More annual reports from Crown Resorts Ltd:
2020 ReportPeers and competitors of Crown Resorts Ltd:
PENN EntertainmentCrown Resorts Limited
Annual Report 2014
i
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Contents
01/
Chairman’s Message
06/
Portfolio of Integrated Resort Assets
08/
Chief Executive Officer’s Report
10/
Crown Melbourne
13/
Crown Perth
16/
Melco Crown Entertainment
19/
Crown Aspinall’s and
Other Investments
20/
Crown Sydney
22/
Sustainability
30/
The Crown Resorts Foundation
33/
Corporate Governance Statement
41/
Nevada Information Statement
45/
Directors’ Statutory Report
55/
Remuneration Report
79/
Auditor’s Independence Declaration
80/
Independent Auditor’s Report
82/
Directors’ Declaration
83/
Financial Report
138/
Shareholder Information
140/
Additional Information
141/
Corporate Information
Crown Resorts Limited ABN 39 125 709 953
Annual General Meeting
Financial Calendar
Thursday 16 October 2014
10.00 am (Perth time)
The Astral Ballroom, Convention Centre
Crown Perth, Great Eastern Highway, Perth, WA
Record date for dividend – 26 September 2014
Payment of final dividend – 10 October 2014
Annual General Meeting – 16 October 2014
2015 interim results – second half of February 2015
ii
Artist’s impression of Crown Sydney. The development of Crown Sydney remains conditional on the granting of all necessary planning approvals and
the finalisation of certain agreements with the Barangaroo Delivery Authority and the developer of Barangaroo South, Lend Lease.
Chairman’s Message
Crown Resorts is one of Australia’s leading luxury
tourism and entertainment businesses, with a significant
and growing global reach.
Crown’s Australian resorts make a major contribution to Australian tourism. We are a leading employer, with more than
15,000 people working across both properties, and Crown is one of the most significant taxpayers in the country,
contributing two-thirds of its pre-tax profits to governments. This is more than any other ASX 50 company.
For the financial year ended 30 June 2014, Crown Resorts announced a net profit of $702.5 million before significant items,
which was up 43.1% on the prior year.
Australia’s leading integrated resorts, Crown Melbourne and Crown Perth, have improved their performance in the second
half to deliver earnings growth, despite a challenging domestic environment. The main contributor to Crown’s improved
performance this year was our investment in Melco Crown Entertainment (MCE) in Macau. MCE delivered strong earnings
growth and Crown received its first dividends from MCE, which totalled $94.4 million for the year.
For our shareholders, a final dividend of 19 cents per share, franked to 50%, was declared, bringing the total dividend for the
year to 37 cents per share. The Crown Board has adopted a revised dividend policy. The revised dividend policy is to pay an
annual dividend of the higher of 37 cents per share and 65% of normalised NPAT (excluding profits from associates but
including dividends received from associates), subject to the company’s financial position.
Crown is setting the bar for luxury tourism in Australia and I am extremely excited about our future pipeline of projects. In
Perth, our six-star Crown Towers project is underway and is expected to open in late 2016 and we continue to make progress
on our plans to complete the Crown Sydney project. I believe that Crown Sydney will offer New South Wales and Australia a
once-in-a-lifetime tourism infrastructure opportunity. Sydney is Australia’s international gateway and an iconic six-star luxury
Crown resort on its harbour will help attract millions of tourists and create great economic benefit for the city and this country.
In Victoria, Crown has reached agreement with the State Government on a number of reforms to the Melbourne Licence and
associated taxation arrangements, which will improve our competitiveness and investment certainty for the long run. With the
support of the Victorian Government, we will have a licence and taxation regime that will enable us to compete on a more
level playing field to help drive tourism, jobs and economic benefit for the State.
Through our investment and partnership with MCE, we are expanding our resorts across Asia and building a global luxury
brand based on the highest quality product and exceptional service. MCE will continue to explore the opportunity that may
arise in Japan, should Japan decide to develop integrated resorts to compete on the world stage.
Crown, through a majority-owned subsidiary, has also acquired a 34.6-acre site on Las Vegas Boulevard. Our investment in
Las Vegas will expand Crown’s global presence as a leading integrated resort operator and importantly, will provide our
company with business and entertainment synergies that come from a network of resorts around the world. This
complements our strong expansion in Australia and Asia.
Importantly, Crown Resorts continues to be a good corporate citizen, investing in local jobs and training, and contributing to
the local communities we operate in through responsible practices and extensive charitable endeavours.
I am very proud of the contribution Crown has made to Australian communities over the past two decades. To take this to the
next level, the Crown Resorts Foundation was established in September 2013. As the new philanthropic arm of Crown
Resorts, it will formalise our substantial community involvement and aggregate the range of initiatives already being
undertaken across our Australian resorts. The Foundation recently announced a $200 million National Philanthropic Fund
together with the Packer Family Foundation, which will establish community partnerships and provide financial support to
programs with demonstrated success in the areas of social welfare, Indigenous education, and the arts.
On behalf of the Board, I wish to thank all of our employees and management for working so hard to ensure the success of
Crown’s future. I would also like to thank you for your continued support and interest as a shareholder of Crown Resorts Limited.
James Packer
Chairman, Crown Resorts Limited
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
1
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.
2
2
Hotels
Crown Resorts offers premium and luxury
accommodation in all of its world-class
hotels, with facilities that include
swimming pools, gyms, tennis courts and
day spas. This year we provided almost
1.2 million guest nights, delivering
impeccable service to our local, interstate
and international guests.
3
Gaming &
Entertainment
Both Crown Melbourne and Crown Perth
have luxurious world-class VIP salons and
a vibrant and exciting main gaming floor,
offering customers a world of entertaining
gaming experiences.
Each resort shows a variety of musicals,
plays, rock concerts, comedy acts and
other performances and spectacles
across a range of excellent venues.
4
4
Shopping &
Events
Whether guests are looking for the latest trends
in clothing and accessories, or luxury items
from the world’s most prestigious designers,
Crown offers the perfect shopping experience.
Crown hosts events for an extraordinary range
of occasions, from intimate meetings to
large-scale corporate conferences, galas and
televised events.
5
5
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Melbourne
PERTH
MACAU
With our major investment
in tourism infrastructure,
our world-class resorts,
hotels and entertainment
experiences, Crown is
building a global luxury
brand based on the
highest quality product
and exceptional service.
6
100% owned
• Crown Melbourne operates 2,500 gaming machines and
has approval to operate 500 table games.
• Crown Towers Melbourne hotel has 481 guest rooms.
• Crown Metropol Melbourne hotel has 658 guest rooms.
• Crown Promenade Melbourne hotel has 465 guest rooms.
• Crown Conference Centre has 7,350 square metres of
conference and meeting facilities, across three floors.
• Banqueting facilities include the Palladium’s 1,500-seat
ballroom and the Palms’ 900-seat cabaret venue.
• A broad selection of restaurants and bars are provided in
the resort, including many of Melbourne’s finest.
• Crown Melbourne’s retail precinct includes internationally
renowned designer boutiques and retail outlets.
• Entertainment facilities include a multi-screen cinema
complex, a bowling alley, and an interactive entertainment
auditorium.
• Crown Melbourne has two luxurious day spas.
Melbourne
Melbourne
PERTH
PERTH
MACAU
MACAU
100% owned
33.6% interest in Melco Crown Entertainment
• Crown Perth has approval to operate 2,200 gaming
machines and 270 table games.
• Crown Metropol Perth hotel has 395 guest rooms and a
luxury day spa.
• Crown Promenade Perth hotel has 291 guest rooms.
• Crown Towers Perth hotel will have approximately 500
guest rooms and is expected to open in late 2016.
• Crown Perth’s large-scale entertainment facilities include
CITY OF DREAMS
• City of Dreams operates approximately 500 table games and
approximately 1,400 gaming machines.
• Crown Towers Macau hotel has approximately 300 guest
rooms.
• Hard Rock hotel has approximately 300 guest rooms.
• Grand Hyatt hotel has approximately 800 guest rooms.
• City of Dreams has more than 30 restaurants and bars.
the 2,300-seat Crown Theatre Perth.
• The resort has a range of retail options.
• World-class convention and event facilities are available.
• City of Dreams hosts Franco Dragone’s iconic and spectacular
• A broad selection of restaurants and bars are provided in
the resort, including some of Perth’s best.
show The House of Dancing Water.
• Other key attractions include The Bubble audio-visual
experience and Club Cubic.experience and Club Cubic.
ALTIRA
• The casino and hotel feature approximately 120 table games
and approximately 230 guest rooms.
MOCHA CLUBS
• The Mocha Clubs are a network of gaming lounges, with more
than 1,200 gaming machines.
with approximately 1,600 gaming machines.
7
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Chief Executive Officer’s Report
Crown is a leading provider of
world-class luxury resorts and
entertainment facilities, with
properties and investments in
Melbourne, Perth, Macau and
London.
Rowen Craigie
Chief Executive Officer, Crown Resorts Limited
Australian Integrated Resorts
Overall, the results for the year were satisfactory, with
improved trading in the second half. Normalised EBITDA was
up 2.8% at Crown Melbourne and up 0.3% at Crown Perth,
with main floor gaming revenue up 1.4% across both resorts.
Despite this, we continue to see the weak consumer sentiment
that has dampened trading at both Crown Melbourne and
Crown Perth, and which reflects the structural and cyclical
challenges their local economies are experiencing. VIP
program play turnover was down 1.5% for the year.
Normalised EBITDA from Crown Melbourne was $561.8 million.
Reported EBITDA for the period was $593.3 million, up 8.4%
on the previous corresponding period. This reflects a win rate
of 1.46%, which is above the theoretical win rate of 1.35%,
and generated a positive EBITDA variance of $31.5 million.
This compares to a win rate of 1.36% in the previous
corresponding period, which resulted in a positive EBITDA
variance of $0.4 million.
Normalised EBITDA from Crown Perth was $241.6 million.
Reported EBITDA for the period was $315.7 million, up 31.1%
on the previous corresponding period. This reflects a win rate
of 2.21%, which is above the theoretical win rate of 1.35%, and
generated a positive EBITDA variance of $74.1 million. In the
previous corresponding year, the actual result was in line with
the theoretical win rate.
In August 2014, Crown announced it reached agreement with
the Victorian Government on a number of reforms to the
Melbourne Casino Licence and associated taxation
arrangements, which will improve the competitiveness of the
Crown Melbourne integrated resort as a tourism destination
compared to other integrated resorts in Australia and Asia. The
reforms will help boost Victorian tourism and create new jobs,
as they will allow Crown Melbourne to compete more
effectively in interstate and international markets. The
implementation of these reforms remains subject to the
passing of legislation by the Victorian Parliament and
amendments to the Crown Melbourne Casino Licence by the
Victorian Commission for Gambling and Liquor Regulation.
Overview
Crown reported a normalised net profit after tax (NPAT) of
$640.0 million for the full year ended 30 June 2014, up 35.2%.
Crown’s Australian resorts achieved normalised EBITDA
growth of 2.0% and normalised revenue growth of 1.4%.
MCE’s result was the major contributor to the growth in
Crown’s normalised NPAT. Crown’s operating cash flow for
the period was $702.0 million, and net debt, excluding
working capital cash, was $1,675.9 million.
Performance for the year ended
30 June 2014
Normalised revenue1
Normalised expenditure1
Normalised EBITDA2
Normalised EBIT3
Normalised NPAT
Reported NPAT before significant items
Significant items4
Reported NPAT after significant items
$m
2,935.4
(2,152.7)
782.7
537.8
640.0
702.5
(46.7)
655.8
Overall, the results for the year were satisfactory, with
improved trading in the second half in Australia and another
strong year for Melco Crown Entertainment (MCE), which was
driven primarily by strong growth in the mass market table
games segment at City of Dreams.
During the year Crown has received dividends of $94.4 million
from MCE, of which $68.6 million was from the 2013 special
dividend and $25.8 million from the result for the quarter
ending 31 March 2014. For the quarter ending 30 June 2014,
MCE has announced the payment of a dividend of which
Crown’s share will be US$14.5 million.
1.
2.
3.
4.
8
Normalised results have been adjusted to exclude the impact of any variance from theoretical win rate on VIP program play and significant items.
Normalised earnings before interest, tax, depreciation, and amortisation.
Normalised earnings before interest and tax.
Relates to legal settlement costs of $23.6 million (net of tax) and an asset impairment charge of $23.1 million (net of tax).
FIGURE 1
10 YEAR CROWN MELBOURNE NORMALISED
REVENUE AND EBITDA PERFORMANCE
FIGURE 1
10 YEAR CROWN MELBOURNE NORMALISED
REVENUE AND EBITDA PERFORMANCE
FIGURE 2
10 YEAR CROWN PERTH NORMALISED
REVENUE AND EBITDA PERFORMANCE
FIGURE 2
10 YEAR CROWN PERTH NORMALISED
REVENUE AND EBITDA PERFORMANCE
600
600
2000
2000
300
300
900
900
550
500
450
400
350
m
$
A
D
T
B
E
d
e
s
I
i
l
a
m
r
o
N
I
550
m
$
500
A
D
450
T
B
E
400
d
e
s
350
a
m
300
r
o
N
250
i
l
300
250
200
200
FY05
FY05
FY06
FY06
FY07
FY07
FY08
FY08
FY09
FY09
FY10
FY10
FY11
FY11
FY12
FY12
FY13
FY13
FY14
FY14
m
$
e
u
n
e
v
e
R
d
e
s
m
$
e
u
n
e
v
e
R
d
e
s
i
l
i
l
a
m
r
o
N
a
m
r
o
N
1750
1750
1500
1500
1250
1250
1000
1000
750
750
500
500
250
250
0
0
250
200
150
100
m
$
A
D
T
B
E
d
e
s
I
i
l
a
m
r
o
N
I
250
m
$
A
D
200
T
B
E
150
d
e
s
100
a
m
r
o
N
50
i
l
50
720
720
540
540
m
$
e
u
n
e
v
e
R
d
e
s
m
$
e
u
n
e
v
e
R
d
e
s
i
l
i
l
360
360
a
m
r
o
N
a
m
r
o
N
180
180
0
0
FY05
FY05
FY06
FY06
FY07
FY07
FY08
FY08
FY09
FY09
FY10
FY10
FY11
FY11
FY12
FY12
FY13
FY13
FY14
FY14
0
0
Normalised EBITDA
Normalised EBITDA
Normalised
Normalised
Revenue
Revenue
Normalised EBITDA
Normalised EBITDA
Normalised
Normalised
Revenue
Revenue
Figures 1 and 2 show a year by year comparison of the normalised revenue and EBITDA at Crown Melbourne and Crown Perth respectively
Melco Crown Entertainment
Crown’s share of MCE’s normalised NPAT was an equity
accounted profit of $291.2 million, up 91.2% on the previous
year. After adjusting for an above theoretical win rate and
pre-opening costs, Crown’s share of MCE’s reported result
for the year was an equity accounted profit of $287.6 million,
up 64.3%.
Queen’s Wharf Brisbane Proposal
In July 2014, Crown announced that it had entered into an
agreement with a subsidiary of the international Chinese
diversified property group, Greenland Holdings Group, to
jointly prepare a detailed proposal to develop the Queen’s
Wharf precinct in Brisbane. This proposal will be submitted to
the Queensland Government in late 2014.
MCE’s result was attributable to solid underlying financial
performance, driven primarily by its mass market table games
business at City of Dreams. However, market conditions did
weaken during the fourth quarter.
MCE’s development pipeline is progressing, with City of
Dreams in Manila, the Philippines due to open later this year.
Studio City, MCE’s second large-scale resort in Cotai, Macau
(in which MCE has a 60% interest) remains on track to open in
mid-2015, representing the next standalone integrated
property to open in Macau. The iconic fifth tower at City of
Dreams is progressing as planned. This new hotel tower will
represent another strong catalyst for growth, particularly in the
premium end of the market, when it opens in 2017.
Las Vegas Site Acquisition
In August 2014, Crown announced that a majority-owned
subsidiary had acquired a 34.6-acre site on Las Vegas
Boulevard, which was formerly occupied by the New Frontier
casino. The site was acquired through a foreclosure auction
initiated by lenders to the former owner of the site.
The development plans for the site and the capital structure of
the ownership entity are not yet finalised. However, it is
expected that Crown will have majority ownership and Crown’s
total equity investment will be approximately US$400 million to
US$500 million, with a total project budget of approximately
US$1.6 billion to US$1.9 billion.
Conclusion
Looking ahead, Crown will progress its key strategies and
business focuses. These are to continue to maximise the
performance of Crown Melbourne and Crown Perth, including
revenue growth, cost control and margins. We will progress
the Crown Towers Perth project, the Crown Sydney project,
the Queen’s Wharf Brisbane bid and the Las Vegas site
development to deliver value to our shareholders. We will
continue to assist MCE with the Studio City and Philippines
projects and assess other relevant growth opportunities.
Finally, I sincerely thank the Board, management and all our
employees for their valued contribution in 2014.
Development Projects
Crown Towers Perth
Crown Towers Perth is expected to open in late 2016. As
Perth’s first six-star and largest hotel, it will feature a unique
combination of entertainment, luxury and service that is
capable of competing with the best in the Asian region.
Crown Sydney
In November 2013, the New South Wales Parliament passed
legislation to permit the issue of a restricted gaming licence for
Crown Sydney, a six-star luxury hotel resort to be located at
Barangaroo South in Sydney. The Independent Liquor and
Gaming Authority issued a restricted gaming licence to Crown
on 8 July 2014.
The development of Crown Sydney remains conditional on the
granting of all necessary planning approvals and the
finalisation of certain agreements with the Barangaroo Delivery
Authority and the developer of Barangaroo South, Lend Lease.
It is envisaged that Crown Sydney will be operational from
November 2019.
9
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Crown’s Australian Resorts
Attracting more than 19 million visits
each year, Crown Melbourne is one
of Australia’s most visited tourist
destinations.
Barry Felstead
Chief Executive Officer, Australian Resorts
Crown Melbourne
Overview
Crown Melbourne is one of the region’s leading integrated
resorts and is Australia’s number one destination for world-
class luxury accommodation, dining, conference and
gaming facilities together with diverse entertainment and retail
options. The resort is Australia’s largest single-site private
sector employer, with a workforce of approximately
9,200 people working on site.
In 2013, Crown was awarded the prestigious Australian
Employer of the Year at the Australian Training Awards,
following the 2013 Victorian Employer of the Year award by the
Victorian Government. We have previously won both awards
as recently as 2010.
In February, Crown Melbourne was awarded the 2014
Casino / Integrated Resort of the Year at the prestigious
International Gaming Awards (IGA) in London. Considered
the definitive awards for outstanding performance in the
industry worldwide, it recognised Crown Melbourne’s clear
vision and innovative approach to attracting both Australian
and international guests.
Reinforcing this position, Crown Melbourne continues to
enhance the property to ensure it remains competitive with the
best in the world. Crown is investing $1.7 billion over
ten years from financial year 2007 to achieve this. While we
have completed all major refurbishments, a key focus this
year was to increase visitation through continued property
refinement and several new attractions and promotions.
We are pleased to report that Crown Melbourne welcomed
more than 19 million visits this year, which is our highest
level of visitation ever.
In the year to 30 June, normalised EBITDA grew by 2.8%
and normalised revenue grew by 0.7% on the previous
corresponding period. Results improved in the second half
due to increased visitation and trading, however Crown
Melbourne will continue its focus on operational cost and
efficiency programs in the current subdued environment.
Main gaming floor revenue grew by 2.0% for the year to
$1,020.3 million while normalised VIP program play revenue
decreased by 4.6% to $501.2 million on turnover
of $37.1 billion. Non-gaming revenue grew 4.5% to
$409.7 million.
10
Left to right: Mahogany Room, Crown Melbourne; The Conservatory, Crown Melbourne; Nobu, Crown Melbourne; Rosetta, Crown Melbourne
Property Update
While the major capital works at Crown Melbourne are
complete, ongoing projects focus on quality, with several
upgrades providing new gaming, restaurant and retail
experiences.
Famed UK chef, Heston Blumenthal, will temporarily relocate
to Crown Melbourne in early 2015 with his three-Michelin-star
restaurant The Fat Duck. Breezes closed during the year to
make way for this ground-breaking culinary project, which is
expected to bring diners from around the world to Melbourne.
Following six months trading as The Fat Duck, Heston will
open Dinner by Heston Blumenthal, securing ongoing ties with
Crown Melbourne.
Gradi, a modern interpretation of a classic Italian pizzeria
featuring specialties from Chef Johnny Di Francesco (winner of
the 2014 Pizza World Championship in Italy), will open in
September 2014.
Crown Melbourne enhanced its retail offering during the year
with the addition of luxury watch retailer Monards,
incorporating Cartier, and a new permanent home for Crown
Gifts in Crown Metropol. Village Cinemas also underwent a full
refurbishment with the introduction of new state-of-the-art
Vmax cinemas.
The Level 1 Casino also opened new venues the Crown Sports
Bar and Groove, a live music venue, which are welcome
additions to the established entertainment and dining venues in
this exciting precinct. A new state-of-the art TAB outlet opened
in September 2013 along with our refurbished Poker Room
and bar.
The ground level main food court was completely refurbished
and enhanced with the new openings of Cucina, Tandoor
Kitchen, Moorish Table and Ten Miles. On Level 1, the new
Degani Bakery Café opened as well as Schnitz in the
food court.
To ensure consistency in quality and customer experience
across the resort, Crown Melbourne has upgraded numerous
support facilities, including a new security control room, hotel
reservations call centre and an improved multi-level
car park exit.
Local Gaming and Crown Signature Club
The refurbishment of the Riverside Lounge in November 2013
completes the upgrade program for Crown Melbourne’s VIP
areas. The Riverside Lounge complements the Teak and
Mahogany Rooms in its offer of world-class gaming facilities,
with each space now including restaurant, bar and outdoor
terrace amenities.
Along with refreshing the gaming product offering, Crown
Melbourne has invested in its gaming systems to deliver
next-generation jackpot and bonus products. The first of these
introduced during the year was the Member Money Jackpot
promotion, which proved popular with customers.
Crown Melbourne hosted its thirteenth Aussie Millions Poker
Tournament during the year, which is now a major event on the
international poker circuit. The response from both Australian
and international customers was extremely positive, with many
guests choosing to stay at Crown post-event to participate in
Lunar New Year celebrations.
The Crown Signature Club loyalty program continued to attract
thousands of new members. It promotes patronage across
Crown Melbourne resort facilities, with benefits including
access to VIP rooms, invitations to events and golf at Crown’s
Capital Golf Course.
VIP Program Play
VIP program play turnover for the year was $37.1 billion, down
4.6% on the previous year. This reflected the competitive
challenges facing Crown Melbourne, including the impact of
the super tax on VIP program play revenue.
Crown has made significant enhancements to its VIP assets
including new gaming areas and Crown Towers Melbourne
villas and hotel rooms. During the period, Crown acquired
three Bombardier jets to expand the range of our private jet
service to Asian VIP customers and provide a superior level of
comfort and amenity.
Crown has also acquired the shares of Capital Club Pty Ltd
(the owner and operator of Capital Golf Course and Melbourne
Golf Academy), situated on 103-hectares of freehold land, for a
purchase price of $67.6 million. This provides full control to
better integrate these facilities into our VIP operations.
11
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Crown Melbourne continued
Hotels, Conferences and Retail
As one of the world’s leading integrated resorts, Crown Melbourne
features more than 1,600 guest rooms across three hotels – each
recognised for excellence in its class. Together they provided more
than 850,000 guest nights during the year, up 6% on last year.
Crown Towers was recently awarded the 2014 Luxury Travel
magazine Gold List Award for Best Australian Hotel and was also the
2013 Travellers’ Choice Winner in the Tripadvisor Awards since
publication last year. Crown Spa was awarded 2014 Best Luxury
Hotel Spa - Australia and Oceania in the World Luxury Spa Awards.
Crown Promenade was awarded 2014 Superior Accommodation
Hotel of the Year in the Tourism Accommodation Australia (Victoria)
State Awards for Excellence.
Restaurants and Bars
In its first year without major refurbishment since 2007,
Crown Melbourne’s premium dining precinct offered patrons
a consistent wealth of choice in quality fine dining that is
second-to-none in Australia.
October 2013 saw the transition of Crown Melbourne’s flagship
premium restaurant Number 8 into No. 8 by John Lawson.
Ten of Crown’s signature restaurants featured in The Age Good
Food Guide 2015. Rockpool Bar & Grill, Rosetta and Spice
Temple each retained their two chef’s hats and Neil Perry
became the first chef to accumulate more than 100 hats in the
history of the Good Food Guides. In addition, No. 8 by John
Lawson was awarded its first hat, and Bistro Guillaume was
awarded a coveted hat for the fourth year.
At the 2015 Gourmet Traveller Restaurant Guide Awards, four of
Crown’s restaurants were named in the magazine’s influential list
of Australia’s top 100 restaurants, with Rockpool Bar & Grill,
ranking in the top 25.
Overall, restaurant and bar operations continued to strengthen,
with the popular Margo’s on the main gaming floor also
experiencing a full 12-months of operation since reopening in
June 2013. Significant progress was made in the consolidation
of produce and beverage suppliers both for Crown Melbourne
and Crown Perth, to achieve notable cost reductions without
compromising quality.
Crown Melbourne takes its responsibilities in the provision of
Responsible Service of Alcohol (RSA) very seriously to help
ensure a safe and pleasant environment for all customers and
employees. We continue to be a leader in RSA best practice
within our industry, with a dedicated team of RSA officers
working closely with Security and relevant training programs
delivered to all employees.
Entertainment and Events
Crown Melbourne continued to provide the venues of choice for
some of Australia’s most memorable events, with more than
1,700 events booked during the year.
At the Palladium ballroom, the largest events included the TV
Week Logie Awards and the AFL Brownlow Medal. Key
charitable events hosted at Crown Melbourne included
Diamonds, Starry Starry Night and the Epworth Medical
Foundation Dinner. The Palladium also hosted a number of
Victoria Racing Club’s official events during the annual Spring
Racing Carnival, including the Crown Oaks Club Ladies
Luncheon and the Call of the Card.
This year’s major live performances at The Palms on Level 3
included Jason Alexander, Jimmy Barnes, Human Nature, and
Icehouse. Also on Level 3, the Co. and Fusion nightclubs
continued to feature contemporary Australian artists including
Bombs Away, Stafford Brothers, Havana Brown and Helena. The
entrance to these nightclubs shifted in 2014 to be located via the
Level 1 Casino, benefiting patron experience and increasing foot
traffic.
Crown Melbourne hosted Empire for the second year, a live mix of
vaudeville, acrobatics and burlesque, which was performed in a
spiegel tent on the roof of the casino. This proved very successful
and moved on to Crown Perth at the season’s conclusion.
In its twelfth year, Lunar New Year festivities at Crown Melbourne
were enjoyed by visitors of all ages over four days of celebrating
the year of the horse. A hawker’s bazaar and fireworks displays on
Crown’s riverside attracted large numbers together with live
entertainment both within and outside the resort.
Crown Melbourne again participated as a partner in the Melbourne
Food and Wine Festival and held events catering
to all food and wine fans. The most exclusive of these was a
bespoke dining concept for 250 guests in the Crown Towers lobby,
which showcased Crown’s creativity and was well received.
12
Left to right: The Atrium Bar, Crown Melbourne; The Conservatory, Crown Melbourne; Bistro Guillaume, Crown Perth; Crown Metropol Lobby, Crown Perth
The transformation of Crown Perth
demonstrates our ability to focus on
building businesses for the long term.
Crown Perth
Overview
Crown Perth is an expanded modern resort of world-class
standard that has become one of Western Australia’s largest
tourist destinations, attracting nine million visits each year.
With approximately 5,800 people working on site, it is also
the State’s largest single-site private sector employer.
The revitalised property has received many prestigious
awards during the period, cementing its position of quality
under the internationally recognised Crown brand.
Crown Towers Perth, the new six-star hotel currently under
construction, will add another dimension to Crown Perth’s
already extensive offering of hotels, resort style pool
facilities, world-class convention centre, gaming options,
restaurants, bars, nightclub, 2,300 seat theatre and day spa.
In the year to 30 June, normalised EBITDA grew by 0.3%
and normalised revenue grew by 3.0% on the previous
corresponding period. Crown Perth’s result performance
was impacted by the slowdown in the Western Australian
economy throughout the year.
Main gaming floor revenue grew by 0.4% for the year to
$485.4 million, reflecting local market conditions. Normalised
VIP Program Play revenue increased by 8.6% to $173.1
million on turnover of $12.8 billion. Non-gaming revenue
grew 4.5% to $225.1 million.
Property Update
Crown Perth’s capital works focus is now on the
construction of Australia’s newest six-star destination,
Crown Towers Perth. On track for completion in 2016, it will
be the largest hotel in Perth and will increase hotel room
capacity at Crown Perth to nearly 1,200 rooms. This major
development is a $645 million investment that will provide
employment for 700 people during construction and a
further 500 people when operational.
There was an improvement in the availability of parking
during the year with the introduction of a temporary car
park and the creation of additional car parking following the
demolition of the Dome stadium. The improved parking
facilities will be further enhanced as the multi-level car
park, currently under construction, introduces a further
1,500 bays in May 2015.
13
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Crown Perth continued
Local Gaming and Crown Club
The rollout of improved gaming systems together with
increased car parking capacity has delivered year-on-year
growth in a strong comparative period. However the slow
growth in revenue from Crown Perth’s main gaming floor
reflected weak consumer sentiment in the local economy.
Targeted marketing campaigns to Crown Club loyalty
program members, together with cost rationalisation in
discretionary marketing activity, helped to offset the more
difficult trading conditions.
VIP Program Play
VIP program play turnover for the year was $12.8 billion, up
8.6% despite increased regional competition for high net
worth tourists.
Crown has made significant enhancements to its VIP assets
in recent years. In Perth, these have included new gaming
areas, the refurbishment of Crown Metropol Perth, the
development of resort pool facilities in “Vegas” style format,
Crown Perth’s luxurious Infinity Suites and the development
of two luxury villas, the Crown Perth Mansions, on the
Swan River. The acquisition of a 140-foot luxury Italian-
made super yacht, Infinity, has also allowed us to showcase
the beauty of Perth and Western Australia to high net worth
customers.
During this period, Crown acquired three Bombardier jets to
expand its private jet service to Asian VIP customers.
The Infinity Suites at Crown Perth have been shortlisted in
the Society of British and International Design (SBID)
Awards 2014 for Best International Hotel Design. An SBID
Award is one of the most exclusive achievements of design
excellence in the interior design industry, demonstrating the
world-class standard of the VIP facilities offered at Crown’s
resorts.
Hotels and Conferences
Hotel business remained consistent despite the economic
downturn in Western Australia, with approximately 320,000
guest nights provided across both Crown Metropol Perth
and Crown Promenade Perth. While we experienced a
decline in the corporate sector, this was offset by an
increase in tourist and leisure guests.
Crown Metropol Perth continued to receive prestigious
industry awards, recognising its transformation into one of
Perth’s leading five-star hotels. This year it was named
2014 winner of the Certificate of Excellence from
Tripadvisor, was a finalist in the 2014 World Luxury Hotel
Awards and was also included in the inaugural 2014
Gourmet Traveller Australian Hotel Guide. Reservation web
site wotif.com reviewers also awarded it Best Hotel in
Perth, placing it tenth nationally.
In August, Crown Metropol Perth received the Deluxe
Accommodation Award and the Resort Style
Accommodation Award in the Australian Hotels Association
2014 WA Accommodation Industry Awards for the second
year running. It also won the Redeveloped Accommodation
Hotel Award in 2013.
The six-star Crown Towers Perth is expected to open late
2016. The hotel will provide approximately 500 luxury
rooms, bringing Crown Perth’s capacity to 1,200 and will
include VIP gaming salons, restaurants, bars and
conference facilities.
Crown Perth function spaces attracted 10,000 additional
patrons during the year, with major conferences and
functions including those from the Royal Australian Navy,
the Perinatal Society of Australia and New Zealand, the
Real Estate Institute of Australia and the General Practice
Education and Training Convention.
In addition, there has been considerable interest in pre-
bookings for the large conference facilities planned for Crown
Towers Perth.
The Crown Towers Convention Centre development will
provide approximately 4,800 square metres of new multi-
purpose venue space, securing Crown Perth’s place as a
leading destination for conferencing and events globally.
14
Left to right: The Mansions, Crown Perth; VIP Mansion swimming pool, Crown Perth; Sky Salon terrace, Crown Perth; Bar, Crown Perth
Restaurants and Bars
A highlight of the year in review was the launch in August
2013 of Crown Perth’s premium Chinese restaurant, Silks. A
select team led by Chef Tam Kwok Fung from Michelin-
starred Jade Dragon at the City of Dreams in Macau
ensured the opening was a success. In addition, in June
2014, internationally acclaimed Singapore-based designer
Michael Fiebrich was awarded the 2014 International Hotel
and Property Award for a Restaurant within a Hotel for his
work on Silks. The restaurant was the only venue in Australia
to be shortlisted.
Guillaume Brahimi’s French restaurant Bistro Guillaume
Perth was named winner of the Restaurant within a Hotel
Award in the Australian Hotels Association 2014 WA
Accommodation Industry Awards for the second year
running. It also won the Accommodation Hotel Wine
List Award.
Neil Perry’s Rockpool Bar & Grill at Crown Perth won the
highest accolade Restaurant of the Year with a rating of
17.5/20 in the independent West Australian Good Food
Guide 2014, also taking out Wine List of the Year in the same
publication. Other Crown Perth venues included in the Guide
were Bistro Guillaume, Nobu, La Vie Champagne Lounge,
The Merrywell and Modo Mio.
Other awards include Nobu at Crown Perth winning
Australia’s Favourite Japanese Restaurant and Rockpool
Bar & Grill winning WA’s Favourite Dessert in the 2014 I Love
Food Awards by Foxtel Lifestyle Food. In September 2013,
designer Michael Fiebrich won the Best Restaurant Asia
Pacific Award at the prestigious 2013 International Design &
Architecture Awards for his project on Crown Perth’s
premium Italian restaurant Modo Mio.
In casual dining, The Merrywell is rated one the most
popular gastro pub concepts in Perth. To further drive
visibility and success, The Merrywell Food Truck was
launched in March 2014, with bookings proving popular for
both private functions and public events and festivals.
Responsible Service of Alcohol (RSA) initiatives continued to
be a focus throughout the year. As a responsible industry
participant, Crown Perth has developed comprehensive
RSA policies and practices to help ensure that all guests
and employees enjoy a safe and pleasant environment.
Entertainment and Events
With the increased public profile of the Crown Perth resort,
it was the venue of choice for 1,275 events throughout the
year.
In April 2014, the Variety of Chefs Ball was held in the Grand
Ballroom, with some of WA’s top chefs cooking live on stage
before an audience of 400 guests. Acclaimed Chef Guillaume
Brahimi (Bistro Guillaume), Chef de Cuisine Pat Cheong
(Silks), and Executive Sous Chef Sean Marco (La Vie) all
participated, serving main courses from each restaurant as
well as canapés designed by Chef Nobu Matsuhisa (Nobu).
More than $180,000 was raised for Variety in support of WA
children in need.
The inaugural Taste of Perth festival in May featured Nobu,
Bistro Guilluame and Silks restaurants and was an
overwhelming success with over 160,000 dishes served
across the weekend.
Crown Theatre had several long running shows throughout
the year including seasons of Chitty Chitty Bang Bang, South
Pacific and The Rocky Horror Show. The musical Grease
also commenced its season during the period.
A new entertainment initiative at Crown Perth this year saw
Crown Theatre stage Empire, a live mix of vaudeville,
acrobatics and burlesque, which was performed in a spiegel
tent on the Great Lawn. This enjoyed a successful run and
will be the first of similar shows. Also successful was the
January showing of The Illusionists, which attracted more
than 28,000 patrons to the resort. Other Crown Theatre
performances included Engelbert Humperdinck, The Hollies,
Boz Scaggs, Sesame Street Live, Ballet Revolution and The
Footy Show.
Crown Perth sponsored many local events, cultural activities
and other community-based programs throughout the year,
including providing the venue for the Ronald MacDonald
Ball, the Royal Queensbury Challenge and Styleaid for the
WA AIDS Council.
15
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Melco Crown Entertainment
Macau is currently the
only market in Greater
China, and one of only
several in Asia, to offer
legalised casino
gaming.
As at 30 June 2014, Crown Resorts held a 33.6% 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.
MCE has enjoyed yet another successful year with record operating and financial
results. Crown’s share of MCE’s normalised NPAT was an equity accounted
profit of $291.2 million, up 91.2% on the previous year. After adjusting for an
above theoretical win rate and pre-opening costs, Crown’s share of MCE’s
reported result for the year was an equity accounted profit of $287.6 million, up
64.3%. MCE’s result was attributable to solid underlying financial performance,
driven primarily by its mass market table games business at City of Dreams.
However, market conditions did weaken during the fourth quarter.
In Macau, MCE owns and operates two premium properties, City of Dreams and
Altira Macau, in addition to the Mocha Clubs business. It also has a 60% equity
interest in Macau Studio City, an integrated resort project on Cotai. In the
Philippines, MCE, has a 68.8% equity interest in City of Dreams Manila, which is
an integrated resort project due to open in late 2014.
City of Dreams – Macau
City of Dreams is an integrated casino resort in Cotai, Macau, which opened in
June 2009. It is a premium focused property targeting high-end customers and
rolling chip players from regional markets across Asia. As of 30 June 2014, City
of Dreams featured approximately 500 gaming tables and 1,400 gaming
machines.
Three exceptional hotels, Crown Towers (a Forbes Five-Star Hotel), Grand Hyatt
Macau and the Hard Rock hotel, together provide 1,400 guest rooms. City of
Dreams also features around 30 restaurants and bars, approximately 70 retail
outlets, banquet and meeting facilities and recreation and leisure facilities that
include health and fitness clubs, three swimming pools, spas and salons. Other
key attractions include an audio-visual multimedia experience and the Club
Cubic nightclub.
SOHO, a new lifestyle entertainment and dining precinct located on the second
floor of City of Dreams, had its grand opening in August 2014. It is attracting
customers with its wide selection of food and beverage options and other
non-gaming offerings. The Dancing Water Theatre, a wet stage performance
theatre with approximately 2,000 seats, features the internationally-acclaimed and
award-winning The House of Dancing Water show.
MCE is progressing with the development of its fifth hotel tower at City of
Dreams, which according to MCE’s current development schedule is anticipated
to open in early 2017. The new hotel tower is a collaboration with award-winning,
internationally renowned architect, Dame Zaha Hadid. It will add a truly iconic
landmark to Macau, further extending City of Dreams’ leading position at the
premium end of the market.
16
Left to right: Images of Altira and City of Dreams, Macau. Inset: House of Dancing Water, City of Dreams, Macau
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
Properties currently
operating
Properties under
construction or pending
construction permit
Phase 1 Macau
Light Rail Transit
Stations
Altira Macau
Altira Macau is designed to provide a casino and hotel
experience that caters to Asian rolling chip customers and
players sourced primarily through gaming promoters. Altira
Macau offers a luxurious hotel experience with its
internationally-acclaimed accommodation and guest
services. In 2014, it was awarded the Forbes Five-Star
rating in both Lodging and Spa categories by the Forbes
Travel Guide for the fifth year running.
HENGQIN ISLAND
Mocha Clubs
Mocha Clubs comprise the largest non-casino based
operations of gaming machines in Macau. As of 30 June
2014, Mocha Clubs had eight clubs, with a total of 1,266
gaming machines in operation.
Studio City – Macau
MCE is currently developing Studio City, a large-scale
cinematically themed integrated entertainment, retail and
gaming resort, which is expected to open in mid-2015.
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.
The Studio City site is located directly adjacent to the Lotus
Bridge immigration checkpoint and one of the proposed
light rail stations. MCE believes that the location of Studio
City, in addition to its vast array of entertainment and
leisure offerings, is a key competitive advantage.
17
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Melco Crown Entertainment continued
MCE currently estimates that the design and construction
cost for the first phase of Studio City will be approximately
US$2.3 billion. The Studio City project is funded through a
combination of equity contributions from shareholders,
proceeds from the Studio City senior notes and a project
loan. MCE has successfully raised approximately US$825
million under the Studio City Notes offering and has signed
the facilities agreement with the lead arranging banks in
relation to the US$1.4 billion Studio City senior secured credit
facilities, both of which were achieved without a corporate
guarantee from MCE.
City of Dreams – Manila
In the Philippines, MCE, through its 68.8% owned subsidiary,
Melco Crown (Philippines) Resorts Corporation (MCP), has
an interest in a consortium that will develop and operate City
of Dreams Manila, an integrated resort in Manila.
City of Dreams Manila is located on approximately
6.2-hectares at the gateway of Entertainment City, Manila,
close to metro Manila’s international airport and central
business district. The development continues to progress
well, with the resort expected to open later this year.
City of Dreams Manila is expected to be one of the
Philippines’ leading integrated tourist resorts and will diversify
MCE’s exposure to the rapidly developing Asian gaming and
entertainment industry, enabling it to further participate in the
growth of the Asian middle class and the increasing
consumerism of this important target market.
MCE’s investment in the City of Dreams Manila project,
up to the time of opening, is estimated to be approximately
US$832 million, consisting of funds primarily for capital
expenditures, working capital for initial opening and other
pre-opening expenses. MCP has raised approximately
US$340 million from the issuance of the Philippine Notes by
MCE Leisure Philippines in January 2014. MCP has also
recently raised approximately US$122 million of net proceeds
from the 2014 Top-up Placement in June 2014, which
included the offer and sale of common shares of MCP.
Dividend and Capital Management
MCE has announced and implemented a special dividend
and a new quarterly dividend policy, with a view to distributing
surplus capital while at the same time maintaining suitable
flexibility to support MCE’s current and future growth plans,
with the ultimate goal of driving long-term shareholder value.
During the year, Crown has received dividends of
$94.4 million from MCE, of which $68.6 million was from
the special dividend in respect of 2013 and $25.8 million in
respect of the result for the quarter ending 31 March 2014.
For the quarter ending 30 June 2014, MCE has announced
the payment of a dividend of which Crown’s share will be
US$14.5 million.
MCE has approved the implementation of a US$500 million
stock repurchase program. MCE believes this capital
management strategy provides it with the mechanism to
return surplus capital opportunistically and efficiently, while
maintaining flexibility to fund MCE’s current operations and
future development pipeline.
Macau Market Update
In its financial year 2014, market-wide gross gaming revenues
increased 16.9% from financial year 2013 to a record
US$47.9 billion, with the rolling chip segment growing 9.3%
and the mass market table games segment expanding by
36.5%. The mass market table games segment in financial
year 2014 accounted for 32.8% of market-wide gross gaming
revenues, compared to 28.1% for financial year 2013.
However, market conditions did weaken during the fourth
quarter.
MCE, through its substantial exposure to mass market
segments, particularly through its flagship property, City of
Dreams and the upcoming Studio City project, is well
positioned 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 year to
June 2014, Macau welcomed approximately 30.5 million
visitors. Visitation to Macau increased 6.4% compared to
financial year 2013. Visitors from China continue to outpace
visitors from other areas, increasing 12.7% on a year-on-year
basis and accounting for 65.4% of all visitors to Macau in
financial year 2014, compared to 61.8% in financial year 2013.
Macau continues to benefit from the People’s Republic of
China central and Macau governments’ development plans
for the region, including improved infrastructure, immigration
policies and development of Hengqin Island. This wide-
reaching development plan is expected to strengthen the
appeal of Macau as a multi-faceted leisure and tourist
destination, offering an increasingly expanded array of
entertainment attractions and amenities to drive long-term
growth and a more diversified tourism experience.
18
Left to right: Images of City of Dreams and Altira, Macau; Images of Crown Aspinall’s, London
Crown Aspinall’s
Normalised EBITDA from
Crown Aspinall’s was $35.2 million,
up 5.7% on last year. Reported
EBITDA for the period was
$25.1 million, down 5.3%.
Crown Aspinall’s is an exclusive
high-end London casino. It is one of
only five licensed high-end 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.
Other Investments
Aspers Group
United Kingdom
50.0% interest
Crown Resorts holds a 50% equity interest in the Aspers Group, which 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). Crown did not receive a distribution of any profits or recognise any earnings from
Aspers Group during the period.
Betfair
Australia
Cannery
United States
24.5% interest
Caesars
Growth
Partners
United States
1.9% interest
Crown Resorts held at 30 June 2014 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 $3.4 million. Crown acquired Betfair Group plc’s 50% equity interest in
Betfair Australasia on 12 August 2014 for consideration of $10 million.
Crown Resorts 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. During the period, Crown did not receive a distribution of any
profits or recognise any earnings from Cannery. Also during the period, Cannery entered into an
agreement to sell the Meadows Racetrack and Casino located in Pennsylvania for US$465 million. The
transaction is subject to regulatory approval and is expected to close in 2015 with net proceeds to be
used to reduce Cannery’s debt.
Crown Resorts exercised its rights to acquire an interest in a newly formed entity, Caesars Growth
Partners (CGP), the owner of certain assets, which were transferred to CGP from Caesars
Entertainment Corporation (Caesars). These assets include a majority stake in Caesars Interactive
Entertainment, the Planet Hollywood Resort in Las Vegas and a portfolio of bonds issued by Caesars.
The interest in CGP was acquired at a cost of US$22.6 million.
19
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Crown Sydney
Crown Resorts has announced plans to develop and operate an
iconic six-star hotel resort, including VIP gaming facilities, at
Barangaroo South, Sydney.
In November 2013, the New South Wales Parliament passed
legislation to permit the issue of a restricted gaming licence for
Crown Sydney. The Independent Liquor and Gaming Authority
issued a restricted gaming licence to Crown on 8 July 2014.
Crown’s plan for an iconic six-star hotel resort on Sydney
Harbour aims to give Sydney a landmark hotel that 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.
Crown Sydney will be the city’s first six-star hotel resort. Crown’s
plan 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 resort will be assured through the
appointment of Wilkinson Eyre, one of the world’s leading
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.
Crown Sydney 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 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.
The development of Crown Sydney remains conditional on the
granting of all necessary planning approvals and the finalisation
of certain agreements with the Barangaroo Delivery Authority
and the developer of Barangaroo South, Lend Lease.
It is envisaged that Crown Sydney will be operational from
November 2019.
20
Left to right: Sydney Harbour; vertical image artist’s impressions of Crown Sydney
Crown’s plan for an iconic six-star hotel resort on Sydney Harbour
aims to give Sydney a landmark hotel that it can be proud of. We have
the track record and experience to deliver something very special for
Sydney-siders and visitors from interstate and overseas.
21
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Sustainability: Our People
Crown Resorts is a significant Australian employer. Crown
Melbourne is the largest private sector, single site employer
in Australia, while Crown Perth is the largest private sector
single site employer in Western Australia. This year, total
payroll expenditure was more than $790 million, with more
than 15,000 people working at Crown Melbourne and
Crown Perth across 700 different roles.
Crown has an outstanding record in employment and
employee training and our learning and development
pathways are widely acknowledged as a best practice
model. In Melbourne, we have a $10 million dedicated
training facility, Crown College, and to date over 5,000
apprentices and trainees have graduated with nationally
accredited qualifications. This year saw the enhancement of
Crown College Perth to further support the development of
our employees in Western Australia.
In 2013, Crown Melbourne was awarded the prestigious
Australian Employer of the Year Award at the Australian
Training Awards and in the same year was also awarded the
Victorian Employer of the Year Award by the Victorian
Government. We have previously won both awards as
recently as 2010 and are the only organisation to win the
national award twice.
Crown’s learning and development program is widely
acknowledged as a best practice model, as is our
Indigenous Employment Program. Crown was the first
company to sign the Australian Employment Covenant in
2009 with an initial pledge to create 300 job opportunities
for Indigenous Australians. In 2012, that commitment was
revised to 2,000 job opportunities by 2021. In September
2014, a considerable milestone towards this target was
achieved, with the 400th job opportunity in the program
filled.
empowered to transfer this knowledge to their urban,
regional and remote communities extending Crown’s
positive reach beyond our physical sites.
Crown’s commitment to diversity in the workplace is also
demonstrated through our CROWNability Program, which
supports Crown’s strategy to provide an employment
pathway for people with disabilities.
Crown believes people with disabilities are an untapped
resource in the Australian workforce. We recognise the
benefits of creating sustainable employment opportunities
for people with disabilities and have a goal to create a
culture that encourages and supports the disclosure of
disability.
This year, Crown has employed a full time Group Disability
Manager to develop and expand the direction of the
CROWNability program across our Australian resorts and
has appointed a number of disability employment service
providers in Melbourne and Perth to refer candidates to our
recruitment teams.
The CROWNability program works to build awareness of the
opportunities of real jobs via the development of a recruitment
process that is barrier free. It is our way to ensure people with
disabilities are given every opportunity to gain and retain
employment at Crown.
At the core of Crown’s operations is a commitment to
providing a safe work environment for all of our employees.
In July 2014, Crown launched its new Health & Safety
Management System, CrownSAFE. CrownSAFE will ensure
a consistent approach to managing health and safety across
Crown’s properties and will further improve Crown’s
performance in reducing occupational injuries.
Crown was recently awarded the Community Contribution
Award at the 2014 Australian Business Awards in recognition
of its ongoing commitment to Indigenous employment and
the positive impacts this has on the broader community.
Crown Melbourne: Our People
More than 9,200 people come to work at Crown
Melbourne, and we are proud to be Australia’s largest
single-site private employer.
Through a focused Learning and Development strategy, our
Indigenous employees are building valued careers in Crown
and becoming future leaders within the community. As their
experience and skills increase, these employees are
To create an engaged workforce capable of providing high
standards of service to all our visitors, the learning and
development of our employees is one of our main priorities.
Almost 300,000 hours of employee training were
22
Left to right: Culinary consultants - Neil Perry and Guillaume Brahimi; Gaming staff, Crown Towers Melbourne; Reception, Crown Towers Melbourne
EMPLOYMENT HEADCOUNT AT CROWN RESORTS
14,437 14,940 15,031
15500
13,817
13,112 13,199
12,650
11,587
10,925
11625
10,065
completed during the period, with 495 employees
commencing accredited qualifications. As well, over 260
employees are currently completing a Learning Pathways
program at Crown Melbourne, which aligns careers with
qualifications in the Australian Qualifications Framework.
Testament to our commitment to our employees and their
ongoing training, Crown Melbourne was recently awarded
Top 100 Companies Employer of Choice Award at the 2014
Australian Business Awards.
This is in addition to the previously mentioned Australian
Employer of the Year Award at the 2013 Australian Training
Awards and the Victorian Employer of the Year Award at
the 2013 Victorian Training Awards.
Other awards for the year included winning the 2013 RACV
Victorian Tourism Award for Tourism Education and
Training and receiving a Bronze Qantas Australian Tourism
Award also for Tourism Education and Training. Crown
Melbourne was also a finalist for the Wayne Cascio Award
for Organisational Development and Leadership from the
Australian Human Resources Institute and a finalist in
Organisational Learning Effectiveness from the Australian
Institute of Training and Development.
Crown Melbourne has established several consultation
committees, comprising employees and management from
across the business. This includes an Employee
Consultative Committee dedicated to discussing and
consulting on change, a Work-Life Rostering Committee
that focusses on improving the work-life balance of our
employees, and a Crown Resorts Foundation Advisory
Committee where employees are invited to contribute
ideas and feedback to support the Crown Resorts
Foundation Advisory Board. Employee Consultative
Committees are also in place within the key business areas
to concentrate on any specific areas of interest that impact
that business area only.
7750
3875
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Employees
Tenancy
Contractors
Crown Perth: Our People
Crown Perth is Western Australia’s largest single-site
private sector employer with approximately 5,800 people
working on site.
As the interest in the Crown brand continues to grow, so
does the need to attract, develop and retain a competent
workforce with diverse skills and experience. During the
period almost 108,000 hours of training was completed at
Crown Perth, with over 240 employees commencing
accredited qualifications.
In 2013, Crown Perth invested more than $2 million to
redevelop its own purpose-built training facility, Crown
College. Crown College will accommodate the training
requirements for security, table games, food and beverage
and other business units across the resort and includes a
dedicated reception area, kitchenette and several training
rooms.
During the period, 475 Crown Perth employees received a
nationally accredited qualification, with almost 250 of these
receiving a Certificate IV in Hospitality Supervision. Our
apprentice chef commercial cookery program remains
strong with 50 apprentices currently enrolled. A number of
apprentices also participated in, and won, various external
awards throughout the year.
This year, Crown Perth Recruitment focused on updating
employee benefits and delivering a dedicated Talent
Management program to better reflect changing trends in
the market. In addition, we took the opportunity to increase
digital communications, including social media, which
assisted in broadening communication channels in a
continued competitive labour market.
Recognising Crown Perth’s high service standards and
dedicated professionals, the Australian Hotels Association
2014 WA Accommodation Industry Awards announced in
August that Crown Perth won all six major awards in which
it was a finalist. For our people, these included Crown
Perth’s Hotels Engineering Manager receiving the
Engineering and Maintenance Award for outstanding work
across Crown Metropol Perth and Crown Promenade
Perth, and Crown Metropol Perth’s Housekeeping
Manager (already Crown Perth’s 2014 Employee of the
Year) receiving a joint Housekeeping Award.
23
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Sustainability: Responsible Gaming
Crown Resorts is proud of its ongoing commitment to
providing world-leading responsible service of gaming
programs and support services. Crown allocates
significant resources to raising awareness of responsible
gaming and to assisting customers enjoy their gaming
experience.
In August 2010, the Crown Resorts Board established a
committee dedicated to overseeing the responsible service
of gaming at both Crown Melbourne and Crown Perth. The
Responsible Gaming Committee, chaired by independent
Director, Professor John Horvath, AO, meets at least six
times a year.
The delivery of education, information, assistance and
resources is at the centre of Crown’s approach to
responsible gaming and sustainable business practices.
Employee training and education at all levels is the
cornerstone of Crown’s responsible gaming program. Staff
participate in training that begins at induction and
continues throughout their career at Crown. Training
focuses on legislative compliance and Crown policies, the
identification of observable signs that a customer may be
experiencing difficulty with their gambling and how to
direct the customer to appropriate support services.
In a world first responsible gaming initiative, Crown
Melbourne implemented an onsite support facility, the
Responsible Gaming Support Centre (RGSC) in 2002. With
its specially trained staff, the RGSC is a free service that is
available 24 hours a day, seven days a week, and provides
information in English and other languages. Crown Perth
opened a similar centre in 2009.
Play Safe Limits, Crown’s voluntary time and spend limit
setting program (in place in Melbourne since 2003 and in
Perth since 2010), allows Crown’s loyalty club members
who play gaming machines and fully automated table
games to set daily spend and time limits.
Crown’s Self-Exclusion Program, also available at both
resorts, allows customers to voluntarily ban themselves
from the gaming floor.
A Responsible Gambling Code of Conduct specific to each
resort has been available for many years. The Codes
describe and demonstrate how each property executes it
commitment to its customers and employees concerning
the responsible service of gaming.
Responsible gaming is the shared responsibility of
individuals, community, the gaming industry and the state
government, working in partnership to achieve socially
responsible outcomes that are responsive to community
concerns. Crown is proud of its broad range of customer
and employee programs promoting awareness of
responsible gaming and remains actively involved with
many community and government bodies.
In 2013, Crown signed a Memorandum of Understanding
with Mission Australia outlining a commitment to working
together to provide responsible gaming support services at
the proposed Crown Sydney Resort. Through the
partnership with Mission Australia, Crown will continue to
evolve its approach to responsible gaming, ensuring it
remains an industry leader.
Crown Melbourne: Responsible Gaming
Crown Melbourne’s commitment to responsible gaming is
long-standing, with a self-exclusion and customer
assistance program available since the Melbourne casino’s
opening in 1994.
The resort’s RGSC has been central to the delivery of all
responsible gaming services since 2002. Open 24 hours a
day, seven days a week, it is staffed by a team of highly
trained professionals, including psychologists and a
chaplain.
The RGSC facilitates the Self-Exclusion program, the Play
Safe Limits program (voluntary time and spend limit setting)
as well as providing chaplaincy support, individual
counselling and referrals to government funded support
services.
The Responsible Gaming team regularly engages with
government, community and welfare organisations,
including the Victorian Responsible Gambling Foundation,
Gambler’s Help and the Peer Connection programs.
Participation in the Victorian Responsible Gambling
Ministerial Advisory Council and its Working Groups
continues.
24
Left to right: Crown Melbourne’s launch of Responsible Gambling Awareness Week;
Sustainability: Responsible Gaming
The RGSC also hosts information sessions for community,
government and industry. During the year, these visitors
included Gambler’s Help and Peer Connection program
staff, Singapore government representatives, welfare
services and industry staff.
This year, Crown Resorts has focused on specialised
training, including cross-cultural awareness training of
problem gaming interventions, mental health, drug and
alcohol awareness, and leadership development to provide
enhanced support and services to Crown Perth customers.
In May 2014, Crown Melbourne again participated in
Responsible Gambling Awareness Week, a Victorian
government, community and industry initiative. As well as
hosting a launch event, Crown Melbourne hosted smaller
events for customers during the week. One of Crown
Melbourne’s responsible gaming messages, ‘Have you had
a break?’, was headlined, with information presented on
Crown Melbourne’s extensive responsible gaming
programs and services.
This year, the General Manager Responsible Gaming was
invited to present at the Victorian Commission for
Gambling and Liquor Regulation’s Community Forum and
delivered a presentation to students participating in the
William Angliss Tourism and Hospitality Degree.
The Responsible Gaming logo and information is visible in
the form of a sticker on all gaming machines and electronic
table games and was updated to contain a QR Code for
scanning and linking the user via an online App to the
Crown Melbourne Responsible Gaming web page.
Crown Perth: Responsible Gaming
Crown Perth’s Responsible Gambling Information Centre
continues to implement Crown’s responsible service of
gaming initiatives and provides a focal point for interacting
with customers who may need support, including referral
services or information on self-exclusion and third party
exclusion programs. The team consists of dedicated staff
members from multi-disciplinary backgrounds who provide
this free specialist service 24 hours a day, seven days a
week.
The Responsible Gambling team continues to engage and
develop relationships with a wide range of community
service organisations and industry partners. Continued
engagement with Gambling Help WA has been very
successful, with a focus this year on referrals to financial
counsellors who provide additional support.
Crown Perth continues to promote Player Activity
Statements and the Play Safe Limit Program, encouraging
customers who play gaming machines to stay informed
about their gaming. As an initiative to increase responsible
gaming awareness, ‘Know the electronic games’ and
‘Know the table games’ brochures were introduced as
quick guides to accompany pre-existing information.
Crown Perth’s ongoing support for Responsible Gambling
Awareness Week helps to raise awareness of its programs
and the importance of responsible gaming. The “Take a
break” theme was launched in the opening ceremony,
which was attended by representatives from a variety of
community service providers. To encourage Crown Perth
customers to take a break, the week long initiative
incorporated a free and informal coffee service in gaming
areas.
The Responsible Gambling team has maintained a strong
and positive working relationship with the Department of
Racing, Gaming and Liquor. In addition, the team has
established further connections with several local
government and community bodies, including the WA
Transcultural Mental Health Service, multi-cultural services
and Aboriginal Alcohol and Drug Services.
25
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Sustainability: Community
Crown has always been proactive in supporting the
communities in which it operates. We recognise the
positive impact we can have on social outcomes and have
cultivated our approach over many years through
community partnerships, sponsorships and creating
employee volunteering opportunities.
A major long-term initiative to structure and shape our
community contribution well into the future was the
establishment of the Crown Resorts Foundation,
announced in September 2013. Where relevant, it will
formalise Crown’s community involvement program and
aggregate the range of community initiatives already
being undertaken across our Australian resorts.
We are proud of the partnerships with leading charities and
community services organisations we maintain. These
partnerships include Reconciliation Australia, Mission
Australia and United Voice (NSW Branch). Some
community partnerships will now be overseen by the
Crown Resorts Foundation, including those with the
National Centre for Indigenous Excellence (NCIE), The
Salvation Army and the Father Bob Maguire Foundation.
Crown continues to host and support many events that
promote and fundraise for charitable organisations. In 2014
this included providing Crown’s corporate entertainment
facilities at the Formula 1 Australian Grand Prix Paddock to
a fundraising arm of the Cancer Council. As well, the
Crown Resorts Autumn Ladies Luncheon, held in Sydney
in April, raised funds to support the White Ribbon
Foundation, an organisation dedicated to raising
awareness of domestic violence against women.
This year, Crown also utilised some of its sporting
sponsorships to help raise the profile of significant
community campaigns. One example was the National
Rugby League Close the Gap round, where Crown joined
with its sponsored South Sydney Rabbitohs team to
promote KARI Aboriginal Resources, Australia’s largest
accredited Aboriginal children’s service. Crown donated its
South Sydney Rabbitoh’s front-of-jersey position to KARI
Aboriginal Resources for the game, to help raise
awareness of its foster care programs.
Crown Melbourne’s Community Support
Crown Melbourne has continued its significant investment
in community initiatives through corporate sponsorships
and generous financial contributions. Use of Crown
facilities, employee time and donated Crown Melbourne
packages are other ways we continue to support a broad
range of community activities and charities.
Crown Melbourne is a long-term premium partner of the
Victoria Police Blue Ribbon Foundation, sponsoring Blue
Ribbon Day since its inception in 1999 and hosting the
annual Blue Ribbon Ball at the Palladium. In recognition of
this generous and sustained support, Crown was awarded
the Foundation’s highest honour, the 2014 Frank Green
Memorial Award.
Major continuing event sponsorships for the year included
Starry Starry Night for the Alannah & Madeline Foundation,
the Ronald McDonald House Charities Ball, the My Room
Ball for the Children’s Cancer Centre Foundation at the
Royal Children’s Hospital Melbourne, the Reach Ball and
Breakfast for Reach, the Robert Allenby Gala Dinner for
Challenge, Fashion Aid for HeartKids Australia, the L’Oreal
Fashion Lunch for the Royal Children’s Hospital
Foundation, the Think Pink Foundation’s 2014 Masquerade
Ball and the Royal Children’s Hospital Neonatal Unit’s
Celebration of Life.
In addition, Crown supported the Epworth Medical
Foundation Dinner, the Financial Markets Foundation Gala
Ball, the Susan Alberti Charitable Foundation Gala Ball and
the Fight Cancer Foundation Red Ball through major event
sponsorships.
Many of our employees enthusiastically volunteer their time
and give personal donations and the Staff Club is active in
encouraging and coordinating participation in many
charitable initiatives. Some of these included the Red Cross
Typhoon Haiyan Appeal (matched dollar-for-dollar by the
Crown Resorts Foundation), Australia’s Biggest Morning
Tea for the Cancer Council, the Royal Children’s Hospital
Good Friday Appeal, The Salvation Army Red Shield
Appeal (plus a $10,000 donation to Melbourne’s appeal by
the Crown Resorts Foundation), the Royal Children’s
26
Left to right: Crown employees supporting Clean Up Australia Day; Crown Perth supporting Breast Cancer Month; Crown supporting the Salvation Army and the Easter program; Crown Perth
supporting the annual Telethon
Crown Perth turned pink during October for
Breast Cancer month and in 2013 we hosted a
charity Pink Poker Tournament, which raised more
than $40,000. Crown Perth continued to host some
of Western Australia’s major fundraising events during
the year, including Styleaid for the WA AIDS Council,
the Boobalicious Ball for Breast Cancer Care WA, the
Op Shop Ball for Anglicare, the Night of Nights Ball for
Youth Focus and the Ronald McDonald House Charities
Ball.
Many of Crown Perth’s employees provide support
through workplace giving and personal donations. The
Salvation Army Red Shield Appeal, the CEO Sleepout for
St Vincent De Paul and the Anglicare Winter Appeal,
which has been a 15 year partnership, are some of the
initiatives that staff have supported during the year. In
addition, there was the Red Cross Typhoon Haiyan
Appeal (matched dollar-for-dollar by the Crown Resorts
Foundation) and an appeal by The Salvation Army for
those affected by the Perth Hills bushfires in January
2014. Crown Perth, through the Crown Resorts
Foundation, made a separate donation of $30,000 to
this cause.
Volunteering also plays a big part in Crown Perth
employee support. The Hotel Sales team volunteered for
the Make a Meal program at Ronald McDonald House
and cooked meals for the children and their families.
Also, as part of leadership and development team
building, employees physically built brand new bicycles
for both Ronald McDonald House Charities and The
Salvation Army.
Hospital Kids Day Out, the Salvos in the City Christmas
Appeal (also supported by the Crown Resorts Foundation),
The Salvation Army K-Mart Wishing Tree, Around the Bay
in a Day for the Smith Family, as well as for HeartKids and
Ballarat Zoo. Every year, Crown chefs prepare festive meals
for delivery by dedicated Crown employees on Christmas
morning. This supports the work by Open Family and
Whitelion in ensuring many people enjoy a special meal on
Christmas Day.
Crown Perth’s Community Support
Crown Perth continues to be proud of the funding
contributions and assistance it provides to many
worthwhile causes across the community. We also
provide ongoing support to a large number of
community activities and charities through the use of
Crown venues, the provision of auction items and
employee time.
The Telethon Mega Bingo was held for the last time at
the Dome, attended by more than 5,500 people and
raising $90,000 for Telethon. Crown Perth continued its
major support of Telethon by pledging $2 million in
support of the child health services that benefit from
Western Australia’s largest fundraising initiative.
Crown Perth also supported the ‘Tour De Crawf’ breast
cancer awareness and fundraising initiative in which
Australian Football League legend Shane Crawford
cycled from Melbourne to Perth. Raising more than
$1.32 million for the Breast Cancer Network Australia,
the end of the ride was televised live for The Footy Show
and broadcast from Crown Theatre Perth.
Our long-standing support of Foodbank WA continued in
2014 with daily soup donation, financial support and
staff donations. A Crown Perth executive chef also
volunteered their time for a mobile soup kitchen during
Homeless Persons Week. Crown Perth has donated
more than 175,000 litres of soup to Foodbank WA since
1999, which is distributed to over 600 charitable
organisations and schools.
27
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Sustainability: Environment
Crown Resorts is committed to taking action towards minimising
its environmental impact and we aim to be a leader in
sustainable business practice in our industry. Our programs
focus on three major areas: energy efficiency; water
conservation, and; life cycle management.
This year, Crown introduced an environmental sustainability
online training module for all employees and contractors. The
induction software incorporates the latest in interactivity and
behavioural change concepts to ensure optimal uptake from
participants.
This year, our Australian resorts have achieved a reduction in
greenhouse gas emissions of 4.2% compared to the previous
financial year, despite increasing business activity across both
properties.
Crown Melbourne’s Eco-Shoots team (comprising of
volunteer employees) was formed in 2011 and continues to
conduct monthly environmental awareness campaigns that
encourage employees to reduce, re-use and recycle.
Crown’s Environmental Committee comprises representatives
from each major business unit from both resorts. The
Committee focuses on numerous energy, water, and waste
management initiatives, while providing advice to the Executive
teams at both resorts on policy development.
In addition, Crown Melbourne continues its membership to a
number of organisations, including the Australian Packaging
Covenant, Waste Wise, and the City of Melbourne’s 1200
Buildings Program, which aims to retrofit existing buildings to
reduce the city’s environmental impact.
In addition to its organisational programs, Crown proudly
participated in a number of major community-based initiatives.
These included the global Earth Hour, Clean-up Australia Day,
World Environment Day and for the fifth year, the Carbon
Disclosure Project.
Crown Melbourne: Environment
Crown Melbourne reduced its greenhouse gas emissions by
5.0% this year, compared to the previous financial year.
The resort continued to implement a variety of initiatives,
including its fifth year of investment in a resource monitoring
and reporting system that provides live data for measuring
electricity, gas and water consumption throughout the
property. This system provides each business unit with daily,
weekly and monthly reports to assist in reducing and
monitoring consumption.
Over the same five-year period, more than $11 million was
allocated to resource-saving projects such as the carbon offset
program for hotel guests as well as employee-based training
initiatives and those from Crown Melbourne’s Eco-Shoots.
Crown introduced its carbon offset program for guests in our
hotels – a first in the hospitality and tourism industry – in
partnership with Climate Friendly in April 2012. This program
was recertified in 2014 under the Australian Government’s
National Carbon Offset Standard. When a guest voluntarily
offsets their hotel stay, function, or conference event, we
offset their emissions by purchasing carbon credits in
Tasmanian forestry projects.
Energy Efficiency
Crown Melbourne completed its energy efficiency upgrade of
Crown Metropol Melbourne in March 2014. The project aimed
to reduce greenhouse gas emissions by 2 million kilograms of
carbon dioxide, or a 16% reduction. To achieve this, we
replaced more than 6,000 lights with LED technology,
optimised heating, cooling and ventilation control, and
improved housekeeping and maintenance procedures.
Through its investment in smart engineering across the
resort’s IT, lighting, heating, ventilation and air conditioning
systems, Crown Melbourne has achieved a demonstrable
outcome that has created significant savings. As Australia’s
largest single-site private employer operating 24 hours a day,
seven days a week, with a focus on guest experience, there
will always be challenges to the implementation of energy
efficient initiatives. The success of this upgrade project
proves that energy efficiency can be achieved in the most
complex of environments.
Together, Crown Melbourne’s energy efficiency projects for
this year have resulted in a carbon dioxide abatement of more
than 6,800 tonnes, the equivalent of powering more than 560
homes or removing 1700 cars from the streets. Crown’s
reporting system provides accountability for energy
performance and a process of continuous improvement.
28
Left to right: Recycling at Crown Perth; Clean up Australia Day at Crown Perth
Crown Metropol Melbourne’s Journey to Energy Efficiency:
CO2 Savings by Category:
Lighting Projects: HVAC Projects:
Lighting Upgrades
HVAC Optimisation
Housekeeping
Procedures
Maintenance
Procedures
IT Equipment
6,000
Energy efficient lights fitted
65
Sensors throughout the hotel
CO2 levels controlled
by monitoring internal ventilation
CO2
HVAC = Heating, ventilation and air conditioning
Water Conservation
Crown Melbourne has invested in a number of water
efficiency projects since 2010, resulting in significant water
consumption savings 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 have also expanded our rainwater
harvesting to a total capacity of 300,000 litres. These
systems have the potential to save 6 million litres of drinking
water every year. We have also upgraded more than 500
shower heads, 400 taps and 140 toilets.
Life Cycle Management
Life Cycle Management programs allow us to better manage
or expand the total life cycle of products and services. We
work with suppliers, employees, customers and waste
management contractors to actively manage the
manufacture, distribution, consumption and disposal of as
many products as we can across the resort.
Crown Melbourne continued to expand its recycling systems,
which now include those for soft plastic, green waste,
polystyrene, e-waste, food, metal, fluorescent tubes,
batteries, oil, CDs, DVDs, corks, mobile phones, metal, wood
and gaming cards.
In March 2014, Crown joined an Australian-first initiative in
recycling cigarette butts across the resort. Cigarette waste
was collected and dispatched to Terracycle for conversion
into recycled plastic items such as containers and ash trays.
Crown Perth: Environment
Crown Perth reduced its greenhouse gas emissions by 2.1%
this year, compared to the previous financial year.
For five years, Crown Perth has invested in a comprehensive
resource monitoring and reporting system that provides live
data for measuring electricity, gas and water consumption
throughout the resort. This year, we continued to install water
and energy sub-metering across the property to monitor and
improve consumption.
The resort continues to improve employee awareness of
environmental issues by providing ongoing relevant
information, in conjunction with an employee education
program that commenced in December 2012.
Crown Perth also continued its partnership with the
Sustainability Environmental Association.
Energy Efficiency
Crown Perth continues to implement resource-saving
projects that reduce our impact on the environment. This
year, these included the upgrade of 15,000 lights across the
resort to more efficient LED technology, the upgrade of
Crown Metropol Perth architectural façade lighting to more
efficient LED technology, time scheduling to convention areas
and the continual review of restaurant and office areas to
match operational requirements. These initiatives have
reduced lighting consumption by 80%.
Water Conservation
Crown Perth continues its strong focus on water conservation
and this year initiated a resort-wide water audit, which has
recommended additional sub-metering and ongoing review
and installation of tapware aerators (restrictors) in all areas.
Water saving initiatives include the installation of 2.5-litre
tapware aerators to hand basins, a main water supply water-
flow meter to allow for active monitoring of water use, and
water-saving shower heads and tapware at Crown Metropol
Perth and Crown Promenade Perth.
Crown Perth was awarded a Bronze Award from the Water
Corporation of Western Australia for conserving between 10%
and 25% of water across both the Crown Metropol Perth and
Crown Promenade Perth hotels.
Life Cycle Management
Crown Perth has implemented a resort-wide recycling
program, including a food waste recycling system, allowing
the resort to annually divert from landfill more than 80% of
waste (approximately 5,000 tonnes), reducing carbon
dioxide emissions by approximately 2,500 tonnes each
year. This has been achieved by identifying a new waste
facility that has a process of extracting food waste from the
putrescible waste stream.
Crown Perth continued to expand its recycling systems,
which now include those for soft plastic, green waste,
polystyrene, e-waste, food, metal, fluorescent tubes, oil,
batteries, wood and gaming cards.
29
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company The Crown Resorts Foundation
In September 2013, the Board announced the
establishment of the Crown Resorts Foundation. The
Crown Resorts Foundation will engage with and provide
financial support to programs with demonstrated success
in the areas of community welfare, education, health care
and research, the arts and the environment.
The Crown Resorts Foundation is overseen by the Crown
Resorts Foundation Board, which comprises The Hon.
Helen Coonan (Chair), Rowen Craigie, John Horvath AC,
and Harold Mitchell AO.
The Crown Resorts Foundation is committed to creating
and supporting opportunities across the communities in
which it operates. Through its partnership with the Packer
Family Foundation, its close working relationship with
Crown Melbourne and Crown Perth and particularly
through the support of their employees, it aims to inspire
positive change.
$200 million National Philanthropic Fund
In July 2014, a $200 million National Philanthropic Fund
was announced - a joint commitment by the Crown
Resorts Foundation and the Packer Family Foundation.
The $200 million National Philanthropic Fund will be
allocated over ten years, with $100 million allocated to the
National Arts Fund for eligible charities which promote the
arts; and $100 million allocated to the Community
Partnerships and Indigenous Education Fund for eligible
charities which support the broader community and, in
particular, Indigenous education.
The National Philanthropic Fund is administered jointly by
the Crown Resorts Foundation Board and the Packer
Family Foundation Board, with both Boards offering
extensive philanthropic experience.
I applaud and thank
the Packer Family and
Crown Resorts Foundation
for the significant and
generous contribution they
have made to Australia’s arts
sector and for their
leadership in building a
culture of giving in Australia.
Attorney General, Senator The Hon. George Brandis
on the announcement of the $200 million National
Philanthropic Fund
Improving the accessibility and
availability of the arts across Australia
The $100 million National Arts Fund aims to promote both
access to and the development of the arts across
Australia.
One of the first partnerships announced by the National
Arts Fund, is with the Melbourne Theatre Company
(MTC). The funding will enable the MTC to provide live
theatre experiences and subsidised access to around
17,500 disadvantaged young people and families each
year. It will also allow them to take education productions
on tour to regional Victoria and Tasmania and further, it
will provide for a multi-year Indigenous scholarship
program.
30
Left to right: Contributing to Ovarian Cancer Research; Supporting the Sydney Children’s Hospital;
Supporting The Salvo’s in the City Christmas Appeal 2013, Major Brendon Nottle, Lord Mayor Robert Doyle, Crown Melbourne’s Ann Peacock; Father Bob Maguire with Barry Felstead
The Community Partnerships and Indigenous Education
Fund has also confirmed support for organisations such as
the Exodus Foundation’s with their Aboriginal Literacy
Program in Darwin and the Father Bob Maguire Foundation,
which operates in and around the Melbourne CBD.
During the year, the Crown Resorts Foundation also
supported fundraising initiatives in New South Wales,
including the We’re for the Kids Appeal for the Sydney
Children’s Hospital, The Salvation Army’s NSW Bushfire
Appeal for those affected by the New South Wales
bushfires, and the RiseForAlex campaign to support the
recovery of Alex McKinnon, a former Newcastle Knights
footballer who suffered a devastating spinal injury.
Utilising the close working relationship
with Crown Resorts
The Crown Resorts Foundation formalises Crown’s
community involvement program and community initiatives
already being undertaken at Crown’s Australian resorts.
In addition to supporting Crown Melbourne and Crown
Perth employees in their fundraising goals, the Crown
Resorts Foundation seeks to leverage Crown Resort’s
sporting sponsorships to bring greater attention to worthy
causes.
In May, the Crown Resorts Foundation launched its
inaugural Crown Resorts Foundation Charity Challenge,
utilising one of the National Rugby League Premiership
games between the Crown-sponsored South Sydney
Rabbitohs and Melbourne Storm to raise the profile of and
act as a fundraising event for a chosen charity partner. This
year’s chosen charity was the Ovarian Cancer Research
Foundation (OCRF), whose logo appeared on all player
jerseys. The Crown Resorts Foundation donated $25,000
upon completion of the match and a further $1,000 per try
as well, further funds were contributed by both teams.
Royal De Luxe’s The Giants, which will be presented at
the 2015 Perth International Arts Festival, is the first
Western Australian arts project to be supported by the
Crown Resorts Foundation (in collaboration with the
Western Australian Government). Based on the story of
Gallipoli-bound troops and Fay Howe of Breaksea Island
Lighthouse, The Giants will also serve as part of the
commemoration of the centenary of World War I.
The $100 million National Arts Fund will encompass the
$60 million Crown Resorts Foundation Sydney Arts Fund
which was announced in November 2013. Over 10 years,
beginning in financial year 2015, $30 million will be
committed to Sydney art and cultural institutions, and
$30 million to Western Sydney arts projects, through a
merit-based grants process.
Strengthening communities and
Indigenous education
The $100 million Community Partnerships and Indigenous
Education Fund aims to strengthen communities by
providing assistance to community organisations where it
is needed. It will principally support innovative programs
that provide some of Australia’s most marginalised youth
with the confidence to grow and to succeed.
The first Crown Resorts Foundation Community
partnership announced was The Salvation Army
(Melbourne Project 614). This partnership formalised the
relationship which had been developed by Crown
Melbourne over many years.
Through this partnership, the Crown Resorts Foundation
has committed $750,000 to The Salvation Army over the
next five years. The Crown Resorts Foundation and The
Salvation Army will work together on several charitable
projects including employee volunteering opportunities,
providing training and employment pathways and funding
the new ‘Night Watch’ program.
The Salvation Army’s ‘Night Watch’ program operates in
Melbourne’s CBD and inner city and provides for two
qualified and experienced workers, along with a team of
trained volunteers to provide a critical response service for
people experiencing drug and/or alcohol intoxication,
separation from friends, homelessness or emotional
distress.
31
Crown Limited Annual Report 2014Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company Corporate GovernanCe Statement
Corporate Governance Statement
The Crown Resorts Limited Board is committed to the
implementation and maintenance of good corporate
governance practices. This Statement sets out the extent
to which Crown Resorts 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 2014. The disclosures in this Statement
respond to the ASX Corporate Governance Council’s
second edition of its Corporate Governance Principles and
Recommendations. Crown will make disclosures in
response to the third edition in its 2015 Annual Report.
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.crownresorts.com.au under the heading
Corporate Governance – Charters.
Principle 2
Structure the Board to add value
Composition of the Board
As at the date of this Statement, the Board comprises the
following eleven Directors:
• James D Packer
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
• 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
t
n
e
m
e
t
a
t
S
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
33
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Corporate GovernanCe Statement ContInUeD
• Michael R Johnston BEc, CA
non-independent, non-executive Director
• Harold C Mitchell AC
– other directorships and time availability; and
– the effect that their appointment would have on the
overall balance and composition of the Board; and
Independent, non-executive Director
• finally, all existing Board members must consent to the
Mr Christopher D Corrigan resigned as a director of the
Company during the financial year. Information about
each current Director’s qualifications, experience and
period in office is set out in the Directors’ Statutory
Report. Since year end, the Board approved the
appointment of Mr Andrew Demetriou as a director,
subject to receipt of all necessary regulatory approvals.
Mr Demetriou’s appointment will only become effective
once the necessary approvals have been received.
The roles of Chair and Chief Executive Officer are
exercised by separate persons. James Packer is
Chairman and Rowen Craigie is Chief Executive Officer
and Managing Director.
relationships affecting independence
The Crown Board is currently comprised of eleven
Directors, six 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.
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;
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
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
S
t
a
t
e
m
e
n
t
34
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.
Crown Board Committees
To assist in carrying out its responsibilities, the Crown Board has established the following Committees:
Committees
Audit & Corporate Governance
Corporate Social Responsibility
Finance1
Investment2
Nomination and Remuneration
Occupational Health & Safety
Responsible Gaming
Risk Management
Current members
Benjamin Brazil (Chair)
Rowena Danziger
Michael Johnston
Helen Coonan (Chair)
Rowen Craigie
John Horvath
Harold Mitchell
Geoffrey Dixon (Chair)
Benjamin Brazil
Michael Johnston
James Packer (Chair)
John Alexander
Rowen Craigie
Ashok Jacob
Geoffrey Dixon (Chair)
John Horvath
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
meetings held
during FY 2014
4
3
0
0
1
4
6
2
1. The Finance Committee did not meet this financial year.
2. The Investment Committee did not meet this financial year, however there were four written resolutions assented to by the Committee during
financial year 2014.
Each Committee has adopted a formal Charter that outlines its duties and responsibilities.
More information
A full copy of each of the Crown Committee Charters is available at:
www.crownresorts.com.au 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.crownresorts.com.au under the heading Corporate Governance.
t
n
e
m
e
t
a
t
S
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
35
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
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 Resorts Limited, Crown
Melbourne and Crown Perth groups.
An assessment of Crown’s progress in achieving those objectives has also been included.
objective
• 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.
• 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.
Crown’s progress
Crown Resorts – operating across both Crown Melbourne and Crown Perth
Four senior positions operating across both properties were filled during
FY14. Of those four positions, three were filled by females. The one role not
filled by a female had no female shortlisted as no suitable female candidate
was available.
In addition, there were three senior management and senior executive
positions that were filled via internal movements only. One of the three was
a female appointed into the role. For the other two roles where males were
appointed, no other candidates were shortlisted.
Crown Melbourne
Four recruitment processes for senior managers and senior executive
positions were undertaken. At least one female was on each shortlist for
two of the roles and one female was successful in gaining the role. There
were no suitable female candidates for the two roles where no female was
shortlisted.
During the year, 37% of participants in leadership and development
programs across the group were female. This represents a decrease on
the percentage participation in 2013 of 40%.
Crown Melbourne and Crown Perth will continue to monitor female
enrolments, both targeting and encouraging female participation in FY15.
• To incorporate a targeted mentoring
program for women into existing group
leadership and development programs.
During FY14, Crown commenced a project to scope a number of targeted
programs through meeting with several external providers to best source
programs that meet the business needs and gender objectives.
These providers have presented a number of options, such as one-on-one
coaching for mid to senior level employees, and more tailored programs
with a broader reach across different levels.
Crown will review these providers’ recommendations to source options
throughout FY15.
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
S
t
a
t
e
m
e
n
t
36
objective
• 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’s progress
Crown has conducted an annual review of the remuneration of the Business
Operations Teams within Crown’s major operating subsidiaries, Crown
Melbourne and Crown Perth. The average total male remuneration at
Crown Melbourne was $255,220 and the average total female remuneration
was $232,897. The average total male remuneration at Crown Perth was
$210,560 and the average total female remuneration was $152,330.
This suggested there may have been a gender based pay gap at senior
levels. However, analysis was conducted to break down the data to see
whether this gap exists within the same “pay grade”, as the Business
Operations Teams encompass several “pay grades”.
Crown Melbourne examined the grade levels within the Business
Operations Team, of which there are three, comparing male and female
remuneration, number of employees, and length of service within each
grade level. The analysis indicated that females actually earned more than
their male counterparts for two of the grade levels. In the one grade level
where males on average had a higher TPV, the average length of service for
the males was more than double that of the females in this group. This
indicates there is no significant difference in the gender pay gap.
The Crown Perth grade system also has three pay grades covering
employees on the Business Operations Team. An analysis was conducted
comparing TPVs within each grade that revealed a substantially smaller gap
between male and female salaries in one of the grade levels, and females
actually higher than males in another grade level. For the one grade level
whereby males were being paid a higher TPV, the presence of an outlier has
been identified as impacting the results.
Crown Resorts is currently undertaking a comprehensive review of its
remuneration framework to be applied across both Crown Melbourne and
Crown Perth. The objective of this review is to ensure our remuneration
practices continue to be applied in a consistent and fair manner, most
notably in relation to the issue of gender pay equity.
The proportion of women employees in the group, women in senior executive positions and women on the Board as at
30 June 2014 is as follows:
measure
• Proportion of women employees in the
group:
result
There were 5,097 women in the group. This represents 43% of the total
workforce of 11,772 employees.
• Proportion of women in senior executive
positions in the group:
There were 29 women in senior executive positions in the group. This
represents 28% of senior positions in the group.
• Proportion of women on the Board:
Two women out of eleven directors, or 18%.
Crown’s Audit & Corporate Governance Committee has been delegated responsibility for developing and monitoring the
application of Crown’s Diversity Policy.
t
n
e
m
e
t
a
t
S
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
37
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Corporate GovernanCe Statement ContInUeD
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.
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.
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
Crown’s Corporate Social Responsibility Committee
assists the Board in setting Crown’s corporate social
responsibility policies and programs and assessing
Crown’s corporate social responsibility performance.
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.
More information
In summary, the policy provides that Crown may make
political donations, provided that:
Full copies of Crown’s Code of Conduct for Directors
and Code of Conduct for Employees are available at:
• 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.
www.crownresorts.com.au under the heading
Corporate Governance – Codes.
A full copy of Crown’s Diversity Policy is available at:
www.crownresorts.com.au under the heading
Corporate Governance – Policies.
A full copy of Crown’s Securities Trading Policy is
available at:
www.crownresorts.com.au under the heading
Corporate Governance – Policies.
A full copy of Crown’s Anti-Bribery and Corruption
Policy is available at:
www.crownresorts.com.au under the heading
Corporate Governance – Policies.
A full copy of Crown’s Corporate Social
Responsibility Charter is available at:
www.crownresorts.com.au under the heading
Corporate Governance – Charters.
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
S
t
a
t
e
m
e
n
t
38
Principle 4
Safeguard Integrity in Financial Reporting
Crown audit & Corporate Governance
Committee and Charter
Principle 6
Respect the Rights of Shareholders
promotion of effective communication with
shareholders
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.
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.crownresorts.com.au under the
heading Corporate Governance – Policies.
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.crownresorts.com.au 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.
t
n
e
m
e
t
a
t
S
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
39
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
The current members of the Nomination and
Remuneration Committee are Geoffrey Dixon (Chair), John
Horvath 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 and
the 2014 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.crownresorts.com.au under the heading
Corporate Governance – Charters.
Corporate GovernanCe Statement ContInUeD
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.
crownresorts.com.au under the heading Corporate
Governance – Charters.
A full copy of Crown’s Risk Management Policy is
available at: www.crownresorts.com.au under the
heading Corporate Governance – Policies.
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 2015; and
• the short term bonus payments made to senior
executives referable to the financial year ending 30
June 2014.
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
S
t
a
t
e
m
e
n
t
40
Nevada Information Statement
The gaming industry in Nevada is highly regulated and
Crown Resorts 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.
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
t
n
e
m
e
t
a
t
S
n
o
i
t
a
m
r
o
f
n
I
a
d
a
v
e
n
41
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
nevaDa InFormatIon Statement ContInUeD
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.
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.
n
e
v
a
d
a
I
n
f
o
r
m
a
t
i
o
n
S
t
a
t
e
m
e
n
t
42
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.
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
t
n
e
m
e
t
a
t
S
n
o
i
t
a
m
r
o
f
n
I
a
d
a
v
e
n
43
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
nevaDa InFormatIon Statement ContInUeD
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.
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:
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
• 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.
n
e
v
a
d
a
I
n
f
o
r
m
a
t
i
o
n
S
t
a
t
e
m
e
n
t
44
Directors’ Statutory Report
Company Information
review of operations
A review of operations of the Crown Resorts Limited
(Crown) group for the financial year ended 30 June 2014
and the results of those operations is detailed on pages 8
to 31.
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 2013 include:
• 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.
• On 2 August 2013, Crown announced that it had
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.
• On 30 October 2013, Crown announced that it had
changed the name of the company from Crown Limited
to Crown Resorts Limited.
• On 11 November 2013, Crown announced that it had
entered into agreements with the New South Wales
Government for the development of a six-star luxury
hotel resort at Barangaroo South in Sydney.
• On 13 December 2013, Crown announced that it had
entered into discussions with the Victorian Government
in relation to a range of matters including the terms and
conditions of the Crown Melbourne casino licence and
a restructuring of tax arrangements to ensure the
Crown Melbourne resort remains competitive, supports
Victorian jobs and positions the facility to compete
strongly in the future for inbound tourists.
• On 26 February 2014, Crown announced that the Board
of Melco Crown Entertainment Limited had
recommended the payment of a special dividend and
had adopted a new dividend policy. On 27 March 2014,
Crown announced that the shareholders of Melco
Crown Entertainment Limited had approved the
payment of a special dividend.
Significant events after Balance Date
On 8 July 2014, Crown announced that it had been issued
a Restricted Gaming Licence by the New South Wales
Independent Liquor and Gaming Authority for the Crown
Sydney Hotel Resort at Barangaroo South.
Subsequent to 30 June 2014, the Crown Board reviewed
its dividend policy and adopted a revised policy. The
revised dividend policy is to pay an annual dividend of the
higher of 37 cents per share and 65% of normalised NPAT
(excluding profits from associates but including dividends
received from associates), subject to the company’s
financial position. For the final F14 Crown dividend, the
Board determined that the MCE special dividend related to
the year ended 31 December 2013 should not be included
in the calculation.
The Directors of Crown subsequently declared a final
dividend on ordinary shares in respect of the year
ending 30 June 2014. 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
2014 financial statements.
On 18 July 2014, Crown announced that it had entered
into an agreement with a subsidiary of the international
Chinese diversified property group, Greenland Holdings
Group, to jointly prepare a detailed proposal to be
submitted to the Queensland Government to develop the
Queen’s Wharf precinct in Brisbane.
On 4 August 2014, Crown announced that a majority-
owned subsidiary had acquired a 34.6 acre vacant site on
Las Vegas Boulevard. The site, on the “Las Vegas Strip”,
was formerly occupied by the New Frontier casino and
was acquired through a foreclosure auction initiated by
lenders to the former owner of the site.
On 7 August 2014, Crown announced that its Board had
resolved to appoint Mr Andrew Demetriou as a director of
the company, subject to receipt of all necessary gaming
regulatory approvals.
On 13 August 2014, Crown announced that it had acquired
Betfair Group plc’s 50% equity interest in Betfair
Australasia Pty Limited (Betfair Australasia) for
consideration of $10 million.
On 22 August 2014, Crown announced that it had reached
agreement with the Victorian Government on a number of
reforms to the Melbourne Casino Licence, whereby the
licence term will be extended to 2050, “super tax” on
international and interstate VIP program play will be
removed, Crown Melbourne will be entitled to additional
gaming product and Crown will make agreed specified
payments to the State of Victoria.
t
r
o
p
e
r
y
r
o
t
u
t
a
t
S
’
s
r
o
t
c
e
r
i
D
45
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
DIreCtorS’ StatUtorY report ContInUeD
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.
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 repealed in July 2014. Crown Melbourne was considered a ‘liable
entity’ under the legislation and was therefore required to surrender carbon units to meet its FY14 liability. However,
moving forward Crown Melbourne is no longer considered a ‘liable entity’ and has no further obligations.
The Energy Efficiency Opportunities Act 2006 was repealed in May 2014. As such, Crown has no further obligations in
regards to this legislation.
Under the Western Australian Water By-laws legislation, Crown Perth is required to complete annual water management
assessments and submit water efficiency management plans. Relevant reports have been submitted during the year.
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 reported a consolidated net profit after tax (NPAT) of $655.8 million and a normalised NPAT1 of $640.0 million for
the 12 months ended 30 June 2014. Crown Melbourne and Crown Perth achieved normalised EBITDA growth of 2.0% and
normalised revenue growth of 1.4%.
performance for the year ended
June 30 2014
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
2,935.4
(2,152.7)
782.7
537.8
640.0
702.5
(46.7)
655.8
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 legal settlement costs of $23.6 million (net of tax) and an asset impairment charge of $23.1 million (net of tax).
D
i
r
e
c
t
o
r
s
’
S
t
a
t
u
t
o
r
y
r
e
p
o
r
t
46
The activities and results of Crown’s operations are
discussed further below.
Work is progressing well on Crown Towers Perth, which is
expected to open at the end of 2016.
Crown Melbourne
Crown Aspinall’s
Normalised EBITDA from Crown Melbourne was
$561.8 million, up 2.8% on the prior comparable period
(pcp). Reported EBITDA for the period was $593.3 million,
up 8.4% on the pcp. This reflects a win rate of 1.46%,
which is above the theoretical win rate of 1.35%, and
generated a positive EBITDA variance of $31.5 million. This
compares to a win rate of 1.36% in the pcp which resulted
in a positive EBITDA variance of $0.4 million.
Normalised revenue of $1,931.2 million was up 0.7% on
the pcp. During the year, main floor gaming revenue was
$1,020.3 million, up 2.0% on the pcp. Normalised VIP
program play revenue was $501.2 million, down 4.6% on
the pcp with turnover of $37.1 billion reflecting the
competitive challenges facing Crown Melbourne including
the impact of Super Tax on the Melbourne casino.
Non-gaming revenue grew 4.5% to $409.7 million. Crown
Towers Melbourne hotel occupancy was 96.1% with an
average room rate of $332. Crown Metropol Melbourne
achieved hotel occupancy of 92.1% with an average room
rate of $248. Crown Promenade Melbourne hotel
occupancy was 93.9% with an average room rate of $215.
The overall operating margin1 improved from 28.5 % to
29.1%. This, in part, reflects Crown Melbourne’s
comprehensive review of back of house costs and front of
house operational efficiency as well as changes in
business mix.
Crown Perth
Normalised EBITDA from Crown Perth was $241.6 million,
up 0.3% on the pcp. Reported EBITDA for the period was
$315.7 million, up 31.1% on the pcp. This reflects a win
rate of 2.21%, which is above the theoretical win rate of
1.35%, and generated a positive EBITDA variance of
$74.1 million. In the pcp the actual result was in-line with
the theoretical win rate.
Normalised revenue of $883.6 million was up 3.0% on
the pcp. During the year, main floor gaming revenue was
$485.4 million, up 0.4% on the pcp reflecting local market
conditions. Normalised VIP program play revenue was
$173.1 million, up 8.6% on the pcp with turnover of
$12.8 billion.
Non-gaming revenue grew 4.5% to $225.1 million.
Crown Metropol Perth hotel occupancy was 90.5% with
an average room rate of $308. Hotel occupancy at Crown
Promenade Perth was 94.1% with an average room rate
of $217.
The overall operating margin1 decreased from 28.1% to
27.3%. This reflects the change in business mix, partially
offset by productivity and efficiency improvements.
1 Normalised EBITDA divided by normalised revenue.
Normalised EBITDA from Crown Aspinall’s was
$35.2 million, up 5.7% on the pcp. Reported EBITDA for
the period was $25.1 million, down 5.3% on the pcp.
Melco Crown Entertainment (MCE) – 33.6% equity
interest
Crown’s share of MCE’s normalised NPAT for the year
to 30 June 2014 was an equity accounted profit of
$291.2 million, up 91.2% on the pcp. After adjusting for
an above theoretical win rate and pre-opening costs,
Crown’s share of MCE’s reported result for the year was
an equity accounted profit of $287.6 million, up 64.3% on
the pcp.
MCE’s result was attributable to solid underlying financial
performance, driven primarily by its mass market table
games business at City of Dreams. However, market
conditions weakened during the fourth quarter.
Cash flow and debt
Operating cash flow for the period was $702.0 million.
After net capital expenditure of $401.4 million, licence fee
payments of $5.0 million, net investment payments of
$160.1 million, dividend payments of $269.5 million and
net drawdown of debt of $103.4 million, total Group debt
was $1,742.8 million as at 30 June 2014. Total cash and
cash equivalents at 30 June 2014 was $177.8 million,
which consisted of cash maintained for working capital
purposes of $110.9 million, with the balance of $66.9
million available for general purposes. Net debt,
excluding working capital cash, at 30 June 2014 stood at
$1,675.9 million.
At 30 June 2014, total liquidity, excluding working capital
cash of $110.9 million, was $1,140.0 million, represented
by $66.9 million in available cash and $1,073.1 million in
committed undrawn facilities.
Conclusion
Crown’s key strategies and business focuses are to:
• continue to maximise the performance of Crown
Melbourne and Crown Perth including revenue growth,
cost control and margins;
• progress the Crown Towers Perth project, Crown
Sydney Hotel Resort project. Queen’s Wharf Brisbane
bid and the Las Vegas site development to deliver value
for shareholders;
• assist MCE with the Studio City and Philippines
projects; and
• assess other relevant growth opportunities.
t
r
o
p
e
r
y
r
o
t
u
t
a
t
S
’
s
r
o
t
c
e
r
i
D
47
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
DIreCtorS’ StatUtorY report ContInUeD
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 11 April 2014. The dividend was 50%
franked. None of the unfranked component was conduit foreign income.
Final Dividend: The Directors of Crown have declared a final dividend of 19 cents per ordinary share to shareholders
registered as at 26 September 2014. 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 2013 financial year of $138.4 million.
Directors and Officers
Director details
Set out below are the names of each person who has been a Director of Crown during or since year end and the period for
which they have been a Director. There are eleven current Directors.
name
James Douglas Packer
John Henry Alexander
Benjamin Alexander Brazil
Helen Anne Coonan
Christopher Darcy Corrigan
Rowen Bruce Craigie
Rowena Danziger
Geoffrey James Dixon
John Stephen Horvath
Ashok Jacob
Michael Roy Johnston
Harold Charles Mitchell
Date appointed
6 July 2007
6 July 2007
26 June 2009
2 December 2011
6 July 2007
31 May 2007
6 July 2007
6 July 2007
9 September 2010
6 July 2007
6 July 2007
10 February 2011
Date Ceased
–
–
–
–
29 November 2013
–
–
–
–
–
–
–
Since year end, the Board approved the appointment of Mr Andrew Demetriou as a director, subject to receipt of all
necessary regulatory approvals. Mr Demetriou’s appointment will only become effective once the necessary approvals
have been received.
At Crown’s 2013 Annual General Meeting, Mr Geoffrey Dixon, Mr Ashok Jacob, Mr Harold Mitchell and Mr James Packer
stood for re-election as Directors. Each was re-elected as a Director at that time.
D
i
r
e
c
t
o
r
s
’
S
t
a
t
u
t
o
r
y
r
e
p
o
r
t
48
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.
Benjamin a Brazil BCom LLB,
Independent, Non-Executive Director
Mr Brazil is an Executive Director of Macquarie Group
Limited, a member of the Executive Committee 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 Packer is a director of various companies including
Crown Melbourne Limited, Burswood Limited and Melco
Crown Entertainment Limited.
Mr Brazil is the Chairman of the Crown Audit and
Corporate Governance Committee and a member of the
Crown Finance Committee.
t
r
o
p
e
r
y
r
o
t
u
t
a
t
S
’
s
r
o
t
c
e
r
i
D
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
John H alexander Ba, Executive Deputy Chairman
Mr Alexander is the Executive Deputy Chairman of Crown
Resorts 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
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 Non-Executive Director of Snowy Hydro
Limited, a member of the Advisory Council of J.P. Morgan,
a Member of the Board of Advice for Aon Risk Services
Australia, 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, Co-Chair of GRACosway (a subsidiary of the
Clemenger Group) and a Non-Executive Director of
Obesity Australia Limited. She is also a member of Chief
Executive Women.
Ms Coonan Chairs the Crown Resorts Foundation. She is
also Chair of the Crown Resorts Corporate Social
Responsibility Committee.
1. Consolidated Media Holdings Pty Limited (CMH) (previously Consolidated Media Holdings Limited and, prior to that, Publishing and
Broadcasting Limited, ASX Code: PBL). CMH was removed from the ASX’s official list on 20 November 2012.
49
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
DIreCtorS’ StatUtorY report ContInUeD
rowen B Craigie Bec (Hons),
Chief Executive Officer and Managing Director
Geoffrey J Dixon,
Independent, Non-Executive 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, Responsible Gaming, Risk
Management and Corporate Social Responsibility
Committees. He also sits on the Crown Resorts
Foundation Board.
Mr Craigie is a member of the Commonwealth
Government’s Trade and Investment Policy Advisory
Council (TIPAC) and is President of Casinos and Resorts
Australasia.
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 Resorts Limited Occupational
Health & Safety 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 19 November 2012
Mr Dixon is Chairman of Tourism Australia, the Australian
Government’s major international tourism marketing
organisation. He is also Chairman of the Garvan Medical
Research Foundation, based in Sydney.
Mr Dixon also sits on the board of publicly listed Australian
company, Adslot Limited, and the boards of the Museum
of Contemporary Art and the Local Organising Committee
of the Asian Football Cup. He is an Ambassador for the
Australian Indigenous Education Foundation.
Mr Dixon has also worked in the media, mining and
government sectors. He 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 24 December 2013 when the company
was delisted from the ASX
• Adslot Limited: 23 December 2013 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, the
National Health and Medical Research Council 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 sat on the
Board of the Garvan Research Foundation until March this
year and continues to be a Governor of the Centenary
Institute of Medical Research. 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 is a Member of the Ministerial Advisory
Council to the Minister of Health.
1. Consolidated Media Holdings Pty Limited (CMH) (previously Consolidated Media Holdings Limited and, prior to that, Publishing and
Broadcasting Limited, ASX Code: PBL). CMH was removed from the ASX’s official list on 20 November 2012.
D
i
r
e
c
t
o
r
s
’
S
t
a
t
u
t
o
r
y
r
e
p
o
r
t
50
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 and Corporate Social
Responsibility Committees. He also sits on the Crown
Melbourne Board and the Crown Resorts Foundation
Board.
ashok Jacob BSc, mBa,
Non-independent, Non-Executive Director
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
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
t
r
o
p
e
r
y
r
o
t
u
t
a
t
S
’
s
r
o
t
c
e
r
i
D
Mr Ashok Jacob is a non-executive director of Crown.
2011 to 10 February 2012
Mr Jacob is the Chairman and Chief Investment Officer
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 is a member of the Advisory Board of Visy
Australia.
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.
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.
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.
1. Consolidated Media Holdings Pty Limited (CMH) (previously Consolidated Media Holdings Limited and, prior to that, Publishing and
Broadcasting Limited, ASX Code: PBL). CMH was removed from the ASX’s official list on 20 November 2012.
51
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
DIreCtorS’ StatUtorY report ContInUeD
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 was awarded the Victorian Australian of the
Year for 2013.
In August 2013 Harold Mitchell was appointed Adjunct
Professor, School of Humanities and Communications
Arts, University of Western Sydney.
Mr Mitchell is a member of the Crown Nomination and
Remuneration Committee and the Corporate Social
Responsibility Committee. He also sits on the Crown
Resorts Foundation Board.
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 Chair 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 and a secretary of the Crown Resorts
Foundation.
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 – Australian Resorts
• Greg F Hawkins
Chief Executive Officer – Crown Melbourne until
1 August 2013
• W todd nisbet
Executive Vice President, Strategy and Development
D
i
r
e
c
t
o
r
s
’
S
t
a
t
u
t
o
r
y
r
e
p
o
r
t
52
relevant interests of Directors
Details of relevant interests of current Directors in Crown shares as at 30 June 2014 were as follows:
Director
John Alexander
Rowen Craigie
Rowena Danziger
Harold Mitchell
James Packer
total number of ordinary shares1
256,549
102,3142
30,896
114,887
364,270,253
Notes:
1. For more information on relevant interests of current Directors, please see the Remuneration Report.
2. The registered holder of these shares as at 30 June 2014 was Australian Executor Trustees Limited as trustee under the 2010 Crown Resorts
Limited Long Term Incentive Plan. Mr Craigie has become entitled to have those shares transferred to him after 30 June 2014 given that the
conditions in the 2010 Crown Resorts Limited Long Term Incentive Plan have been 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 2014
financial year together with each Director’s attendance details.
Audit & Corporate
Governance
Committee
Meetings
Corporate Social
Responsinility
Committee
Nomination and
Remuneration
Committee
Meetings
Occupational
Health & Safety
Committee
Meetings
Responsible
Gaming Committee
Meetings
Risk Management
Committee
Meetings
Board Meetings
Held
Attended 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
9
9
9
9
4
9
9
9
9
9
9
9
7
9
9
9
2
9
9
9
8
8
8
9
4
4
4
4
4
4
3
3
3
3
3
3
3
3
1
1
1
1
1
1
4
4
4
4
3
4
4
3
6
6
6
4
6
6
2
2
2
1
2
2
* Professor Horvath replaced Mr Corrigan on the Nomination and Remuneration Committee following Mr Corrigan’s resignation.
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 three
written resolutions assented to by the Board this financial year. There were also four written resolutions assented to by the
Investment Committee. The Investment Committee and the Finance Committee did not formally meet this financial year.
t
r
o
p
e
r
y
r
o
t
u
t
a
t
S
’
s
r
o
t
c
e
r
i
D
53
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
The ratio of non-audit to audit services provided by Ernst
& Young to Crown is approximately 5.0:1. This ratio
reflects that:
• Ernst & Young advised Crown on matters relating to
Crown’s refinancing activities and proposed
developments including in Sydney, Colombo and Las
Vegas; and
• Ernst & Young provided taxation advisory services,
mostly reflecting 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.
DIreCtorS’ StatUtorY report ContInUeD
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.
Indemnification of auditors
To the extent permitted by law, Crown has agreed to
indemnify its auditors, Ernst & Young, as part of the terms
of its audit engagement agreement against claims by third
parties arising from the audit (for an unspecified amount).
No payment has been made to indemnify Ernst & Young
during or since the financial year.
Auditor Information
auditor details
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.
D
i
r
e
c
t
o
r
s
’
S
t
a
t
u
t
o
r
y
r
e
p
o
r
t
54
Remuneration Report
This Remuneration Report for the year ended 30 June
2014, 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.
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. Summary of Senior Executive Remuneration Structure
•
Fixed Remuneration
• Performance Based Remuneration
4. Details of Performance Based Remuneration
Elements
• Short Term Incentives
•
Long Term Incentives: 2010 Crown LTI and 2014
Crown LTI
5. Relationship between Remuneration Policy and
Company Performance
• Remuneration linked to performance
• Policy on entering into transactions in associated
products which limit economic risk
6. Remuneration details for Non-Executive Directors
(including statutory remuneration disclosures)
7. Remuneration details for Senior Executives
• Executive Contract Summaries
• Statutory Remuneration Disclosures
8. Shareholdings of Key Management Personnel
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 (until 29 November 2013)
• 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)
Other company executives and key management
personnel
• Kenneth M Barton (Chief Financial Officer)
• Barry J Felstead (Chief Executive Officer – Australian
Resorts)
• 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 2013 Remuneration Report. Apart from
the introduction of the new 2014 Crown LTI and the
modification to the rules of the 2010 Crown LTI, there has
been no material change to the Company’s remuneration
policy during the period and much of the description of the
Company’s remuneration policy in this report is therefore
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.
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
55
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
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.
Crown’s key strategies and business focuses are to:
• continue to maximise the performance of Crown
Melbourne and Crown Perth including revenue growth,
cost control and margins;
• progress the Crown Towers Perth project, Crown
Sydney Hotel Resort project, Queen’s Wharf Brisbane
bid and the Las Vegas site development to deliver value
for shareholders;
• assist MCE with the Studio City and Philippines
projects; and
• assess other relevant growth opportunities.
Senior Executive remuneration structure is tied to these
strategies and focuses.
Summary 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
performance against his 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 Resorts 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
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
56
November 2007. Mr Craigie’s fixed remuneration has not
changed since that date.
Crown LTI commenced on 1 July 2014 and did not apply
during the year which is the subject of this report.
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.
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, 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 70.
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 2010 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 2010 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. A summary of the
process involved is set out below.
A new long term incentive has been implemented for the
four year period from financial year 2015 to financial year
2018 (the 2014 Crown LTI). A detailed description of the
2014 Crown LTI is provided later in this report. The 2014
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 Resorts 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.
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
57
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
Details of Performance Based Remuneration Elements
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
typical non-financial objectives
Performance against budgeted normalised EBITDA1 and/or net profit after tax.
• Management of major capital expenditure and investment programs to ensure
projects 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.
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
58
In financial year 2014, the Group’s financial performance
objectives were only met in part. Neither Crown
Melbourne nor Crown Perth met their financial
performance objectives. However, Crown Resorts Limited
achieved its normalised NPAT budget, largely as a result of
the performance of MCE’s businesses in Macau.
Additionally, some important non-financial objectives were
achieved, including good progress on the Crown Towers
Perth project, the Crown Sydney project and other
development projects. Accordingly, STI bonuses were not
paid at Crown Melbourne and Crown Perth, except for
some key executives who were paid reduced STI bonuses
(generally 70% of their target STI bonus) where retention
was considered an issue. At Crown Resorts Limited,
reduced bonuses were paid (generally at 80% of target
STI bonuses), except for some executives who achieved
significant non-financial objectives, who received their
target STI bonus. 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 2014
STI bonuses see page 75.
Long term Incentives
2010 Crown Long Term Incentive Plan (2010 Crown LTI)
The 2010 Crown LTI was made available to selected senior
executives with effect from 1 July 2010. Approximately 16
senior executives in the Crown group continued to
participate in the 2010 Crown LTI. Most participants
commenced participating in the 2010 Crown LTI with
effect from 1 July 2010, but some executives who joined
the Crown group after this date participated on a pro rata
basis. A number of executives who had been participating
in the 2010 Crown LTI have left the Group and, under the
terms of the 2010 Crown LTI, ceased to participate in the
2010 Crown LTI.
A summary of the terms of the 2010 Crown LTI follows.
As noted in the following commentary, following an
assessment by the Nomination and Remuneration
Committee, the 2010 Crown LTI was modified. Further
detail regarding the modification follows the general
description of how the 2010 Crown LTI operated
pre-modification.
Operation of the 2010 Crown LTI
The award of a long term incentive bonus under the 2010
Crown LTI was 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 2010 Crown LTI, earnings per
share (EPS) excluded contribution from Melco Crown
Entertainment Limited (MCE) and was 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 were derived
The EPS Hurdles adopted in the 2010 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 2010 Crown LTI was specifically designed
to provide an incentive to senior executives participating in
the 2010 Crown LTI (Participants) to ensure the Four Year
Financial Plan from financial year 2011 to financial year
2014 was 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 were 98% of the EPS Target for
the relevant year in the Four Year Financial Plan. The EPS
Hurdle in financial year 2014 was 100% of the EPS Target
for the relevant year in the Four Year Financial Plan.
The Four Year Financial Plan upon which EPS Hurdles
were based was not varied during the life of the 2010
Crown LTI and remained the basis for determining the
2010 Crown LTI bonus payments.
Why earnings per share was used as the single measure
for 2010 Crown LTI
Crown elected to use earnings per share as the single
measure for its 2010 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 were aggregated with
group costs, interest and taxes to arrive at a Crown group
earnings per share target.
As a result, each executive knew with certainty what
performance hurdles needed to be met from their
respective business operations over an extended period in
order to meet the EPS Targets. In addition, as the
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
59
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
executive group collectively needed to achieve the
consolidated EPS Target, it fostered a cooperative
approach across businesses to optimise Crown group as
well as individual business unit outcomes.
The Plan rules provided that bonuses would only ultimately
be paid at the end of financial year 2014 either by way of
the transfer of shares acquired under the 2010 Crown LTI
or the payment of cash. See further below.
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
In developing the 2010 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 accrued
If an EPS Hurdle was achieved in respect of a Plan Year, a
Participant became entitled to a portion of the potential
maximum bonus (Maximum Bonus) which may be
achieved under the 2010 Crown LTI in accordance with
the following table:
plan Year
Plan Year 1
Plan Year 2
Plan Year 3
Plan Year 4
60
percentage
15%
20%
25%
40%
Effect of achieving an EPS Hurdle
If an EPS Hurdle was met in respect of a Plan Year, the
2010 Crown LTI provided that Crown would 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 was Plan Year 1, Plan Year 2 or Plan Year 3,
the 2010 Crown LTI provided that Crown pay the Plan Year
Bonus earned by the Participant to the nominated Trustee
and with an instruction that the Trustee 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 could
be transferred to the Participant).
In respect of Plan Year 4 the 2010 Crown LTI provided that
Crown would pay the Plan Year 4 Plan Year Bonus to the
Participant in cash and also advise the Trustee, who would
arrange for any shares held in trust to be transferred to the
relevant Participant. The Plan Year 4 Plan Year Bonus was
designed to be 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 was not met, the 2010 Crown LTI
provided 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.
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
Illustration
The following is an illustration of a range of outcomes which might have been achieved by a Participant under the 2010
Crown LTI. It does not include every permutation or combination of outcomes which the 2010 Crown LTI was designed to
achieve.
Key: 4 = Achieved 7 = 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?
4
4
4
4
7
4
4
4
7
7
4
4
7
7
7
4
7
7
7
7
4
60% shares
40% cash
4
60% shares
40% cash
7
60% shares
No cash
7
35% shares
65% cash
7
35% shares
25% cash
7
15% shares
85% cash
7
15% shares
45% cash
7 (cid:31)
60% shares
No cash
7
60% shares
No cash
7
35% shares
No cash
7
35% shares
No cash
7
15% shares
No cash
7
15% shares
No cash
7
No shares
No cash
4
7
4
7
4
7
7
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.
61
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
What happened to dividends earned on Crown shares acquired under the 2010 Crown LTI
All dividends received on shares held in trust were passed through to the Participant. As bonuses earned in the final year
of the 2010 Crown LTI (including any Carried Over Plan Year Bonuses) were to be paid in cash, no dividends applied in
respect of these bonuses.
What happened if an executive’s employment with Crown ceases
If a Participant’s employment with Crown ceased, then the Participant was not entitled to any part of his or her 2010 Crown
LTI bonus, except for where the Participant’s employment was terminated by Crown without cause, in which case the
Participant would have been entitled to any tranche (in the form of shares held on trust) which had vested prior to the date
of termination. There were no employees in this category.
How EPS Hurdles could be amended
The 2010 Crown LTI provides that 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 2010 Crown LTI from time to time.
How the 2010 Crown LTI ameliorated issues with “cliff’s edge” vesting
The key features of the 2010 Crown LTI were that:
• the EPS Hurdles for Plan Years 1, 2 and 3 were 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 were met, then any Carried
Over Plan Year Bonuses would vest and be paid to the relevant senior executive in cash.
Accordingly, when viewed as a whole, the Maximum Bonus under the 2010 Crown LTI consisted of four separate and
individually achievable targets, as well as a cumulative target. As a result, there were a range of potential outcomes
depending on performance against target in each year of the 2010 Crown LTI as well as the cumulative result.
This feature was 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 was not met.
Disclosure of historical EPS Targets
Set out below are the EPS Targets and EPS Hurdles which applied for financial years 2011, 2012, 2013 and 2014 together
with Crown’s actual EPS for financial years 2011, 2012, 2013 and 2014.
epS target
(2011 Four Year
Financial plan)
epS target
Growth (2011
Four Year
Financial plan)
epS Hurdle
(Crown LtI)*
actual epS
actual epS
Growth (from
previous year)
tranche
vested?
FY11
FY12
FY13
FY14
44.1 cents
48.7 cents
58.9 cents
68.8 cents
N/A
10.4%
20.9%
16.8%
43.2 cents
47.7 cents
57.7 cents
68.8 cents
42.3 cents
(3.0%)
43.9 cents
44.0 cents
47.9 cents
3.7%
0.2%
8.9%
No
No
No
No
* In financial year 2011, financial year 2012 and financial year 2013, the EPS Hurdle was 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 2010 Crown LTI, EPS for the purposes of measuring performance against EPS
Hurdles excludes significant items.
62
The Crown Nomination and Remuneration Committee conducted an annual review of EPS Hurdles during the life of the
2010 Crown LTI, to consider whether the Board should exercise its discretion to adjust any EPS Hurdle.
A final assessment of EPS Hurdles was conducted by the Nomination and Remuneration Committee at the conclusion of
the term of the 2010 Crown LTI, noting that the EPS Hurdle in respect of 2014 was not met. Following that assessment the
Nomination and Remuneration Committee resolved to modify the 2010 Crown LTI Rules. Details of that modification are
set out below.
The 2010 LTI Modification has no impact on the MCE Contribution component of the Plan which ceased on 30 June 2014
with entitlements to an MCE Contribution Bonus dealt with in accordance with the existing Plan rules. A summary of the
MCE Contribution Bonus follows.
MCE Contribution Bonus
At the commencement of the 2010 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) was dependent on MCE achieving certain MCE Contribution hurdles (MCE Contribution
Hurdles).
Mr Craigie’s maximum potential MCE Contribution Bonus was approximately 15% of his Maximum Bonus. For Mr Barton, it
was approximately 11% and for Mr Nisbet it was approximately 17%.
The MCE Contribution Hurdles were 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 was achieved in respect of a Plan Year, a Participant would become entitled to a portion of
their potential Maximum Bonus. The rules on the effect of achieving or not achieving MCE Contribution Hurdles were the
same as for the EPS Bonus.
The MCE Contribution Bonus was independent of the portion of the bonus which was referable to meeting the EPS
Hurdles (EPS Bonus). Accordingly, Mr Craigie, Mr Barton and Mr Nisbet were able to achieve all of their entitlement to the
MCE Contribution Bonus without achieving any part of the EPS Bonus.
Disclosure of MCE Contribution Targets
Set out below are the MCE Contribution Targets and MCE Contribution Hurdles for financial years 2011, 2012, 2013 and
2014 and MCE’s actual Contribution for financial years 2011, 2012, 2013 and 2014.
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
FY14
(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
US$116.3 million
34.8% US$116.3 million
US$267.0 million
154.7%
365.7%
64.2%
71.2%
Yes
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 became entitled to the maximum proportion of shares as part of the MCE Contribution Bonus portion of the
2010 Crown LTI. They were also entitled to a cash bonus in relation to financial year 2014.
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
63
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
Details of Participation of Senior Executives in 2010 Crown LTI
Of the Senior Executives named in this Report, four participated in the 2010 Crown LTI. Details of potential 2010 Crown LTI
cash bonuses are as follows:
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
Senior executive
Ken Barton
Rowen Craigie
Barry Felstead
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
$5,250,000
$540,000
$720,000
$900,000
$1,440,000
$787,500
$1,050,000
$1,312,500
$2,100,000
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;
• 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; and
• in financial year 2014, Crown did not meet the relevant EPS Hurdle, however, the 2010 Crown LTI has been modified as
described below to allow for a re-testing of the EPS Hurdle following the end of financial year 2015. The MCE
Contribution Hurdle for financial year 2014 was, however, achieved. Accordingly, an entitlement to 40% 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, 2013 and
2014 associated with the MCE Contribution Hurdle:
Senior executive
Ken Barton
Rowen Craigie
Barry Felstead
Todd Nisbet
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
vested in relation to
the financial year
ended 30 June 2014
$75,000
$270,000
Nil
$135,000
$100,000
$360,000
Nil
$180,000
$125,000
$450,000
Nil
$225,000
$200,000
$720,000
Nil
$360,000
64
In accordance with the rules of the 2010 Crown LTI, the vested component of the cash bonus for financial years 2011, 2012
and 2013 was applied by Crown to fund the purchase of Crown shares on market, which are held on trust for each of Mr
Craigie, Mr Barton and Mr Nisbet and which have been released to each of them following 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
Ken Barton
Rowen Craigie
Todd Nisbet
Shares acquired
with FY11 Bonus1
Shares acquired
with FY12 Bonus2
Shares acquired
with FY13 Bonus3
9,782
35,217
17,608
10,799
38,875
19,438
7,839
28,222
14,111
1. Shares acquired for an average price of $7.65 per share.
2. Shares acquired for an average price of $9.24 per share.
3. Shares acquired for an average price of $15.91 per share.
Modification to 2010 Crown LTI Rules
Having considered changes in the Crown Resorts group’s circumstances since the time the EPS Hurdles under the Plan
were adopted, upon the recommendation of the Nomination and Remuneration Committee, the Board resolved that the
rules of the 2010 Long Term Incentive Plan be modified by extending the time for achieving the Plan Year 4 EPS Hurdle for
an additional year (2010 LtI modification).
Given that the purpose of the 2010 Crown LTI was to assist in the recruitment, reward, retention and motivation of
executive and management employees of Crown and its Subsidiaries and given that no EPS Hurdles were met and no
bonuses were paid under the 2010 Crown LTI (with the exception of the MCE Contribution Bonuses), the Board considered
that it would be reasonable to give Participants a further opportunity to receive their Plan Year 4 Bonus in cash should the
Plan Year 4 EPS Hurdle (as described above) be achieved by the Crown Resorts Limited group in relation to the financial
year ending 30 June 2015, ie a one year extension.
The 2010 LTI Modification only applies to original Participants in the 2010 Crown LTI and no new employees are entitled to
the potential benefit of the 2010 LTI Modification.
1. a consumer price index (CPI) adjustment of 3.0% has been made to the Plan Year 4 EPS Hurdle approximating the CPI
movement from 1 July 2013 through to 30 June 2014 (Indexed Year 4 epS Hurdle);
2. If the Indexed Year 4 EPS Hurdle is achieved in relation to the financial year ending 30 June 2015, the Plan Year 4 Plan
Year Bonus will be paid by Crown to each Participant in cash. Conversely, if the Indexed Plan Year 4 EPS Hurdle is not
achieved, no bonus will be paid and the 2010 Crown LTI will be at an end;
3. Participants will cease to have any right to any Carried Over Plan Year Bonuses which have accrued under the Plan to
date; and
4. The Plan Rules will continue to apply to the extent necessary to give effect to the 2010 LTI Modification.
The Board considered that the achievement of the Indexed Year 4 EPS Hurdle would be of substantial value to
shareholders as it would require an increase in EPS for financial year 2015 of 48% which compares to an actual compound
annual EPS growth rate of 4% from financial year 2011 to financial year 2014.
2014 Crown Long Term Incentive Plan (2014 Crown LTI)
As noted above, the 2010 Crown LTI was put in place with effect from 1 July 2010 and was due to expire 30 June 2014.
Whilst the modification to the 2010 Plan rules has the effect of extending the testing date for the last EPS Hurdle under the
Plan to 30 June 2015, because the number of executives who continue to participate in that plan is relatively small, absent
a replacement plan, Crown would have effectively had no long term incentive plan in place from 1 July 2014. The Board
has therefore adopted a new long term incentive plan with effect from 1 July 2014.
The new 2014 Crown LTI is substantially the same as the 2010 Crown LTI, namely that the award of a long term incentive
bonus under the 2014 Crown LTI will be 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 2015, 30 June 2016, 30 June 2017 and 30 June 2018
(each a Plan Year).
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
65
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
Features of the 2014 Crown LTI
A summary of the features of the 2010 Crown LTI which are largely identical to the 2014 Crown LTI (except in relation to the
applicable testing years) has been provided above.
As with the 2010 Crown LTI, the 2014 Crown LTI excludes the contribution of MCE in the calculation of EPS. The EPS
Hurdles which will apply to the 2014 Crown LTI have been derived from the 2014 Four Year Financial Plan approved by the
Crown Resorts Board. The 2014 Four Year Financial Plan has been prepared on the same basis as described above and
the EPS Hurdles have also been derived in the same manner as described above.
The only material change is that there is no MCE Contribution Bonus under the 2014 Crown LTI.
When considering the features of the 2014 Crown LTI, the Crown Nomination and Remuneration Committee again
considered whether EPS is the appropriate performance measure for Crown. For the reasons described earlier in this
Report, the Nomination and Remuneration Committee maintained its view that EPS is the preferred measure of
performance for the 2014 Crown LTI.
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
Details of Participation of Senior Executives in 2014 Crown LTI
Of the Senior Executives named in this Report, five participate in the 2014 Crown LTI. Details of potential 2014 Crown LTI
cash bonuses are as follows:
Senior executive
John Alexander
Ken Barton
Rowen Craigie
Barry Felstead
Todd Nisbet
maximum
value over four
year period
4,500,000
4,050,000
9,000,000
6,300,000
6,300,000
30 June 2015
(15%)
30 June 2016
(20%)
30 June 2017
(25%)
30 June 2018
(40%)
675,000
607,500
1,350,000
945,000
945,000
900,000
810,000
1,800,000
1,260,000
1,260,000
1,125,000
1,012,500
2,250,000
1,575,000
1,575,000
1,800,000
1,620,000
3,600,000
2,520,000
2,520,000
The EPS Targets for the 2014 Crown LTI have not been disclosed in this Report. 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 will be disclosed
on a year by year basis commencing next year.
The achievability of the EPS Targets for the 2014 Crown LTI are considered to be of a similar standard to the EPS Targets
for the 2010 Crown LTI.
Relationship between policy and company performance
remuneration linked to performance
As detailed above in the sections on Fixed Remuneration and Performance Based Remuneration, 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 each of the 2010 Crown LTI and the 2014 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 2010 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;
66
• The 2010 Crown LTI was linked to predetermined EPS Hurdles in financial year 2011, financial year 2012, financial year
2013 and financial year 2014;
• The 2014 Crown LTI may be payable where Crown achieves predetermined EPS Hurdles in financial year 2015, financial
year 2016, financial year 2017 and financial year 2018; and
• A component of the 2010 Crown LTI was payable to key senior executives involved in managing the performance of
MCE, where MCE achieved predetermined MCE Contribution Targets.
This year, normalised EBITDA generated by Crown Melbourne and Crown Perth, Crown’s wholly owned Australian casinos,
grew by 2.0%. The compound average normalised EBITDA growth for Crown Melbourne and Crown Perth for the five year
period commencing from financial year 2009 through to financial year 2014 was 4.0%. Normalised Crown group NPAT grew
by 35.2% in financial year 2014. The compound average normalised NPAT growth for the Crown group for the five year period
commencing from financial year 2009 through to financial year 2014 was 17.9%.
The table and graph below set out information about movements in shareholder wealth for the years ended 30 June 2010 to
30 June 2014.
Year ended
30 June 2010
Year ended
30 June 2011
Year ended
30 June 2012
Year ended
30 June 2013
Year ended
30 June 2014
Share price at start of period
Share price at end of period
$7.27
$7.77
$7.77
$8.93
$8.93
$8.49
$8.49
$12.11
$12.11
$15.12
Full year dividend
37 cents1
37 cents2
37 cents3
37 cents3
37 cents3
Basic/diluted earnings per share4
38.54 cps
44.29 cps
69.78 cps
67.40 cps
96.44 cps
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$-
d
o
i
r
e
p
f
o
d
n
e
t
a
e
c
i
r
p
e
r
a
h
S
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
e
r
a
h
s
i
r
e
p
s
g
n
n
r
a
e
d
e
t
u
l
i
i
d
/
c
s
a
B
Year ended
30 June 2010
Year ended
30 June 2011
Year ended
30 June 2012
Year ended
30 June 2013
Year ended
30 June 2014
Basic/diluted earnings per share
Share price at end of period
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 significant items.
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
67
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
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 Committee, the Nomination
and Remuneration Committee, the Corporate Social Responsibility 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.
Set out below is a table showing Non-Executive Director remuneration for financial years 2014 and 2013.
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
Ben Brazil
Non-Executive Director
Helen Coonan
Non-Executive Director
Christopher Corrigan
Non-Executive Director
rowena Danziger1
Non-Executive Director
Geoffrey Dixon
Non-Executive Director
John Horvath1
Non-Executive Director
ashok Jacob2
Non-Executive Director
michael Johnston2
Non-Executive Director
Harold mitchell
Non-Executive Director
2014 totaLS
2013 totaLS
Notes:
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
120,000
120,000
120,000
100,000
45,833
110,000
210,000
210,000
140,000
140,000
200,833
190,000
-
-
-
-
116,100
101,750
952,766
971,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,100
10,800
11,100
9,000
4,240
9,900
17,775
-
12,950
-
17,775
16,470
-
-
-
-
15,000
8,250
89,940
54,420
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
total
131,100
130,800
131,100
109,000
50,073
119,900
227,775
210,000
152,950
140,000
218,608
206,470
-
-
-
-
131,100
110,000
1,042,706
1,026,170
1. 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.
2. Neither Mr Jacob nor Mr Johnston receives remuneration for their services to Crown.
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
68
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
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
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);
• 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
2014 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.
The Company did not obtain any remuneration recommendation from a remuneration consultant in relation to any of its key
management personnel during the financial year.
69
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
Summary of Contracts of employment applicable During the Year ended 30 June 2014
James D packer
John H alexander
Current position
Chairman
Fixed Remuneration
Base salary:
Nil.
executive Deputy Chairman (commenced
1 December 2007): Mr Alexander’s current
employment agreement with Crown Resorts
Limited has no fixed term.
$1,482,225 per annum
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.
Superannuation
Nil
Compulsory Superannuation Guarantee Contributions
up to the maximum contribution base, equating to
$17,775 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
Not applicable
2014 percentage
breakdown
of remuneration
Not applicable
post-employment
benefits
post-employment
restraint
Termination
Not applicable
Not applicable
By Senior Executive:
Not applicable
By Crown:
Not applicable
termination benefits Not applicable
payments made
prior to
commencement
Not applicable
Directors’ Fees
Nil
Mr Alexander participates in the 2014 Crown LTI. See
further page 59.
Fixed remuneration
(Includes voluntary and
compulsory
superannuation)
100%
Nil
StI
LtI
0%
0%
Crown may impose a restraint for various periods up to
12 months.
12 months’ notice.
12 months’ notice without cause; one month’s notice
for performance issues; three months’ notice due to
incapacity.
Nil
Nil
Nil
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
70
rowen B Craigie
Current position
Chief executive officer and managing Director (commenced 1 December 2007): Mr Craigie’s five year
employment agreement with Crown Resorts Limited will expire on 15 September 2015.
Fixed Remuneration
Base salary:
Superannuation
$2,982,225 per annum.
Compulsory Superannuation Guarantee Contributions up to the maximum contribution base, equating to
$17,775 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.
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.
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
LTI:
Mr Craigie participates in the 2010 Crown LTI as well as the 2014 Crown LTI. See further page 59.
2014 percentage
breakdown
of remuneration
Fixed remuneration
(Includes voluntary and compulsory superannuation)
122%
StI
32%
LtI
(54)%
During the 2014 financial year, Crown reassessed the total potential LTI payments and amended its
provisioning accordingly. This has resulted in a reversal of amounts previously expensed and, as a result of
this, each executive who participated in the 2010 Crown LTI must be shown to have a negative amount for the
LTI component of their F14 remuneration.
post-employment
benefits
Nil
post-employment
restraint
Termination
Crown may impose a restraint for various periods up to 24 months.
By Senior Executive:
12 months’ notice.
By Crown:
12 months’ notice without cause; one month’s notice for performance issues (following least three months’
notice to improve); three months’ notice for incapacity.
termination benefits 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
Nil
Directors’ Fees
Nil
71
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
Kenneth m Barton
Current position
Chief Financial officer (commenced 9 march 2010): Mr Barton’s employment agreement with
Crown Resorts Limited commenced on 9 March 2010 and expires in March 2015.
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
Fixed Remuneration
Base salary:
Superannuation
Non-monetary benefits
and other:
performance based
remuneration
STI:
$1,332,683 per annum.
Compulsory Superannuation Guarantee Contributions up to the maximum contribution base, equating to
$17,775 per annum.
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.
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 Barton participates in the 2010 Crown LTI as well as the 2014 Crown LTI. See further page 59.
2014 percentage
breakdown
of remuneration
Fixed remuneration
(Includes voluntary and compulsory superannuation)
104%
StI
37%
LtI
(41)%
During the 2014 financial year, Crown reassessed the total potential LTI payments and amended its provisioning
accordingly. This has resulted in a reversal of amounts previously expensed and, as a result of this, each
executive who participated in the 2010 Crown LTI must be shown to have a negative amount for the LTI
component of their F14 remuneration.
post-employment
benefits
post-employment
restraint
Termination
Nil
Nil
By Senior Executive:
6 months’ notice.
By Crown:
6 months’ notice without cause; one month’s notice for performance issues (following least 3 months’ notice to
improve); 3 months’ notice for incapacity.
termination benefits Nil
payments made prior
to commencement
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.
Directors’ Fees
Nil
72
Barry J Felstead
Current position
Chief executive officer – australian resorts and Chief executive officer – vIp International (from
1 august 2013): Mr Felstead’s current employment agreement with Crown Resorts Limited has no fixed
term.
Fixed Remuneration
Base salary:
Superannuation
$2,082,225 per annum
Compulsory Superannuation Guarantee Contributions up to the maximum contribution base, equating to
$17,775 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. Mr Felstead is entitled to a travel allowance of $50,000 per
annum.
performance based
remuneration
STI:
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 Felstead participates in the 2010 Crown LTI as well as the 2014 Crown LTI. See further page 59.
2014 percentage
breakdown
of remuneration
Fixed remuneration
(Includes voluntary andcompulsory superannuation)
StI
101%
29%
LtI
(30)%
During the 2014 financial year, Crown reassessed the total potential LTI payments and amended its provisioning
accordingly. This has resulted in a reversal of amounts previously expensed and, as a result of this, each
executive who participated in the 2010 Crown LTI must be shown to have a negative amount for the LTI
component of their F14 remuneration.
post-employment
benefits
Nil
post-employment
restraint
Termination
By Senior Executive:
By Crown:
Crown may impose various restraint periods up to a period of 12 months post-employment.
12 months’ notice.
12 months’ notice without cause; one month’s notice for performance issues; three months’ notice due to
incapacity.
termination benefits Nil
payments made prior
to commencement
Nil
Directors’ Fees
Nil
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
73
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
W. todd nisbet
Current position
executive vice president – Strategy and Development (from 9 august 2010): Mr Nisbet’s employment
agreement with Crown Resorts Limited is due to expire in November 2014.
Fixed Remuneration
Base salary:
Superannuation
$2,082,225 per annum.
Compulsory Superannuation Guarantee Contributions up to the maximum contribution base, equating to
$17,775 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.
Mr Nisbet is entitled to Relocation Benefits which assist with the relocation of him and his family from Nevada,
USA to Melbourne.
During Mr Nisbet’s employment with Crown, he is also 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 2010 Crown LTI as well as the 2014 Crown LTI. See further page 59.
2014 percentage
breakdown
of remuneration
Fixed remuneration
(Includes voluntary andcompulsory superannuation)
StI
82%
36%
LtI
(18)%
During the 2014 financial year, Crown reassessed the total potential LTI payments and amended its provisioning
accordingly. This has resulted in a reversal of amounts previously expensed and, as a result of this, each
executive who participated in the 2010 Crown LTI must be shown to have a negative amount for the LTI
component of their F14 remuneration.
post-employment
benefits
Nil
post-employment
restraint
Termination
By Senior Executive:
By Crown:
Crown may impose various restraint periods up to a period of up to 12 months post-employment.
6 months’ notice.
12 months’ notice without cause; one month’s notice for performance issues; three months’ notice due to
incapacity.
termination benefits Nil
payments made prior
to commencement
Nil
Directors’ Fees
Nil
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
74
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 2014 and 30 June 2013 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
Mr Alexander, Mr Craigie and Mr Barton did not receive an increase to their fixed remuneration in financial year 2014 as
compared with financial year 2013.
Mr Nisbet received an increase to his fixed remuneration of 8%, reflecting the increased scope of his responsibilities. Mr
Felstead received an increase to his fixed remuneration of 74%. Effective 1 August 2013, Mr Felstead, took over
responsibility for both Crown Melbourne and Crown Perth effective 1 August 2013, which significantly increased the scope
of his responsibilities.
Short Term Incentives (STI)
In financial year 2014, the Group’s financial performance objectives were only met in part. Neither Crown Melbourne nor
Crown Perth met their financial performance objectives. However, Crown Resorts Limited achieved its normalised NPAT
budget, largely as a result of the performance of MCE’s businesses in Macau. Additionally, some important non-financial
objectives were achieved, including good progress on the Crown Towers Perth project, the Crown Sydney project and
other development projects. Accordingly, STI bonuses were not paid at Crown Melbourne and Crown Perth, except for
some key executives who were paid reduced STI bonuses (generally 70% of their target STI bonus) where retention was
considered an issue. At Crown Resorts Limited, reduced bonuses were paid (generally at 80% of target STI bonuses),
except for some executives who achieved significant non-financial objectives, who received their target STI bonus. 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.
Long Term Incentives (LTI)
As summarised earlier, Senior Executives participated in the 2010 Crown LTI.
In accordance with relevant accounting standards, the 2010 Crown LTI is included in the remuneration for each Senior
Executive to the extent that it is considered more likely than not at the date of this financial report that the performance
condition and service condition will eventuate. During the 2014 financial year, Crown reassessed the total potential LTI
payments and amended its provisioning accordingly. This has resulted in a reversal of amounts previously expensed.
As explained earlier, the first, second and third tranches of the 2010 Crown LTI represents 15%, 20% and 25%
(respectively) of the total 2010 Crown LTI bonus for which each Senior Executive is eligible. The EPS Hurdle of the 2010
Crown LTI for financial years 2011, and 2012 and 2013 were not met. As explained above, as a result of the 2010 LTI
Modification, the time for achieving the Plan Year 4 EPS Hurdle has been extended to 30 June 2015. The MCE Contribution
Hurdles for financial years 2011, 2012, 2013 and 2014 were met, resulting in all of the MCE Contribution Bonuses of the
2010 Crown LTI for eligible Senior Executives vesting. Detail of the actual sums vested to relevant Senior Executives has
been provided earlier.
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
75
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
Short Term Benefits
Financial
Year
Salary &
Fees
Non
Monetary
Other
STI
% of
max STI
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
-
-
1,482,225
1,483,530
-
-
-
-
1,332,683
42,360
1,333,530
45,522
2,982,225
2,983,530
2,008,058
1,193,530
261,553
1,065,030
2,082,225
1,933,530
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
400,000
800,000
800,000
35,171
580,000
-
-
-
390,000
86,500
265,009 1,050,000
248,675
975,000
-
-
-
-
80%
80%
80%
72%
80%
20%
100%
100%
Post-
employment
Benefits –
Super-
annuation1
-
-
17,775
16,470
Long Term Incentives
Cash
Based
Equity
Based –
Crown LTI2
Termina-
tion
Benefits
-
-
-
-
-
-
-
-
100%
17,775
200,000
(755,000)
16,470
-
405,000
17,775
720,000
(2,055,000)
16,470
17,775
16,470
4,444
16,470
-
-
-
-
-
1,185,000
(612,000)
252,000
210,000
17,775
360,000
(874,500)
16,470
-
529,500
Total2
-
-
1,500,000
1,500,000
1,337,818
2,200,522
2,465,000
4,985,000
2,029,004
1,852,000
-
-
-
-
-
-
-
-
-
-
-
-
-
1,378,000
2,900,509
3,703,175
-
-
- 1,494,978
1,760,975
10,148,969
9,992,680
42,360
45,522
300,180 2,930,000
248,675 2,651,500
93,319 1,280,000
(4,296,500) 1,494,978
11,993,306
98,820
2,581,500
15,618,697
James Packer
Chairman
John Alexander
Executive Deputy Chairman
Ken Barton
Chief Financial Officer
Rowen Craigie
Chief Executive Officer
& Managing Director
Barry Felstead3
Chief Executive Officer -
Australian Resorts
Greg Hawkins4
Chief Executive Officer
Crown Melbourne Limited
Todd Nisbet5
Executive Vice President
– Strategy & Development
2014 TOTALS2
2013 TOTALS
Notes:
1. Long service leave accrued balances have increased during the financial year ended 30 June 2014 for the following Senior Executives:
Mr Alexander $24,920, Mr Barton $22,436, Mr Craigie $49,840, Mr Felstead $313,194, Mr Nisbet $34,888.
2. The 2010 Crown LTI has been included in total remuneration to the extent that it is considered more likely than not at the date of this financial
report that the performance condition and service condition will eventuate. During the 2014 financial year, Crown reassessed the total potential
LTI payments and amended its provisioning accordingly. This has resulted in a reversal of amounts previously expensed. Detail of the actual
sums vested to relevant Senior Executives has been provided earlier.
3. With effect from 1 August 2013, Mr Felstead was employed by Crown Resorts Limited in the role of Chief Executive Officer – Australian Resorts
and Chief Executive Officer – VIP International. His Salary & Fees figure reflects one month in his previous role and 11 months in his current
role.
4. As a result of a senior management restructure, Mr Hawkins’ position was made redundant and Mr Hawkins agreed to leave the group,
effective 27 September 2013. As no tranche of Mr Hawkins’ 2010 Crown LTI Bonus was paid, with no shares held in trust, Mr Hawkins was not
entitled to any part of his 2010 Crown LTI Bonus. Termination benefits set out above include payment in lieu of notice period and customary
entitlements including a payment under the company’s redundancy policy, accrued annual leave and long service leave.
5. 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.
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
76
Key Management Personnel Disclosures
Shareholdings of Key management personnel
Set out below is a summary of equity instruments held directly, indirectly or beneficially by KMPs, close family or controlled
entities. The Company does not have any options on issue.
30 June 2014
Crown Directors
Directors (Including
directors who left
the Board during
the year)
James D Packer
John H Alexander
Rowen B Craigie*
Rowena Danziger
Harold C Mitchell
Crown Executives
executives
Ken M Barton*
Barry J Felstead
Todd W Nisbet*
Balance
1 July 2013
364,270,253
256,549
74,092
30,896
114,887
Issued under
executive
Share plan other net Change
-
-
28,222
-
-
-
-
-
-
-
Balance
1 July 2013
20,581
-
37,046
Issued
under executive
Share plan
7,839
-
14,111
other net Change
-
-
-
Balance
30 June 2014
364,270,253
256,549
102,314
30,896
114,887
Balance
30 June 2014
28,420
-
51,157
* 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 have become entitled to have those shares transferred to them after 30 June 2014
30 June 2013
Crown Directors
Directors (Including
directors who left
the Board during
the year)
James D Packer*
John H Alexander*
Rowen B Craigie**
Rowena Danziger
Harold C Mitchell
Crown Executives
executives
Ken M Barton**
Barry J Felstead
Greg Hawkins
Todd W Nisbet**
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
Issued under
executive
Share plan other net Change
-
-
38,875
-
-
13,958,286
(249,498)
-
-
-
Issued
under executive
Share plan other net Change
10,799
-
-
19,438
-
-
-
-
Balance
30 June 2013
364,270,253
256,549
74,092
30,896
114,887
Balance
30 June 2013
20,581
-
1,509
37,046
* On market trade.
** 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 have become entitled to have those shares transferred to them after 30 June 2014.
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
r
77
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
remUneratIon report ContInUeD
Loans to Key management personnel
There have been no loans made, guaranteed or secured, directly or indirectly by the Company or any of its subsidiaries in
the reporting period in relation to KMPs, close family or controlled entities.
transactions entered into with Key management personnel
Other than as has been disclosed in Note 30 of the Financial Report, there have been no transactions entered into during
the reporting period between the Company or any of its subsidiaries and KMPs, close family and controlled entities.
Signed in accordance with a resolution of the Directors.
J D Packer
Director
R B Craigie
Director
Melbourne, 3rd day of September, 2014
r
e
m
u
n
e
r
a
t
i
o
n
r
e
p
o
r
t
78
Auditor’s Independence Declaration
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
Auditor’s Independence Declaration to the Directors of Crown Resorts Limited
In relation to our audit of the financial report of Crown Resorts Limited for the year ended 30 June 2014,
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.
Ernst & Young
David McGregor
Partner
3 September 2014
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
l
n
o
i
t
a
r
a
c
e
D
e
c
n
e
d
n
e
p
e
d
n
I
s
’
r
o
t
i
d
u
a
79
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
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 Resorts Limited
Report on the financial report
We have audited the accompanying financial report of Crown Resorts Limited, which comprises the
statement of financial position as at 30 June 2014, 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
I
n
d
e
p
e
n
d
e
n
t
a
u
d
i
t
o
r
’
s
r
e
p
o
r
t
80
Opinion
In our opinion:
a.
The financial report of Crown Resorts Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June 2014
and of its performance for the year ended on that date; and
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
2014. 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 Resorts Limited for the year ended 30 June 2014,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
David McGregor
Partner
Melbourne
3 September 2014
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
t
r
o
p
e
r
s
’
r
o
t
i
d
u
a
t
n
e
d
n
e
p
e
d
n
I
81
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
DIreCtorS’ DeCLaratIon ContInUeD
Directors’ Declaration
In accordance with a resolution of the Directors, we declare as follows:
In the opinion of the directors:
D
i
r
e
c
t
o
r
s
’
l
D
e
c
a
r
a
t
i
o
n
1.
the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001,
including:
(a)
(b)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance
for the year ended on that date; and
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 2014; 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 32 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, 3rd day of September, 2014
82
Financial Report
84
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
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
83
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Statement of Profit or Loss
For the year ended 30 June 2014
S
t
a
t
e
m
e
n
t
o
f
P
r
o
f
i
t
o
r
L
o
s
s
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
2014
$’000
2013
$’000
3,094,344
2,894,804
420
183
(2,510,763)
(2,467,540)
Note
3
3
3
2,10
284,252
147,911
868,253
575,358
3
(116,254)
(133,446)
751,999
441,912
2,5
(96,236)
(46,125)
655,763
395,787
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 declared
Current year interim dividend paid
2014
Cents
per share
2013
Cents
per share
90.03
90.03
54.34
54.34
Note
28
28
4
4
19.00
18.00
19.00
18.00
84
FINANCIAL REPORT 2014 CONTINUED
Statement of Comprehensive Income
For the year ended 30 June 2014
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
2014
$’000
2013
$’000
655,763
395,787
21
21
21
(40,778)
134,621
(15,619)
17,383
-
204
(56,397)
152,208
599,366
547,995
e
m
o
c
n
I
e
v
i
s
n
e
h
e
r
p
m
o
C
f
o
t
n
e
m
e
t
a
t
S
(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.
85
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Statement of Financial Position
As at 30 June 2014
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
2014
$’000
2013
$’000
24
177,780
205,511
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
341,553
257,459
12,901
31,289
-
12,639
17,476
1,568
563,523
494,653
211,980
126,822
457
925
85,066
89,671
1,541,708
1,403,037
3,096,335
2,865,462
647,039
649,511
231,808
204,572
131,184
112,212
59,431
62,780
6,005,008
5,514,992
6,568,531
6,009,645
345,874
296,581
103,531
118,837
81,395
53,642
138,792
120,262
1,499
-
708,533
551,880
138
138
1,639,270
1,553,868
189,411
202,235
32,815
16,703
44,304
4,619
1,878,337
1,805,164
2,586,870
2,357,044
3,981,661
3,652,601
446,763
446,763
(1,918)
(1,118)
394,597
450,994
3,142,219
2,755,962
3,981,661
3,652,601
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
S
t
a
t
e
m
e
n
t
o
f
F
n
a
n
c
a
i
i
l
P
o
s
i
t
i
o
n
86
FINANCIAL REPORT 2014 CONTINUED
Cash Flow Statement
For the year ended 30 June 2014
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Borrowing costs paid
Income tax paid
Note
2014
$’000
2013
$’000
3,044,801
2,846,300
(2,267,546)
(2,130,086)
94,405
11,872
3,328
9,842
(122,729)
(138,052)
(58,778)
(95,134)
Net cash flows from/(used in) operating activities
24b
702,025
496,198
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments in respect of licences
Payment for purchases of investments
Payment for acquisition of financial instruments
Payment for acquisition of controlled entities
Net proceeds from sale of equity investments
Loans to associated entities
Repayments of loans from 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
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
(401,847)
(253,620)
424
(5,000)
183
-
(24,051)
(66,938)
(61,372)
(63,308)
-
-
201
261,332
(11,551)
(12,644)
2,527
(2,552)
-
2,689
(566,529)
(68,998)
763,530
2,083,708
(660,115)
(2,191,326)
(269,506)
(269,506)
(166,091)
(377,124)
(30,595)
50,076
205,511
149,353
2,864
6,082
Cash and cash equivalents at the end of the financial year
24a
177,780
205,511
The above Cash Flow Statement should be read in conjunction with the accompanying notes.
t
n
e
m
e
t
a
t
S
w
o
F
h
s
a
C
l
87
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Statement of Changes in Equity
For the year ended 30 June 2014
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
$’000
Year ended
30 June 2014
Balance at 1 July 2013
446,763
(1,118) 2,755,962
628,908
(188,798)
(2,126)
13,010
3,652,601
-
-
-
-
-
-
655,763
-
-
-
655,763
-
(269,506)
(800)
-
-
-
-
-
-
-
-
-
655,763
(40,778)
(15,619)
-
(56,397)
(40,778)
(15,619)
-
599,366
-
-
-
-
-
(269,506)
-
(800)
446,763
(1,918) 3,142,219
628,908
(229,576)
(17,745)
13,010 3,981,661
Profit for the period
Other comprehensive
income
Total comprehensive
income for the period
Dividends paid
Shares acquired under
Long Term Incentive Plan
Balance at
30 June 2014
Year ended
30 June 2013
Balance at 1 July 2012
446,763
(480) 2,629,681
628,704
(323,419)
(19,509)
13,010
3,374,750
Profit for the period
Other comprehensive
income
Total comprehensive
income for the period
Dividends paid
Shares acquired under
Long Term Incentive Plan
Balance at
30 June 2013
-
-
-
-
-
-
395,787
-
-
-
-
395,787
-
-
204
134,621
17,383
-
152,208
-
395,787
204
134,621
17,383
-
547,995
-
(269,506)
(638)
-
-
-
-
-
-
-
-
(269,506)
-
(638)
446,763
(1,118) 2,755,962
628,908
(188,798)
(2,126)
13,010 3,652,601
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
S
t
a
t
e
m
e
n
t
o
f
C
h
a
n
g
e
s
i
n
E
q
u
i
t
y
88
FINANCIAL REPORT 2014 CONTINUED
Notes to the Financial Statements
For the year ended 30 June 2014
1. Summary of Significant Accounting Policies
(a) Basis of preparation
This financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of
the Corporations Act 2001, Australian Accounting Standards and other authorative pronouncements of the Australian
Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for derivative
financial instruments and investments that have been measured at fair value and investments in associates accounted for
using the equity method.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’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.
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
The financial report of Crown Resorts Limited and its controlled entities (the Group) for the year ended 30 June 2014 was
authorised for issue in accordance with a resolution of the directors on 3 September 2014 subject to final approval by a
subcommittee.
s
e
t
o
N
(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 2013:
-
-
-
-
-
-
AASB 10
AASB 11
AASB 12
AASB 13
AASB 119
–
–
–
–
–
Consolidated Financial Statements
Joint Arrangements
Disclosure of Interests in Other Entities
Fair Value Measurement
Employee Benefits
AASB 2012-2
–
Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial
Assets and Financial Liabilities
The adoption of these standards 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 2014 are outlined in the table below.
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 from the application of this
standard.
(1) Designates the beginning of the applicable annual reporting period unless otherwise stated.
89
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
1. Summary of Significant Accounting Policies continued
(b) Statement of compliance continued
Application
date of
standard (1)
Impact on Group financial report
1 January 2014 AASB 2013-3 amends the disclosure
Application
date for
Group (1)
1 July 2014
Reference
Title
AASB 2013-3
Amendments to
AASB 136 –
Recoverable Amount
Disclosures for
Non-Financial Assets
IFRS 15
Revenue from
Contracts with
Customers
1 January 2017
AASB 2014-1
Part A -Annual
Improvements
Annual Improvements
to IFRSs 2010–2012
Cycle
1 July 2014
2010–2012
Cycle
Amendments
to IAS 16 and
IAS 38
Clarification of
Acceptable Methods
of Depreciation and
Amortisation
1 January 2016
requirements in AASB 136 Impairment of
Assets. The amendments include the
requirement to disclose additional information
about the fair value measurement when the
recoverable amount of impaired assets is
based on fair value less costs of disposal.
Crown does not expect any significant impact
on the Group from the application of this
standard.
The standard specifies the accounting
treatment for all revenue arising from contracts
with customers and provides a model for the
recognition and measurement of gains and
losses on the sales of some non-financial
assets (e.g., disposals of property, plant and
equipment) that are not an output of the
entity’s ordinary activities. Crown does expect
any significant impact on the Group from the
application of this standard.
This standard sets out amendments to
Australian Accounting Standards arising from
the issuance by the International Accounting
Standards Board (IASB) of International
Financial Reporting Standards (IFRSs) Annual
Improvements to IFRSs 2010–2012 Cycle and
Annual Improvements to IFRSs 2011–2013
Cycle. Crown does expect any significant
impact on the Group from the application of
this standard.
IAS 16 and IAS 38 both establish the principle
for the basis of depreciation and amortisation
as being the expected pattern of consumption
of the future economic benefits of an asset.
Crown does expect any significant impact on
the Group from the application of this
standard.
1 July 2017
1 July 2014
1 July 2016
(1) Designates the beginning of the applicable annual reporting period unless otherwise stated.
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
90
FINANCIAL REPORT 2014 CONTINUED
1. Summary of Significant Accounting
Policies continued
(c) Basis of consolidation
The consolidated financial statements are those of the
consolidated entity, comprising Crown Resorts Limited (the
parent entity) and all entities that Crown Resorts Limited
controlled from time to time during the year and at
reporting date. Control is achieved when the Group is
exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect
those returns through its power over the investee.
The Group re-assesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control.
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.
(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.
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
91
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
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.
(g) Foreign currency translation
Both the functional and presentation currency of Crown
Resorts 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.
As at the reporting date the assets and liabilities of
overseas subsidiaries are translated into the presentation
currency of Crown Resorts 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.
1. Summary of Significant Accounting
Policies continued
(e) Income tax continued
N
o
t
e
s
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:
• when the deferred income tax asset relating to the
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.
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.
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
92
FINANCIAL REPORT 2014 CONTINUED
1. Summary of Significant Accounting
Policies continued
(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.
(i) Trade and other receivables
Trade receivables are recognised and carried at original
invoice amount less an allowance for any uncollectible
amounts.
An estimate for doubtful debts is made when there is
objective evidence that the full amount may not be
collected. Bad debts are written off when 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.
(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
(ii) The characteristics of the contractual cash flow.
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.
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.
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
93
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
1. Summary of Significant Accounting
(n) Intangible assets
Policies continued
Licences
(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.
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
having an indefinite useful life 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.
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
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
94
FINANCIAL REPORT 2014 CONTINUED
1. Summary of Significant Accounting
(q) Interest-bearing loans and borrowings
Policies continued
(n) Intangible assets continued
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.
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 6.3% (2013: 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.
(p) Trade and other payables
(s) Employee benefits
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.
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
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
95
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
1. Summary of Significant Accounting
Policies continued
derivatives, except for those that qualify as cash flow
hedges, are taken directly to profit or loss for the year.
N
o
t
e
s
(s) Employee benefits continued
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
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
96
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.
FINANCIAL REPORT 2014 CONTINUED
1. Summary of Significant Accounting
(y) Revenue
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.
(x) Contributed equity
Ordinary shares are classified as equity. Issued capital is
recognised at the fair value of the consideration received,
less transaction costs.
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.
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
97
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
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 9
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.
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
98
FINANCIAL REPORT 2014 CONTINUED
2. Segment Information
30 June 2014
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
VIP program play
Non Gaming
Intersegment
1,020,299
485,441
-
501,202
173,080
119,579
-
-
1,505,740
-
793,861
143,367
409,669
225,053
1,045
15
635,782
(1,194)
-
-
Operating revenue
1,931,170
883,574
120,624
15
2,934,189
143,367
-
-
-
-
-
-
1,505,740
937,228
635,782
(1,194)
3,077,556
17,208
1,931,170
883,574
120,624
15
2,951,397
143,367
- 3,094,764(2)
17,208
-
Operating expenses
(777,963)
(417,930)
(31,600)
(55,881)
(1,283,374)
(591,394)
(224,082)
(53,802)
-
(869,278)
(47,872)
1,194
-
-
-
-
-
(917,150)
(1,283,374)
1,194
561,813
241,562
35,222
(55,866)
782,731
95,495
-
878,226
(179,575)
(60,907)
(1,164)
(3,285)
(244,931)
-
-
(244,931)
382,238
180,655
34,058
(59,151)
537,800
95,495
-
633,295
-
-
-
-
(33,730)
(33,730)
(32,772)
(32,772)
287,870
(3,618)
-
284,252
(99,046)
-
-
(99,046)
(86,604)
(29,409)
19,777
(96,236)
Profit/(loss) after tax
382,238
180,655
34,058
(59,151)
640,020
62,468
(46,725)
655,763
Capital expenditure
183,901
183,070
544
46,610
414,125
Investments in associates
-
-
- 1,541,708
1,541,708
-
-
-
-
414,125
1,541,708
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), pre-opening costs from Melco Crown, legal settlement costs and asset
impairments (refer footnote 3 below). 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, commissions & other expenses, income tax expense
and equity accounted share of associates’ results.
(2) Total revenue of $3,094.8 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.
(3) Significant items consist of legal settlement costs of $33.7m ($23.6m net of tax) and asset impairments of $32.8m ($23.1m net of tax). Refer
note 3.
Interest revenue
Total revenue
Segment result
Gaming taxes,
commissions & other
Intersegment
Earnings before interest, tax,
depreciation and amortisation
"EBITDA"
Depreciation and
amortisation
Earnings before interest and
tax "EBIT"
Legal Settlements
Asset Impairments
Equity accounted share of
associates' net profit/(loss)
Net interest income/
(expense)
Income tax benefit/(expense)
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
99
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
2. Segment Information continued
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
–
Interest revenue
Total revenue
Segment result
Gaming taxes,
commissions & other
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)
Operating expenses
(764,564)
(414,281)
(26,325)
(65,868)
(1,271,038)
(606,770)
(203,077)
(55,196)
–
(865,043)
2,321
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, commissions & other
expenses, 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.
–
–
–
790,066
611,337
(3,743)
– 2,881,951
–
13,036
–
(862,722)
– (1,271,038)
–
–
–
–
3,743
751,934
(238,127)
513,807
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
100
FINANCIAL REPORT 2014 CONTINUED
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
Legal settlement costs
Asset impairment
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 foreign currency (gains)/losses
2014
$’000
2013
$’000
2,673,761
2,498,042
376,410
355,520
17,208
13,036
-
3,328
26,965
24,878
3,094,344
2,894,804
420
183
138,220
131,211
2,246,875
2,168,218
-
99,396
33,730
32,772
59,166
-
-
68,715
2,510,763
2,467,540
87,276
80,535
140,430
140,374
227,706
220,909
14,413
2,812
17,225
14,413
2,805
17,218
244,931
238,127
126,079
143,232
(9,825)
(9,786)
116,254
133,446
3,546
52,150
3,218
48,462
753,550
722,147
(874)
(2,818)
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
101
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
3. Revenue and Expenses continued
N
o
t
e
s
(e) Significant items - income / (expense)
Legal settlements (net of tax)
Asset impairment (net of tax)
Loss on disposal of investment in Echo (net of tax)
Crown's share of Melco Crown's development and refinance costs
4. Dividends Paid and Declared
2014
$’000
2013
$’000
(23,611)
(23,114)
-
-
-
-
(69,577)
(25,594)
(46,725)
(95,171)
2014
$’000
2013
$’000
(a) Dividends declared and paid during the financial year
Prior year final dividend (paid 11 October 2013)
Paid 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
Current year interim dividend (paid 11 April 2014)
Paid at 18 cents (2013: 18 cents) per share franked at 50% (2013: 50% franked) at the
Australian tax rate of 30% (2013: 30%)
Total dividends appropriated
131,111
131,111
269,506
269,506
(b) Dividends declared and not recognised as a liability
Current year final dividend (expected to be paid 10 October 2014)
Declared at 19 cents (2013: 19 cents) per share and franked at 50% (2013: 50% franked) at
the Australian tax rate of 30% (2013: 30%)
138,395
138,395
(c) Franking credits
The tax rate at which the final dividend will be franked is 30% (2013: 30%). The franking
account disclosures have been calculated using the franking rate applicable at 30 June 2014.
The amount of franking credits available for the subsequent financial year:
Franking account balance as at the end of the financial year at 30% (2013: 30%)
7,359
24,922
Franking credits that will arise from the payment of income taxes payable as at the end of the
financial year
68,253
15,714
Franking debits that will arise from the refund of income taxes receivable as at the end of the
financial year
Total franking credits
(1,719)
(21,469)
73,893
19,167
The amount of franking credits available for future reporting periods:
Impact on the franking account of dividends declared 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
(29,656)
(29,656)
44,237
(10,489)
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
102
FINANCIAL REPORT 2014 CONTINUED
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:
2014
$’000
2013
$’000
s
t
n
e
m
e
t
a
t
S
l
Profit before income tax
751,999
441,912
Prima facie income tax expense on profit at the Australian rate of 30% (2013: 30%)
225,600
132,574
Tax effect of:
Non deductible depreciation and amortisation
Share of associates' net losses/(profits)
Differences in foreign tax rates
Deferred income tax adjustment
Income tax (over)/under provided in prior years
Franking credits
Other items - net
Income tax expense
Income tax expense comprises:
Current expense
Deferred expense
Adjustments for current income tax of prior periods
Tax on significant items
(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
Other receivables
Other provisions
Prepaid casino tax
Licences and intangibles
Land and buildings
Property, plant & equipment
Other
Net deferred income tax assets/(liabilities)
2,242
2,242
(85,276)
(44,373)
(27,125)
(29,070)
(16,696)
1,042
-
(3,551)
(2,881)
(7,174)
(1,415)
(3,778)
96,236
46,125
147,324
85,999
(32,353)
1,042
(2,881)
(7,174)
(19,777)
(29,819)
96,236
46,125
131,184
112,212
(189,411)
(202,235)
(58,227)
(90,023)
26,947
29,549
24,822
26,425
14,582
27,202
24,125
26,920
(16,409)
(17,230)
(101,050)
(105,241)
(80,447)
(75,111)
14,119
17,817
3,371
11,359
(58,227)
(90,023)
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
103
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
For the year ended 30 June 2014
5. Income Tax continued
N
o
t
e
s
Notes to the Financial Statements continued
(d) Movements in deferred income tax assets and liabilities during
the financial year
Carrying amount at the beginning of the year
Tax income / (expense) during the period recognised in profit or loss
Acquisitions
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
Tax losses arising in Australia for offset against future capital gains
Foreign income tax losses for offset against future foreign profits
Total tax losses not brought to account
Potential tax benefit at respective tax rates
(f) Unrecognised temporary differences
2014
$’000
2013
$’000
(90,023)
(92,965)
32,353
2,881
(545)
(12)
-
61
(58,227)
(90,023)
743,819
801,992
261,389
253,985
1,005,208
1,055,977
314,632
329,492
At 30 June 2014, there is no recognised or unrecognised deferred income tax liability (2013: $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 Resorts Limited and its 100% owned Australian resident subsidiaries have formed a tax consolidated group with
effect from 1 July 2007. Crown Resorts Limited is the head entity of the tax consolidated group. Members of the group
have entered into a tax sharing arrangement with Crown Resorts Limited in order to allocate income tax expense between
Crown Resorts 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 Resorts Limited.
6. Trade and Other Receivables
Current
Trade receivables
Provision for doubtful debts (a)
Other receivables
2014
$’000
2013
$’000
426,946
291,372
(102,812)
(57,605)
324,134
233,767
17,419
23,692
341,553
257,459
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
104
FINANCIAL REPORT 2014 CONTINUED
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
2014 – consolidated
Current
Past due not impaired
Considered impaired
2013 – 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)
2014
$’000
(57,605)
(44,978)
745
(974)
2013
$’000
(31,389)
(27,354)
1,365
(227)
(102,812)
(57,605)
0-30 days
$’000
>30 days
$’000
Total
$’000
91,377
-
91,377
-
88
232,757
232,757
102,724
102,812
91,465
335,481
426,946
86,783
-
86,783
-
146,984
146,984
425
57,180
57,605
87,208
204,164
291,372
2014
$’000
2013
$’000
141,200
117,059
70,780
9,763
211,980
126,822
2014
$’000
2013
$’000
12,901
12,639
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
105
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
8. Other Financial Assets
Current
Receivable on forward exchange contracts
Non-current
Receivable on interest rate swaps
2014
$’000
-
-
457
457
2013
$’000
1,568
1,568
925
925
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 (USA)
Shares - unlisted (Australia)
Shares - unlisted (North America)
2014
$’000
2013
$’000
34,277
-
50,789
85,066
-
36,353
53,318
89,671
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.
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. Refer to note 34 for further information regarding the valuation
techniques.
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)
2014
$’000
2013
$’000
1,932
5,314
1,539,776
1,397,723
1,541,708
1,403,037
7,059,056
4,562,303
7,059,056
4,562,303
(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.
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
106
FINANCIAL REPORT 2014 CONTINUED
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
2014
30 June
2013
33.6
50.0
50.0
33.7
50.0
50.0
Melco Crown Entertainment Ltd and Betfair Australasia Pty Ltd are accounted for using the equity method in these
consolidated financial statements. 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 2014 for Aspers Group is $20.2 million (2013: $12.1 million).
Summarised financial information in respect of each of the Group’s material associates is set out below.
Melco Crown Entertainment Ltd:
Revenue
Profit/(loss) for the year
Other comprehensive income for the year
Total comprehensive income for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Reconciliation of net asset to carrying mount:
Proportion of Crown's ownership interest in MCE
Crown's share of net assets
Non-controlling interest
Other
Carrying amount of investment
2014
$’000
2013
$’000
7,256,138
6,347,423
855,845
480,226
(3,272)
(9,018)
852,573
471,208
3,295,573
3,293,109
6,527,650
5,801,281
(1,325,453)
(1,297,811)
(3,030,804)
(3,059,785)
5,466,966
4,736,794
33.6%
33.7%
1,836,900
1,596,300
(254,742)
(179,604)
(42,382)
(18,973)
1,539,776
1,397,723
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
107
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
10. Investments in Associates continued
Carrying amount of investment in Melco Crown Entertainment Ltd
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
Dividends Received
2014
$’000
2013
$’000
1,397,723
1,081,944
-
16,563
287,634
149,397
(51,176)
149,819
(94,405)
-
Carrying amount of investment in associates at the end of the financial year
1,539,776
1,397,723
Aggregate financial information in respect of each of the Group’s associates which are not individually material are set out
below.
Carrying amount of investment
Balance at the beginning of the financial year
Share of associates’ net profit/(loss) for the year
Carrying amount of investment in associates at the end of the financial year
Impairment Testing
2014
$’000
2013
$’000
5,314
(3,382)
1,932
6,800
(1,486)
5,314
Based on detailed impairment testing performed, there has been no impairment charge during the year (2013: $nil).
For the purposes of impairment testing, management uses a value in use calculation using a discounted cash flow
methodology covering a specified period, with an appropriate residual value at the end of that period. The methodology
utilises cash flow forecasts 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 3.0% (2013: 3.5%). Post-tax discount rates of between 10% and 13% were used in the impairment review
calculations (2013: 10% - 13%).
Any reasonable possible change in key assumptions used would not cause the carrying amount of the investments in
associates to exceed their recoverable amounts.
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
108
FINANCIAL REPORT 2014 CONTINUED
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
s
t
n
e
m
e
t
a
t
S
l
Year ended 30 June 2014
At 1 July 2013, net of accumulated
depreciation and impairment
Additions
Disposals
1,080,390
933,366
738,920
101,437
11,349
2,865,462
71,978
50,940
161,571
129,636
-
-
-
-
-
-
-
-
-
-
414,125
-
(680)
(227,706)
-
-
-
-
(32,772)
75,955
1,271
-
Depreciation expense
(27,827)
(59,449)
(139,750)
Impairment
Acquisition of subsidiary
Exchange differences
-
75,000
-
-
-
977
(32,772)
955
294
Reclassification/ transfer
23,918
35,027
16,278
(75,223)
At 30 June 2014, net of
accumulated depreciation and
impairment
At 1 July 2013
1,223,459
960,861
745,496
155,850
10,669
3,096,335
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
At 30 June 2014
Cost (gross carrying amount)
1,521,603
1,527,192
2,095,782
155,850
11,545
5,311,972
Accumulated depreciation and
impairment
(298,144)
(566,331)
(1,350,286)
-
(876)
(2,215,637)
Net carrying amount
1,223,459
960,861
745,496
155,850
10,669
3,096,335
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
109
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
11. Property, Plant and Equipment continued
Year ended 30 June 2013
At 1 July 2012, net of accumulated
depreciation and impairment
Additions
Disposals
Depreciation expense
Exchange differences
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
1,022,193
854,182
799,898
128,106
-
2,804,379
5,042
79,495
106,558
78,239
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
-
4,590,714
Accumulated depreciation and
impairment
(226,030)
(458,539)
(1,101,766)
-
Net carrying amount
1,022,193
854,182
799,898
128,106
-
-
(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
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
110
FINANCIAL REPORT 2014 CONTINUED
12. Licences
Year ended 30 June 2014
At 1 July 2013, net of accumulated amortisation and impairment
Additions
Amortisation expense
At 30 June 2014, net of accumulated amortisation and impairment
At 1 July 2013
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
At 30 June 2014
Cost (gross carrying amount)
Additions
Accumulated amortisation and impairment
Net carrying amount
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
Casino
Licence
$’000
649,511
5,000
(7,472)
647,039
794,899
(145,388)
649,511
794,899
5,000
(152,860)
647,039
656,983
(7,472)
649,511
794,899
(137,916)
656,983
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 having an
indefinite useful life and no amortisation is charged. The addition relates to the deposit paid in relation to the Crown
Sydney Hotel Resort.
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
111
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
13. Other Intangible Assets
N
o
t
e
s
Casino
Management
Agreement (1)
$’000
Goodwill (1)
$’000
Other
$’000
Total
$’000
Year ended 30 June 2014
At 1 July 2013, net of accumulated amortisation and impairment
60,762
141,718
2,092
204,572
Business acquisitions
Additions
Exchange differences
Amortisation expense
26,855
-
4,370
-
-
-
-
(6,941)
-
26,855
3,030
-
(78)
3,030
4,370
(7,019)
At 30 June 2014, net of accumulated amortisation and
impairment
91,987
134,777
5,044
231,808
At 1 July 2013
Cost (gross carrying amount)
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
At 30 June 2014
Cost (gross carrying amount)
91,987
245,279
5,843
343,109
Accumulated amortisation and impairment
-
(110,502)
(799)
(111,301)
Net carrying amount
91,987
134,777
5,044
231,808
Year ended 30 June 2013
At 1 July 2012, net of accumulated amortisation and impairment
56,950
148,659
2,163
207,772
Exchange differences
Amortisation expense
3,812
-
-
(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)
56,950
245,279
2,812
305,041
Accumulated amortisation and impairment
-
(96,620)
(649)
(97,269)
Net carrying amount
56,950
148,659
2,163
207,772
(1) Purchased as part of a business combination
Goodwill is considered to have an indefinite life and is tested annually for impairment (see note 14). The goodwill balance at
30 June 2014 is allocated to Crown Melbourne $26.9 million (2013: $nil), Crown Perth $11.9m (2013: $11.9 million) and
Crown Aspinall’s $53.2 million (2013: $48.9 million).
The useful life of the Crown Melbourne casino management agreement is 34 years, and is amortised on a straight line basis.
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
112
FINANCIAL REPORT 2014 CONTINUED
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 a value in use calculation 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% (2013: 2.5%).
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
2014
$’000
2013
$’000
100,800
100,800
(46,103)
(43,369)
54,697
57,431
4,734
5,349
59,431
62,780
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
113
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
16. Trade and Other Payables
Current - unsecured
Trade and other payables
Deferred Income
Non-current - unsecured
Other
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
2014
$’000
2013
$’000
345,008
296,411
866
170
345,874
296,581
138
138
138
138
2014
$’000
2013
$’000
102,846
80,726
685
669
103,531
81,395
424,209
331,549
1,205,023
1,211,613
10,038
10,706
1,639,270
1,553,868
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.
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
114
FINANCIAL REPORT 2014 CONTINUED
17. Interest-Bearing Loans and Borrowings continued
Financing and Credit Facilities
Unsecured credit facilities are provided as part of the overall debt funding structure of the Crown Group as follows:
Facility Type
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
220,000
122,846
24,078
73,076 Feb 15 / Oct 16
1,250,000
250,000
154,209
154,209
-
-
185,000
-
185,000
1,000,000
2016 - 2019
-
-
2015 - 2016
June 2021
1,809,209
527,055
209,078
1,073,076
174,634
174,634
300,000
300,000
518,300
518,300
212,089
212,089
1,205,023
1,205,023
-
-
-
-
-
July 2036
July 2017
Sept 2072
2015 - 2020
-
-
-
-
-
Total at 30 June 2014
3,014,232
1,732,078
209,078
1,073,076
Total at 30 June 2013
2,958,162
1,623,888
207,702
1,126,572
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 24(b) for a summary of Crown’s overdraft facilities.
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
115
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
Employee
Entitlements
$’000
Other
$’000
Total
$’000
145,796
18,770
164,566
99,871
(97,385)
5,555
105,426
(1,000)
(98,385)
148,282
23,325
171,607
119,249
19,543
138,792
29,033
3,782
32,815
148,282
23,325
171,607
103,163
17,099
120,262
42,633
1,671
44,304
145,796
18,770
164,566
2014
$’000
1,332
167
1,499
2,834
13,869
16,703
2013
$’000
-
-
-
679
3,940
4,619
For the year ended 30 June 2014
18. Provisions
N
o
t
e
s
At 1 July 2013
Arising during the year
Utilised during the year
At 30 June 2014
Current 2014
Non-current 2014
At 30 June 2014
Current 2013
Non-current 2013
At 30 June 2013
19. Other Financial Liabilities
Current
Payables on forward exchange contracts
Payables on interest rate swaps
Non-current
Payables on interest rate swaps
Payables on cross currency swaps
Other financial liabilities are outlined in note 34.
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
116
FINANCIAL REPORT 2014 CONTINUED
20. Contributed Equity
Issued share capital
Ordinary shares fully paid
Shares held in Trust
Balance at beginning of the financial year
Shares acquired by the Crown Resorts Limited Long Term Incentive Plan
Balance at the end of the financial year
Issued share capital
Ordinary shares fully paid
Terms and Conditions of Contributed Equity
2014
$’000
2013
$’000
446,763
446,763
s
t
n
e
m
e
t
a
t
S
l
(1,118)
(800)
(480)
(638)
(1,918)
(1,118)
2014
No.
2013
No.
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 2014, the Group paid dividends of $269.5 million (2013: $269.5 million). The Group’s dividend policy is to pay the higher
of 37 cents per share and 65% of normalised full year NPAT (excluding profits from associates but including dividends received
from associates), subject to the company’s financial position.
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
117
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
21. Reserves and Retained Earnings
Foreign currency translation reserve
Employee equity benefits reserve
Net unrealised gains reserve
Cash flow hedge reserve
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
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
Employee Equity Benefits Reserve
2014
$’000
2013
$’000
(229,576)
(188,798)
13,010
13,010
628,908
628,908
(17,745)
(2,126)
394,597
450,994
(188,798)
(323,419)
(40,778)
134,621
(229,576)
(188,798)
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
Balance at the end of the financial year
628,908
628,704
-
204
628,908
628,704
(2,126)
(2,790)
(9,929)
(2,900)
(19,509)
11,577
4,575
1,231
(17,745)
(2,126)
118
FINANCIAL REPORT 2014 CONTINUED
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. Business Combinations
Acquisition of Capital Club Pty Ltd
2014
$’000
2013
$’000
2,755,962
2,629,681
655,763
395,787
3,411,725
3,025,468
(269,506)
(269,506)
3,142,219
2,755,962
On 1 December 2013, Crown acquired Capital Club Pty Ltd and its controlled entities (“Capital Club”), the owner and
operator of the Capital Golf Club and the Melbourne Golf Academy. The purchase price (inclusive of acquisition costs) was
$67.6 million, resulting in Crown owning 100% of the ordinary shares in Capital Club. Crown had previously acquired an
exclusive corporate membership share in Capital Club for $36.4 million.
The initial accounting for the business combination requires the identification of fair values to be assigned to Capital Club’s
identifiable assets, liabilities and contingent liabilities. In accordance with Australian Accounting Standards, Crown will
recognise any adjustments to these provisional fair values as a result of completing the initial accounting within 12 months
of the acquisition date.
Based on the provisional fair values, Capital Club’s net assets at the date of acquisition were $77.1 million, resulting in
$26.9 million of goodwill. The acquisition of Capital Club will provide Crown with full and exclusive access to the golf
course to entertain guests and international VIP patrons, as well as the ownership of the freehold land associated with the
golf course. None of the goodwill recognised is expected to be deductible for income tax purposes.
The financial statements include the results of Capital Club for the seven month period from the acquisition date.
The provisional fair value of the identifiable assets and liabilities of Capital Club as at the date of acquisition were:
Cash and cash equivalents
Other current assets
Property, plant and equipment
Deferred tax assets
Trade and other payables
Deferred tax liabilities
Fair value of identifiable net assets
Goodwill arising on acquisition
Consideration transferred for acquisition of identifiable net assets
Net Cash Flow - Acquisition of subsidiary
Cash Paid
Cash Acquired
Net Cash Flow - Acquisition of subsidiary
2014
$’000
4,311
337
75,955
174
80,777
2,942
718
3,660
77,117
26,855
103,972
67,619
(4,311)
63,308
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
119
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
23. Expenditure Commitments
(a) Capital expenditure commitments
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
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
2014
$’000
2013
$’000
234,675
288,890
89,155
20,000
523,565
109,155
At 30 June 2014, 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
2014
$’000
3,236
6,458
11,316
21,010
2013
$’000
3,538
6,851
11,373
21,762
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 9 years (2013: 10 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.
(c) Non-cancellable finance lease commitments
Payable within one year
Payable after one year but not more than five years
2014
$’000
669
10,037
10,706
2013
$’000
669
10,706
11,375
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.
l
S
t
a
t
e
m
e
n
t
s
120
FINANCIAL REPORT 2014 CONTINUED
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
24. Cash Flow Statement Reconciliation
(a) Cash balance represents:
• cash on hand and at bank
• deposits at call
2014
$’000
2013
$’000
159,905
187,651
17,875
17,860
177,780
205,511
The above closing cash balances includes $110.9 million (2013: $118.5 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 $66.9 million (2013:
$87.0 million) for other purposes.
(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
Impairment of assets
Net loss on disposal of investments
Net mark-to-market (gain)/loss on investments
Dividends received from associates
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
2014
$’000
2013
$’000
655,763
395,787
227,706
220,909
17,225
17,218
(420)
381
(183)
(1,189)
(284,252)
(147,911)
32,772
-
-
69,577
(9,995)
94,405
-
-
(157,777)
45,207
(262)
(13,197)
(18,972)
(2,531)
56,560
65,195
7,041
(12,824)
(91,525)
26,216
(789)
(1,458)
428
(2,574)
52,368
(46,956)
9,650
(3,370)
702,025
496,198
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
As at 30 June 2014 there were no drawn down amounts on the overdraft facilities (2013: nil).
2014
2013
A$20 million A$20 million
US$10 million US$10 million
£20 million
£20 million
121
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
25. Events After the Reporting Period
N
o
t
e
s
On 8 July 2014 Crown was issued with a Restricted Gaming Licence by the New South Wales Independent Liquor and
Gaming Authority (“ILGA”) for the Crown Sydney Hotel Resort at Barangaroo South. Subsequently, Crown paid a Licence
Fee to the New South Wales Government of $100 million (of which a $5 million deposit was paid in July 2013).
On 4 August 2014, Crown announced that a majority-owned subsidiary had acquired a 34.6 acre vacant site on Las Vegas
Boulevard, which was formerly occupied by the New Frontier casino. The site was acquired through a foreclosure auction
initiated by lenders to the former owner of the site.
On 22 August 2014, Crown announced that it had reached agreement with the Victorian Government on a number of
reforms to the Melbourne Casino Licence, whereby the licence term will be extended to 2050, “super tax” on international
and interstate VIP program play will be removed, Crown Melbourne will be entitled to additional gaming product and Crown
will make agreed specified payments to the State of Victoria.
Subsequent to 30 June 2014, the directors of Crown declared a final dividend on ordinary shares in respect of the year
ending 30 June 2014. The total amount of the dividend is $138.4 million, which represents a dividend of 19 cents per share
franked at 50%. No part of the unfranked portion of the dividend will consist of conduit foreign income.
26. Contingent Liabilities and Related Matters
The Group has no contingent liabilities at 30 June 2014.
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.
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
Amounts received, or due and receivable, by non Ernst & Young audit firms for:
Auditing services
2014
$’000
780
4,146
2013
$’000
774
5,725
99
115
192
18
79
14
5,235
6,707
84
76
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
122
FINANCIAL REPORT 2014 CONTINUED
28. Earnings Per Share (EPS)
The following reflects the income and share data used in the calculations of basic and
diluted EPS:
Net profit / (loss) after tax used in calculating basic and diluted EPS ($'000)
655,763
395,787
Weighted average number of ordinary shares used in calculating basic and diluted EPS ('000)
728,394
728,394
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.
2014
2013
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 (resigned 29 November 2013)
Chief Executive Officer and Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Subsequent to 30 June 2014, the Board approved the appointment of Mr Andrew Demetriou as a director, subject to
receipt of all necessary regulatory approvals. Mr Demetriou’s appointment will only become effective once the necessary
approvals have been received.
(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
Termination benefits
Long term incentives
Further details are contained in the Remuneration Report.
2014
$
2013
$
13,421,509
12,938,377
93,319
98,820
1,494,978
-
(3,016,500)
2,581,500
11,993,306
15,618,697
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
123
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
30. Related Party Disclosures
(a) Parent entity
Crown Resorts 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% (2013: 50.01%) of the Company’s fully paid
ordinary shares.
(d) Key management personnel
Disclosures relating to key management personnel are set out in note 29, and in the Remuneration Report.
(e) 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.
(f) Transactions with related parties
The continuing operations have had the following transactions with related parties:
(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 (2013: $0.1 million). CPH paid costs on behalf of Crown to third parties totalling $3.2 million during the year (2013:
$6.6 million). At 30 June 2014 there were no amounts owing to CPH (2013: $nil).
Crown and its controlled entities provided CPH with hotel and banqueting services of $0.1 million during the year (2013:
$0.1 million). At 30 June 2014 there were no amounts owing from CPH (2013: $nil).
(ii) Associates
Crown did not acquire any additional equity in Melco Crown during 2014 (2013: $16.6 million acquired from Melco Crown
SPV Limited).
Crown provided Melco Crown IT and related services of $1.0 million (2013: $0.6 million) at cost during the year. During the
year Crown paid costs on behalf of Melco Crown to third parties totaling $10.3 million (2013: $ nil). At 30 June 2014 Crown
had $10.3 million receivable from Melco Crown (2013: $nil).
During the year Mr Nisbet received a fee of US$0.1m for acting as a director of Melco Crown (Philippines) Resorts
Corporation, being an indirect majority owned subsidiary of Melco Crown.
Melco Crown provided $11,000 (2013: $5,000) in Hotel and other services to Crown during the year. In addition, Melco
Crown paid costs of $0.1 million (2013: $0.1 million) on behalf of Crown during the year which has subsequently been
reimbursed in full.
Crown provided additional loans of $11.6 million (2013: $12.6 million) to Aspers Holdings (Jersey) Ltd during the year. There
were loan repayments of $2.5 million to Crown during the year (2013: $nil). Interest charged on loans advanced to Aspers
was $15.3 million for the year (2013: $10.4 million). At 30 June 2014 $129.5 million (2013: $105.4 million) was owed by
Aspers. At 30 June 2014 there were no amounts owing to Aspers (2013: $nil).
Crown made no further loans to Betfair during the year (2013: $nil). The loan balance with Betfair at 30 June 2014 was
$11.7 million (2013: $11.7 million). No interest is payable on the loan. Crown provided Betfair Hotel, Banqueting and other
services of $5,000 (2013: $0.4 million) during the year. There were no amounts receivable from Betfair at 30 June 2014
(2013: $nil).
For the year ended 30 June 2014, 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 (2013: $nil).
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
124
FINANCIAL REPORT 2014 CONTINUED
30. Related Party Disclosures continued
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.
31. Investment in Controlled Entities
The consolidated financial statements include the financial statements of Crown Resorts Limited and its controlled entities.
Significant controlled entities and those included in a class order with the parent entity are:
Crown Limited
Artra Pty Ltd
Aspinall’s Club Limited
Burswood Limited
Burswood Nominees Ltd
Burswood Resort (Management) Ltd
Capital Club Pty 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 Sydney Gaming Pty Ltd
Crown Sydney Holdings Pty Ltd
Crown Sydney Property Pty Ltd
Crown UK Investments Ltd
Crown (Western Australia) Pty Ltd
Footnote
2014
2013
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
Country of
Incorporation
Beneficial Interest Held by
the Consolidated Entity(1)
Australia
Australia
United Kingdom
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
Australia
USA
Australia
Australia
Australia
Australia
United Kingdom
Australia
2014
%
2013
%
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
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
125
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
31. Investment in Controlled Entities continued
Flienn Pty Ltd
Jade West Entertainment Pty Ltd
Jemtex Pty Ltd
Melbourne Golf Academy 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
Footnote
2014
2013
Country of
Incorporation
Beneficial Interest Held by
the Consolidated Entity(1)
2014
%
2013
%
A
A
A
A
A
A
A
A
A
A
A
A
Australia
Australia
Australia
Australia
Australia
Cayman Islands
Australia
Australia
Bahamas
Australia
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).
32. Deed of Cross Guarantee
Certain controlled entities of Crown Resorts 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.
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
Dividends provided for or paid
Closed Group
2014
$’000
2013
$’000
3,365,192
593,880
(97,233)
(55,267)
3,267,959
538,613
124,744
(144,363)
(269,506)
(269,506)
Retained earnings / (accumulated losses) at the end of the financial year
3,123,197
124,744
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
126
FINANCIAL REPORT 2014 CONTINUED
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
2014
$’000
2013
$’000
126,664
156,247
300,377
237,825
12,360
28,148
-
12,172
16,507
1,568
467,549
424,319
1,213,932
1,105,002
2,557,988
2,529,798
2,394
3,364
1,541,708
1,403,037
3,036,804
2,850,817
642,039
649,511
178,645
155,858
130,170
112,187
59,431
62,780
9,363,111
8,872,354
9,830,660
9,296,673
299,641
265,705
103,531
105,994
81,395
37,377
136,029
117,499
1,499
-
646,694
501,976
138
138
3,199,955
3,095,334
184,908
201,938
32,815
16,703
44,304
4,619
3,434,519
3,346,333
4,081,213
3,848,309
5,749,447
5,448,364
2,180,793
4,809,818
(1,919)
(1,118)
447,376
514,920
3,123,197
124,744
5,749,447
5,448,364
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
127
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
Crown Resorts Limited
2014
$’000
2013
$’000
2,907,086
276,360
-
-
2,907,086
276,360
-
-
12,704,968
9,858,901
12,704,968
9,858,901
104,211
38,803
3,016,422
2,873,344
3,120,633
2,912,147
9,927,204
9,927,204
13,010
13,010
(355,879)
(2,993,460)
9,584,335
6,946,754
For the year ended 30 June 2014
33. Parent Entity Disclosures
N
o
t
e
s
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
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
128
There are no contingent liabilities for the parent entity at 30 June 2014 (2013: $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 2014 (2013: $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.
FINANCIAL REPORT 2014 CONTINUED
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.
Financial assets
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
2014
$’000
2013
$’000
12,516
17,875
24,925
17,860
36,405
43,532
5
84
599
65
66,885
86,981
270,000
210,000
218,300
218,065
10,707
102,846
18,142
11,375
60,726
16,653
619,995
516,819
(553,110)
(429,838)
As at balance date, the Group maintained floating rate liabilities of $620.0 million (2013: $516.8 million) that were not
hedged by interest rate swaps. The associated interest rate risk is partially mitigated by total financial assets of $66.9
million (2013: $87.0 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 155 basis points, and for HKD
facilities, the Group pays HIBOR plus a margin of 52.5 basis points.
Of the AUD cash on hand and at bank $12.5 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
$110.9 million for operational purposes and is non interest bearing (2013: $118.5 million).
As at balance date, the Group maintained floating rate borrowings of $18.1 million in GBP (2013: $16.7 million) and had
cash and cash equivalents of $36.4 million (2013: $43.5 million) which is interest bearing and invested at the UK daily cash
rate.
As at balance date, the Group maintained floating rate borrowings in HKD of $102.8m (2013: $60.7m) and had minimal
interest earning cash and cash equivalents (2013: minimal).
As at balance date, the Group maintained no floating rate borrowings in USD (2013: $nil) and had minimal cash and cash
equivalents (2013: minimal).
As at balance date, the Group maintained no floating rate borrowings in EUR (2013: $nil) and had minimal cash and cash
equivalents (2013: minimal).
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
129
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
34. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
(i) Interest rate risk – cash flow continued
Group Sensitivity
As a result of 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 $2.6 million (2013: $2.1 million). As a result of 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 by $1.7 million (2013: $1.4 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
2014
$’000
2013
$’000
50,000
-
386,067
424,896
174,634
174,634
610,701
599,530
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 2014
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%
(167)
(401)
(813)
(806)
(814)
375
82
Cross Currency Swap Contract
June 2036
USD 4.91%
AUD 7.05%
(13,869)
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)
The terms of each of the swap contracts are matched directly against the appropriate loan and interest expense and as
such are highly effective.
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
130
FINANCIAL REPORT 2014 CONTINUED
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 $1,122.8 million (2013: $1,118.4 million). As at balance date, the carrying
amounts of the Group’s fixed rate debt were not materially different from the fair values (2013: not material).
As at balance date the Group had no interest rate swaps in place to hedge fixed rate debt issuances.
(iii) Foreign exchange risk
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
The Group has currency exposure as a result of capital expenditure and investments/sales in currencies other than the
Group’s functional currency.
s
e
t
o
N
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
Trade and other receivables
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
2014
$’000
2013
$’000
6,960
60,697
67,657
876
-
876
212,089
218,914
212,089
218,914
(144,432)
(218,038)
2014
$’000
2013
$’000
4,215
3,257
129,500
105,359
133,715
108,616
154,209
141,549
154,209
141,549
(20,494)
(32,933)
131
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
34. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
N
o
t
e
s
(iii) Foreign exchange risk continued
2014
$’000
2013
$’000
5,482
96,204
101,686
16,052
102,846
118,898
2,501
62,668
65,169
6,293
60,726
67,019
(17,212)
(1,850)
2014
$’000
208
208
208
2013
$’000
1,768
1,768
1,768
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
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
132
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 $14.5 million higher or $18.0 million lower (2013:
$21.6 million higher or $26.9 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 be $0.8 million higher or lower $0.7 million (2013: 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 $2.1 million higher or $2.5 million lower (2013: $2.8
million higher or $3.3 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 (2013: 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 (2013: 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 be $1.1 million higher or $1.3 million lower (2013: 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 (2013: 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 (2013: not material).
FINANCIAL REPORT 2014 CONTINUED
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
Maturity 1 - 5 years
Closing Balance
Notional Amounts
Average Rate
2014
$’000
2013
$’000
2014
$’000
2013
$’000
38,084
20,970
59,054
14,906
0.9062
1.0153
-
14,906
0.8941
0.9019
-
1.0153
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
2014
$’000
34,277
50,789
85,066
2013
$’000
-
89,671
89,671
The Group’s sensitivity to equity securities price risk for the listed investments has been estimated by reference to
published price quotations in an active market. The sensitivity to movement in fair value for listed investments as a result of
a 10% movement in the share price of the listed shares at balance date was $2.3 million (2013: nil).
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 profit and loss as a
result of a one percent increase or decrease in either the forecast earnings growth rate or discount rate would be an
increase of up to US$3 million or a reduction of up to US$0.6 million.
(ii) Commodity Price Risk
Neither the Group nor the parent entity is exposed to commodity price risk.
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
133
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Notes to the Financial Statements continued
For the year ended 30 June 2014
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 5.9% or $103.5 million of the Group’s interest bearing liabilities will mature in less than 12 months
(2013: 5.0%).
As at balance date the Group had $1,073 million in undrawn committed bank lines (2013: $1,127 million).
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
134
FINANCIAL REPORT 2014 CONTINUED
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
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
2014
$’000
2013
$’000
2014
$’000
2013
$’000
2014
$’000
2013
$’000
2014
$’000
2013
$’000
Financial assets
Cash and cash equivalents
177,780
205,511
-
-
Receivables - trade
341,553
257,459
10,083
9,763
-
-
-
-
60,697
141,200
117,059
36,600
16,565
19,883
-
-
-
-
-
-
-
-
-
177,780
205,511
351,636
267,222
141,200
117,059
60,697
-
-
56,483
16,565
s
e
t
o
N
-
-
Receivables - associates
Receivables - other
Forward exchange contracts
receivable
Cross currency interest rate
swaps receivable
Total financial assets
562,507
486,321
258,160
153,965
111,762
122,145
932,429
762,431
6,574
6,786
26,297
27,143
111,762
122,145
144,633
156,074
Financial liabilities
Trade and other payables
345,874
296,581
138
138
Finance lease liabilities
Capital markets
Bank loans
Forward exchange contracts
payable
685
-
669
10,038
10,706
102,846
80,726
424,209
331,549
38,084
14,906
20,970
-
Interest rate swaps payable
2,279
1,940
4,241
5,768
-
-
-
-
346,012
296,719
10,723
11,375
-
-
-
-
527,055
412,275
-
-
59,054
14,906
6,520
7,708
-
474,974
316,419
730,050
895,194 1,205,024 1,211,613
Cross currency interest rate
swaps payable
12,312
12,312
49,248
49,248
209,299
221,611
270,859
283,171
Total financial liabilities
502,080
407,134
983,818
713,828
939,349 1,116,805 2,425,247 2,237,767
Net maturity
60,427
79,187
(725,658)
(559,863)
(827,587) (994,660) (1,492,818) (1,475,336)
135
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
N
o
t
e
s
t
o
t
h
e
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
Notes to the Financial Statements continued
For the year ended 30 June 2014
34. Financial Risk Management Objectives and Policies continued
(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.
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 2014
Financial Assets
Derivative Instruments
Receivable on interest rate swaps
Investments
Shares - listed (North America)
Shares - unlisted (North America)
Financial Liabilities
Derivative Instruments
Payables on forward exchange contracts
Payables on interest rate swaps
Payables on cross currency swaps
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
Valuation Technique
Quoted
market
price
Observable
inputs
Non market
observable
Level One
$’000
Level Two
$’000
Level Three
$’000
Total
$’000
-
457
-
457
34,277
-
-
-
34,277
457
-
34,277
50,789
50,789
50,789
85,523
-
-
-
-
-
-
-
-
-
-
-
-
1,332
3,001
13,869
18,202
-
-
-
-
1,332
3,001
13,869
18,202
1,568
925
-
-
2,493
679
3,940
4,619
-
-
1,568
925
36,353
53,318
89,671
36,353
53,318
92,164
-
-
-
679
3,940
4,619
There have been no transfers during the financial year ended 30 June 2014.
136
FINANCIAL REPORT 2014 CONTINUED
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
Business Combination
Other Comprehensive Income
Closing Balance
Valuation techniques
2014
$’000
2013
$’000
89,671
100,976
(271)
(20,713)
-
(1,155)
(36,353)
-
(2,258)
10,563
50,789
89,671
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 Comprehensive Income 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 (2013: $nil), other than foreign exchange rate movements.
A weighted average cost of capital (after tax) of between 7% and 10% was used by the Group in impairment testing, risk
adjusted where applicable. The sensitivity to the fair value of Level Three financial instruments of a one percent increase or
decrease in either the forecast earnings growth rate or discount rate would be an increase of up to US$3.0 million or a
reduction of up to US$0.6 million in fair value.
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
137
Crown Resorts Limited Annual Report 2014 | Australia’s Leading Integrated Resort Company
Shareholder Information
Substantial shareholders as at 31 August 2014
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 securities
Crown only has ordinary shares on issue. The total number of ordinary shares on issue is 728,394,185 held by 62,980
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 31 August 2014
Size of Holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001+
Total
Holding less than a marketable parcel
Number of
Shareholders
% of Issued
Capital
41,579
18,945
1,643
729
84
62,980
1,183
2.34
5.47
1.57
2.10
88.52
100
S
h
a
r
e
h
o
d
e
r
l
I
n
f
o
r
m
a
t
i
o
n
138
FINANCIAL REPORT 2014 CONTINUED
10. RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
Continue reading text version or see original annual report in PDF format above