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Vail ResortsCrown Limited Annual Report 2013
Crown Limited ABN 39 125 709 953
Annual General Meeting
Financial Calendar
Wednesday 30 October 2013
10.00 am (Melbourne time)
River Room Level 1, Crown Towers
8 Whiteman Street, Southbank, Melbourne
Record date for dividend – 27 September 2013
Payment of fi nal dividend – 11 October 2013
Annual General Meeting – 30 October 2013
2014 interim results – second half of February 2014
1
Chairman’s Letter
13
Crown Perth
22
Sustainability Report
57
Remuneration Report
83
Financial Report
6
Portfolio of Integrated
Resort Assets
16
Melco Crown
Entertainment
30
Corporate Governance
Statement
79
Auditor’s Independence
Declaration
138
Shareholder Information
8
Chief Executive
Officer’s Report
19
Crown Aspinall’s
40
Nevada Information
Statement
80
Independent Auditor’s
Report
140
Additional Information
10
Crown Melbourne
20
Crown Sydney
44
Directors’
Statutory Report
82
Directors’ Declaration
141
Corporate Information
“My vision for
Crown sees
us as a leading
global luxury
brand, with a
clear focus on
Asian tourism.”
James Packer
Chairman
Crown Limited
Chairman’s Letter
Dear fellow shareholders,
Crown announced a net profi t of $491.0 million for the fi nancial year ended 30 June
2013, before signifi cant items. A fi nal dividend of 19 cents per share, franked to 50%,
was announced, bringing the total dividend for the year to 37 cents per share.
During the last 12 months, Australia’s leading integrated resorts, Crown Melbourne
and Crown Perth, have delivered an improved performance, despite evidence
of weak consumer sentiment, particularly in Melbourne. The result demonstrates
that by providing fi rst class facilities, we can continue to attract domestic and
international visitors to our resorts.
The signifi cant investment we have made in our Australian resorts has
ensured they remain two of Australia’s premier tourist destinations, capable of
competing with the best tourist facilities in the Asian region. The all-encompassing
transformation of our properties has reinforced Crown’s position as one of the
region’s leading operators of integrated resorts.
In July 2013, the New South Wales Government invited Crown to advance to
Stage Three of the New South Wales Unsolicited Proposal process in respect of
our proposed development and operation of a six-star hotel resort at Barangaroo
South on Sydney Harbour. Crown is continuing to work with the NSW Government
as part of this process.
In Macau, Melco Crown Entertainment’s (MCE) development pipeline continues
to progress. MCE’s Studio City is on track and is due to open in mid-2015. MCE is
moving forward with plans for a fi fth hotel tower at City of Dreams and anticipates
that construction will commence by the end of 2013. MCE also has an interest
in a consortium to develop and operate an integrated resort in Manila, the
Philippines, which is expected to open in the middle of 2014. These exciting
development opportunities are key components of MCE’s strategy to diversify
its revenue streams, maximise return on invested capital and drive long term
shareholder value.
In the year ahead, we will be focussing on the performance of our Australian resorts,
including a continued focus on cost control. We will progress the Crown Sydney
Hotel Resort proposal and the Crown Towers Perth development. We will continue
to assist MCE with their development projects.
The Crown Board has resolved, subject to shareholder approval, that the company
change its name from Crown Limited to Crown Resorts Limited. The change
of the company name is timely, given the large investment Crown has made
in its tourism infrastructure over the last few years and its expanding domestic
and international investments.
Crown remains focussed on investing in our employees, who are our most
valuable asset, so we can deliver the highest quality service in all segments of
our business. We will also continue to invest in Australia’s tourism infrastructure,
demonstrating our confi dence in the ability of our integrated resorts to effectively
compete as world-class tourist destinations. In addition, we will continue to work
closely with governments at all levels and our other stakeholders.
On behalf of the Board, I wish to thank Crown’s employees and management
for their valued contributions during 2013. I would also like to thank you for your
continued support and interest as a shareholder of Crown Limited.
Yours faithfully,
James Packer
Chairman
Crown Limited
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
1
Hotels
2
Crown’s integrated resorts offer premium and luxury accommodation in all of
our world-class hotels, with facilities that include swimming pools, gyms, tennis
courts, and day spas. This year we provided over one million guest nights,
delivering impeccable service to our local, state and international guests.
Dining
From some of the most awarded restaurants in Australia through to casual
food court offerings and cafés, Crown Melbourne and Crown Perth are each
renowned for their range of cuisines and dining options.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
3
Gaming
Both Crown Melbourne and Crown Perth have
luxurious world-class VIP salons and a vibrant
and exciting main gaming floor, offering customers
a range of gaming experiences.
Entertainment
Crown Melbourne and Crown Perth host a variety of
musicals, plays, ballets, rock concerts, comedy acts and
other entertainment across a range of excellent venues.
4
Shopping
Whether guests are looking for the latest fashion
clothing and accessories, or luxury items from
Louis Vuitton, Prada, Burberry, Bvlgari, Versace
and other leading designers, Crown offers the
perfect shopping experience.
Events
Crown hosts an extraordinary range of occasions, from
intimate meetings to large-scale corporate conferences,
gala events and weddings.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
5
Our goal is to
create integrated
resorts capable
of competing
with the best in
the Asian region.
6
100% owned
(cid:129) Crown Melbourne operates 2,500 gaming machines
and has approval to operate 500 table games.
(cid:129) Crown Towers Melbourne hotel has 481 guest rooms.
(cid:129) Crown Metropol Melbourne hotel has 658 guest rooms.
(cid:129) Crown Promenade Melbourne hotel has 465 guest rooms.
(cid:129) Crown Conference Centre has 7,350 square metres of
conference and meeting facilities, across three floors.
(cid:129) Banqueting facilities include the Palladium’s 1,500-seat
ballroom and the Palms’ 900-seat cabaret venue.
(cid:129) A broad selection of restaurants and bars are provided
in the resort, including many of Melbourne’s finest.
(cid:129) Crown Melbourne’s retail precinct includes internationally
renowned designer boutiques and retail outlets.
(cid:129) Entertainment facilities include a multi-screen
cinema complex, a bowling alley, and an interactive
entertainment auditorium.
(cid:129) Crown Melbourne has two luxurious day spas.
100% owned
33.7% interest in Melco Crown Entertainment
(cid:129) Crown Perth has approval to operate 2,100 gaming
machines and 245 table games.
(cid:129) Crown Metropol Perth hotel has 395 guest rooms.
(cid:129) Crown Promenade Perth hotel has 291 guest rooms.
(cid:129) Crown Towers Perth hotel will have approximately
500 guest rooms and will be completed in 2016.
(cid:129) Crown Perth’s large-scale entertainment facilities include
CITY OF DREAMS
(cid:129) City of Dreams operates more than 1,580 gaming
machines and approximately 450 table games.
(cid:129) Crown Towers Macau hotel has approximately
300 guest rooms.
(cid:129) Hard Rock hotel has approximately 300 guest rooms.
(cid:129) Grand Hyatt hotel has approximately 800 guest rooms.
the 2,300-seat Crown Theatre Perth.
(cid:129) City of Dreams has more than 20 restaurants and bars.
(cid:129) World-class convention and event facilities are available.
(cid:129) The resort has a range of retail options.
(cid:129) A broad selection of restaurants and bars are provided
in the resort, including some of Perth’s best.
(cid:129) City of Dreams hosts Franco Dragone’s iconic and
spectacular show ‘The House of Dancing Water’.
(cid:129) Crown Perth also has a luxury day spa and retail outlets.
(cid:129) Other key attractions include The Bubble audio-visual
experience and Club Cubic.
ALTIRA
(cid:129) The casino and hotel feature approximately 170 table
games and approximately 200 guest rooms.
MOCHA CLUBS
(cid:129) The Mocha Clubs are a network of gaming lounges,
with approximately 1,600 gaming machines.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
7
Chief Executive Officer’s Report
“The extensive capital expenditure program has ensured
Crown Melbourne and Crown Perth are world-class
resorts, capable of competing with the best in the Asian
region. Both resorts offer unsurpassed service, six-star
luxury and a variety of entertainment experiences
– a unique combination that underpins the strength
of Crown’s leading global luxury brand.”
Rowen Craigie Chief Executive Officer Crown Limited
Overview
Crown reported a normalised1 net profit after tax (NPAT) of
$473.2 million for the 12 months ended 30 June 2013. Crown
Melbourne and Crown Perth achieved normalised EBITDA
growth of 6.9% and normalised revenue growth of 5.6%.
Crown’s operating cash flow was $496.2 million for the
12 months, and net debt, excluding working capital cash,
was $1,548.3 million at 30 June 2013.
Performance for the year ended
30 June 2013
Normalised revenue1
Normalised expenditure1
Normalised EBITDA2
Normalised EBIT3
Normalised net profit after
tax before significant items
Reported net profit after tax
before significant items
Significant items4
Reported net profit after tax
$m
2,894.4
(2,136.1)
758.3
520.2
473.2
491.0
(95.2)
395.8
Crown sold its shareholding in Echo Entertainment Limited
(Echo) in May 2013. This resulted in an after tax loss of
$69.6 million which has been reported as a significant item.
The results from our Macau joint venture, Melco Crown
Entertainment, were strong, particularly in the premium mass
market segment, and were a major contributor to the growth
in Crown’s normalised NPAT.
Development Update
This has been a significant year for Crown. Crown Melbourne
has reached the end of its seven-year, $1.5 billion expansion
and upgrade. Property-wide projects have included the
addition of the luxurious Crown Metropol Melbourne (the
largest hotel in Australia), the expansion and redevelopment
of Crown Melbourne’s world-class gaming facilities, the
upgrading of the existing hotel facilities, and the enhancement
of the retail, dining and entertainment experience.
In addition, with a property-wide refurbishment and
expansion, the rebranding of Crown Perth from Burswood
was completed in September 2012. This milestone signifies
the transformation of the resort and enables it to leverage
off the internationally recognisable Crown brand, firmly
establishing Crown Perth’s ability to compete successfully
in the international tourism market.
Crown Perth’s offering will be further enhanced with
the addition of Crown Towers Perth. Due to open in 2016,
Crown Towers Perth will be a 500-room six-star luxury
hotel with VIP gaming salons, restaurants, bars, resort
and convention facilities.
This extensive capital expenditure program has ensured
Crown Melbourne and Crown Perth are world-class resorts,
capable of competing with the best in the Asian region.
Both resorts offer unsurpassed service, six-star luxury and a
variety of entertainment experiences – a unique combination
that underpins the strength of Crown’s leading global luxury
brand. This investment in growth capital is progressively
delivering benefits and is expected to be earnings and value
accretive for shareholders.
Australian Integrated Resorts
Overall, the results for Crown’s wholly-owned Australian
resorts, Crown Melbourne and Crown Perth, were mixed,
as we continue to see evidence of weak consumer sentiment,
particularly in Melbourne. Cost control continues to be a
focus at both resorts. Normalised EBITDA was up 7.1%
in Crown Melbourne and up 6.4% in Crown Perth. Across
the two resorts, main floor gaming revenue grew by 3.6%,
VIP program play turnover grew by 7.8%, and non-gaming
revenue grew by 8.1%.
Normalised EBITDA from Crown Melbourne was
$546.7 million, up 7.1% on the prior corresponding period
(pcp). Reported EBITDA for the period was $547.1 million,
down 3.0% or $17.1 million on the pcp. This reflected a win
rate of 1.36% which generated a positive EBITDA variance
of $0.4 million, compared to a positive EBITDA variance
of $53.6 million in the pcp when the win rate was 1.50%.
1 Normalised results have been adjusted to exclude the impact of any variance from theoretical win rate on VIP program play and significant items.
2 Normalised earnings before interest, tax, depreciation, and amortisation.
3 Normalised earnings before interest and tax.
4 Relates to the loss on disposal of Crown’s investment in Echo, a loss of $69.6 million net of tax, and Crown’s share of MCE’s development
and refinancing costs of $25.6 million.
8
Normalised EBITDA from Crown Perth was $240.8 million,
up 6.4% on the pcp. Reported EBITDA for the period was
$240.8 million, down 11.1% or $30.1 million on the pcp.
The win rate in the pcp was 1.84% which resulted in a positive
EBITDA variance of $44.6 million.
To further optimise the synergies and performance of our two
Australian resorts, Crown recently created the position of
Chief Executive Officer Australian Resorts. Barry Felstead,
who had been Chief Executive Officer of Crown Perth, was
appointed to that position.
Crown Sydney Hotel Resort Proposal
In July 2013, the New South Wales Government invited
Crown to advance to Stage Three of the Unsolicited
Proposal process for Crown’s proposed development
and operation of a six-star hotel resort at Barangaroo
South on Sydney Harbour.
The proposed Crown Sydney Hotel Resort will include
world-class VIP gaming facilities, 350 hotel rooms and
suites, luxury apartments, signature restaurants, bars, luxury
retail outlets, pool and spa facilities and conference rooms.
Crown is working with the New South Wales Government
as part of Stage Three of the Unsolicited Proposal process.
Melco Crown Entertainment (MCE)
Crown’s share of MCE’s normalised NPAT result for the
full year to 30 June 2013 was an equity accounted profit
of $152.3 million, after adjusting for an above theoretical
win rate. Crown’s share of MCE’s reported result before
significant items for the full year to June 2013 was an
equity accounted profit of $175.0 million.
MCE incurred costs in respect of debt refinancing and costs
associated with the Studio City and Philippines development
projects. Crown’s share of these costs was $25.6 million
which has been reported as a significant item.
The growth in MCE’s EBITDA was achieved despite an overall
subdued performance in the Macau VIP market and was
attributable to strong growth in the mass market table games
segment at City of Dreams and improved group-wide rolling
chip volume, together with MCE’s committed cost control
culture. City of Dreams again increased its market share
in the mass market table games segment and achieved
market-leading mass table yields, which is increasingly
important in a table supply constrained market.
Studio City, in which MCE has a 60% equity interest,
is on budget and on track and due to open in mid-2015.
In addition, MCE is moving forward with the fifth hotel tower
at City of Dreams and anticipates construction to commence
by the end of 2013. As well, MCE, through its 69.3% owned
subsidiary, Melco Crown (Philippines) Resorts Corporation,
has an interest in a consortium to develop and operate
an integrated resort in Manila, the Philippines. The resort
is expected to open in the middle of 2014.
These exciting development opportunities are key
components of MCE’s strategy to diversify its revenue
streams, maximise return on invested capital and drive
long-term shareholder value.
Conclusion
Crown remains focussed on optimising the performance
of our Australian resorts, and our comprehensive review
of back of house and front of house operational efficiency
will continue. We will manage the Crown Towers Perth
development and construction and complete the final
stages of the remaining capital expenditure projects.
As well, management will continue to progress the
Crown Sydney Hotel Resort proposal.
We will also continue to work closely with MCE to further
build the value of MCE’s Macau businesses.
I would like to sincerely thank the Board for its support,
and all employees and management for their efforts in 2013.
Rowen Craigie
Chief Executive Officer
FIGURE 1
10 YEAR CROWN MELBOURNE NORMALISED
REVENUE AND EBITDA PERFORMANCE
FIGURE 2
10 YEAR CROWN PERTH NORMALISED
REVENUE AND EBITDA PERFORMANCE
m
$
A
D
T
B
E
d
e
s
I
i
l
a
m
r
o
N
600
550
500
450
400
350
300
250
200
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
2000
1750
1500
1250
1000
750
500
250
0
m
$
e
u
n
e
v
e
R
d
e
s
i
l
a
m
r
o
N
m
$
A
D
T
B
E
d
e
s
I
i
l
a
m
r
o
N
300
250
200
150
100
50
0
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
900
720
540
360
180
0
m
$
e
u
n
e
v
e
R
d
e
s
i
l
a
m
r
o
N
Normalised EBITDA
Normalised
Revenue
Normalised EBITDA
Normalised
Revenue
Figures 1 and 2 show a year by year comparison of the normalised revenue and EBITDA at Crown Melbourne and Crown Perth respectively.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
9
Crown’s Australian Resorts
“The quality of Crown Melbourne’s seven-year,
$1.5 billion capital works program has reinforced
its position as a leading integrated resort, while
providing considerable benefits to the Australian
and Victorian tourism industries.”
Barry Felstead Chief Executive Officer Australian Resorts
CROWN MELBOURNE
Overview
Crown Melbourne is Australia’s leading
integrated resort. The dynamic and
diverse complex, covering more than
550,000 square metres, includes luxury
accommodation in its three hotels,
world-class dining, a variety of retail
options, the Palladium ballroom,
outstanding conference facilities and
vibrant gaming and entertainment
options, making it one of Australia’s
most visited tourist attractions.
Supporting this extensive offering
is a workforce of approximately 8,800
people, making Crown Melbourne
Victoria’s largest single-site private
sector employer.
In recognition of our commitment to
the professional development of our
employees, Crown Melbourne was
awarded the 2013 Victorian Employer
of the Year award, at the prestigious
Victorian Government Training Awards.
This is a remarkable achievement that
follows Crown Melbourne winning the
same award in 2010. Crown Melbourne
is now a finalist in the Australian Employer
of the Year awards which we also won
in 2010.
In this financial year, normalised
EBITDA grew by 7.1% and normalised
revenue grew by 4.0%. In response
to the weak consumer sentiment in
Melbourne and low revenue growth
in main floor gaming, Crown Melbourne
has continued its comprehensive
review of back of house costs and
front of house operational efficiency.
Main gaming floor revenue grew by 0.9%
for the year to $1,000.8 million and
normalised VIP program play revenue
increased by 9.2% to $525.2 million
on turnover of $38.9 billion. Non-gaming
revenue grew 5.4% to $392.1 million.
Property Update
The quality of the refurbishment
and expansion program undertaken
at Crown Melbourne has reinforced
its position as a leading integrated
resort, amongst the best in the world,
while providing considerable benefits
to the Australian and Victorian
tourism industries.
The main gaming floor refurbishment,
completed in August this year, was the
final project of Crown Melbourne’s
resort-wide upgrade. The 15-month
refurbishment program has added a
new level of vibrancy to the property
and the changes have been well
received by customers.
The luxury experience of Crown Towers
Melbourne was enhanced with the
extensive refurbishment and upgrade
of the award-winning spa, which
was completed in September 2012.
Crown Melbourne’s world-class dining
options were enriched with a number
of additions this year. These included
Neil Perry’s Rosetta, an architecturally
impressive restaurant on Crown’s
Left to right: Mahogany Room, Crown Melbourne; Bistro Guillaume, Crown Melbourne;
Nobu, Crown Melbourne; Crown Towers Melbourne, Crown Melbourne.
10
Riverfront, which provides guests
with the option of the luxurious dining
room or the heated alfresco terrace.
As well, two new restaurants, Jimbo
& Rex and Man Tong Kitchen, were
opened in The West End, and the
casual Japanese cafe, Gochi, was
opened in the retail precinct.
Ensuring the quality of Crown
Melbourne’s offering across the entire
complex, improvements were made to
the public Riverside space, including
the upgrade of outside seating, lighting
and landscaping.
Crown Melbourne’s retail offering also
expanded this year with the addition
of new luxury outlets, complementing
the already extensive high-end
retail offerings.
Local Gaming and Crown
Signature Club
An upgrade to the look and feel of the
entire Crown Melbourne main gaming
floor was completed in August 2013.
As well as refreshing the entrances,
the upgrade included the refurbishment
of the popular Jackpot Bar, the
remodelling of Velvet Bar, and the
extensive expansion and refurbishment
of the popular restaurant Margo’s
which is now a 24-hour restaurant,
bar and café.
In partnership with Caesar’s
Entertainment, Crown Melbourne
hosted Australasia’s first World Series
Poker Championship. Customer
response was overwhelmingly positive,
cementing Crown as Australia’s leading
venue for major poker tournaments.
The Crown Signature Club loyalty
program is continuing to grow in
popularity, and this year set a record
for new memberships. Some of the
benefits provided to members and
their guests included invitations to the
Spring Racing Carnival, the Australian
Open Tennis Championships and the
Grand Prix.
VIP Program Play
VIP Program Play turnover for the year
was $38.9 billion, an increase of 9.2%
on the previous year. Customers from
China are still the driving force behind
the strong growth, and there has
been an improvement in business
from South East Asia.
Hotels, Conferences
and Retail
With over 1,600 world-class guest
rooms, Crown Melbourne’s hotels
provided over 800,000 guest nights
this year, which is an 8% increase
on the previous financial year. As
industry-leading properties, each
one of Crown Melbourne’s three
hotels has again been recognised
as the pre-eminent hotel in its
respective class, each receiving
several prestigious awards.
The opulent six-star Crown Towers
Melbourne was awarded the 2013
Gourmet Traveller Readers’ Choice
Award for Best Large Luxury Hotel,
as well as the 2013 Asia Pacific
Hotel Awards Best Hotel in Australia,
indicating that guests and tourism
industry participants believe that
Crown Towers Melbourne provides
the most outstanding service and luxury
accommodation offering in Australia.
Crown Metropol Melbourne received
two significant awards: the 2012
Victorian Tourism Award for Luxury
Accommodation (for the second
consecutive year), and the 2012 Hotel
Management Award for Best Hotel –
Upper Upscale Hotel.
As well, Crown Promenade
Melbourne was the 2012 winner
of the Superior Accommodation Hotel
of the Year category of the Tourism
Accommodation Australia (Victoria)
State Awards for Excellence.
Crown Melbourne’s improved spa
offering has been well received by
guests, particularly the new aqua
retreat areas and the range of
specialised treatments available at
the Spa at Crown Towers Melbourne.
Each pampering area now includes a
dedicated aqua retreat with Hamman
and vitality pool, and there is also
a hair and beauty area, a manicure
and pedicure area and indulgence
treatment rooms. The ultra-luxurious
and state-of-the-art facilities offer
guests the ultimate spa experience.
The Conference Centre continues
to be a popular choice for local and
international companies seeking
competitive conference packages
in well-managed conference facilities
of world-class quality. This year,
the Conference Centre hosted over
500 events.
Crown Melbourne’s retail precinct
was enhanced with the opening of
three new luxury brands – Hugo Boss,
IM Lingerie and Paspaley.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
11
CROWN MELBOURNE CONTINUED
Restaurants and Bars
Crown Melbourne’s quality dining
offering was again expanded this
year. With the opening of Neil Perry’s
exclusive Italian restaurant, Rosetta,
and several additions to the food court
and The West End, there are options
for every Crown Melbourne customer.
This year, The West End’s restaurants
were expanded to include Jimbo
& Rex, with its contemporary pub
menu, and Man Tong Kitchen, offering
authentic Chinese cuisine, and both
have proven to be very popular.
A more casual Japanese option,
Gochi, was also recently opened.
The popular Margo’s on the main
gaming floor underwent a complete
renovation, and re-opened in June 2013
with an increased seating capacity
and over 80 international menu items.
Other openings, following the main
gaming floor refurbishment, included
the new Velvet Bar and the expanded
and upgraded Las Vegas Bar.
As in past years, Crown Melbourne’s
restaurants and bars have received
numerous awards. Three of our
restaurants received awards in the
2012 Restaurant & Catering Victoria
Awards for Excellence: Conservatory
was awarded Best New Restaurant;
Nobu was awarded Best Modern
Asian Restaurant; and Silks was
awarded Best Chinese Restaurant.
Rockpool Bar & Grill, Rosetta and
Spice Temple were all awarded two
hats in the 2014 Age Good Food Guide
Awards, while Bistro Guillaume was
awarded one hat. Five other Crown
Melbourne restaurants also feature
in the guide: The Atlantic, Koko,
Mr Hive, Nobu and Silks.
Crown Melbourne continues to receive
prestigious awards for its professional
development and training programs.
The Commercial Cookery program,
which operates in Crown Melbourne’s
training restaurant, was awarded the
2012 Victorian Employer Award for
Apprentice Development in the Victorian
Training Awards, and was a finalist
in the 2013 award. The program
also won both the Australian and
Victorian 2012 George Mure Memorial
Professional Development Awards.
With a strong focus on ensuring a
safe and pleasant environment for
all customers and employees, Crown
Melbourne takes its responsibilities
in the provision of Responsible Service
of Alcohol (RSA) very seriously. With
a dedicated team of RSA officers
working closely with Security, and
relevant training programs delivered
to all employees, we continue to be
a leader in RSA best practice within
our industry.
Entertainment and Events
This year, over 570 organisations
booked nearly 2,000 events at Crown
Melbourne, at venues that included
Palladium, River Room, Garden Room
and Studio 3.
As in past years, the Palladium
ballroom hosted some of Australia’s
most memorable events, including the
TV Week Logie Awards and the AFL
Brownlow Medal, which was attended
by over 900 guests and televised live
nationally. Some of the key charitable
events hosted at Crown Melbourne
included the My Room Ball, Starry
Starry Night and the Epworth Medical
Foundation Dinner.
During Victoria’s annual Spring Racing
Carnival, the Palladium was home
to a number of Victoria Racing Club’s
official events, including the Crown
Oaks Club Ladies Luncheon and the
Call of the Card.
The Palms continued to host a diverse
range of artists to entertain guests
of all ages and interests. Some of
this year’s key events included
performances by Cosentino,
Ricki-Lee, Icehouse and Empire.
The two nightclubs at Crown Melbourne,
Co. and Fusion, both continued to
showcase contemporary Australian
artists that included Stan Walker,
Havana Brown, Justice Crew,
Hed Kandi, the Stafford Brothers
and Timomatic.
Crown Melbourne again participated
as a partner in the Melbourne Food
and Wine Festival held at the Royal
Exhibition Building. Crown chefs
prepared a three-course meal for
over 1,000 guests at the Gala Dinner,
which is always the most prestigious
event in the festival’s program.
Other major events held at Crown
Melbourne this year included: the
VMC Community Event, the 2013
Diamonds are a Girl’s Best Friend
Dinner, the 12WBT Finale Cocktail
Party, and the very popular
Spiegeltent on the Crown rooftop.
Left to right: Atrium Bar, Crown Melbourne; The Conservatory,
Crown Melbourne; Crown Perth; Nobu, Crown Perth.
12
“This year has been a milestone with the
rebranding of Crown Perth from Burswood
following the resort-wide refurbishment
and expansion. Crown Perth’s revitalised
offerings have added a new dimension
to Perth’s tourism offering.”
Barry Felstead Chief Executive Officer Australian Resorts
CROWN PERTH
Overview
This year has been a milestone for
Crown Perth. After a significant
resort-wide refurbishment and
expansion, the rebranding of Crown
Perth from Burswood occurred in
September 2012. Now providing the
quality associated with the Crown
brand, Crown Perth is able to leverage
off the internationally recognised Crown
name and is able to compete with the
world’s leading integrated resorts.
Crown Perth’s revitalised offerings –
including luxury hotel rooms, high-end
restaurants and bars, gaming facilities,
convention centre, spa and spectacular
resort pool area – add a new dimension
to Perth’s tourist offering.
Receiving millions of visitors a year,
Crown Perth is one of Western Australia’s
most visited tourist destinations and
the state’s largest single-site employer
with a workforce of approximately
6,100 employees.
In this financial year, normalised
EBITDA grew by 6.4% and normalised
revenue grew by 9.3%. EBITDA growth
was less than revenue growth due in
part to some one-off costs, including
costs associated with the rebranding
of the property.
Main gaming floor revenue grew by 9.7%
for the year to $483.5 million. Normalised
VIP program play revenue increased
by 3.3% to $159.4 million on turnover
of $11.8 billion. Non-gaming revenue
grew by 13.3% to $215.3 million.
In August 2012, Crown again
demonstrated its long-term commitment
to Australian tourism, with the decision
to develop a new six-star hotel, Crown
Towers Perth. The 500-room luxury
hotel will add to the quality hotel
accommodation already available
at Crown Perth, further improving the
resort’s ability to attract its share
of the international tourism market.
Property Update
The extensive capital expenditure
program undertaken at Crown Perth
has reinvigorated the resort. The
transformation of the resort has been
all-encompassing, and developments
have included the addition of Crown
Metropol Perth’s expansive resort
swimming pool, internationally acclaimed
restaurants such as Rockpool Bar &
Grill, Bistro Guillaume, and Nobu, the
upgrade of existing accommodation
to five and six-star standard, improved
conference and meeting facilities,
and renovated gaming areas.
The expansion of the main gaming
floor was completed this year,
delivering a gaming space in line with
Crown’s world-class standards and able
to accommodate new gaming product.
The selection of dining options
at the resort has also expanded.
Accompanying the main gaming floor
refurbishment was the opening of three
new restaurants and two new bars.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
13
CROWN PERTH CONTINUED
Bistro Guillaume was opened in
September 2012 and, taking advantage
of the views over the new pool areas,
it offers a casual elegance. The Atrium
buffet which was re-opened in October
2012, following the expansion to provide
additional seating now offers Perth’s
quintessential buffet dining experience.
The addition of La Vie, an intimate
champagne bar, has been particularly
well received.
The extensive upgrade to all the guest
rooms at Crown Metropol Perth was
completed in November 2012, and
includes an upgrade to the Infinity
Suite, a luxury six-star accommodation
offering that was completed in July 2012.
The Club Lounge was also refurbished
into a sophisticated executive lounge
with reception, buffet, dining area,
lounge area, library, kitchen and
outdoor terrace.
Work is continuing on the expansion
of the multi-storey car park. Due to be
completed in 2014, the expansion will
provide an additional 1,520 parking
bays and the flexible access points will
improve accessibility to Crown Perth.
Crown Towers Perth
Expected to be completed in 2016,
Crown Towers Perth will be the largest
hotel in Perth, providing six-star
accommodation to domestic and
international visitors. Crown Towers
Perth will also include resort and
convention facilities as well as premium
restaurants and bars, making it a
significant addition to Crown Perth
and reinforcing Crown Perth’s status
as a world-class integrated resort.
Local Gaming
The growth in revenue from Crown
Perth’s main gaming floor was
predominantly a result of the area’s
refurbishment and expansion, and
the increase in gaming product. The
re-branding and associated marketing
increased visitation to the resort, which
also contributed to this revenue growth.
VIP Program Play
The reinvigorated VIP facilities at Crown
Perth, combined with the rebranding
of the resort makes the VIP offering
instantly recognisable as part of the
Crown brand. Crown Perth is now
well positioned to compete with the
integrated resorts of South East Asia.
Hotels
This year, Crown Perth’s two hotels
provided almost 320,000 guest nights,
as Crown Metropol Perth cemented
its position as the leading luxury hotel
in Perth.
Crown Metropol Perth again received
several prestigious awards, including
the Best Gaming Space and Best
Resort Pool at the 2012 HOSPY Awards
held in Las Vegas, and Best Hotel
Renovation for the Asia Pacific region
at the International Hotel Awards –
Asia Pacific. The hotel was also
recognised with a 2013 Certificate of
Excellence from TripAdvisor, placing
Crown Metropol Perth in TripAdvisor’s
top 10% of all accommodation
providers worldwide.
The upgrade of Crown Metropol Perth’s
guest rooms addressed every element
of each room, resulting in a luxurious
accommodation experience.
Attesting to the quality of the
refurbishment was Crown Metropol
Perth’s success at the Australian
Hotels Association (AHA) 2013
ME Bank WA Accommodation
Industry Awards. Crown Metropol
Perth received the Redeveloped
Accommodation Hotel Award, the
Deluxe Accommodation Award and
the Resort Style Accommodation
Award. Crown Promenade Perth
was a finalist in the Superior
Accommodation Award category.
Restaurants and Bars
Esteemed chef, Guillaume Brahimi,
opened his Crown Perth restaurant,
Bistro Guillaume, in September 2012.
Offering a classic French bistro
menu, the world-class restaurant
has been well received by customers.
Another high-end opening was that
of champagne bar La Vie, located in
the lobby at Crown Metropol Perth,
its luxurious furnishings and beverages
proving to be popular with customers.
As well, the Atrium Buffet and Lobby
Lounge were re-opened following
extensive refurbishments.
With the refurbishment of the main
gaming floor, several new food and
beverage outlets were opened, including
the entertainment venue Groove Bar
& Lounge, the café Cotta, and the bar
Fusion. Other openings included the
Junction Grill, offering a menu of classic
favourites, and The Merrywell, a gastro
pub with a diverse range of American
influenced dishes. The Merrywell has
Left to right: Infinity Suite Crown Metropol Perth, Crown Perth; VIP Mansion swimming pool, Crown Perth;
Sky Salon terrace, Crown Metropol Perth, Crown Perth; La Vie, Crown Metropol Perth, Crown Perth.
14
already won ‘WA’s Best Steak Sandwich’
at the AHA’s 2013 Metropolitan Steak
Sandwich Competition.
The quality of Crown Perth’s restaurants
and bars has been recognised by
several industry awards, including
the School/Community Partnership
Training Award at the AHA Aon Hotel
and Hospitality Awards for Excellence.
Crown Perth achieved certification to
ISO 22000 and three HACCP standards
in February 2013, confirming the
emphasis we place on food safety.
This year, four of Crown Perth’s
premium restaurants have received
prestigious accolades. Neil Perry’s
Rockpool Bar & Grill won two stars in
The West Australian Good Food Guide
2013, and two stars in the Australian
Gourmet Traveller Restaurant Awards
2013. Bistro Guillaume was named
the winner of the Restaurant within
an Accommodation Hotel Award
at the AHA 2013 ME Bank WA
Accommodation Industry Awards.
Nobu was awarded one star in The
West Australian Good Food Guide
2013 and won Best Asian Restaurant
at the Restaurant & Catering HOSTPLUS
Awards for Excellence. As well, Modo
Mio won Best Italian Restaurant
(Formal) at the Restaurant & Catering
HOSTPLUS Awards for Excellence,
and the quality seal ‘Ospitalita’ award
from the Italian Chamber of Commerce.
Two of our chefs also received
recognition in highly regarded
competitions: Michael Hull was
the winner of the WA Chaine des
Rôtisseurs Jeunes Commis Competition
in April 2013; and Modo Mio Chef
de Cuisine, Andrea Tranchero, was
successful in reaching the semi-finals
in the Pasta World Championships
in Italy in June 2013.
Crown Perth hosted a number of
special events and dining experiences
during the year. These included an
exclusive champagne tasting event at
Bistro Guillaume hosted by Champagne
house Château Latour.
Crown’s premium Chinese
restaurant, Silks, opened in August
2013, bringing a fine Chinese dining
experience to Crown Perth customers
with its selection of authentic multi-
regional dishes.
Crown Perth’s restaurants and
bars continue to focus on RSA. As a
responsible industry participant, Crown
Perth has developed comprehensive
RSA policies and practices that help to
ensure that all guests and employees
enjoy a safe and pleasant environment.
Crown Perth was inducted into the
AHA Western Australia’s Hall of Fame
for its success in winning the RSA
Award three years in a row.
Entertainment and Events
The re-branding of Crown Perth and
the associated marketing considerably
increased the resort’s public profile,
resulting in a renewed interest in Crown
Perth’s function and event offerings.
This coincided with the completion
of the refurbishment of pre-function
areas, resulting in additional meeting
space and an upgraded area in which
to conduct VIP pre-function events.
As well, there has been extensive interest
in pre-booking the Crown Towers Perth
event space for 2017–2019.
Major events this year included the
Ronald McDonald House Charities
Mercedes-Benz Ball, Western Australian
Citizen of the Year Awards, Ernst
& Young Entrepreneur of the Year
Award, Sandover Medal, Australian
Rheumatology Conference and the
ALTA Conference. Crown Perth also
sponsored many local events, cultural
activities and other community-based
programs, including Artitude by
Crown Perth (an annual art exhibition
benefitting the Telethon Speech &
Hearing Centre), Boobalicious Ball
(benefitting the Breast Cancer
Foundation) and The Op Shop Ball
(benefitting Anglicare WA).
Crown Theatre has again enjoyed
a successful year with long-running
seasons of Annie, A Chorus Line and
Jersey Boys. Other performances
were held by The Australian Ballet,
Cosentino, Ronan Keating and Guy
Sebastian, along with comedians
Wayne Brady, Dave Hughes and
the ever-popular Barry Humphries.
The Dome hosted its final shows in
September 2012, prior to the opening of
Perth Arena in November 2012. Since
opening 26 years ago, The Dome has
had over 7.5 million attendances at
hundreds of shows.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
15
Melco Crown Entertainment
“City of Dreams again
increased its market
share in the mass
market table games
segment and achieved
market-leading mass
table yields, which is
increasingly important
in a table supply
constrained market.”
As at 30 June 2013, Crown held
a 33.7% equity interest in Melco
Crown Entertainment (MCE), a joint
venture between Crown and Melco
International Development Limited.
MCE has a dual listing on the
NASDAQ and the Stock Exchange
of Hong Kong.
In Macau, MCE has two premium
properties (City of Dreams and Altira
Macau), operates the Mocha Clubs,
and has a 60% equity interest in Macau
Studio City, an integrated resort project
on Cotai. In the Philippines, MCE,
through its 69.3% owned subsidiary,
Melco Crown (Philippines) Resort
Corporation (MCP), has an interest
in a consortium that will develop and
operate an integrated resort in Manila.
MCE reported strong results for
the twelve months to 30 June 2013.
Crown’s share of MCE’s normalised
NPAT result for the full year to 30 June
2013 was an equity accounted profit
of $152.3 million, after adjusting for
an above theoretical win rate. Crown’s
share of MCE’s reported result before
significant items for the full year
to 30 June 2013 was an equity
accounted profit of $175.0 million.
During the year, MCE issued a
US$1.0 billion senior note offering
at a 5.0% coupon, allowing MCE
to, among other things, refinance
MCE’s existing US$600 million
10.25% senior notes.
MCE incurred costs in respect of the
debt refinance and costs associated
with the Studio City and Philippines
development projects. Crown’s share
of these costs was $25.6 million which
has been reported as a significant item.
The growth in MCE’s EBITDA was
achieved despite an overall subdued
performance in the Macau VIP market
and was attributable to strong
growth in the mass market table
games segment at City of Dreams
and improved group-wide rolling
chip volume, together with MCE’s
committed cost control culture.
City of Dreams again increased its
market share in the mass market
table games segment and achieved
market-leading mass table yields,
which is increasingly important in
a table supply constrained market.
MCE is moving forward with the fifth
hotel tower at City of Dreams and
anticipates construction to commence
by the end of 2013. The addition of the
fifth tower at City of Dreams represents
a significant addition to the wide
array of amenities and attractions
that City of Dreams already offers
its premium-mass and high-end
customers, providing another tool
to further extend its leading position
in this key segment.
Studio City, in which MCE has
a 60% equity interest, is MCE’s next
integrated resort offering on Cotai,
Macau. Upon completion, Studio
City will include significant gaming
capacity, five-star hotel offerings
and various entertainment, retail and
food and beverage outlets to attract
a diverse range of customers. Studio
City is designed to capture the
increasingly important mass market
segment, with its destination theming,
unique and innovative interactive
attractions, and strong Asian focus.
Top left: House of Dancing Water, City of Dreams
All other images: City of Dreams, Macau
16
Macau Casino Map – Cotai
CHINA
CHINA
MACAU
TAIPA
COTAI
CHINA
HENGQIN
ISLAND
TAIPA
To Macau
International
Airport
Galaxy
Macau I
Galaxy
Macau II
Galaxy Macau
III & IV
Venetian
Macau
City of
Dreams
Wynn
The Plaza
Macau
Parisian
Macau
Sands
Cotai
Central
MGM
SJM
Lotus
Bridge
SJM
Studio City
Immigration
Control Point
MCE properties
MCE properties under
construction or pending
construction permit
Properties currently
operating
Properties under
construction or pending
construction permit
Phase 1 Macau
Light Rail Transit
Stations
MCE believes that the location
of Studio City, adjacent to the Lotus
Bridge immigration checkpoint
and one of the proposed light rail
stations, in addition to its vast array
of entertainment and leisure offerings,
will create a key competitive advantage.
Studio City is on budget and on track,
due to open in mid-2015. The resort
is expected to cost US$2.0 billion
and is being financed through a
US$1.4 billion senior secured facility
and a US$825 million senior note
offering, as well as committed equity
from Studio City’s shareholders.
MCE, through its interest in
Melco Crown (Philippines) Resorts
Corporation, is developing a casino,
hotel, retail and entertainment
complex in Manila, the Philippines.
Located in Entertainment City,
Manila, the site is close to Metro
Manila’s international airport and
central business districts. The resort
is expected to open in the middle of
2014 and will be one of the Philippines’
leading integrated tourism resorts in
Entertainment City.
Upon completion, and subject to
final property design, the Philippines
project is expected to have significant
gaming space, hosting approximately
1,450 electronic gaming machines
and 240 gaming tables. The property
will also feature six hotel towers with
almost 1,000 rooms in aggregate,
including VIP and five-star luxury
rooms and high-end boutique hotel
rooms. As well, there will be numerous
specialty restaurants along with a
number of bars and a multi-level
car park.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
17
MELCO CROWN ENTERTAINMENT CONTINUED
The resort is expected to house three
separate entertainment venues, a live
performance central lounge within the
casino and a night club within the
Fortune Egg. The Fortune Egg is an
attractive domelike structure, which
will be accentuated with creative
external lighting and is expected to
become a centrepiece of the property.
MCP’s net contribution towards the
project up to the time of opening
is estimated to be approximately
US$620 million, consisting of funds
primarily for capital expenditures,
working capital for initial opening and
other pre-opening expenses. This
project will be financed by both debt
financing and the capital generated by
a public equity raising undertaken in
April 2013, which raised approximately
US$335 million.
This project is expected to diversify
MCE’s exposure to the rapidly
developing Asian gaming and
entertainment industry, enabling
MCE to further participate in the
growth in the Asian middle class
and the increasing consumerism
of this important target market.
MCE believes that its exciting
development opportunities are
key components of its strategy
to diversify its revenue streams,
maximise return on invested capital
and drive long-term shareholder value.
Macau Market Update
In financial year 2013, Macau
generated record gross gaming
revenues of $40.9 billion, an increase
of 11.8% from financial year 2012. The
mass market table games segment
continues to deliver above-market
growth, increasing approximately
27.3% on pcp. As a result of the
strength in the mass market segments,
the mass market table games and
gaming machines segment contributed
approximately 32.2% of total gross
gaming revenue in financial year 2013,
compared to approximately 28.3%
in financial year 2012. MCE, through
its substantial exposure to mass
market segments, particularly through
its flagship property City of Dreams
and the upcoming Studio City project,
is perfectly placed to take full advantage
of this fast growing and increasingly
important segment of the Macau market.
Tourism is a major driver of Macau’s
economy. In the 12 months to June 2013,
Macau welcomed approximately
28.6 million visitors. Visitors from
mainland China increased 5.4% in
financial year 2013, compared to
the pcp, and accounted for 61.8%
of all visitors to Macau, compared to
59.3% the previous year. Visitors from
Hong Kong and Taiwan accounted
for 24.3% and 3.6% respectively in
financial year 2013.
Recognising the significance of
tourism to its economy, Macau’s
government has developed a
comprehensive infrastructure plan
which will enable it to cater to a wider
spectrum of visitors, ultimately driving
future growth. The plan ranges from
local infrastructure improvements,
including increasing the border gate
checkpoint capacity to 500,000
people per day, increasing airport
capacity, improving ferry terminals
and the light rail system, to regional
infrastructure improvements aimed
at reducing travel time to Macau,
including the 50km Zhuhai-Macau
Bridge, the Guangzhou-Zhuhai
Intercity Mass Rapid Transit and the
Guangzhou-Zhuhai Super Highway.
The development of Hengqin Island,
which is adjacent to Macau, is also part
of the government’s infrastructure
plan to support and grow Macau’s
tourism industry. Hengqin Island has
been designated a special economic
zone under China’s 12th Five Year Plan
on the basis of developing it into a
regional leisure, tourism, commercial
and cultural destination – an offering
which, given its proximity to Macau,
will further enhance Macau’s status
as an attractive destination for tourists.
The expansive infrastructure
development plan, together with the
wide-reaching Hengqin development
blueprint, will further broaden Macau’s
appeal and significantly improve
visitors’ overall experience, thereby
ensuring the long-term success of
Macau as a world-class leisure and
tourism destination.
Left page: Images of City of Dreams, Macau.
Right page: Images of Crown Aspinall’s, London.
18
Crown Aspinall’s
Crown Aspinall’s, previously Aspinall’s
Club, is a high-end London casino.
It is one of only five licensed casinos
in London’s prime West End
entertainment district. Nestled in
the heart of Mayfair, Crown Aspinall’s
offers members and guests an exciting
and opulent world of international VIP
gaming, in an environment that only
London can provide.
Normalised EBITDA from Crown
Aspinall’s was $33.3 million. A below
theoretical win rate generated
a negative EBITDA variance of
$6.8 million which resulted in a
reported EBITDA of $26.5 million
for the period.
Other Investments
Aspers Group
United Kingdom
50.0% interest
Betfair
Australia
50.0% interest
Cannery
United States
24.5% interest
Echo
Crown holds a 50% equity interest in the Aspers Group, which currently operates
four regional casinos in the United Kingdom, in Newcastle, Stratford, Milton
Keynes and Northampton (the latter in a joint venture with Kerzner UK Limited).
The Stratford casino is located within the new Westfield shopping complex,
adjacent to the 2012 Olympic Games site. The casino in Milton Keynes opened
in September 2013. Crown did not receive a distribution of any profits or recognise
any earnings from Aspers Group during the period.
Crown has a 50% equity interest in Betfair, a joint venture company with Betfair
UK (The Sporting Exchange Limited). Betfair is a betting exchange for customers
who reside in Australia and New Zealand. Betfair does not operate retail
premises, nor does it have an on-course presence: its services are exclusively
provided via the internet or telephone. Crown’s equity accounted share of
Betfair’s loss was $1.5 million.
Crown holds a 24.5% equity interest in Cannery which is based in the United
States and has operations at The Meadows Racetrack & Casino in Pittsburgh,
Pennsylvania, and Cannery Casino and East Side Cannery in Las Vegas,
Nevada. Crown did not receive a distribution of any profits or recognise any
earnings from Cannery during the period.
Crown sold its shareholding in Echo in May 2013. This resulted in an after tax
loss of $69.6 million which has been reported as a significant item.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
19
Crown Sydney
In July 2013, the New South Wales
Government invited Crown to move
to Stage Three of the Unsolicited
Proposal process for Crown’s proposed
development and operation of an iconic
six-star hotel resort, including VIP
gaming facilities, at Barangaroo South.
Crown’s proposal for an iconic six-star
hotel resort on Sydney Harbour aims
to give Sydney a landmark hotel it
can be proud of. It is widely accepted
in the tourism sector that Sydney’s
luxury hotels are not competitive with
the best hotels in Asia, and the city
is missing out on a valuable segment
of the luxury tourist market.
In Crown’s view, Sydney has a
significant opportunity, as Australia’s
international gateway, to capitalise on
the enormous growth in Asian tourism
– particularly high net worth tourists
from China. Crown believes that to
realise this opportunity, Sydney needs
a luxury hotel resort whose design,
construction and operations are
of world-class standard.
The proposed Crown Sydney Hotel
Resort will be the city’s first six-star
hotel resort. Crown’s proposal includes
350 hotel rooms and suites, luxury
apartments, signature restaurants,
bars, retail outlets, pool and spa
facilities, conference rooms and
VIP gaming facilities.
The ‘iconic’ status of the hotel resort
will be assured through the appointment
of Wilkinson Eyre, one of the world’s
best architects, to design a landmark
building that will be instantly recognisable
around the world and will complement
Sydney icons like the Sydney Harbour
Bridge and the Sydney Opera House.
Under Crown’s proposal, the Crown
Sydney Hotel Resort will deliver
significant and unique benefits
for the people of New South Wales,
including increases to employment,
business investment, export income,
and Gross State Product.
Crown has the track record and
experience to deliver something very
special for Sydney-siders and visitors
from interstate and overseas. Crown
believes that the world-class Crown
Sydney Hotel Resort will assist
New South Wales to meet its tourism
targets by attracting a larger share of
the booming Asian outbound tourism
market. Incorporating world-class VIP
gaming into such a hotel resort will
provide a further attraction to high net
worth tourists from China and other
Asian countries and will make the
project commercially viable.
Crown is currently working with the
New South Wales Government as part
of the Stage Three process.
Top Image: Sydney Harbour; Vertical image: Artist’s impression of Crown Sydney;
Page 21: Artist’s impression of Crown Sydney.
20
“Sydney is one of the world’s great cities:
it deserves one of the world’s great hotels.
I want this building to be instantly recognisable
around the world and feature on postcards
and memorabilia promoting Sydney. That’s
how you attract international tourists, create
jobs and put Sydney on the map in Asia.”
James Packer Chairman Crown Limited
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
21
Sustainability Report: Our People
As the largest single-site private sector
employer in both Victoria and Western
Australia, Crown understands the
importance of recruiting, developing
and retaining quality employees across
all areas of the business. Approximately
15,000 people come to work at our
Australian resorts in more than 700
different roles. Our total employment
expenditure is more than $750 million.
As the first signatory of the Australian
Employment Covenant (AEC), which
supports the federal government’s
‘Closing the Gap’ strategy, Crown is
committed to providing sustainable
employment to Indigenous Australians.
Our Indigenous Employment Programs
at both resorts continue to develop
and implement programs that focus on
achieving our AEC pledge to provide
2,000 sustainable careers for Aboriginal
and Torres Strait Islander Australians
by 2020.
Crown believes it can best support
reconciliation and work towards ‘Closing
the Gap’ by creating sustainable jobs
for Indigenous Australians and
supporting Indigenous businesses.
Crown recently announced a partnership
with Reconciliation Australia and,
in accordance with their guidelines,
launched Crown’s first Reconciliation
Action Plan (RAP). Building on the
successful Indigenous employment and
mentoring programs currently in place,
the RAP will enable these programs
to be more focussed on individual
support and cultural awareness.
The RAP provides employees and
others with an understanding of how
we will work towards achieving our
AEC pledge through our Indigenous
Employment Programs, career
pathways, professional development
and contracting.
At the launch of Crown’s RAP at
Crown Melbourne, Dr Denis Napthine,
the Premier of Victoria, said:
“This is a very positive and practical
way forward towards true reconciliation
with Aboriginal and Torres Strait Islander
people. This plan will provide 2,000
jobs across Crown, throughout Australia
for people of Aboriginal and Torres
Strait Islander background. This is a
great opportunity for Aboriginal people.”
In recognition of Crown’s Indigenous
program, we were the recipient of the
Australian Business Award’s 2012
Community Contribution award.
As in past years, Health and Safety
Management training was delivered
to key personnel, emphasising our
commitment to safety management
and awareness programs. These
initiatives ensure ongoing legislative
compliance, as well as the health and
safety of our employees, contractors
and visitors.
Both Crown Melbourne and Crown
Perth remain committed to increasing
and promoting the diversity of their
workforce. Each property also has
a Disability Employment Program
which successfully places people
with disabilities into a broad range
of careers and provides appropriate
training and support. The number
of people employed under these
programs is steadily increasing at
both resorts, and we are planning
further developments to ensure these
programs continue to grow.
Crown Melbourne:
Our People
Crown Melbourne is Victoria’s largest
single-site private sector employer, with
approximately 8,800 people working
on site.
Over 250,000 hours of training were
undertaken by Crown Melbourne
employees in financial year 2013, and
over 580 employees commenced
accredited qualifications. Over 4,600
apprentices and trainees have graduated
from Crown College since its inception.
This year we have again received several
awards that acknowledge Crown’s
commitment to our employees. These
awards include the 2013 Victorian
Employer of the Year, awarded at the
Victorian Government’s Training Awards,
the 2012 Victorian Training Award in the
Apprentice Development category, the
Organisational and Staff Development
award at the Learning and Technology
Impacts Awards, and the Recommended
Employer award at the 2012 Australian
Business Awards. We were also a
finalist in the Victorian Tourism’s Tourism
Education and Training award.
Our Learning Pathways program aligns
careers with qualifications within the
Australian Qualifications Framework.
We currently have more than 1,200
employees, including supervisors
and managers, completing one
of the qualifications we offer.
Left to right: Indigenous employees; a food and beverage trainee; apprentice chefs.
22
EMPLOYMENT HEADCOUNT AT CROWN RESORTS
15,000
12,000
9,000
6,000
3,000
0
14,940
14,437
13,817
13,112
13,199
12,650
11,587
10,925
10,065
2005
2006
2007
2008
2009
2010
2011
2012
2013
Employees
Tenancy
Contractors
Crown Melbourne has a strong
Indigenous Employment Program
that focusses on working towards
achievement of Crown’s AEC pledge.
Crown Melbourne provides support
to our Indigenous employees outside
of the workplace, assisting them in
areas such as counselling, housing,
relocation and any other issues that
arise directly or indirectly as a result
of their employment.
This year, we have again won awards
that recognise our commitment and
achievements in the employment of
Indigenous Australians, including the
prestigious Australian Business Awards’
2012 Community Contribution Award.
Crown Melbourne is proud of the
success of its Disability Program,
evidenced by a retention rate that
is almost twice that of the national
average. Crown Melbourne’s partnership
with WISE has greatly enhanced and
supported our commitment to disability
employment. Crown Melbourne
aims to increase the already strong
contribution to the program from each
business unit, by increasing knowledge,
awareness and confidence in the area
of disability employment.
This year, we introduced a new
program, also in partnership with
WISE, called Jobs in Jeopardy.
This program identifies employees
who have encountered an obstacle
to ongoing employment, such as
a disability or learning difficulty,
or changed medical or personal
circumstances. The aim of the
program is to identify strategies,
opportunities, and practical action
that can help them resume their duties
and potentially progress their career.
Crown Melbourne has made significant
improvements in key Health and Safety
performance measures this year. In
particular, we have strengthened our
partnerships with a number of service
providers who support our Injury
Management philosophy, and
established a Health and Safety
Executive Steering Committee that
oversees the mitigation of health
and safety risks, and promotes
best practice injury management.
In May 2013, Crown Melbourne
conducted a business-wide
Employee Survey to collect and
analyse employees’ views on all
aspects of the business. The results
of the survey have been collated and
disseminated to management, and
will be used to identify and address
areas that will enhance Crown’s
position as an employer of choice.
Crown Perth: Our People
With approximately 6,100 people
working on site, Crown Perth remains
Western Australia’s largest single-site
private sector employer. Crown Perth
continues to implement successful
recruitment strategies as well as a
solid learning and development
strategy that delivers talented
and skilled employees.
Crown Perth’s recruitment
requirements have continued to grow
in line with the expansion of the resort.
With the demand for labour in Western
Australia continuing to be highly
competitive, Recruitment developed
several targetted strategies to maintain
the strength of our employer brand
and attract new employees who would
meet business requirements. These
strategies, along with the corporate
advertising and rebranding of the resort,
and continued enhancement of
our profile in international markets,
resulted in an unprecedented
number of employment enquiries
and applications.
In 2013, approximately 154,000 hours
of accredited and non-accredited
training was delivered to Crown Perth
employees, and we currently have
50 apprentices and over 750 trainees
completing nationally accredited training.
As further demonstration of Crown
Perth’s commitment to the professional
development of our employees, we
successfully applied to have our scope
of registration expanded to include the
Certificate IV in Hospitality (Supervision),
which we began delivering this year.
Crown Perth’s Indigenous Employment
Program continues to be successful
and we are immensely proud of our
contribution to Crown’s AEC pledge.
More than 200 Indigenous Australians
have entered employment at Crown
Perth since the program began in 2009.
Crown Perth’s Disability Employment
Program, established early in 2012,
has this year been renamed to
CROWNability. The program has been
very successful, as we have greatly
exceeded our targetted number of
employees and achieved a very pleasing
retention rate. Amongst the program’s
several noteworthy achievements was
the announcement that we were a
finalist in the 2013 Australian Human
Resources Institute’s Diversity Awards.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
23
Sustainability Report: Responsible Gaming
As a world leader in responsible
gaming initiatives, we are proud
of our long-standing commitment to
responsible gaming. We continue to
allocate significant resources to raising
awareness of responsible gaming
and to helping customers enjoy their
gaming at Crown. This year, we have
again developed and implemented
a range of initiatives in this area.
Crown Melbourne and Crown Perth
both have dedicated facilities that
provide information, referral and
other services 24 hours a day, seven
days a week. Crown Melbourne’s
Responsible Gaming Support Centre
was the first of its kind in the world
when it opened in 2002. Both Centres
are staffed by specially trained
employees, and provide brochures
in English and other languages.
Our ongoing commitment to responsible
gaming is further demonstrated by the
work of the Crown Limited Responsible
Gaming Board Committee which is
chaired by Crown Director, Professor
John Horvath. The Committee meets
regularly to review and monitor the
effectiveness of Crown’s responsible
gaming programs.
Crown employees complete training
in responsible gaming that begins
with their induction and continues
throughout their employment at Crown.
This education focusses on legislative
compliance and Crown policies,
observable signs that may indicate
a customer may be experiencing
difficulty, and how to direct the
customer to appropriate support
services provided by Crown. As such,
this comprehensive training underpins
Crown’s commitment to its responsible
gaming programs.
Crown’s voluntary pre-commitment
system, called the Play Safe Limit
Program, operates at both resorts.
Introduced at Crown Melbourne in 2003
and Crown Perth in 2010, it enables
Crown’s loyalty club members who
play gaming machines and fully
automated table games to select
their own time and/or spend limit.
Crown’s Self-Exclusion Program, which
is legally binding, allows customers to
ban themselves from the gaming floors
and is available at both resorts.
Crown Melbourne and Crown Perth
both have a Responsible Gambling
Code of Conduct, specific to each
resort. Copies are available on and
around the gaming floors at Crown
Melbourne and Crown Perth, and in
numerous languages on our websites.
The Codes are regularly reviewed
and updated by Crown, and regularly
reviewed by the relevant regulators.
Crown continues to adopt a pro-active
and business-wide approach to
responsible gaming, and remains
actively involved with many community
and government bodies. We are proud
of our broad range of customer and
employee programs and the availability
and dissemination of information
that promotes awareness of
responsible gaming.
Crown Melbourne:
Responsible Gaming
Crown Melbourne’s Responsible
Gaming Support Centre is staffed
by a dedicated Responsible Gaming
team comprised of managers,
Responsible Gaming Liaison Officers,
psychologists and a chaplain. The
Centre provides a range of specialised
services for customers that include the
Self-Exclusion Program, the Play Safe
Limit Program, the Chaplaincy Support
Service and individual counselling,
as well as information and referral to
government-funded support services.
The team works with several
government and community bodies,
including the Victorian Responsible
Gambling Foundation and Gambler’s
Help, and has a representative on the
steering committee of the Responsible
Gambling Awareness Week. The
Responsible Gaming team also trains
employees in responsible gaming
policies and practices, which helps
to communicate the importance of
responsible gaming to individuals
and the community.
Crown Melbourne has participated in
each Responsible Gambling Awareness
Week since its inception. This year, we
hosted an event attended by players
from the National Rugby League’s
Melbourne Storm, players from Super
Rugby’s Melbourne Rebels, numerous
Crown employees and representatives
from various community organisations,
including Gambler’s Help. The General
Manager Responsible Gaming spoke
Left to right: Launch of Responsible Gambling Awareness Week, Crown Melbourne; Crown Perth Responsible Gaming Team;
Players from the Melbourne Rebels and Melbourne Storm support Crown Melbourne’s Responsible Gambling Awareness Week;
Attendees at the launch of Crown Melbourne’s Responsible Gambling Awareness Week.
24
about Crown’s commitment to
responsible gaming and our ‘Have
you had a break?’ campaign, which
encourages customers to gamble
responsibly and take regular breaks.
The Centre again received a range of
local, national and international visitors
who work in responsible gambling,
representatives from Gambler’s Help
and other community groups who
were keen to learn about the work
conducted by the Centre.
As part of our whole-of-property
approach to responsible service of
gaming, we continued to increase the
number of locations where we place
customer information. For example,
we have introduced a responsible
gaming television channel in all Crown
hotels, updated the responsible
gaming information in restrooms and
translated it into three other languages,
and included responsible gaming
information on the new Wayfinding
Kiosks. The whole-of-property
approach also ensures that our
employees are aware of responsible
gaming programs and compliance,
and this year we updated our employee
training programs and conducted the
employee awareness campaign called
‘Know your RG’.
Further consolidating our reputation
as a leader in responsible gaming,
Crown Melbourne was this year
invited to deliver a component of the
University of Melbourne Law School’s
inaugural and world-first unit of study
called ‘Gambling, Policy and the Law’,
as part of the university’s Masters in
Law course.
This year we reviewed and updated
several forms of responsible gaming
information, with a focus on ‘Observable
Signs’. In particular, we updated
our Responsible Gambling Code
of Conduct, our on-line Responsible
Service of Gaming Training for
employees and the responsible
gaming component of our
Corporate Induction.
Crown Perth has continued to promote
Player Activity Statements and Play
Safe Limit Program, encouraging
customers who play gaming machines
to stay informed about their gambling
so that they can enjoy their gambling
at Crown. To complement this, we ran
a number of awareness campaigns
on the main gaming floor to promote
the use of Player Activity Statements.
Crown Perth:
Responsible Gaming
Crown Perth’s Responsible Gambling
Information Centre continues to offer
support and assistance twenty-four
hours a day, seven days a week,
providing information to customers
about responsible gambling, referral
services, self-exclusions and third
party exclusions.
This year, we have focussed on
promoting the twenty-four hour
presence across the complex, both
to customers and employees, in order
to increase the level of awareness of
our Responsible Service of Gaming
programs. We have received positive
feedback about the programs: in
particular, employees indicate that
they are more aware of the signs
of concerning gambling behaviour
in customers and the process of
referring customers to the Responsible
Gambling Information Centre.
As in past years, the Responsible
Gambling team has continued to
engage with providers of a range of
support services in the community,
in order to increase awareness of the
responsible gambling programs and to
encourage referral to the Responsible
Gambling team when appropriate.
Crown Perth’s continued engagement
with Gambling Help WA has been
very successful, and this year the
team attended information sessions
with Gambling Help WA’s Financial
Counsellor to better understand
services available to customers. As in
previous years, we also participated in
the Responsible Gambling Awareness
Week, helping to raise awareness of
our programs and of the importance
of responsible gambling. During this
week, the Responsible Gambling team
ran a free coffee service each day for
customers on the main gaming floor
and received positive feedback from
customers and employees. Further,
a staff campaign was run back
of house to raise awareness of
responsible service of gaming.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
25
Sustainability Report: Community
Crown recognises it can play a
significant role within the community
and seeks to do so by providing
assistance, donations and support
to a broad range of worthy community
activities, local sporting clubs and
various charities. Crown’s contributions
include sponsorship arrangements,
employee time, the use of Crown
facilities and donations of Crown
hospitality packages. In addition, through
partnerships with leading community
organisations, we work to gain further
support for the community service
operators and charities we support.
Crown is proud of the community
partnerships it maintains with leading
charities and community services
operators. This year, a number of new
partnerships were developed with
several such organisations, including
National Centre of Indigenous
Excellence (NCIE), Reconciliation
Australia, Mission Australia and the New
South Wales branch of United Voice.
As a corporate partner of the NCIE,
Crown is helping the successful
not-for-profit organisation to undertake
important functions at a local and
national level. Through this partnership,
Crown contributes financially to the
NCIE and has signed an exclusive
Memorandum of Understanding to
provide a training facility for Indigenous
employees at the proposed Crown
Sydney Hotel Resort.
Crown’s partnership with Reconciliation
Australia facilitated the creation of
Crown’s first Reconciliation Action
Plan, launched in March 2013.
The plan will build on the already
successful Indigenous employment
and mentoring programs in Perth
and Melbourne, enabling them to
remain focussed on individual support
and cultural awareness.
As part of the project to develop the
Crown Sydney Hotel Resort, Mission
Australia has agreed to become a
project partner with Crown. The
Memorandum of Understanding
signed by Crown and Mission Australia
outlines their joint commitment to
work together to continue to provide
responsible gaming support services
at Crown’s existing resorts and establish
similar services at the proposed
Crown Sydney Hotel Resort.
Crown also sponsors several sporting
organisations and teams, using these
partnerships to align sporting clubs
with Crown-supported community
initiatives that help raise the profile of
these causes. For example, in May this
year, players from Melbourne Storm
and Melbourne Rebels participated
in Crown Melbourne’s launch of the
2013 Responsible Gambling
Awareness Week.
Crown hosts or assists with many
events that promote and support
charitable organisations. One such
event this year was the Autumn Ladies
Lunch that Crown conducted in April
to raise money for the National Breast
Cancer Foundation. Held in Sydney’s
Guillaume at Bennelong restaurant
located in the Sydney Opera House,
the lunch was attended by approximately
120 of Australia’s most influential
women, including Her Excellency
Professor Marie Bashir AC CVO,
Governor of New South Wales.
As well, on Stakes Day 2012, Crown
donated the use of their front row
Birdcage marquee to the Starlight
Children’s Foundation and Ronald
McDonald House Charities to treat
their families to a special day out at
Melbourne’s Spring Racing Carnival.
As well as meeting some of their
favourite celebrities, the children were
treated to many fun activities, including
face painting, magicians, clowns and
delicious culinary delights.
Crown Melbourne:
Community
Crown Melbourne has continued to
support a broad range of community
activities and charities, based on the
belief that we have a responsibility and
the opportunity to help those who are
in need of assistance. This year, we
have again sponsored many events,
contributed employee time and the
use of Crown facilities, and donated
Crown Melbourne packages, particularly
for organisations that help children
who are ill.
For more than eight years, Crown
Melbourne has sponsored and hosted
the My Room Ball which raises funds
for the Oncology Unit at The Royal
Children’s Hospital in Melbourne.
This year’s Starry Starry Night raised
more than $650,000 for The Alannah
and Madeline Foundation.
Crown Melbourne also supported the
Epworth Medical Foundation Dinner,
attended by 1,000 guests, along
with Challenge’s Robert Allenby Gala
Dinner and the Diamonds Are A Girl’s
Best Friend Dinner, which both assist
children living with cancer and other
life-threatening blood disorders.
As part of our contribution to The
Shane Warne Foundation, Crown
Left to right: Crown Resorts employee; Crown Resorts Reconciliation Action Plan artwork; Crown Perth employees
support the Salvation Army’s fourth annual Easter Appeal; Crown Perth donate $1 million to Western Australia’s Telethon.
26
Melbourne again sponsored and
hosted the Shane Warne Foundation
Boxing Day Breakfast, the Joe Hachem
and Shane Warne Charity Poker
Tournament, and the Shane Warne
Foundation Anzac Day Brunch. The
Foundation raises money for charities
that work with seriously ill and
underprivileged Australian children.
Crown Melbourne also supported
several gala balls and events for other
national charities, including the Kids
Under Cover Umbrella Ball, the Ronald
McDonald House Charities Ball and
Lillian Frank’s Royal Children’s Hospital
Fashion Luncheon.
Many of our employees enthusiastically
volunteer their time and effort in
a number of ways to benefit the
community. For example, hundreds
of employees purchased tickets in the
Cadbury Easter Egg Hunt, the proceeds
of which went to the Royal Children’s
Hospital Good Friday Appeal. Crown
Melbourne also raised funds for the
Cancer Council by participating in
Australia’s Biggest Morning Tea held in
May each year. Many people contributed
and baked food, decorated work areas,
and encouraged employees to attend
and donate a gold coin.
Each year, the Staff Club donates the
entry fees for their Family Event to the
Royal Children’s Hospital, and each
Christmas Day our employees support
the Open Family Australia Christmas
program by packing and distributing
more than 250 hampers filled with
items donated by Crown Melbourne.
With the same generosity of spirit,
many employees again personally
delivered hampers and other special
items to families and individuals living
throughout Melbourne.
Crown Melbourne employees also
participate in numerous sporting and
social events that raise money for
charity. Our Staff Club promotes and
coordinates participation, and Crown
Melbourne subsidises entry fees to
encourage staff participation. Events
include the Around the Bay in a Day
cycling event that raises funds for
The Smith Family, the MS Melbourne
Summer Cycle, the Eureka Climb that
raises funds for Interplas, and the
Run for the Kids.
Crown Perth: Community
Crown Perth is proud of the funding,
support and employee assistance
that it provides to many worthwhile
charities, organisations and individuals
throughout Western Australia.
In addition to a number of not-for-
profit charity events and fundraising
initiatives, Crown Perth hosts and
sponsors a number of gala balls that
are considered a highlight on the Perth
social calendar, including Styleaid for
WA Aids Council, Ronald McDonald
House Charities Ball and the Western
Australian of the Year Awards for
Celebrate WA.
In 2012, Crown Perth again pledged
$1 million to Western Australia’s largest
fundraising initiative, Telethon, taking
its contribution over the past three
years to $3 million dollars. As a
million-dollar partner, Crown Perth
has made a significant contribution to
Telethon’s work to support child health
services across Western Australia.
Through our long association with
Foodbank WA, Crown Perth continues
to provide daily donations of soup and
has, to date, donated in excess of
117,000 meal portions that have been
distributed to more than 600 charitable
organisations and schools across
Western Australia. Crown Perth is
extremely proud of this partnership
and the benefits it brings to so many
people in the Perth community.
As part of the Global Illumination
Project that supports the National
Breast Cancer Foundation, Crown
Perth again glowed pink all through
October 2012. In addition, Crown
Perth hosted many fundraising activities
and initiatives throughout the month,
including the very successful Pink Poker
Tournament which was attended by
numerous local personalities and
media. As a result of these events,
more than $30,000 was raised
for the Foundation to go towards
valuable research.
At the heart of Crown Perth’s
community program are our
employees, many of whom actively
participate in many charitable events,
and donate to organisations and
events such as the Anglicare WA
Winter Appeal, Ronald McDonald
House Charities’ Make a Meal
Program, and The Salvation Army’s
Easter Appeal.
CEO, Barry Felstead, broke his
fundraising record in the annual
St Vincent de Paul Society’s CEO
Sleepout, raising a total of $83,786
for homeless services. Barry has
raised a grand total of $230,000
over four years of participation. The
Sleepout aims to increase awareness
of homelessness across Australia
and raise funds for the homeless,
and since inception has raised over
$13 million dollars nationally.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
27
“Despite increasing
the floor area of both
resorts, Crown achieved
a reduction in greenhouse
gas emissions of 2.9%
across both resorts
compared to the pcp.”
Sustainability Report: Environment
This year saw a further increase in
environmental action across Crown’s
two resorts, as we continue to work
towards being the leader in sustainable
business practice in the gaming and
entertainment industry. Focussing on
three major areas – energy efficiency,
water conservation, and waste
reduction – we have implemented
several programs to reduce our
environmental impact. This year we
have achieved a combined reduction
in greenhouse gas emission of 2.9%
across both resorts compared to the
pcp, despite increasing the floor area
of both resorts.
In particular, our continued live
monitoring of energy consumption
enables us to review the use of
gas, electricity and water, and
then take appropriate measures
to reduce consumption.
Crown Melbourne and Crown Perth
work closely to develop and implement
strategies for both resorts that will
reduce our impact on the environment,
and contribute to developing a more
sustainable business. Our Environmental
Committee has representatives from
each major business unit at both
resorts, focussing on numerous
energy, water and waste management
initiatives. The committee also provides
advice to the Executive teams at both
resorts on policy development.
Crown proudly participated in a number
of externally organised programs,
including the global Earth Hour
when we turned off all non-essential
lighting, World Environment Day,
and the Carbon Disclosure Project
(for the fourth year running).
Crown Melbourne:
Environment
Crown Melbourne has this year
reduced its greenhouse gas emission
by 6.5% compared to the pcp.
Over the last four years, Crown
Melbourne has invested in a resource
monitoring and reporting system
that provides live data for measuring
electricity, gas and water consumption
throughout the resort. The system
provides each business unit with
daily, weekly and monthly reports
that show time-of-use data, so that
they can identify how to reduce their
consumption and then monitor the
effectiveness of programs.
Over the same period, more than
$10 million was spent on resource
savings projects, such as the energy
reduction, water conservation and waste
minimisation projects outlined below.
Crown Melbourne’s Eco-Shoots team
(comprised of volunteer employees)
was formed in 2011 and continues
to conduct monthly environmental
awareness events that encourage
employees to reduce, re-use and
recycle. This year’s major campaigns
included Mobile Muster, Battery
Recycling, and Corks for the Elephants.
In partnership with Climate Friendly,
Crown Melbourne introduced a Carbon
Offset program for guests in our
hotels. This program subsequently
achieved certification under the
Australian Government’s National
Carbon Offset Standard – a first
in the hospitality and tourism industry.
Crown Melbourne has retained
membership of a number of
organisations in order to demonstrate
our commitment to sustainability.
These include the Australian Packaging
Covenant, Waste Wise, and the
City of Melbourne’s 1200 Buildings
Program that aims to reduce the
city’s environmental impact by
retrofitting existing buildings.
Energy Efficiency
In March 2012, Crown Melbourne
completed its largest energy efficiency
project to date with the upgrade of the
Crown Promenade Hotel. With funding
assistance from AusIndustry through the
Green Building Fund, the project aimed
to reduce greenhouse gas emissions by
3 million kg CO2, which amounts to a
22% reduction. To achieve this, we
replaced more than 9,000 lights with
LED and fluoro technology, optimised
heating, cooling and ventilation control,
and improved housekeeping and
maintenance procedures. We have
exceeded our target, as the project
has so far achieved a 25% reduction
in greenhouse gas emissions.
Crown Melbourne also upgraded the
controls and lighting systems serving
the Clarke Street administration and
car park building, resulting in an
energy reduction of 16.8%.
Over the last two years, Engineering
and Maintenance have focussed on
improving the energy efficiency of the
central plant. Changes made include
installing variable speed drives for
cooling towers, upgrading absorption
chillers, replacing gas trains on central
boilers, replacing heat exchangers,
optimising control strategies for electric
Left to right: Crown participates in the National Carbon Offset Program.
28
Crown Promenade Melbourne’s Journey to Energy Efficiency:
CO2 Savings by Category:
Lighting Upgrades
HVAC Optimisation
Housekeeping
Procedures
Maintenance
Procedures
IT Equipment
Lighting Projects: HVAC Projects:
CO2 levels controlled
by monitoring internal ventilation
8,860
Energy efficient lights fitted
126
Sensors throughout the hotel
CO2
chillers and gas boilers, and introducing
real-time monitoring of the performance
of equipment. Along with upgrades to
the lighting and HVAC systems, these
improvements have resulted in a
reduction in electricity consumption
in the main complex of 13%.
Throughout the rest of the resort,
we have upgraded more than 80,000
lamps to energy efficient technology,
installed more than 1,100 occupancy
and daylight harvesting sensors,
and upgraded 40% of the resort’s
automation control system.
All of our energy efficiency projects
for this year have resulted in a CO2
abatement of more than 9,700 tonnes,
the equivalent to powering more than
800 homes or removing 2,400 cars
from the streets.
Water Conservation
Since 2010, Crown Melbourne has
invested in a number of water saving
projects, resulting in cost efficiencies
across the resort.
This year, we have continued operating
our water-recycling system, generating
1.4 million litres of recycled water used
for toilet flushing, and also expanded
our rainwater harvesting system by
adding a 125,000-litre rainwater
collection and re-use system. These
systems have the potential to save
5.5 million litres of drinking water
every year. We have also upgraded
more than 500 shower heads,
300 taps and 140 toilets.
Life Cycle Management
Life Cycle Management enables us to
manage the total life cycle of products
and services. By working with suppliers,
employees, customers and waste
management contractors, we manage
how products are made and
distributed, how our products
are consumed, and how our products
are disposed, enabling us to create
more sustainable production and
consumption patterns.
We continued to expand our recycling
systems including soft plastic, green
waste, polystyrene, e-waste, organics,
metal, fluorescent tubes, oil, CDs,
DVDs, and corks.
The biggest addition to our repertoire
of recycling programs is the recycling
of gaming cards that began in October
2012. All gaming cards are shredded
on-site and then taken off-site for
recycling where they are converted
into paper towels and toilet tissue.
It is estimated that this will divert
from landfill approximately 240 tonnes
of waste per year.
Crown Perth: Environment
Over the last four years, Crown Perth
has invested in a comprehensive
resource monitoring and reporting
system which provides live data for
measuring electricity, gas and water
consumption throughout the resort.
This year, we strengthened our
monitoring and measuring of energy
and water use by continuing to install
water and energy sub-metering across
the resort. By accurately monitoring
resource consumption, we are able
to identify areas for improvement.
Energy Efficiency
Crown Perth continues to implement
resource-saving projects that will
produce cost efficiencies and savings.
Energy-saving initiatives that were
undertaken this year include: the
rollout of sub-metering; the installation
of more efficient heating, ventilation,
and air conditioning equipment (an
HVAC chiller) in the Convention Centre;
optimisation of the casino’s chilled
water system; and upgrading of the
lighting in the undercover car park
(halving the energy consumption
of the lighting to this area).
As part of our ongoing resort-wide
lighting project, we have upgraded
the lighting in the VIP Gaming area,
replacing the coffer lamps with LED-
style lamps. This initiative alone has
resulted in a 40% reduction in lighting
energy use in this area.
Water Conservation
Crown Perth continues its strong focus
on water conservation, successfully
implementing a number of water
saving initiatives, including the ongoing
installation of 2.5-litre tapware
restrictors/aerators to hand basins,
the installation of a water-flow meter
for the main water supply to allow us
to actively monitor water use, and the
fitting of resource-saving shower heads
and tapware in Crown Promenade
Perth and Crown Metropol Perth hotels.
Life Cycle Management
Crown Perth has implemented
a resort-wide recycling program,
including an organic waste recycling
program, allowing us to annually
divert from landfill 60% of our waste
(approximately 4,000 tonnes), reducing
CO2 emissions by approximately
2,000 tonnes each year.
Crown Perth continues to improve
employee awareness of environmental
issues by providing employees with
relevant information in innovative
and effective ways.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
29
CORPORATE GOVERNANCE STATEMENT CONTINUED
Corporate Governance Statement
The Crown Limited Board is committed to the implementation and maintenance of good corporate governance practices.
This Statement sets out the extent to which Crown Limited (Crown) has followed the best practice recommendations set
by the ASX Corporate Governance Council (the Principles and Recommendations) during the twelve month period ending
30 June 2013.
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 (in
conjunction with management) 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.
Board appointments are made pursuant to formal terms of appointment.
Functions delegated to Senior Executives
Crown’s senior executives have 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. An evaluation
of senior executives took place following the end of the financial year and in accordance with the processes described
in the Remuneration Report.
Induction process for new executives
Crown executives are required to undertake formal induction training through either the Crown Melbourne on-site
accredited training facility – Crown College, or Crown Perth’s on-site training program.
The program involves training about:
• the history and development of the Crown brand and businesses;
• the main legal and regulatory obligations affecting the Crown businesses;
• Crown’s responsible gaming policies and procedures;
• Crown’s responsible service of alcohol policies; and
• the rights and obligations of Crown employees.
As part of the induction program, 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 at:
www.crownlimited.com under the heading Corporate Governance – Charters.
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Principle 2
Structure the Board to add value
Composition of the Board
As at the date of this Statement, the Board comprises the following twelve Directors:
• James D Packer
Chairman
• John H Alexander BA
Executive Deputy Chairman
• Benjamin A Brazil BCom LLB
Independent, Non-Executive Director
• Helen A Coonan BA, LLB
Independent, Non-Executive Director
• Christopher D Corrigan
Independent, Non-Executive Director
• Rowen B Craigie BEc (Hons)
Chief Executive Officer and Managing Director
• Rowena Danziger AM, BA, TC, MACE
Independent, Non-Executive Director
• Geoffrey J Dixon
Independent, Non-Executive Director
• Professor John S Horvath AO, MB, BS (Syd), FRACP
Independent, Non-Executive Director
• Ashok Jacob MBA
Non-independent, Non-Executive Director
• Michael R Johnston BEc, CA
Non-independent, Non-Executive Director
• Harold C Mitchell AC
Independent, Non-Executive Director
Information about each current Director’s qualifications, experience and period in office is set out in the Directors’
Statutory Report.
The roles of Chair and Chief Executive Officer are exercised by separate persons. James Packer acts as Chairman
and Rowen Craigie as Chief Executive Officer and Managing Director.
Relationships affecting independence
The Crown Board is currently comprised of twelve Directors, seven of whom are independent Directors. A majority of
Directors are therefore independent.
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 2.2: The Principles and Recommendations 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 is sanctioned by shareholders and who will 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.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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CORPORATE GOVERNANCE STATEMENT CONTINUED
Procedure for selection and appointment of new Directors
Where a new Director appointment is required, Crown adheres to procedures (Selection Procedure) 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 are considered;
• upon identifying a potential appointee, specific consideration is 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.
The duties, responsibilities and powers of Crown’s Nomination and Remuneration Committee extend to reviewing the
Selection Procedure and making appropriate recommendations to the Board in relation to the Selection Procedure.
The Committee is responsible for implementing the Selection Procedure and developing succession plans in order
for the Board to maintain appropriate experience, expertise and diversity.
The re-appointment procedures for incumbent Directors are as outlined in Crown’s Constitution. In summary, subject to
the specific matters described in the Constitution, an election of Directors must take place each year at which one third
of Directors must retire. Any Director who has been in office for three or more years and for three or more annual general
meetings must also retire. Directors who retire are generally eligible for re-election.
Process for evaluating performance of the Board, its Committees and its Directors
A performance evaluation of the Board and of its Committees is undertaken annually, following completion of each financial
year, by way of a questionnaire sent to each Director.
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 Director, with questionnaire responses to be provided to the
Chairman of the Nomination and Remuneration Committee for his consideration and provision of a report to the Board.
Crown’s Nomination and Remuneration Committee also has delegated responsibility for reviewing Crown’s procedure
for the evaluation of the performance of the Board, its Committees and its Directors.
An evaluation of the Board and its Committees took place following the end of the financial year and in accordance with
the processes described above.
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 Chairman of the nature of the advice sought prior to obtaining that
advice, so that the Chairman can take steps to ensure that the party from whom advice is sought has no material conflict
of interest with Crown. The Chairman is also responsible for approving payment of invoices in relation to the external advice.
In addition, each 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.
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Crown Board Committees
To assist in carrying out its responsibilities, the Crown Board has established the following Committees:
Committees
Current Members
Meetings held during
FY 2013
Audit & Corporate Governance
Finance1
Investment2
Nomination and Remuneration
Occupational Health, Safety & Environment
Responsible Gaming
Risk Management
Benjamin Brazil (Chair)
Rowena Danziger
Michael Johnston
Geoffrey Dixon (Chair)
Benjamin Brazil
Michael Johnston
James Packer (Chair)
John Alexander
Rowen Craigie
Ashok Jacob
Geoffrey Dixon (Chair)
Christopher Corrigan
Harold Mitchell
Rowena Danziger (Chair)
Rowen Craigie
John Horvath
Michael Johnston
John Horvath (Chair)
Rowen Craigie
Rowena Danziger
Geoffrey Dixon (Chair)
Rowen Craigie
Rowena Danziger
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4
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1. The Finance Committee did not meet this financial year, however there were two written resolutions assented to by the Committee during the
financial year 2013.
2. The Investment Committee did not meet this financial year, however there were two written resolutions assented to by the Committee during
financial year 2013.
Each Committee has adopted a formal Charter that outlines its duties and responsibilities. Since year end, Crown has
established a new Corporate Social Responsibility Committee.
More information
A full copy of the Crown Board Charter is available 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 Annual Report 2013 | Australia’s Leading Integrated Resort Company
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CORPORATE GOVERNANCE STATEMENT CONTINUED
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;
• legal obligations of employees and the reasonable expectations of their stakeholders; and
• responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
Policy concerning diversity
Crown has established a policy concerning diversity and disclosed its policy on its website. The policy includes requirements
for the Board to establish measurable objectives for achieving gender diversity and for the Board to assess annually both
the objectives and progress in achieving them.
In accordance with the policy, Crown has established the measurable objectives for achieving gender diversity set out below.
Except where specifically noted, these objectives have been set in relation to employees of Crown Limited, Crown
Melbourne and Crown Perth groups.
An assessment of Crown’s progress in achieving those objectives has also been included.
Objective
Crown’s Progress
• To require that at least one female
candidate is presented on candidate
short lists for all Senior Management
and Senior Executive positions within
the group for which a recruitment
process is undertaken.
During the year, there were a total of 11 recruitment processes
commenced for Senior Management and Senior Executive positions
within the group.
Except in relation to the recruitment of the Crown Melbourne and Crown
Perth Chief Financial Officers which were internal recruitment processes
where there were no suitable female candidates, all short lists included
a female candidate.
• To increase the number of female
participants in leadership and
development programs across the
group so that by 2015 females represent
at least 45% of all participants.
During the year, 40% of participants in leadership and development
programs across the group were female. Whilst this represents a slight
decrease on the percentage participation in 2012 of 43%, overall the total
number of participants in leadership programs has increased as has the
total number of female participants.
• To incorporate a targeted mentoring
program for women into existing group
leadership and development programs.
Crown will continue its work towards increasing that percentage in a bid
to meeting its objective of 45% female participation by 2015.
Leadership development programs conducted across the group all
included a mentoring component.
Crown is continually developing relevant leadership and development
programs so that, where appropriate, female participants on those
programs are able to receive targeted mentoring.
In addition, funds have been set aside in a diversity budget for FY14
to further develop targeted mentoring for women.
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Objective
Crown’s Progress
• To conduct a review on an annual basis
of the remuneration for key roles within
the group to ascertain the existence of
any gender pay gaps and to implement
action plans to address any such gaps.
Crown has conducted an annual review of the remuneration of key roles
within the group.
Based on that review, within Crown’s major operating subsidiaries, Crown
Melbourne and Crown Perth, the average total male remuneration was
$216,863 and the average total female remuneration was $182,715.
An analysis was conducted to break down this data to see whether a pay
gap exists within the same “pay grade”, as Crown’s management team
encompasses several “pay grades”.
Crown Melbourne examined the grade levels within its Business Operations
Team, comparing male and female remuneration, number of employees,
and length of service within each grade level. The analysis indicated
that the current pay gaps are due to outliers skewing the data, with the
removal of the outliers indicating no significant difference in the gender
pay gap.
The Crown Perth grade system has two pay grades covering employees
on its Business Operations Team. An analysis was conducted comparing
total employment cost within each grade which revealed a substantially
smaller gap between male and female salaries. Additionally, length of
service has been determined as a potential contributor and the presence
of outliers has impacted the results.
Crown Melbourne and Crown Perth will continue to monitor and review
the average salaries for key roles.
• To recruit at least one further female
director for Crown Limited by financial
year 2013.
The Honourable Helen Coonan joined the Crown Board in December
2011. Accordingly, the Crown Board is comprised of two female directors
and ten male directors and this objective has been achieved.
The proportion of women employees in the group, women in senior executive positions and women on the Board
as at 30 June 2013 is as follows:
Measure
Result
• Proportion of women employees
in the group:
There were 5,088 women in the group. This represents 43% of the total
workforce of 11,764 employees.
• Proportion of women in senior executive
positions in the group:
There were 28 women in senior executive positions in the group.
This represents 31% of senior positions in the group.
• Proportion of women on the Board:
Two women out of twelve directors, or 17%.
Crown’s Audit & Corporate Governance Committee has been delegated responsibility for developing and monitoring
the application of Crown’s Diversity Policy.
Policy concerning trading in company securities
Crown has adopted a formal Securities Trading Policy which details Crown’s policy concerning trading in Crown shares
by Directors, senior executives and employees.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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CORPORATE GOVERNANCE STATEMENT CONTINUED
The Securities Trading Policy:
• includes a requirement that employees do not buy and sell Crown shares within a 12 month period (i.e. that they do not
short trade);
• establishes formal “trading windows” during which Crown employees can and cannot trade in Crown shares;
• includes restrictions and clearance procedures as to when trading can and cannot occur;
• 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 2001 and the consequences
of contravention thereof.
A copy of the Securities Trading Policy has been given to Australian Securities Exchange and released to the market.
Policy concerning political donations
Crown has adopted a formal Political Donations Policy which details Crown’s policy regarding donations to political parties.
The policy imposes annual monetary limits on political donations and sets up a framework to ensure Crown is able to comply
with relevant State based and Commonwealth reporting requirements.
In summary, the policy provides that Crown may make political donations, provided that:
• the contributions support public policy which is aligned to the best interests of Crown’s shareholders, customers,
staff and the broader community;
• no particular political party is unduly favoured; and
• contributions are approved, made and recorded in compliance with the requirements of the policy and any other
legislative requirements.
Policy concerning anti-corruption and bribery
Crown has adopted a formal Anti-bribery and Corruption Policy which details Crown’s policy concerning acts of bribery
and corruption.
Crown takes a zero tolerance approach to acts of bribery and corruption by any officers, employees, third-party
representatives or business partners.
Crown’s Anti-bribery and Corruption Policy requires that Crown not, either directly or indirectly, solicit, encourage or accept
any form of bribe from anyone, including a business partner, a supplier, a customer or fellow employees as an inducement
for business, information or any other purpose.
The Crown Board is fully committed to the implementation of a zero tolerance Anti-bribery and Corruption Policy. The Board
and senior management team must continue to foster a culture within Crown in which bribery or corruption is not acceptable.
Employees who are required to deal with external suppliers of goods and services to Crown must avoid placing themselves
in situations of a potential conflict of interest.
It is a fundamental principle of Crown that all of its business affairs be conducted legally, ethically and with strict
observance of the highest standards of integrity and professionalism.
Corporate Social Responsibility
Since year end, Crown has established a Corporate Social Responsibility Committee to assist the Board in setting Crown’s
corporate social responsibility policies and programs and assessing Crown’s corporate social responsibility performance.
The members of the Committee are Helen Coonan (Chair), Rowen Craigie, John Horvath and Harold Mitchell. Three out
of four of the Committee members are independent directors of Crown.
Among other things, the Committee’s mandate extends to continuing Crown’s efforts in establishing appropriate corporate
social responsibility policies and programs, monitoring and reviewing the effectiveness of those policies and programs
and promoting and supporting continuous improvement in Crown’s corporate social responsibility performance.
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More information
Full copies of Crown’s Code of Conduct for Directors and Code of Conduct for Employees are available at:
www.crownlimited.com under the heading Corporate Governance – Codes.
A full copy of Crown’s Diversity Policy is available at:
www.crownlimited.com under the heading Corporate Governance – Policies.
A full copy of Crown’s Securities Trading Policy is available at:
www.crownlimited.com under the heading Corporate Governance – Policies.
A full copy of Crown’s Anti-Bribery and Corruption Policy is available at:
www.crownlimited.com under the heading Corporate Governance – Policies.
A full copy of Crown’s Corporate Social Responsibility Charter is available at:
www.crownlimited.com under the heading Corporate Governance – Charters.
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Principle 4
Safeguard Integrity in Financial Reporting
Crown Audit & Corporate Governance 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 current members of the Audit & Corporate Governance Committee are Ben Brazil (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 Ben Brazil is an independent Director who has
extensive financial qualifications and experience. He holds a Bachelor of Commerce degree and holds a senior role
at Macquarie Bank in the Corporate and Asset Finance Group.
Further information about each Committee member’s qualifications and experience is set out in the Directors’ Statutory
Report.
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. Last year marked the fifth anniversary of the appointment of Crown’s
audit partner and accordingly, a new audit partner has been appointed commencing financial year 2013.
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
A full copy of Crown’s Continuous Disclosure Policy is available at:
www.crownlimited.com under the heading Corporate Governance – Policies.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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CORPORATE GOVERNANCE STATEMENT CONTINUED
Principle 6
Respect the Rights of Shareholders
Promotion of effective communication with shareholders
Crown has 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 Annual Report;
• disclosures made to the 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.
Advance notification of results announcements is made via Crown’s website.
More information
A full copy of Crown’s Communication Policy is available 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
As required by the Board, Crown’s management have devised and implemented risk management systems appropriate
to Crown.
Management are charged with monitoring the effectiveness of risk management systems and are required to report to the
Board via the Risk Management Committee. The Board convened Risk Management Committee administers 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. A formal Risk
Management Plan has been developed using the model outlined in AS/NZS ISO 31000:2009 Risk Management
– Principles and Guidelines.
The Plan identifies specific Head Office risks in light of major risks identified at an operational level and provides
the framework for the reporting and monitoring of material risks across the Crown group.
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 2001 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.
More information
A full copy of Crown’s Risk Management Committee Charter is available at:
www.crownlimited.com under the heading Corporate Governance – Charters.
A full copy of Crown’s Risk Management Policy is available at: www.crownlimited.com under the heading
Corporate Governance – Policies.
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Principle 8
Remunerate Fairly and Responsibly
Remuneration of Board members and Senior Executives
Crown has established a formal Nomination and Remuneration Committee. The role of the Nomination and Remuneration
Committee includes:
• the review and recommendation of appropriate Directors’ fees to be paid to Non-Executive Directors; and
• consideration of remuneration policies to be applied to executives, including any equity-based remuneration plan that
may be considered, subject to shareholder approval (where required).
Following the end of the financial year, the Committee has reviewed and approved:
• the remuneration for senior executives which will apply during the financial year ending 30 June 2014; and
• the short term bonus payments made to senior executives referable to the financial year ending 30 June 2013.
The current members of the Nomination and Remuneration Committee are Geoffrey Dixon (Chair), Christopher Corrigan
and Harold Mitchell who are each independent, Non-Executive Directors. Information about each Committee member’s
qualifications and experience is set out in the Directors’ Statutory Report.
The Nomination and 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. 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.
Policy on entering into transactions in associated products which limit economic risk
The rules of the 2010 Crown Long Term Incentive Plan specifically provide that a participant must not grant or enter into
any Security Interest in or over any Crown shares that may be acquired under the Plan (Participant Shares) or otherwise
deal with any Participant Shares or interest in them until the relevant Participant Shares are transferred from the Trustee
to the participant in accordance with the Plan rules. Security Interests are defined to extend to any mortgage, charge,
pledge or lien or other encumbrance of any nature, and includes any derivative relating to or involving a Participant Share.
Any Security Interest, disposal or dealing made by a participant in contravention of the Plan rules will not be recognised
by Crown.
More information
A full copy of Crown’s Nomination and Remuneration Committee Charter is available at:
www.crownlimited.com under the heading Corporate Governance – Charters.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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NEVADA INFORMATION STATEMENT CONTINUED
Nevada Information Statement
The gaming industry in Nevada is highly regulated and Crown Limited (Crown) must maintain relevant licences to continue
its investments in entities with gaming operations in Nevada. Each of the casinos in which Crown has an interest is subject
to extensive regulation under the laws, rules and regulations of the jurisdiction where it is located. These laws, rules and
regulations generally concern the responsibility, financial stability and character of the owners, managers and persons
with financial interest in gaming operations. Violations of laws in one jurisdiction could result in disciplinary action in
other jurisdictions.
Crown is registered as a publicly traded corporation in the state of Nevada. One of the conditions of that registration requires
Crown to summarise relevant Nevada gaming law requirements in this Report. Crown Melbourne and Crown Perth are
regulated in a similar manner by the Victorian Commission for Gambling and Liquor Regulation and the Western Australian
Department of Racing Gaming and Liquor, respectively. We are not, however, required to summarise the regulations
specific to Victoria and Western Australia in this Report.
Nevada Government Regulation
The ownership and operation of casino gaming facilities in Nevada are subject to the Nevada Gaming Control Act and
the regulations promulgated thereunder (collectively, the Nevada Act) and various local regulations. Gaming operations
are subject to the licensing and regulatory control of the Nevada Gaming Commission (the Nevada Commission), the
Nevada State Gaming Control Board (the Nevada Board) and various county and city licensing agencies (the local
authorities). The Nevada Commission, the Nevada Board and the local authorities are collectively referred to as the
“Nevada Gaming Authorities”.
The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public
policy that are concerned with, among other things:
• the prevention of unsavoury or unsuitable persons from having a direct or indirect involvement with gaming at any time
or in any capacity;
• the establishment and maintenance of responsible accounting practices;
• the maintenance of effective controls over the financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and revenues;
• providing reliable record keeping and requiring the filing of periodic reports with the Nevada Gaming Authorities;
• the prevention of cheating and fraudulent practices; and
• providing a source of state and local revenues through taxation and licensing fees.
Each of the entities in which Crown holds an investment and which currently operate casinos in Nevada (the casino
licensees) is required to be licensed by the Nevada Gaming Authorities. Certain of Crown’s subsidiaries in the Cannery
ownership chain have also been licensed or found suitable as shareholders, members or general partners, as relevant,
of the casino licensees.
The casino licensees and the foregoing subsidiaries are collectively referred to as the “licensed subsidiaries”.
Registration as a Publicly Traded Corporation
Crown is required to be registered by the Nevada Commission as a publicly traded corporation and, as such, is required
periodically to submit detailed financial and operating reports to the Nevada Commission and to furnish any other information
that the Nevada Commission may require. No person may become a shareholder or member of, or receive any percentage
of profits from, the licensed subsidiaries without first obtaining licences and approvals from the Nevada Gaming Authorities.
Additionally, local authorities have taken the position that they have the authority to approve all persons owning or controlling
the shares of any corporation controlling a gaming licensee. Crown and the licensed subsidiaries have obtained from the
Nevada Gaming Authorities the various registrations, approvals, permits and licences required in order to engage in gaming
activities in Nevada.
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Suitability of Individuals
Power to investigate
The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement
with, Crown or any of the licensed subsidiaries to determine whether such individual is suitable or should be licensed
as a business associate of a gaming licensee.
Officers, Directors and certain key employees of the licensed subsidiaries must file applications with the Nevada Gaming
Authorities and may be required to be licensed by the Nevada Gaming Authorities. Crown’s officers, Directors and key
employees who are actively and directly involved in the gaming activities of the licensed subsidiaries may be required
to be licensed or found suitable by the Nevada Gaming Authorities.
The Nevada Gaming Authorities may deny an application for licensing or a finding of suitability for any cause they deem
reasonable. A finding of suitability is comparable to licensing and both require submission of detailed personal and financial
information followed by a thorough investigation. The applicant for licensing or a finding of suitability, or the gaming licensee
by which the applicant is employed or for whom the applicant serves, must pay all the costs of the investigation.
Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to
deny an application for a finding of suitability for a licence, the Nevada Gaming Authorities have jurisdiction to disapprove
a change in a corporate position.
Consequences of finding of unsuitability
If the Nevada Gaming Authorities were to find an officer, Director or key employee unsuitable for licensing or to continue
having a relationship with Crown or the licensed subsidiaries, such company or companies would have to sever all
relationships with that person. In addition, the Nevada Commission may require Crown or the licensed subsidiaries
to terminate the employment of any person who refuses to file appropriate applications. Determinations of suitability
or of questions pertaining to licensing are not subject to judicial review in Nevada.
Reporting requirements
Crown and the licensed subsidiaries are required to submit detailed financial and operating reports to the Nevada Commission.
Substantially all of Crown and the licensed subsidiaries’ material loans, leases, sales of securities and similar financing
transactions must be reported to or approved by the Nevada Commission.
Consequences of Violation of the Nevada Act
If the Nevada Commission determined that Crown or a licensed subsidiary violated the Nevada Act, it could limit,
condition, suspend or revoke, subject to compliance with certain statutory and regulatory procedures, Crown’s Nevada
gaming licences and those of Crown’s licensed subsidiaries. In addition, Crown and the licensed subsidiaries and the
persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the discretion
of the Nevada Commission.
Certain Beneficial Holders of Shares Required to be Licensed
Generally
Any beneficial holder of Crown’s voting securities, regardless of the number of shares owned, may be required to file an
application, be investigated and have his or her suitability as a beneficial holder of the voting securities determined if the
Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies
of the State of Nevada. The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in
conducting any such investigation.
The Nevada Act requires any person who acquires more than 5% of any class of Crown’s voting securities to report the
acquisition to the Nevada Commission. The Nevada Act requires that beneficial owners of more than 10% of any class
of Crown’s voting securities apply to the Nevada Commission for a finding of suitability within thirty days after the Chairman
of the Nevada Board mails a written notice requiring such filing.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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NEVADA INFORMATION STATEMENT CONTINUED
Institutional investors
Under certain circumstances, an “institutional investor” as defined in the Nevada Act, who acquires more than 10% but not
more than 25% of any class of Crown’s voting securities, may apply to the Nevada Commission for a waiver of such finding
of suitability if such institutional investor holds the voting securities for investment purposes only.
An institutional investor will be deemed to hold voting securities for investment purposes if it acquires and holds the voting
securities in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of Crown’s Board of Directors, any change in Crown’s Constitution,
management, policies or operations or any of Crown’s gaming affiliates or any other action that the Nevada Commission
finds to be inconsistent with holding Crown’s voting securities for investment purposes only.
Activities that are deemed to be consistent with holding voting securities for investment purposes only include:
• voting on all matters voted on by shareholders;
• making financial and other inquiries of management of the type normally made by securities analysts for informational
purposes and not to cause a change in its management, policies or operations; and
• such other activities as the Nevada Commission may determine to be consistent with such investment intent.
Corporations and trusts
If the beneficial holder of voting securities who must be found suitable is a corporation, partnership or trust, it must submit
detailed business and financial information including a list of beneficial owners. The applicant is required to pay all costs
of investigation.
Consequences of finding of unsuitability
Any person who fails or refuses to apply for a finding of suitability or a licence within 30 days after being ordered to do
so by the Nevada Commission or the Chairman of the Nevada Board may be found unsuitable.
The same restrictions apply to a nominee if the nominee, after request, fails to identify the beneficial owner. Any shareholder
found unsuitable and who holds, directly or indirectly, any beneficial ownership of Crown’s shares beyond such period of
time as may be prescribed by the Nevada Commission may be guilty of a criminal offence in Nevada. Crown will be subject
to disciplinary action if, after Crown receives notice that a person is unsuitable to be a shareholder or to have any other
relationship with Crown or a licensed subsidiary, Crown or any of the licensed subsidiaries:
• pays that person any dividend or interest upon any of Crown’s voting securities;
• allows that person to exercise, directly or indirectly, any voting right conferred through securities held by that person;
• pays remuneration in any form to that person for services rendered or otherwise; or
• fails to pursue all lawful efforts to require such unsuitable person to relinquish his or her voting securities including,
if necessary, the immediate purchase of the voting securities for cash at fair market value.
Certain Debt Holders Required to be Licensed
The Nevada Commission may, in its discretion, require the holder of any of Crown’s debt securities to file an application,
be investigated and be found suitable to hold the debt security. If the Nevada Commission determines that a person
is unsuitable to own such security, then pursuant to the Nevada Act, Crown can be sanctioned, including the loss
of its approvals, if without the prior approval of the Nevada Commission, it:
• pays to the unsuitable person any dividend, interest or any distribution whatsoever;
• recognises any voting right by such unsuitable person in connection with such securities;
• pays the unsuitable person remuneration in any form; or
• makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation
or similar transaction.
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Maintenance of Share Register
Crown is required to maintain a current share register in Nevada that may be examined by the Nevada Gaming Authorities
at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose
the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make such disclosure may be grounds for
finding the record holder unsuitable. Crown is also required to render maximum assistance in determining the identity of
the beneficial owner. The Nevada Commission has the power to require Crown’s holding statements or share certificates
bear a legend indicating that such securities are subject to the Nevada Act. To date, however, the Nevada Commission
has not imposed such a requirement on Crown.
Actions Requiring Prior Approval of the Nevada Commission
Public offerings to fund Nevada gambling activities
Crown may not make a public offering of any securities without the prior approval of the Nevada Commission if the
securities or the proceeds there from are intended to be used to construct, acquire or finance gaming facilities in Nevada
or to retire or extend obligations incurred for those purposes or for similar purposes. An approval, if given, does not
constitute a finding, recommendation or approval by the Nevada Commission or the Nevada Board as to the accuracy
or adequacy of the prospectus or the investment merits of the securities. Any representation to the contrary is unlawful.
Transactions effecting a change in control
Changes in control of Crown through merger, consolidation, share or asset acquisitions, management or consulting
agreements or any act or conduct by a person whereby he or she obtains control, may not occur without the prior approval
of the Nevada Commission. Entities seeking to acquire control of a registered corporation must satisfy the Nevada Board
and the Nevada Commission concerning a variety of stringent standards prior to assuming control of the registered corporation.
The Nevada Commission may also require controlling shareholders, officers, Directors and other persons having a material
relationship or involvement with the entity proposing to acquire control to be investigated and licensed as part of the
approval process relating to the transaction.
Share buy-backs and other arrangements
Approvals are, in certain circumstances, required from the Nevada Commission before Crown can make exceptional
repurchases of voting securities above the current market price and before a corporate acquisition opposed by management
can be consummated. The Nevada Act also requires prior approval of a plan of recapitalisation proposed by a registered
corporation’s Board of Directors in response to a tender offer made directly to the registered corporation’s shareholders
for the purpose of acquiring control of that corporation.
Investigation and Monitoring of “Foreign Gaming Operations”
Because Crown is involved in gaming ventures outside of Nevada, Crown is required to deposit with the Nevada Board and
thereafter maintain a revolving fund in the amount of US$10,000 to pay the expenses of investigation by the Nevada Board
of Crown’s participation in such gaming.
The Nevada Board refers to any of Crown’s operations outside of Nevada as “foreign gaming operations”. The revolving
fund is subject to increase or decrease at the discretion of the Nevada Commission. Crown is also required to comply with
certain reporting requirements imposed by the Nevada Act. Crown would be subject to disciplinary action by the Nevada
Commission if Crown:
• knowingly violates any laws of the foreign jurisdiction pertaining to the foreign gaming operation;
• fails to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required
of Nevada gaming operations;
• engages in any activity or enters into any association that is unsuitable because it poses an unreasonable threat to
the control of gaming in Nevada, reflects or tends to reflect discredit or disrepute upon the State of Nevada or gaming
in Nevada or is contrary to the gaming policies of Nevada;
• engages in any activity or enters into any association that interferes with the ability of the State of Nevada to collect
gaming taxes and fees; or
• employs, contracts with or associates with any person in the foreign gaming operation who has been denied a license or a
finding of suitability in Nevada on the ground of personal unsuitability or who has been found guilty of cheating at gambling.
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DIRECTORS’ STATUTORY REPORT CONTINUED
Directors’ Statutory Report
Company Information
Review of operations
A review of operations of the Crown Limited (Crown) group for the financial year ended 30 June 2013 and the results
of those operations is detailed on pages 8 to 29.
The principal activity of the entities within the Crown group is gaming and entertainment.
Significant changes in state of affairs
Some of the significant changes in the state of affairs of the consolidated group since 1 July 2012 include:
• In February 2012, it was announced that Crown had acquired a 10% interest in Echo Entertainment Group Limited
(Echo) and that, on account of restrictions in the Echo Constitution, Crown had sought relevant regulatory approvals to
increase its voting power in Echo beyond 10%. On 4 July 2012, Crown amended its application for regulatory approval
by introducing a condition that Crown not acquire more than 25% of the shares in Echo without first seeking and
obtaining a further approval from relevant regulators.
• On 1 August 2012, it was announced that Crown intends to develop a new luxury six-star hotel at its Crown Perth
integrated resort.
• On 2 August 2012, Crown announced that it had signed an Exclusive Dealing Agreement with Lend Lease Corporation
Limited in relation to a proposed development of a world-class, six-star resort at Barangaroo South, Sydney.
• On 3 August 2012, Crown announced that it had raised $300 million through a new five year bond issue, which was
distributed predominantly to institutional investors in Australia and Asia. The proceeds from the issue were used to repay
existing debt, diversify Crown’s funding sources and extend its debt maturity profile.
• On 13 August 2012, Crown announced that it had launched an offer of dated, unsecured, subordinated, cumulative notes
(Crown Subordinated Notes) to raise approximately $400 million, with the ability to raise more or less. Following the
completion of the bookbuild process for Crown Subordinated Notes, the Margin was set at 5.00%. On 14 September 2012
it was announced that the offer of Crown Subordinated Notes had closed, with Crown successfully raising $532 million.
• On 25 October 2012, Crown announced that the New South Wales Government had invited Crown to proceed to Stage
Two of the Government’s Unsolicited Proposal process for the Crown Sydney Hotel Resort and confirmed that, in
accordance with New South Wales Government guidelines, Crown had lodged an Unsolicited Proposal to construct
and manage a world-class, six-star hotel resort at Barangaroo South.
• On 3 December 2012, Crown announced that the Gaming and Wagering Commission of Western Australia had
given approval for additional gaming product at Crown Perth, conditional upon the development of Crown Towers
Perth proceeding.
• On 10 May 2013, Crown announced that it had received written advice from the New South Wales Independent Liquor
and Gaming Authority that the necessary approvals had been granted to allow Crown to have voting power in Echo
in excess of 10%, but not to exceed an approved cap of 23%.
• On 17 May 2013, Crown announced that it had received written advice from the Queensland Office of Liquor and
Gaming Regulation that the necessary approvals had been granted to allow Crown to have voting power in Echo
in excess of 10%.
• On 24 May 2013, Crown announced that it had divested its interest in Echo, pursuant to a block trade agreement.
Under the agreement, Crown’s 82,561,200 shares in Echo were sold for $264 million or $3.20 per Echo share.
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Significant events after Balance Date
On 4 July 2013, Crown announced that it had been invited by the New South Wales Government to move to Stage Three
of the Unsolicited Proposal process for a six-star hotel resort including VIP gaming facilities at Barangaroo South and on
19 July 2013, Crown announced that it had accepted that invitation.
Subsequent to 30 June 2013, the Directors of Crown announced a final dividend on ordinary shares in respect of the year
ending 30 June 2013. The total amount of the dividend is $138.4 million, which represents 19 cents per share. The final
dividend will be 50% franked. None of the unfranked component of the dividend will be conduit foreign income. The
dividend has not been provided for in the 30 June 2013 financial statements.
In addition, on 2 August 2013, Crown announced that it has restructured its senior management team in Australia and created
the new position of Chief Executive Officer – Australian Resorts. Barry Felstead, the Chief Executive Officer of Crown Perth,
was appointed to that position. As a result, the positions of Chief Executive Officer Crown Melbourne and Chief Executive
Officer Crown Perth, having been combined into this new position, ceased to exist.
Environmental regulation
The National Greenhouse and Energy Reporting Act 2007 (the NGER Act) established a mandatory reporting system for
corporate greenhouse gas emissions and energy production and consumption. Crown is required to report emissions
under the NGER Act. Relevant reports have been submitted during the year.
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Key features of the NGER Act are:
• reporting of greenhouse gas emissions, energy consumption and production by large corporations;
• corporate level public disclosure of greenhouse gas emissions and energy information; and
• to provide consistent and comparable data for decision making.
The Federal Government’s Clean Energy Legislation was introduced on 1 July 2012. Under this legislation, Crown
Melbourne is considered a ‘liable entity’ and is required to register with the Clean Energy Regulator and surrender carbon
units on an annual basis.
Crown is also subject to the Energy Efficiency Opportunities Act 2006 which encourages large energy-using businesses
to improve their energy efficiency. It does this by requiring businesses to identify, evaluate and report publicly on cost
effective energy savings opportunities. Crown submits reports in line with the required reporting schedule.
Under the Western Australian Water By-laws legislation, Crown Perth is required to complete annual water management
assessments and submit water efficiency management plans.
The Crown group is not otherwise 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 in the Sustainability section of this Annual Report.
Operating and financial review
In addition to the information provided in the review of operations section of this Report, set out below is some additional
information that members of Crown might reasonably require to make an informed assessment of the operations, financial
position and business strategies of Crown. The commentary which follows omits some information which might be
considered relevant to Crown’s business strategies and prospects for future financial years, on the basis that the
directors have reasonable grounds to believe that disclosure would likely result in unreasonable prejudice to Crown.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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DIRECTORS’ STATUTORY REPORT CONTINUED
Crown reported a consolidated net profit after tax (NPAT) of $395.8 million and a normalised NPAT1 of $473.2 million for
the 12 months ended 30 June 2013. Crown Melbourne and Crown Perth achieved normalised EBITDA growth of 6.9%
and normalised revenue growth of 5.6%.
Performance for the year ended June 30 2013
Normalised revenue1
Normalised expenditure1
Normalised EBITDA2
Normalised EBIT3
Normalised net profit after tax before significant items
Reported net profit after tax before significant items
Significant items4
Reported net profit after tax
$m
2,894.4
(2,136.1)
758.3
520.2
473.2
491.0
(95.2)
395.8
Crown sold its shareholding in Echo in May 2013. This resulted in an after tax loss of $69.6 million which has been reported
as a significant item.
The results from Crown’s Macau joint venture, Melco Crown Entertainment, were strong, particularly in the premium mass
market segment, and were a major contributor to the growth in Crown’s normalised NPAT.
The activities and results of Crown’s operations are discussed further below.
Crown Melbourne
Normalised EBITDA from Crown Melbourne was $546.7 million, up 7.1% on the prior comparable period (pcp). Reported
EBITDA for the period was $547.1 million, down 3.0% or $17.1 million on the pcp. This reflects a win rate of 1.36% which
generated a positive EBITDA variance of $0.4 million, compared to a positive EBITDA variance of $53.6 million in the pcp
when the win rate was 1.50%.
Normalised revenue increased by 4.0% over the pcp to $1,918.1 million. During the year, main floor gaming revenue grew
0.9% to $1,000.8 million. Normalised VIP program play revenue increased 9.2% to $525.2 million on turnover of $38.9 billion.
Non-gaming revenue grew 5.4% to $392.1 million. Crown Towers Melbourne hotel occupancy was 93.6% with an average
room rate of $312. Crown Metropol Melbourne achieved hotel occupancy of 89.5% with an average room rate of $224.
Crown Promenade Melbourne hotel occupancy was 90.5% with an average room rate of $211.
The overall operating margin5 improved from 27.7% to 28.5% despite the shift in business mix towards the lower margin
VIP business. In response to the weak consumer sentiment in Melbourne and low revenue growth in main floor gaming,
Crown Melbourne has continued its comprehensive review of back of house costs and front of house operational efficiency.
1 Normalised results have been adjusted to exclude the impact of any variance from theoretical win rate on VIP program play and significant items.
2 Normalised earnings before interest, tax, depreciation, and amortisation.
3 Normalised earnings before interest and tax.
4 Relates to the loss on disposal of Crown’s investment in Echo, a loss of $69.6 million net of tax, and Crown’s share of MCE’s development
and refinancing costs of $25.6 million.
5 Normalised EBITDA divided by normalised revenue.
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Crown Perth
Normalised EBITDA from Crown Perth was $240.8 million, up 6.4% on the pcp. Reported EBITDA for the period was
$240.8 million, down 11.1% or $30.1 million on the pcp. The win rate in the pcp was 1.84% which resulted in a positive
EBITDA variance of $44.6 million.
Normalised revenue increased 9.3% over the pcp to $858.2 million. During the year, main floor gaming revenue grew
9.7% to $483.5 million, benefiting from the expansion of Crown Perth’s gaming floor. Normalised VIP program play revenue
increased 3.3% to $159.4 million on turnover of $11.8 billion.
Non-gaming revenue grew 13.3% to $215.3 million due to the improved trading in food and beverage as a result of the
completion of a number of key refurbishment projects and improved trading in both hotels. Crown Metropol Perth hotel
occupancy was 83.6% with an average room rate of $313. Refurbishment work at Crown Metropol Perth has reduced
the number of rooms available and hotel occupancy based on available rooms was 90.5%. Hotel occupancy at Crown
Promenade Perth was 93.0% with an average room rate of $220.
The overall operating margin1 decreased from 28.8% to 28.1%, reflecting the impact of one-off costs associated with the
rebranding to Crown Perth and the set-up and opening costs associated with the launch of the new gaming floor and new
food and beverage outlets.
The rebranding of Crown Perth from Burswood was completed in September 2012 following the opening of the expansion
of Crown Perth’s main gaming floor to accommodate new gaming product and new food and beverage areas. Crown
Perth’s restaurant facilities were further enhanced with the recent opening of the new premier Chinese restaurant, Silks.
The construction of the multi-storey car park, expected to improve accessibility of the complex, is underway and expected
to be completed by late 2014. In addition, the demolition of the Dome will create an additional 1,000 car parking spaces
by December 2013. Work is progressing on the early stages of Crown Towers Perth which is expected to open in 2016.
The capital expenditure undertaken in upgrading and expanding Crown Perth will progressively deliver benefits and is
expected to be earnings and value enhancing for shareholders.
Crown Aspinall’s (previously Aspinall’s Club)
Normalised EBITDA from Crown Aspinall’s was $33.3 million (2012: $20.6 million). A below theoretical win rate generated
a negative EBITDA variance of $6.8 million which resulted in a reported EBITDA of $26.5 million (2012: $1.7 million) for the period.
Melco Crown Entertainment (MCE): Macau (33.7% equity interest)
Crown’s share of MCE’s normalised NPAT result for the full year to 30 June 2013 was an equity accounted profit of
$152.3 million (2012: $92.1 million), after adjusting for an above theoretical win rate. Crown’s share of MCE’s reported result
before significant items for the full year to June 2013 was an equity accounted profit of $175.0 million (2012: $135.8 million).
During the year MCE issued a US$1.0 billion senior note offering at a 5.0% coupon, allowing MCE to, among other things,
refinance MCE’s existing US$600 million 10.25% senior notes.
MCE incurred costs in respect of the debt refinance and costs associated with the Studio City and Philippines development
projects. Crown’s share of these costs was $25.6 million which has been reported as a significant item.
The growth in MCE’s EBITDA was achieved despite an overall subdued performance in the Macau VIP market and was
attributable to strong growth in the mass market table games segment at City of Dreams and improved group-wide rolling
chip volume, together with MCE’s committed cost control culture. City of Dreams again increased its market share in the
mass market table games segment and achieved market-leading mass table yields, which is increasingly important in a
table supply constrained market.
1 Normalised EBITDA divided by normalised revenue.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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DIRECTORS’ STATUTORY REPORT CONTINUED
Cash flow and debt
Operating cash flow for the period was $496.2 million. After net capital expenditure of $253.4 million, dividend payments
of $269.5 million, net repayment of borrowings of $107.6 million and net investment proceeds of $184.4 million, total Group
debt was $1,635.3 million as at 30 June 2013 (2012: $1,694.7 million). Total cash and cash equivalents at 30 June 2013
was $205.5 million (2012: $149.4 million), which consisted of cash maintained for working capital purposes of $118.5 million
(2012: $143.4 million), with the balance of $87.0 million (2012: $6.0 million) available for general purposes. Net debt, excluding
working capital cash, at 30 June 2013 stood at $1,548.3 million (2012: $1,688.7 million).
At 30 June 2013, total liquidity, excluding working capital cash of $118.5 million, was $1,213.6 million (2012: $512.4 million),
represented by $87.0 million (2012: $6.0 million) in available cash and $1,126.6 million (2012: $506.4 million) in committed
undrawn facilities.
Crown’s capital management strategy targets an efficient capital structure with sufficient liquidity and flexibility to support
its strategy and maintain its current investment grade credit ratings. In August 2012, Crown completed a $300 million
five-year bond issue. In September, Crown raised $532 million through a subordinated notes issue and in November,
Crown completed the refinance of its two bank facilities that were to mature in July 2013 into one new $500 million
syndicated facility.
Conclusion
Crown remains focused on optimising the performance of its Australian resorts and its comprehensive review of back
of house and front of house operation efficiency will continue. Crown will manage the Crown Towers Perth development
and construction and complete the final stages of the remaining capital expenditure projects. As well, management
will continue to progress the Crown Sydney Hotel Resort proposal.
Crown will also continue to work closely with MCE to further build the value of MCE’s Macau businesses.
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.
Dividends and distributions
Interim Dividend: Crown paid an interim dividend of 18 cents per ordinary share on 16 April 2013. The dividend was 50%
franked. None of the unfranked component was conduit foreign income.
Final Dividend: The Directors of Crown have announced a final dividend of 19 cents per ordinary share to shareholders
registered as at 27 September 2013. The final dividend will be 50% franked. None of the unfranked component of the
dividend will be conduit foreign income.
In summary:
Interim Dividend paid
Final Dividend payable
Total
Dividend per share
18 cents per share
19 cents per share
37 cents per share
$’000
$131,111
$138,395
$269,506
Crown paid shareholders a final dividend in respect of the 2012 financial year of $138.4 million.
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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 twelve current Directors.
Name
James Douglas Packer
John Henry Alexander
Date Appointed
6 July 2007
6 July 2007
Benjamin Alexander Brazil
26 June 2009
Helen Anne Coonan
2 December 2011
Christopher Darcy Corrigan
6 July 2007
Rowen Bruce Craigie
Rowena Danziger
Geoffrey James Dixon
31 May 2007
6 July 2007
6 July 2007
John Stephen Horvath
9 September 2010
Ashok Jacob
Michael Roy Johnston
6 July 2007
6 July 2007
Harold Charles Mitchell
10 February 2011
Date Ceased
–
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At Crown’s 2012 Annual General Meeting, Mr Ben Brazil, Ms Rowena Danziger, Professor John Horvath and
Mr Michael Johnston stood for re-election as Directors. As required by Crown’s Constitution, having been appointed
a director in December 2011, Ms Helen Coonan also stood for election at Crown’s 2012 AGM. Each was re-elected
as a Director at that time.
The details of each Director’s qualifications and experience as at the date of this Report are set out below. Details of
all directorships of other Australian listed companies held in the three years before the end of the financial year have
been included.
James D Packer, Chairman
Mr Packer is the Chairman of Consolidated Press Holdings Limited (CPH), a family company. CPH is a substantial
shareholder in Crown.
Mr Packer is a director of various companies including Crown Melbourne Limited, Burswood Limited and Melco Crown
Entertainment Limited.
Mr Packer is the chair of the Crown Investment Committee.
Directorships of other Australian listed companies held during the last three years:
• Consolidated Media Holdings Pty Limited1: from 28 April 1992 to 19 November 2012
• Ten Network Holdings Limited: from 13 December 2010 to 2 March 2011
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John H Alexander BA, Executive Deputy Chairman
Mr Alexander is the Executive Deputy Chairman of Crown Limited and is also a director of a number of companies,
including Seven West Media Limited, Crown Melbourne Limited, Burswood Limited and Aspers Holdings (Jersey) Limited.
Mr Alexander was the Executive Chairman of Consolidated Media Holdings Limited (CMH) from 2007 to November 2012,
when CMH was acquired by News Corporation. Prior to 2007, Mr Alexander was the Chief Executive Officer and Managing
Director of Publishing and Broadcasting Limited (PBL) from 2004, the Chief Executive of ACP Magazines Limited from
1999 and PBL’s group media division comprising ACP Magazines Limited and the Nine Network from 2002.
Before joining the PBL Group, Mr Alexander was the Editor-in-Chief, Publisher & Editor of The Sydney Morning Herald
and Editor-in-Chief of The Australian Financial Review.
Mr Alexander is a member of the Crown Investment Committee.
Directorships of other Australian listed companies held during the last three years:
• Consolidated Media Holdings Limited1: from 16 December 1999 to 19 November 2012
• Seven West Media Limited: from 2 May 2013 to current
Benjamin A Brazil BCom LLB, Independent, Non-Executive Director
Mr Brazil is an Executive Director of Macquarie Group Limited and is Co-Head of its Corporate and Asset Finance
Group. He originally commenced employment at Macquarie in 1994 and has operated across a range of geographies
and business lines during the course of his career. He holds a Bachelor of Commerce and a Bachelor of Laws from the
University of Queensland.
Mr Brazil is the Chairman of the Crown Audit and Corporate Governance Committee and a member of the Crown
Finance Committee.
The Honourable Helen A Coonan BA, LLB, Independent, Non-Executive Director
Helen Coonan is a former Senator for New South Wales serving in the Australian Parliament from 1996 to 2011.
She holds degrees in Bachelor of Arts and Bachelor of Laws from the University of Sydney. Prior to entering Parliament
she worked as a lawyer including as principal of her own legal firm, as a partner in law firm Gadens, as a commercial
barrister in Australia and as an attorney in New York.
In Parliament, Helen Coonan served as the Deputy leader of the Government in the Senate. She was appointed to Cabinet
as the former Minister for Communications, Information Technology and the Arts and was shareholder Minister for Telstra
Corporation and Australia Post. She also served as the Minister for Revenue and Assistant Treasurer and had portfolio
oversight of the Australian Taxation Office and the Australian Prudential Regulatory Authority.
Ms Coonan is a member of the Advisory Council of J.P. Morgan, a Trustee of the Sydney Opera House Trust, Chair of the
Conservation Council of the Opera House Trust, a Member of the Australian World Heritage Advisory Committee, Member
of the Board of Advice for AON Australia, Co-Chair of Government Relations Australia Pty Limited (a subsidiary of the
Clemenger group of companies), a Non-Executive Director of Obesity Australia Limited and Special Counsel of SR/7
Social Media Intelligence. She is also a member of Chief Executive Women.
Ms Coonan is the Chair of the Crown Corporate Social Responsibility Committee.
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Christopher D Corrigan, Independent, Non-Executive Director
From March 1990 to July 2006, Mr Corrigan was Managing Director of Patrick Corporation Limited, Australia’s largest
container terminal operator and stevedore. Patrick Corporation Limited also had interests in land-based logistics, freight
rail transportation and aviation through Virgin Blue.
In 1990, Mr Corrigan sponsored the formation of a development capital business, Jamison Equity, which in December
1996 became a wholly owned subsidiary of the then publicly listed company Patrick Corporation Limited.
Prior to that, Mr Corrigan had a career with Bankers Trust spanning 20 years, including periods as Managing Director
of Bankers Trust in Australia and then the Asia-Pacific region.
In September 2011, Mr Corrigan became the Chairman of Qube Logistics Holdings Limited.
Mr Corrigan is a member of the Crown Nomination and Remuneration Committee.
Directorships of other Australian listed companies held during the last three years:
• Consolidated Media Holdings Limited1: from 8 March 2006 to 19 November 2012
• Qube Logistics Holdings Limited: from 23 March 2011 to current
• Webster Limited: from 30 November 2007 to 9 July 2010, reappointed on 15 October 2012 to current
Rowen B Craigie BEc (Hons), Chief Executive Officer and Managing Director
Mr Craigie was appointed Chief Executive Officer and Managing Director in 2007. He is also a director of Crown Melbourne
Limited, Burswood Limited, Melco Crown Entertainment Limited and Aspers Holdings (Jersey) Limited.
Mr Craigie previously served from 2005 to 2007 as the Chief Executive Officer of PBL Gaming and as the Chief Executive
Officer of Crown Melbourne Limited from 2002 to 2007. 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.
Mr Craigie is a member of Crown’s Investment, Occupational Health, Safety & Environment, Responsible Gaming, Risk
Management and Corporate Social Responsibility Committees.
Rowena Danziger AM, BA, TC, MACE, Independent, Non-Executive Director
Mrs Danziger’s professional experience spans over 30 years in various Australian and American educational institutions.
Mrs Danziger was the Headmistress at Ascham School in Sydney from 1973 to 2003.
Mrs Danziger is a Director of Crown Melbourne Limited and is Chair of the Crown Limited Occupational Health, Safety &
Environment Committee and a member of the Crown Audit & Corporate Governance, Risk Management and Responsible
Gaming Committees.
Directorships of other Australian listed companies held during the last three years:
• Consolidated Media Holdings Limited1: 17 September 1997 to to 19 November 2012
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Geoffrey J Dixon, Independent, Non-Executive Director
Mr Dixon is Chairman of the Australian Government’s major tourism marketing organisation Tourism Australia and Chairman
of the Garvan Medical Research Foundation.
Mr Dixon also sits on the board of publicly listed Australian company, Facilitate Digital Holdings Limited. He is on the boards
of Voyages Indigenous Tourism Australia, the Museum of Contemporary Art and is an Ambassador for the Australian
Indigenous Education Foundation. Mr Dixon has also worked in the media, mining and government sectors.
Mr Dixon was Managing Director and Chief Executive Officer of Qantas Airways Limited from 2001 to 2008. He joined
Qantas Airways Limited in 1994 and was also Chief Commercial Officer and, for two years, Deputy Chief Executive.
Mr Dixon is the Chairman of the Crown Finance, Nomination and Remuneration and Risk Management Committees.
Directorships of other Australian listed companies held during the last three years:
• Consolidated Media Holdings Limited1: from 31 May 2006 to 19 November 2012
• Facilitate Digital Holdings Limited: from 9 July 2009 to current
Professor John S Horvath AO, MB, BS (Syd), FRACP, Independent, Non-Executive Director
Professor John Horvath was the Australian Government Chief Medical Officer from 2003 to 2009. He is currently continuing
to advise the Department of Health & Ageing and the School of Medicine, University of Sydney, and holds the position
of Honorary Professor of Medicine.
Professor Horvath is a Fellow of the Royal Australasian College of Physicians and is a distinguished practitioner, researcher
and teacher. Professor Horvath sits on the Board of the Garvan Research Foundation, the Centenary Institute of Medical
Research and Health Workforce Australia. He is a member of the Advisory Board to the World Health Organisation Influenza
Collaborating Centre, a member of the Advisory Council to the Australian Organ and Tissue Donation Agency and a member
of the Finance and Administration Committee of the School of Medicine at the University of Sydney.
Professor Horvath was previously Clinical Professor of Medicine at University of Sydney. He is also known as a leader
in a range of medical training and workforce organisations. He is also a former President of the Australian Medical Council
and the NSW Medical Board.
Professor Horvath is the Chair of the Crown Responsible Gaming Committee and a member of Crown’s Occupational
Health, Safety & Environment and Corporate Social Responsibility Committees.
Ashok Jacob BSc, MBA, Non-independent, Non-Executive Director
Mr Ashok Jacob is a non-executive director of Crown.
Mr Jacob is the Chairman of Ellerston Capital. Mr Jacob was the Chief Executive Officer of Consolidated Press Holdings
Limited from 2006 to 2011 and previously the Joint Chief Executive Officer from 1998 to 2006.
Mr Jacob is a director of Consolidated Press Holdings Limited and a director of MRF Limited.
Mr Jacob holds a Master of Business Administration from the Wharton School, University of Pennsylvania and a Bachelor
of Science from the University of Bangalore.
Mr Jacob is a member of the Crown Investment Committee.
Directorships of other Australian listed companies held during the last three years:
• Consolidated Media Holdings Limited1: from 10 September 2009 to 19 November 2012.
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Michael R Johnston BEc, CA, Non-independent, Non-Executive Director
Mr Johnston is the Finance Director of Consolidated Press Holdings Limited, having previously been an advisor to the
Consolidated Press Holdings Limited Group for 17 years. As Finance Director, Mr Johnston oversees a large number
of operational businesses within the Consolidated Press Holdings Limited Group and its controlled associates. Mr Johnston
was also the Chief Financial Officer of Ellerston Capital (a subsidiary of Consolidated Press Holdings Limited) until 30 June 2008.
Prior to his appointment with the Consolidated Press Holdings Limited Group, Mr Johnston 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 of Australia.
Mr Johnston is a member of the Crown Audit & Corporate Governance, Finance, and Occupational Health, Safety and
Environment Committees.
Directorships of other Australian listed companies held during the last three years:
• Consolidated Media Holdings Limited1: from 8 April 2009 to 19 November 2012, alternate director to Mr James Packer
and Mr Guy Jalland; from 10 September 2009 to 19 November 2012, alternate director to Mr Ashok Jacob
• Living and Leisure Australia Group: from 23 August 2011 to 10 February 2012
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Harold C Mitchell AC, Independent, Non-Executive Director
Harold Mitchell is the founder of Mitchell & Partners and Executive Chairman of Aegis Media Pacific. Since he started
Mitchell & Partners in 1976, the company has evolved to become the largest media and communications group in Australia
today, with a growing presence in New Zealand and across the Asia-Pacific region. In December 2000, he launched the
Harold Mitchell Foundation which distributes funds between health and the arts. He has been Chairman of the National
Gallery of Australia, President of the Melbourne International Festival of Arts, Director of Deakin Foundation, President of
the Museums Board of Victoria and a Board Member of the Opera Australia Council, as well as Chairman of ThoroughVision
and Chairman and Owner of the Melbourne Rebels Rugby Union team.
Mr Mitchell holds a large number of community roles including Chairman CARE Australia; Chairman of the Melbourne
Symphony Orchestra; Chairman of TVS, University of Western Sydney’s television service for Greater Sydney; Chairman
of Art Exhibitions Australia, Vice President of Tennis Australia; Chairman of The Florey Institute of Neuroscience and Mental
Health, and Board Member New York Philharmonic.
In December 2002, Deakin University conferred on him an honorary degree of Doctor of Laws. In 2003, he delivered
the Andrew Olle Memorial Lecture on Media.
In January 2004, he was awarded the Officer of the Order of Australia for his services as a benefactor and fundraiser
in support of artistic and cultural endeavour.
On 28 July 2005, he was awarded the Richard Pratt Business Leader Award given by the Australian Business Arts Foundation
in recognition of excellence in arts leadership. Mr Mitchell was appointed Companion of the Order of Australia in 2010 for
eminent service to the community through leadership and philanthropic endeavours in the fields of art, health and education
and as a supporter of humanitarian aid in Timor-Leste and Indigenous communities.
In December 2011, Mr Mitchell was awarded an Honorary Doctorate – Doctor of Business Honoris Causa, by RMIT University
and in 2012 he was inducted into the Adnews Hall of Fame.
Mr Mitchell is a member of the Crown Nomination and Remuneration Committee.
Directorships of other Australian listed companies held during the last three years:
• Mitchell Communication Group Limited – From 10 March 2000 to 24 November 2010 (removed from ASX).
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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.
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.
Mr Neilson is also a member of the Board of Trustees of the International Association of Gaming Advisers (IAGA) and a member
of the School Council of Camberwell Grammar School.
Mary Manos BCom, LLB (Hons), GAICD
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.
Ms Manos is a Graduate of the Australian Institute of Company Directors.
Other officer details
In addition to the above, Crown’s principal officers include:
• Kenneth M Barton
Chief Financial Officer
• Barry J Felstead*
Chief Executive Officer, Crown Perth until 1 August 2013 and Chief Executive Officer Crown Resorts
from 1 August 2013
• Greg F Hawkins*
Chief Executive Officer, Crown Melbourne until 1 August 2013
• W Todd Nisbet
Executive Vice President, Strategy and Development
* Subsequent to year end, Mr Hawkins and Mr Felstead’s positions were replaced with a new position, Chief Executive Officer – Australian
Resorts. Mr Felstead has taken that position and Mr Hawkins has agreed to leave the group.
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Relevant interests of Directors
Details of relevant interests of current Directors in Crown shares as at 30 June 2013 were as follows:
Director
John Alexander
Rowen Craigie
Rowena Danziger
Harold Mitchell
James Packer
Notes:
Total number of ordinary shares1
256,549
74,0922
30,896
114,887
364,270,253
1. For more information on relevant interests of current Directors, please see the Remuneration Report and the key management personnel
disclosures set out in the Notes to the Financial Statements.
2. The registered holder of these shares is Australian Executor Trustees Limited as trustee under the 2010 Crown Limited Long Term Incentive
Plan. Mr Craigie may become entitled to have those shares transferred to him after 30 June 2014 if certain conditions in the 2010 Crown
Limited Long Term Incentive Plan are met.
Other than in connection with Crown’s Long Term Incentive Plan which is described in the Remuneration Report, none of
Crown’s Directors is party to any contract which would give that Director the right to call for the delivery of shares in Crown.
Board and Committee meetings
Set out below are details of the number of Board meetings and Committee meetings held by Crown during the 2013
financial year together with each Director’s attendance details.
Audit &
Corporate
Governance
Committee
Meetings
Nomination and
Remuneration
Committee
Meetings
Occupational
Health, Safety &
Environment
Committee
Meetings
Responsible
Gaming
Committee
Meetings
Risk
Management
Committee
Meetings
Board Meetings
Held Attended Held Attended Held Attended Held Attended Held Attended Held Attended
J D Packer
J H Alexander
B A Brazil
H L Coonan
C D Corrigan
R B Craigie
R Danziger
G J Dixon
J S Horvath
A P Jacob
M R Johnston
H C Mitchell
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7
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7
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3
3
3
3
1
1
1
1
3
3
1
1
6
6
6
4
6
6
2
2
2
1
2
2
4
4
4
4
4
4
4
4
The Corporate Governance Statement includes details on Committee structure and membership during the year.
Under Crown’s Constitution, its Board and Committee Charters, documents containing written resolutions assented to by
Directors are to be taken as a minute of a meeting of Directors or of a Committee (as the case may be). There were four
written resolutions assented to by the Board this financial year. There were also two written resolutions assented to by the
Investment Committee and two by the Finance Committee. The Investment Committee and Finance Committee did not
formally meet this financial year.
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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.
Directors’ and officers’ 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 David McGregor 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 27 of the Financial Report.
Crown acquires non-audit services from Ernst & Young, largely in respect of taxation matters relating to pre-demerger
and ongoing taxation items. These include, but are not limited to, matters in respect of the financial years ending on
or prior to 30 June 2007, which at the time of the de-merger of Crown and Consolidated Media Holdings Limited
(then Publishing and Broadcasting Limited (PBL)) agreed they would share as follows:
• Crown: 75 per cent; and
• CMH: 25 per cent.
The ratio of non-audit to audit services provided by Ernst & Young to Crown is approximately 6.5:1. This ratio reflects that:
• Ernst & Young advised Crown on matters relating to Crown’s refinancing activities (including a $300 million bond issue
and a $532 million subordinated notes issue), Crown’s acquisition and divestment of its interest in Echo Entertainment
Group Limited, Crown’s proposed development at Barangaroo South, Sydney; and
• The fees paid by Crown to Ernst & Young in respect of non-audit services, largely taxation advisory services, mostly
reflect taxation matters pre-dating the PBL de-merger (which occurred in December 2007).
In the absence of pre-demerger matters, the ratio of non-audit services to audit services provided by Ernst & Young would
be lower.
The Directors are satisfied that the non-audit services are compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. 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.
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Remuneration Report
This Remuneration Report for the year ended 30 June 2013, outlines the Director and executive remuneration arrangements
of Crown in accordance with the requirements of the Corporations Act 2001 and its regulations. For the purposes of
this report, key management personnel (KMP) of the Crown group are defined as those persons having authority and
responsibility for planning, directing and controlling the major activities of the Crown group, directly or indirectly, including
any Director (whether executive or otherwise) of the parent company. For further details of KMP, refer to note 29 of the
Financial Report. The disclosures in the Remuneration Report have been audited. The Remuneration Report is presented
under the following sections:
1.
Introduction
2. Overview of Remuneration Policy
3. Details of Senior Executive Remuneration Structure
• Fixed Remuneration
• Performance Based Remuneration
– Short Term Incentives
– Long Term Incentive: 2010 Crown LTI
• Relationship between Remuneration Policy and Company Performance
• Policy on entering into transactions in associated products which limit economic risk
4. Remuneration details for Non-Executive Directors (including statutory remuneration disclosures)
5. Remuneration details for Senior Executives
• Executive Contract Summaries
• Statutory Remuneration Disclosures
Introduction
Persons to whom Report applies
The remuneration disclosures in this Report cover the following persons:
Non-Executive Directors
• Benjamin A Brazil
• Helen A Coonan
• Christopher D Corrigan
• Rowena Danziger
• Geoffrey J Dixon
• John S Horvath
• Ashok Jacob
• Michael R Johnston
• Harold C Mitchell
Executive Directors
• James D Packer (Chairman)
• John H Alexander (Executive Deputy Chairman)
• Rowen B Craigie (Managing Director and Chief Executive Officer)
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Other company executives and key management personnel
• Kenneth M Barton (Chief Financial Officer)
• Barry J Felstead (Chief Executive Officer, Crown Resorts, from 1 August 2013 and Chief Executive Officer, Crown Perth,
until 1 August 2013)
• Greg F Hawkins (Chief Executive Officer, Crown Melbourne, until 1 August 2013)
• W Todd Nisbet (Executive Vice President – Strategy and Development)
In this Report the group of persons comprised of the Executive Directors and the other company executives and key
management personnel (listed above) are referred to as “Senior Executives”.
This Remuneration Report contains a similar level of disclosure to the 2012 Remuneration Report. As there has been
no material change to the Company’s remuneration policy during the period, much of the description of the Company’s
remuneration policy in this report is unchanged from last year.
Overview of Remuneration Policy
Philosophy
Crown is a company that provides outstanding customer service and to remain competitive Crown must continue to
enhance the experience of all customers who visit Crown’s properties. As a result, the performance of the Crown group
is highly dependent upon the quality of its Directors, senior executives and employees.
Crown seeks to attract, retain and motivate skilled Directors and senior executives in leadership positions 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 Nomination and Remuneration Committee bears the responsibility of determining the appropriate remuneration for
Non-Executive Directors. Non-Executive Directors’ fees are reviewed periodically by the Nomination and Remuneration
Committee with reference taken to the fees paid to the Non-Executive Directors of comparable companies. The Nomination
and 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 Nomination and Remuneration
Committee may also elect to receive advice from independent remuneration consultants, if necessary. Details regarding the
composition of the Nomination and Remuneration Committee and its main objectives are outlined in the Corporate Governance
Statement. The Nomination and Remuneration Committee is comprised solely of Non-Executive independent Directors.
No performance based fees are paid to Non-Executive Directors. Non-Executive Directors are not entitled to participate
in Crown’s long term incentive plan (described more fully below).
Non-Executive Directors are not provided with retirement benefits other than statutory superannuation at the rate prescribed
under the Superannuation Guarantee legislation.
Senior Executives
The remuneration structure incorporates a mix of fixed and performance based remuneration. The following section provides
an overview of the fixed and performance based elements of executive remuneration. The summary tables provided later
in this Report indicate which elements apply to each Senior Executive.
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Crown’s key strategies and business focuses are to:
• continue to maximise the performance of Crown Melbourne and Crown Perth and to manage the significant capital
expenditure programs currently underway to deliver value for shareholders;
• progress the Crown Sydney Hotel Resort project;
• assist MCE with the Studio City and Philippines projects;
• improve the profitability of Crown’s other international joint ventures; and
• assess other relevant growth opportunities.
Senior Executive remuneration structure is tied to these strategies and focuses.
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 qualifications and experience of the individual. From time to time, Crown
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, mobile telephone costs, complimentary privileges at Crown Melbourne and Crown Perth and
may include, at the election of the Senior Executive, other benefits such as a motor vehicle, additional contribution to
superannuation, car parking and staff gym membership, aggregated with associated 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 and the Chairman of Crown and is approved by the Nomination
and Remuneration Committee.
The review process measures the achievement by the Senior Executives of their Key Performance Objectives (KPOs)
established at the beginning of the financial year (see further below), the performance of Crown and the business in
which the Senior Executive is employed, relevant comparative remuneration in the market and relevant external advice.
Fixed remuneration for the Chief Executive Officer and Managing Director is reviewed by the Chairman and approved
annually following consideration by the Nomination and Remuneration Committee of his or her performance against
his or her annual KPOs.
The fixed remuneration for Crown’s Chief Executive Officer and Managing Director, Mr Rowen Craigie, was determined in
2007 as part of the de-merger of the gaming businesses of Publishing and Broadcasting Limited and listing of Crown Limited
in December 2007. Details of Mr Craigie’s remuneration, including his fixed remuneration, were included in the Demerger
Scheme Booklet issued by Publishing and Broadcasting Limited and considered by Publishing and Broadcasting Limited
shareholders at the Scheme meeting on 30 November 2007. Mr Craigie’s fixed remuneration has not changed since that date.
Mr Craigie’s fixed remuneration is in the top quartile of ASX top 50 listed companies. Mr Craigie’s awarded short term incentive,
however, is below the 25th percentile for the same group and his total cash remuneration is at the median of that group.
In addition, Mr Craigie’s fixed remuneration is comparable to the Chief Executive Officers of global gaming companies with
operations across several jurisdictions. When taken together with his potential STI payment, Mr Craigie’s remuneration
is commensurate with his peers in the global gaming industry.
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The global gaming industry is highly competitive and the Board believes Mr Craigie’s skills and experience in developing
and operating major integrated resorts are in high demand in this industry. The Board believes that these capabilities,
together with Mr Craigie’s longstanding association with Crown’s Australian businesses, are valuable to the Group. As a
result, giving consideration to the fact that Mr Craigie has not received an increase to his fixed remuneration since 2007
and the Board believes his fixed remuneration remains appropriate.
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 72.
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 to the Senior Executives during
the year were as follows:
• Short Term Incentives (STI); and
• Long Term Incentives (the Crown LTI).
A key focus of the Crown Board is the achievement of the Crown group’s annual business plan and budget and the long
term financial plan. In order to provide incentives to executives, each of the STI and the Crown LTI link back to elements of
the business plan and budget and long term financial plan. It is therefore important to understand how that business plan
and budget and long term financial plan are developed.
Development of Long Term Financial Plan (Four Year Financial Plan)
Each year, the Crown Board approves a financial plan which contains the key assumptions and forecasts for each Crown
group business and for the Crown group as a whole for the four year period commencing in the following financial year
(Four Year Financial Plan).
The process for developing, reviewing and approving each Four Year Financial Plan is rigorous. Each department in each
Crown business must prepare a four year financial plan. Key inputs into this process include current operating performance
and the previously approved Four Year Financial Plan, having regard to:
• performance relative to targets set in the previous Four Year Financial Plan;
• any changes in the business;
• any changes in factors affecting performance over the four year period; and
• any new strategic initiatives and changes in the market in which those businesses are operating.
The targets in each department’s four year financial plan incorporate an underlying target growth in operating profit with
additional operating profit increases arising from capital expenditure programs, performance improvement initiatives and
other strategic impacts.
Each department’s four year forecast is consolidated into the relevant business’s four year forecast which is then reviewed
by the Chief Executive Officer and Chief Financial Officer of the relevant business.
In turn, each business’s four year forecast is then incorporated into the Four Year Financial Plan and reviewed by the
Crown Limited Chief Executive Officer and Chief Financial Officer. The Four Year Financial Plan is then reviewed by the
Chairman before it is submitted to the Crown Board for review and approval.
Development of Annual Business Plan and Budget
Crown’s annual business plan and budget (Annual Business Plan and Budget) is prepared having regard to the Crown
Four Year Financial Plan.
The Annual Business Plan and Budget is based on the first year of the Four Year Financial Plan and details key operational
strategic initiatives and the risks to be addressed. It is developed on a departmental basis, which is then incorporated into
each business’s annual budget and business plan and, finally, into the Crown group Annual Business Plan and Budget,
which then must be approved by the Crown Board.
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Short Term Incentives (STI)
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 annual KPOs. Senior Executives have a potential or target STI, which is
subject to the Crown group’s performance and the achievement of the Senior Executive’s KPOs established at the
beginning of each financial year. In summary, the typical KPO structure might comprise the following elements:
Financial Performance Objectives Performance against budgeted normalised EBITDA1 and/or net profit after tax.
Typical Non-financial Objectives
• Management of major capital expenditure programs to ensure projects
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are delivered on time and on budget, while minimising disruption at relevant
Australian properties as well as the subsequent delivery of anticipated benefits
from those capital programs.
• Reinforcement and delivery of outstanding customer experiences through
continuous improvement in Crown’s service culture.
• Successful management of Crown stakeholders, including government,
media, trade unions, community organisations, to achieve targeted outcomes.
• Achievement of successful expansion of customer base for Crown properties
through marketing or other relevant activities.
• Growth in engagement levels of employees across Crown.
• Achievement of margin improvement targets through the implementation
of approved programs aimed at reducing costs and increasing asset yield.
• Achievement (or maintenance) of improvements in key occupational health
and safety statistics.
• Achievement of VIP turnover growth and market share.
1
In this Report, the term “normalised EBITDA” represents EBITDA which has been adjusted to exclude the impact of any variance from
theoretical win rate on VIP program play and the impact of significant items (where applicable).
Financial performance objectives are derived from Crown’s Annual Business Plan and Budget as the Crown Board
considers this is the best way to ensure that Crown meets that Annual Business Plan and Budget, aligning performance
outcomes with shareholder value.
A failure to achieve relevant financial performance objectives will result in Senior Executives receiving either, no STI bonus
or, where relevant financial performance objectives are only partially met, a reduced STI bonus. The Crown Board retains
discretion, however, to pay an STI bonus where financial performance objectives have not been met, but other objectives
have been achieved.
Appropriate non-financial performance objectives (such as those set out above) are also included in a Senior Executive’s
KPOs where they are within that Senior Executive’s sphere of influence and are relevant to the Senior Executive’s area
of work. These metrics are aligned with the achievement of Crown’s Annual Business Plan and Budget.
The performance of each Senior Executive against financial and non-financial KPOs is reviewed on an annual basis.
Whether KPOs have been achieved is determined by the Chief Executive Officer and Managing Director, having regard to
the operational performance of the business or function in which the Senior Executive is involved and the Chief Executive
Officer and Managing Director’s assessment of the attainment of the individual’s KPOs.
The Chief Executive Officer and Managing Director and the Chairman review performance based remuneration entitlements
and recommend the STI payments, subject to final approval by the Nomination and Remuneration Committee and the Board.
The Chief Executive Officer and Managing Director’s eligibility for an STI is reviewed by the Chairman and determined by the
Nomination and Remuneration Committee on behalf of the Board.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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In financial year 2013, the Group’s financial performance objectives were only met in part. Crown Perth met its financial
performance objectives for its non-VIP businesses. Although Crown Melbourne’s financial performance objectives were
not met, Crown Melbourne achieved 7% year on year normalised EBITDA growth on the back of significant margin
improvement. Crown Limited achieved its normalised NPAT budget, largely as a result of the performance of MCE’s
businesses in Macau and some important non-financial objectives were also achieved. Accordingly, STI bonuses were
reduced by 20% at Crown Perth, by 80% at Crown Melbourne and by 20% at Crown Limited. The Chief Executive
Officer received 80% of his target STI bonus of $1 million and did not receive any part of his further “discretionary bonus”
of $1 million for exceptional performance.
For a more detailed commentary on financial year 2013 STI bonuses see page 77.
2010 Crown LTI (Crown LTI)
The Crown LTI has been made available to selected senior executives with effect from 1 July 2010. All Senior Executives
together with approximately 15 other senior executives in the Crown group participate in the Crown LTI. Most participants
commenced participating in the Crown LTI with effect from 1 July 2010, but some executives who joined the Crown group
after this date are participating on a pro rata basis.
Operation of the Crown LTI
The award of a long term incentive bonus under the Crown LTI is dependent on Crown achieving certain earnings per
share hurdles (EPS Hurdles) in respect of, or in relation to, the four financial years ending 30 June 2011, 30 June 2012,
30 June 2013 and 30 June 2014 (each a Plan Year).
For the purposes of the Crown LTI, earnings per share (EPS) excludes contribution from Melco Crown Entertainment
Limited (MCE) and is calculated in accordance with the following formula:
Crown Profit
Total Crown Shares
where:
Crown Profit means, in respect of a Plan Year, the normalised net profit after tax of the group for that Plan Year (excluding
the contribution made by MCE and significant items); and
Total Crown Shares means the average of the largest number of Crown shares on issue during each day during the relevant
Plan Year.
How EPS Hurdles are derived
The EPS Hurdles adopted in the Crown LTI were derived directly from EPS forecasts put in place in respect of the 2011
Four Year Financial Plan (each an EPS Target). Accordingly, the Crown LTI is specifically designed to provide an incentive
to senior executives participating in the Crown LTI (Participants) to ensure the Four Year Financial Plan from financial year
2011 to financial year 2014 is met. The way in which Crown’s Four Year Financial Plans are developed has been described
in detail above.
The EPS Hurdles in financial year 2011, financial year 2012 and financial year 2013 are 98% of the EPS Target for the relevant
year in the Four Year Financial Plan. The EPS Hurdle in financial year 2014 is 100% of the EPS Target for the relevant year
in the Four Year Financial Plan.
The Four Year Financial Plan upon which EPS Hurdles are based has not been varied and remains the basis for determining
the Crown LTI bonus payments.
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Why EPS has been used as the single measure for Crown LTI
Crown has elected to use earnings per share as the single measure for its Crown LTI.
Earnings per share targets represent the product of individual business unit future performance projections (as determined
by relevant executives based on their business unit’s four year financial plan targets). These individual future performance
projections are aggregated with group costs, interest and taxes to arrive at a Crown group earnings per share target.
As a result, each executive knows with certainty what performance hurdles need to be met from their respective business
operations over an extended period in order to meet the EPS Targets. In addition, as the executive group collectively needs
to achieve the consolidated EPS Target, it fosters a cooperative approach across businesses to ensure the Crown group
as well as individual business unit outcomes are optimised.
In developing the Crown LTI, consideration was given by the Crown Board to a range of measures as well as multiple
measures, however, ultimately, it was determined that a single clear, unambiguous target in the form of an earnings per
share hurdle was best suited to Crown. For example, consideration was given to the use of a relative measure, such as
relative total shareholder return (TSR), however, it was decided such measures were not appropriate for Crown. This is
because there are a limited number of comparable companies within any sizeable ASX comparator group and many of
the larger companies listed on ASX bear little resemblance to Crown (e.g. financial institutions and resource companies).
As the results and share prices of such companies can be expected to move in line with different economic factors (such
as credit conditions and global resource market conditions) the Crown Board considered it to be inappropriate to base
Crown executives’ long term rewards on factors over which Crown executives have little influence.
In addition, the complexity of TSR and other relative measures (to accommodate changes in the comparator group, restructurings
and capital management initiatives) can, in some cases, cause them to be of limited value in motivating executives to individually
and collectively deliver outstanding performance. It is difficult for executives to equate their individual performance and efforts
to the performance of Crown’s share price relative to unrelated and incomparable companies.
Crown acknowledges that its EPS Targets are, to a large degree, an internal measure. However, Crown has disclosed
in this Report its historical EPS Targets and EPS Hurdles as well as actual EPS, so that shareholders are able to see the
“stretch” nature of these targets.
How bonuses accrue
If an EPS Hurdle is achieved in respect of a Plan Year, a Participant will become entitled to a portion of the potential
maximum bonus (Maximum Bonus) which may be achieved under the Crown LTI in accordance with the following table:
Plan Year
Plan Year 1
Plan Year 2
Plan Year 3
Plan Year 4
Percentage
15%
20%
25%
40%
Bonuses are only ultimately paid at the end of financial year 2014 either by way of the transfer of shares acquired under
the Crown LTI or the payment of cash. See further below.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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Effect of achieving an EPS Hurdle
If an EPS Hurdle is met in respect of a Plan Year, the Crown LTI provides that Crown will calculate the dollar value of the bonus
in respect of the relevant Plan Year (Plan Year Bonus) by multiplying the Maximum Bonus for the Participant by the relevant
percentage applicable to that Plan Year (as set out in the table above).
If the Plan Year is Plan Year 1, Plan Year 2 or Plan Year 3, Crown will pay the Plan Year Bonus earned by the Participant
to the nominated Trustee and instruct the Trustee to apply that Plan Year Bonus to acquire Crown shares on market
(Participant Shares), to be held on trust for the benefit of the Participant until the end of Plan Year 4 at which time the shares
will be transferred to the Participant.
If the Plan Year is Plan Year 4, Crown will pay the Plan Year 4 Plan Year Bonus to the Participant in cash. Crown will also
advise the Trustee, who will arrange for any shares held in trust to be transferred to the relevant Participant. The Plan Year
4 Plan Year Bonus is paid in cash because the Participant will be required to pay tax on the Bonus at this time.
Effect of not achieving one or more EPS Hurdles
If an EPS Hurdle is not met, the Crown LTI provides as follows:
• if an EPS Hurdle in respect of Plan Year 1, Plan Year 2 or Plan Year 3 is not met, Crown will calculate the Plan Year
Bonus which would have been applied to the purchase of Participant Shares had the relevant EPS Hurdle been met
(Carried Over Plan Year Bonus);
• if the EPS Hurdle in respect of Plan Year 4 is met:
– the Plan Year 4 Bonus will be paid by Crown to the relevant Participant in cash;
– the Trustee will arrange for any shares held in trust to be transferred to the relevant Participant; and
– if the sum of the EPS Targets for financial year 2011, financial year 2012, financial year 2013 and financial year 2014
(Cumulative EPS Hurdle) has also been met, any Carried Over Plan Year Bonuses will also be paid to the relevant
Participant in cash. The Carried Over Plan Year Bonuses (if any) are paid in cash because the Participant will be required
to pay tax on these Bonuses at this time.
• if the EPS Hurdle in respect of Plan Year 4 is not met but both the Fallback Plan Year 4 EPS Hurdle (i.e. 98% of the Plan
Year 4 EPS Target) and the Cumulative EPS Hurdle are met:
– the Plan Year Bonus in respect of Plan Year 4 will be paid by Crown to the relevant Participant in cash;
– any Carried Over Plan Year Bonuses will be paid to the relevant Participant in cash; and
– the Trustee will arrange for any shares held in trust to be transferred to the relevant Participant.
• if neither the EPS Hurdle in respect of Plan Year 4 nor the Fallback Plan Year 4 EPS Hurdle are met but the Cumulative
EPS Hurdle is met:
– the Plan Year Bonus in respect of Plan Year 4 will not be paid by Crown to the relevant Participant;
– any Carried Over Plan Year Bonuses will be paid to the relevant Participant in cash; and
– the Trustee will arrange for any shares held in trust to be transferred to the relevant Participant.
• if neither the EPS Hurdle in respect of Plan Year 4 nor the Cumulative EPS Hurdle are met (whether or not the Fallback
Plan Year 4 EPS Hurdle is met):
– the Plan Year Bonus in respect of Plan Year 4 will not be paid by Crown to the relevant Participant;
– any Carried Over Plan Year Bonuses will lapse and will not be paid by Crown to the relevant Participant; and
– the Trustee will arrange for any shares held in trust to be transferred to the relevant Participant.
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Illustration
The following is an illustration of a range of outcomes which might have been achieved by a Participant under the Crown
LTI. It does not include every permutation or combination of outcomes which the Crown LTI was designed to achieve.
Key: (cid:57) = Achieved (cid:56) = Not achieved.
Year 1
EPS Hurdle Met?
15%
Year 2
EPS Hurdle Met?
20%
Year 3
EPS Hurdle Met?
25%
Year 4
EPS Hurdle Met?
40%
Fallback Year 4
EPS Hurdle Met?
40%
Cumulative EPS Hurdle Met?
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:56)
(cid:57)
(cid:57)
(cid:57)
(cid:56)
(cid:56)
(cid:57)
(cid:57)
(cid:56)
(cid:56)
(cid:56)
(cid:57)
(cid:56)
(cid:56)
(cid:56)
(cid:56)
(cid:57)
60% shares
40% cash
(cid:57)
60% shares
40% cash
(cid:57)
60% shares
No cash
(cid:57)
35% shares
65% cash
(cid:57)
35% shares
25% cash
(cid:57)
15% shares
85% cash
(cid:57)
15% shares
45% cash
(cid:56)
60% shares
No cash
(cid:56)
60% shares
No cash
(cid:56)
35% shares
No cash
(cid:56)
35% shares
No cash
(cid:56)
15% shares
No cash
(cid:56)
15% shares
No cash
(cid:56)
No shares
No cash
(cid:57)
(cid:56)
(cid:57)
(cid:56)
(cid:57)
(cid:56)
(cid:56)
Note: the percentage allocations between cash and shares are based on the Maximum Bonus, with the share component being valued based
on the value of Crown shares at the time of acquisition. Subsequent movements in the price of Crown shares may result in changes to the cash
and share proportions.
What happens to dividends earned on Crown shares acquired under the Crown LTI
All dividends received on shares held in trust are passed through to the Participant. All bonuses earned in the final year
of the Crown LTI (including any Carried Over Plan Year Bonuses) will be paid in cash and so no dividends are earned
or passed through to executives in respect of these bonuses.
What happens if an executive’s employment with Crown ceases
If a Participant’s employment with Crown ceases, then the Participant would not be entitled to any part of his or her Crown
LTI bonus, except for where the Participant’s employment has been terminated by Crown without cause, in which case the
Participant will be entitled to any tranche (in the form of shares held on trust) which has vested prior to the date of termination.
The shares will only be transferred to the Participant after the end of financial year 2014, in accordance with the terms
of the Crown LTI.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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How EPS Hurdles can be amended
In the event that corporate control events or capital reconstruction events impact the achievement of EPS Hurdles, then
the Crown Board has discretion to amend the EPS Hurdles in such a way that does not materially disadvantage Participants.
The Crown Board retains general power to amend the rules of the Crown LTI from time to time.
How the Crown LTI ameliorates issues with “cliff’s edge” vesting
The key features of the Crown LTI are that:
• the EPS Hurdles for Plan Years 1, 2 and 3 are set at 98% of the EPS Targets in the 2011 Four Year Financial Plan; and
• if at the end of financial year 2014, on a cumulative basis, the EPS Hurdles over all four years are met, then any Carried
Over Plan Year Bonuses will vest and be paid to the relevant senior executive in cash.
Accordingly, when viewed as a whole, the Maximum Bonus under the Crown LTI consists of four separate and individually
achievable targets, as well as a cumulative target. As a result, there are a range of potential outcomes depending on
performance against target in each year of the Crown LTI as well as the cumulative result.
This is designed to ameliorate issues with “cliff’s edge” vesting, by giving participants a “second chance” to have a tranche
paid when an individual EPS Hurdle is not met.
Disclosure of prospective EPS Targets and historical EPS Targets
The disclosure of prospective EPS Targets would have the consequence of providing the market and Crown’s competitors
with Crown’s forecasted financial targets. It has been Crown’s longstanding practice not to disclose prospective financial
information and financial forecasts. Accordingly, Crown will not publicly disclose prospective EPS Targets.
Such concerns, however, are not as significant in relation to historical EPS Targets and EPS Hurdles and performance
against those historical EPS Hurdles.
Set out below are the EPS Targets and EPS Hurdles which applied for financial years 2011, 2012 and 2013 together with
Crown’s actual EPS for financial years 2011, 2012 and 2013.
EPS Target
(2011 Four
Year Financial
Plan)
EPS Target
Growth (2011
Four Year
Financial Plan)
FY11
FY12
FY13
44.1 cents
48.7 cents
58.9 cents
N/A
10.4%
20.9%
Actual EPS
(excludes MCE
and significant
items)
42.3 cents
43.9 cents
44.0 cents
EPS Hurdle
(Crown LTI)*
43.2 cents
47.7 cents
57.7 cents
Growth (from
previous year)
Tranche
Vested?
(3.0%)
3.7%
0.2%
No
No
No
*
In financial year 2011, financial year 2012 and financial year 2013, the EPS Hurdle is 98% of the 2011 Four Year Financial Plan EPS Target.
All references in the above table to “EPS” exclude the contribution made by MCE.
In addition, under the Plan Rules for the Crown LTI, EPS for the purposes of measuring performance against EPS Hurdles
excludes significant items. Accordingly, the mark-to-market loss on the sale of Crown’s investment in Echo Entertainment
Group Limited (which was accounted for as a significant item) did not impact the calculation of Crown’s performance
against the 2013 EPS Hurdles. The Crown Nomination and Remuneration Committee conducts an annual review of EPS
Hurdles to consider whether the Board should exercise its discretion to adjust the EPS Hurdles. In financial year 2013, the
Committee determined that the exercise of its discretion was not warranted. A final assessment will be conducted by the
Nomination and Remuneration Committee at the conclusion of the term of the Crown LTI in financial year 2014.
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Given that the financial year 2011, 2012 and 2013 EPS Hurdles were not met, participants have lost the opportunity to acquire
shares under the Crown LTI.
The range of outcomes available to a Participant are now reduced.
Set out below is an illustration of future outcomes (recognising that the financial year 2011, 2012 and 2013 EPS Hurdles
were not met).
Year 1
EPS Hurdle Met?
15%
Year 2
EPS Hurdle Met?
20%
Year 3
EPS Hurdle Met?
25%
Year 4
EPS Hurdle Met?
40%
Fallback Year 4
EPS Hurdle Met?
40%
Cumulative EPS Hurdle Met?
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(cid:56)
(cid:56)
(cid:56)
(cid:56)
(cid:56)
(cid:57)
(cid:56)
(cid:57)
(cid:57)
No shares
100% cash
(cid:56)
No shares
40% cash
(cid:56)
No shares
No cash
Note: the percentage allocations between cash and shares are based on the Maximum Bonus, with the share component being valued based
on the value of Crown shares at the time of acquisition. Subsequent movements in the price of Crown shares may result in changes to the cash
and share proportions.
MCE Contribution Bonus
At the commencement of the Crown LTI, the Crown Board considered it of high importance to the Crown group that MCE
achieve the MCE “Contribution” targets in Crown’s Four Year Financial Plan and that certain executives who played a key
role in Crown’s relationship with MCE be provided with an extra incentive to ensure this goal was achieved. Mr Craigie
and Mr Nisbet are Crown nominees on the MCE Board and Mr Barton works with the MCE Chief Financial Officer in
providing assistance on MCE financial matters.
Accordingly, in the case of Mr Craigie, Mr Barton and Mr Nisbet, part of the Maximum Bonus to which they are eligible (the
MCE Contribution Bonus) is dependent on MCE achieving certain MCE Contribution hurdles (MCE Contribution Hurdles).
Mr Craigie’s maximum potential MCE Contribution Bonus is approximately 15% of his Maximum Bonus. For Mr Barton,
it is approximately 11% and for Mr Nisbet it is approximately 17%.
The MCE Contribution Hurdles are derived from the MCE Contribution targets in Crown’s 2011 Four Year Financial Plan
(MCE Contribution Targets). MCE Contribution is defined as Crown’s percentage interest in MCE from time to time, multiplied
by the normalised net profit after tax of MCE.
If an MCE Contribution Hurdle is achieved in respect of a Plan Year, a Participant will become entitled to a portion of their
potential Maximum Bonus. The rules on the effect of achieving or not achieving MCE Contribution Hurdles are the same
as for the EPS Bonus.
The MCE Contribution Bonus is independent of the portion of the bonus which is referable to meeting the EPS Hurdles
(EPS Bonus). Accordingly, Mr Craigie, Mr Barton and Mr Nisbet may achieve some or all of their entitlement to the MCE
Contribution Bonus without achieving any part of the EPS Bonus and the converse also applies.
Disclosure of MCE Contribution Targets
For the same reasons set out above, Crown elects not to publicly disclose prospective MCE Contribution Targets.
Such concerns, however, are not as significant in relation to historical MCE Contribution Targets and MCE Contribution
Hurdles and performance against those historical MCE Contribution Hurdles.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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Set out below are the MCE Contribution Targets and MCE Contribution Hurdles for financial years 2011, 2012 and 2013
and MCE’s actual Contribution for financial years 2011, 2012 and 2013.
MCE
Contribution
Target (2011
Four Year
Financial Plan)
MCE
Contribution
Target Growth
(2011 Four Year
Financial Plan)
MCE
Contribution
Hurdle*
Actual MCE
Contribution
Actual MCE
Contribution
Growth
Tranche
Vested?
FY11
FY12
FY13
(US$30.9 million)
N/A
(US$31.5 million)
US$20.4 million
US$37.2 million
220.4%
US$36.5 million
US$95.0 million
US$86.3 million
132.0%
US$84.6 million
US$156.0 million
154.7%
365.7%
64.2%
Yes
Yes
Yes
*
In financial year 2011, financial year 2012 and financial year 2013, the MCE Contribution Hurdle is 98% of the 2011 Four Year Financial Plan
MCE Contribution Target.
Given that the financial year 2011, financial year 2012 and financial year 2013 MCE Contribution Hurdles were met,
participants will become entitled to the maximum proportion of shares as part of the MCE Contribution Bonus portion
of the Crown LTI.
Details of Participation of Senior Executives in Crown LTI
Of the Senior Executives named in this Report, five participate in the Crown LTI. Details of potential Crown LTI cash
bonuses are as follows:
Senior Executive
Ken Barton
Rowen Craigie
Barry Felstead
Greg Hawkins*
Todd Nisbet
Maximum
Value over
four year
period
30 June 2011
(15%)
30 June 2012
(20%)
30 June 2013
(25%)
30 June 2014
(40%)
$4,500,000
$675,000
$900,000
$1,125,000
$1,800,000
$12,300,000
$1,845,000
$2,460,000
$3,075,000
$4,920,000
$3,600,000
$3,000,000
$5,250,000
$540,000
$271,500
$787,500
$720,000
$642,000
$900,000
$802,500
$1,440,000
N/A
$1,050,000
$1,312,500
$2,100,000
* As a result of a senior management restructure, Mr Hawkins’ position was made redundant effective 1 August 2013 and Mr Hawkins has agreed
to leave the group. As no tranche of Mr Hawkins’ Crown LTI Bonus has been paid, with no shares held in trust, Mr Hawkins is not entitled to any
part of his Crown LTI Bonus.
Mr Hawkins’ commencement date with Crown Melbourne Limited was 6 December 2010. Accordingly, his first year entitlement to an EPS Bonus
has been reduced on a pro rata basis to approximately seven months of participation in the Crown LTI. Had Mr Hawkins been a participant from
1 July 2010, his Maximum Value over the four year period would have been $3,210,000. The entitlements for 30 June 2012, 30 June 2013 and
30 June 2014 have been determined by reference to that Maximum Value. On account of the pro rata reduction, the total possible EPS Bonus
which Mr Hawkins would have been able to achieve was $3,000,000.
As noted in the tables above:
• in financial year 2011, Crown did not meet the relevant EPS Hurdle and accordingly, EPS Bonuses for financial year 2011
have not vested. The MCE Contribution Hurdle for financial year 2011 was, however, achieved. Accordingly, an entitlement
to 15% of their potential MCE Contribution Bonus for each of Mr Craigie, Mr Barton and Mr Nisbet has vested;
• in financial year 2012, Crown did not meet the relevant EPS Hurdle and accordingly, EPS Bonuses for financial year 2012
have not vested. The MCE Contribution Hurdle for financial year 2012 was, however, achieved. Accordingly, an entitlement
to 20% of their potential MCE Contribution Bonus for each of Mr Craigie, Mr Barton and Mr Nisbet has vested; and
• in financial year 2013, Crown did not meet the relevant EPS Hurdle and accordingly, EPS Bonuses for financial year 2013
have not vested. The MCE Contribution Hurdle for financial year 2013 was, however, achieved. Accordingly, an entitlement
to 25% of their potential MCE Contribution Bonus for each of Mr Craigie, Mr Barton and Mr Nisbet has vested.
Set out below are the vested bonus amounts for the above participants in respect of financial years 2011, 2012 and 2013
associated with the MCE Contribution Hurdle:
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Senior Executive
Ken Barton
Rowen Craigie
Barry Felstead
Greg Hawkins
Todd Nisbet
Maximum Bonus
over four
year period
Vested in relation to
the financial year
ended 30 June 2011
Vested in relation to
the financial year
ended 30 June 2012
Vested in relation to
the financial year
ended 30 June 2013
$4,500,000
$12,300,000
$3,600,000
$3,000,000
$5,250,000
$75,000
$270,000
Nil
Nil
$100,000
$360,000
Nil
Nil
$125,000
$450,000
Nil
Nil
$135,000
$180,000
$225,000
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In accordance with the rules of the Crown LTI, the vested component of the cash bonus for financial years 2011 and 2012
has been (and in the case of financial year 2013 will be) applied by Crown to fund the purchase of Crown shares on market,
which are to be held on trust for each of Mr Craigie, Mr Barton and Mr Nisbet until the end of financial year 2014.
Details of shares held on trust for Mr Craigie, Mr Barton and Mr Nisbet are set out below:
Senior Executive
Shares Acquired with FY11 Bonus1
Shares Acquired with FY12 Bonus2
Ken Barton
Rowen Craigie
Todd Nisbet
1. Shares acquired for an average price of $7.65 per share.
2. Shares acquired for an average price of $9.24 per share.
9,782
35,217
17,608
10,799
38,875
19,438
As at the date of this report, no shares had yet been acquired with the Bonus for financial year 2013.
Relationship between policy and company performance
As detailed above in the sections on Fixed Remuneration, STI and the Crown LTI, various elements of Crown’s remuneration
policy are linked to company performance, in particular, the achievement of Crown’s Board approved Annual Budget and
Business Plan (in the case of STI) and Crown’s Board approved Four Year Financial Plan (in the case of the Crown LTI).
The Crown Board has sought to achieve this link by requiring the achievement of an annual level of normalised EBITDA
and net profit after tax (in the case of STI) or predetermined EPS Targets and the achievement of MCE Contribution Targets
(in the case of the Crown LTI).
Full details of how these links have been achieved are set out in the sections of the Report above, but, in summary:
• An STI may be payable if Crown achieves its budgeted financial objectives and where an individual achieves his or her
annual KPOs, assessed using a combination of financial and non-financial measures;
• The Crown LTI may be payable where Crown achieves predetermined EPS Hurdles in financial year 2011, financial year
2012, financial year 2013 and financial year 2014; and
• A component of the Crown LTI may be payable to key senior executives involved in managing the performance of MCE,
where MCE has achieved predetermined MCE Contribution Targets.
This year, normalised EBITDA generated by Crown Melbourne and Crown Perth, Crown’s wholly owned Australian casinos,
grew by 6.9%. The compound average normalised EBITDA growth for Crown Melbourne and Crown Perth for the five year
period commencing from financial year 2008 through to financial year 2013 was 4.6%. Normalised Crown group NPAT grew
by 14.0% in financial year 2013. The compound average normalised NPAT growth for the Crown group for the five year period
commencing from financial year 2008 through to financial year 2013 was 5.0%.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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The table and graph below set out information about movements in shareholder wealth for the years ended 30 June 2009
to 30 June 2013.
Year ended
30 June 2009
Year ended
30 June 2010
Year Ended
30 June 2011
Year Ended
30 June 2012
Year Ended
30 June 2013
Share price at start of period
Share price at end of period
$9.29
$7.27
$7.27
$7.77
$7.77
$8.93
$8.93
$8.49
Full year dividend
37 cents1
37 cents1
37 cents2
37 cents3
Basic/diluted earnings per share4
33.74 cps
38.54 cps
44.29 cps
69.78 cps
$8.49
$12.11
37 cents3
67.40 cps
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
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Year ended
30 June 2009
Year ended
30 June 2010
Year ended
30 June 2011
Year ended
30 June 2012
Year ended
30 June 2013
Basic/diluted earnings per share4
Share price at end of period
e
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$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
Notes:
1. Franked to 60% with none of the unfranked component comprising conduit foreign income.
2. Interim dividend franked to 60% and final dividend franked to 50% with none of the unfranked components comprising conduit foreign income.
3. Franked to 50% with none of the unfranked component comprising conduit foreign income.
4. Excluding the effect of discontinued operations and significant items.
Policy on entering into transactions in associated products which limit economic risk
Directors and Senior Executives are prohibited from entering into transactions in associated products which limit economic
risk. This policy is further described in the Corporate Governance Statement.
Remuneration Details for Non-Executive Directors
Non-Executive Directors
Non-Executive Directors are entitled to a base fee of $100,000 per annum for acting as a Director of Crown.
Non-Executive Directors acting on the Board of Crown Melbourne Limited are entitled to receive a further fee of $60,000
per annum.
Non-Executive Directors of Crown are entitled to additional fees if they act as either chair or a member of an active
Committee (the Audit & Corporate Governance Committee, the Occupational Health, Safety & Environment Committee,
the Nomination and Remuneration Committee or the Risk Management Committee):
• $20,000 per annum for acting as Chair of an active Board Committee; or
• $10,000 per annum for acting as a member of an active Board Committee.
All Directors are entitled to complimentary privileges at Crown Melbourne and Crown Perth facilities.
In accordance with Crown’s constitution, Non-Executive Directors’ fees are currently determined within an aggregate
Non-Executive Directors’ fee cap of $1,300,000 per annum.
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Set out below is a table showing Non Executive Director remuneration for financial years 2013 and 2012.
Remuneration Table – Non-Executive Directors
Short Term Benefits
Financial
Year
Salary &
Fees
Non
Monetary
Other
Post-
employment
Benefit –
Superannuation
Long Term Incentives
Cash
Based
Equity
Based
Termina-
tion
Benefits
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
120,000
120,000
100,000
58,333
110,000
110,000
210,000
210,000
140,000
140,000
190,000
190,000
–
–
–
–
101,750
77,000
971,750
905,333
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10,800
10,800
9,000
5,250
9,900
9,900
–
–
–
–
16,470
15,775
–
–
–
–
8,250
42,900
54,420
84,625
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
130,800
130,800
109,000
63,583
119,900
119,900
210,000
210,000
140,000
140,000
206,470
205,775
–
–
–
–
110,000
119,900
1,026,170
989,958
Ben Brazil
Non-Executive Director
Helen Coonan1
Non-Executive Director
Christopher Corrigan
Non-Executive Director
Rowena Danziger2
Non-Executive Director
Geoffrey Dixon
Non-Executive Director
John Horvath2
Non-Executive Director
Ashok Jacob3
Non-Executive Director
Michael Johnston3
Non-Executive Director
Harold Mitchell
Non-Executive Director
2013 TOTALS
2012 TOTALS
Notes:
1. Ms Coonan was appointed on 2 December 2011.
2. Mrs Danziger and Professor Horvath each received Directors’ fees at a rate of $60,000 per annum for their participation on the
Crown Melbourne Limited Board.
3. Neither Mr Jacob nor Mr Johnston receives remuneration for their services to Crown.
Remuneration details for Senior Executives
Senior Executives
Senior Executives are employed under service agreements with Crown or a subsidiary of Crown. Common features
to these service agreements include (unless noted otherwise):
• an annual review of the executive’s fixed remuneration, with any increases requiring approval of the Chief Executive
Officer and Managing Director and the Nomination and Remuneration Committee and dependent on Crown’s financial
performance, the individual’s KPO 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 KPOs;
• a provision that Crown may ask the executive to act as a 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 maintains licences required and issued by relevant regulatory
authorities (such as the Victorian Commission for Gambling and Liquor Regulation and the Western Australian Gaming
and Wagering Commission);
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• 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, a provision that notice may be given in writing or payment
may be made (wholly or partly) in lieu of notice;
• a provision that all contracts may be terminated without notice by Crown for serious misconduct; and
• all Senior Executives are entitled to complimentary privileges at Crown Melbourne and Crown Perth facilities.
Specific details of each Senior Executive’s contract of employment which applied during the financial year ending 30 June 2013
are summarised in the tables on the following pages. Where a Senior Executive has had more than one contract of employment
during the year, or where a new contract of employment has been entered into post year end, this has been noted in
those tables.
Summary of New or Amended Contracts of Employment
Senior Executive
Date of new or amended
employment agreement
Key features/changes from previous contract
John H Alexander
Extension and variation of
employment agreement entered
into on 13 September 2013.
Mr Alexander’s extended and varied contract of employment
has no fixed term and may be terminated by Mr Alexander
on 12 months’ notice or by Crown on 12 months’ notice.
Mr Alexander is no longer entitled to an annual increase in
remuneration based on CPI.
Mr Alexander’s post-employment restraint will apply for periods
of up to 12 months.
Barry J Felstead
New employment agreement
entered into on 1 August
2013.
Mr Felstead is now employed by Crown Limited in the role of
Chief Executive Officer – Australian Resorts and Chief Executive
Officer – VIP International.
Commensurate with his new role, Mr Felstead’s total fixed
remuneration per annum has been increased to $2,100,000,
with an annual review at the discretion of Crown.
A travel allowance of up to $50,000 per annum applies.
Mr Felstead’s employment agreement has no fixed term
and may be terminated by Mr Felstead on 12 months’ notice
or by Crown on 12 months’ notice.
Mr Felstead’s post-employment restraint will apply for periods
of up to 12 months.
Mr Felstead’s short term incentive target percentage remains
at 40%.
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Summary of Contracts of Employment Applicable During the Year Ended 30 June 2013
James D Packer
John H Alexander
Current Position
Chairman
Fixed Remuneration
Base salary:
Nil.
The 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’s employment with
Crown Limited continued on the terms
set out in his employment agreement.
That employment agreement was
extended and amended by agreement
dated 13 September 2013. The following
summarises the terms of Mr Alexander’s
employment agreement, with key changes
between that employment agreement and
his amended and restated employment
agreement summarised above.
$1,483,530 per annum
Superannuation
Nil
Compulsory Superannuation Guarantee
Contributions up to the maximum contribution
base, equating to $16,470 per annum.
Non-monetary benefits and other:
Complimentary privileges at Crown Melbourne
and Crown Perth facilities.
Complimentary privileges at Crown Melbourne
and Crown Perth facilities and superannuation.
Performance based
remuneration
2013 Percentage breakdown
of remuneration
Not applicable
Not applicable
Not applicable
Fixed remuneration1
100%
STI
0%
LTI
0%
Post-employment benefits
Not applicable
Nil
Post-employment restraint
Not applicable
Termination
By Senior Executive:
By Crown:
Termination benefits
Payments made prior to
commencement
Not applicable
Not applicable
Not applicable
Not applicable
Directors’ Fees
Nil
1. Includes voluntary and compulsory superannuation.
Crown was entitled to impose a restraint for
the five year term of Mr Alexander’s employment
agreement up to 30 November 2012.
12 months’ notice.
12 months’ notice without cause; one month’s
notice for performance issues; three months’
notice due to incapacity.
Nil
Nil
Nil
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Current Position
Fixed Remuneration
Base salary:
Superannuation
Rowen B Craigie
Kenneth M Barton
Chief Executive Officer and Managing
Director (commenced 1 December 2007):
Mr Craigie’s five year employment agreement
with Crown Limited will expire on 15
September 2015.
Chief Financial Officer (commenced
9 March 2010): Mr Barton’s employment
agreement with Crown Limited commenced
on 9 March 2010 and expires in March 2015.
$2,983,530 per annum.
$1,333,530 per annum.
Compulsory Superannuation Guarantee
Contributions up to the maximum contribution
base, equating to $16,470 per annum.
Compulsory Superannuation Guarantee
Contributions up to the maximum contribution
base, equating to $16,470 per annum.
Non-monetary benefits and other:
Complimentary privileges at Crown Melbourne
and Crown Perth facilities, mobile telephone
and salary sacrifice arrangements for motor
vehicle and superannuation.
Complimentary privileges at Crown Melbourne
and Crown Perth facilities, mobile telephone
and salary sacrifice arrangements for motor
vehicle and superannuation. Until Mr Barton
relocates to Melbourne, Crown will meet the
weekly travel costs of his Melbourne/Sydney
commuting and will provide hotel
accommodation while in Melbourne.
Performance based remuneration
STI:
A maximum of $1,000,000, assessed by
the Chairman based on the achievement
of personal KPOs. 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.
Mr Barton’s annual target STI is $500,000 and
payment depends on meeting agreed personal
KPOs. The STI may, at the discretion of the
Nomination and Remuneration Committee,
be increased to a maximum of $750,000 if
Mr Barton exceeds his KPOs and Crown also
achieves its performance objectives.
LTI:
Mr Craigie participates in the Crown LTI.
See further page 62.
Mr Barton participates in the Crown LTI.
See further page 62.
2013 Percentage breakdown
of remuneration
Fixed remuneration1
60%
STI
16%
LTI
24%
Fixed remuneration1
64%
STI
18%
LTI
18%
Post-employment benefits
Nil
Post-employment restraint
Crown may impose a restraint for various
periods up to 24 months.
Nil
Nil
Termination
By Senior Executive:
By Crown:
Termination benefits
12 months’ notice.
6 months’ notice.
12 months’ notice without cause; one month’s
notice for performance issues (following least
three months’ notice to improve); three
months’ notice for incapacity.
6 months’ notice without cause; one month’s
notice for performance issues (following least
3 months’ notice to improve); 3 months’ notice
for incapacity.
Nil
Subject to the receipt of shareholder
approval, Mr Craigie will be entitled to
receive a severance payment equal to
24 months’ fixed remuneration in the event
of early termination of his employment
by Crown. The imposition of Mr Craigie’s
post-employment restraint is conditional
upon receipt of his severance payment.
Payments made prior to
commencement
Directors’ Fees
Nil
Nil
1. Includes voluntary and compulsory superannuation.
A $400,000 sign on payment in 2010 less
applicable taxes in order to compensate
Mr Barton for unvested incentives forfeited
on cessation of employment with his
previous employer.
Nil
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Current Position
Greg F Hawkins
Barry J Felstead
Chief Executive Officer, Crown Melbourne
(from 5 December 2011): Mr Hawkins
commenced the role of Chief Executive Officer
of Crown Melbourne on 5 December 2011.
As a result of a senior management restructure,
Mr Hawkins’ position was made redundant
effective 1 August 2013 and Mr Hawkins
has agreed to leave the group.
Chief Executive Officer, Crown Perth (from
6 March 2007): During FY13, Mr Felstead’s
employment arrangements were governed
by an employment agreement entered into on
24 June 2011 which was to expire in accordance
with its terms. Mr Felstead entered into a new
employment agreement on 1 August 2013.
The key changes between the employment
agreement which applied during FY13 and
Mr Felstead’s new employment agreement
are summarised above.
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Fixed Remuneration
Base salary:
Superannuation
Non-monetary benefits and other:
Performance based remuneration
STI:
$1,065,030 per annum.
$1,193,530 per annum.
Compulsory Superannuation Guarantee
Contributions up to the maximum contribution
base, equating to $16,470 per annum.
Compulsory Superannuation Guarantee
Contributions up to the maximum contribution
base, equating to $16,470 per annum.
Complimentary privileges at Crown Melbourne
and Crown Perth facilities, mobile telephone
and salary sacrifice arrangements for motor
vehicle and superannuation.
Complimentary privileges at Crown Melbourne
and Crown Perth facilities, mobile telephone
and salary sacrifice arrangements for motor
vehicle and superannuation. Mr Felstead is
entitled to one annual economy airfare between
Perth and Melbourne for himself and his family.
Discretionary STI based on the performance
of Crown Limited and the achievement of
personal KPOs. Mr Hawkins’ annual target
STI is 40% of his TEC.
Discretionary STI based on the performance
of Crown and the achievement of personal
KPOs. Mr Felstead’s annual target STI
is 40% of his TEC.
LTI:
Mr Hawkins participates in the Crown LTI.
See further page 62.
Mr Felstead participates in the Crown LTI.
See further page 62.
2013 Percentage breakdown
of remuneration
Fixed remuneration1
79%
STI
6%
LTI
15%
Fixed remuneration1
65%
STI
21%
LTI
14%
Post-employment benefits
Nil
Nil
Post-employment restraint
Crown may impose various restraint
periods up to a period of up to 12 months
post-employment.
Crown may impose various restraint
periods up to a period of 12 months
post-employment.
Termination
By Senior Executive:
By Crown:
6 months’ notice.
6 months’ notice.
12 months’ notice without cause; one month’s
notice for performance issues; three months’
notice due to incapacity.
12 months’ notice without cause; one month’s
notice for performance issues; three months’
notice due to incapacity.
Termination benefits
Payments made prior to
commencement
Directors’ Fees
Nil
Nil
Nil
1. Includes voluntary and compulsory superannuation.
Nil
Nil
Nil
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Current Position
Fixed Remuneration
Base salary:
Superannuation
Non-monetary benefits
and other:
W. Todd Nisbet
Executive Vice President – Strategy
and Development (from 9 August 2010):
Mr Nisbet’s employment agreement with Crown
Limited is due to expire in November 2014.
$1,933,530 per annum.
Compulsory Superannuation Guarantee
Contributions up to the maximum contribution
base, equating to $16,470 per annum.
Complimentary privileges at Crown Melbourne
and Crown Perth facilities, mobile telephone
and salary sacrifice arrangements for motor
vehicle and superannuation.
Mr Nisbet is entitled to Relocation Benefits to
assist with the relocation of him and his family
from Nevada, USA to Melbourne.
During Mr Nisbet’s employment with Crown,
he will also be entitled to additional customary
expatriate benefits for himself and his family.
Upon cessation of employment Mr Nisbet will
be entitled to relocation benefits for him and
his family to Las Vegas.
Performance based remuneration
STI:
Discretionary STI based on the performance
of Crown and the achievement of personal
KPOs. Mr Nisbet’s annual target STI is 50%
of his base salary.
LTI:
Mr Nisbet participates in the Crown LTI. See
further page 62.
2013 Percentage breakdown
of remuneration
Fixed remuneration1
60%
STI
26%
LTI
14%
Post-employment benefits
Nil
Post-employment restraint
Crown may impose various restraint periods
up to a period of up to 12 months
post-employment.
Termination
By Senior Executive:
By Crown:
6 months’ notice.
12 months’ notice without cause; one month’s
notice for performance issues; three months’
notice due to incapacity.
Termination benefits
Payments made prior to
commencement
Directors’ Fees
Nil
Nil
Nil
1. Includes voluntary and compulsory superannuation.
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Remuneration table for Senior Executives
The structure of senior executive remuneration has been described in detail in this Report, both generically and specifically
in relation to each named Senior Executive. In addition, a table summarising all remuneration to be attributed to each
Senior Executive for the financial years ending 30 June 2013 and 30 June 2012 is set out below. Accounting Standards
are prescriptive in relation to the required presentation of remuneration tables. Accordingly, as an aid to understanding,
the following additional information should be read in conjunction with the table set out below.
Fixed Remuneration
Neither of Mr Alexander nor Mr Craigie received an increase to their fixed remuneration in financial year 2013 as compared
with financial year 2012.
Mr Barton and Mr Hawkins received increases to their fixed remuneration of 3.8% and 3.0% respectively in financial year
2013 as compared with financial year 2012. Mr Nisbet and Mr Felstead received increases to their fixed remuneration
of 24% and 18% respectively, reflecting the increased scope of their responsibilities.
Short Term Incentives (STI)
In financial year 2013, the Group’s financial performance objectives were only met in part. Crown Perth met its financial
performance objectives for its non-VIP businesses. Although Crown Melbourne’s financial performance objectives were not
met, Crown Melbourne achieved 7% year on year normalised EBITDA growth on the back of significant margin improvement.
Crown Limited achieved its normalised NPAT budget, largely as a result of the performance of MCE’s businesses in Macau.
However, some important non-financial objectives were achieved, including successfully moving to Stage Three of the
New South Wales Unsolicited Proposal process for the proposed Crown Sydney Hotel Resort, solid performance in the
Group’s international businesses and successful bank refinancing and debt capital market projects. Accordingly, STI bonuses
were reduced by 20% at Crown Perth, by 80% at Crown Melbourne and by 20% at Crown Limited. Mr Craigie, Mr Barton,
Mr Felstead and Mr Hawkins received STI bonuses in accordance with the above. Mr Craigie received 80% of his target STI
bonus of $1 million and did not receive any part of his further “discretionary bonus” of $1 million for exceptional performance.
In the case of Mr Nisbet, he received a discretionary STI bonus based on the achievement of additional significant non-
financial performance objectives including the successful completion of major capital expenditure projects, design of the
proposed Crown Sydney Hotel Resort and supporting MCE with the Philippines project.
Long Term Incentives (LTI)
As summarised earlier, Senior Executives participate in the Crown LTI.
In accordance with relevant accounting standards, the Crown LTI is included in the remuneration for each Senior Executive
on the basis that it is considered more likely than not at the date of this financial report that the performance condition
and service condition will occur evenly over the life of the Crown LTI, notwithstanding that the benefits will vest for the
Senior Executives at a different rate. During the 2013 financial year, Crown reassessed the total potential LTI payments
and amended its provisioning accordingly. The total expected LTI payments will continue to be expensed on a straight line
basis over the period of the Plan. Accordingly, 25% of the total expected Crown LTI bonus for which each Senior Executive
is potentially eligible will be included in the remuneration table for each of the four active years of the plan, regardless of
whether a bonus has vested or not.
As explained earlier, the first, second and third tranches of the Crown LTI represents 15%, 20% and 25% (respectively)
of the total Crown LTI bonus for which each Senior Executive is eligible. The EPS Hurdle of the Crown LTI for financial
years 2011, and 2012 and 2013 were not met, but the MCE Contribution Hurdles were met, resulting in 15%, 20% and 25%
(respectively) of the MCE Contribution Bonus of the Crown LTI for eligible Senior Executives vesting. Detail of the actual
sums vested to relevant Senior Executives has been provided earlier.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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Short Term Benefi ts
Financial
Year
Salary &
Fees
Non
Monetary
Other
STI
% of
max STI
Post-
employment
Benefi ts –
Super-
annuation4
Long Term Incentives
Equity
Based –
Crown LTI5
Termina-
tion
Benefi ts
Cash
Based
James Packer
Chairman
John Alexander
Executive Deputy Chairman
Ken Barton
Chief Financial Offi cer
Rowen Craigie
Chief Executive Offi cer
& Managing Director
Barry Felstead4
Chief Executive Offi cer
Crown Perth
Greg Hawkins4
Chief Executive Offi cer
Crown Melbourne Limited
Todd Nisbet1
Executive Vice President
– Strategy & Development
2013 TOTALS
2012 TOTALS
Notes:
2013
2012
–
–
2013 1,483,530
2012 1,484,225
–
–
–
–
2013 1,333,530
45,522
2012 1,284,225
56,753
2013 2,983,530
2012 2,984,225
2013 1,193,530
2012 1,014,225
2013 1,065,030
2012
970,588
2013 1,933,530
2012 1,560,025
–
–
–
–
–
–
–
–
–
–
–
–
400,000
550,000
800,000
800,000
390,000
–
–
–
–
80%
110%
80%
80%
80%
650,000
158%
–
–
–
–
–
–
–
–
–
–
–
–
86,500
84,000
248,675
975,000
240,876
985,000
20%
20%
100%
125%
9,992,680
45,522
248,675 2,651,500
9,297,513
56,753
240,876 3,069,000
–
–
16,470
15,775
16,470
15,775
16,470
15,775
16,470
15,775
16,470
15,775
16,470
15,775
98,820
94,650
–
–
–
–
–
–
–
–
–
405,000
– 1,125,000
– 1,185,000
– 3,075,000
–
–
–
–
–
252,000
900,000
210,000
750,000
529,500
– 1,312,500
– 2,581,500
– 7,162,500
Total
–
–
1,500,000
1,500,000
2,200,522
3,031,753
4,985,000
6,875,000
1,852,000
2,580,000
1,378,000
1,820,363
3,703,175
4,114,176
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
15,618,697
–
19,921,292
1. Refer to the summary of Mr Nisbet’s contract of employment for a description of the short term benefits to which Mr Nisbet is entitled.
2. Long service leave accrued balances have increased during the financial year ended 30 June 2013 for the following Senior Executives:
Mr Alexander $25,000, Mr Barton $24,430, Mr Craigie $50,000, Mr Felstead $75,010, Mr Hawkins $22,426, Mr Nisbet $44,325.
3. The Crown LTI has been included in total remuneration on the basis that it is considered more likely than not at the date of this financial report
that the performance condition and service condition will occur evenly over the life of the Crown LTI, notwithstanding that the benefits will vest
for the Senior Executives at a different rate. During the 2013 financial year, Crown reassessed the total potential LTI payments and amended
its provisioning accordingly. Detail of the actual sums vested to relevant Senior Executives has been provided earlier.
4. As a result of a senior management restructure, Mr Hawkins’ position was made redundant effective 1 August 2013 and Mr Hawkins has agreed
to leave the group. As no tranche of Mr Hawkins’ Crown LTI Bonus has been paid, with no shares held in trust, Mr Hawkins is not entitled to
any part of his Crown LTI Bonus. With effect from 1 August 2013, Mr Felstead is now employed by Crown Limited in the role of Chief Executive
Officer – Australian Resorts and Chief Executive Officer – VIP International.
Signed in accordance with a resolution of the Directors.
J D Packer
Director
R B Craigie
Director
Melbourne, 18th day of September, 2013
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Auditor’s Independence Declaration
(cid:19)(cid:45)(cid:42)(cid:46)(cid:47)(cid:1)(cid:2)(cid:1)(cid:30)(cid:43)(cid:48)(cid:42)(cid:37)(cid:1)
(cid:13)(cid:1)(cid:19)(cid:50)(cid:38)(cid:39)(cid:32)(cid:39)(cid:47)(cid:39)(cid:43)(cid:42)(cid:1)(cid:27)(cid:47)(cid:45)(cid:35)(cid:35)(cid:47)(cid:1)(cid:1)
(cid:24)(cid:35)(cid:40)(cid:32)(cid:43)(cid:48)(cid:45)(cid:42)(cid:35)(cid:1)(cid:1)(cid:29)(cid:22)(cid:18)(cid:1)(cid:1)(cid:9)(cid:6)(cid:6)(cid:6)(cid:1)(cid:1)(cid:16)(cid:48)(cid:46)(cid:47)(cid:45)(cid:31)(cid:40)(cid:39)(cid:31)(cid:1)
(cid:21)(cid:26)(cid:25)(cid:1)(cid:17)(cid:43)(cid:50)(cid:1)(cid:11)(cid:12)(cid:1)(cid:24)(cid:35)(cid:40)(cid:32)(cid:43)(cid:48)(cid:45)(cid:42)(cid:35)(cid:1)(cid:1)(cid:29)(cid:22)(cid:18)(cid:1)(cid:1)(cid:9)(cid:6)(cid:6)(cid:7)(cid:1)
(cid:1)
(cid:1)
(cid:28)(cid:35)(cid:40)(cid:15)(cid:1)(cid:3)(cid:11)(cid:7)(cid:1)(cid:9)(cid:1)(cid:14)(cid:8)(cid:13)(cid:13)(cid:1)(cid:13)(cid:6)(cid:6)(cid:6)(cid:1)
(cid:20)(cid:31)(cid:50)(cid:15)(cid:1)(cid:3)(cid:11)(cid:7)(cid:1)(cid:9)(cid:1)(cid:13)(cid:11)(cid:10)(cid:6)(cid:1)(cid:12)(cid:12)(cid:12)(cid:12)(cid:1)
(cid:35)(cid:51)(cid:4)(cid:33)(cid:43)(cid:41)(cid:5)(cid:31)(cid:48)(cid:1)
(cid:1)
(cid:1)
Auditor’s Independence Declaration to the Directors of Crown Limited
In relation to our audit of the financial report of Crown Limited for the financial year ended 30 June 2013, to
the best of my knowledge and belief, there have been no contraventions of the auditor independence
requirements of the Corporations Act 2001 or any applicable code of professional conduct.
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Ernst & Young
David McGregor
Partner
18 September 2013
(cid:1)
(cid:16)(cid:1)(cid:41)(cid:35)(cid:41)(cid:32)(cid:35)(cid:45)(cid:1)(cid:36)(cid:39)(cid:45)(cid:41)(cid:1)(cid:43)(cid:36)(cid:1)(cid:19)(cid:45)(cid:42)(cid:46)(cid:47)(cid:1)(cid:2)(cid:1)(cid:30)(cid:43)(cid:48)(cid:42)(cid:37)(cid:1)(cid:21)(cid:40)(cid:43)(cid:32)(cid:31)(cid:40)(cid:1)(cid:23)(cid:39)(cid:41)(cid:39)(cid:47)(cid:35)(cid:34)(cid:1)
(cid:23)(cid:39)(cid:31)(cid:32)(cid:39)(cid:40)(cid:39)(cid:47)(cid:51)(cid:1)(cid:40)(cid:39)(cid:41)(cid:39)(cid:47)(cid:35)(cid:34)(cid:1)(cid:32)(cid:51)(cid:1)(cid:31)(cid:1)(cid:46)(cid:33)(cid:38)(cid:35)(cid:41)(cid:35)(cid:1)(cid:31)(cid:44)(cid:44)(cid:45)(cid:43)(cid:49)(cid:35)(cid:34)(cid:1)(cid:48)(cid:42)(cid:34)(cid:35)(cid:45)(cid:1)(cid:26)(cid:45)(cid:43)(cid:36)(cid:35)(cid:46)(cid:46)(cid:39)(cid:43)(cid:42)(cid:31)(cid:40)(cid:1)(cid:27)(cid:47)(cid:31)(cid:42)(cid:34)(cid:31)(cid:45)(cid:34)(cid:46)(cid:1)(cid:23)(cid:35)(cid:37)(cid:39)(cid:46)(cid:40)(cid:31)(cid:47)(cid:39)(cid:43)(cid:42)(cid:1)
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
79
INDEPENDENT AUDITOR’S REPORT CONTINUED
Independent Auditor’s Report
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent auditor's report to the members of Crown Limited
Report on the financial report
We have audited the accompanying financial report of Crown Limited, which comprises the statement of
financial position as at 30 June 2013, the statement of profit or loss, statement of comprehensive income,
statement of changes in equity and cash flow statement for the year ended on that date, notes comprising a
summary of significant accounting policies and other explanatory information, and the directors’ declaration
of the consolidated entity comprising the company and the entities it controlled at the year-end or from time
to time during the financial-year.
Directors' Responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal controls that the directors determine are necessary to enable the preparation of the financial report
that is free from material misstatement, whether due to fraud or error. In Note 1(b), the directors also state,
in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor's judgment, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation
of the financial report in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy
of which is included in the Directors’ Report.
(cid:1)
(cid:1)
(cid:1)
A member firm of Ernst & Young Global Limited
(cid:1)
Liability limited by a scheme approved under Professional Standards Legislation
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(cid:1)
Opinion
In our opinion:
(cid:1)
a. The financial report of Crown Limited is in accordance with the Corporations Act 2001, including:
i
giving a true and fair view of the consolidated entity's financial position as at 30 June 2013
and of its performance for the year ended on that date; and
ii
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b. The financial report also complies with International Financial Reporting Standards as disclosed in
Note 1(b).
Report on the remuneration report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June
2013. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to
express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Crown Limited for the year ended 30 June 2013, complies with
section 300A of the Corporations Act 2001.
Ernst & Young
David McGregor
Partner
Melbourne
18 September 2013
(cid:1)
A member firm of Ernst & Young Global Limited
(cid:1)
Liability limited by a scheme approved under Professional Standards Legislation
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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DIRECTORS’ DECLARATION CONTINUED
Directors’ Declaration
In accordance with a resolution of the Directors, we declare as follows:
In the opinion of the directors:
1.
the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001,
including:
(a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance
for the year ended on that date; and
(b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001;
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 1
of the Financial Report;
there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they
become due and payable;
this declaration has been made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2013; and
2.
3.
4.
5. as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group
identified in note 31 of the Financial Report will be able to meet any obligations or liabilities to which they are or may
become subject, by virtue of the Deed of Cross Guarantee.
On behalf of the Board
J D Packer
Director
R B Craigie
Director
Melbourne, 18th day of September, 2013
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Financial Report
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Statement of
Profit or Loss
86
Statement of
Financial Position
88
Statement of
Changes in Equity
138
Shareholder Information
85
Statement of
Comprehensive Income
87
Cash Flow Statement
89
Notes to the
Financial Statements
140
Additional Information
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FINANCIAL REPORT 2013 CONTINUED
Statement of Profit or Loss
For the year ended 30 June 2013
Revenues
Other income
Expenses
Share of profits of associates and joint venture entities
Profit before income tax and finance costs
Finance costs
Profit before income tax
Income tax expense
Net profit after tax
Note
3
3
3
2,10
2013
$’000
2012
$’000
2,894,804
2,808,870
183
426
(2,467,540)
(2,214,766)
147,911
575,358
138,872
733,402
3
(133,446)
(113,584)
441,912
619,818
2,5
(46,125)
(106,493)
395,787
513,325
The above Statement of Profit or Loss should be read in conjunction with the accompanying notes.
Earnings per share (EPS)
Basic EPS
Diluted EPS
EPS calculation is based on the weighted average number of shares on issue
throughout the period
Dividends per share
Current year final dividend proposed
Current year interim dividend paid
2013
Cents
per share
2012
Cents
per share
54.34
54.34
69.78
69.78
Note
28
28
4
4
19.00
18.00
19.00
18.00
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Statement of Comprehensive Income
For the year ended 30 June 2013
Net profit after tax
Other Comprehensive Income
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation (1)
Movement in cashflow hedge reserve
Items that will not be reclassified subsequently to profit or loss:
Unrealised gain/(loss) on investments
Other comprehensive income/(loss) for the period, net of income tax
Total comprehensive income/(loss) for the period
Note
2013
$’000
2012
$’000
395,787
513,325
21
21
21
134,621
17,383
40,385
32,941
204
(328)
152,208
547,995
72,998
586,323
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(1) The movement in the foreign currency translation reserve is largely attributable to foreign exchange movements relating to Crown’s equity
accounted investment in Melco Crown.
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Statement of Financial Position
As at 30 June 2013
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Other financial assets
Total current assets
Non-current assets
Receivables
Other financial assets
Investments
Investments in associates
Property, plant and equipment
Licences
Other intangible assets
Deferred tax assets
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Income tax payable
Provisions
Other financial liabilities
Total current liabilities
Non-current liabilities
Other payables
Interest-bearing loans and borrowings
Deferred tax liabilities
Provisions
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Treasury shares
Reserves
Retained earnings
Total equity
Note
23
6
7
8
6
8
9
10
11
12
13
5
15
16
17
18
19
16
17
5
18
19
20
20
21
21
2013
$’000
2012
$’000
205,511
257,459
12,639
17,476
1,568
149,353
201,734
11,850
18,693
337
494,653
381,967
126,822
102,867
925
–
89,671
454,338
1,403,037
1,088,744
2,865,462
2,804,379
649,511
204,572
112,212
62,780
656,983
207,772
112,640
62,840
5,514,992
5,490,563
6,009,645
5,872,530
296,581
81,395
53,642
120,262
–
325,731
29,077
100,598
101,977
22,221
551,880
579,604
138
138
1,553,868
1,665,589
202,235
205,605
44,304
4,619
38,183
8,661
1,805,164
1,918,176
2,357,044
2,497,780
3,652,601
3,374,750
446,763
446,763
(1,118)
(480)
450,994
298,786
2,755,962
2,629,681
3,652,601
3,374,750
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
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Cash Flow Statement
For the year ended 30 June 2013
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Borrowing costs paid
Income tax paid
Note
2013
$’000
2012
$’000
2,846,300
2,764,378
(2,130,086)
(2,027,218)
3,328
9,842
4,628
7,124
(138,052)
(122,459)
(95,134)
(55,753)
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Net cash flows from/(used in) operating activities
23b
496,198
570,700
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payment for purchases of investments
Net proceeds from sale of equity investments
Loans to associated entities
Other (net)
Net cash flows from/(used in) investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Payment for share buy-back
ESP proceeds received
Net cash flows from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effect of exchange rate changes on cash
(253,620)
(464,403)
183
461
(66,938)
(261,676)
261,332
(12,644)
2,689
6,632
(27,364)
(3,300)
(68,998)
(749,650)
2,083,708
962,542
(2,191,326)
(347,786)
(269,506)
(272,741)
–
–
(238,057)
39,345
(377,124)
143,303
50,076
(35,647)
149,353
183,699
6,082
1,301
Cash and cash equivalents at the end of the financial year
23a
205,511
149,353
The above Cash Flow Statement should be read in conjunction with the accompanying notes.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Statement of Changes in Equity
For the year ended 30 June 2013
Shares
Held in
Trust
$’000
Retained
Earnings
$’000
Net
Unrealised
Gains
Reserve
$’000
Foreign
Currency
Translation
Reserve
$’000
Ordinary
Shares
$’000
Cashflow
Hedge
Reserve
$’000
Employee
Benefits
Reserve
$’000
Total
Equity
$’000
Year ended
30 June 2013
Balance at 1 July 2012
446,763
(480) 2,629,681
628,704
(323,419)
(19,509)
13,010
3,374,750
–
–
–
–
–
–
–
–
–
395,787
–
–
–
–
204
134,621
17,383
395,787
(269,506)
(638)
–
204
134,621
17,383
–
–
–
–
–
–
–
–
–
–
–
395,787
152,208
547,995
(269,506)
(638)
446,763
(1,118) 2,755,962
628,908
(188,798)
(2,126)
13,010 3,652,601
Profit for the period
Other comprehensive
income
Total comprehensive
income for the period
Dividends paid
Shares acquired under
Long Term Incentive Plan
Balance at
30 June 2013
Year ended
30 June 2012
Balance at 1 July 2011
645,475
Profit for the period
Other comprehensive
income
Total comprehensive
income for the period
Dividends paid
–
–
–
–
ESP proceeds received
39,345
Share buy-back
(238,057)
–
–
–
–
–
–
–
Shares acquired under
Long Term Incentive Plan
Balance at
30 June 2012
–
(480)
2,389,097
629,032
(363,804)
(52,450)
13,010 3,260,360
513,325
–
–
–
–
(328)
40,385
32,941
513,325
(272,741)
–
–
–
(328)
40,385
32,941
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
513,325
72,998
586,323
(272,741)
39,345
(238,057)
(480)
446,763
(480) 2,629,681
628,704
(323,419)
(19,509)
13,010
3,374,750
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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Notes to the Financial Statements
For the year ended 30 June 2013
1. Summary of Significant Accounting Policies
(a) Basis of preparation
This financial report is a general-purpose financial report, which has been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting Standards and other authorative pronouncements of the Australian
Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for derivative
financial instruments and investments that have been measured at fair value and investments in associates accounted
for using the equity method.
The financial 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. The Company
is an entity to which the class order applies.
The financial report of Crown Limited and its controlled entities (the Group) for the year ended 30 June 2013 was
authorised for issue in accordance with a resolution of the directors on 18 September 2013 subject to final approval
by a subcommittee.
(b) Statement of compliance
The financial 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.
The Group has adopted the following accounting standards, which became applicable from 1 July 2012:
– AASB 2011-9 – Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income
The adoption of this standard did not have a material effect on the financial position or performance of the Group during
the period.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective
and have not been adopted by the Group for the reporting period ending 30 June 2013 are outlined in the table below.
Reference Title
AASB 10 Consolidated Financial
Statements
Application
date of
standard (1)
Impact on Group financial report
Application
date for
Group (1)
1 January 2013 AASB 10 establishes a new control model that
1 July 2013
applies to all entities. It replaces parts of AASB 127
Consolidated and Separate Financial Statements
dealing with the accounting for consolidated
financial statements and UIG-112 Consolidation
– Special Purpose Entities. Crown does not expect
any significant impact on the Group.
AASB 11
Joint Arrangements
1 January 2013 AASB 11 replaces AASB 131 Interests in Joint
1 July 2013
Ventures and UIG-113 Jointly-controlled Entities
– Non-monetary Contributions by Ventures.
AASB 11 uses the principle of control in AASB 10 to
define joint control, and therefore the determination
of whether joint control exists may change.
In addition AASB 11 removes the option to account
for jointly-controlled entities using proportionate
consolidation. Instead, accounting for a joint
arrangement is dependent on the nature of the
rights and obligations arising from the arrangement.
Crown does not expect any significant impact on
the Group.
(1) Designates the beginning of the applicable annual reporting period unless otherwise stated.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
1. Summary of Significant Accounting Policies continued
(b) Statement of compliance continued
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Reference Title
AASB 12
Disclosure of Interests
in Other Entities
Application
date of
standard (1)
Impact on Group financial report
Application
date for
Group (1)
1 January 2013 AASB 12 includes all disclosures relating to an
1 July 2013
entity’s interests in subsidiaries, joint arrangements,
associates and structured entities. New disclosures
have been introduced about the judgments made
by management to determine whether control
exists, and to require summarised information about
joint arrangements, associates and structured
entities and subsidiaries with non-controlling
interests. This standard may result in additional
or changes in disclosure.
AASB 13
Fair Value Measurement 1 January 2013 AASB 13 establishes a single source of guidance
1 July 2013
for determining the fair value of assets and liabilities.
AASB 13 does not change when an entity is required
to use fair value, but rather, provides guidance
on how to determine fair value when fair value
is required or permitted. Crown does not expect
any significant impact on the Group.
1 July 2013
1 July 2013
1 January 2013 The revised standard changes the definition of
short-term employee benefits. The distinction
between short-term and other long-term employee
benefits is now based on whether the benefits are
expected to be settled wholly within 12 months after
the reporting date. Crown does not expect any
significant impact on the Group.
1 January 2013 AASB 2012-2 principally amends AASB 7 Financial
Instruments: Disclosures to require disclosure of the
effect or potential effect of netting arrangements,
including rights of set-off associated with the entity’s
recognised financial assets and recognised financial
liabilities, on the entity’s financial position, when
all the offsetting criteria of AASB 132 are not met.
Crown does not expect any significant impact
on the Group.
1 July 2013
This amendment will result in the individual KMP
disclosure requirements for all disclosing entities in
relation to equity holdings, loans and other related
party transactions forming part of the Remuneration
Report instead of the KMP note of the accounts.
1 July 2013
AASB 119 Employee Benefits
AASB
2012-2
AASB
2011-4
Amendments to
Australian Accounting
Standards – Disclosures
– Offsetting Financial
Assets and Financial
Liabilities
Amendments to
Australian Accounting
Standards to
Remove Individual
Key Management
Personnel Disclosure
Requirements
[AASB 124]
(1) Designates the beginning of the applicable annual reporting period unless otherwise stated.
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1. Summary of Significant Accounting Policies continued
(b) Statement of compliance continued
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Reference Title
AASB
2012-3
Amendments to
Australian Accounting
Standards – Offsetting
Financial Assets and
Financial Liabilities
Application
date for
Group (1)
1 July 2014
Application
date of
standard (1)
Impact on Group financial report
1 January 2014 AASB 2012-3 adds application guidance to AASB
132 Financial Instruments: Presentation to address
inconsistencies identified in applying some of the
offsetting criteria of AASB 132, including clarifying
the meaning of “currently has a legally enforceable
right of set-off” and that some gross settlement
systems may be considered equivalent to net
settlement. Crown does not expect any
significant impact on the Group.
(1) Designates the beginning of the applicable annual reporting period unless otherwise stated.
(c) Basis of consolidation
The consolidated financial 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 financial 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 financial
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
acquisition method of accounting. The financial 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.
All inter-company balances and transactions, including
unrealised profits arising from intra-group transactions,
have been eliminated in full. Unrealised losses are
eliminated unless costs cannot be recovered.
The accounting policies adopted have been applied
consistently throughout the two reporting periods.
(d) Significant accounting judgements,
estimates and assumptions
The carrying amounts of certain assets and liabilities
are often determined based on judgements, estimates
and assumptions of future events. The key judgements,
estimates and assumptions that have a significant 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 indefinite useful lives
The Group determines whether goodwill and casino
licences with indefinite useful lives are impaired at least
on an annual basis. This requires an estimation of the
recoverable amount of the cash-generating units to which
the goodwill and casino licences with indefinite useful lives
are allocated. The assumptions used in this estimation of
recoverable amount and the carrying amount of goodwill
and casino licences with indefinite useful lives are
discussed in note 14.
Fair value of investments
In accordance with accounting standards the Group
uses the Level Three method in estimating the fair value
of financial assets. Accordingly, the fair value is estimated
using inputs for the asset that are not based on observable
market data.
Taxes
Deferred tax assets are recognised for all unused tax
losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilised.
Management judgement is required to determine the
amount of deferred tax assets that can be recognised,
based upon the likely timing and the level of future
taxable profits.
Doubtful debts
An allowance for doubtful debts is recognised when
there is objective evidence that an individual trade debt
is impaired.
Significant Items
Significant items are transactions or events that fall
outside the ordinary course of business. Significant items
are disclosed separately to allow users of the financial report
to see the performance of the Group in a comparable form
to that of the comparative period.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
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. The tax rates and
tax laws used to compute the amount are those that are
enacted or substantively enacted by the reporting date.
Deferred income tax is provided on all temporary
differences at the reporting date between the tax bases of
assets and liabilities and their carrying amounts for financial
reporting purposes.
Deferred income tax liabilities are recognised for all taxable
temporary differences 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, affects neither the accounting profit
nor taxable profit or loss; or
• in respect of taxable temporary differences associated
with investments in subsidiaries, associates and interests
in joint ventures, when the timing of the reversal of the
temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the
foreseeable future.
Deferred income tax assets are recognised for all deductible
temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that
taxable profit will be available against which the deductible
temporary differences, and the carry-forward of unused
tax assets and unused tax losses can be utilised except:
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 reporting date.
Income taxes relating to items recognised directly in equity
are recognised in equity and not the Statement of Profit
or Loss.
(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 offset against
casino taxes; and
• receivables and payables are stated with the amount
of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the Statement of Financial Position.
Cash flows are included in the Cash Flow Statement on a
gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable
from, or payable to, the taxation authority, are classified
as operating cash flows.
Commitments and contingencies are disclosed net
of the amount of GST recoverable from, or payable to,
the taxation authority.
• when the deferred income tax asset relating to the
(g) Foreign currency translation
deductible temporary difference 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, affects neither the accounting profit nor
taxable profit or loss; or
• in respect of deductible temporary differences
associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are
recognised only to the extent that it is probable that the
temporary differences will reverse in the foreseeable
future and taxable profit will be available against which
the temporary differences can be utilised.
The carrying amount of deferred income tax assets is
reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred income tax
asset to be utilised.
Both the functional and presentation currency of Crown
Limited and its Australian subsidiaries is Australian dollars.
Each foreign entity in the Group determines its own functional
currency and items included in the financial statements
of each foreign entity are measured using that functional
currency, which is translated to the presentation 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 reporting date.
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.
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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 reporting date and the profit or loss is translated
at the weighted average exchange rates for the period.
The exchange differences 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 Statement of
Profit or Loss.
(h) Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial
Position comprises of cash at bank and on hand, and short
term deposits with an original maturity of three months or
less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes
in future value.
For the purposes of the Cash Flow Statement, cash and
cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts.
(k) Investments in associates
The financial statements of the associates are used by the
Group to apply the equity method. Where associates apply
different accounting policies to the Group, adjustments are
made upon application of the equity method.
Investments in associates are carried in the Statement
of Financial Position at cost plus post-acquisition changes
in the Group’s share of net assets of the associates, less
any impairment in value. The Statement of Profit or Loss
reflects 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 Statement of Comprehensive Income.
When the Group’s share of losses in an associate equals
or exceeds its interest in the associate, including any
unsecured long term receivables and loans, the Group
does not recognise further losses unless it has incurred
obligations or made payments on behalf of the associate.
(l) Investments and other financial assets
Financial assets are classified based on:
(i) The objective of the entity’s business model for
managing the financial assets; and
(i) Trade and other receivables
(ii) The characteristics of the contractual cash flow.
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 identified.
Receivables from associates and other related parties
are carried at amortised cost less an allowance for
impairment. 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:
• Inventories which include food, beverages and other
consumables are costed on a weighted average basis;
and
• 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.
The classification depends on the purpose for which the
financial assets were acquired. Management determines
the classification of its financial assets at initial recognition.
An irrevocable election is made by instrument to determine
if the instrument is measured at fair value either through
Other Comprehensive Income (OCI) or the Statement
of Profit or Loss.
When financial assets are recognised initially, they are
measured at fair value, plus, in the case of assets at fair
value through OCI, directly attributable transaction costs.
The best evidence of fair value is quoted prices in an active
market. The fair value of the investments and other financial
assets that do not have a price quoted in an active market
have been estimated using valuation techniques based
on assumptions that are not supported by observable
market prices or rates. The fair value is reassessed each
reporting period.
If the fair value through Statement of Profit or Loss
approach is adopted, increments and decrements on
the fair value of the financial asset at each reporting date
are recognised through the Statement of Profit or Loss.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
1. Summary of Significant Accounting
Policies continued
(l) Investments and other financial assets continued
If the fair value through OCI approach is adopted, increments
and decrements on the fair value are recognised in OCI,
without recycling of gains and losses between the Statement
of Profit or Loss and OCI, even on disposal of the investment.
Dividends in respect of these investments that are a return
on investment are recognised in the Statement of Profit
or Loss.
Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or
convention in the market place (regular way trades) are
recognised on the trade date, i.e., the date that the Group
commits to purchase or sell the asset.
(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; and
• Plant and equipment – 2 to 15 years.
The asset’s residual values, useful lives and amortisation
methods are reviewed, and adjusted if appropriate, at each
financial year end.
Impairment
The 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 inflows, 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.
The 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
flows are discounted to their present value using a post-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
Derecognition
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is included
in the Statement of Profit or Loss in the period the item
is derecognised.
(n) Intangible assets
Licences
Licences are carried at cost less any accumulated
amortisation and any accumulated impairment losses.
The 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.
The casino licence premiums are carried at cost of
acquisition. The 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. The Crown Perth licence is assessed as perpetual
and, as such, no amortisation is charged. The Crown Perth
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 identifiable
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 benefit 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.
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1. Summary of Significant Accounting
Policies continued
(n) Intangible assets continued
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.
The useful lives of these intangible assets are assessed to
be either finite or indefinite. Where amortisation is charged
on assets with finite lives, this expense is taken to the
Statement of Profit or Loss.
Intangible assets created within the business are not
capitalised and expenditure is charged against profits
in the period in which the expenditure is incurred.
Intangible assets are tested for impairment where an
indicator of impairment exists, and annually in the case
of intangible assets with indefinite lives, 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 difference between the net
disposal proceeds and the carrying amount of the asset
and are recognised in the Statement of Profit or Loss when
the net asset is derecognised.
(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. For the purposes of assessing
impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows that are
largely independent of the cash flows from other assets
or groups of assets (cash-generating units). In assessing
value in use, the estimated future cash flows are discounted
to their present value using a post-tax discount rate that
reflects current market assessments of the time value
of money and the risks specific to the asset.
(p) Trade and other payables
Trade and other payables 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. The 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 the fair
value of the consideration received less directly attributable
transaction costs.
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost
using the effective interest method.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting date.
Borrowing costs
Borrowing costs directly associated with qualifying assets
are capitalised, including any other associated costs directly
attributable to the borrowing. The capitalisation rate to
determine the amount of borrowing costs to be capitalised
is the weighted average interest rate applicable to the
Group’s outstanding borrowings during the year, in
this case 6.7%.
All other borrowing costs are expensed in the period
they are incurred.
(r) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) to make a future sacrifice
of economic benefits to other entities as a result of past
transactions or other events, it is probable that a future
sacrifice of economic benefit will be required and a reliable
estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to
be reimbursed, the reimbursement is recognised as a
separate asset. The expense relating to any provision
is presented in the Statement of Profit or Loss net of
any reimbursement.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects
the risks specific to the liability. When discounting is used,
the increase in the provision due to the passage of time
is recognised as a finance cost.
A provision for dividends is not recognised as a
liability unless the dividends are declared, or publicly
recommended on or before the reporting date.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
1. Summary of Significant Accounting
Policies continued
(s) Employee benefits
Provision is made for employee benefits accumulated as
a result of employees rendering services up to reporting
date including related on-costs. The benefits include
wages and salaries, incentives, compensated absences
and other benefits, which are charged against profits in
their respective expense categories when services are
provided or benefits vest with the employee.
The provision for employee benefits is measured at the
remuneration rates expected to be paid when the liability
is settled. Benefits expected to be settled after twelve
months from the reporting date are measured at the
present value of the estimated future cash outflows to
be made in respect of services provided by employees
up to the reporting date.
The liability for long service leave is recognised in the
provision for employee benefits 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 outflows.
(t) Leases
Finance leases, which transfer to the Group substantially
all the risks and benefits 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 finance
charges and reduction of the lease 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 Statement of Profit or Loss on a straight-line basis
over the lease term.
(u) Derecognition of financial instruments
The derecognition of a financial instrument takes place
when the Group no longer controls the contractual rights
that comprise the financial instrument, which is normally
the case when the instrument is sold, or all the cash flows
attributable to the instrument are passed through to an
independent third party.
(v) Derivative financial instruments and hedging
Derivatives are carried as assets when their fair value is
positive and as liabilities when their fair value is negative.
Any gains or losses arising from changes in the fair value
of derivatives, except for those that qualify as cash flow
hedges, are taken directly to profit or loss for the year.
The fair value of forward exchange contracts are calculated
by reference to current forward exchange rates for contracts
with similar maturity profiles. The fair values of interest rate
swaps are determined by reference to market values for
similar instruments.
Hedges that meet the strict criteria for hedge accounting
are accounted for as follows:
(i) Fair value hedges
Fair value hedges are hedges of the Group’s exposure to
changes in the fair value of a recognised asset or liability
or an unrecognised firm commitment, or an identified
portion of such an asset, liability or firm commitment that
is attributable to a particular risk and could affect profit
or loss. For fair value hedges, the carrying amount of the
hedged item is adjusted for gains and losses attributable
to the risk being hedged and the derivative is remeasured
to fair value. Gains and losses from both are taken to
profit or loss.
The Group discontinues fair value hedge accounting if
the hedging instrument expires or is sold, terminated or
exercised, the hedge no longer meets the criteria for hedge
accounting or the Group revokes the designation. Any
adjustment to the carrying amount of a hedged financial
instrument for which the effective interest method is used
is amortised to profit or loss. Amortisation may begin as
soon as an adjustment exists and shall begin no later than
when the hedged item ceases to be adjusted for changes
in its fair value attributable to the risk being hedged.
(ii) Cash flow hedges
Cash flow hedges are hedges of the Group’s exposure
to variability in cash flows that is attributable to a particular
risk associated with a recognised asset or liability that is
a firm commitment and that could affect profit or loss.
The effective portion of the gain or loss on the hedging
instrument is recognised directly in equity, while the
ineffective portion is recognised in the Statement
of Profit or Loss.
Amounts taken to equity are transferred out of equity and
included in the measurement of the hedged transaction
(finance costs or inventory purchases) when the forecast
transaction occurs. If the hedging instrument expires or
is sold, terminated or exercised without replacement or
rollover, or if its designation as a hedge is revoked (due to it
being ineffective), amounts previously recognised in equity
remain in equity until the forecast transaction occurs.
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1. Summary of Significant Accounting
Policies continued
(w) Impairment of financial assets
The Group assesses at each reporting date whether a
financial asset or group of financial assets is impaired.
(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
difference between the asset’s carrying amount and the
present value of estimated future cash flows (excluding
future credit losses that have not been incurred) discounted
at the financial asset’s original effective interest rate (i.e. the
effective interest rate computed at initial recognition). The
carrying amount of the asset is reduced either directly or
through use of an allowance account. The amount of the
loss is recognised in the Statement of Profit or Loss.
The Group first assesses whether objective evidence of
impairment exists individually for financial assets that are
individually significant, and individually or collectively for
financial assets that are not individually significant. If it
is determined that no objective evidence of impairment
exists for an individually assessed financial asset, whether
significant or not, the asset is included in a group of financial
assets with similar credit risk characteristics and that group
of financial 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 the Statement of Profit 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
difference between the assets carrying amount and the
present value of estimated cash flows, discounted at the
current market rate of return for a similar financial asset.
(x) Contributed equity
Ordinary shares are classified as equity. Issued capital is
recognised at the fair value of the consideration received,
less transaction costs.
(y) Revenue
Revenue is recognised and measured at the fair value of
the consideration received or receivable to the extent that
it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured. The
following specific recognition criteria must also be met
before revenue is recognised:
Sale of goods
Revenue is recognised when the significant risks and rewards
of ownership of the goods have passed to the buyer and can
be measured reliably. Risks and rewards are considered to
have passed to the buyer at the time of delivery of the goods
to the customer.
Rendering of services
Revenue is recognised when 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
effective interest method, which is the rate that exactly
discounts estimated future cash receipts through the
expected life of the financial instrument) to the net
carrying amount of the financial asset.
Dividends
Revenue is recognised when the shareholders’ right
to receive the payment is established.
(z) Earnings per share (EPS)
Basic EPS is calculated as net profit after tax, adjusted to
exclude any costs of servicing equity (other than dividends),
divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit after tax, adjusted for:
• costs of servicing equity (other than dividends);
• the after tax effect 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.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
97
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
1. Summary of Significant Accounting
Policies continued
(aa) Segment Information
The Group’s operating segments have been determined
based on internal management reporting structure and the
nature of the products provided by the Group. They reflect
the business level at which financial information is provided
to management for decision making regarding resource
allocation and performance assessment. The segment
information presented is consistent with internal
management reporting.
The Group has three operating segments being Crown
Melbourne, Crown Perth and Crown Aspinall’s.
(ab) Business Combinations
Business combinations are accounted for using the
acquisition method. The consideration transferred in
a business combination shall be measured at fair value,
which shall be calculated as the sum of the acquisition date
fair values of the assets transferred by the acquirer, the
liabilities incurred by the acquirer to former owners of the
acquiree and the equity issued by the acquirer, and the
amount of any non-controlling interest in the acquiree.
Acquisition-related costs are expensed as incurred.
When the Group acquires a business, it assesses the
financial assets and liabilities assumed for appropriate
classification and designation in accordance with the
contractual terms, economic conditions, the Group’s
operating or accounting policies and other pertinent
conditions as at the acquisition date. This includes the
separation of embedded derivatives in host contracts
by the acquiree.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value
at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the
acquirer will be recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent
consideration which is deemed to be an asset or liability
will be recognised in accordance with AASB 139 either
in profit or loss or as a change to other comprehensive
income. If the contingent consideration is classified
as equity, it should not be remeasured until it is finally
settled within equity.
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98
–
–
–
790,066
611,337
(3,743)
– 2,881,951
–
13,036
–
(862,722)
– (1,271,038)
–
–
–
–
3,743
751,934
(238,127)
513,807
Interest revenue
Total revenue
Segment result
Intersegment
Earnings before interest,
tax, depreciation and
amortisation “EBITDA”
Depreciation and
amortisation
Earnings before interest
and tax “EBIT”
Loss on disposal
of investments
Equity accounted share of
associates’ net profit/(loss)
Net interest income/(expense)
Income tax benefit/(expense)
2. Segment Information
30 June 2013
Normalised Result (1)
Crown
Melbourne
$’000
Crown
Perth
$’000
Crown
Aspinall’s
$’000
Unall-
ocated
$’000
Crown
Group
$’000
Adjust-
ment(1)
$’000
Significant
Items(3)
$’000
Actual
Crown
Group
$’000
Operating revenue
Main floor gaming
1,000,768
483,461
62
– 1,484,291
–
– 1,484,291
VIP program play
525,190
159,356
114,178
–
798,724
(8,658)
Non Gaming
Intersegment
392,118
215,299
592
3,328
611,337
(3,743)
–
–
Operating revenue
1,918,076
858,116
114,832
3,328 2,890,609
(8,658)
1,918,076
858,116
114,832
3,328 2,903,645
(8,658)
– 2,894,987(2)
13,036
–
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Gaming taxes & commissions
(606,770)
(203,077)
(55,196)
–
(865,043)
2,321
Operating expenses
(764,564)
(414,281)
(26,325)
(65,868)
(1,271,038)
3,743
–
–
546,742
240,758
33,311
(62,540)
758,271
(6,337)
(177,189)
(57,018)
(1,073)
(2,847)
(238,127)
–
369,553
183,740
32,238
(65,387)
520,144
(6,337)
–
–
–
–
–
–
(99,396)
(99,396)
150,903
22,602
(25,594)
147,911
(120,410)
–
–
(120,410)
(77,420)
1,476
29,819
(46,125)
Profit/(loss) after tax
369,553
183,740
32,238
(65,387)
473,217
17,741
(95,171)
395,787
Capital expenditure
133,075
135,596
599
11,609
280,879
Investments in associates
–
–
– 1,403,037 1,403,037
–
–
–
280,879
– 1,403,037
(1) Normalised results have been adjusted to exclude the impact of any variance from theoretical win rate on VIP program play (at Crown Melbourne,
Crown Perth, Crown Aspinall’s and Melco Crown), refinance and development costs from Melco Crown and loss on disposal of Crown’s
investment in Echo Entertainment Group Ltd (Echo). The theoretical win rate is the expected hold percentage on VIP program play over time.
Accordingly, the normalised result gives rise to adjustments to VIP program play revenue, gaming taxes, income tax expense and equity
accounted share of associates’ results.
(2) Total revenue of $2,895.0 million includes $0.2 million of profit on disposal of non-current assets, which is not included in revenue in the
Statement of Profit or Loss.
(3) The significant items relate to the loss on disposal of Crown’s Investment in Echo, which resulted in a loss of $99.4 million for the year
($69.6 million net of tax) and Crown’s share of Melco Crown’s development and refinance costs ($25.6 million). Refer note 3.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
99
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
2. Segment Information continued
30 June 2012
N
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Normalised Result (1)
Crown
Melbourne
$’000
Crown
Perth
$’000
Crown
Aspinall’s
$’000
Unall-
ocated
$’000
Crown
Group
$’000
Adjust-
ment(1)
$’000
Actual
Crown
Group
$’000
991,915
440,774
253
– 1,432,942
–
1,432,942
481,013
154,267
91,402
–
726,682
70,636
372,074
190,068
1,138
4,627
567,907
(393)
–
–
797,318
567,907
(393)
1,845,002
785,109
92,793
4,627
2,727,138
70,636
2,797,774
11,522
–
11,522
1,845,002
785,109
92,793
4,627 2,738,660
70,636
2,809,296(2)
Operating revenue
Main floor gaming
VIP program play
Non Gaming
Intersegment
Operating revenue
Interest revenue
Total revenue
Segment result
Gaming taxes & commissions
(580,959)
(195,946)
(48,839)
–
(825,744)
8,619
(817,125)
Operating expenses
Intersegment
Earnings before interest, tax,
depreciation and amortisation “EBITDA”
(753,457)
(362,884)
(23,310)
(40,123)
(1,179,774)
393
–
–
(1,179,774)
393
510,586
226,279
20,644
(35,496)
722,013
79,255
801,268
Depreciation and amortisation
(168,519)
(45,916)
(1,195)
(2,630)
(218,260)
–
(218,260)
Earnings before interest and tax “EBIT”
342,067
180,363
19,449
(38,126)
503,753
79,255
583,008
Equity accounted share of associates’
net profit/(loss)
Net interest income/(expense)
Income tax benefit/(expense)
95,133
43,739
138,872
(102,062)
–
(102,062)
(81,864)
(24,629)
(106,493)
Profit/(loss) after tax
342,067
180,363
19,449
(38,126)
414,960
98,365
513,325
Capital expenditure
249,418
238,611
1,827
33
489,889
Investments in associates
–
–
– 1,088,744 1,088,744
–
–
489,889
1,088,744
(1) Normalised results have been adjusted to exclude the impact of any variance from theoretical win rate on VIP program play (at Crown Melbourne,
Crown Perth, Crown Aspinall’s and Melco Crown). The theoretical win rate is the expected hold percentage on VIP program play over time.
Accordingly, the normalised result gives rise to adjustments to VIP program play revenue, gaming taxes, income tax expense and equity
accounted share of associates’ results.
(2) Total revenue of $2,809.3 million includes $0.4 million of profit on disposal of non-current assets, which is not included in revenue in the
Statement of Profit or Loss.
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3. Revenue and Expenses
Profit before income tax expense includes the following revenues and expenses:
(a) Revenue
Revenue from services
Revenue from sale of goods
Interest
Dividends
Other operating revenue
(b) Other income
Profit on disposal of non-current assets
(c) Expenses
Cost of sales
Operating activities
Loss on disposal of investment in Echo
Other expenses
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
Total depreciation and amortisation expense
(d) Other income and expense disclosures
Finance costs expensed:
Debt facilities
Capitalised interest
Operating leases
Superannuation expense
Other employee benefits expense
Net mark-to-market gain on listed investments & total return swaps
Net foreign currency (gains)/losses
2013
$’000
2012
$’000
2,498,042
2,433,817
355,520
339,402
13,036
3,328
24,878
11,522
4,627
19,502
2,894,804
2,808,870
183
426
131,211
127,210
2,168,218
2,044,803
99,396
68,715
–
42,753
2,467,540
2,214,766
80,535
140,374
220,909
70,394
130,182
200,576
14,413
2,805
17,218
14,437
3,247
17,684
238,127
218,260
143,232
125,705
(9,786)
(12,121)
133,446
113,584
3,218
48,462
722,147
–
(2,818)
7,002
45,219
683,951
(20,111)
(1,214)
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
101
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
3. Revenue and Expenses continued
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(e) Significant items (net of tax)
Loss on disposal of investment in Echo
Crown’s share of Melco Crown’s development and refinance costs
4. Dividends Paid and Announced
2013
$’000
2012
$’000
(69,577)
(25,594)
(95,171)
–
–
–
2013
$’000
2012
$’000
(a) Dividends declared and paid during the financial year
Prior year final dividend (paid 12 October 2012)
Paid at 19 cents (2011: 19 cents) per share and franked at 50% (2011: 50% franked)
at the Australian tax rate of 30% (2011: 30%)
138,395
141,630
Current year interim dividend (paid 16 April 2013)
Paid at 18 cents (2012: 18 cents) per share franked at 50% (2012: 50% franked)
at the Australian tax rate of 30% (2012: 30%)
Total dividends appropriated
(b) Dividends announced and not recognised as a liability
Current year final dividend (expected to be paid 11 October 2013)
131,111
269,506
131,111
272,741
Announced at 19 cents (2012: 19 cents) per share and franked at 50% (2012: 50% franked)
at the Australian tax rate of 30% (2012: 30%)
138,395
138,395
(c) Franking credits
The tax rate at which the final dividend will be franked is 30% (2012: 30%). The franking
account disclosures have been calculated using the franking rate applicable at 30 June 2013.
The amount of franking credits available for the subsequent financial year:
Franking account balance as at the end of the financial year at 30% (2012: 30%)
24,922
6,550
Franking credits that will arise from the payment of income taxes payable as at the end
of the financial year
Franking debits that will arise from the refund of income taxes receivable as at the end
of the financial year (1)
Total franking credits
15,714
42,955
(21,469)
19,167
(528)
48,977
The amount of franking credits available for future reporting periods:
Impact on the franking account of dividends announced before the financial report
was authorised for issue but not recognised as a distribution to equity holders during
the financial year
Total franking credits available for future reporting periods
(1) Refund is not anticipated until after the payment of the current year final dividend.
(29,656)
(10,489)
(29,656)
19,321
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5. Income Tax
(a) Income tax expense
The prima facie tax expense, using tax rates applicable in the country of operation,
on profit differs from income tax provided in the financial statements as follows:
Profit before income tax
Prima facie income tax expense on profit at the Australian rate of 30% (2012: 30%)
Tax effect of:
Non deductible depreciation and amortisation
Share of associates’ net losses/(profits)
Differences in foreign tax rates
Deferred income tax on temporary differences
Income tax (over)/under provided in prior years
Franking credits
Other items – net
Income tax expense
Income tax expense comprises:
Current expense
Deferred expense
Deferred expense/(benefit) due to change in tax rate
Adjustments for current income tax of prior periods
Tax on loss on disposal of investment in Echo
(b) Deferred income taxes
Deferred income tax assets
Deferred income tax liabilities
Net deferred income tax assets/(liabilities)
(c) Deferred income tax assets and liabilities at the end of the financial year
The balance comprises temporary differences attributable to:
Doubtful debt provision
Employee benefits provision
Revenue losses carried forward
Other receivables
Other provisions
Prepaid casino tax
Licences and intangibles
Land and buildings
Property, plant & equipment
Other
Net deferred income tax assets/(liabilities)
2013
$’000
2012
$’000
441,912
132,574
619,818
185,945
2,242
(44,373)
(29,070)
(2,881)
(7,174)
(1,415)
(3,778)
2,242
(41,662)
(34,850)
(8,238)
11,820
–
(8,764)
46,125
106,493
85,999
(2,881)
–
102,912
(8,456)
217
(7,174)
11,820
(29,819)
–
46,125
106,493
112,212
202,235
112,640
205,605
(90,023)
(92,965)
14,582
27,202
–
24,125
26,920
8,851
26,442
3,241
33,474
23,289
(17,230)
(18,050)
(105,241)
(109,565)
(75,111)
(77,653)
3,371
11,359
6,683
10,323
(90,023)
(92,965)
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
103
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
5. Income Tax continued
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(d) Movements in deferred income tax assets and liabilities
during the financial year
Carrying amount at the beginning of the year
Charged/(credited) to the income statement
Exchange differences
Carrying amount at the end of the year
(e) Tax losses not brought to account, as the realisation of the benefits
represented by these balances is not considered to be probable
The Group has tax losses arising in Australia that are available indefinitely for offset against
future capital gains.
Capital gains tax – no expiry date
Total tax losses not brought to account
Potential tax benefit at respective tax rates
(f) Unrecognised temporary differences
2013
$’000
2012
$’000
(92,965)
(101,194)
2,881
61
8,239
(10)
(90,023)
(92,965)
801,992
1,190,351
801,992
1,190,351
240,597
357,105
At 30 June 2013, there is no recognised or unrecognised deferred income tax liability (2012: $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.
(g) Tax consolidation
Crown Limited and its 100% owned Australian resident subsidiaries have formed a tax consolidated group with effect 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 effect accounting by members of the tax consolidated group
Members of the tax consolidated group have entered into a tax funding agreement. The 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. The allocation of taxes under the tax funding agreement is recognised as an increase/decrease
in the subsidiaries inter-company accounts with the tax consolidated group head company, Crown Limited.
6. Trade and Other Receivables
Current
Trade receivables
Provision for doubtful debts (a)
Loans to associated entities
Other receivables
2013
$’000
2012
$’000
291,372
203,532
(57,605)
233,767
–
23,692
23,692
(31,389)
172,143
209
29,382
29,591
257,459
201,734
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6. Trade and Other Receivables continued
(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
Allowance for doubtful debts at the beginning of the year
Net doubtful debt expense (1)
Net Amounts written off
Exchange differences
(1) Amounts are included in other expenses.
Ageing analysis of trade debtors
2013 – consolidated
Current
Past due not impaired
Considered impaired
2012 – consolidated
Current
Past due not impaired
Considered impaired
Non-current
Loans to associated entities (1)
Other receivables
(1) Loan terms are outlined in note 30.
7. Inventories
Current
Finished goods (at cost)
2013
$’000
(31,389)
(27,354)
1,365
(227)
2012
$’000
(30,704)
(17,326)
16,659
(18)
(57,605)
(31,389)
0-30 days
$’000
>30 days
$’000
Total
$’000
86,783
–
425
–
86,783
146,984
146,984
57,180
57,605
87,208
204,164
291,372
22,137
–
136
–
22,137
150,006
150,006
31,253
31,389
22,273
181,259
203,532
2013
$’000
117,059
9,763
2012
$’000
92,713
10,154
126,822
102,867
2013
$’000
2012
$’000
12,639
11,850
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
105
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
8. Other Financial Assets
N
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e
s
Current
Receivable on forward exchange contracts
Non-current
Receivable on interest rate swaps
2013
$’000
1,568
1,568
925
925
2012
$’000
337
337
–
–
Details of the Group’s exposure to interest rate risk and foreign currency changes are provided in note 34.
9. Investments
At fair value
Shares – listed (Australia)
Shares – unlisted (Australia)
Shares – unlisted (North America)
2013
$’000
2012
$’000
–
353,362
36,353
53,318
89,671
37,305
63,671
454,338
Investments consist of shares, and therefore have no fixed maturity date or coupon rate.
The fair value of listed investments have been determined by reference to published price quotations in an active market.
On 24 May 2013 Crown divested its interest in Echo.
The fair value of the unlisted investments have been estimated using valuation techniques based on assumptions that are
not supported by observable market prices or rates. Management believes that the estimated fair values resulting from
the valuation techniques and recorded in the Statement of Financial Position and the related changes in fair value recorded
in the Statement of Profit or Loss are reasonable and the most appropriate at the reporting date.
Based on the valuation techniques performed, there has been no fair value movement on unlisted investments during
the year (2012: $nil), other than foreign exchange rate movements.
10. Investments in Associates
Investment details:
Associated entities – unlisted shares
Associated entities – listed shares
Total investments in associates
Fair value of listed investments:
Melco Crown Entertainment Ltd (1)
2013
$’000
2012
$’000
5,314
6,800
1,397,723
1,081,944
1,403,037
1,088,744
4,562,303
2,087,261
4,562,303
2,087,261
(1) Reflects Melco Crown share price at balance date, converted to Australian dollars. In accordance with Crown’s accounting policies, recoverable
amount is the greater of fair value less costs to sell and value in use. The Melco Crown carrying amount does not exceed its recoverable amount.
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10. Investments in Associates continued
Investments in Associates
Reporting
Date
Melco Crown Entertainment Ltd
31 Dec (1)
Principal Activity
Resort/Casino and gaming
machine operator
Betfair Australasia Pty Ltd
30 April (1)
Betting exchange
Aspers Holdings (Jersey) Ltd
30 June
Casino and gaming
machine operator
(1) The Group uses 30 June results to equity account for the investments.
(2) Melco Crown Entertainment Ltd was incorporated in the Cayman Islands.
Principal
Place of
Business
Macau (2)
Australia
U.K.
% Interest
30 June
2013
30 June
2012
33.7
50.0
50.0
33.6
50.0
50.0
Share of associates’ revenue and profits/(losses)
Share of associates’:
Revenue
Operating profit/(loss) before income tax
Income tax benefit/(expense)
Share of associates’ net profit/(loss) after income tax
Carrying amount of investments in associates
Balance at the beginning of the financial year
Carrying amount of investments in associates acquired during the year
Share of associates’ net profit/(loss) for the year
Foreign exchange movements
2013
$’000
2012
$’000
2,166,081
1,759,465
147,274
140,214
637
(1,342)
147,911
138,872
2013
$’000
2012
$’000
1,088,744
16,563
147,911
149,819
851,721
57,550
138,872
40,601
Carrying amount of investment in associates at the end of the financial year
1,403,037
1,088,744
Represented by:
• Melco Crown
• Betfair
The 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 profits/(accumulated losses) of the consolidated entity attributable to associates
Balance at the beginning of the financial year
Share of associates’ net profits/(losses)
Balance at the end of the financial year
1,397,723
1,081,944
5,314
6,800
1,403,037
1,088,744
1,141,043
744,152
2,007,996
1,517,125
(463,733)
(490,183)
(1,103,412)
(648,641)
1,581,894
1,122,453
(99,502)
(238,374)
147,911
48,409
138,872
(99,502)
The investment in Aspers Holdings (Jersey) Ltd was previously written down to $nil and Crown has therefore discontinued
recognising its share of further losses. The Group’s share of unrecognised losses as at 30 June 2013 for Aspers Group is
$12.1 million (2012: $10.4 million).
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
10. Investments in Associates continued
Impairment Testing
Based on detailed impairment testing performed, there has been no impairment charge during the year (2012: $nil).
For the purposes of impairment testing, management estimated the present value of the future cash flows expected to be
generated from operations and the proceeds from ultimate disposal. These calculations use cash flow projections based
on past performance and expectations for the future using a four year cash flow period. The implied terminal growth rate
beyond the four year period does not exceed the forecasted long term inflation rates of up to 3.5% (2012: 3.5%). Post-tax
discount rates of between 10% and 13% were used in the impairment review calculations (2012: 10% – 12%).
Any reasonable possible change in key assumptions used would not cause the carrying amount of the investments
to exceed their recoverable amounts.
11. Property, Plant and Equipment
Freehold
land and
buildings
$’000
Buildings on
leasehold
land
$’000
Plant &
equipment
$’000
Construction
work in
progress
$’000
Leased
plant &
equipment
$’000
Total
property,
plant and
equipment
$’000
Year ended 30 June 2013
At 1 July 2012, net of accumulated
depreciation and impairment
Additions
Disposals
Depreciation expense
Exchange differences
1,022,193
5,042
–
854,182
79,495
799,898
106,558
128,106
78,239
–
2,804,379
11,545
280,879
(4)
(13)
(27,089)
(53,446)
(140,178)
–
756
374
–
–
–
–
(17)
(196)
(220,909)
–
–
1,130
–
Reclassification/transfer
80,244
52,383
(27,719)
(104,908)
At 30 June 2013, net of
accumulated depreciation
and impairment
At 1 July 2012
1,080,390
933,366
738,920
101,437
11,349
2,865,462
Cost (gross carrying amount)
1,248,223
1,312,721
1,901,664
128,106
Accumulated depreciation
and impairment
(226,030)
(458,539)
(1,101,766)
–
Net carrying amount
1,022,193
854,182
799,898
128,106
–
–
–
4,590,714
(1,786,335)
2,804,379
At 30 June 2013
Cost (gross carrying amount)
1,337,994
1,440,699
1,971,334
101,437
11,545
4,863,009
Accumulated depreciation
and impairment
(257,604)
(507,333)
(1,232,414)
–
(196)
(1,997,547)
Net carrying amount
1,080,390
933,366
738,920
101,437
11,349
2,865,462
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11. Property, Plant and Equipment continued
Freehold
land and
buildings
$’000
Buildings on
leasehold
land
$’000
Plant &
equipment
$’000
Construction
work in
progress
$’000
Leased
plant &
equipment
$’000
Year ended 30 June 2012
At 1 July 2011, net of accumulated
depreciation and impairment
Additions
Disposals
Depreciation expense
Exchange differences
Reclassification/transfer
At 30 June 2012, net of
accumulated depreciation
and impairment
At 1 July 2011
906,013
326
–
685,752
214,978
746,534
67,832
176,606
206,753
(74)
(25)
(23,812)
(46,582)
(130,182)
–
139,666
108
–
152
115,587
(255,253)
–
–
–
1,022,193
854,182
799,898
128,106
–
–
–
–
–
–
–
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Total
property,
plant and
equipment
$’000
2,514,905
489,889
(99)
(200,576)
260
–
2,804,379
Cost (gross carrying amount)
1,103,774
1,098,679
1,729,766
176,606
10,679
4,119,504
Accumulated depreciation
and impairment
(197,761)
(412,927)
(983,232)
–
(10,679)
(1,604,599)
Net carrying amount
906,013
685,752
746,534
176,606
–
2,514,905
At 30 June 2012
Cost (gross carrying amount)
1,248,223
1,312,721
1,901,664
128,106
Accumulated depreciation
and impairment
(226,030)
(458,539)
(1,101,766)
–
Net carrying amount
1,022,193
854,182
799,898
128,106
–
–
–
4,590,714
(1,786,335)
2,804,379
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
12. Licences
N
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Year ended 30 June 2013
At 1 July 2012, net of accumulated amortisation and impairment
Amortisation expense
At 30 June 2013, net of accumulated amortisation and impairment
At 1 July 2012
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
At 30 June 2013
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
Year ended 30 June 2012
At 1 July 2011, net of accumulated amortisation and impairment
Amortisation expense
At 30 June 2012, net of accumulated amortisation and impairment
At 1 July 2011
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
(1) Purchased as part of a business combination.
The casino licence premiums are carried at cost and amortised on a straight line basis over their useful lives.
The Crown Melbourne licence is being amortised over 34 years. The Crown Perth licence is assessed as perpetual
and no amortisation is charged.
Casino
Licence (1)
$’000
656,983
(7,472)
649,511
794,899
(137,916)
656,983
794,899
(145,388)
649,511
664,455
(7,472)
656,983
794,899
(130,444)
664,455
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13. Other Intangible Assets
Year ended 30 June 2013
At 1 July 2012, net of accumulated amortisation and impairment
Exchange differences
Amortisation expense
Goodwill (1)
$’000
56,950
3,812
Casino
Management
Agreement (1)
$’000
Other
$’000
Total
$’000
148,659
2,163
207,772
–
–
(6,941)
–
(71)
3,812
(7,012)
At 30 June 2013, net of accumulated amortisation
and impairment
60,762
141,718
2,092
204,572
At 1 July 2012
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
At 30 June 2013
Cost (gross carrying amount)
56,950
245,279
–
(96,620)
56,950
148,659
2,812
(649)
2,163
305,041
(97,269)
207,772
60,762
245,279
2,813
308,854
Accumulated amortisation and impairment
–
(103,561)
(721)
(104,282)
Net carrying amount
60,762
141,718
2,092
204,572
Year ended 30 June 2012
At 1 July 2011, net of accumulated amortisation and impairment
56,518
155,624
Additions
Exchange differences
Amortisation expense
–
432
–
–
–
(6,965)
888
1,787
–
(512)
213,030
1,787
432
(7,477)
At 30 June 2012, net of accumulated amortisation
and impairment
56,950
148,659
2,163
207,772
At 1 July 2011
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
(1) Purchased as part of a business combination
56,518
245,279
1,025
302,822
–
(89,655)
56,518
155,624
(137)
888
(89,792)
213,030
Goodwill is considered to have an indefinite life and is tested annually for impairment (see note 14). $48.9 million of the
goodwill balance at 30 June 2013 is attributable to Crown Aspinall’s.
The useful life of the Crown Melbourne casino management agreement is 34 years, and is amortised on a straight line basis.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
14. Impairment Testing of Intangible Assets
Impairment tests for intangible assets
Intangible assets deemed to have indefinite lives are allocated to the Group’s cash generating units (CGU’s) identified
according to business segment.
The 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 flow methodology covering a specified period, with an appropriate residual value at the end of
that period, for each segment. The methodology utilises cash flow forecasts that are based primarily on business plans
presented to and approved by the Board. The implied terminal growth rate beyond the five year period does not exceed
the forecasted long term Australian inflation rate of 2.5% (2012: 2.2%).
The following describes each key assumption on which management has based its cash flow projections to undertake
impairment testing of goodwill and casino licences.
(a) Cash flow forecasts
Cash flow forecasts are based on past performance and expectations for the future using a five year cash flow period.
(b) Residual value
Residual value is calculated using a perpetuity growth formula based on the cash flow forecast using a weighted average
cost of capital (after tax) and forecast growth rate.
(c) Forecast growth rates
Forecast growth rates are based on past performance and management’s expectations for future performance
in each segment.
(d) Discount rates
A weighted average cost of capital (after tax) of between 8% and 10% was used by the Group in impairment testing,
risk adjusted where applicable.
15. Other Assets
Non-current
Prepaid casino tax at cost
Accumulated amortisation
Other prepayments
16. Trade and Other Payables
Current – unsecured
Trade and other payables
Deferred Income
Non-current – unsecured
Other
2013
$’000
2012
$’000
100,800
100,800
(43,369)
(40,634)
57,431
60,166
5,349
62,780
2,674
62,840
2013
$’000
2012
$’000
296,411
324,561
170
1,170
296,581
325,731
138
138
138
138
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17. Interest-Bearing Loans and Borrowings
Current – unsecured
Bank Loans – unsecured
Finance Lease – secured
Non-current – unsecured
Bank Loans – unsecured
Capital Markets Debt – unsecured
Finance Lease – secured
Assets pledged as security
2013
$’000
80,726
669
2012
$’000
29,077
–
81,395
29,077
331,549
1,295,509
1,211,613
370,080
10,706
–
1,553,868
1,665,589
The lease liabilities are effectively secured, as the rights to the leased assets revert to the lessor in the event of default.
Fair Value Disclosures
Details of the fair value disclosures of the Group’s interest bearing liabilities are set out in note 34.
Financial Risk Management
Information about the Group’s exposure to interest rate and foreign currency changes is provided in note 34.
Financing and Credit Facilities
Unsecured credit facilities are provided as part of the overall debt funding structure of the Crown Group as follows:
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Facility Type
Bank Facilities
Bilateral Multi Option Facilities
Syndicated Revolving Facilities
GBP Syndicated Facility
Letter of Credit Facility
Debt Capital Markets
Euro Medium Term Note
Australian Medium Term Note
AUD Subordinated Notes
US Private Placement
Facility
Amount
$’000
Drawn
Amount
$’000
Letters
of Credit
Issued
$’000
Available
$’000 Expiry Dates
170,000
1,250,000
141,549
185,000
80,726
190,000
141,549
22,702
66,572 Oct 13/Feb 14
–
–
1,060,000
2015 – 2017
–
–
2015 – 2016
June 2021
–
185,000
1,746,549
412,275
207,702
1,126,572
174,634
174,634
300,000
300,000
518,065
218,914
518,065
218,914
1,211,613
1,211,613
–
–
–
–
–
July 2036
July 2017
Sept 2072
2015 – 2020
–
–
–
–
–
Total at 30 June 2013
2,958,162
1,623,888
207,702
1,126,572
Total at 30 June 2012
2,405,589
1,694,666
204,498
506,425
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
17. Interest-Bearing Loans and Borrowings continued
The bank facilities are provided on an unsecured basis by domestic and international banks.
The debt capital markets drawn amounts represent unsecured notes issued to domestic and international debt investors.
Crown is able to make advances and issue letters of credit under the letter of credit facility, syndicated facilities and the
bilateral facilities which are multi option in nature.
Each of the above mentioned facilities is issued by or supported by a Group guarantee from Crown and certain of its
subsidiaries and impose various affirmative covenants on Crown, which may include compliance with certain financial
ratios and negative covenants, including restrictions on encumbrances, and customary events of default, including
a payment default, breach of covenants, cross-default and insolvency events.
During the current and prior year, there were no defaults or breaches on any of the loans or borrowings.
Refer to note 23(b) for a summary of Crown’s overdraft facilities.
18. Provisions
At 1 July 2012
Arising during the year
Utilised during the year
At 30 June 2013
Current 2013
Non-current 2013
At 30 June 2013
Current 2012
Non-current 2012
At 30 June 2012
19. Other Financial Liabilities
Current
Payables on interest rate swaps
Payables on total return swaps
Non-current
Payables on interest rate swaps
Payables on cross currency swaps
Other financial liabilities are outlined in note 34.
Employee
Entitlements
$’000
122,937
92,271
(69,412)
Other
$’000
17,223
3,077
Total
$’000
140,160
95,348
(1,530)
(70,942)
145,796
18,770
164,566
103,163
42,633
145,796
84,754
38,183
17,099
1,671
18,770
17,223
–
120,262
44,304
164,566
101,977
38,183
122,937
17,223
140,160
2013
$’000
2012
$’000
–
–
–
679
3,940
4,619
11,185
11,036
22,221
146
8,515
8,661
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20. Contributed Equity
Issued share capital
Ordinary shares fully paid
Movements in issued share capital
Carrying amount at the beginning of the financial year
ESP proceeds
Share buy-back
Carrying amount at the end of the financial year
Shares held in Trust
Balance at beginning of the financial year
Shares acquired by the Crown Limited Long Term Incentive Plan
Balance at the end of the financial year
Issued share capital
Ordinary shares fully paid
Movements in issued share capital
Balance at the beginning of the financial year
Share buy-back
Balance at the end of the financial year
Terms and Conditions of Contributed Equity
2013
$’000
2012
$’000
446,763
446,763
446,763
645,475
–
–
39,345
(238,057)
446,763
446,763
(480)
(638)
(1,118)
2013
No.
–
(480)
(480)
2012
No.
728,394,185 728,394,185
728,394,185 758,394,185
– (30,000,000)
728,394,185 728,394,185
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.
The 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.
Capital Management
When managing capital, the Group’s objective is to maintain optimal returns to shareholders and benefits for other stakeholders.
The Group also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.
During 2013, the Group paid dividends of $269.5 million. The Group’s dividend policy going forward is to pay the higher
of 37 cents per share or 65% of normalised full year NPAT (excluding non-cash profits from associates), subject to the
Group’s financial position.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
115
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
21. Reserves and Retained Earnings
N
o
t
e
s
Foreign currency translation reserve
Employee equity benefits reserve
Net unrealised gains reserve
Cash flow hedge reserve
2013
$’000
2012
$’000
(188,798)
(323,419)
13,010
13,010
628,908
628,704
(2,126)
(19,509)
450,994
298,786
Foreign Currency Translation Reserve
The foreign currency translation reserve is used to record exchange differences arising
from the translation of the financial statements of foreign operations. It is also used
to recognise gains and losses on hedges of the net investment in foreign operations.
Balance at the beginning of the financial year
Net foreign exchange translation
Balance at the end of the financial year
(323,419)
(363,804)
134,621
40,385
(188,798)
(323,419)
Employee Equity Benefits Reserve
The employee equity benefits reserve is used to record share based remuneration
obligations to executives in relation to ordinary shares.
Balance at the beginning of the financial year
Balance at the end of the financial year
13,010
13,010
13,010
13,010
Net Unrealised Gains Reserve
The net unrealised gains reserve records the movement from changes in investments
and associates equity.
Balance at the beginning of the financial year
Change in net unrealised gains reserve
Balance at the end of the financial year
Cash Flow Hedge Reserve
The cash flow hedge reserve records the portion of the gain or loss on a hedging
instrument in a cash flow hedge that is determined to be an effective hedge.
Balance at the beginning of the financial year
Movement in interest rate swaps
Movement in cross currency swaps
Movement in forward exchange contracts
Transfer to statement of financial position/statement of comprehensive income
Balance at the end of the financial year
628,704
629,032
204
(328)
628,908
628,704
(19,509)
(52,450)
11,577
4,575
1,231
(361)
54,740
2,399
–
(23,837)
(2,126)
(19,509)
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21. Reserves and Retained Earnings continued
Retained Earnings
Balance at the beginning of the financial year
Net profit after tax
Total available for appropriation
Dividends provided for or paid
Balance at the end of the financial year
22. Expenditure Commitments
(a) Capital expenditure commitments
Estimated capital expenditure contracted for at balance date, but not provided for:
Payable within one year
Payable after one year but not more than five years
2013
$’000
2012
$’000
2,629,681
2,389,097
395,787
513,325
3,025,468
2,902,422
(269,506)
(272,741)
2,755,962
2,629,681
2013
$’000
2012
$’000
89,155
20,000
213,043
20,683
109,155
233,726
At 30 June 2013, the Group has capital expenditure commitments principally relating to funding various projects.
(b) Non-cancellable operating lease commitments
Payable within one year
Payable after one year but not more than five years
Payable more than five years
2013
$’000
3,538
6,851
11,373
21,762
2012
$’000
2,672
6,022
11,911
20,605
The Group has entered into non-cancellable operating leases. The leases vary in contract period depending on the asset
involved but generally have an average lease term of approximately 10 years (2012: 11 years). Operating leases include
telecommunications rental agreements and leases on assets including 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 specific
entity that holds the lease. On renewal, the terms of the leases are usually renegotiated. There are no restrictions placed
upon the lessee by entering into these leases.
In addition, in 1993 Crown Melbourne entered into a ninety-nine year lease agreement for the site upon which Crown
Melbourne Entertainment Complex is located. For years one to forty inclusive the annual rent payable by the parent entity
is one dollar per annum. For years forty-one to ninety-nine inclusive the annual rent payable will be the then current market
rent for the site. The aggregate lease expenditure contracted for at balance date but not provided for which is disclosed
in this report does not include an estimate for the rent payable for years forty-one to ninety-nine inclusive due to the
uncertainty of these amounts.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
22. Expenditure Commitments continued
(c) Non-cancellable finance lease commitments
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Payable within one year
Payable after one year but not more than five years
2013
$’000
669
10,706
11,375
2012
$’000
–
–
–
Under the terms of the lease, Crown has the option to acquire the leased asset for a predetermined residual value
on expiry of the lease.
23. Cash Flow Statement Reconciliation
(a) Cash balance represents:
• cash on hand and at bank
• deposits at call
2013
$’000
2012
$’000
187,651
17,860
131,545
17,808
205,511
149,353
The above closing cash balances includes $118.5 million (2012: $143.4 million) of cash on the company’s premises
and cash held in bank accounts needed to run the day to day operations of the businesses and cash of $87.0 million
(2012: $6.0 million) for other purposes.
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23. Cash Flow Statement Reconciliation continued
(b) Reconciliation of the profit/(loss) after tax to the net cash flows
from operating activities
Profit after tax
Depreciation and amortisation:
• property, plant and equipment
• intangibles
(Profit)/loss on sale of property, plant and equipment
Unrealised foreign exchange (gain)/loss
Share of associates’ net (profit)/loss
Net loss on disposal of investments
Net mark-to-market (gain)/loss on investments & total return swaps
Changes in assets and liabilities:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in doubtful debts
(Increase)/decrease in inventories
(Increase)/decrease in prepayments
(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
(Decrease)/increase in deferred income tax liability
Net cash flows from operating activities
2013
$’000
2012
$’000
395,787
513,325
220,909
200,576
17,218
(183)
(1,189)
17,684
(426)
(816)
(147,911)
(138,872)
69,577
–
–
(20,111)
(91,525)
26,216
(789)
(1,458)
428
(2,574)
52,368
(46,956)
9,650
(3,370)
(77,942)
685
6,220
(820)
(3,909)
(9,329)
17,639
61,573
9,543
(4,320)
496,198
570,700
Bank Overdraft Facilities
The consolidated entity has bank overdraft facilities available as follows:
Bank
ANZ Banking Group Limited
Citibank NA
Royal Bank of Scotland PLC
2013
2012
A$20 million A$20 million
US$10 million US$10 million
£20 million
£20 million
As at 30 June 2013 there were no drawn down amounts on the overdraft facilities (2012: £8.0million).
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
119
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
24. Events After the Reporting Period
In July 2013, the New South Wales Government invited Crown to move to Stage Three of the Unsolicited Proposal
process for Crown’s proposed development and operation of a six-star hotel resort including VIP gaming facilities
at Barangaroo South on Sydney Harbour. Crown accepted the invitation and the conditions requested by the
New South Wales Government.
Subsequent to 30 June 2013, the directors of Crown announced a final dividend on ordinary shares in respect of the
year ending 30 June 2013. The total amount of the dividend is $138.4 million, which represents a dividend of 19 cents
per share franked at 50%. The dividend has not been provided for in the 30 June 2013 financial statements.
25. Executive Share Plan
The Executive Share Plan (ESP) was wound up in the 2012 financial year.
At 30 June 2013, there were no remaining ESP shares on issue.
Shares at the beginning of the financial year
Forfeited
Shares on issue at the end of the financial year
Loans to executives at the beginning of the financial year
Loans repaid and satisfied during the year
Loans to executives at year end
Long Term Incentive Plan (Crown LTI)
2013
No.
2012
No.
–
–
–
4,952,807
(4,952,807)
–
– $57,726,075
– ($57,726,075)
–
–
In 2010, Crown established a new long term incentive plan. The Crown LTI was designed as a successor long term
incentive to the Employee Share Plan which was wound up during financial year 2012. The Crown LTI has been made
available to selected senior executives with effect from 1 July 2010. The Crown LTI rewards relevant senior executives
for achieving certain earnings per share targets over the four year period from 1 July 2010 to 30 June 2014. Further detail
regarding the operation of the Crown LTI and the Senior Executives (or KMPs) who participate in the Crown LTI can be
found in the Remuneration Report.
26. Contingent Liabilities and Related Matters
The Group has no contingent liabilities at 30 June 2013.
Legal Actions
Entities within the group are defendants from time to time in legal proceedings arising from the conduct of their business.
The group does not consider that the outcome of any proceedings ongoing at balance date, either individually or in
aggregate, is likely to have a material effect on its financial position. Where appropriate, provisions have been made.
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27. Auditors’ Remuneration
Amounts received, or due and receivable, by Ernst & Young (Australia) for:
Auditing the accounts
Taxation services
Amounts received, or due and receivable, by other member firms
of Ernst & Young International for:
Auditing the accounts
Other services:
• Taxation services
• Consulting services
2013
$’000
774
5,725
115
79
14
6,707
2012
$’000
873
4,716
165
171
184
6,109
Amounts received, or due and receivable, by non Ernst & Young audit firms for:
Auditing services
76
49
28. Earnings Per Share (EPS)
The following reflects the income and share data used in the calculations of basic
and diluted EPS:
Net profit/(loss) after tax used in calculating basic and diluted EPS ($’000)
395,787
Weighted average number of ordinary shares used in calculating basic and diluted EPS (’000)
728,394
513,325
735,634
There are no transactions involving ordinary shares or potential ordinary shares that would significantly change the number
of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these
financial statements.
2013
2012
29. Key Management Personnel Disclosures
(a) Details of key management personnel
(i) Directors
James D Packer
John H Alexander
Benjamin A Brazil
Helen A Coonan
Christopher D Corrigan
Rowen B Craigie
Rowena Danziger
Geoffrey J Dixon
John S Horvath
Ashok Jacob
Michael R Johnston
Harold C Mitchell
Chairman
Executive Deputy Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer and Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
29. Key Management Personnel Disclosures continued
(a) Details of key management personnel continued
(ii) Executives
Kenneth M Barton
Barry J Felstead
Greg F Hawkins
W Todd Nisbet
Chief Financial Officer
Chief Executive Officer – Crown Perth (until 1 August 2013),
Chief Executive Officer – Australian Resorts (from 1 August 2013)
Chief Executive Officer – Crown Melbourne (until 1 August 2013)
Executive Vice President – Strategy and Development
(b) Remuneration of key management personnel
Total remuneration for key management personnel for the Group and Parent Entity during the financial year
are set out below:
Remuneration by category
Short term benefits
Post employment benefits
Long term incentives
Further details are contained in the Remuneration Report.
(c) Shareholdings of key management personnel
Ordinary shares held in Crown (directly and indirectly)
30 June 2013
Directors
(including directors who left the Board during the year)
James D Packer (1)
John H Alexander (1)
Rowen B Craigie (2)
Rowena Danziger
Harold C Mitchell
Executives
Ken M Barton (2)
Greg F Hawkins
Todd W Nisbet (2)
2013
$
2012
$
12,938,377
12,664,142
98,820
94,650
2,581,500
7,162,500
15,618,697
19,921,292
Issued
under
Executive
Share Plan
Other Net
Change
Balance
30 June
2013
–
–
13,958,286 364,270,253
(249,498)
256,549
38,875
–
–
Issued
under
Executive
Share Plan
10,799
–
19,438
–
–
–
74,092
30,896
114,887
Other Net
Change
–
–
–
Balance
30 June
2013
20,581
1,509
37,046
Balance
1 July 2012
350,311,967
506,047
35,217
30,896
114,887
Balance
1 July 2012
9,782
1,509
17,608
(1) Change is a result of an on market trade.
(2) The registered holder of these shares is Australian Executor Trustees Limited as trustee under the 2010 Crown Limited Long Term Incentive
Plan. Mr Craigie, Mr Barton and Mr Nisbet may become entitled to have those shares transferred to them after 30 June 2014 if certain
conditions in the 2010 Crown Limited Long Term Incentive Plan are met.
The Company does not have any options on issue.
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29. Key Management Personnel Disclosures continued
(c) Shareholdings of key management personnel
Ordinary shares held in Crown (directly and indirectly)
30 June 2012
Directors
(including directors who left the Board during the year)
James D Packer (1)
John H Alexander
Rowen B Craigie (3)
Rowena Danziger
Harold C Mitchell
Executives
Ken M Barton (2)
Barry J Felstead (3)
Greg F Hawkins
Todd W Nisbet (2)
Issued
under
Executive
Share Plan
Other Net
Change
Balance
30 June
2012
–
–
24,182,723 350,311,967
–
506,047
Balance
1 July 2011
326,129,244
506,047
2,341,102
35,217(2)
(2,341,102)
30,896
114,887
–
–
–
–
Issued
under
Executive
Share Plan
Balance
1 July 2011
Other Net
Change
–
9,782
–
234,110
1,509
–
–
–
17,608
(234,110)
–
–
35,217
30,896
114,887
Balance
30 June
2012
9,782
–
1,509
17,608
(1) Change is a result of an on market trade.
(2) The registered holder of these shares is Australian Executor Trustees Limited as trustee under the 2010 Crown Limited Long Term Incentive
Plan. Mr Craigie, Mr Barton and Mr Nisbet may become entitled to have those shares transferred to them after 30 June 2014 if certain conditions
in the 2010 Crown Limited Long Term Incentive Plan are met.
(3) The other net change reflects the sale of ESP shares as part of the wind up of the ESP which completed during the 2012.
The Company does not have any options on issue.
30. Related Party Disclosures
(a) Parent entity
Crown Limited is the ultimate parent entity of the Group.
(b) Controlled entities, associates and joint ventures
Interests in significant controlled entities are set out in note 31.
Investments in associates and joint ventures are set out in note 10.
(c) Entity with significant influence over the Group
At balance date Consolidated Press Holdings Group (“CPH”), comprising Consolidated Press Holdings Limited and
its related corporations, a group related to Mr James Packer, holds 50.01% (2012: 48.09%) of the Company’s fully paid
ordinary shares.
(d) Director related entities
Until 19 November 2012, Consolidated Media Holdings (“CMH”) was an entity classified as a related party due
to Crown and CMH having a number of common directors.
(e) Key management personnel
Disclosures relating to key management personnel are set out in note 29, and in the Remuneration Report.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
123
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
30. Related Party Disclosures continued
(f) Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made in arm’s length transactions both at normal market prices
and on normal commercial terms, unless otherwise stated.
(g) Transactions with related parties
The continuing operations have had the following transactions with related parties:
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(i) Director related entities and entities with significant influence over the Group
CPH provided corporate secretarial and administrative services to Crown and its controlled entities of $0.1 million during
the year (2012: $0.2 million). CPH paid costs on behalf of Crown to third parties totalling $1.3 million during the year
(2012: $0.7 million). In addition, Crown reimbursed CPH with $5.3 million, representing probity related costs incurred
by CPH on behalf of Crown (2012: $nil). At 30 June 2013 there were no amounts owing to CPH (2012: $nil).
Crown and its controlled entities provided CPH with hotel and banqueting services of $62,000 during the year
(2012: $41,000). At 30 June 2013 there were no amounts owing from CPH (2012: $nil).
Crown and CMH jointly engaged certain legal and other advisers in relation to certain matters arising prior to the
PBL demerger. Costs of these advisers are shared in a manner consistent with Section 14 of the PBL Scheme Booklet,
generally Crown – 75% and CMH – 25%. Similarly, payments in relation to liabilities arising from activities prior to the
PBL demerger were shared on the same basis. At 30 June 2013 there were no amounts owing to CMH (2012: $0.2 million)
in relation to pre-demerger matters.
(ii) Associates
Crown acquired additional equity in Melco Crown from Melco Crown SPV Limited for an amount of $16.6 million
(2012: $nil). In 2012, Crown acquired additional equity in Melco Crown for an amount of $57.5 million arising from the
conversion of previously outstanding shareholder loans to Melco Crown.
There was no interest charged on loans to Melco Crown for the year (2012: $45,000). Crown provided Melco Crown IT
and related services of $0.6 million (2012: $1.5 million) at cost during the year. There were no amounts receivable from
Melco Crown at 30 June 2013 (2012: $0.7 million).
Melco Crown provided $5,000 (2012: $38,000) in Hotel and other services to Crown during the year. In addition, Melco
Crown paid costs of $0.1 million (2012: $0.1 million) on behalf of Crown during the year which has subsequently been
reimbursed in full.
Crown provided additional loans of $12.6 million (2012: $27.4 million) to Aspers Holdings (Jersey) Ltd during the year.
There were no loan repayments to Crown during the year (2012: $nil). Interest charged on loans advanced to Aspers
was $10.4 million for the year (2012: $7.5 million). At 30 June 2013 $105.4 million (2012: $81.2 million) was owed by
Aspers. There were no costs paid by Aspers on behalf of Crown during the year (2012: $nil). At 30 June 2013 there
were no amounts owing to Aspers (2012: $nil).
Crown made no further loans to Betfair during the year (2012: $nil). The loan balance with Betfair at 30 June 2013
was $11.7 million (2012: $11.7 million). No interest is payable on the loan. Crown provided Betfair Hotel, Banqueting
and other services of $0.4 million (2012: $0.1 million) during the year. There were no amounts receivable from Betfair
at 30 June 2013 (2012: $nil).
For the year ended 30 June 2013, 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 (2012: $nil).
An impairment assessment is undertaken each financial year by examining the financial 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.
During the financial year Crown has assessed there is no impairment to related party receivables.
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31. Investment in Controlled Entities
The consolidated financial statements include the financial statements of Crown Limited and its controlled entities.
Significant controlled entities and those included in a class order with the parent entity are:
Country of
Incorporation
Beneficial Interest Held by
the Consolidated Entity(1)
Footnote
2013
2012
Crown Limited
Artra Pty Ltd
Aspinall’s Club Limited
Burswood Limited
Burswood Nominees Ltd
Burswood Resort (Management) Ltd
Crown Asia Investments Limited
Crown Australia Pty Ltd
Crown Capital Golf Pty Ltd
Crown Cyprus Limited
Crown CCR Group Holdings One Pty Ltd
Crown CCR Group Holdings Two Pty Ltd
Crown CCR Group Holdings General Partnership
Crown CCR Group Investments One LLC
Crown CCR Group Investments Two LLC
Crown CCR Holdings LLC
Crown CPS Holdings Pty Ltd
Crown Entertainment Group Holdings Pty Ltd
Crown Gateway Luxembourg Pty Ltd
Crown Group Finance Limited
Crown Group Securities Ltd
Crown Management Holdings Pty Ltd
Crown Management Pty Ltd
Crown Melbourne Limited
Crown North America Holdings One Pty Ltd
Crown North America Investments LLC
Crown Overseas Investments Pty Ltd
Crown Services (US) LLC
Crown Sydney Pty Ltd
Crown UK Investments Ltd
Crown (Western Australia) Pty Ltd
Flienn Pty Ltd
Jade West Entertainment Pty Ltd
Jemtex Pty Ltd
Nine Television (Netherlands Antilles) Pty Ltd
PBL (CI) Finance Limited
Pennwin Pty Ltd
Publishing and Broadcasting (Finance) Ltd
Publishing and Broadcasting International Holdings Ltd
Renga Pty Ltd
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
Australia
Australia
United Kingdom
A Australia
A Australia
A Australia
A Australia
Australia
Australia
Australia
A Australia
Australia
USA
USA
USA
USA
A Australia
A Australia
A Australia
A Australia
A Australia
A Australia
A Australia
A Australia
Australia
USA
A Australia
USA
Australia
United Kingdom
A Australia
A Australia
A Australia
A Australia
Australia
Cayman Islands
A Australia
A Australia
Bahamas
A Australia
2013
%
2012
%
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(1) The proportion of ownership interest is equal to the proportion of voting power held.
A These 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 32).
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
32. Deed of Cross Guarantee
Certain controlled entities of Crown Limited, as detailed in note 31, are parties to a Deed of Cross Guarantee under which
each company guarantees the debts of the others.
By entering into the deed, 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.
The consolidated income statement and balance sheet of the entities which are members of the “Closed Group” are
detailed below.
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Consolidated income statement
Profit/(loss) before income tax
Income tax (expense)/benefit
Net profit/(loss) after income tax
Retained earnings/(accumulated losses) at the beginning of the financial year
Retained earnings/(accumulated losses) of entities entering Closed Group
Dividends provided for or paid
Retained earnings/(accumulated losses) at the end of the financial year
Closed Group
2013
$’000
2012
$’000
593,880
622,722
(55,267)
(89,961)
538,613
532,761
(144,363)
(222,182)
–
(182,201)
(269,506)
(272,741)
124,744
(144,363)
126
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32. Deed of Cross Guarantee continued
Consolidated balance sheet
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Other financial assets
Total current assets
Non-current assets
Receivables
Other financial assets
Investments
Investment in associates
Property, plant and equipment
Licences
Other intangible assets
Deferred tax assets
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Income tax payable
Provisions
Other financial liabilities
Total current liabilities
Non-current liabilities
Other payables
Interest-bearing loans and borrowings
Deferred tax liability
Provisions
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Treasury shares
Reserves
Retained earnings
Total equity
Closed Group
2013
$’000
2012
$’000
156,247
237,825
12,172
16,507
1,568
159,027
176,908
11,613
16,225
337
424,319
364,110
1,105,002
1,080,508
2,529,798
2,511,130
3,364
357,327
1,403,037
1,088,744
2,850,817
2,790,405
649,511
155,858
112,187
62,780
656,983
162,714
101,734
62,840
8,872,354
8,812,385
9,296,673
9,176,495
265,705
292,679
81,395
37,377
117,499
–
29,077
83,695
99,213
22,221
501,976
526,885
138
138
3,095,334
3,384,382
201,938
205,481
44,304
4,619
38,183
8,661
3,346,333
3,636,845
3,848,309
4,163,730
5,448,364
5,012,765
4,809,818
4,809,818
(1,118)
514,920
124,744
(480)
347,790
(144,363)
5,448,364
5,012,765
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
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FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
Crown Limited
2013
$’000
2012
$’000
276,360
419,503
–
–
276,360
419,503
–
3
9,858,901
9,787,154
9,858,901
9,787,157
38,803
83,192
2,873,344
2,764,065
2,912,147
2,847,257
9,927,204
9,927,204
13,010
13,010
(2,993,460)
(3,000,314)
6,946,754
6,939,900
For the year ended 30 June 2013
33. Parent Entity Disclosures
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Results of the parent entity
Profit after tax for the period
Other comprehensive income/(loss)
Total comprehensive income for the period
Financial position of the parent entity
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Issued capital
Employee equity benefits reserve
Accumulated losses
Total equity
Contingent liabilities
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There are no contingent liabilities for the parent entity at 30 June 2013 (2012: $nil).
Capital expenditure
The parent entity does not have any capital expenditure commitments for the acquisition of property, plant and equipment
contracted but not provided for at 30 June 2013 (2012: $nil).
Parent entity guarantees in respect of debts of its subsidiaries
The parent entity has entered into a deed of cross guarantee with the effect that the Company guarantees debts in respect
of its subsidiaries. Further details of the deed of cross guarantee and the subsidiaries subject to the deed, are set out in
notes 31 and 32.
34. Financial Risk Management Objectives and Policies
The Group’s principle financial instruments comprise receivables, payables, bank loans, capital market debt, finance lease
liabilities, investments, cash and short term deposits and derivatives.
The Group’s business activities expose it to the following risks; market risks (interest rate and foreign exchange), 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
Group is satisfied that there are no material concentrations of risk.
The Group has policies in place to manage different 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 flow forecasts.
Financial risk management is carried out under policies approved by the Board of Directors. The Group identifies,
evaluates and hedges financial risks in accordance with approved polices. The Board are informed on a regular basis
of risk management activities.
34. Financial Risk Management Objectives and Policies continued
(a) Market Risk
(i) Interest rate risk – cash flow
The Group’s exposure to market interest rates relates primarily to the Group’s cash and cash equivalents and long term
debt obligations as outlined in note 17.
At balance date, the Group had the following mix of financial assets and liabilities exposed to variable interest rates that are
not designated as cash flow hedges.
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AUD cash on hand and at bank
AUD deposits at call
GBP cash on hand and at bank
EUR cash on hand and at bank
USD cash on hand and at bank
Total financial assets
Financial liabilities
AUD bank loans
AUD Capital Market debt
Finance lease liability
HKD bank loans
GBP bank loans
Total financial liabilities
Net exposure
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$’000
24,925
17,860
43,532
599
65
2012
$’000
15,460
17,808
(9,555)
–
15
86,981
23,728
210,000
218,065
11,375
60,726
16,653
865,000
–
–
29,077
15,354
516,819
909,431
(429,838)
(885,703)
As at balance date, the Group maintained floating rate liabilities of $516.8 million (2012: $909.4 million) that were not
hedged by interest rate swaps. The associated interest rate risk is partially mitigated by total financial assets of $87.0 million
(2012: $23.7 million). Under the financial liabilities outstanding, for AUD facilities, the Group pays the Bank Bill Swap rate
(BBSW) plus a margin of between 100 and 500 basis points, for the finance lease liability, the Group pays USD LIBOR
plus a margin of 200 basis points, for GBP facilities, the Group pays LIBOR plus a margin of 180 basis points, and for
HKD facilities, the Group pays HIBOR plus a margin of 62.5 basis points.
Of the AUD cash on hand and at bank $24.9 million is interest bearing and is invested at approximately BBSW. Deposits
at call of $17.9 million are invested at approximately BBSW. The Group maintains cash and cash equivalents on hand of
$118.5 million for operational purposes and is non interest bearing (2012: $125.6 million).
As at balance date, the Group maintained floating rate borrowings in HKD of $60.7m (2012: $29.1m) and had minimal
interest earning cash and cash equivalents (2012: minimal).
As at balance date, the Group maintained no floating rate borrowings in USD (2012: $nil) and had minimal cash and cash
equivalents (2012: minimal).
As at balance date, the Group maintained no floating rate borrowings in EUR (2012: $nil) and had minimal cash and cash
equivalents (2012: minimal).
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
129
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
34. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
(i) Interest rate risk – cash flow continued
Group Sensitivity
If there was an increase of 75 basis points in AUD interest rates, an increase of 100 basis points in GBP, EUR and USD
interest rates, and an increase of 50 basis points in HKD interest rates, the Group’s post-tax-profit for the year would have
decreased by $2.1 million (2012: $6.6 million).
If there was a decrease of 50 basis points in AUD and GBP interest rates, and a decrease of 25 basis points in USD,
EUR and HKD interest rates, the Group’s post-tax-profit for the year would have increased $1.4 million (2012: $4.4 million).
The Group, where appropriate, uses interest rate swaps to manage the risk of adverse movements in interest rates
for its long term floating rate borrowings which are subject to variable rates.
The 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.
As at balance date the notional principal amounts and period of expiry of the interest rate swap contracts were as follows:
Cash flow hedge
Maturity under 1 year
Maturity 1 -5 years
Maturity over 5 years
Closing Balance
2013
$’000
2012
$’000
–
300,000
424,896
174,634
115,155
174,634
599,530
589,789
As at balance date the key terms of the interest rate swap contracts were as follows:
Hedge Type
Maturity Date
Interest Rate
Received
Interest Rate
Paid
Fair Value of
Swap Contract
$’000
Year Ended 30 June 2013
Interest Rate Swap Contract
Interest Rate Swap Contract
Interest Rate Swap Contract
Interest Rate Swap Contract
Interest Rate Swap Contract
Interest Rate Swap Contract
Interest Rate Swap Contract
June 2015
March 2016
June 2017
March 2018
June 2018
December 2015
December 2016
BBSW
BBSW
BBSW
BBSW
BBSW
LIBOR
LIBOR
3.00%
3.20%
3.26%
3.50%
3.39%
1.00%
1.19%
(151)
(236)
254
38
633
(109)
(183)
Cross Currency Swap Contract
June 2036
USD 4.91%
AUD 7.05%
(3,940)
Year Ended 30 June 2012
Interest Rate Swap Contract
Interest Rate Swap Contract
Interest Rate Swap Contract
June 2013
December 2015
December 2016
BBSW
LIBOR
LIBOR
6.99%
1.00%
1.19%
Cross Currency Swap Contract
June 2036
USD 4.91%
AUD 7.05%
(11,185)
(110)
(36)
(8,515)
The terms of each of the swap contracts are matched directly against the appropriate loan and interest expense and as
such are highly effective.
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34. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
(ii) Interest rate risk – fair value
Where appropriate, the Group enters into fixed rate debt to mitigate exposure to interest rate risk. As the Group holds fixed
rate debt there is a risk that the fair value of financial instruments will fluctuate because of market movements in interest
rates. The level of fixed rate debt at balance date was $1,118.4 million (2012: $785.2 million).
As at balance date the Group had no interest rate swaps in place to hedge fixed rate debt issuances.
(iii) Foreign exchange risk
The 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 significant receivables or payables as is deemed appropriate.
All forward exchange contracts must be in the same currency as the firm commitment and the Group negotiates the
terms of the hedges to exactly match the underlying commitment to maximise hedge effectiveness. As at balance date,
the Group had hedged the majority of its foreign currency receivables and payables that are firm commitments.
As at balance date, the Group had the following material foreign exchange exposures that were not designated as cash
flow hedges:
USD Exposure
Financial assets
Cash and cash equivalents
Total financial assets
Financial liabilities
US Private Placement
Total financial liabilities
Net exposure
GBP Exposure
Financial assets
Cash and cash equivalents
Loans to associates
Total financial assets
Financial liabilities
GBP Loan Facilities
Total financial liabilities
Net exposure
2013
$’000
876
876
2012
$’000
1,442
1,442
218,914
218,914
195,446
195,446
(218,038)
(194,004)
2013
$’000
2012
$’000
3,257
105,359
108,616
2,780
81,222
84,002
141,549
141,549
110,241
110,241
(32,933)
(26,239)
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
131
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
34. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
(iii) Foreign exchange risk continued
HKD Exposure
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
HKD Debt Facilities
Total financial liabilities
Net exposure
SGD Exposure
Financial assets
Cash and cash equivalents
Total financial assets
Net exposure
Group sensitivity – USD
2013
$’000
2012
$’000
2,501
62,668
65,169
6,293
60,726
67,019
(1,850)
2013
$’000
1,768
1,768
1,768
5,811
29,072
34,883
2,440
29,077
31,517
3,366
2012
$’000
3,023
3,023
3,023
Based on the financial instruments held at balance date, the sensitivity to fair value movements through equity as a result
of the AUD strengthening or weakening by 10c against the USD would be $21.6 million higher or $26.9 million lower
(2012: $17.4 million higher or $21.2 million lower).
The sensitivity to fair value movements through profit and loss as a result of the AUD strengthening or weakening
by 10c against the USD would not be material as at balance date (2012: not material).
Group sensitivity – GBP
Based on the financial instruments held at balance date, the sensitivity to fair value movements through equity as a
result of the AUD strengthening or weakening by 5c against the GBP would be $2.8 million higher or $3.3 million lower
(2012: $2.1 million higher or $2.4 million lower).
The sensitivity to fair value movements through profit and loss as a result of the AUD strengthening or weakening
by 5c against the GBP would not be material as at balance date (2012: not material).
Group sensitivity – HKD
Based on the financial instruments held at balance date, the sensitivity to fair value movements through equity as a result of
the AUD strengthening or weakening by 50c against the HKD would not be material as at balance date (2012: not material).
The sensitivity to fair value movements through profit and loss as a result of the AUD strengthening or weakening
by 50c against the HKD would not be material as at balance date (2012: not material).
Group sensitivity – SGD
Based on the financial instruments held at balance date, the sensitivity to fair value movements through equity as a result of
the AUD strengthening or weakening by 10c against the SGD would not be material as at balance date (2012: not material).
The sensitivity to fair value movements through profit and loss as a result of the AUD strengthening or weakening
by 10c against the SGD would not be material as at balance date (2012: not material).
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34. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
(iii) Foreign exchange risk continued
Foreign Exchange Contracts
The Group uses derivative instruments such as forward exchange contracts to manage the currency risks arising from
the Group’s operations and its sources of finance.
Derivatives are exclusively used for hedging purposes and not as trading or other speculative instruments. These derivatives
qualify for hedge accounting and are based on limits set by the Board.
Cash flow hedges
At balance date details of outstanding contracts denominated in AUD was:
Buy USD/Sell AUD
Maturity under 1 year
Notional Amounts
Average Rate
2013
$’000
2012
$’000
2013
$’000
2012
$’000
14,906
14,881
1.0153
1.0169
The change in fair value of cash flow hedges as at balance date was not material (2012: not material).
The forward exchange contracts are considered to be highly effective 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.
(b) Price Risk
(i) Equity Securities Price Risk
The Group is exposed to equity securities price risk. Equity securities price risk arises from investments held by the
Group and classified on the balance sheet as investments.
Shares – listed
Shares – unlisted
Net exposure
Group sensitivity
2013
$’000
–
89,671
89,671
2012
$’000
353,362
100,976
454,338
The Group’s sensitivity to equity securities price risk for the unlisted investments has been estimated using valuation
techniques based on the fair value of securities held. The sensitivity to fair value movements through equity or profit
and loss as a result of movement in value of the securities was not material as at balance date (2012: not material).
(ii) Commodity Price Risk
Neither the Group nor the parent entity is exposed to commodity price risk.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
133
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
34. Financial Risk Management Objectives and Policies continued
(c) Credit Risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other
receivables and derivative instruments. The 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.
The Group does not hold any credit derivatives or collateral to offset its credit exposure.
All investment and financial instruments activity is with approved counterparties with investment grade ratings and
is in accordance with approved policies. There are no significant concentrations of credit risk within the Group and
the aggregate value of transactions is spread amongst a number of financial institutions to minimise the risk of default
of counterparties.
Credit risk in trade receivables is managed in the following ways:
(i) The provision of credit is covered by a risk assessment process for all customers.
(ii) Concentrations of credit risk are minimised by undertaking transactions with a large number of customers.
(iii) The 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 flexibility through the use of cash
reserves, committed bank lines and capital markets debt in order to meet its financial commitments in a timely manner.
At balance date 5.0% or $81 million of the Group’s interest bearing liabilities will mature in less than 12 months (2012: 1.7%).
As at balance date the Group had $1,127 million in undrawn committed bank lines (2012: $506 million).
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34. Financial Risk Management Objectives and Policies continued
(d) Liquidity Risk continued
Maturity analysis of financial assets and liabilities
The table below analyses the Group’s contractual undiscounted cash flows of financial assets and financial liabilities,
net and gross settled derivative financial instruments into relevant maturity groupings based on the remaining period
at balance date to the contractual maturity date.
1 year or less
1 to 5 years
more than 5 years
Total
2013
$’000
2012
$’000
2013
$’000
2012
$’000
2013
$’000
2012
$’000
2013
$’000
2012
$’000
Financial assets
Cash and cash equivalents
205,511
149,353
–
Receivables – trade
257,459
201,525
9,763
Receivables – associates
–
209
117,059
–
10,154
92,713
16,565
14,789
–
–
–
–
–
–
–
–
–
–
205,511
149,353
267,222
211,679
117,059
92,922
16,565
14,789
Forward exchange
contracts receivable
Cross currency interest
rate swaps receivable
Finance lease liabilities
Capital markets
Bank loans
Total financial assets
486,321
371,934
153,965
127,100
122,145
115,109
762,431
614,143
6,786
6,058
27,143
24,233
122,145
115,109
156,074
145,400
Financial liabilities
Trade and other payables
296,581
325,731
669
–
–
–
138
10,706
138
–
–
–
–
–
296,719
325,869
11,375
–
316,419
14,658
895,194
355,422 1,211,613
370,080
80,726
29,077
331,549 1,295,509
Total return swap contracts
–
11,036
Forward exchange
contracts payable
14,906
14,881
–
–
–
–
Interest rate swaps payable
1,940
10,809
5,768
1,630
–
–
–
–
–
–
–
–
412,275 1,324,586
–
11,036
14,906
7,708
14,881
12,439
Cross currency interest
rate swaps payable
12,312
12,312
49,248
49,248
221,611
233,928
283,171
295,488
Total financial liabilities
407,134
403,846
713,828 1,361,183 1,116,805
589,350 2,237,767 2,354,379
Net maturity
79,187
(31,912)
(559,863) (1,234,083) (994,660)
(474,241) (1,475,336) (1,740,236)
(e) Fair Value of Financial Instruments
The fair value of the Group’s financial assets and financial liabilities approximates the carrying value as at balance date.
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level One – the fair value is calculated using quoted prices in active markets;
Level Two – the fair value is estimated using inputs other than quoted prices included in Level One that are observable
for the asset or liability, either directly (as prices) or indirectly (derived from prices); and
Level Three – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
135
FINANCIAL REPORT 2013 CONTINUED
Notes to the Financial Statements continued
For the year ended 30 June 2013
34. Financial Risk Management Objectives and Policies continued
(e) Fair Value of Financial Instruments continued
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised
in the table below.
Year ended 30 June 2013
Financial Assets
Derivative Instruments
Receivable on forward exchange contracts
Receivable on interest rate swaps
Investments
Shares – unlisted (Australia)
Shares – unlisted (North America)
Financial Liabilities
Derivative Instruments
Payables on interest rate swaps
Payables on cross currency swaps
Year ended 30 June 2012
Financial Assets
Derivative Instruments
Receivable on forward exchange contracts
Investments
Shares – listed (Australia)
Shares – unlisted (Australia)
Shares – unlisted (North America)
Financial Liabilities
Derivative Instruments
Payables on interest rate swaps
Payables on cross currency swaps
Payables on total return swaps
Valuation Technique
Quoted
market price
Observable
inputs
Non market
observable
Level One
$’000
Level Two
$’000
Level Three
$’000
Total
$’000
–
–
–
–
–
–
–
–
–
353,362
–
–
1,568
925
–
–
2,493
679
3,940
4,619
337
–
–
–
–
–
36,353
53,318
89,671
–
–
–
–
–
37,305
63,671
1,568
925
36,353
53,318
92,164
679
3,940
4,619
337
353,362
37,305
63,671
353,362
337
100,976
454,675
–
–
–
–
11,331
8,515
11,036
30,882
–
–
–
–
11,331
8,515
11,036
30,882
There have been no transfers during the financial year ended 30 June 2013.
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34. Financial Risk Management Objectives and Policies continued
(e) Fair Value of Financial Instruments continued
Reconciliation of Level Three fair value movements:
Opening balance
Capital return received
Disposal of shares
Other Comprehensive Income
Closing Balance
2013
$’000
2012
$’000
100,976
98,658
(20,713)
(1,155)
10,563
89,671
–
–
2,318
100,976
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Crown Limited Annual Report 2013 | Australia’s Leading Integrated Resort Company
137
FINANCIAL REPORT 2013 CONTINUED
Shareholder Information
Substantial shareholders as at 13 September 2013:
The following information is extracted from substantial shareholder notices received by Crown.
Shareholder
Consolidated Press Holdings Limited
Number of
ordinary
Shares
% of Issued
Capital
364,270,253
50.01%
Holders of each class of equity securities
Crown only has ordinary shares on issue. The total number of ordinary shares on issue is 728,394,185 held by 51,399 shareholders.
Voting rights of ordinary shares
Crown’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) one vote for each fully paid share held by the member and in respect of which the member is entitled to vote; and
(b) 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 13 September 2013:
Size of Holdings
1 – 1,000
1,001 – 5000
5,001 – 10,000
10,001 – 100,000
100,001+
Total
Holding less than a marketable parcel
Number of
Shareholders
% of Issued
Capital
33,928
15,526
1,285
580
80
51,399
1,074
1.87
4.47
1.23
1.72
90.72
100.00
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22.26
21.76
11.74
7.38
6.99
2.41
2.23
2.09
2.01
1.60
1.59
1.40
1.05
0.87
0.48
0.48
0.39
0.29
0.28
0.27
The 20 largest shareholders as at 13 September 2013:
Name
1.
2.
CONSOLIDATED PRESS HOLDINGS LIMITED
BAREAGE PTY LIMITED
3. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
4.
J P MORGAN NOMINEES AUSTRALIA LIMITED
5. NATIONAL NOMINEES LIMITED
6. CITICORP NOMINEES PTY LIMITED
7.
BNP PARIBAS NOMS PTY LTD
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