidated Press Holdings Limited (“CPH”), an entity related to Mr James Packer, provides management and consulting
services to Crown and its controlled entities. Th e charges for the year ended 30 June 2008 were $27,000 (2007: $190,000).
In addition, CPH provided leased premises, car parking and other facilities at a charge of $5,187,000 (2007: $1,693,000).
A controlled entity of CPH provided customs clearance services to Crown and its controlled entities in prior years. Th e charge
for these services for the year ended 30 June 2008 was $Nil (2007: $2,136,000).
Crown and its controlled entities provided television air-time to controlled entities of CPH in prior years. Th e charge for
television air-time for the year ended 30 June 2008 was $Nil (2007: $49,000). Crown and its controlled entities also provided
CPH with hotel rooms for $426,000 (2007: $151,000), Banqueting and other services of $240,000 (2007: $138,000),
information technology services of $Nil (2007: $285,000) and leased premises of $423,000 (2007: $670,000).
p . 1 1 8
All transactions between the consolidated entity and its director related entities are conducted under normal commercial
terms and conditions unless otherwise noted.
33. RELATED PARTY DISCLOSURES
Parent entity
Crown Limited is the ultimate parent entity of the Group at 30 June 2008. However, during the year Publishing and
Broadcasting Limited was the ultimate parent up until the separation of PBL and Crown into two separate listed companies
in December 2007. Th e related party transactions include transactions entered into with PBL related parties up until
11 December 2007 and Crown Limited related parties transactions from 12 December 2007 to 30 June 2008.
Controlled entities, associates and joint ventures
Interests in signifi cant controlled entities are set out in note 34.
Investments in associates and joint ventures are set out in note 11.
Entity with signifi cant infl uence over the Group
Consolidated Press Holdings Limited (“CPH”), an entity related to Mr James Packer, holds 37.92% (2007: 38.42%) of the
Company’s fully paid ordinary shares.
Key management personnel
Disclosures relating to key management personnel are set out in note 32, and in the Remuneration Report.
Transactions with related parties
Th e following table provides the total amount of transactions that were entered into with related parties for the
relevant fi nancial year:
Rendering of services and other revenue from:
Entities with signifi cant infl uence over the Group
CPH
Controlled entities of CPH
Associates
SEEK Ltd
Hoyts Cinemas Group
Foxtel
PBL Media (inc. ninemsn)
Australian News Channel Pty Ltd
Premier Media Group
MPEL
Betfair
Aspers
Gateway
CMH
Receiving of services from related parties:
Entities with signifi cant infl uence over the Group
CPH
Controlled entities of CPH
Associates
SEEK Ltd
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
CONSOLIDATED
2008
$’000
2007
$’000
1,089
–
38
350
77
5,061
–
–
1,599
331
1,500
9,170
7
5,214
–
47
1,243
49
721
592
6,456
3,132
197
668
700
–
500
–
–
1,883
2,136
138
p . 1 1 9
Notes to the Financial Statements continued
For the year ended 30 June 2008
33. RELATED PARTY DISCLOSURES continued
Receiving of services from related parties: continued
Entities with signifi cant infl uence over the Group continued
Hoyts Cinemas Group
Foxtel
PBL Media (inc. ninemsn)
Premier Media Group
Global Television Limited
MPEL
Aspers
Gateway
CMH
CONSOLIDATED
2008
$’000
2007
$’000
233
333
1,732
–
–
86
191
26
1,082
1,445
3,232
3,884
332
4,411
–
–
–
–
Terms and conditions of transactions with related parties
All of the above transactions were conducted under normal commercial terms and conditions.
Under the terms of the ninemsn joint venture agreement, PBL was to provide to ninemsn Pty Ltd the use of brands, including
registered trademarks and logos, and personalities at no charge. An amount of advertising and ongoing promotional airtime was
also provided free of charge as per the agreement. Th e market value of this advertising and promotional service was $Nil (2007:
$1.2 million). Th is condition does not apply to Crown Limited and will not apply in future years.
Under the terms and conditions of the agreement with Seek Limited, PBL previously provided via its wholly owned subsidiaries
advertising at no charge. Th is condition did not apply this year and will not apply in future years. Crown received dividends
from SEEK of $5.9 million during the year (2007: $8.0 million).
Crown received dividends from Foxtel of $50.0 million during the year (2007: $Nil)
Crown has advanced loans to MPEL of $73.8m. Interest received on the loan was $1.6m for the year (2007: $0.7m).
Crown owes $29.9m in other payables to CMH relating to taxation matters.
Crown received dividends from Premier Media Group (“PMG”) during the year of $10.7m (2007: $20.4 million).
PMG loaned Crown $Nil during the year (2007: $9.6 million). No interest was charged on the loan.
Th e PBL Media services of $1.7m (2007: $3.9 million) provided to Crown relate to wireless and website costs, subscriptions,
advertising, publicity and ticketing. Crown provided leased premises of $4.6 million and other services of $0.5 million during
the year to PBL Media.
Subsequent to the investment in Aspinalls Holdings (Jersey) Limited, Crown made further equity contributions of $1.8 million.
Crown also provided loans to Aspinalls of $1.8 million during the fi nancial year. Interest of $1.5 million (2007: $0.5 million)
was charged on the loan for the year.
No further amounts were invested in Betfair Australasia during the reporting period. Th e loan balance at 30 June 2008 was
$7.7 million (2007: $7.7 million). No interest is payable on the loan.
In November 2007, Crown invested $74.6m for 50% interest in Gateway Casinos and Entertainment Inc. Subsequent to the
investment Crown made further equity contributions of $3.2m during the year. Crown also provided a loan to Gateway
of $155.1m. Interest of $9.2m was charged on the loan for the year.
Outstanding balances at year end are unsecured and settlement occurs in cash.
For the year ended 30 June 2008, the Group has not made any allowance for doubtful debts relating to amounts owed by
related parties as there have been no default of payment terms and conditions (2007: $Nil). An impairment assessment is
undertaken each fi nancial year by examining the fi nancial position of the related party and the market in which the related
party operates to determine whether there is objective evidence that a related party receivable is impaired. When such objective
evidence exists, the Group recognises an allowance for the impairment loss.
p . 1 2 0
34. INVESTMENT IN CONTROLLED ENTITIES
Th e consolidated fi nancial statements include the fi nancial statements of Crown Limited and its controlled entities.
Signifi cant controlled entities and those included in a class order with the parent entity are:
Footnote
2008
2007
Place of
Incorporation
Crown Limited
Artra Pty Ltd
Burswood Limited
Burswood Nominees Ltd
Burswood Resort (Management) Ltd
Crown CCR Group Holdings One Pty Ltd
Crown Entertainment Group Holdings Pty Ltd
Crown Group Finance Limited
Crown Melbourne Limited
Crown North America Holdings One Pty Ltd
Crown North America Investments LLC
Crown Services (US) LLC
Events Management Catering Pty Ltd
Flienn Pty Ltd
Jade West Entertainment Pty Ltd
Jemtex Pty Ltd
Mancon Nominees Pty Ltd
Manden Productions Pty Ltd
Nine Television (Netherlands Antilles) Pty Ltd
PBL Asia Investments Limited
PBL Capital Pty Ltd
PBL (CI) Finance Limited
PBL Cinema Holdings Pty Ltd
PBL Enterprises Ltd
PBL Film Holdings Pty Ltd
PBL Gateway (Luxembourg) Sarl
PBL GC (Cyprus) Limited
PBL International Partnership
PBL Overseas Investments Pty Ltd
PBL Management Pty Ltd
PBL Media Shareholder Pty Ltd
PBL Pay TV Pty Ltd
PBL Property Pty Ltd
PBL Securities Ltd
PBL (WA) Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Cayman Islands
Australia
Cayman Islands
Australia
Australia
Australia
Luxembourg
Cyprus
–
Australia
Australia
Australia
Australia
Australia
Australia
Australia
A
A
A
C
A
A,D
A
A
A
A
A
A
A
D
D
A
A,D
A
A
A
A
A
A
D
A
A
D
D
F
A
A
A
F
F
F
F
D
F
F
F
F
A
A
Beneficial Interest
Held by the
Consolidated
Entity*
2008
%
2007
%
Parent Entity
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
–
–
100
100
100
100
100
–
–
100
100
100
100
–
–
–
–
100
100
100
100
100
100
100
100
100
100
–
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
p . 1 2 1
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
34. INVESTMENT IN CONTROLLED ENTITIES continued
Footnote
2008
2007
Place of
Incorporation
Publishing and Broadcasting (Finance) Ltd
A
Publishing and Broadcasting International Holdings Ltd B
A
Renga Pty Ltd
F
Robbdoc Pty Ltd
F
Sydney Superdome Pty Ltd
F
Ticketek Pty Ltd
F
Windfyr Pty Limited
A
B
A
A
A,E
E
A
* Th e proportion of ownership interest is equal to the proportion of voting power held
Australia
Bahamas
Australia
Australia
Australia
Australia
Australia
Beneficial Interest
Held by the
Consolidated
Entity*
2008
%
2007
%
100
100
100
–
–
–
–
100
100
100
100
100
100
100
A
Th ese controlled entities have entered into a deed of cross guarantee with the parent entity under ASIC Class Order 98/1418 – the “Closed Group” (refer note 35).
B Controlled entities which are audited by other member fi rms of Ernst & Young International.
C Members of the “Extended Closed Group” only.
D Entity acquired or incorporated during the fi nancial year.
E Th ese entities are held for sale.
F. Entity disposed during the fi nancial year.
35. DEED OF CROSS GUARANTEE
Pursuant to ASIC Class Order 98/1418, certain controlled entities of Crown have been granted relief from the Corporations
Act 2001 requirements for preparation, audit and publication of accounts.
Th e consolidated profi t and loss statement and balance sheet of the entities which are members of the “Closed Group” for
the year ended 30 June 2008 are detailed below. Crown does not have an Extended Closed Group as at 30 June 2008.
Consolidated income statement
Profi t/(loss) before income tax
Income tax (expense)/benefi t
Net profi t/(loss) after income tax
p . 1 2 2
Retained earnings at the beginning of the fi nancial year
2,039,793
3,583,901
Retained earnings of entities entering Closed Group
96,936
Retained earnings of entities removed from Closed Group
(1,982,502)
–
–
Dividends provided for or paid
(169,521)
(399,143)
Retained earnings/(accumulated losses) at the end
of the fi nancial year
(1,578,235)
2,039,793
CLOSED GROUP
EXTENDED
CLOSED GROUP
2008
$’000
2007
$’000
2008
$’000
2007
$’000
(1,510,339)
(1,249,745)
(52,602)
104,780
(1,562,941)
(1,144,965)
–
–
–
–
–
–
–
–
(905,874)
(14,614)
(920,488)
4,360,756
–
–
(399,143)
3,041,125
35. DEED OF CROSS GUARANTEE continued
Consolidated balance sheet
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Tax asset
Other
Total Current Assets
Non Current Assets
Receivables
Investment in associates
Available for sale assets
Other fi nancial assets
Property, plant and equipment
Licences
Other intangible assets
Deferred tax assets
Other
Total Non Current Assets
Total Assets
Current Liabilities
Payables
Interest-bearing loans and borrowings
Income tax payable
Provisions
Total Current Liabilities
Non Current Liabilities
Payables
Interest-bearing loans and borrowings
Deferred tax liability
Provisions
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Retained earnings/(accumulated losses)
Total Equity
CLOSED GROUP
EXTENDED
CLOSED GROUP
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2,282,780
33,480
4,138
–
7,446
1,937,598
20,278
437
98,691
339
2,327,844
2,057,343
1,670,748
102,437
8,100
9,553,562
559,789
420,426
11,892
82,793
3,274,225
(15,429)
55
8,814,868
77,962
112,736
–
98,616
–
–
12,409,747
12,363,033
14,737,591
14,420,376
105,428
20,000
13,618
42,828
76,437
46
–
57,147
181,874
133,630
6,330,865
42,327
23,059
–
9,747,630
32,868
1,129
6,396,251
9,781,627
6,578,125
9,915,257
8,159,466
4,505,119
9,738,590
(889)
(1,578,235)
2,454,986
10,340
2,039,793
8,159,466
4,505,119
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,060,259
64,809
5,613
–
6,697
2,137,378
3,565,717
(15,429)
55
8,267,191
1,302,688
371,764
–
142,747
73,840
13,708,573
15,845,951
201,530
46
5,704
108,646
315,926
60
9,531,290
152,952
339,272
10,023,574
10,339,500
5,506,451
2,454,986
10,340
3,041,125
5,506,451
p . 1 2 3
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Th e Group’s principal fi nancial instruments comprise receivables, payables, bank loans and capital market debt, available for
sale investments, cash and short term deposits and derivatives.
Th e Group’s business activities expose it to the following risks; market risks (interest rate and foreign exchange), price risk,
credit risk and liquidity risk. For each of these risks, the Group considers the counterparties, geographical area, currency
and markets as applicable to determine whether there are concentrations of risk. Other than as described in this note, the
Treasury Group is satisfi ed that there are no material concentrations of risk.
Th e Group has policies in place to manage diff erent types of risks to which it is exposed. Policies include monitoring the
level of interest rate and foreign exchange risk and assessments of market forecasts for interest rates and foreign exchange
rates. Ageing analysis of and monitoring of exposures to counterparties are undertaken to manage credit risk. Liquidity risk
is monitored through the employment of rolling cash fl ow forecasts.
Risk management is carried out by the Treasury Group under policies approved by the Board of Directors. Th e Treasury
Group identifi es, evaluates and hedges fi nancial risks in accordance with approved policies. Th e Board are informed on
a regular basis of Treasuries risk management activities.
(a) Market Risk
(i) Interest rate risk – cash fl ow
Th e Group’s exposure to market interest rates relates primarily to the Group’s long term debt obligations as outlined in note 19.
At balance date, the Group had the following mix of fi nancial assets and liabilities exposed to variable interest rates that are
not designated in cash fl ow hedges.
Financial Assets
Cash and cash equivalents
Financial Liabilities
Bank loans
Net Exposure
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2,362,964
2,227,657
2,362,964
2,227,657
2,090,000
2,090,000
20,000
20,000
272,964
2,207,657
–
–
–
–
–
–
–
–
–
–
As at balance date, the Group maintained fl oating rate borrowings of $2,090m (2007: $20m) and the associated interest rate
risk is mitigated by net cash and cash equivalents of $2,363m (2007: $2,228m). Under the bank loans, the Group pays the Bank
Bill Swap rate (BBSW) plus a margin (45 basis points), and the cash and cash equivalents are invested at approximately BBSW.
Group Sensitivity
Th e sensitivity to fair value movements through equity or profi t and loss as a result of interest rates increasing or decreasing
by 50% is immaterial as at balance date.
p . 1 2 4
Th e Group uses cross-currency interest rate swaps to manage the risk of adverse movements in interest rates for its long term
foreign currency denominated borrowings which are subject to variable rates.
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES continued
(a) Market Risk continued
(i) Interest rate risk – cash fl ow continued
As at balance date the notional principal amounts and period of expiry of the interest rate swap contracts are as follows:
Cash fl ow hedge
Maturity 1-5 years
Maturity over 5 years
Closing Balance
CONSOLIDATED
PA R ENT
2008
$’000
2007
$’000
2008
$’000
2007
$’000
–
174,634
174,634
–
174,634
174,634
–
–
–
–
–
–
Under the swap contract (maturing July 2036), the Group has the right to receive interest at a fi xed rate of 4.76% (2007:
4.76%) semi-annually and pay interest at fi xed rate of 7.05% (2007: 7.05%) quarterly. Th e terms of the swap contract are
matched directly against the appropriate loan and interest expense and as such are highly eff ective. Th e change in value
of the swap at balance date was negative $22.2m US dollars (2007: negative $11.8m US Dollars).
(ii) Interest rate risk – fair value
Where appropriate, the Group enters into fi xed rate debt to mitigate exposure to interest rate risk. As the Group holds fi xed
rate debt there is a risk that the fair value of fi nancial instruments will fl uctuate because of market movements in interest
rates. Th e level of fi xed rate debt at balance date was $114.6m (2007: $124.6m).
As at balance date the Group had the following interest rate swap in place to hedge the medium term note issuance.
Fair value hedge
Maturity 1-5 years
Maturity over 5 years
Closing Balance
CONSOLIDATED
PA R ENT
2008
$’000
2007
$’000
2008
$’000
2007
$’000
124,600
124,600
–
–
124,600
124,600
–
–
–
–
–
–
Under the terms of the contract (maturing May 2011) the Group has the right to receive a fi xed rate of interest of 6% semi-
annually and pay fl oating rate of interest (i.e. bank bill swap rate) plus 39.5 basis points. Th e value of the swap currently
exceeds the medium term note by $10m. Th e fair value of the swap at balance date was negative $7.6m Australian dollars.
Group Sensitivity
Th e sensitivity to fair value movements through equity or profi t and loss as a result of interest rates increasing or decreasing
by 50% is immaterial as at balance date.
(iii) Foreign exchange risk
Th e Group has currency exposure as a result of capital expenditure and investments/sales in currencies other than the
Group’s functional currency.
Treasury, on behalf of the operating units, uses forward exchange contracts to minimise the currency exposure on any
signifi cant receivables or payables as is deemed appropriate.
All forward exchange contracts must be in the same currency as the fi rm commitment and the Group negotiates the terms
of the hedges to exactly match the underlying commitment to maximise hedge eff ectiveness. As at balance date, the Group
had hedged 100% of its foreign currency receivables and payables that are fi rm commitments.
As at balance date, the Group had the following foreign exchange exposures that were not designated as cash fl ow hedges:
p . 1 2 5
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES continued
(a) Market Risk continued
US Dollars
Financial Assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale fi nancial assets
Financial Liabilities
Net exposure
GBP Exposure
Financial Assets
Loans to associates
Financial Liabilities
Net exposure
Group sensitivity – US dollar
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
502,702
22,162
138,828
663,692
500,000
163,692
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
11,393
11,393
–
8,003
8,003
–
11,393
8,003
–
–
–
–
–
–
–
–
Based on the fi nancial instruments held at balance date, had the Australian dollar strengthened by 5c or weakened by 10c
against the US dollar with all other variables held constant, the Group’s post-tax-profi t for the year would have been $9.0m
lower or $21.0m higher (2007: no exposure).
Th e sensitivity to fair value movements through equity as a result of the Australian dollar strengthening by 5c or weakening
by 10c against the US dollar would not be material.
Group sensitivity – GBP
p . 1 2 6
Th e sensitivity to fair value movements through equity or profi t and loss as a result of the Australian dollar strengthening
or weakening by 5c against the GBP would not be material. Th is sensitivity analysis was conducted based on the foreign
exchange risk exposures in existence at the balance sheet date.
Foreign Exchange Contracts
Th e Group uses derivative instruments such as forward exchange contracts to manage the currency risks arising from the
Group’s operations and its sources of fi nance.
Derivatives are exclusively used for hedging purposes and not as trading or other speculative instruments. Th ese derivatives
qualify for hedge accounting and are based on limits set by the Board.
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES continued
(a) Market Risk continued
Cash fl ow hedges
At balance date details of outstanding contracts are:
CONSOLIDATED
PA R ENT
Notional Amounts
$AUD
2008
$’000
2007
$’000
Average Rate
2008
2007
Notional Amounts
$AUD
2008
$’000
2007
$’000
Average Rate
2008
2007
Buy USD/Sell AUD
Maturity under 1 year
Maturity 1-5 years
Buy AUD/Sell USD
2,728
2,063
2,701
4,791
0.7330
0.7404
0.7271
0.7305
Maturity under 1 year
37,635
15,533
0.8822
0.7523
Maturity 1-5 years
151,236
–
0.8133
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Th e change in fair value of cash fl ow hedges as at balance date was negative $2.3m Australian dollars (2007: negative $1.4m)
Fair value hedges
At balance date details of outstanding contracts are:
CONSOLIDATED
PA R ENT
Notional Amounts
$AUD
2008
$’000
2007
$’000
Average Rate
2008
2007
Notional Amounts
$AUD
2008
$’000
2007
$’000
Average Rate
2008
2007
Buy AUD/Sell USD
Maturity 1-5 years
82,689
–
0.7758
Buy AUD/Sell CAD
Maturity 1-5 years
161,671
–
0.8041
–
–
–
–
–
–
–
–
–
–
Th e change in fair value of fair value hedges as at balance date was negative $11.2m Australian dollars (2007: no exposure).
Th e forward exchange contracts are considered to be highly eff ective hedges as they are matched against known and
committed receivables and payments and any gain or loss on the hedged risk is taken directly to equity.
p . 1 2 7
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES continued
(b) Price Risk
Th e Group is exposed to equities securities price risk. Equity securities price risk arises from investments held
by the Group and classifi ed on the balance sheet as available-for-sale fi nancial assets.
Neither the Group nor the parent entity is exposed to commodity price risk.
Shares – unlisted
Shares – listed
Net exposure
Group sensitivity
CONSOLIDATED
PA R ENT ENTIT Y
2008
$’000
2007
$’000
2008
$’000
2007
$’000
507,489
396,771
–
1,242
507,489
398,013
–
–
–
–
–
–
Th e Group’s sensitivity to price risk has been estimated using valuation techniques based on the fair value of securities held.
Had the value of securities held decreased by 5%, the Group’s post tax profi t and loss would have been $24.2m lower as at
balance date. Had the value of securities held increased by 10%, Equity would have increased by $50.7m as at balance date.
(c) Credit Risk
Credit risk arises from the fi nancial assets of the Group, which comprise cash and cash equivalents, trade and other
receivables and derivative instruments. Th e Group’s exposure to credit risk arises from the potential default of the
counterparty, with a maximum exposure equal to the carrying amount of these instruments. Exposure at balance
date is outlined under each applicable note.
Th e Group does not hold any credit derivatives or collateral to off set its credit exposure.
All investment and fi nancial instruments activity is with approved counterparties with investment grade ratings and is in
accordance with approved policies. Th ere are no signifi cant concentrations of credit risk within the Group and the aggregate
value of transactions is spread amongst a number of fi nancial institutions to minimise the risk of default of counterparties.
Credit risk in trade receivables is managed in the following ways:
i. Th e provision of credit is covered by a risk assessment process for all customers.
ii.
iii.
Concentrations of credit risk are minimised by undertaking transactions with a large number of customers.
Th e provision of cheque-cashing facilities for gaming patrons is subject to detailed policies and procedures designed
to minimise any potential loss, including the taking up of bank opinions and the use of a central credit agency
which collates information from major casinos around the world.
(d) Liquidity Risk
It is the Group’s objective to maintain a balance between continuity of funding and fl exibility through the use of cash
reserves, committed bank lines and capital markets debt in order to meet its fi nancial commitments in a timely manner.
p . 1 2 8
Th e Group’s policy is that no more than 30% or $500 million of borrowings should mature in any 12 month period.
At balance date 0.55% or $20 million of the Group’s debt will mature in less than 12 months (2007: 6.6%).
As at balance date the Group had $875.8 million in undrawn committed bank lines.
Maturity analysis of fi nancial assets and liabilities
Th e table below analyses the Group’s contractual undiscounted cash fl ows of fi nancial liabilities, net and gross settled
derivative fi nancial instruments into relevant maturity groupings based on the remaining period at balance date to the
contractual maturity date.
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES continued
1 year or less
1 to 5 years
More than 5 years
Balance Sheet
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Total carrying
amount as per the
Consolidated Group
Financial Liabilities
Trade and other payables 255,108
234,821
24,059
114
–
–
279,167
234,935
–
–
114,600
124,600
174,634
174,634
289,234
299,234
Capital markets
Bank loans
Finance lease/Hire
purchase liability
20,000
20,000 2,070,000
–
–
46
–
266
Forward exchange contracts 34,906
22,117
393,533
16,462
Interest rate swaps
Cross currency interest
rate swaps
–
–
–
–
124,600
124,600
–
–
174,634
174,634
–
–
–
–
–
5,655
–
– 2,090,000
20,000
–
–
–
–
312
–
–
–
Total Financial Liabilities 310,014 276,984 2,726,792
266,042
349,268
354,923 2,658,401
554,481
Financial Assets
Cash and cash
equivalents
2,362,964 2,227,657
–
–
Receivables – trade
146,210
104,572
183,923
16,762
–
–
– 2,362,964 2,227,657
–
330,133
121,334
Receivables – associates
314
384
228,921
–
–
447,435
–
–
–
–
–
–
30,358
73,339
259,593
73,723
–
–
–
447,435
507,489
398,013
507,489
398,013
Assets held for sale
Available for sale assets
Forward exchange
contracts
Interest rate swaps
Cross currency interest
rate swaps
–
–
34,906
22,117
393,533
16,462
–
124,600
124,600
–
–
5,655
–
–
–
–
174,634
174,634
Total Financial Assets 2,544,394 2,802,165
930,977
157,824
712,481
651,641 3,460,179 3,268,162
Net Maturity
2,234,380 2,525,181 (1,795,815) (108,218) 363,213
296,718
801,778 2,713,681
p . 1 2 9
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Notes to the Financial Statements continued
For the year ended 30 June 2008
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES continued
1 year or less
1 to 5 years
More than 5 years
Balance Sheet
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Total carrying
amount as per the
Parent
Financial Liabilities
Trade and other payables
13,408
Total Financial Liabilities 13,408
Financial Assets
Loans to controlled entities
Total Financial Assets
_
_
(e) Fair Value of Financial Instruments
–
–
–
–
–
–
–
–
–
–
–
–
–
–
178,160
178,160
–
–
–
–
13,408
13,408
178,160
178,160
–
–
–
–
Th e fair value of the Group’s fi nancial assets and fi nancial liabilities approximates the carrying value as at balance date.
p . 1 3 0
Shareholder Information
Substantial shareholders as at 12 September 2008:
The following information is extracted from substantial shareholder notices received by Crown Limited.
Shareholder
Number of Ordinary Shares % of Issued Capital
Consolidated Press Holdings Limited
Janus Capital Management LLC
Perpetual Limited
Holders of each class of securities
261,500,000
54,398,725
58,444,366
37.92
7.98
8.58
Crown only has Ordinary Shares on issue. The total number of ordinary shares on issue is 689,676,925
held by 62,834 shareholders.
Voting rights of ordinary shares
Crown Limited’s Constitution sets out the information in relation to the voting rights attached
to shares. In summary, at a general meeting on a show of hands, every member present has one vote;
and on a poll, every member present has:
(a)
(b)
one vote for each fully paid share held by the member and in respect of which the member
is entitled to vote; and
a fraction of a vote for each partly paid share held by the member and in respect of which the
member is entitled to vote, equivalent to the proportion which the amount paid on the share
bears to the total amount paid and payable on the share.
Distribution of shareholders as at 12 September 2008:
Size of Holdings
Number of Shareholders % of Issued Capital
1 – 1,000
1,001 – 5000
5,001 – 10,000
10,001 – 100,000
100,001+
Total
Holding less than a marketable parcel
42,167
18,363
1,461
734
109
62,834
3,219
2.67
5.54
1.48
2.76
87.55
100.00
p . 1 3 1
C R O W N L I M I T E D A N N U A L R E P O R T 2 0 0 8
Shareholder Information continued
The 20 largest shareholders as at 12 September 2008:
Name
1. Bareage Pty Limited
2. HSBC Custody Nominees (Australia) Limited
3. Consolidated Press Holdings Limited
4.
JP Morgan Nominees Australia Limited
5. National Nominees Limited
6.
RBC Dexia Investor Services Australia Nominees Pty Limited
7. ANZ Nominees Limited
8. Citicorp Nominees Pty Limited
9. Samenic Limited
10.
RBC Dexia Investor Services Australia Nominees Pty Limited
11. UBS Nominees Pty Ltd
12. WIN Television NSW Pty Ltd
13. Cogent Nominees Pty Limited
14.
15.
RBC Dexia Investor Services Australia Nominees Pty Limited
Citicorp Nominees Pty Limited
16. Queensland Investment Corporation
17. UBS Wealth Management Australia Nominees Pty Ltd
18. Perpetual Trustee Company Limited
19. Consolidated Press Investments Pty Ltd
20. Birketu Pty Ltd
Total
Others
Details of unquoted equity securities
No. of Shares % of Issued Capital
158,486,104
104,690,189
88,286,136
54,906,424
34,800,223
30,560,500
20,238,534
16,853,648
11,136,925
9,074,473
7,024,351
5,486,845
4,645,238
3,695,166
3,507,176
3,220,451
2,525,874
2,417,003
2,069,387
2,000,001
565,624,648
124,052,277
23.26
15.37
12.96
8.06
5.11
4.49
2.97
2.47
1.63
1.33
1.03
0.81
0.68
0.54
0.51
0.47
0.37
0.35
0.30
0.29
83.00
17.00
Crown Limited has 8,380,821 Shares on issue which are currently unquoted. These shares are held
by participants in the Executive Share Plan (as described more fully in the Remuneration Report) and
represent shares which are yet to be released from restriction in accordance with the terms of the Plan.
p . 1 3 2
Use of cash and assets
Crown was admitted to the official list of the ASX on 3 December 2007. The company used (and
continues to use) the cash and assets in a form readily convertible to cash that it had at the time
of admission in a manner consistent with its business objectives.
Additional Information
Shareholder enquiries
Shareholders may access their details by visiting the Share Registry’s website at www.computershare.com.
For security reasons, shareholders need to enter their Security holder Reference Number (SRN)
or Holding Identification Number (HIN) and postcode to access personal information. Security
holding information may be updated online. Alternatively, download the relevant forms and have
the completed forms mailed to the Share Registry.
Shareholders with queries about their shareholdings should contact the Share Registry,
Computershare Investor Services, on telephone number 1300 659 795 or if calling from outside
Australia, (61 3) 9415 4000 or by fax (61 3) 9473 2500.
Electronic shareholder communications
Shareholders who wish to receive email alerts informing them of significant announcements,
dividend payment advices and the availability of reports on Crown Limited’s website,
www.crownlimited.com, may either contact the Share Registry or lodge such instructions
online at the Share Registry’s website at www.computershare.com.
Change of address
Issuer sponsored shareholders should notify the Share Registry immediately in writing or by
telephone upon any change in their address quoting their SRN. Changes in addresses for broker
sponsored holders should be directed to the sponsoring brokers with the appropriate HIN.
Direct payment to shareholders’ accounts
Dividends may be paid directly to any bank, building society or credit union account in Australia.
Payments are electronically credited on the dividend date with advisory confirmation containing
payment details mailed to shareholders. Shareholders who wish to have their dividends paid directly
to their account should advise the Share Registry in writing.
Tax File Numbers
Crown is obliged to deduct tax at the top marginal rate plus Medicare levy from unfranked
or partially franked dividends paid to Australian resident shareholders who have not supplied their
Tax File Number (TFN) or exemption details. If you wish to provide your TFN or exemption details,
please contact the Share Registry.
Consolidation of multiple holdings
If you have multiple holdings which you wish to consolidate, please advise the Share Registry
in writing. If your holdings are broker sponsored, please contact the sponsoring broker directly.
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Corporate Information
Directors
• James D Packer Executive Chairman
• John H Alexander BA Executive Deputy Chairman
• Rowen B Craigie BEc (Hons) Chief Executive Offi cer and Managing Director
• Christopher J Anderson BEc
• Christopher D Corrigan
• Rowena Danziger BA, TC, MACE
• Geoff rey J Dixon
• Ashok P Jacob MBA
• Michael R Johnston BEc, CA
• David H Lowy AM, BCom
• Richard W Turner AM, BEc, FCA
Chief Financial Officer
Geoff rey R Kleemann CA
Chief Executive Officer, Crown Melbourne
David G Courtney BBus, F Fin, MBA, ACA, GDipAppFin
Chief Executive Officer, Burswood
Barry J Felstead
General Counsel/Joint Company Secretary
Michael J Neilson BA, LLB
Joint Company Secretary
Mary Manos BCom, LLB (Hons)
Crown Limited’s registered office and principal corporate office
Level 3
Crown Towers
8 Whiteman Street
Southbank VIC 3006
Australia
Share Registry
Computershare Investor Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
Phone: 1300 850 505 (within Australia)
(61 3) 9415 4000 (outside Australia)
Fax:
(61 3) 9473 2500
Website: www.computershare.com
Stock Exchange Listing
Crown Limited’s ordinary shares are listed on the Australian Stock Exchange
under the code “CWN”. Th e home exchange is Melbourne.
Website
Visit our website www.crownlimited.com for media releases and fi nancial information
Auditor
Ernst & Young
Banker
Australia and New Zealand Banking Group Limited
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