ANNUAL REPORT 2016
Contents
Chairman’s Message
Financial Performance
About Crown Resorts
Crown’s Resort Portfolio
Chief Executive Officer’s Report
Australian Resorts
Melco Crown Entertainment
Other International Interests
Crown Wagering &
Online Social Gaming Operations
Corporate Social Responsibility
Corporate Governance Statement
Nevada Information Statement
Directors’ Statutory Report
Remuneration Report
Auditor’s Independence Declaration
Independent Auditor’s Report
Directors’ Declaration
Financial Report
Shareholder Information
Additional Information
1
2
4
6
10
12
16
18
19
20
23
36
40
50
72
73
75
76
134
136
Corporate Information
inside back cover
Financial Calendar
Record date for dividend
23 September 2016
Annual General Meeting
10.00am, Thursday 20 October 2016
Payment of final dividend
7 October 2016
The Astral Ballroom
Annual General Meeting
20 October 2016
Ground Floor, Crown Perth
2017 Interim results
February 2017
Burswood, Perth
CROWN RESORTS LIMITED
ABN 39 125 709 953
Cover: The new luxury Crown Towers Perth, opening December 2016
Inside: Proposed design of One Queensbridge project (subject to planning approval)
in Melbourne by architects Wilkinson Eyre
Chairman’s Message
Crown Resorts has pursued important initiatives to increase transparency, unlock
value for shareholders and position the company for the next decade of growth.
this proposed IPO is subject to approval
from the Crown Resorts Board and
approvals, consents and waivers from
third parties, however it could realise
significant value for shareholders.
Finally, in a move to increase cash
returns to our shareholders, Crown
Resorts has adopted a new dividend
policy to pay 100% of normalised net
profit after tax (before minorities and
excluding profits from associates but
including dividends received from
associates). Effective for the full financial
year ended 30 June 2016, a final
dividend of 39.5 cents per share, franked
to 70%, was declared. This brings the
total dividend for the year to 72.5 cents
per share, up 96% compared to the 2015
total dividend per share.
Our commitment to community
It has been a year of significant progress
for Crown. Importantly, we continue our
major contribution to the communities
in which we operate through our
corporate social responsibility programs
and the important work of the Crown
Resorts Foundation. This year Crown
employed our 550th Indigenous
employee and I am proud to advise that
we now have 111 people employed under
CROWNability, our disability
employment program. We are also
providing significant economic, social
and cultural opportunities to thousands
of worthy Australians through the
Crown Resorts Foundation, which is
now supporting over 85 community and
education organisations across the
country.
I sincerely thank you, as a valued
shareholder of Crown Resorts, for your
support as we work to position the
company for the next decade of growth.
Robert Rankin
Chairman, Crown Resorts Limited
Crown is in a sound financial position,
our balance sheet is strong and we are
well positioned to fund our current and
proposed development projects.
Major initiatives to enhance
shareholder value
One of Crown’s major objectives is to
increase shareholder returns and the
Board has recently endorsed a number
of initiatives designed to achieve this.
Most important is a change in corporate
structure through the demerger of
certain international investments into a
separately listed holding company.
Following the proposed demerger,
Crown Resorts would continue to own
and operate its wholly owned casino
businesses Crown Melbourne, Crown
Perth, Crown Sydney and Crown
Aspinalls. A separate company would
own a number of Crown’s international
investments, providing exposure to the
major gaming markets of Macau, Las
Vegas and the UK. It is proposed that
our shareholders would receive new
shares in the separate international
company proportionate to their existing
Crown Resorts shareholding.
The proposed new structure for the
company will address what we believe is
an undervaluation of the Australian
resorts business. It is a structure that
allows Crown’s wholly owned operations
to be valued independently of its
broader international equity
investments.
Importantly, transparency on the
underlying quality of the assets and
operations of the two entities will
increase. The demerger will also provide
shareholders with greater investment
choice and the ability to tailor their
investment towards their preferred
company.
The proposed demerger is subject to
further approval from the Crown
Resorts Board as well as approval by
Crown Resorts shareholders under a
Scheme of Arrangement. The proposed
demerger is also subject to a number of
approvals, consents and waivers from
third parties, including gaming
regulators and State Governments.
Crown is also evaluating a potential
initial public offer (IPO) of a real estate
investment trust that would own a 49%
interest in some of our Australian hotels.
Crown Resorts would retain a 51%
ownership interest. Implementation of
Crown Resorts Limited Annual Report 2016
1
As a leading Australian tourism and
entertainment company, Crown Resorts
is building a worldwide reputation for
the best in luxury experiences, gaming,
hotel accommodation, signature dining
and retail. It is this reputation that has
helped make our Australian resorts so
appealing to local and international
visitors, attracting more than 31 million
visits during the year.
Crown continues to invest in our tourism
assets to ensure they are equal to or
better than the finest resorts in the
world. We are excited by the imminent
opening of Crown Towers in Perth,
which will be one of Australia’s most
luxurious hotels. We are also excited to
have begun construction work on the
highly anticipated Crown Sydney project
and we continue to progress our
planning application for a proposed
fourth hotel development at Crown
Melbourne.
Results
For the financial year ended 30 June
2016, Crown Resorts achieved a net
profit of $393.6 million before
significant items, which was down 11.8%
from the previous year. This was a solid
result considering the subdued markets
in Western Australia and in Macau.
Reported net profit after significant
items was $948.8 million, up 146.4%. In
May 2016, Crown entered into an
agreement with Melco Crown
Entertainment (Melco Crown) for the
repurchase of 155 million ordinary
shares, resulting in a net gain to Crown
of $602.0 million. This was by far the
largest of the significant items reported.
The net proceeds from the partial sale
of Melco Crown shares this year forms a
key part of Crown’s capital management
strategy to reduce net debt.
Financial Performance
The 2016 full year result reflects a solid performance from the Australian operations
and continued subdued trading in Macau. The result also includes the profit generated
from the partial sale of Crown’s Melco Crown shareholding, which was reported as a
significant item.
• Crown reported a normalised net profit after tax (NPAT) of $406.2 million for the full year ended 30 June 2016,
down 22.7%.
• A net gain from the partial sale of shares in Melco Crown was the major component of $555.2 million
in significant items.
• Crown’s Australian resorts achieved normalised EBITDA growth of 1.8% and normalised revenue
growth of 0.8%.
• Weak market conditions in Macau adversely impacted Melco Crown’s performance.
• Crown’s share of Melco Crown’s normalised NPAT of $58.1 million was down $103.2 million or 64.0%.
• A final dividend of 39.5 cps, franked to 70%, was declared bringing the total full year dividend to 72.5 cps.
Performance for the year ended 30 June 2016
Normalised1 revenue
Normalised expenditure
Normalised EBITDA 2
Normalised EBIT3
Normalised NPAT4 attributable to Crown
Reported NPAT before significant items5 attributable to Crown
Significant items
Reported NPAT after significant items attributable to Crown
FY16
$m
FY15
$m
3,584.9
3,404.5
(2,729.1)
(2,579.6)
855.8
573.1
406.2
393.6
555.2
948.8
824.9
562.0
525.5
446.3
(61.3)
385.0
%
change
5.3%
(5.8%)
3.8%
2.0%
(22.7%)
(11.8%)
N/A
146.4%
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. Net profit after tax.
5. Significant items of $555.2 million in 2016, the major component of which is the net gain from the sale of shares in Melco Crown.
Australian Resorts Normalised Revenue
Australian Resorts Normalised EBITDA
3,500
3,000
s
n
o
2,500
i
l
l
i
i
l
l
i
n
o
m
m
$
$
2,000
1,500
1,000
500
F12
F13
F14
Melbourne
F15
Perth
F16
2
s
n
o
i
l
n
l
i
o
m
m
$
$
i
l
l
i
1,050
950
850
750
650
550
450
350
250
F12
F13
F14
Melbourne
F16
F15
Perth
Crown Resorts’ Business Strategy
• Progress the Crown Resorts Limited demerger, as announced on 15 June 2016.
• Explore a potential IPO of a 49% interest in a property trust which would own some of Crown Resorts’
Australian hotels, with Crown Resorts retaining a 51% interest.
• Continue to improve and grow Crown’s portfolio of well-recognised, premium branded assets.
• Leverage Crown’s international operations, network, contacts and joint ventures to promote Crown’s
integrated resorts and operations.
• Continue to maximise the performance of Crown Melbourne and Crown Perth.
• Manage the Australian properties to achieve earnings growth targets by stimulating visitation and tightly
managing costs to improve margins.
• Successfully open Crown Towers Perth and begin the ramp-up of the property.
• Progress Crown Sydney and the proposed One Queensbridge project adjacent to Crown Melbourne to
p
u
o
r
G
a
i
l
a
r
t
s
u
A
deliver value for shareholders.
• Explore further growth options in the Australian market.
l • Optimise Crown’s wagering and online social gaming operations and explore further growth options.
a
t
i
i
g
D
l
a
n
o
i
t
a
n
r
e
t
n
I
• Work with Melco Crown to execute Melco Crown’s business strategy of:
– continuing the ramp-up of Studio City;
– further develop junket and non-junket relationships;
– maintaining the leadership position at the premium end of the market in Macau; and
– building and operating VIP and mass market facilities.
• Continue to maximise the performance of Crown Aspinalls.
• Continue to work on settling the capital structure for the Alon Las Vegas project.
• Continue to work with Crown’s joint venture partner in Aspers Group’s casinos to optimise performance
and drive growth.
Crown Resorts Limited Normalised NPAT
Head Count Australian Resorts
s
n
o
i
l
l
i
i
l
n
l
i
o
m
m
$
$
700
600
500
400
300
200
100
0
F12
F13
F14
F15
F16
17,000
16,000
15,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
F12
F13
F14
F15
F16
Australian Resorts and Other
Melco Crown
Employees
Tenancy
Contractors
3
Crown Resorts Limited Annual Report 2016
About Crown Resorts
Crown Resorts is one of Australia’s largest entertainment and gaming groups
with operations and investments in Australia, Asia, the United Kingdom and the
United States.
Global snapshot
CROWN’S
RESORTS
AUSTRALIAN
PROJECTS
DIGITAL
VENTURES
INTERNATIONAL
INTERESTS
Crown owns and operates
two of Australia’s leading
integrated resorts, Crown
Melbourne and Crown
Perth, which together
attract more than 31 million
visits each year.
To strengthen their
positions at the forefront of
luxury tourism, Crown is
investing approximately
$2.3 billion in expanding
and upgrading these
Australian resorts between
FY12 and FY19.
In the UK, Crown owns and
operates Crown Aspinalls in
London, one of only five
high-end licensed casinos in
the West End
entertainment district.
Crown has received
conditional planning
approval and preliminary
construction work has
commenced to build
Sydney’s first six-star hotel
resort at Barangaroo on
Sydney Harbour. The
planning approval has
been contested with legal
proceedings, which are
being defended vigorously.
Crown is planning to
invest $2.0 billion in the
development of Crown
Sydney.
Crown Melbourne’s
proposed fourth hotel,
One Queensbridge, is a joint
venture with the Schiavello
Group. The project is a
landmark luxury hotel and
apartment development and
is currently subject to an
application for planning
approval.
The development of the
One Queensbridge project
also remains conditional
upon negotiation of final
legal agreements with the
Schiavello Group and
financing arrangements.
Crown is investing in
complementary assets,
with online wagering
operation CrownBet (62%
interest), online betting
exchange Betfair Australia
(100% owned) and
US-based online social
gaming business DGN
Games (70% interest).
Through this majority-
owned subsidiary, Crown
has acquired Winners Club
Limited, which provides
development and analytical
services to online social
gaming sites.
Crown holds a 27.4% equity
interest in Melco Crown
Entertainment (Melco
Crown), a developer, owner
and operator of integrated
resorts in Macau and the
Philippines. Melco Crown is
one of only six licenced
casino operators in Macau,
the world’s largest gaming
market.
Crown, through a majority-
owned subsidiary, has
acquired a 34.6 acre vacant
site on the Las Vegas strip.
Crown and its partners are
continuing design work on
the project. The capital
structure of the ownership
entity is yet to be settled.
Crown also holds equity
interests in Aspers Group
(50%) in the United
Kingdom and Caesars (2%),
Nobu (20%) and Cannery
(24%) in the United States.
London
Macau
Manila
Las Vegas
Perth
Sydney
Melbourne
4
AWARD-WINNING HOTELS
HIGH-END RETAIL
LUXURY RESORT FACILITIES
EVENTS & ENTERTAINMENT
WORLD-CLASS GAMING
VIP SALONS
SIGNATURE RESTAURANTS
EXCLUSIVE CLUBS
Internationally renowned chef Heston
Blumenthal has opened a restaurant at
Crown Melbourne
CAPITAL GOLF COURSE
ELLERSTON VIP GETAWAY
Crown Resorts Limited Annual Report 2016
5
Crown’s Resort Portfolio
Crown Melbourne
• Crown Melbourne is Australia’s leading integrated resort
and one of the most visited tourist destinations with its
dynamic and diverse facilities.
• It operates 2,628 gaming machines and 540 gaming tables.
• The resort currently features the Crown Towers Melbourne
hotel, with 481 guest rooms, the Crown Metropol
Melbourne hotel with 658 guest rooms and the Crown
Promenade Melbourne hotel with 465 guest rooms.
• The Crown Conference Centre has 7,350 square metres of
conference and meeting facilities, across three floors.
6
• 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 located in the
resort, including many of Melbourne’s finest.
• Crown Melbourne’s retail precinct features prestigious
designer brands and luxury retail outlets.
• Crown has announced plans to develop a new 388-room
luxury six-star hotel on the site adjacent to Crown
Melbourne, subject to planning and other approvals.
Crown Perth
• Crown Perth is one of Western Australia’s largest
tourist destinations, with an exceptional range of
entertainment and tourism experiences.
• It has approval to operate 2,400 gaming machines
and 320 gaming tables.
• The resort currently features the Crown Metropol
Perth hotel with 395 guest rooms and the Crown
Promenade Perth hotel with 291 guest rooms.
• The $645 million Crown Towers Perth hotel, with
500 luxury guest rooms and associated amenities, is
opening in December 2016.
• Large-scale entertainment facilities include the new
2000-seat Crown Ballroom and 2,300-seat Crown
Theatre Perth, along with a world-class convention
centre.
• A premium selection of restaurants and bars are located
across the resort in addition to casual dining options.
7
Crown Resorts Limited Annual Report 2016 Australian Projects
Crown Sydney
100% owned
• Crown Sydney, located on Sydney Harbour
at Barangaroo, will be the city’s first six-star
luxury resort.
• Construction is underway on a new iconic
addition to the Sydney skyline which includes
350 guest rooms and suites, luxury apartments,
signature restaurants, bars, retail outlets, pool
and spa facilities, conference rooms and VIP
gaming facilities.
Proposed concept render
8
Proposed concept render
One Queensbridge
50% equity interest
• One Queensbridge, a joint venture with the
Schiavello Group, is a proposed fourth hotel
development to meet tourism demand at
Crown Melbourne.
• One Queensbridge is a landmark luxury
development that would comprise a
388 room six-star hotel with associated
amenities and approximately 700 luxury
apartments.
• Located on a site adjacent to Crown
Melbourne, the project is currently subject
to an application for planning approval.
• The development of the One Queensbridge
project also remains conditional upon
negotiation of final legal agreements with
the Schiavello Group and financing
arrangements.
Melco Crown Entertainment
City of Dreams, Macau
• City of Dreams is a premier leisure and entertainment
destination designed to appeal to the rapidly evolving
demands of high-end Asian consumers.
• City of Dreams Macau operates approximately 500 gaming
tables and 1,050 gaming machines.
• Resort accommodation features the Crown Towers hotel
and the Hard Rock hotel, each with approximately 300
guest rooms, and the Grand Hyatt hotel across two towers
with approximately 800 guest rooms.
• City of Dreams Macau offers a vast selection of food,
beverage and entertainment options including around 30
restaurants and bars and the first street-front retail precinct
in Cotai, which partially opened in June 2016.
• A state-of-the-art fifth hotel tower designed by legendary
architect the late Dame Zaha Hadid is set to add a truly
iconic landmark to Macau.
Studio City, Macau
• Melco Crown holds a 60% interest in Macau Studio City
(Studio City), a Hollywood-inspired resort located in Cotai
that will transport visitors into a stunning cinematic world.
• Studio City opened on time and within budget in October
2015.
• Innovative attractions include an art deco façade with an
iconic Golden Reel, the world’s highest figure-8 ferris wheel,
a Warner Bros. themed family entertainment centre, the
world’s first Batman 4D digital ride and ‘The House of Magic’
theatre.
• Studio City operates approximately 250 gaming tables and
1,100 gaming machines.
• The resort features approximately 1,600 hotel guest rooms,
a 5,000-seat performance arena, 35,000 square metre
retail mecca and a vast array of food and beverage outlets.
City of Dreams, Manila
• Melco Crown Entertainment holds a 72.9% interest in Melco
Crown (Philippines) Resorts Corporation, the operator of
City of Dreams Manila.
• City of Dreams Manila operates approximately 270 gaming
tables and 1,600 gaming machines.
• The resort offers 950 guest rooms across three
international hotel brands; a six-star Crown Towers hotel,
Asia’s first luxury Nobu hotel and Hyatt City of Dreams
Manila.
• City of Dreams Manila features three separate
entertainment venues and a retail boulevard.
Crown holds a 27.4% interest in Melco Crown Entertainment
99
Chief Executive Officer’s Report
Crown has demonstrated resilience in the face of subdued conditions in Macau and
Western Australia, reducing net debt and strengthening its balance sheet to fund
existing Australian projects.
Australian Resorts
Crown Melbourne maintained its performance, with
normalised revenue up 3.5% to $2,312.5. Crown Perth was
affected by subdued conditions with normalised revenue
down 5.5% to $922.0 million. However a change in business
mix together with productivity and efficiency improvements
resulted in normalised EBITDA increasing by 2.2%. During the
year, main floor gaming revenue increased by 8.5% at Crown
Melbourne, but was down by 0.1% at Crown Perth.
Crown’s newest hotel, the luxury Crown Towers Perth, will
open on schedule in December 2016. It will bolster Crown
Perth’s offering significantly and increase the total number of
guest suites and rooms across the resort to 1,188.
Approximately $326 million of the total $645 million budget
for Crown Towers Perth was spent in FY16. Crown Perth is
the state’s largest single-site employer and is recruiting a
further 500 people in Western Australia to join Crown
Towers ahead of its launch date.
Normalised EBITDA from Crown Melbourne was
$673.3 million, up 1.7%. Reported EBITDA for the period was
$663.4 million, up 2.9% on the prior comparable period. This
reported EBITDA result takes into account an unfavourable
variance from the theoretical VIP program play result, which
had a negative EBITDA impact of $9.9 million. This compares
to a negative EBITDA impact of $17.5 million in the prior
comparable period.
Normalised EBITDA from Crown Perth was $259.9 million,
up 2.2%. Reported EBITDA for the period was $285.8 million,
down 5.4% on the prior comparable period. The reported
EBITDA result takes into account a favourable variance from
the theoretical VIP program play result, which had a positive
EBITDA impact of $25.9 million. This compares to a positive
impact of $47.7 million in the prior comparable period.
Australian Projects
Crown Sydney received conditional planning approval by the
NSW Planning Assessment Commission in June 2016 and
preliminary construction work is underway. Subsequently,
legal proceedings have commenced challenging the validity
of this decision. Crown will defend these proceedings
vigorously and is looking forward to continuing construction
of Sydney’s first six-star hotel resort. It is envisaged that this
$2 billion project will be completed and open in the first half
of 2021.
In Melbourne, Crown and its joint venture partner, the
Schiavello Group, have submitted a planning application for
approval of the development of One Queensbridge, adjacent
to Crown Melbourne. The proposed project would comprise
a 388-room six-star hotel with associated amenities and
approximately 700 luxury apartments. If approved,
One Queensbridge will cement Crown Melbourne’s position
as the largest single-site accommodation provider in
Australia and create over 3,900 new jobs in Victoria.
Rowen Craigie
Chief Executive Officer, Crown Resorts Limited
Overview
Crown reported a normalised net profit after tax (NPAT) of
$406.2 million for the full year ended 30 June 2016, down
22.7%. The result reflects a solid performance from Crown’s
Australian operations, which reported normalised EBITDA
growth of 1.8% and normalised revenue growth of 0.8%, as
well as continued subdued trading in Macau.
At Crown’s Australian resorts, main floor gaming revenue
increased by 5.8%, which was a solid performance. VIP
program play turnover in Australia of $65.1 billion (down
8.0%) was a reasonable outcome given the strong growth in
the prior comparable period of 41.8% and the depressed
nature of VIP gaming activity across Asia.
Melco Crown’s result declined due to challenging market
conditions in Macau. Crown’s share of Melco Crown’s
normalised NPAT of $58.1 million was down $103.2 million or
64.0%. Overall gross gaming revenue across the Macau
market in the year to 30 June 2016 declined by more than
20%.
This year’s result includes the profit generated from
the partial sale in May of Crown’s shareholding in Melco
Crown, which is reported as a significant item. The sale of
155 million ordinary shares in Melco Crown generated
proceeds of $1,067.1 million, resulting in a net gain on sale
of $602.0 million. This, combined with $180.7 million in
Melco Crown dividends received during the year, and the
group’s net operating cashflows, has enabled Crown to
reduce its net debt and to maintain a strong balance sheet
and credit profile to fund existing Australian development
projects.
Since the formation of Melco Crown in 2005, Crown has
received cash returns equivalent to double the total amount
it has invested. Crown continues to hold a 27.4% interest in
Melco Crown, valued at approximately $2.3 billion at
30 June 2016.
Crown’s net operating cash flow for the period was
$482.7 million and the Group’s net debt position (excluding
working capital cash) was $1,962.7 million, a reduction of
20.4% from 30 June 2015.
10
international investments through a more efficient
ownership structure. Crown Resorts would continue to own
and operate its wholly owned casino businesses Crown
Melbourne, Crown Perth, Crown Sydney and Crown
Aspinalls.
As well as its potential to unlock shareholder value, expected
benefits of the demerger will be to provide shareholders with
greater investment choice and the ability to tailor their
investment towards their preferred company. Transparency
will be increased, as will the ability to implement optimal
capital structures and dividend policies that reflect the
differences in the underlying assets of each company. Work
on the proposed demerger is ongoing. The demerger is
subject to shareholder and court approvals, as well as
numerous government, regulatory and third party approvals.
The final initiative is to explore a potential Initial Public Offer
(IPO) of a 49% interest in some of Crown Resorts’ Australian
hotels via a property trust or REIT, with Crown Resorts
retaining a 51% interest. If implemented, the IPO could realise
significant value for Crown Resorts shareholders, while
providing the ability to maintain a majority interest in key
assets within the Australian business. The evaluation of any
IPO is being progressed independently of the proposed
demerger and is subject to approval by the Board, as well as
numerous government, regulatory and third party approvals.
Looking ahead
Crown will progress these structural and capital
management initiatives so as to continue to deliver growing
returns to shareholders. Concurrently, Crown will continue its
strategy of maximising the performance of Crown
Melbourne and Crown Perth. We will progress plans to
develop Crown Sydney and One Queensbridge in Melbourne
and will work to optimise the value of Crown’s international
investments.
Rowen Craigie
Chief Executive Officer, Crown Resorts Limited
Melco Crown Entertainment
In May 2016, Crown reduced its shareholding in Melco Crown
from 34.3% to 27.4% through Melco Crown’s repurchase of
155 million ordinary shares from Crown. The resulting net
gain on sale of $602.0 million is reported as a significant
item.
Crown’s share of Melco Crown’s normalised NPAT for the full
year to 30 June 2016 was an equity accounted profit of
$58.1 million, down $103.2 million or 64.0% on the previous
year. After adjusting for pre-opening costs and the variance
from theoretical, Crown’s share of Melco Crown’s reported
NPAT result for the year was an equity accounted profit of
$42.7 million, down $79.3 million or 65.0%.
Macau continues to face challenges arising from a second
year of softer gaming demand, which has adversely affected
all casino operators. Overall, gross gaming revenue across
the Macau market in the full year to 30 June 2016 declined
by 22.5%.
Despite the downturn, the Chinese territory remains the
world’s largest gambling market, with gaming revenue
approximately five times that of Las Vegas. Melco Crown
believes that revenue trends, particularly in the mass market
segments, will improve as Macau further evolves into a
multi-faceted, mass market-focused destination.
Studio City (in which Melco Crown holds a 60% interest),
Melco Crown’s second integrated resort in Cotai, Macau, is in
its ramp-up phase following a successful opening in October
2015. Meanwhile in the Philippines, City of Dreams Manila (in
which Melco Crown has an interest through a 72.9% owned
subsidiary) delivered an improvement in all gaming and
non-gaming segments in the second quarter of 2016 on a
year-on-year basis.
Crown Wagering and online social gaming
Crown’s wagering operations, CrownBet and Betfair
Australia, together with online social gaming operation DGN
Games, reported an EBITDA loss of $5.4 million. Overall
however, these businesses were profitable in the second half
and revenue growth was strong.
Enhancing shareholder value
In June 2016, Crown announced three major initiatives
designed to enhance shareholder value. Firstly, with effect
from the year ending 30 June 2016 was the adoption of a
revised dividend policy, which has increased the cash returns
payable to shareholders this year.
The most significant structural initiative is the proposed
demerger of certain Crown Resorts’ international
investments into a separately listed holding company. This
aims to address the different nature of Crown’s wholly
owned, and in particular Australian operating assets, from its
Crown Resorts Limited Annual Report 2016
11
Australian Resorts
Crown’s Australian resorts, Crown Melbourne and Crown Perth, are leading
entertainment and tourist destinations, with strong earnings and cash flow capacity.
Importantly, Crown continues to invest in its people. We
recognise it is our people who are the critical element in
driving first class service outcomes. Crown seeks to be an
employer of choice and the ongoing investment in training
and developing our employees is recognised as a best-
practice model by government bodies and external parties.
Crown’s $10 million dedicated training facility, Crown
College, is one of Australia’s most awarded and respected
registered training organisations. Approximately 7,600
people have graduated from the college to date.
Crown is providing 500 places at Crown College to provide
an opportunity to retrain in the hospitality industry. In
addition, Crown Perth is undergoing a major recruitment
drive to employ an additional 500 outstanding people to
join Crown Towers Perth before the end of 2016. At the
recent Australian Training Awards, Crown Perth was proud
to be honoured as Australian Employer of the Year.
Crown Melbourne
Overview
In an increasingly competitive global tourism market,
Crown Melbourne is itself an integral driver of
international and interstate visitors to Victoria. Its
reputation for luxury experiences and exceptional hotel,
gaming and entertainment facilities has seen visits to
Crown Melbourne grow to 21 million for the year.
Crown Melbourne strengthened its offer during the period
with property enhancements and initiatives to stimulate
visitation, in line with Crown’s strategic priorities. The
resort remains Victoria’s largest single-site private sector
employer, with approximately 10,000 people working
across the complex.
Crown continues to develop its digital presence with the
Crown Resorts app and Crown websites providing
valuable tools to engage and transact with customers.
Crown increased its profile on social media over the last
12 months, growing its fans on Facebook and followers on
Twitter and Instagram. In 2015, Facebook identified
Crown Melbourne as the number one checked in location
in Australia.
Property Update
Occupancy at Crown Melbourne’s three hotels was again
over 90%, reaffirming the need for greater hotel capacity
to meet future tourist demand. The proposed new luxury
hotel and residential project, One Queensbridge, on the
site adjacent to Crown Melbourne is expected to achieve
this.
Crown and the Schiavello Group, in a joint venture
announced in December 2014, are planning to develop a
landmark new building comprising a 388-room six-star
hotel with associated amenities and approximately 700
luxury apartments. The property in Melbourne’s Southbank
is proposed to be connected to Crown Melbourne via an
enclosed elevated pedestrian link over Queensbridge
Barry Felstead
CEO, Australian Resorts
Crown’s Australian resorts achieved a solid performance in
2016. Main floor gaming revenue increased by 5.8% and
non-gaming revenue increased by 1.5%. VIP program play
turnover in Australia of $65.1 billion, down 8.0%, was a
pleasing result given the strong growth in the prior
comparable period of 41.8% and the depressed nature of
the VIP program play market across Asia.
Business conditions for Crown Melbourne were favourable
during the period, however Crown Perth’s domestic
business performance was impacted by the slowdown in
the Western Australian economy throughout the year. An
ongoing focus on cost management was maintained, which
resulted in normalised EBITDA increasing by 1.8% for
Crown’s Australian resorts.
A highlight for the year was an increase in visitation at both
properties to in excess of 31 million visits. The drivers of
this growth included capital improvements, new
attractions, product releases and successful digital
promotions.
There was also a marked rise in international visitors,
particularly from China. Crown Resorts’ sustained focus on
growing visitor numbers from China has paid off with our
resorts in Melbourne and Perth now among the most
visited tourist destinations in their respective states.
In 2015, Tourism Research Australia estimated that
approximately one in four Chinese tourists visited Crown
during their stay in Melbourne. In FY16 more than a third of
revenue generated by our Australian Resorts was
generated by international visitors, predominantly from
mainland China.
Crown’s most important priority is to ensure our Australian
resorts are strongly positioned in the global premium
leisure market to continue to attract a growing share of
visitors. That is why Crown is investing $4.0 billion in its
Melbourne, Perth and Sydney resorts from FY2012 to
FY2019. This capital expenditure includes expansion,
upgrades and maintenance to keep Crown’s Australian
resorts at the forefront of luxury tourism.
12
VIP Program Play
The global marketplace for international VIP business
continues to soften. Against that backdrop, Crown
Melbourne produced a pleasing result, retaining virtually all
of the 40% growth delivered during the prior year.
Turnover for the year of $50.1 billion is the second highest
turnover achieved by Crown Melbourne in its 19 years of
operation at Southbank.
Normalised revenue declined by 4.3% on the previous year,
which is a significant outperformance when compared to
many of the global market benchmarks, such as in Macau
and Singapore. It was also delivered in the face of
increasing competition from other Asia Pacific casino
operators seeking to capture a share of Crown Melbourne’s
Australasian market dominance.
In a competitive regional market and to protect profitability,
Crown is aiming to retain a strong focus on customer
service and quality of experience to differentiate our
product offering.
Hotels and Conferences
As one of the world’s leading integrated resorts, Crown
Melbourne accommodation features more than 1,600
guest rooms across three luxury hotels, Crown Towers,
Crown Metropol and Crown Promenade. Together, they
provided more than 860,000 guest nights during the year,
with occupancy levels again exceeding 90%.
Crown Melbourne hotels were the recipients of nine awards
throughout the year across hotel operations. These accolades
included Crown Towers winning Large Hotel of the Year, and
Crown Metropol winning Best Hotel Pool in the Australian
Gourmet Traveller Hotel Guide 2016, as well as Crown Towers
being awarded Deluxe Accommodation Hotel of the Year in
the 2016 Tourism Accommodation Awards.
The events and conferencing division achieved a strong
revenue result in 2016 by driving occupancy in key venues
during high season to over 90% and maximising shoulder
date opportunities.
Street, subject to planning approval and agreement with
the relevant state government entities. Crown and the
Schiavello Group have made an application for planning
approval, which is currently under consideration.
Crown Melbourne’s signature main atrium improvements
were completed in addition to the successful opening of
luxury retailers, Graff and Rolex. These works aimed to
enhance the experience for our guests by creating a more
vibrant and captivating space.
During the financial year, Crown also completed
enhancements to the main gaming floor, creating an
additional 1,000m2 of gaming space in three main
locations, allowing for the full operation of gaming product
following the Melbourne Casino Licence reforms, which
came into effect in November 2014. This provided a more
open gaming environment in the central and western areas,
and new semi-private gaming areas across the floor.
Local Gaming and Crown Signature Club
Crown Melbourne continued to invest in new technology,
including the introduction of the latest gaming innovations,
LED signage and system upgrades to enhance the
customer experience. A new dedicated Learn To Play area
was launched, allowing exploration of the different gaming
options available via interactive touch screens. In addition,
enhancements to digital platforms and cross promotion
with CrownBet customers have been key drivers of
patronage from new customers.
The Crown Signature Club also continues to reward
members across the resort’s facilities with offers such as
access to VIP rooms, invitations to special events and golf
at Crown’s Capital Golf Course. Its membership base
continues to grow on the previous year, assisted by a new
mobile application and improvements to the program,
including integration with CrownBet.
In November 2015, Crown Melbourne was one of the first
venues to introduce Your Play, the Victorian Government’s
voluntary pre-commitment program, replacing Crown’s
existing Play Safe program.
Crown Melbourne hosted its fifteenth Aussie Millions
Poker Tournament in January 2016, which is a major event
on the international poker circuit. The enhanced digital
marketing campaign through the use of live streaming and
social media expanded the tournament’s global reach.
Poker also benefitted from a world first house-funded
jackpot system, with strong customer growth.
13
Restaurants and Bars
Crown Melbourne’s award-winning restaurants and bars
offer patrons a wealth of choice that is unrivalled in
Australia. Following the six-month relocation of three-
Michelin-star UK restaurant, The Fat Duck, Dinner by
Heston Blumenthal opened permanently at Crown
Melbourne. The Fat Duck generated significant global
media publicity for Crown Melbourne and Dinner by
Heston Blumenthal has also received tremendous
publicity and strong customer demand.
Crown’s signature restaurants continue to feature
strongly in The Age Good Food Guide 2017, with Dinner
by Heston Blumenthal, Rockpool Bar & Grill, Rosetta,
Spice Temple, Bistro Guillaume, Koko, Silks and Nobu all
included.
Overall, restaurant and bar operations continued to
strengthen, with The Merrywell, Lumia, Groove and
Sports Bar exceeding expectations. Dining options were
enhanced with the opening of San Antone by Bludso’s
BBQ in November 2015. Koko underwent major kitchen
renovations in the early part of the year and, along with
Conservatory and Nobu, were Crown Melbourne’s most
successful premium restaurants, driving a strong
performance for the year.
Entertainment and Events
Crown Melbourne continued to provide the venues of
choice for some of Australia’s most memorable events.
More than 1,900 events were 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 The Million Dollar Lunch, Challenge – Supporting
Kids with Cancer, Diamonds are a Girl’s Best Friend Gala
Dinner, Starry Starry Night and the Epworth Medical
Foundation Dinner. The Palladium again hosted a number
of Victoria Racing Club’s official events during the annual
Spring Racing Carnival, including the Crown Oaks Club
Ladies Luncheon, the Call of the Card and VRC Young
Members’ End of Season Ball.
This year’s major live performances at The Palms included
sold out seasons with Cosentino, Burn The Floor, James
Reyne, The Black Sorrows, Richard Marx and Todd
McKenney. Crown’s two nightclubs, Co and Therapy,
continued to feature top artists every week including
Havana Brown, Will Sparks, Nervo, Marlo, Joel Fletcher,
Tigerlily, Will Singe, Chingy and many more.
In 2016, Crown partnered again with the Sony
Foundation’s River4Ward event, the Melbourne Food and
Wine Festival and, in addition, Crown held the inaugural
AVPN Pizza Fest, which celebrated some of the best Pizza
makers from Australia and Italy.
Crown Perth
Overview
Crown Perth is Western Australia’s only fully integrated
entertainment resort. Following Crown’s intensive
development and renovation plan since acquisition in 2004,
it has been transformed into a premium tourist destination,
this year attracting more than 10 million visits. The highly
anticipated Crown Towers Perth hotel will open in December
2016, bringing to Perth a new level of prestige.
Crown Perth remains the State’s largest single-site private
sector employer, with more than 5,800 people working
on site. This is set to increase as Crown begins a
substantial recruitment drive for 500 hospitality
professionals to join the new Crown Towers Perth, one
of the world’s finest hotel brands.
Property Update
Crown Towers Perth remains on schedule for a December
2016 opening, bringing a new era of luxury to Perth. In
addition to the 500 guestrooms, suites and villas, the
$645 million development will include a number of new
venues, restaurants and bars including The Waiting Room,
Epicurean, the Crystal Club, Crown Ballroom and a
luxurious Crown Spa.
At the new Epicurean restaurant, guests can experience
the theatre of the active kitchens or choose to dine on the
outdoor terrace with spectacular views overlooking the
hotel pool and surrounding resort landscape.
Located on the fifteenth level of Crown Towers Perth, the
exclusive Crystal Club will provide stunning views of the
Swan River and Perth skyline. The venue’s external terrace
is complemented with the stylish internal Ultra-lounge,
main dining and dedicated private dining areas. Also on
the same level are the luxurious private VIP gaming salons
with views to the new Perth Stadium, which will open
in 2018.
The new 2,000 seat Crown Ballroom and new meeting
rooms will significantly add to Crown Perth’s existing
convention facilities. This, coupled with the refurbishment
of the Grand Ballroom and pre-function area and the
creation of a new Metropol retail corridor completed
during the year, will position Crown Perth as the premier
convention facility in Western Australia.
Local Gaming and Crown Club
Crown Perth’s main gaming floor revenue declined by
0.1% which reflected weak consumer sentiment in the
local economy. Investment in and popularity of automated
table games helped drive increased visitation to the
gaming floor, despite challenging market conditions
overall.
14
A significant project was the expansion of the main gaming
floor and the addition of a premium gaming machine area
located in the casino. The expansion has created almost
1,800m2 of space to accommodate new gaming product,
as well as upgraded amenities and an improved layout for
customers. The new space opened in September 2016 and
was renamed the Riverside Room.
VIP Program Play
The softening global marketplace was felt more
significantly at Crown Perth, with turnover volumes
declining by 18.7% to $15.0 billion. Crown Perth is utilising
an event-focused sales strategy, offering customers an
exciting and entertaining variety of events and
tournaments to stimulate visitation.
With its array of luxury assets and commitment to
customer service, Crown Perth represents a compelling
option for discerning Asian VIP customers. The upcoming
launch of Crown Towers Perth will reinforce Crown Perth’s
position globally as a first-class luxury resort.
Hotels and Conferences
The hotel business continued to be impacted by the
slowdown in the Western Australian economy, with the
drop in consumer sentiment impacting on key market
segments. In the face of these challenging conditions hotel
revenue was in line with last year, which was achieved by a
6.5% increase in guests accommodated during the year
offset by a decrease in the average room rate. Combined,
Crown Metropol Perth and Crown Promenade Perth
accommodated 348,000 guests during the year, with
occupancy in excess of 90%. This is a pleasing result given
the challenging market conditions in the wider Perth
accommodation market.
Interest in the new Crown Towers Perth both locally and
nationally has increased significantly, and internationally
there have been growing enquiries and translated bookings
from a number of key travel partners.
Crown Perth hotels were the recipients of four awards at
the 2015 Australian Hotels Association (WA)
Accommodation Industry Awards. Also, at the 2015 AHA
National Awards for Excellence, Crown Metropol Perth
was awarded Best Resort Style Accommodation.
Events and Conferencing was impacted throughout the
year with the closure of the Grand Ballroom for an
extended period due to its refurbishment and integration
into Crown Towers Perth. Crown Perth convention
facilities attracted 157,000 delegates, down 10% on the
previous year, which was attributed to the Grand Ballroom
disruption. A number of key conferences and events are
confirmed for 2017 and beyond utilising the new
convention facilities at Crown Towers Perth.
Restaurants and Bars
Despite subdued trading conditions, premium restaurants
including Silks, Nobu, Atrium and Bistro Guillaume
outperformed expectations. Main gaming floor restaurants
88 Noodle Bar, Junction Grill and Carver’s also
experienced increased patronage, primarily as a result of
pre- and post-dining for The Lion King, which played in
Crown Theatre.
Crown Perth restaurants were recipients of three Gold
Plate Awards at the Catering Institute of Australia’s 2015
Gala Awards Dinner with the honours going to Modo Mio
for Mediterranean Casual Dining, Atrium for Buffet Dining
and Silks for Licensed Chinese Restaurant.
At the 2015 Australian Hotels Association-Aon Hotel and
Hospitality Awards for Excellence, Crown Perth won four
categories including Crown Sports Bar for Redeveloped
Venue Award and the Sporting Entertainment Venue
Award and The Merrywell for WA’s Best Steak Sandwich
Award. More recently, Crown Perth’s Bistro Guillaume was
awarded Best Accommodation Hotel Wine List at the AHA
2016 Accommodation Awards for Excellence.
The annual Taste of Perth Food Festival featured returning
Crown Perth restaurants Nobu, Bistro Guillaume and Silks,
which together served over 12,000 dishes across the
weekend. Other key events held during the year included
various sporting activations promoted in Crown Sports
Bar, Nobu Matsuhisa’s visit for A Night with Nobu event,
and Eve Nightclub held the official Prince After Party
whilst also hosting Tex Perkins and Chingy.
Entertainment and Events
Crown Perth provided venues of choice for approximately
1,700 events throughout the year, up from 1,400 in the
previous year.
The elegantly refurbished Grand Ballroom was unveiled in
April at a luncheon attended by the Prime Minister of
Australia, the Hon. Malcolm Turnbull MP. The Grand
Ballroom hosted events including Crown Perth’s Blanc Noir
Melbourne Cup Lunch, the West Coast Eagle’s Gala
Auction and the Fremantle Football Club Doig Medal
Awards.
Key charitable events at Crown Perth included the Royal
Flying Doctors Altitude Ball, Youth Focus Night of Nights
Ball and Ronald McDonald House Charities Ball.
Crown Theatre had a successful year with The Lion King
selling a record 254,000 tickets to sold-out audiences
during its 117 performances. Other long-running shows
included Dirty Dancing, Cats and Ghost The Musical.
Short-run shows included Lord of the Dance, The
Australian Ballet – The Sleeping Beauty and Cirque
Adrenalin, in addition to live comedic performances.
15
Melco Crown Entertainment
Melco Crown believes that revenue trends will improve as Macau further evolves into
a multi-faceted, mass market-focused destination.
Overview
Melco Crown Entertainment (Melco Crown) is a developer,
owner and operator of integrated resorts in Macau and the
Philippines. At 30 June 2016, Crown held a 27.4% equity
interest in Melco Crown, valued at approximately
$2.3 billion. Melco Crown is listed on the NASDAQ with a
market capitalisation of US$6.4 billion at 30 June 2016.
In May 2016, Crown entered into an agreement with Melco
Crown for the repurchase of 155 million ordinary shares in
Melco Crown which generated proceeds of $1,067.1 million
and resulted in a net gain on sale of $602.0 million. This is
reported as a significant item.
The challenging market conditions affecting all casino
operators in Macau have adversely impacted Melco
Crown’s operating and financial results. Crown’s share of
Melco Crown’s normalised NPAT was an equity accounted
profit of $58.1 million, down 64.0% on the previous year.
Crown held a 34.3% interest for the full reporting period in
FY2015, whereas in FY2016 it held a 34.3% interest for
approximately 10 months and a 27.4% interest for
approximately 2 months.
After adjusting for pre-opening costs and the variance
from theoretical, Crown’s share of Melco Crown’s reported
result for the year was an equity accounted profit of
$42.7 million, down 65.0%.
In Macau, Melco Crown owns and operates two premium
properties, City of Dreams and Altira Macau, in addition to
a network of niche gaming facilities in the Mocha Clubs
business. It also operates and holds a 60% equity interest
in Studio City, an integrated resort in Cotai that opened in
October 2015. In the Philippines, Melco Crown holds a
72.9% equity interest in the operator of City of Dreams
Manila, an integrated resort that opened to the public in
February 2015.
Macau Market Update
Macau continues to face challenges arising from softer
gaming demand, which has adversely affected all casino
operators. Overall, gross gaming revenue across the Macau
market in the full year to 30 June 2016 declined 22.5%.
However, Melco Crown believes that revenue trends,
particularly in the mass market segments, will improve as
Macau further evolves into a multi-faceted, mass market-
focused destination.
Supported by the People’s Republic of China Central
Government’s long-term infrastructure blueprint, Macau is
undergoing a transition towards a more mass market
tourism-focused business model. Macau continues to
benefit from the government’s 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
accessibility and appeal of Macau as a multifaceted 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.
City of Dreams, Macau
City of Dreams is an integrated casino resort in Cotai,
Macau. It is a premium-focused property targeting high-
end customers and rolling chip players from regional
markets across Asia. At 30 June 2016, City of Dreams
operated approximately 500 gaming tables and 1,050
gaming machines.
Three exceptional hotels, Crown Towers (a Forbes
Five-Star Hotel), the Hard Rock hotel and the Grand Hyatt
Macau, (which spans two towers) together provide
approximately 1,400 guest rooms.
City of Dreams features around 30 restaurants and bars
which includes the contemporary French restaurant The
Tasting Room and Chinese culinary masterpiece Jade
Dragon. They have also been named among Hong Kong
and Macau’s best 100 dining establishments in addition to
the tributes of its five Michelin stars announced this year.
City of Dreams also feature the first street-front retail area
in Cotai, banquet and meeting facilities and recreation and
leisure facilities that include health and fitness clubs, three
swimming pools, spas and salons.
SOHO, a new lifestyle entertainment and dining precinct
located on the second floor of City of Dreams, is attracting
customers with its wide selection of food and beverage
options and other non-gaming offerings. The House of
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.
Enhancement works at City of Dreams include a fifth hotel
tower, designed by legendary architect the late Dame Zaha
Hadid, together with the first street-front retail area in
Cotai which was partially opened in June 2016. These
developments demonstrate Melco Crown’s dedication in
producing a multi-dimensional leisure and tourism
experience for the region.
Studio City, Macau
Melco Crown operates and holds a 60% interest in Studio
City, a large-scale Hollywood-inspired resort project that is
designed to deliver an unparalleled leisure entertainment
and hospitality experience. Studio City, which opened in
October 2015, is still in ramp-up phase. Studio City features
1,600 hotel guest rooms and at 30 June 2016 operated
approximately 250 gaming tables and 1,100 gaming
machines.
16
Located in Cotai, close to the Lotus Bridge immigration
point connecting Hengqin Island and a future station-point
for the Macau Light Rapid Transit, Studio City will
strengthen Macau’s leisure, business and tourism
proposition as a leading visitor destination in Asia.
The Studio City project is funded through a combination
of equity contributions from shareholders, proceeds from
the Studio City US$825 million senior notes and a
US$1.4 billion Studio City senior secured project loan.
Both of these debt instruments do not involve a corporate
guarantee from Melco Crown.
The Studio City Loan Agreement requires compliance with
various minimum financial conditions, all of which are based
on the consolidated EBITDA or cash flow. Compliance with
these conditions will be first tested for the twelve-month
period to 31 March 2017. The ramp-up of Studio City
operations must be significantly accelerated by this time in
order for Studio City to meet the requirements.
Melco Crown believes Studio City’s unique and diversified
offerings will make it a unique asset built consistent with
the Macau Government’s objective of delivering world-
class entertainment.
Altira, Macau
Altira Macau is designed to cater to Asian rolling chip
customers and players sourced primarily through gaming
promoters and features approximately 125 gaming tables
and 60 gaming machines. Altira Macau offers a luxurious
hotel experience with its internationally acclaimed
accommodation and guest services. In February 2016, it
was awarded the Forbes Five-Star rating in both Lodging
and Spa categories by the Forbes Travel Guide for the
seventh year running.
Mocha Clubs
Mocha Clubs comprise the largest non-casino based
operations of gaming machines in Macau. The number of
gaming machines in operation averaged approximately
1,200 during the year ended 30 June 2016.
City of Dreams, Manila
Melco Crown, through its 72.9% owned subsidiary, Melco
Crown (Philippines) Resorts Corporation (MCP), operates
City of Dreams Manila, an integrated resort in Manila.
City of Dreams Manila has three hotels comprising Crown
Towers, Nobu and Hyatt City of Dreams Manila, with
approximately 950 guest rooms in total. It 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.
City of Dreams Manila continues to grow revenues across
all business segments, providing Melco Crown with a
diversified earnings stream to complement its existing
operations in Macau. Melco Crown reported that City of
Dreams Manila delivered an improvement in all gaming and
non-gaming segments in the second quarter results of
2016 on a year-on-year basis. City of Dreams Manila
operated more than 240 gaming tables and more than
1,600 gaming machines at 30 June 2016.
Crown Resorts Limited Annual Report 2016
17
TAIPACOTAIGalaxy Phase IGalaxy Phase IIGalaxy PhaseIII & IVLotusBridgeTo MacauInternationalAirportVenetian Plaza Four SeasonsParisian(Sep 2016)City ofDreamsStudio CityImmigrationControl PointSandsCotaiCentralWynnPalace(Aug 2016)Lisboa(early 2018)MCE propertiesProperties under constructionProperties currently operatingTo HengqinPhase 1 Macau Light Rail Transit StationsMACAUCHINACHINACHINAHENGQINISLANDCOTAITAIPA“MacauTheme Park” LandMGMCotai(early 2017)Tropical GardenSt Regis TowerLand PreserveShunTakDevelop-mentLot 7 & 8Broad-wayCoD Tower 5(late 2017)MacauDomeSportsGround Other International Interests
Crown Aspinalls
Crown Aspinalls 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 Aspinalls offers members and
guests an exciting and opulent world of international VIP
gaming, in an environment that only London can provide.
Normalised EBITDA from Crown Aspinalls was $26.5
million, down 16.4% on the previous period. Reported
EBITDA for the period was $16.0 million, an increase of
$61.3 million on the previous period.
This reported EBITDA result takes into account an
unfavourable variance from the theoretical VIP program
play result, which had a negative EBITDA impact of
$10.5 million. This compares to a negative EBITDA impact
of $77.0 million in the previous period.
Aspers Group
Crown holds a 50% interest in Aspers Group. In 2009,
Crown’s investment in Aspers Group was written down to
zero. Aspers Group operates four casinos in the United
Kingdom, in Newcastle, Stratford (London), Milton Keynes
and Northampton (the latter in a joint venture with Kerzner
UK Limited).
As a result of recent strong operating results and a debt
refinance, Crown has reversed the prior net impairment
loss (after taking into account unbooked losses) of £19.8m
($35.4m), which has been accounted for as a significant
item.
Alon Las Vegas
Crown, through a majority-owned subsidiary, has acquired
a 34.6 acre vacant site on the Las Vegas strip. Crown and
its partners are continuing design work on the project.
The capital structure of the ownership entity is yet to
be settled.
Caesars
Crown holds an ownership interest in Caesars
Entertainment Corporation (approximately 2%), which is
the fourth-largest gaming company in the world, owning
and operating approximately 50 casinos and hotels and
seven golf courses under several brands; and Caesars
Acquisition Company (approximately 2%), which is focused
on acquiring and developing a portfolio of investments in
the gaming and interactive entertainment industries.
Nobu
Crown Resorts holds a 20% interest in Nobu, one of the
world’s most recognised Japanese restaurant brands.
Nobu operates 13 owned restaurants in the US, London
and Tokyo, 17 international licensed restaurants and
manages three hotels in Las Vegas, Manila and Miami. The
other investors in Nobu are Nobu Matsuhisa, Robert De
Niro and Meir Teper. The restaurant business has a pipeline
of four new owned restaurants and three new licensed
restaurants. The managed hotels business has a pipeline of
new hotel openings, which include Chicago, London,
Malibu, Los Cabos, Bahrain and Riyadh.
Cannery
Crown holds a 24.5% 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. Cannery has entered into separate agreements to
dispose of both the Meadows Racetrack & Casino as well
as the Cannery Casino and East Side Cannery to third
parties.
In 2015, the carrying value of Crown’s investment in
Cannery was written down to nil. During the year, Crown
did not receive a distribution of any profits or recognise any
earnings from Cannery.
18
Crown Wagering and Online Social
Gaming Operations
The Crown wagering and online social gaming operations
contributed revenues of $229.9 million and an EBITDA loss
of $5.4 million in the year ended 30 June 2016, which was
below the $16.0 million loss recorded in the prior year.
Overall, the wagering and online social gaming businesses
were profitable in the second half and revenue growth was
strong.
CrownBet
Crown owns a 62% controlling interest in CrownBet, which
is led by the founding shareholder and CEO, Matthew Tripp,
and an experienced management team with a proven track
record of building highly successful businesses in the
wagering industry. CrownBet is the fastest growing
significant operator in the online wagering sector and is an
Australian-owned business in an industry which is largely
foreign-owned.
Betfair
Betfair is 100% owned by Crown and provides access for
Australian and New Zealand customers to the world’s
leading betting exchange. In the current financial year,
Betfair has concentrated on growing revenue from the
core exchange product whilst delivering that product as
efficiently as possible, resulting in strong revenue growth
and a sustainable profitability base which will grow over
time.
DGN
DGN is a leading developer of online social games based in
Austin, Texas. In July 2015, Crown acquired 60% of DGN
for US$32.5 million (A$42.5 million). Subsequently in
December 2015, Crown increased its shareholding in DGN
to 70% by investing a further US$15m (A$20.8 million) in
return for new units in the company.
CrownBet is building its business based on:
• leveraging its relationship with Crown’s Australian
integrated resorts, as well as a number of unique ‘partner’
relationships including the AFL and racing.com (a joint
venture between Seven West Media and Racing Victoria);
In December 2015, Crown through its majority-owned
subsidiary, DGN, acquired 100% of Winners Club Limited
(and subsidiaries) for US$10 million (A$13.8 million).
Winners Club is a business which provides development
and analytical services to online social gaming sites.
• developing proprietary software in order to offer a
best-in-class user experience, with features such as live AFL
vision (the only wagering provider in Australia to offer this),
a unique loyalty program and market leading apps; and
• being recognised as the most responsible wagering
operator in Australia.
Draftstars
In April 2016, a joint venture, Draftstars, was established
between CrownBet and Fox Sports. Draftstars is the
Official Daily Fantasy Sports Partner of the AFL.
Crown Resorts Limited Annual Report 2016
19
Corporate Social Responsibility
Crown is proud of its commitment to the communities in which it operates.
A key focus is to give back by creating and supporting life-changing opportunities,
both in the workplace and through the Crown Resorts Foundation.
Crown recognises its responsibility to the communities in
which it operates and that’s why our approach to corporate
social responsibility (CSR) is integrated into everything we
do. All of our CSR programs are developed to promote
diversity, inclusion, community and environmental
sustainability within Crown.
Creating opportunities through employment
Crown is committed to investing in its people and helping
employees reach their personal ambitions. Crown
understands that to deliver the exceptional service
expected by its customers, the workforce must be
well trained, motivated and rewarded for their skills
and dedication.
Crown is recognised as one of Australia’s leading
employers. Our learning and development programs at
Crown College, our Indigenous employment program and
our disability employment program are all considered best
practice, leading the way for other Australian workplaces.
Crown’s Australian resorts remain the largest single-site
private sector employers in their states, with more than
15,800 people working at Crown Melbourne and Crown
Perth in over 700 different roles. As at 30 June 2016,
Crown Melbourne had approximately 10,000 people
working on site and Crown Perth had more than 5,800
people working on site.
Crown College continues to be recognised throughout
Australia as one of the largest and most successful
enterprise-based registered training organisations. In FY16,
Crown employees undertook approximately 400,000
hours of career training.
In addition, Crown has committed to deliver training for
500 Victorians to obtain new skills in the tourism and
hospitality industry through Crown College. The four-year
program, now in its early stages, is assisting retrenched
automotive workers, Indigenous Victorians, new migrants
and women in crisis to obtain new qualifications to prepare
them for future employment. Crown will continue to
promote the training program with a particular focus on
workers affected by continued structural change in the
Victorian manufacturing industry.
Diversity and inclusion
Diversity and equality are part of day-to-day business at
Crown and are essential to the high performance of the
organisation. Crown continues to be an industry leader
within the Indigenous employment sector, working closely
with the Federal Government and community
organisations to deliver positive outcomes for Aboriginal
and Torres Strait Islander people.
In September 2015, Crown signed an Indigenous
Employment Parity Agreement with the Federal
Government to grow Crown’s Indigenous workforce to 3.1%
of all employees by August 2019. With the additional target
of 2,000 jobs created by 2021, Crown’s Indigenous
Employment Program has grown substantially in the past
financial year, including the hire of the 550th Indigenous
employee in March 2016.
Crown’s Indigenous strategy is centrally focused on
reconciliation. In July 2015, Crown launched its second
Reconciliation Action Plan, joining only twelve out of 600
companies in qualifying for an Elevate status, recognising
our work towards real change.
CROWNability was launched across Crown’s Australian
properties eighteen months ago to support Crown’s
strategy to provide an employment pathway for people
with disability. By working closely with disability
employment service providers, opportunities have been
created across a range of occupations, with a total of 111
people now employed under the program.
As part of the company’s commitment to equality and
gender diversity Crown Resorts CEO Rowen Craigie has
joined the Victorian chapter of the Male Champions of
Change. The program draws together a high-profile group
of CEOs who are committed to advancing gender equality
across Australian organisations and in the community.
Crown has already taken action to explore new strategies
to reduce gender inequality in Australian workplaces.
A new Group Manager for Gender Equity has been
appointed and work has commenced on a Gender Action
Plan to be launched in FY2017. This plan will ensure that
gender equity is engrained in our business policies and
practices and will develop a pathway for more women to
take on leadership roles in our business.
Industry-leading social safeguards
Crown continues to demonstrate its leadership in the
responsible service of gaming with many initiatives and
services available at both Australian resorts. These include
the establishment of onsite Responsible Gaming Support
Centres, a world first in 2002 at Crown Melbourne, and the
introduction of the Play Safe Limits program, the Crown-
developed voluntary time and loss limit setting program.
In November 2015, the Victorian government statewide
pre-commitment scheme for gaming machines, ‘YourPlay’,
was also implemented at Crown Melbourne, as required in
Victoria.
The Responsible Gaming Support Centres at Crown’s
Australian resorts provide the focal point for customers
seeking assistance with their gambling behaviours. Both
centres provide information about responsible gaming
programs and services, which are free, confidential and
available 24 hours a day, seven days a week. Both centres
offer a self-exclusion program, where customers can
voluntarily ban themselves, and information about and
assistance with the YourPlay or Play Safe Limits program.
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Training is an essential component in the delivery of
Crown’s responsible gaming services and programs, and
commences for all employees as part of the Induction
Program. Training is provided using a blended model of
facilitator-led and online modules, and for relevant staff
refresher training is delivered at a minimum every two
years. This year, Crown implemented a more interactive
responsible gaming online training program.
Information about responsible gaming is widely available at
both Australian resorts. This includes responsible gaming
brochures at Loyalty Program information desks and other
locations throughout the gaming floor, at Responsible
Gaming Support Centres, as well as information on kiosks
and plasma screen, and for employees in back of house
areas. Each Australian resort also operates a Responsible
Gambling Code of Conduct, which is advertised and readily
available.
Crown Melbourne and Crown Perth engage with external
gambling help service providers and other community
welfare organisations in their respective states. The
resorts continue to take an active role in Responsible
Gambling Awareness Week, a government, community and
industry initiative.
The Crown Resorts Responsible Gaming Committee,
chaired by independent Director, Professor John Horvath
AO, continues to meet regularly to review and monitor
responsible gaming programs and promote awareness of
responsible gaming issues.
Supporting our communities
Crown believes in supporting the communities in which
it operates. Crown’s stakeholders expect us to act
responsibly and ethically and we engage regularly with
them in order to align our business activities with
community expectations. Recognising our role within
our communities, together with our employees, we
support many community causes and organisations
through our resort-specific community partnerships,
employee volunteering opportunities and the Crown
Resorts Foundation.
Crown’s community support comes in many different
forms. At a resort level we are able to support charities
through subsidising, promoting and hosting their
fundraising events and providing raffle prizes. As well,
many of our employees enthusiastically volunteer their
time to support a wide range of causes.
We leverage our corporate networks, funds and people to
deliver the best outcomes for our community partners.
This year, the Children’s Cancer Foundation’s Million Dollar
Lunch was once again hosted by Crown Melbourne. With
the support of its suppliers, Crown committed to delivering
the event cost-free, significantly assisting the Foundation
to raise over $1.7 million dollars which will be used to fund
childhood cancer research programs, clinical care and
family support.
We look across our business to identifying opportunities to
provide support and help raise the profile of and funding
for organisations that deliver year-round support to those
who need it most. During the 2016 NRL Women in League
round, in partnership with the two teams of whom Crown
is the major sponsor, the South Sydney Rabbitohs and the
Melbourne Storm, Crown gave up its logo position again
for Ovarian Cancer Australia’s logo, to help raise awareness
and support for the organisation. Both clubs contributed
by organising their own fundraisers and the Crown Resorts
Foundation donated $20,000 plus a further $1,000 for
each try.
Within our business we look for opportunities to leverage
our skillsets to support communities in need. Crown
Perth’s chefs’ longstanding-commitment to Foodbank
Western Australia is an excellent example. Every week
Crown Perth’s chefs cook large quantities of meals which
are donated to Foodbank. Significantly, over the course of
the year, more than 30,000 meals were donated to help
feed Perth’s most vulnerable.
Our employees help set the agenda for our community
engagement and are critical in its delivery. Within business
departments, teams will organise their own fundraising
events for charities such as SIDS and Kids, the Cancer
Council, Oxfam, Jeans for Genes and the RSPCA. Since the
formation of the Crown Resorts Foundation, the Employee
Advisory Committee (EAC) to the Foundation has been
able to choose a couple of key organisations and develop
fundraising events that reach across the business. The EAC
successfully coordinated a fundraising event during White
Ribbon Week which raised over $40,000 for The Luke
Batty Foundation.
This culture of giving and support is evident throughout
the business. Crown’s Australian Resorts CEO, Barry
Felstead, participated in the St Vincent de Paul CEO
Sleepout in Perth, this year raising over $120,000.
Participating in this event for six consecutive years,
Barry has raised over $600,000 which has been allocated
to St Vincent de Paul’s homeless and emergency
housing services.
The Crown Resorts Foundation
Overview
We are very proud of the work that the Crown Resorts
Foundation is doing in promoting Indigenous education
opportunities, the arts and culture and in entering
partnerships with organisations that encourage and foster
social cohesion.
The Crown Resorts Foundation, in partnership with the
Packer Family Foundation, is two years into its 10 year
journey to deliver $200 million of funding to the Australian
community through their National Philanthropic Fund. The
National Philanthropic Fund is administered through two
separate funds, the $100 million Community Partnerships
and Indigenous Education Fund and the $100 million
National Arts Fund.
Currently providing funding to over 85 community and
education organisations, the National Philanthropic Fund
aims to deliver more young Australians access to a better
education and more opportunities to be creative and to
develop the self-esteem and confidence that will support
them to build more fulfilled lives.
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Crown Resorts Limited Annual Report 2016 Supporting Indigenous education
The Community Partnerships and Indigenous Education
Fund provides financial support for key community
organisations with a focus on empowering young
Aboriginal and Torres Strait Islander youth through
education.
To date the Foundations have provided significant multi-
year support to 14 different Indigenous education focused
programs. The programs selected involve parents and
communities to establish environments where trust and
security enable children to thrive while benefitting from a
consistent school-based education.
Supporting our local communities – Crown
employees lead the way
Also within the Community Partnerships and Indigenous
Education Fund is an allocation for smaller one-off grants
and to recognise employee-led fundraising initiatives. The
Crown Melbourne and Crown Perth Employee Advisory
Committees oversee these programs.
In November 2015, Crown Melbourne’s Employee Advisory
Committee organised a successful fundraiser during White
Ribbon Week in support of the Luke Batty Foundation.
The event raised more than $40,000 and increased
awareness about domestic violence, with 2015 Australian
of the Year, Rosie Batty, the guest of honour.
Supporting Australian culture
Recognising the ability of the arts to engage and inspire,
the National Arts Fund aims to improve the accessibility
and availability of the arts to young Australians.
This year, in partnership with the Packer Family
Foundation, the Crown Resorts Foundation launched its
$25 million Melbourne and Perth Arts Education Initiative.
Based on the success of our $30 million Western Sydney
Arts Initiative, the Melbourne and Perth Art Education
Initiative aims to provide more opportunities for young
Australians to engage with the arts and to reach their full
potential.
Over eight years, the Foundations will provide $25 million
for arts programs in Melbourne and Perth. As well as
promoting creativity, most of these programs will be
education-focused, using art as the vehicle with which to
engage youth with their learning and their community.
Progress towards environmental goals
Environmental action continues across Crown’s Australian
resorts, as we work towards leading sustainable business
practice in the gaming and entertainment industry. Crown
has implemented several programs to reduce its
environmental impact, focusing on three major areas:
energy efficiency, water conservation and waste reduction.
Crown Melbourne and Crown Perth work together to
develop and implement strategies for both properties that
will reduce environmental impact and contribute to more
sustainable practices as part of everyday business
decisions.
In 2015, Crown Melbourne launched CrownEarth to
formalise initiatives in environmental sustainability which
had commenced from 2010. CrownEarth reinforces
Crown’s commitment to the environment in all aspects of
its operations. The launch and associated education
campaign for employees and stakeholders marks the
half-way point in the implementation of a 10-year strategic
plan.
Communication encourages employees to be
environmentally aware in all aspects of their lives, not just
at work, and includes a weekly e-newsletter, quarterly staff
magazine, electronic communication kiosks and a
dedicated CrownEarth section on the intranet.
Crown’s resource monitoring and reporting systems
continue to provide live data to relevant business units
highlighting their electricity, gas and water consumption
throughout both resorts. The systems provide each
business unit with daily, weekly and monthly reports that
show time-of-use data, so that resource savings
opportunities can be identified and the effectiveness of
programs can be monitored.
In addition to our internal programs, Crown participated in
a number of externally organised programs, including the
global Earth Hour when both resorts turned off all non-
essential lighting, Clean-up Australia Day and the Carbon
Disclosure Project (for the seventh year running).
Despite an increase in business activity, this year Crown
achieved reductions in greenhouse gas emissions intensity
of 5.2% per area and 4.8% per $EBITDA, a decrease in
water consumption of 1.5% and an overall increase in
recycling rates to 72%.
2016 CSR Report
Crown’s 2016 Corporate Social Responsibility Report will
be published later this year and contains more detail and
specific data on all the above areas. Copies of previous
CSR Reports are available on the Crown Resorts website
at: www.crownresorts.com.au.
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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 2016. The disclosures in this Statement
respond to the ASX Corporate Governance Council’s third
edition of its Corporate Governance Principles and
Recommendations.
Crown Board Committees
To assist in carrying out its responsibilities, the Crown
Board has established the following Committees:
Committees
Current Members
Audit and Corporate
Governance Committee
Corporate Social
Responsibility Committee
Principle 1: Lay solid foundations for
management and oversight
Finance Committee
Functions reserved for the Board and Senior
Management
Investment Committee
Nomination and
Remuneration Committee
Occupational Health &
Safety Committee
Responsible Gaming
Committee
Risk Management
Committee
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.
More information
A full copy of the Crown Board Charter is available
at: www.crownresorts.com.au under the heading
Corporate Governance – Charters.
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).
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.
Benjamin Brazil (Chair)
Rowena Danziger
Michael Johnston
Helen Coonan (Chair)
Rowen Craigie
John Horvath
Harold Mitchell
Geoff Dixon (Chair)
Benjamin Brazil
Michael Johnston
Robert Rankin (Chair)
John Alexander
Rowen Craigie
Geoff Dixon (Chair)
John Horvath
Harold Mitchell
Rowena Danziger (Chair)
Rowen Craigie
John Horvath
Michael Johnston
John Horvath (Chair)
Rowen Craigie
Rowena Danziger
Geoff Dixon (Chair)
Rowen Craigie
Rowena Danziger
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CorporatE GovErnanCE StatEMEnt CONTINUED
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Director probity reviews and elections
Director agreements
Every appointment of a Crown director is subject to
receipt of necessary gaming regulatory approvals.
The gaming industry is highly regulated and 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.
Officers, directors and certain key employees of Crown
licensed subsidiaries must file applications with relevant
gaming authorities and may be required to be licensed in
certain jurisdictions. These investigations generally
concern the responsibility, financial stability and character
of the owners, managers and persons with financial
interest in gaming operations and generally include
requirements to obtain police checks and credit checks
and undergo fingerprinting.
A director will only be formally appointed once all
necessary gaming regulatory approvals have been
obtained. As a separate exercise, Crown undertakes its
own internal investigations on the suitability of nominated
directors as a pre-condition to a recommendation to the
Board to appoint a director.
The Company’s Constitution requires that an election of
directors must take place each year. In addition, directors
appointed to fill casual vacancies during the year, must
retire from office at the next annual general meeting
following his or her appointment but are eligible for
re-election by shareholders at that time. The Notice of
Meeting for an Annual General Meeting sets out the
background for the election and re-election of directors,
informs shareholders where they can find background
information on the skills and experience of the relevant
director and provides a recommendation of the Board in
relation to the proposed election or re-election.
Accordingly, security holders are provided with all material
information in Crown’s possession relevant to a decision
on whether or not to elect or re-elect a director.
More information
Copies of Crown’s past and present Notices of
Meeting are available at: www.crownresorts.com.au
under the heading Investors & Media – Annual
Reports.
Crown directors are provided with an induction pack upon
appointment which, among other things, includes a letter
agreement setting out the terms of that director’s
appointment. The letter agreement, which directors must
countersign, describes when the appointment
commences and when it ends, sets out the director’s
powers and duties, sets out agreed remuneration
arrangements and obliges the director to comply with all
Crown Policies, Procedures and Codes of Conduct. In
addition, the letter agreement requires the director to enter
into a separate undertaking to inform Crown of any
interests that director may have in securities (and
contracts relevant to securities) so that Crown is able to
comply with its disclosure requirements under Listing Rule
3.19A to provide ASX with completed Appendices 3X, 3Y
and 3Z within the time period allowed by the Listing Rules.
Company Secretary accountability
The company secretary is accountable directly to the
Board, through the Chair, on all matters to do with the
proper functioning of the Board. The decision to appoint
or remove a company secretary must be made or
approved by the Board.
The role of the company secretary is set out in the Crown
Board Charter and includes:
• advising the Board and its committees on governance
matters;
• monitoring that Board and committee policy and
procedures are followed;
• coordinating the timely completion and despatch of
Board and committee papers;
• ensuring that the business at Board and committee
meetings is accurately captured in the minutes; and
• helping to organise and facilitate the induction and
professional development of directors.
More information
A full copy of the Crown Board Charter is available
at: www.crownresorts.com.au under the heading
Corporate Governance – Charters.
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Diversity policy
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.
The objectives were reviewed and revised with effect from 1 July 2015 to recognise that a number of the originally adopted
objectives had been achieved. Additional objectives were also added which recognise Crown’s participation in the Male
Champions of Change program and its succession planning processes.
The Male Champions of Change strategy centres on creating a group of influential men who work together to advance
gender equality within their organisations and more broadly across society.
The Victorian Equal Opportunity and Human Rights Commissioner invited 22 Victorian male CEOs and other high profile
men from business, politics, government and academia to form the Victorian Male Champions of Change (MCC). Crown’s
CEO, Rowen Craigie, is one of the CEOs to accept this invitation.
An assessment of Crown’s progress in achieving the adopted objectives has also been included in the table below. These
objectives have been set in relation to employees of Crown Resorts Limited and its wholly-owned subsidiaries.
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Objective
Crown’s Progress
1. 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.
2. To maintain the level of female
participation in leadership and
development programs (which
incorporate targeted mentoring/
coaching elements) across the
group at no less than 45% of all
participants.
3. 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.
Overall good progress was made during the year in relation to this objective. In
summary, female candidates were presented on candidate short lists for at
least 73% of all Senior Management and Senior Executive positions recruited
during the year. Of the positions that did not have a female shortlisted, these
were generally for roles which traditionally have a lower female pool of
candidates such as the role of Head Engineer.
Crown Resorts’ wholly owned properties achieved 45% female participation in
leadership and development programs out of the 304 total participants.
In FY15 Crown Resorts established and rolled out a new Australian Resorts
Classification Framework to optimise the approach to pay decisions, and to
harmonise the distinction between career and salary levels across properties.
This framework was used during the period to perform an equity review on the
remuneration of key roles within the group to ascertain the existence of any
gender pay gaps.
The review has identified that there potentially may be a gender pay gap,
although further analysis is required to confirm the position and this is currently
underway.
Separately, Crown is reviewing and exploring a more sophisticated tool to
understanding key drivers of pay, with gender being a key variable for this
investigation, in addition to other individual attributes, organisational factors and
external influences. This new tool will assist in the further analysis of any
potential pay gaps currently underway.
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Crown Resorts Limited Annual Report 2016
CorporatE GovErnanCE StatEMEnt CONTINUED
Objective
Crown’s Progress
4. To participate in the Male
Champions of Change program
and to implement relevant actions
arising out of that program.
As previously reported, Crown Resorts CEO Rowen Craigie joined the Victorian
Chapter of the Male Champions of Change (MCC) program, which is a group of
influential men who work together to advance gender equality within their
organisations and more broadly across society.
Mr Craigie was invited to join this group by the Victorian Equal Opportunity and
Human Rights Commissioner who also invited 22 Victorian male CEOs and
other high profile men from business, politics, government and academia to
form the Victorian MCC.
Through participating in the Victorian MCC, Crown is progressing action plans
in line with the group and is currently developing a Gender Action Plan.
Crown has appointed a new Group Manager - Gender Equity role who is
responsible for gender equity issues across the Group.
A thorough exercise was undertaken during the year to identify high potential
women across Crown Melbourne and Crown Perth properties.
Once these people were identified, an analysis was undertaken to ascertain
what development opportunities had or could be applied to aid in their
development and career progression. This exercise was compiled into a report
for review and will be extended to all Crown Resorts companies in the first half
of FY17.
5. To identify and implement
development plans for high
potential women for career
progression as part of the
company’s succession planning
processes and to ensure that
these development plans are
reviewed annually by the CEO.
The proportion of women employees in the group, women in senior executive positions and women on the Board as at
30 June 2016 is as follows:
Measure
Result
Proportion of women employees in the
group:
There were 5,169 women in the group. This represents 42% of the total
workforce of 12,453 employees.
Proportion of women in senior
executive positions in the group:
There were 30 women in senior executive positions in the group. This represents
19% of senior positions in the group.
Proportion of women on the Board:
Two women out of 11 directors, or 18%.
For the purposes of these statistics, the term “senior executive position” refers to the Executive Team and Board members
of Crown Resorts Limited, Crown Melbourne, Crown Perth and Betfair as well as the most senior functional leaders from
each operational unit therein. The Executive Team is comprised of persons with the title Executive General Manager, Chief
Information Officer, Chief Marketing Officer together with the Chief Operating Officers, Chief Financial Officers, and Chief
Executive Officers within the group.
Crown’s Audit & Corporate Governance Committee has been delegated responsibility for developing and monitoring the
application of Crown’s Diversity Policy.
More information
A full copy of Crown’s Diversity Policy is available at: www.crownresorts.com.au under the heading Corporate
Governance – Policies.
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process for evaluating performance of the
Board, its Committees and its Directors
the members at those meetings has also been provided in
the Directors’ Statutory Report.
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,
procedures 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.
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.
Principle 2: Structure the Board to
add value
nomination and remuneration Committee
Crown has established a Nomination and Remuneration
Committee. The Nomination and Remuneration
Committee has adopted a formal Charter that outlines its
duties and responsibilities.
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. Information
regarding the number of times the Committee met
throughout the period and the individual attendances of
The role of the Committee is to assist the Board to
develop, maintain and implement policies in relation to:
1. the selection and appointment practices for directors;
and
2. the remuneration of directors and relevant executives.
Selection, appointment and development of directors
The role of the Nomination and Remuneration Committee
includes to:
• review Crown Resorts’ procedure for the selection and
appointment of new directors (Selection Procedure)
and make appropriate recommendations to the Board
in relation to the Selection Procedure;
• implement the Selection Procedure and make
nomination recommendations to the Board;
• develop succession plans in order for the Board to
maintain appropriate experience, expertise and
diversity;
• review Crown Resorts’ procedure for the evaluation of
the performance of the Board, its Committees and its
directors and be primarily responsible for the
implementation of the evaluation process; and
• implement a plan for enhancing director competencies
and ensure that an effective induction process is in
place for new directors.
The Selection Procedure requires that in the event that a
new director appointment is required, the Nomination and
Remuneration Committee (on behalf of the Board) must
adhere to procedures including the following:
• the experience and skills appropriate for an appointee,
having regard to those of the existing Board and likely
changes to the Board will be considered;
• upon identifying a potential appointee, specific
consideration will be given to that candidate’s:
– competencies and qualifications;
– independence;
– other directorships and time availability; and
– the effect that their appointment would have on the
overall balance and composition of the Board
including by reference to the Crown Board Skills
Matrix adopted from time to time; and
• finally, all existing Board members must consent to the
proposed appointment.
The Nomination and Remuneration Committee also has
responsibility for reviewing the Board Skills Matrix on an
annual basis to ensure it remains consistent with the
objectives of Crown Resorts and existing regulatory
requirements and recommendations.
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Crown Resorts Limited Annual Report 2016
CorporatE GovErnanCE StatEMEnt CONTINUED
remuneration of directors and relevant executives
The role of the Nomination and Remuneration Committee also includes:
1. the review and recommendation of appropriate Directors’ fees to be paid to Non-Executive Directors; and
2. 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 non-executive directors and senior executives which will apply during the financial year ending
30 June 2017;
• the short term bonus payments made to senior executives referable to the financial year ending 30 June 2016; and
• a proposed adjustment to the determination of Crown Profit under the 2014 Crown LTI.
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.
Board Skills Matrix
As noted above, the Selection Procedure for director nomination requires that the Nomination and Remuneration
Committee (on behalf of the Board) consider the effect any proposed director candidate would have on the overall balance
and composition of the Board including by reference to the Crown Board Skills Matrix adopted from time to time.
The Crown Board has adopted the following Board Skills Matrix which sets out the mix of skills and diversity that the Board
is looking to achieve in its membership. The Board Skills Matrix highlights the key skills and experience of the Board and
the extent to which those skills are currently represented on the Board and on each of its Committees.
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Skill / Competency
total number of Directors
Executive Experience
Experience in senior positions at executive levels.
Strategic Planning and Execution
Ability to develop and implement successful strategy
and deliver agreed strategic planning goals.
Risk Management
Experience in the oversight and management of
material business risk including Board Risk
Management Committee membership.
Financial Acumen
Senior executive or equivalent experience in financial
accounting and reporting, capital management,
industry taxation, internal financial controls and
corporate financing arrangements.
Governance
Experience with listed and other organisations subject
to robust governance frameworks with an ability to
assess the effectiveness of relevant governance
processes.
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Skill / Competency
total number of Directors
Occupational Health and Safety
Experience in relation to workplace health and safety.
Environment and Sustainability
Experience in relation to environmental and social
responsibility and community.
Legal and Regulatory
Experience in legal and regulatory matters including
regulatory and contractual frameworks governing
gaming matters.
Information Technology
Senior executive experience in information technology
including gaming systems and data security.
Human Resources / Remuneration
Experience in relation to remuneration practices,
development of incentive plans, succession planning
and director appointment processes including Board
Remuneration Committee membership.
Capital Projects
Senior executive experience in executing large scale
projects with long term investment horizons and
substantial capital outlays.
Sales and Marketing
Senior executive experience in marketing coupled with
a detailed understanding of Crown’s strategic direction
and competitive environment.
Industry Experience - Gaming and Entertainment
Senior executive experience in the gaming and
entertainment industry.
Industry Experience - Hospitality and
Management
Senior executive experience in the hospitality, food and
beverage industries.
Industry Experience – Tourism
Senior executive experience in the tourism industry.
Industry Experience – Public Policy
Experience in public and regulatory policy, including in
relation to gaming related policy.
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The Board Skills Matrix, albeit important, is only part the Selection Procedure which the Board is required to follow. As
mentioned, the Nomination and Remuneration Committee has responsibility for reviewing the appropriateness of the Board
Skills Matrix on an annual basis.
Succession planning in order for the Board to maintain appropriate experience, expertise and diversity is an important part
of the responsibilities of the Nomination and Remuneration Committee.
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Crown Resorts Limited Annual Report 2016
CorporatE GovErnanCE StatEMEnt CONTINUED
relationships affecting independence
The table below sets out the names of Crown’s directors as at the date of this Statement, indicates which of those directors
are considered to be independent directors and notes the length of service of each director from the date of their
appointment to 1 September 2016:
Name of Director
Robert J Rankin LLB, BEc
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
Andrew Demetriou BA, BED
Independent, Non-Executive Director
Geoffrey J Dixon
Independent, Non-Executive Director
John S Horvath AO, MB, BS (Syd),
FRACP
Independent, Non-Executive Director
Michael R Johnston BEc, CA
Non-independent, Non-Executive
Director
Harold C Mitchell AC
Independent, Non-Executive Director
Independent Board Directors
Independence Status
Non-independent
Length of Tenure
(By years and complete months)
1 year, 1 Month
Non-independent
9 Years, 2 Months
Independent
7 Years, 3 Months
Independent
4 Years, 9 Months
Non-independent
9 Years, 4 Months
Independent
9 Years, 2 Months
Independent
1 year, 8 Months
Independent
9 Years, 2 Months
Independent
6 Years
Non-independent
9 Years, 2 Months
Independent
5 Years, 7 Months
The Crown Board is currently comprised of eleven Directors, seven of whom are independent Directors. A majority of
Directors are therefore independent. The independence of Directors is assessed against a list of criteria and materiality
thresholds. Those criteria have been formally enshrined in the Crown Board Charter. Each Director who is listed as an
independent Director complies with the relevant criteria for independence set out in the Crown Board Charter.
Board Chair independence
The roles of Chair and Chief Executive Officer are exercised by separate persons. Robert Rankin is Chairman and Rowen
Craigie is Chief Executive Officer and Managing Director.
Departure from Recommendation 2.5: The Principles and Recommendations recommend that the chair of the Board
should be an independent Director. Crown’s Chairman is not an independent Director. Crown’s Chairman is the Chief
Executive Officer of Crown’s major shareholder. The Board believes that the interests of shareholders are well served by a
Chairman who represents the interests of shareholders and who will act in their best interests as a whole. Crown’s
Chairman is well placed to act on behalf of shareholders and in their best interests.
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Director professional development
The induction process for new directors involves both
formal and informal elements. As noted earlier, new
directors are provided with a formal induction pack which
includes important information a director must know about
the company and their appointment terms and includes
copies of relevant constitutions, Board Charters and
Policies. In addition, new directors are provided with tours
of Crown’s main businesses and the opportunity to spend
time with various members of senior management.
The professional development program for directors has
largely consisted of presentations from time to time to the
Board regarding issues including developments in
accounting standards, updates in legal issues and
governance processes.
In an attempt to provide more structure to director
professional development, the Nomination and
Remuneration Committee has been formally delegated with
responsibility for implementing a plan for enhancing director
competencies and ensuring that an effective induction
process is in place for new directors. This process involves,
amongst other things, a review of the Board Skills Matrix
and consideration of the extent to which those skills are
currently represented on the Board and on each of its
Committees. Where skills are not currently adequately
represented, appropriate professional development in this
area will be considered.
Principle 3: Act ethically and
responsibly: A listed entity should act
ethically and responsibly
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.
Code of Conduct for Directors
The purpose of the Code of Conduct for Directors is to
ensure they have a clear understanding of Crown’s
expectations of their conduct and reinforces the statutory
duties of directors to, among other things:
• act with proper purpose and honesty, in good faith and
in the best interests of Crown as a whole;
• use due care and diligence in fulfilling the functions of
office; and
• avoid improper use of information acquired as a Director,
improper advantage of the position of Director and
conflicts of interest.
Crown directors have an obligation to be independent in
judgement and actions and to take all reasonable steps to
be satisfied as to the soundness of all decisions taken by
the Board. Directors are required to maintain the
confidentiality of confidential information received in the
course of the exercise of their duties and are prohibited
from engaging in conduct likely to bring discredit upon
Crown.
Finally, directors are obliged to, at all times, comply with the
spirit as well as the letter of the law, the principles of the
Code of Conduct and are encouraged to the report
suspected unlawful or unethical behaviour.
Code of Conduct for employees
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.
More information
Full copies of Crown’s Code of Conduct for Directors
and Code of Conduct for Employees are available at:
www.crownresorts.com.au under the heading
Corporate Governance – Codes.
Principle 4: Safeguard integrity in
corporate reporting
audit & Corporate Governance Committee
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.
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Crown Resorts Limited Annual Report 2016
CorporatE GovErnanCE StatEMEnt CONTINUED
Further information about each Committee member’s
qualifications and experience is set out in the Directors’
Statutory Report. Information regarding the number of
times the Committee met throughout the period and the
individual attendances of the members at those meetings
has also been provided 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.
More information
A full copy of each of the Audit & Corporate
Governance Committee Charter is available at:
www.crownresorts.com.au under the heading
Corporate Governance – Charters.
CEo & CFo declarations
Before it approved Crown’s full year financial statements,
the Board received assurance from the Chief Executive
Officer and the Chief Financial Officer a declaration that, in
their opinion:
• the financial records of Crown have been properly
maintained;
• the financial statements comply with the appropriate
accounting standards and give a true and fair view of
the financial position and performance of Crown; and
• that the opinion has been formed on the basis of a
sound system of risk management and internal control
which is operating effectively.
An equivalent assurance was also obtained in relation to
Crown’s half year accounts.
auditor’s attendance at aGMs
Crown security holders are provided with an opportunity
at the AGM to ask questions and make comments on
Crown’s Annual Report and on the business and
operations of the company. Crown’s Auditor is required to
attend the AGM and security holders are therefore also
provided a reasonable opportunity to ask the Auditor
questions about the Auditor’s Report and the conduct of
the audit of the Financial Report. Security holders are
informed of their opportunity to address the Auditor in the
Notice of Meeting for the AGM.
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.
Principle 6: Respect the rights of
security holders
providing online information to investors
Crown has a dedicated corporate website which provides
information about itself and its governance to investors.
The website has a dedicated Corporate Governance tab
which sets out Crown’s Charters, Policies and Codes,
describes Crown’s Board Committees and includes
copies of current and historical Corporate Governance
Statements and reports.
More information
For more information, visit: www.crownresorts.
com.au under the heading Corporate Governance.
promotion of effective communication with
security holders
The Board aims to ensure that shareholders and
prospective investors are kept informed of all major
developments affecting Crown.
Crown’s investor relations program is designed to facilitate
effective communication between security holders,
prospective investors and Crown.
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Crown actively engages with security holders and
prospective investors through a program of scheduled
interactions with institutional investors, sell-side and
buy-side analysts and the financial media. In addition
meetings are held with security holders and prospective
investors on request and responses are provided to
enquires made from time to time.
Crown’s investor relations program works in tandem with
its obligations under its Continuous Disclosure Policy, a
copy of which is available on Crown’s website.
Crown’s head of Investor Relations regularly reports to the
Board.
In addition, 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.
Advance notification of results announcements is made
via Crown’s website.
More information
A full copy of Crown’s Continuous Disclosure Policy
and Communication Policy is available at: www.
crownresorts.com.au under the heading Corporate
Governance – Policies.
Security holders are encouraged to both attend and
participate in all meetings of security holders. The date of
Crown’s AGM is advertised well in advance on its website
and separately communicated to investors via its
investment relations channels.
Security holders are informed in the formal Notice of
Meeting for the AGM of their opportunity to participate in
the meeting by asking questions of either Crown directors
or its Auditor.
At the AGM itself, as an introduction to the formal business
of the meeting, the Chairman encourages security holders
to ask questions on each item of business and offers a
further opportunity to ask general questions at the
conclusion of the formal business of the meeting.
More information
Copies of Crown’s Notices of Meeting are available
at: www.crownresorts.com.au under the heading
Investors and Media – Annual Reports.
Security holder communications
Crown security holders have the option to receive
communications from Crown and send communications
to Crown electronically. Crown’s share registry (on behalf
of Crown) actively encourages shareholders to receive
their shareholder communications electronically and
provides online access to shareholder information.
Separately, the Crown website includes a “Contact Us”
feature which can be used by both security holders and
others to ask questions of the company.
Principle 7: Recognise and manage risk
policy for oversight and management of material
business risks
Crown has established a formal Risk Management
Committee to provide strategic risk management
leadership, oversight and analysis to the Crown Board.
The current members of the Risk Management Committee
are Geoff Dixon (Chair), Rowen Craigie and Rowena
Danziger. A majority of Committee members are
independent Directors.
The Chairman of the Risk Management Committee, Mr
Geoff Dixon is an independent Director who has extensive
experience in risk management having previously held a
number of senior executive positions in large corporations.
Further information about each Committee member’s
qualifications and experience is set out in the Directors’
Statutory Report. Information regarding the number of
times the Committee met throughout the period and the
individual attendances of the members at those meetings
has also been provided in the Directors’ Statutory Report.
The Risk Management Committee has adopted a formal
Charter that outlines its duties and responsibilities.
More information
A full copy of each of the Risk Management
Committee Charter is available at: www.
crownresorts.com.au under the heading Corporate
Governance – Charters.
Design and implementation of risk management
and internal control systems
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.
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Crown Resorts Limited Annual Report 2016
CorporatE GovErnanCE StatEMEnt CONTINUED
Management are charged with monitoring the
effectiveness of risk management systems and are
required to report to the Board via the Risk Management
Committee.
The Board convened Risk Management Committee
administers Crown’s Risk Management Policy.
The policy sets out procedures which are designed to
identify, assess, monitor and manage risk at each of
Crown’s controlled businesses and requires that the
results of those procedures are reported to the Crown
Board. A formal Risk Management Plan has been
developed using the model outlined in AS/NZS ISO
31000:2009 Risk Management – Principles and
Guidelines.
The Plan identifies specific Head Office risks in light of
major risks identified at an operational level and provides
the framework for the reporting and monitoring of material
risks across the Crown group.
Management are required to conduct an annual review of
the Risk Management Plan to ensure that risk ratings and
risk definitions remain appropriate for Crown, and that
adequate controls are in place to manage risk.
A review has been conducted during the reporting period
and presented to the Risk Management Committee (and
the Board). In the course of that review the current Risk
Profiles of Crown’s major operating businesses were taken
into account and the risk environment of its investments
also considered.
In addition, 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.
Disclosure of internal audit functions
Crown’s major operating businesses (namely Crown
Melbourne and Crown Perth) each had an internal audit
function in place for the full year that meets the definition
of “internal audit” under the Institute of Internal Auditor’s
International Professional Practices Framework.
The function is internally led and resourced at each
business, with supplemental resourcing provided by
specialist third parties if required.
Internal audit delivers a comprehensive audit program to
provide additional comfort around significant risks,
processes, systems and regulatory requirements where
assurance is determined to be a priority for that period.
audit on the control environment, areas for improvement
and progress in addressing those areas for improvement.
To ensure independence of the function, the Internal Audit
Manager reports to the Chief Executive Officer (together
with the relevant Head of Legal, as an alternate). Further,
each Internal Audit Manager periodically meets with
members of the operating subsidiary’s Board throughout
the year.
As a holding company, Crown does not have a separate
internal audit function, however its accounts are subject to
third party independent audit.
Disclosure of sustainability risks
The Crown group is exposed to a number of economic,
environmental and social sustainability risks.
Crown’s goal is to be a leader in the global entertainment
and tourism industry by creating long-term value for its
stakeholders across economic, social and environmental
dimensions. Crown aspires to be a model corporate
citizen and recognises that a company is assessed not
only on its financial performance, but also by its
commitment to corporate social responsibility (CSR),
which includes consideration of, among others, the
following factors:
• the quality of its workplace;
• its environmental footprint;
• its level of community engagement;
• the creation of a safe environment for its customers,
employees and contractors; and
• the provision of employment opportunities.
Crown has established a Corporate Social Responsibility
Committee to assist the Board in setting Crown’s
corporate social responsibility policies and programs and
assessing Crown’s corporate social responsibility
performance. The Corporate Social Responsibility
Committee has adopted a formal Charter that outlines its
duties and responsibilities.
The current members of the Corporate Social
Responsibility Committee are Helen Coonan (Chair),
Rowen Craigie, John Horvath and Harold Mitchell.
Information about each Committee member’s
qualifications and experience is set out in the Directors’
Statutory Report. Information regarding the number of
times the Committee met throughout the period and the
individual attendances of the members at those meetings
has also been provided in the Directors’ Statutory Report.
Internal audit coverage is determined using a structured
approach. The Boards of each major operating business
and management receive regular reports from internal
The responsibilities of the Committee extend to:
• establishing appropriate corporate social responsibility
policies and programs for Crown;
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• monitoring and reviewing the operation and
effectiveness of Crown’s corporate social responsibility
policies and programs;
• promoting and supporting continuous improvement in
Crown’s corporate social responsibility performance;
• encouraging and monitoring the establishment and
maintenance of relationships with key stakeholders
including non-government organisations, sporting and
cultural organisations and other community groups;
and
• encouraging and promoting awareness of corporate
social responsibility related issues at Crown among
Crown’s staff and other stakeholders.
The Committee oversaw the development and publication
of Crown’s Corporate Social Responsibility Report. The
Corporate Social Responsibility Report brings together the
elements of Crown’s CSR activities and programs and
identifies and addresses all material economic,
environmental and social sustainability risks and Crown’s
processes for managing them.
A copy of the Corporate Social Responsibility Report is
publically available and can be found on the Crown
website.
More information
A full copy of each of the Corporate Social
Responsibility Report is available at:
www. crownresorts.com.au under the heading
Our Contribution – Corporate Social
Responsibility Report.
Principle 8: Remunerate fairly and
responsibly
nomination and remuneration Committee
As noted in response to Recommendation 2.1, Crown has
established a formal Nomination and Remuneration
Committee. The Nomination and Remuneration
Committee has adopted a formal Charter that outlines its
duties and responsibilities.
The current members of the Nomination and
Remuneration Committee are each independent, Non-
Executive Directors. Information about each Committee
member’s qualifications and experience is set out in the
Directors’ Statutory Report. Information regarding the
number of times the Committee met throughout the
period and the individual attendances of the members at
those meetings has also been provided in the Directors’
Statutory Report.
policy for Director remuneration
A summary of current remuneration arrangements is set
out more fully in the Remuneration Report. Crown
separately discloses the policies and practices regarding
the remuneration of non-executive directors and the
remuneration of executive directors and other senior
executives.
restrictions on dealing in equity based
remuneration
The rules of 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.
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Crown Resorts Limited Annual Report 2016
nEvaDa InForMatIon StatEMEnt
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
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
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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.
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.
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Crown Resorts Limited Annual Report 2016
nEvaDa InForMatIon StatEMEnt CONTINUED
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
shareholders, officers, Directors and other persons having
a material relationship or involvement with the entity
proposing to acquire control to be investigated and
licensed as part of the approval process relating to the
transaction.
Share buy-backs and other arrangements
Approvals are, in certain circumstances, required from the
Nevada Commission before Crown can make exceptional
repurchases of voting securities above the current market
price and before a corporate acquisition opposed by
management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalisation
proposed by a registered corporation’s Board of Directors
in response to a tender offer made directly to the
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registered corporation’s shareholders for the purpose of
acquiring control of that corporation.
Investigation and monitoring of “Foreign Gaming
operations”
Because Crown is involved in gaming ventures outside of
Nevada, Crown is required to deposit with the Nevada
Board and thereafter maintain a revolving fund in the
amount of US$10,000 to pay the expenses of investigation
by the Nevada Board of Crown’s participation in such
gaming.
The Nevada Board refers to any of Crown’s operations
outside of Nevada as “foreign gaming operations”. The
revolving fund is subject to increase or decrease at the
discretion of the Nevada Commission. Crown is also
required to comply with certain reporting requirements
imposed by the Nevada Act. Crown would be subject to
disciplinary action by the Nevada Commission if Crown:
• knowingly violates any laws of the foreign jurisdiction
pertaining to the foreign gaming operation;
• fails to conduct the foreign gaming operation in
accordance with the standards of honesty and integrity
required of Nevada gaming operations;
• engages in any activity or enters into any association
that is unsuitable because it poses an unreasonable
threat to the control of gaming in Nevada, reflects or
tends to reflect discredit or disrepute upon the State of
Nevada or gaming in Nevada or is contrary to the
gaming policies of Nevada;
• engages in any activity or enters into any association
that interferes with the ability of the State of Nevada to
collect gaming taxes and fees; or
• employs, contracts with or associates with any person
in the foreign gaming operation who has been denied a
license or a finding of suitability in Nevada on the
ground of personal unsuitability or who has been found
guilty of cheating at gambling.
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Crown Resorts Limited Annual Report 2016
DIrECtorS’ Statutory rEport CONTINUED
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 2016
and the results of those operations is detailed on pages 10
to 22.
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 2015 include:
• On 30 July 2015, Crown announced that the
appointment of Robert Rankin as a Director of Crown
had become effective following receipt of all necessary
regulatory approvals.
Significant events after Balance Date
On 2 August 2016, Crown announced that it had been
served with legal proceedings from the Millers Point Fund
Incorporated, as applicant, challenging the validity of the
decision of the PAC to approve the applications for the
modification of the approved concept plan for Barangaroo
(known as “Mod 8”) and for the construction of the Crown
Sydney Hotel Resort at Barangaroo South and that it
intends to defend these proceedings vigorously.
Subsequent to year end, the Directors of Crown declared
a final dividend on ordinary shares in respect of the year
ending 30 June 2016. The total amount of the dividend is
$287.7 million, which represents 39.5 cents per share. The
final dividend will be 70% franked. The unfranked
component of the dividend will be conduit foreign income.
The dividend has not been provided for in the 30 June
2016 financial statements.
• On 13 August 2015, Crown announced that James
Environmental regulation
Packer had stepped down as Chairman of Crown and
that Robert Rankin had been appointed the new
Chairman. James Packer subsequently resigned as a
Director of Crown on 21 December 2015.
• On 29 October 2015 Crown announced that it had
acquired a 20% ownership interest in the international
restaurant and hotel company, Nobu, for US$100
million.
• On 4 May 2016 Crown announced an agreement with
Melco Crown Entertainment Limited (MCE) had been
entered into for the repurchase of 155 million ordinary
MCE shares (equivalent to approximately 51.67 million
MCE American Depository Shares held by Crown). The
repurchase resulted in Crown’s shareholding in MCE
decreasing from 34.3% to 27.4%.
• On 15 June 2016 Crown announced that it intends to:
• pursue a demerger of certain international
investments to create a separately listed holding
company;
• adopt a new dividend policy to pay 100% of
normalised net profit after tax (before minorities and
excluding profits from associates but including
dividends received from associates), effective from
the date of the announcement; and
• explore a potential IPO of a 49% interest in a
property trust which would own some of Crown
Resorts’ Australian hotels, with Crown Resorts
retaining a 51% interest.
• On 28 June 2016 Crown announced that the NSW
Planning Assessment Commission (“PAC”) approved,
subject to a number of substantial modifications and
conditions, the applications for the modification of the
approved concept plan for Barangaroo and for the
construction of the Crown Sydney Hotel Resort at
Barangaroo South.
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.
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
Corporate Social Responsibility 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
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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)
attributable to the parent of $948.8 million and a
normalised NPAT1 of $406.2 million for the 12 months
ended 30 June 2016. Crown Melbourne and Crown Perth
achieved normalised EBITDA growth of 1.8% and
normalised revenue growth of 0.8%.
Performance for the year ended
June 30 2016
Normalised revenue1
Normalised expenditure1
Normalised EBITDA2
Normalised EBIT3
Normalised net profit after tax attributable
to Crown
Reported net profit after tax before
significant items attributable to Crown
Significant items4
Reported net profit after tax attributable to
Crown
$m
3,584.9
(2,729.1)
855.8
573.1
406.2
393.6
555.2
948.8
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 a net gain on sale of Melco Crown shares and an Aspers
impairment reversal, partially offset by proposed demerger related
costs, early debt retirement costs and a tax provision adjustment
relating to amended assessments.
The activities and results of Crown’s operations are
discussed further below.
Crown Melbourne
Normalised EBITDA from Crown Melbourne was $673.3
million, up 1.7% on the prior comparable period (pcp).
Reported EBITDA for the period was $663.4 million, up
2.9% on the pcp. The reported EBITDA result takes into
account an unfavourable variance from the theoretical VIP
program play result which had a negative EBITDA impact
of $9.9 million. This compares to a negative EBITDA
impact of $17.5 million in the pcp.
Normalised revenue of $2,312.5 million was up 3.5% on
the pcp. During the year, main floor gaming revenue was
$1,183.3 million, up 8.5% on the pcp.
Normalised VIP program play revenue was $676.5 million,
down 4.3% on the pcp with turnover of $50.1 billion.
Non-gaming revenue grew 3.7% to $452.7 million. Crown
Towers Melbourne hotel occupancy was 97.1% with an
average room rate of $361. Crown Metropol Melbourne
achieved hotel occupancy of 92.4% with an average room
rate of $268. Crown Promenade Melbourne hotel
occupancy was 93.6% with an average room rate of $227.
These high occupancy rates reflect the very strong
demand for luxury hotel accommodation in Melbourne.
The overall normalised operating margin decreased from
29.6% to 29.1%. The decline in margin was largely due to
the change in the mix of VIP program play in favour of
junket play versus direct premium play and the additional
costs associated with that change in mix.
Crown perth
Normalised EBITDA from Crown Perth was $259.9 million,
up 2.2% on the pcp. Reported EBITDA for the period was
$285.8 million, down 5.4% on the pcp. The reported
EBITDA result takes into account a favourable variance
from the theoretical VIP program play result which had a
positive EBITDA impact of $25.9 million. This compares to
a positive EBITDA impact of $47.7 million in the pcp.
Normalised revenue of $922.0 million was down 5.5% on
the pcp. During the year, main floor gaming revenue was
$497.3 million, down 0.1% on the pcp.
Normalised VIP program play revenue was $202.8 million,
down 18.7% on the pcp with turnover of $15.0 billion.
Non-gaming revenue was down 2.7% to $221.9 million.
Crown Metropol Perth hotel occupancy was 90.9% with
an average room rate of $300. Hotel occupancy at Crown
Promenade Perth was 93.8% with an average room rate of
$205.
The overall normalised operating margin increased from
26.1% to 28.2%. This improvement includes the impact of
the change in business mix between main floor play and
VIP program play as well as benefits from productivity and
efficiency improvements despite lower revenues.
Crown aspinalls
Normalised EBITDA from Crown Aspinalls was $26.5
million, down 16.4% on the pcp. Reported EBITDA for the
period was $16.0 million, an increase of $61.3 million on
the pcp. The reported EBITDA result takes into account an
unfavourable variance from the theoretical VIP program
play result which had a negative EBITDA impact of $10.5
million. This compares to a negative EBITDA impact of
$77.0 million in the pcp.
Crown Wagering and online Social Gaming operations
EBITDA from Crown’s wagering and online social gaming
operations was a loss of $5.4 million. Overall, the wagering
and online social gaming businesses were profitable in the
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Crown Resorts Limited Annual Report 2016
DIrECtorS’ Statutory rEport CONTINUED
second half and revenue growth was strong. Crown’s
wagering and on-line social gaming operations include
CrownBet (a 62% owned, on-line wagering business),
Betfair Australasia (a 100% owned, on-line betting
exchange) and DGN Games (a 70% owned, on-line social
gaming business based in Austin, Texas).
Melco Crown Entertainment (MCE)
In May 2016 Crown entered into an agreement with MCE
for the repurchase of 155 million ordinary shares in MCE
which generated proceeds of $1,067.1 million resulting in a
net gain on sale of $602.0 million, which is reported as a
significant item. Crown continues to hold a 27.4% interest
in MCE valued at approximately $2.3 billion at 30 June
2016.
Crown’s share of MCE’s normalised NPAT for the full year
to 30 June 2016 was an equity accounted profit of $58.1
million, down $103.2 million or 64.0% on the pcp. After
adjusting for pre-opening costs and the variance from
theoretical, Crown’s share of MCE’s reported NPAT result
for the year was an equity accounted profit of $42.7
million, down $79.3 million or 65.0% on the pcp.
Macau continues to face challenges arising from softer
gaming demand, which has adversely affected all casino
operators. Overall, gross gaming revenue across the
Macau market in the full year to 30 June 2016 declined
22.5%. However, MCE believes that revenue trends,
particularly in the mass market segments, will improve as
Macau further evolves into a multi-faceted, mass market-
focused destination.
Cash Flow and Debt
Net operating cash flow for the period of $482.7 million
compared to cash flow of $634.6 million in the pcp. After
proceeds received from the repurchase of 155 million
ordinary shares in Melco Crown of $1,067.1 million, net
capital expenditure of $490.3 million, acquisition of
investments of $255.2 million, net repayment of loans
from associates of $131.5 million and dividend payments
of $378.8 million, the Group’s net debt position (excluding
working capital cash of $151.1 million) at 30 June 2016
was $1,962.7 million, consisting of total debt of
$2,261.3 million and cash (excluding working capital cash)
of $298.6 million.
At 30 June 2016, total liquidity, excluding working capital
cash of $151.1 million, was $1,587.9 million, represented by
$298.6 million in available cash and $1,289.3 million in
committed undrawn facilities.
Conclusion
Crown’s key strategies and business focuses are set out
on page 3.
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.
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Dividends and distributions
Interim Dividend: Crown paid an interim dividend of 33 cents per ordinary share on 6 April 2016. The dividend was 50%
franked. The unfranked component was conduit foreign income.
Final Dividend: The Directors of Crown have declared a final dividend of 39.5 cents per ordinary share to shareholders
registered as at 23 September 2016. The final dividend will be 70% franked. The unfranked component of the dividend will
be conduit foreign income.
In summary:
Interim Dividend paid
Final Dividend declared
Total
Dividend
per share
33.0 cents per share
39.5 cents per share
72.5 cents per share
$’000
$240,370
$287,716
$528,086
Crown paid shareholders a final dividend in respect of the 2015 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 currently eleven Directors.
Name
Robert J Rankin
John H Alexander
Benjamin A Brazil
Helen A Coonan
Rowen B Craigie
Rowena Danziger
Andrew Demetriou
Geoffrey J Dixon
John S Horvath
Michael R Johnston
Harold C Mitchell
James D Packer
Date Appointed
Date Ceased
30 July 2015
6 July 2007
26 June 2009
2 December 2011
31 May 2007
6 July 2007
29 January 2015
6 July 2007
9 September 2010
6 July 2007
10 February 2011
6 July 2007
21 December 2016
At Crown’s 2015 Annual General Meeting, Benjamin Brazil, Michael Johnston, and Harold Mitchell stood for re-election as
Directors. As required by Crown’s Constitution, having been appointed Directors in FY2015, Robert Rankin and Andrew
Demetriou also stood for election at Crown’s 2015 AGM. Each was re-elected as a Director at that time.
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Crown Resorts Limited Annual Report 2016
DIrECtorS’ Statutory rEport CONTINUED
Directors and officers continued
Benjamin a Brazil, BCom, LLB
Non-executive Director
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.
robert J rankin, BEc/LLB Chairman
Mr Rankin is the Chairman of Crown Resorts Limited.
Mr Rankin is also Chief Executive Officer of Consolidated
Press Holdings Pty Limited, a position he has held since
March 2015. Prior to joining, Mr Rankin was Co-Global
Head of Corporate Banking and Securities, and Global
Head of Corporate Finance at Deutsche Bank AG.
Mr Rankin holds Bachelor of Economics and Bachelor of
Law degrees, both obtained at the University of Sydney.
Mr Rankin is also a Director of Melco Crown Entertainment
Limited, Chair of the Crown Investment Committee, and a
member of the Board of Directors for the Packer Family
Foundation.
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, Aspers Holdings
(Jersey) Limited and CrownBet Pty 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 and 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:
• Seven West Media Limited: from 2 May 2013 to current
Mr Brazil is an Executive Director of Macquarie Group
Limited, member of the Executive Committee and
Co-Head of the Corporate and Asset Finance Group. He
originally commenced employment at Macquarie in 1994
and has operated across a range of geographies and
business lines during the course of his career. He holds a
Bachelor of Commerce and a Bachelor of Laws from the
University of Queensland.
Mr Brazil is the Chairman of the Crown Audit and
Corporate Governance Committee and a member of the
Crown Finance Committee.
the Honourable Helen a Coonan, Ba, LLB
Non-executive Director
Ms Coonan is a former Senator for New South Wales
serving in the Australian Parliament from 1996 to 2011.
Ms Coonan 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, Ms 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 Regulation
Authority. She is the recipient of a Centenary Medal for
service to the Australian Parliament.
Ms Coonan is a non-executive Director of Snowy Hydro
Limited and is Chair of Snowy Hydro Retail Committee.
She is Chair of the Sydney Harbour Foreshore Authority, a
member of the Advisory Council of J.P. Morgan, a
member of the Board of Advice for Aon Risk Services
Australia, and is Co-Chair of GRACosway (a subsidiary of
the Clemenger Group). She is a Non-executive Director of
Obesity Australia Limited and a trustee of the Sydney
Opera House. She is also a consultant to Samsung
Electronics Australia.
Ms Coonan is a member of Chief Executive Women and
also serves on the Corporate Council of the European
Australian Business Council and the Australia-Israel
Chamber of Commerce Advisory Council.
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Ms Coonan is an Ambassador for the Menzies School of
Health Research and of the GUT Foundation. She serves
on the Advisory Council of the National Breast Cancer
Foundation.
Ms Coonan is Chair of the Crown Resorts Foundation and
the Crown Corporate Social Responsibility Committee.
rowen B Craigie, BEc (Hons)
Chief Executive Officer and Managing Director
Mr Craigie was appointed Chief Executive Officer and
Managing Director in 2007. He is also a Director of Crown
Melbourne Limited, Burswood Limited 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 and Safety, Responsible Gaming,
Risk Management and Corporate Social Responsibility
Committees. He also sits on the Crown Resorts
Foundation Board.
Mr Craigie is a Director of the Australasian Gaming
Counsel and a member of the Victorian Male Champions
of Change.
rowena Danziger, aM, Ba, tC, MaCE
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 Occupational Health and Safety
Committee and is a member of the Crown Audit and
Corporate Governance, Risk Management and
Responsible Gaming Committees. Mrs Danziger also sits
on the Crown Resorts Foundation Board.
andrew Demetriou, Ba, Bed Non-executive Director
Mr Demetriou was Chief Executive Officer of the Australian
Football League from 2003 until June 2014.
Prior to becoming Chief Executive Officer, Mr Demetriou
served as AFL General Manager – Football Operations for
three years, overseeing all aspects of the AFL competition.
This followed a stint as head of the AFL Players
Association when he was instrumental in establishing
programs to look after players both during and after their
playing careers.
Following an AFL playing career of 106 games, Mr
Demetriou was the Managing Director of the Ruthinium
Group, a business importing acrylic teeth, growing the
business significantly by expanding manufacturing and
exports to 70 countries worldwide and he currently
remains a Board member.
Mr Demetriou also holds the role of Executive Chairman of
Acquire Learning, a Melbourne company that enrols
students on behalf of training providers in courses, is
Executive Chairman of Career One, is a Director of the
Melbourne Sports Marketing firm, Bastion Group, is a
Non-executive Chairman of Capitol Health Limited,
Transitional Chairman of Cox Architects, Global Chairman
of Beyond Boundaries and a Non-executive Director of the
non-partisan Climate Institute.
Mr Demetriou also served as Non-executive Chairman of
the Baxter Group, a waste management group listed on
ASX in 2003 with a market capitalisation of $40 million
– the company was later sold to Transpacific for
$260 million – and is a former Chairman of the Australian
Multicultural Advisory Council.
Mr Demetriou is a Director of CrownBet Pty Limited.
Directorship of other Australian listed companies held
during last three years:
• Capitol Health Limited: from 17 November 2014 to
current
Geoffrey J Dixon Non-executive Director
Mr Dixon is an experienced and successful corporate
executive with a background in the media, mining, aviation
and tourism industries.
He was Managing Director and Chief Executive of Qantas
Airways Limited for eight years until 2008 - joining Qantas
in 1994 and also serving as Chief Commercial Officer and,
for two years, as Deputy Managing Director. He was
Chairman of the Australian Government’s principal tourism
authority, Tourism Australia, for six years from 2009 to
June 2015.
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Crown Resorts Limited Annual Report 2016
DIrECtorS’ Statutory rEport CONTINUED
Directors and officers continued
Michael r Johnston, BEc, Ca Non-executive Director
Mr Dixon is Chairman of the privately-held Australian Pub
Fund and is on the Board of the publicly listed Australian
company Adslot Limited.
Mr Dixon is also Chairman of the Garvan Medical
Research Foundation, is on the Board of the Museum of
Contemporary Art Australia and is an Ambassador for the
Australian Indigenous Education Foundation. He is also
Chairman of the Crown Nomination and Remuneration,
Risk Management and Finance Committees.
Directorships of other Australian listed companies held
during the last three years:
• Facilitate Digital Holdings Limited: from 9 July 2009 to
24 December 2013 when the company was delisted
from the ASX
• Adslot Limited: from 23 December 2013 to current
professor John S Horvath, ao, MB, BS (Syd), FraCp
Non-executive Director
Professor John Horvath was the Australian Government
Chief Medical Officer from 2003 to 2009 and principal
Medical Consultant to the Commonwealth Department
until January 2016. He is currently continuing to advise the
Department of Health 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 previously sat
on the Board of the Garvan Research Foundation and
continues to be a Governor of the Centenary Institute of
Medical Research until January 2016. He is 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.
Professor Horvath was previously Clinical Professor of
Medicine at the University of Sydney. He is also known as
a leader in a range of medical training and workforce
organisations and is a former President of the Australian
Medical Council and the New South Wales Medical Board.
Professor Horvath is the Chairman of the Crown
Responsible Gaming Committee and a member of
Crown’s Occupational Health and Safety, Corporate Social
Responsibility and Nomination and Remuneration
Committees. He also sits on the Crown Melbourne Board
and the Crown Resorts Foundation Board.
Professor Horvath is currently the Global Strategic Medical
Advisor to the Chief Executive Officer of Ramsay Health
Care.
Mr Johnston is the Finance Director of Consolidated Press
Holdings Pty Limited (“CPH”), having previously been an
adviser to the Consolidated Press Holdings Group (“CPH
Group”) for seventeen years. As Finance Director, Mr
Johnston oversees a large number of operational
businesses within the CPH Group and its controlled
associates. He was also the Chief Financial Officer of
Ellerston Capital (a subsidiary of CPH) until 30 June 2008.
Prior to his appointment with the CPH Group, Mr Johnston
was a senior partner in the Australian member firm of
Ernst & Young. He was also on the Board of Partners of
Ernst & Young, Australia.
Mr Johnston holds a Bachelor of Economics degree from
Sydney University and is an Associate of the Institute of
Chartered Accountants of Australia.
Mr Johnston is a member of the Crown Audit and
Corporate Governance, Finance and Occupational Health
and Safety Committees.
Harold C Mitchell, aC Non-executive Director
Mr Mitchell is the founder of Mitchell & Partners and until
August 2013, was Executive Chairman of Aegis Media,
Australia and New Zealand. Since he started Mitchell &
Partners in 1976, the company has evolved to become the
largest media and communications group in Australia
today.
In December 2000, Mr Mitchell launched the Harold
Mitchell Foundation which distributes funds between
health and the arts.
Mr Mitchell holds a large number of community roles
including Chairman of Art Exhibitions Australia, Vice
President of Tennis Australia, Chairman of The Florey
Institute of Neuroscience and Mental Health, Board
member of New York Philharmonic, Chairman of Australia-
Indonesia Centre and Chairman of FreeTV Australia.
Previously Mr Mitchell was Chairman of the Melbourne
Symphony Orchestra, TVS and University of Western
Sydney’s television service for Greater Sydney and in June
2015, Mr Mitchell was appointed Chairman of the Victorian
Premier’s Job and Investment Panel.
In 2003, Mr Mitchell 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.
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.
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Directors and officers continued
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
W todd nisbet
Executive Vice President, Strategy and Development
In December 2011, Mr Mitchell was awarded an Honorary
Doctorate – Doctor of Business Honoris Causa, by RMIT
University.
Mr Mitchell was awarded the Victorian Australian of the
Year for 2013.
In August 2013, Mr Mitchell was appointed Adjunct
Professor, School of Humanities and Communications
Arts, University of Western Sydney.
In December 2014, Melbourne University conferred on him
an honorary degree of Doctor of Laws.
Mr Mitchell is a member of the Crown Corporate Social
Responsibility and Nomination and Remuneration
Committees and he 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. 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.
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Crown Resorts Limited Annual Report 2016
DIrECtorS’ Statutory rEport CONTINUED
Relevant interests of Directors
Details of relevant interests of current Directors in Crown shares as at 30 June 2016 were as follows:
Director
John Alexander
Rowen Craigie
Rowena Danziger
Harold Mitchell
Notes:
Total number of ordinary shares1
333,768
225,556
30,896
114,887
1. For more information on relevant interests of current Directors, please see the Remuneration Report.
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 2016
financial year together with each Director’s attendance details.
Audit &
Corporate
Governance
Committee
Meetings
Board
Meetings
Corporate Social
Responsibility
Committee
Meetings
Nomination and
Remuneration
Committee
Meetings
Occupational
Health & Safety
Committee
Meetings
Responsible
Gaming
Committee
Meetings
Risk
Management
Committee
Meetings
Held Attended Held Attended Held Attended Held Attended Held Attended Held Attended Held Attended
R J Rankin *
J D Packer **
J H Alexander
B A Brazil
H L Coonan
R B Craigie
R Danziger
A Demetriou
G J Dixon
J S Horvath
M R Johnston
H C Mitchell
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5
11
11
11
11
11
11
11
11
11
11
11
4
9
7
10
10
9
11
11
10
10
10
3
3
3
3
3
3
2
2
2
2
2
1
2
0
4
4
4
4
2
4
4
4
4
4
4
4
4
4
6
6
6
6
5
6
2
2
2
2
2
1
* Robert Rankin was appointed a Director on 30 July 2015
** James Packer resigned as a Director on 21 December 2015
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 two
written resolutions assented to by the Board this financial year. The Finance Committee and the Investment Committee did
not formally meet this financial year.
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Shares and Options
Auditor Information
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 details
Ernst & Young has been appointed Crown’s auditor.
Mr David McGregor is the Ernst & Young partner
responsible for the audit of Crown’s accounts.
non-audit services
Details of the amounts paid or payable to the auditor for
non-audit services provided during the year by the auditor
are outlined in note 28 of the Financial Report.
Crown acquires non-audit services from Ernst & Young,
largely in respect of taxation matters relating to:
• structural and capital management initiatives (including
the proposed demerger and the exploration of the IPO
of an interest in some of Crown Resorts’ Australian
hotels);
• refinancing of existing facilities and restructuring of
other debt and capital markets instruments;
• proposed developments and major capital projects
(including social gaming investments, Sydney and
One Queensbridge projects); and
• ongoing taxation matters (including advice related to
the amended assessments and a notice of penalties
received from the Australian Taxation Office (ATO) in
February 2016).
The ratio of non-audit to audit services provided by Ernst
& Young to Crown is approximately 7.6:1. This ratio
reflects an elevated level of activity in the areas noted
above during the year.
Management are satisfied that the non-audit services are
compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001 and
consider 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 2016/191. Crown is an entity to
which the Class Order applies.
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Crown Resorts Limited Annual Report 2016
rEMunEratIon rEport CONTINUED
Remuneration Report
This Remuneration Report for the year ended 30 June
2016, 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: 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
7. Remuneration details for Senior Executives
8. Key Management Personnel Disclosures
Introduction
persons to whom report applies
The remuneration disclosures in this Report cover the
following persons:
Non-executive Directors
• Robert J Rankin (Chairman from 12 August 2015)
• Benjamin A Brazil
• Helen A Coonan
• Rowena Danziger
• Andrew Demetriou
• Geoffrey J Dixon
• John S Horvath
• Michael R Johnston
• Harold C Mitchell
• James D Packer (Chairman until 12 August 2015,
Non-executive Director until 21 December 2015)
Executive Directors
• 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)
• 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 2015 Remuneration Report. 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.
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
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are reviewed periodically by the Nomination and
Remuneration Committee with reference 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.
A review of Non-executive Directors’ fees was conducted
following year end and it is proposed that, subject to
shareholder approval to increase the Non-executive
Directors fee cap in the Crown Constitution, those fees be
increased with effect from 1 November 2016. Further
detail regarding this process is set out under the heading
“Remuneration details for Non-executive Directors” later in
this Report.
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 which are
taken into consideration as part of performance based
remuneration, are set out on page 3.
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 conditions 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 help
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 KPOs for Senior Executives, including the Chief
Executive Officer and Managing Director are closely
aligned with objectives set out in Crown’s Four Year
Financial Plan (see below).
The fixed remuneration for Crown’s Chief Executive Officer
and Managing Director, Mr Rowen Craigie, which applied
during the financial year, was $3,090,000, which
represented a 3% increase on his financial year 2015 fixed
remuneration. Mr Craigie’s fixed remuneration had
remained unchanged from 2007, when his fixed
remuneration of $3,000,000 was determined as part of the
de-merger of the gaming businesses of Publishing and
Broadcasting Limited and listing of Crown Resorts Limited
in December 2007 until 30 June 2015.
Any payments relating to redundancy or retirement are as
specified in each relevant Senior Executive’s contract of
employment.
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Crown Resorts Limited Annual Report 2016
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 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.
rEMunEratIon rEport CONTINUED
Remuneration Report
For summaries of Senior Executive contracts of
employment, see page 62.
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 2014 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 2014 Crown LTI link
back to key 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.
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.
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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
Performance against budgeted normalised EBITDA1 and/or net profit after tax.
Typical Non-Financial Objectives
• 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.
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.
For a more detailed commentary on financial year 2016 STI bonuses see page 67.
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).
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Remuneration Report
Long term Incentives
2014 Crown Long term Incentive plan (2014 Crown LtI)
The 2014 Crown LTI was made available to selected senior
executives with effect from 1 July 2014. A summary of the
terms of the 2014 Crown LTI follows.
Operation of the 2014 Crown LTI
The award of a long term incentive bonus under the 2014
Crown LTI is dependent on Crown achieving certain
earnings per share hurdles (EPS Hurdles) in respect of, or
in relation to, the four financial years ending 30 June 2015,
30 June 2016, 30 June 2017 and 30 June 2018 (each a
Plan Year).
The 2014 Crown LTI rules provide that earnings per share
(EPS) target would exclude the contribution from Melco
Crown Entertainment Limited (MCE) and are to be
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). Normalised net profit excludes the
impact of any variance from the theoretical win rate on VIP
program play. For the purposes of both the EPS Hurdles
and actual EPS, a theoretical win rate of 1.4% is applied;
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 2014 Crown LTI were
derived directly from EPS forecasts put in place in respect
of the 2014 Four Year Financial Plan (each an EPS Target).
Accordingly, the 2014 Crown LTI is specifically designed to
provide an incentive to senior executives participating in
the 2014 Crown LTI (Participants) to ensure the Four Year
Financial Plan from financial year 2015 to financial year
2018 is met. The way in which Crown’s Four Year Financial
Plans are developed has been described in detail above.
The EPS Hurdles in financial year 2015, financial year 2016
and financial year 2017 are 98% of the EPS Target for the
relevant year in the Four Year Financial Plan. The EPS
Hurdle in financial year 2018 is 100% of the EPS Target for
the relevant year in the Four Year Financial Plan.
Why earnings per share is used as the single measure
for the 2014 Crown LTI
Crown has elected to use earnings per share as the single
measure for its 2014 Crown LTI.
Earnings per share targets represent the product of
individual business unit future performance projections (as
determined by relevant executives based on their business
unit’s four year financial plan targets). These individual
future performance projections are aggregated with group
costs, interest and taxes to arrive at a Crown group
earnings per share target.
As a result, each executive knows with certainty what
performance hurdles need to be met from their respective
business operations over an extended period in order to
meet the EPS Targets. In addition, as the executive group
collectively needs to achieve the consolidated EPS Target,
it fosters a cooperative approach across businesses to
optimise Crown group as well as individual business unit
outcomes.
In developing the 2014 Crown LTI, consideration was
given by the Crown Board to a range of different measures
as well as the potential use of 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.
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Crown acknowledges that its EPS Targets are, to a large
degree, an internal measure. However, Crown has
disclosed in this Report (and will continue to disclose) its
historical EPS Targets and EPS Hurdles as well as actual
EPS performance against those historical targets, so that
shareholders are able to see the “stretch” nature of these
targets.
How bonuses accrue
If an EPS Hurdle is achieved in respect of a Plan Year, a
Participant will become entitled to a portion of the
potential maximum bonus (Maximum Bonus) which may
be achieved under the 2014 Crown LTI in accordance with
the following table:
Plan Year
Plan Year 1
Plan Year 2
Plan Year 3
Plan Year 4
Percentage
15%
20%
25%
40%
The Plan rules provide that bonuses will only ultimately be
paid at the end of financial year 2018 either by way of the
transfer of shares acquired under the 2014 Crown LTI or
the payment of cash. See further below.
Effect of achieving an EPS Hurdle
If an EPS Hurdle is met in respect of a Plan Year, the 2014
Crown LTI provides that Crown will calculate the dollar
value of the bonus in respect of the relevant Plan Year
(Plan Year Bonus) by multiplying the Maximum Bonus for
the Participant by the relevant percentage applicable to
that Plan Year (as set out in the table above).
If the Plan Year is Plan Year 1, Plan Year 2 or Plan Year 3,
the 2014 Crown LTI provides that Crown will 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 2014 Crown LTI provides that
Crown will pay the Plan Year 4 Plan Year Bonus to the
Participant in cash and also advise the Trustee, who will
arrange for any shares held in trust to be transferred to the
relevant Participant. The Plan Year 4 Plan Year Bonus is
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 is not met, the 2014 Crown LTI provides
as follows:
• if an EPS Hurdle in respect of Plan Year 1, Plan Year 2
or Plan Year 3 is not met, Crown will calculate the Plan
Year Bonus which would have been applied to the
purchase of Participant Shares had the relevant EPS
Hurdle been met (Carried Over Plan Year Bonus);
• if the EPS Hurdle in respect of Plan Year 4 is met:
– the Plan Year 4 Bonus will be paid by Crown to the
relevant Participant in cash;
– the Trustee will arrange for any shares held in trust to
be transferred to the relevant Participant; and
– if the sum of the EPS Targets for financial year 2015,
financial year 2016, financial year 2017 and financial
year 2018 (Cumulative EPS Hurdle) has also been
met, any Carried Over Plan Year Bonuses will also
be paid to the relevant Participant in cash. The
Carried Over Plan Year Bonuses (if any) are paid in
cash because the Participant will be required to pay
tax on these Bonuses at this time.
• if the EPS Hurdle in respect of Plan Year 4 is not met
but both the Fallback Plan Year 4 EPS Hurdle (i.e. 98%
of the Plan Year 4 EPS Target) and the Cumulative EPS
Hurdle are met:
– the Plan Year Bonus in respect of Plan Year 4 will be
paid by Crown to the relevant Participant in cash;
– any Carried Over Plan Year Bonuses will be paid to
the relevant Participant in cash; and
– the Trustee will arrange for any shares held in trust to
be transferred to the relevant Participant.
• if neither the EPS Hurdle in respect of Plan Year 4 nor
the Fallback Plan Year 4 EPS Hurdle are met but the
Cumulative EPS Hurdle is met:
– the Plan Year Bonus in respect of Plan Year 4 will not
be paid by Crown to the relevant Participant;
– any Carried Over Plan Year Bonuses will be paid to
the relevant Participant in cash; and
– the Trustee will arrange for any shares held in trust to
be transferred to the relevant Participant.
• if neither the EPS Hurdle in respect of Plan Year 4 nor
the Cumulative EPS Hurdle are met (whether or not the
Fallback Plan Year 4 EPS Hurdle is met):
– the Plan Year Bonus in respect of Plan Year 4 will not
be paid by Crown to the relevant Participant;
– any Carried Over Plan Year Bonuses will lapse and
will not be paid by Crown to the relevant Participant;
and
– the Trustee will arrange for any shares held in trust to
be transferred to the relevant Participant.
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Crown Resorts Limited Annual Report 2016
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Remuneration Report
Illustration
The following is an illustration of a range of outcomes which might have been achieved by a Participant under the 2014
Crown LTI. It does not include every permutation or combination of outcomes which the 2014 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
4
60% shares
No cash
4
35% shares
65% cash
4
35% shares
25% cash
4
15% shares
85% cash
4
15% shares
45% cash
7
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.
What happens to dividends earned on Crown shares acquired under the 2014 Crown LTI
All dividends received on shares held in trust are to be passed through to the Participant. As bonuses earned in the final
year of the 2014 Crown LTI (including any Carried Over Plan Year Bonuses) are to be paid in cash, no dividends apply in
respect of these bonuses.
What happens if an executive’s employment with Crown ceases
If a Participant’s employment with Crown ceases, then the Participant is not entitled to any part of his or her 2014 Crown
LTI bonus, except where the Participant’s employment is terminated by Crown without cause, in which case the Participant
will be entitled to any tranche (in the form of shares held on trust) which have vested prior to the date of termination.
How EPS Hurdles can be amended
The 2014 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.
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The Crown Board retains general power to amend the
rules of the 2014 Crown LTI from time to time.
How the 2014 Crown LTI ameliorates issues with
“cliff’s edge” vesting
The key features of the 2014 Crown LTI are that:
• the EPS Hurdles for Plan Years 1, 2 and 3 are set at
98% of the EPS Targets in the 2014 Four Year Financial
Plan; and
• if at the end of financial year 2018, on a cumulative
basis, the EPS Hurdles over all four years are met, then
any Carried Over Plan Year Bonuses will vest and be
paid to the relevant senior executive in cash.
Accordingly, when viewed as a whole, the Maximum
Bonus under the 2014 Crown LTI consists of four separate
and individually achievable targets, as well as a cumulative
target. As a result, there are a range of potential outcomes
depending on performance against target in each year of
the 2014 Crown LTI as well as the cumulative result.
This feature is designed to ameliorate issues with “cliff’s
edge” vesting, by giving participants a “second chance” to
have a tranche paid when an individual EPS Hurdle is not
met.
Disclosure of historical EPS Targets
The disclosure of prospective EPS Targets would have the
consequence of providing the market and Crown’s
competitors with Crown’s financial forecasts. 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.
After the Plan Year ended 30 June 2015, the Crown
Nomination and Remuneration Committee conducted a
review of the 2014 Crown LTI and the EPS Hurdles, to
consider whether the Board should exercise its discretion
to adjust any EPS Hurdle or any feature of the Plan.
Whilst there was no change to the EPS Hurdles which will
apply over the life of the Plan, the Nomination and
Remuneration Committee recognised that since the
adoption of the 2014 Crown LTI, there had been a number
of events which affect the definition of Crown Profit, which
were not contemplated when the 2014 Four Year Financial
Plan was adopted.
Those events have both a positive impact on the
determination of Crown Profit, in some cases, and a
negative impact in other cases. They include the beneficial
effect of the removal of super tax for Crown Melbourne as
part of the modifications to the Crown Melbourne Casino
Licence, changes in interest expense on account of
various debt raising activities (including the issue of Crown
Subordinated Notes II) and various additional corporate
costs.
Accordingly, for the purposes of calculating “Crown Profit”
and EPS, the Board determined that the effect of these
uncontemplated events should not be taken into account
during the financial year ended 30 June 2015 and
thereafter.
The Crown Nomination and Remuneration Committee
conducted a similar review of the 2014 Crown LTI and the
EPS Hurdles, following 30 June 2016. Again, there was
no change to the EPS Hurdles which will apply over the life
of the Plan. However, in addition to the above matters, the
Nomination and Remuneration Committee recognised that
there had been a number of events which affect the
determination of Crown Profit, which were not
contemplated in the 2014 Four Year Financial Plan. Again
some of those events had a positive impact on the
determination of Crown Profit and others had a negative
impact. Those events include new business acquisitions
not contemplated in the 2014 Four Year Financial Plan
such as CrownBet and DGN, potential development
projects including One Queensbridge and Alon and
foreign exchange movements and asset revaluations.
The Nomination and Remuneration Committee concluded
that in light of these events and unforeseen costs,
appropriate adjustments to neutralise these events should
be made. As a result of those adjustments to the
determination of Crown Profit, the EPS Hurdles were
considered to be achieved in relation to the 2016 financial
year.
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Remuneration Report
Set out below are the EPS Targets and EPS Hurdles which applied for financial year 2015 and financial year 2016 together
with Crown’s actual EPS for financial year 2015 and financial year 2016.
EPS Target
(2014 Four Year
Financial Plan)
51.5 cents
57.6 cents
EPS Target
Growth (2014
Four Year
Financial Plan)
N/A
11.8%
FY15
FY16
EPS Hurdle
(Crown LTI)*
50.5 cents
56.4 cents
Actual EPS
53.0 cents
57.1 cents
Actual EPS
Growth (from
previous year)
N/A
7.7%
Tranche
Vested?
Yes
Yes
* In financial year 2015 and financial year 2016 the EPS Hurdle was 98% of the 2014 Four Year Financial Plan EPS Target.
All references in the above table to “EPS” exclude the contribution made by MCE and significant items and Crown’s actual
EPS also excludes the impact of certain uncontemplated events as described above.
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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
Maximum Value over
four year period
30 June 2015
(15%)
30 June 2016
(20%)
30 June 2017
(25%)
30 June 2018
(40%)
John Alexander
Ken Barton
Rowen Craigie
Barry Felstead
Todd Nisbet
4,500,000
4,050,000
9,000,000
6,300,000
6,300,000
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
As noted in the tables above, in financial year 2016, Crown met the relevant EPS Hurdle and accordingly, an entitlement to
20% of potential EPS Bonuses for financial year 2016 has vested.
Set out below are the vested bonus amounts for the above participants in respect of financial year 2015 and financial year
2016:
Senior Executive
Vested in relation to
the financial year ended 30 June 2015
Vested in relation to the
financial year ended 30 June 2016
John Alexander
Ken Barton
Rowen Craigie
Barry Felstead
Todd Nisbet
675,000
607,500
1,350,000
945,000
945,000
900,000
810,000
1,800,000
1,260,000
1,260,000
In accordance with the rules of the 2014 Crown LTI, the vested component of the cash bonus for financial year 2016 will be
applied by Crown to fund the purchase of Crown shares on market, which will be held on trust for each of Mr Alexander, Mr
Barton, Mr Craigie, Mr Felstead and Mr Nisbet until the end of financial year 2018.
Relationship between remuneration 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 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 (in the case of the 2014 Crown LTI).
58
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; and
• The 2014 Crown LTI is linked to predetermined EPS Hurdles in financial year 2015, financial year 2016, financial year
2017 and financial year 2018.
This year, normalised EBITDA generated by Crown Melbourne and Crown Perth, Crown’s wholly owned Australian casinos,
grew by 1.8%. The compound average normalised EBITDA growth for Crown Melbourne and Crown Perth for the five year
period commencing from financial year 2011 through to financial year 2016 was 5.9%. Normalised Crown group NPAT fell
by 22.7% in financial year 2016 predominantly due to a decline in the earnings of Melco Crown Entertainment Limited. The
compound average normalised NPAT growth for the Crown group for the five year period commencing from financial year
2011 through to financial year 2016 was 3.6%.
The table and graph below set out information about movements in shareholder wealth for the years ended 30 June 2012
to 30 June 2016.
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Share price at start of period
Share price at end of period
Full year dividend
Basic/diluted earnings per share4
Notes:
Year ended
Year Ended
Year Ended
Year Ended
Year Ended
30 June 2012
30 June 2013
30 June 2014
30 June 2015
30 June 2016
$8.93
$8.49
37 cents1
69.78 cps
$8.49
$12.11
37 cents1
67.40 cps
$12.11
$15.12
$15.12
$12.20
$12.20
$12.61
37 cents1
37 cents2
72.5 cents3
96.44 cps
61.28 cps
54.04 cps
1. Franked to 50% with none of the unfranked component comprising conduit foreign income.
2. Franked to 50% with all of the unfranked component of the final dividend comprised of conduit foreign income.
3. Interim dividend franked to 50% and final dividend franked to 70% with all of the unfranked components comprising conduit foreign income.
4. Excluding the effect of significant items.
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$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$-
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
Basic/diluted earnings per share
Share price at end of period
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
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policy on entering into transactions in associated products which limit economic risk
The rules of 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.
59
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Remuneration Report
Remuneration Details for Non-executive
Directors
non-executive Directors
Non-executive Directors are entitled to a base fee 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 in
respect of that service. Crown’s nominee on the
CrownBet Board is also entitled to an annual fee in
respect of that service.
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).
Non-executive Directors fees which applied during the
financial year ended 30 June 2016 were as follows:
Egan Associates, an expert remuneration consultant, was
engaged by the Committee to assist by providing factual
information and analysis. Egan Associates provided a
report to the Nomination and Remuneration Committee
regarding the level of fees paid to Non-executive Directors
in other Top 100 Listed Companies so that the Nomination
and Remuneration Committee could assess whether to
increase Non-executive Director fees and assess whether
there might be a need to increase the fee cap in the
Crown Constitution. No recommendation was made by or
sought from Egan Associates. The advice contained only
facts and an analysis of those facts.
With the benefit of the advice from the remuneration
consultant, the Nomination and Remuneration Committee
recommended to the Board that Non-executive Directors
fees which should apply commencing 1 November 2016
be as follows, subject to shareholders approving the
increase in the remuneration pool cap (further discussed
below):
Base Board Fees:
$150,000
Base Board Fees:
Active Board Committees:
- Chair
- Member
Crown Melbourne Board:
CrownBet Board:
$100,000
Active Board Committees:
- Chair
- Member
Crown Melbourne Board:
CrownBet Board:
$20,000
$10,000
$60,000
$75,000
$25,000
$15,000
$60,000
(no change)
$75,000
(no change)
All Directors are entitled to complimentary privileges at
Crown Melbourne and Crown Perth facilities.
In accordance with Crown’s constitution, Non-executive
Directors’ fees were within an aggregate Non-executive
Directors’ fee cap of $1,300,000 per annum.
A review of Non-executive Directors’ fees was conducted
following year end by the Nomination and Remuneration
Committee. The focus of the review was twofold:
• Firstly to consider whether the existing Non-executive
Director fees remain appropriate, in light of the fact that
there has been no increase in Non-executive Directors’
fees since the Publishing and Broadcasting Limited
demerger in 2007; and
• To determine whether the aggregate Non-executive
Directors’ fee cap could accommodate a potential
increase in Non-executive Director fees.
The Nomination and Remuneration Committee also
considered whether there would be potential within the
existing Non-executive Directors’ fee cap to accommodate
future Non-executive Director fee increases and the
possible appointment of another Non-executive Director.
In light of the above recommendation and to allow for
scope for possible future fee increases as well as the
possible appointment of another Non-executive Director,
the Nomination and Remuneration Committee also
recommended to the Board that the Non-executive
Directors’ fee cap be increased from $1,300,000 per
annum to $2,500,000 per annum (that is, an increase of
$1,200,000 per annum).
Under Crown’s Constitution, an increase in the fee cap
requires the approval of shareholders by an ordinary
resolution. The Crown Board has therefore adopted the
recommendation of the Nomination and Remuneration
Committee to increase the Non-executive Directors’ fee
cap to $2,500,000 per annum by seeking shareholder
approval at the 2016 Annual General Meeting. The 2016
Notice of Annual General Meeting provides further
information regarding the proposed increase in the fee cap
in an Explanatory Memorandum.
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Set out below is a table showing Non-executive Director remuneration for financial years 2016 and 2015.
remuneration table – non-executive Directors
Short term Benefits
Financial
year
Salary &
Fees
non
Monetary
post-employment
Benefit –
Superannuation
other
Long term Incentives
Cash
Based
Equity
Based
termina-
tion
Benefits
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Ben Brazil
Non-executive Director
Helen Coonan
Non-executive Director
Rowena Danziger1
Non-executive Director
Andrew Demetriou3
Non-executive Director
Geoffrey Dixon
Non-executive Director
John Horvath1
Non-executive Director
Michael Johnston2
Non-executive Director
Harold Mitchell
Non-executive Director
Robert Rankin2
Non-executive Director
2016 TOTALS
2015 TOTALS
Notes:
120,000
120,000
120,000
120,000
210,000
210,000
175,000
69,792
140,000
140,000
210,000
210,000
-
-
120,000
120,000
-
-
1,095,000
989,792
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,400
11,400
11,400
11,400
19,308
18,783
16,625
6,630
13,300
13,300
19,308
18,783
-
-
11,400
11,400
-
-
102,741
91,696
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
total
131,400
131,400
131,400
131,400
229,308
228,783
191,625
76,422
153,300
153,300
229,308
228,783
-
-
131,400
131,400
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 1,197,741
- 1,081,488
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 Johnston nor Mr Rankin currently receive remuneration from Crown for their services to Crown.
3. Mr Demetriou received Directors’ fees at a rate of $75,000 per annum for his participation on the CrownBet Pty Ltd and CrownBet Holdings Pty Ltd
Boards.
Remuneration details for Senior Executives
Senior Executives are employed under service agreements with Crown or a subsidiary of Crown. Common features to
these service agreements include (unless noted otherwise):
• an annual review of the executive’s fixed remuneration, with any increases requiring approval of the Chief Executive
Officer and Managing Director and the Nomination and Remuneration Committee and dependent on Crown’s financial
performance, the individual’s KPO performance and market changes;
• competitive performance based incentive payments annually and in the long term, dependent upon Crown achieving its
objectives and the Senior Executive achieving his or her KPOs;
• a provision that Crown may ask the executive to act as a Director of a member or associate of the Crown group for no
additional remuneration;
• a prohibition from gambling at any property within the Crown group during the term of employment and for six months
following termination and a requirement that the executive maintains licences required and issued by relevant regulatory
authorities (such as the Victorian Commission for Gambling and Liquor Regulation and the Western Australian Gaming
and Wagering Commission);
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Remuneration Report
• 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 at the end of the financial year ending 30
June 2016 are summarised in the tables on the following pages.
Summary of Contracts of Employment applicable During the year Ended 30 June 2016
Current Position
Fixed Remuneration
Base salary:
Superannuation
John H Alexander
Executive Deputy Chairman (commenced 1 December 2007): Mr Alexander’s current
employment agreement with Crown Resorts Limited has no fixed term.
$1,480,692 per annum
Compulsory Superannuation Guarantee Contributions up to the maximum contribution
base, equating to $19,308 per annum.
Non-monetary benefits
and other:
Complimentary privileges at Crown Melbourne and Crown Perth facilities and
superannuation.
Performance based
remuneration
2016 Percentage
breakdown of
remuneration
Mr Alexander participates in the 2014 Crown LTI. See further page 54.
Fixed remuneration
(Includes voluntary and
compulsory superannuation)
57%
STI
0%
2014 Crown LTI
43%
Post-employment benefits Nil
Post-employment restraint Crown may impose a restraint for various periods up to 12 months.
Termination
By Senior Executive:
12 months’ notice.
By Crown:
12 months’ notice without cause; one month’s notice for performance issues; three
months’ notice due to incapacity.
Termination benefits
Payments made prior to
commencement
Directors’ Fees
Nil
Nil
Nil
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Current Position
Fixed Remuneration
Base salary:
Superannuation
Rowen B Craigie
Chief executive officer and managing Director (commenced 1 December 2007):
Mr Craigie’s employment agreement with Crown Resorts Limited will expire on 30
November 2018.
$3,070,692 per annum.
Compulsory Superannuation Guarantee Contributions up to the maximum contribution
base, equating to $19,308 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:
LTI:
A maximum of $1,000,000, assessed by the Chairman based on the achievement of
personal KPOs. A further $1,000,000 may be paid at the discretion of the Crown Board if
Crown’s performance substantially exceeds that set out in Crown’s business plan and
represents an exemplary outcome.
Mr Craigie participates in the 2014 Crown LTI. See further page 54.
2016 Percentage
breakdown of
remuneration
Fixed remuneration
(Includes voluntary and
compulsory superannuation)
50%
STI
14%
Post-employment benefits Nil
2014 Crown LTI
36%
Post-employment restraint Crown may impose a restraint for various periods up to 12 months.
Termination
By Senior Executive:
12 months’ notice.
By Crown:
Termination benefits
12 months’ notice without cause; one month’s notice for performance issues (following at
least three months’ notice to improve); three months’ notice for incapacity.
Subject to the receipt of shareholder approval, Mr Craigie will be entitled to receive a
severance payment equal to 12 months’ fixed remuneration in the event of early
termination of his employment by Crown. The imposition of Mr Craigie’s post-employment
restraint is conditional upon receipt of his severance payment.
Payments made prior to
commencement
Directors’ Fees
Nil
Nil
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Current Position
Fixed Remuneration
Base salary:
Superannuation
Non-monetary benefits
and other:
Performance based
remuneration
STI:
LTI:
Kenneth M Barton
Chief Financial Officer (commenced 9 March 2010): Mr Barton’s employment agreement
with Crown Resorts Limited will expire on 30 September 2018.
$1,760,692 per annum.
Compulsory Superannuation Guarantee Contributions up to the maximum contribution
base, equating to $19,308 per annum. During the year, Mr Barton made additional
voluntary contributions to superannuation as disclosed in the remuneration tables later in
this Report.
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.
Mr Barton participates in the 2014 Crown LTI. See further page 54.
2016 Percentage
breakdown of
remuneration
Fixed remuneration
(Includes voluntary and
compulsory superannuation)
51%
STI
20%
2014 Crown LTI
29%
Post-employment benefits Nil
Post-employment restraint Nil
Termination
By Senior Executive:
6 months’ notice.
By Crown:
6 months’ notice without cause; one month’s notice for performance issues (following at
least 3 months’ notice to improve); 3 months’ notice for incapacity.
Termination benefits
Nil
Payments made prior to
commencement
As previously disclosed, a sign on payment was made in 2010 to compensate Mr Barton
for unvested incentives forfeited on cessation of employment with his previous employer.
Directors’ Fees
Nil
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Current Position
Fixed Remuneration
Base salary:
Superannuation
Non-monetary benefits
and other:
Performance based
remuneration
STI:
LTI:
2016 Percentage
breakdown of
remuneration
Barry J Felstead
Chief Executive Officer – Australian Resorts (from 1 August 2013): Mr Felstead’s current
employment agreement with Crown Resorts Limited has no fixed term.
$2,205,692 per annum
Compulsory Superannuation Guarantee Contributions up to the maximum contribution
base, equating to $19,308 per annum
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.
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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
Mr Felstead participates in the 2014 Crown LTI. See further page 54.
Fixed remuneration
(Includes voluntary and
compulsory superannuation)
46%
STI
21%
2014 Crown LTI
33%
Post-employment benefits Nil
Post-employment restraint Crown may impose various restraint periods up to a period of 12 months
post-employment.
Termination
By Senior Executive:
12 months’ notice.
By Crown:
12 months’ notice without cause; one month’s notice for performance issues; three
months’ notice due to incapacity.
Termination benefits
Payments made prior to
commencement
Directors’ Fees
Nil
Nil
Nil
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Crown Resorts Limited Annual Report 2016
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Remuneration Report
Current Position
Fixed Remuneration
Base salary:
Superannuation
Non-monetary benefits
and other:
Performance based
remuneration
STI:
LTI:
2016 Percentage
breakdown of
remuneration
W. Todd Nisbet
Executive Vice President – Strategy and Development (from 9 August 2010): Mr Nisbet’s
fixed term employment agreement with Crown Resorts Limited expired on 31 December
2015 and is continuing on the same terms and conditions except as to term, which is now
no longer fixed.
$2,205,692 per annum.
Compulsory Superannuation Guarantee Contributions up to the maximum contribution
base, equating to $19,308 per annum.
Complimentary privileges at Crown Melbourne and Crown Perth facilities, mobile
telephone and salary sacrifice arrangements for motor vehicle and superannuation. 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.
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.
Mr Nisbet participates in the 2014 Crown LTI. See further page 54.
Fixed remuneration
(Includes voluntary and
compulsory superannuation)
50%
STI
19%
2014 Crown LTI
31%
Post-employment benefits Nil
Post-employment restraint Crown may impose various restraint periods up to a period of 12 months
post-employment.
Termination
By Senior Executive:
12 months’ notice.
By Crown:
2 months’ notice without cause; one month’s notice for performance issues; three months’
notice due to incapacity.
Termination benefits
Payments made prior to
commencement
Directors’ Fees
Nil
Nil
Nil
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the additional $250,000 to which he may be entitled,
based on exceptional performance. Mr Felstead’s STI
bonus of $1 million exceeded his target STI, based on
exceptional performance at Crown Melbourne during the
period.
Long Term Incentives (LTI)
As summarised earlier, Senior Executives participated in
the 2014 Crown LTI.
In accordance with relevant accounting standards, the
2014 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 over the life of the 2014 Crown LTI,
notwithstanding that the benefits will vest for the Senior
Executives at a different rate. Accordingly, 25% of the total
2014 Crown LTI bonus for which each Senior Executive is
potentially eligible will be included in the remuneration
table for each of the four active years of the plan,
regardless of whether a bonus has vested or not.
As explained earlier, the first, second and third tranches of
the 2014 Crown LTI represents 15%, 20% and 25%
(respectively) of the total 2014 Crown LTI bonus for which
each Senior Executive is eligible. The EPS Hurdle of the
2014 Crown LTI for financial year 2016 was met. Detail of
the actual sums vested to relevant Senior Executives has
been provided earlier, however, these have also been
shown in the separate Remuneration Received / Vested
table below.
remuneration table for Senior executives
Commentary
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 2016 and 30 June 2015 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.
In addition, a separate table has been provided this year
which details the remuneration that was received, or
vested by each senior executive during the year.
Fixed Remuneration
Mr Alexander did not receive an increase to his fixed
remuneration in financial year 2016 as compared with
financial year 2015.
Mr Craigie, Mr Nisbet and Mr Felstead received an
increase to their fixed remuneration of 3%. Mr Barton
received an increase to his fixed remuneration of 15%,
reflecting the expanded scope of his responsibilities, the
achievement of various performance objectives and the
relative remuneration of his peers.
Short Term Incentives (STI)
In financial year 2016, the Group’s financial performance
objectives were generally met. Crown Melbourne met its
financial performance objectives and Crown Perth
exceeded its local contribution objective although did not
achieve its overall financial performance objectives.
However, on account of declined performance of MCE’s
businesses, Crown Resorts Limited did not achieve its
normalised NPAT budget. Notwithstanding, some
important non-financial objectives were achieved,
including good progress on the Crown Towers Perth
project, the Crown Sydney project and other development
projects.
STI bonuses at Crown Melbourne, Crown Perth and
Crown Resorts were generally paid at 100% of target STI
bonuses. However, individual STI bonuses were adjusted
to reflect the extent to which non-financial objectives were
achieved. Accordingly, Mr Craigie received 90% 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. Mr Nisbet received $1 million
representing 90% of his target STI bonus and Mr Barton
received his target STI of $500,000, together with 85% of
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Crown Resorts Limited Annual Report 2016
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69
Crown Resorts Limited Annual Report 2016
rEMunEratIon rEport CONTINUED
Remuneration Report
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 2016
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
Balance
1 July 2015
364,270,253
272,147
102,314
30,896
114,887
Issued under
executive
Share plan
-
61,621
123,242
-
-
Other net
Change
Balance
30 June 2016
-
-
-
-
-
364,270,253
333,768
225,556
30,896
114,887
* Mr Packer ceased as a Director on 21 December 2015. As required by the ASX Listing Rules, Mr Packer provided Crown with an Appendix 3Z, detailing
his interests in Crown shares on the date of his resignation. The interests in respect of Mr Packer are therefore as at 21 December 2015.
Crown Executives
Executives
Ken M Barton
Barry J Felstead
Todd W Nisbet
30 June 2015
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 2015
28,420
-
51,157
Issued under
executive
Share plan
55,478
86,269
86,269
Other net
Change
Balance
30 June 2016
-
-
-
83,898
86,269
137,426
Balance
1 July 2014
364,270,253
256,549
102,314
30,896
114,887
Issued under
executive
Share plan
-
-
-
-
-
Other net
Change
Balance
30 June 2015
-
15,598
-
-
-
364,270,253
272,147
102,314
30,896
114,887
Balance
1 July 2014
28,420
-
51,157
Issued under
executive
Share plan
-
-
-
Other net
Change
Balance
30 June 2015
-
-
-
28,420
-
51,157
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70
Remuneration Report
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 31 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.
R J Rankin
Director
R B Craigie
Director
Melbourne, 9 September 2016
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71
Crown Resorts Limited Annual Report 2016
auDItor’S InDEpEnDEnCE DECLaratIon
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
As lead auditor for the audit of Crown Resorts Limited for the financial year ended 30 June 2016, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Crown Resorts Limited and the entities it controlled during the financial
year.
Ernst & Young
David McGregor
Partner
Melbourne
9 September 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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72
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 2016, 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
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73
Crown Resorts Limited Annual Report 2016
InDEpEnDEnt auDItor’S rEport CONTINUED
I
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74
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 2016
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
2016. 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 2016,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
David McGregor
Partner
Melbourne
9 September 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Directors’ Declaration
In accordance with a resolution of the Directors, we declare as follows:
In the opinion of the directors:
1.
the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001,
including:
(a)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its
performance for the year ended on that date; and
2.
3.
4.
5.
(b)
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001;
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
note 1 of the Financial Report;
there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they
become due and payable;
this declaration has been made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2016; and
as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group
identified in note 33 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.
R J Rankin
Director
R B Craigie
Director
Melbourne, 9 September 2016
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75
Crown Resorts Limited Annual Report 2016
FINANCIAL REPORT 2016
Financial Report
77
Statement of
Profit or Loss
79
Statement of
Financial Position
81
Statement of
Changes in Equity
78
Statement of
Comprehensive Income
80
Cash Flow Statement
82
Notes to the
Financial Statements
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76
Statement of Profit or Loss
For the year ended 30 June 2016
Revenues
Other income
Expenses
Note
3
3
3
2016
$'000
2015
$'000
3,616,152
3,484,404
603,593
349
(2,996,405)
(3,011,132)
Share of profits of associates and joint venture entities
2,10
41,261
122,058
Profit before income tax and finance costs
Finance costs
Profit before income tax
Income tax expense
Net profit after tax
Attributable to:
Equity holders of the Parent
Non-controlling interests
1,264,601
595,679
3
(215,671)
(132,088)
1,048,930
463,591
2,5
(105,354)
(85,284)
943,576
378,307
948,823
385,047
(5,247)
(6,740)
943,576
378,307
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
2016
Cents
per share
2015
Cents
per share
130.26
130.26
52.86
52.86
Note
29
29
4
4
39.50
33.00
19.00
18.00
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77
Crown Resorts Limited Annual Report 2016
Statement of Comprehensive Income
For the year ended 30 June 2016
Net profit after tax
Other Comprehensive Income
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation (1)
Movement in cash flow hedge reserve
Unrealised gain / (loss) on investments
Items reclassified to profit or loss:
Foreign currency translation
Items that will not be reclassified subsequently to profit or loss:
Employee benefits reserve
Note
2016
$'000
2015
$'000
943,576
378,307
21
21
21
21
21
65,751
(14,230)
(5,079)
388,950
33,875
7,250
(70,576)
3,188
-
-
Other comprehensive income / (loss) for the period, net of income tax
(20,946)
430,075
Total comprehensive income / (loss) for the period
922,630
808,382
Attributable to:
Equity holders of the Parent
Non-controlling interests
925,236
810,667
(2,606)
(2,285)
922,630
808,382
(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 Entertainment Ltd.
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
S
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78
FINANCIAL REPORT 2016 CONTINUED
Statement of Financial Position
As at 30 June 2016
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
Equity attributable to equity holders of the Parent
Non-controlling interest
Total equity
Note
25
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
2016
$'000
449,663
333,200
16,296
33,405
9,639
842,203
141,488
15,136
51,760
1,614,886
4,069,036
1,113,959
608,518
330,964
60,694
8,006,441
8,848,644
475,240
85,715
138,720
182,017
-
881,692
339,489
2,175,611
219,035
58,580
22,060
2,814,775
3,696,467
5,152,177
446,763
(8,886)
796,630
3,827,818
5,062,325
89,852
5,152,177
2015
$'000
340,984
377,632
14,861
29,511
16,032
779,020
151,284
10,674
41,918
1,965,717
3,690,497
1,130,623
420,844
205,109
61,264
7,677,930
8,456,950
451,593
188,784
153,818
169,174
626
963,995
171,495
2,473,233
192,916
36,361
9,950
2,883,955
3,847,950
4,609,000
446,763
-
820,217
3,257,760
4,524,740
84,260
4,609,000
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
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Crown Resorts Limited Annual Report 2016
Cash Flow Statement
For the year ended 30 June 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Borrowing costs paid
Income tax paid
Note
2016
$'000
2015
$'000
3,566,724
3,466,517
(2,695,800)
(2,637,838)
195,913
14,184
52,578
16,120
(252,771)
(156,648)
(345,568)
(106,153)
Net cash flows from/(used in) operating activities
25b
482,682
634,576
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 the acquisition of equity accounted associates
Net proceeds from sale of investments
Payment for acquisition of financial instruments
Net proceeds from disposal of financial instruments
Net payment for acquisition of controlled entities
Loans to associated entities
Repayments of loans from associated entities
Other (net)
(556,549)
(599,602)
66,291
97,713
-
(345,000)
(203,105)
-
1,067,109
1,000
-
-
(49,523)
(386)
131,867
(2,599)
(272,440)
69,090
(3,971)
(476)
9,875
(1,817)
Net cash flows from/(used in) investing activities
453,105
(1,045,628)
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Equity injections from non-controlling interests
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
883,394
2,905,854
(1,331,718)
(2,160,985)
-
72,431
(378,765)
(269,506)
(827,089)
547,794
108,698
136,742
340,984
177,780
(19)
26,462
Cash and cash equivalents at the end of the financial year
25a
449,663
340,984
The above Cash Flow Statement should be read in conjunction with the accompanying notes.
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FINANCIAL REPORT 2016 CONTINUED
Statement of Changes in Equity
For the year ended 30 June 2016
Ordinary
Shares
Shares
Held in
Trust
Retained
Earnings Reserves
$’000
$’000
$’000
$’000
Non-
Controlling
Interest
$’000
Total
$’000
Total
Equity
$’000
Year ended 30 June 2016
Balance at 1 July 2015
446,763
-
3,257,760
820,217
4,524,740
84,260
4,609,000
Profit for the period
Other comprehensive income
Total comprehensive income
for the period
Dividends paid
Shares transferred under
Long Term Incentive Plan
Acquisition of subsidiaries
-
-
-
-
-
-
-
-
948,823
-
948,823
(5,247)
943,576
-
(23,587)
(23,587)
2,641
(20,946)
-
948,823
(23,587)
925,236
(2,606)
922,630
-
(378,765)
-
(378,765)
-
(378,765)
(8,886)
-
-
-
-
-
(8,886)
-
(8,886)
-
8,198
8,198
Balance at 30 June 2016
446,763
(8,886)
3,827,818
796,630
5,062,325
89,852
5,152,177
Year ended 30 June 2015
Balance at 1 July 2014
446,763
(1,918)
3,142,219
394,597
3,981,661
-
3,981,661
Profit for the period
Other comprehensive income
Total comprehensive income
for the period
Dividends paid
Shares transferred under
Long Term Incentive Plan
Acquisition of subsidiaries
-
-
-
-
-
-
-
-
385,047
-
385,047
(6,740)
378,307
-
425,620
425,620
4,455
430,075
-
385,047
425,620
810,667
(2,285)
808,382
-
(269,506)
-
(269,506)
-
(269,506)
1,918
-
-
-
-
-
1,918
-
1,918
-
86,545
86,545
Balance at 30 June 2015
446,763
-
3,257,760
820,217
4,524,740
84,260
4,609,000
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements
For the year ended 30 June 2016
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 2016/191. The Company is an
entity to which the class order applies.
The financial report of Crown Resorts Limited and its controlled entities (the Group) for the year ended 30 June 2016 was
authorised for issue in accordance with a resolution of the directors on 9 September 2016 subject to final approval by a
subcommittee.
(b) Statement of compliance
The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards
Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
The Group has adopted the following accounting standards, which became applicable from 1 July 2015:
- AASB 2013-9 – Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial
Instruments
- AASB 2015-3 – Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031
Materiality
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 2016 which may impact the entity in the
period of initial application are outlined in the table below:
Application
date of
standard (1)
1 January
2018
Reference
AASB 15
Title
Revenue from
Contracts
with
Customers
AASB 16
Leases
1 January
2019
Application
date for
Group (1)
1 July 2018
1 July 2019
Impact on Group financial report
This 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 is assessing the impact the application of this
standard will have on the Group.
This standard has a number of key features included that
are required to recognise assets and liabilities for all
leases with a term of more than 12 months, unless the
underlying asset is of low value. Assets and liabilities
arising from a lease are initially measured on a present
value basis. For Lessor accounting, AASB 16
substantially carries forward the accounting requirements
in AASB 117. Crown is assessing the impact the
application of this standard will have on the Group.
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FINANCIAL REPORT 2016 CONTINUED
1. Summary of Significant Accounting Policies continued
(b) Statement of compliance continued
Reference Title
AASB 9
Financial
Instruments
Application
date of
standard (1)
1 January
2018
Application
date for
Group (1)
1 July 2016
Impact on Group financial report
AASB 9 Financial Instruments (December 2014) is a new
standard which replaces AASB 139 Financial Instruments:
Recognition and Measurement. This new version supersedes
AASB 9 issued in December 2009 (as amended) and AASB 9
issued in December 2010 and includes a model for
classification and measurement, a single, forward-looking
‘expected loss’ impairment model and a substantially-reformed
approach to hedge accounting.
AASB 9 is effective for annual periods beginning on or after 1
January 2018. However, the Standard is available for early
adoption.
From 31 December 2010, Crown elected to early adopt the
classification and measurement component of AASB 9, which
has been applied to Crown’s financial statements.
Crown has elected to early adopt AASB 9 in its entirety from 1
July, 2016.
Classification and measurement
Crown has applied the classification and measurement
requirements since 31 December 2010; therefore there will be
no further impact on the financial statements.
Hedge Accounting
The requirements for general hedge accounting have been
simplified for hedge effectiveness testing. Crown does not
expect any significant impact on the Group from the
application of this section of the standard.
Impairment
AASB 9 introduces a new expected-loss impairment model
that will require more timely recognition of expected credit
losses which will replace the incurred loss model under the
current accounting standard. Specifically, the new Standard
requires entities to account for expected credit losses from the
time financial instruments are first recognised and to recognise
full lifetime expected losses on a more timely basis.
The impact of transitioning to AASB 9 on the Group’s financial
statements will be a decrease in net assets of $59.5 million,
comprising:
- An increase in provisioning for doubtful debts on trade
receivables of $85.0 million; and
- An increase in deferred tax assets of $25.5 million.
As per the transition requirements of AASB 9, adjustments will
be recognised against retained earnings. Accordingly,
opening retained earnings at 1 July 2016 is expected to
decrease by $57.4 million.
The transitional impact is based on best estimates as at the
reporting date. The information provided in this note is focused
upon material items; it does not represent a complete list of
expected adjustments.
(1) Designates the beginning of the applicable annual reporting period unless otherwise stated, however may be early
adopted.
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
1. Summary of Significant Accounting
Policies continued
certain assets and liabilities within the next annual
reporting period are:
(b) Statement of compliance continued
Certain other new Accounting Standards and
Interpretations have been published that are not
mandatory for the 30 June 2016 reporting period. The
Group has assessed the impact of these new Accounting
Standards and Interpretations that are relevant to the
Group, and does not expect any material impact on net
assets, net profit, presentation or disclosures when these
standards become effective and are adopted.
(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. Change
of ownership interest of a subsidiary without the loss of
control is accounted for as an equity transaction.
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.
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
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 tax is provided on most temporary differences at
the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes.
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FINANCIAL REPORT 2016 CONTINUED
1. Summary of Significant Accounting
Policies continued
(e) Income tax continued
Deferred tax liabilities are recognised for all taxable
temporary differences except:
• where the deferred tax liability arises from the initial
recognition of an asset or liability in a transaction that is
not a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss; or
• in respect of taxable temporary differences associated
with investments in subsidiaries, associates and
interests in joint ventures, when the timing of the reversal
of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse
in the foreseeable future.
Deferred 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 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 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 tax asset to be
utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted
at the reporting date.
Income taxes relating to items recognised directly in equity
are recognised in equity and not the Statement of Profit or
Loss.
(f) Other taxes
Revenues, expenses and assets are recognised net of the
amount of GST except:
• where the GST incurred on a purchase of goods and
services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense item
as applicable;
• gaming revenues, due to the GST being offset against
casino taxes; and
• receivables and payables are stated with the amount of
GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the Statement of Financial Position.
Cash flows are included in the Cash Flow Statement on a
gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable
from, or payable to, the taxation authority, are classified as
operating cash flows.
Commitments and contingencies are disclosed net of the
amount of GST recoverable from, or payable to, the
taxation authority.
(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.
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
1. Summary of Significant Accounting
Policies continued
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(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.
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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.
FINANCIAL REPORT 2016 CONTINUED
1. Summary of Significant Accounting
Policies continued
(m) Property, plant and equipment
Property, plant and equipment is stated at cost less
accumulated depreciation and any impairment in value.
Depreciation and amortisation is calculated on a straight-line
basis over the estimated useful life of the asset as follows:
• Freehold buildings - 40 to 75 years;
• Leasehold improvements - lease term; and
• Plant and equipment - 2 to 15 years.
The asset’s residual values, useful lives and amortisation
methods are reviewed, and adjusted if appropriate, at each
financial year end.
Impairment
The carrying values of property, plant and equipment are
reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be
recoverable. For an asset that does not generate largely
independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset
belongs. If any such indication exists and where the
carrying values exceed the estimated recoverable amount,
the assets or cash-generating units are written down to
their recoverable amount.
The recoverable amount of property, plant and equipment
is the greater of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a post-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
Derecognition
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is included
in the Statement of Profit or Loss in the period the item is
derecognised.
(n) Intangible assets
Licences
Licences are carried at cost less any accumulated
amortisation and any accumulated impairment losses.
The directors regularly assess the carrying value of casino
licences so as to ensure they are not carried at a value
greater than their recoverable amount.
The casino licences 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 to 2050.
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. Amortisation will commence on
the Crown Sydney licence once the property is operational.
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
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.
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
1. Summary of Significant Accounting
Borrowing costs
Policies continued
(n) Intangible assets continued
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Intangible assets are tested for impairment where an
indicator of impairment exists, and annually in the case of
intangible assets with indefinite lives, either individually or at
the cash generating unit level. Useful lives are also
examined on an annual basis and adjustments, where
applicable, are made on a prospective basis.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset
and are recognised in the Statement of Profit or Loss when
the net asset is derecognised.
(o) Recoverable amount of assets
At each reporting date, the Group assesses whether there
is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes a formal
estimate of recoverable amount. Where the carrying
amount of an asset exceeds its recoverable amount the
asset is considered impaired and is written down to its
recoverable amount.
Recoverable amount is the greater of fair value less costs
to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows that are
largely independent of the cash flows from other assets or
groups of assets (cash-generating units). In assessing value
in use, the estimated future cash flows are discounted to
their present value using a post-tax discount rate that
reflects current market assessments of the time value of
money and the risks specific to the asset.
(p) Trade and other payables
Trade and other payables are brought to account for
amounts payable in relation to goods received and services
rendered, whether or not billed to the Group at reporting
date. The Group operates in a number of diverse markets,
and accordingly the terms of trade vary by business.
(q) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair
value of the consideration received less directly attributable
transaction costs.
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost
using the effective interest method.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
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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 6.4% (2015: 6.1%).
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.
(s) Employee benefits
Provision is made for employee benefits accumulated as a
result of employees rendering services up to reporting date
including related on-costs. The benefits include wages and
salaries, incentives, compensated absences and other
benefits, which are charged against profits in their
respective expense categories when services are provided
or benefits vest with the employee.
The provision for employee benefits is measured at the
remuneration rates expected to be paid when the liability is
settled. Benefits expected to be settled after twelve
months from the reporting date are measured at the
present value of the estimated future cash outflows to be
made in respect of services provided by employees up to
the reporting date.
The liability for long service leave is recognised in the
provision for employee benefits and measured as the
present value of expected future payments to be made in
respect of services provided by employees up to the
reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary
FINANCIAL REPORT 2016 CONTINUED
1. Summary of Significant Accounting
Policies continued
(s) Employee benefits continued
levels, experience of employee departures, and periods of
service. Expected future payments are discounted using
market yields at the reporting date on 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.
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.
(v) Derivative financial instruments and hedging
(w) Impairment of financial assets
Derivatives are carried as assets when their fair value is
positive and as liabilities when their fair value is negative.
Any gains or losses arising from changes in the fair value of
derivatives, except for those that qualify as cash flow
hedges, are taken directly to profit or loss for the year.
The fair value of forward exchange contracts are calculated
by reference to current forward exchange rates for
contracts with similar maturity profiles. The fair values of
interest rate swaps are determined by reference to market
values for similar instruments.
Hedges that meet the strict criteria for hedge accounting
are accounted for as follows:
(i) Fair value hedges
Fair value hedges are hedges of the Group’s exposure to
changes in the fair value of a recognised asset or liability or
an unrecognised firm commitment, or an identified portion of
such an asset, liability or firm commitment that is attributable
to a particular risk and could affect profit or loss. For fair
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.
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
1. Summary of Significant Accounting
Rendering of services
Policies continued
(w) Impairment of financial assets continued
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.
(y) Revenue
Revenue is recognised and measured at the fair value of
the consideration received or receivable to the extent that it
is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured. The
following specific recognition criteria must also be met
before revenue is recognised:
Sale of goods
Revenue is recognised when the significant risks and
rewards of ownership of the goods have passed to the
buyer and can be measured reliably. Risks and rewards are
considered to have passed to the buyer at the time of
delivery of the goods to the customer.
Revenue is recognised when control of the right to be
compensated for the services and the stage of completion
can be reliably measured.
Gaming 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.
(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 four operating segments being Crown
Melbourne, Crown Perth, Crown Aspinalls and Wagering &
Online.
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FINANCIAL REPORT 2016 CONTINUED
1. Summary of Significant Accounting
Policies continued
(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.
For each business combination the group elects whether
to measure the non-controlling interest in the acquiree at
the fair value or at the proportionate share of the acquiree’s
identifiable net assets.
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 in
the Statement of Profit or Loss. If the contingent
consideration is classified as equity, it should not be
remeasured until it is finally settled within equity.
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
2. Segment Information
30 June 2016
Crown
Melbourne
$’000
Normalised Result(1)
Wager-
ing &
Online
$’000
Crown
Aspinalls
$’000
Crown
Perth
$’000
Unall-
ocated
$’000
Crown
Group
$’000
Adjust-
ment(1)
$’000
Significant
Items (3)
$’000
Crown
Group
$’000
Actual
Operating revenue
Main floor gaming
VIP program play
Wagering & Non
gaming
Intersegment
Operating revenue
Interest revenue
Total revenue
Segment result
Gaming taxes,
commissions & other
Operating expenses
Intersegment
Earnings before
interest, tax,
depreciation and
amortisation “EBITDA”
Depreciation and
amortisation
Earnings before interest
and tax “EBIT”
Net gain on sale of
MCE
Impairment reversal
Proposed demerger
related costs
Equity accounted share
of associates’ net
profit/(loss)
Net interest income/
(expense)
Income tax benefit/
(expense)
Profit/(loss) after tax
Non-controlling interest
Profit/(loss)
attributable to equity
holders of the Parent
1,183,267
676,481
497,322
202,769
-
107,266
-
-
- 1,680,589
986,516
-
452,708
221,901
893
229,905
12,345
2,312,456
921,992
108,159
229,905
12,345
2,312,456
921,992
108,159
229,905
12,345
917,752
(1,499)
3,583,358
16,332
3,599,690
-
18,067
-
-
18,067
-
18,067
(754,469)
(884,675)
(235,162)
(426,894)
(49,322)
(32,357)
-
(235,353)
(110,794)
- (1,038,953)
(1,690,073)
1,499
(12,535)
-
-
673,312
259,936
26,480
(5,448)
(98,449)
855,831
5,532
(194,105)
(66,843)
(1,201)
(15,810)
(4,816)
(282,775)
-
479,207
193,093
25,279
(21,258)
(103,265)
573,056
5,532
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
601,988
35,465
1,680,589
1,004,583
917,752
(1,499)
3,601,425
16,332
3,617,757(2)
(1,051,488)
(1,690,073)
1,499
861,363
(282,775)
578,588
601,988
35,465
(9,033)
(9,033)
479,207
193,093
25,279
(21,258) (103,265)
56,714
(15,453)
-
41,261
(141,604)
-
(57,735)
(199,339)
(87,196)
400,970
5,247
(2,707)
(12,628)
-
(15,451)
555,234
-
(105,354)
943,576
5,247
479,207
193,093
25,279
(21,258) (103,265)
406,217
(12,628)
555,234
948,823
(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 Aspinalls and Melco Crown), pre-opening costs from Melco Crown and significant items. 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 $3,617.8 million includes $1.6 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 of $555.2 million consist of a net gain on sale of Melco Crown shares and an Aspers impairment reversal, partially offset by
proposed demerger related costs, early debt retirement costs and a tax provision adjustment relating to amended assessments. Refer note 3.
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FINANCIAL REPORT 2016 CONTINUED
2. Segment Information continued
30 June 2015
Normalised Result(1)
Crown
Melbourne
$’000
Crown
Perth
$’000
Crown
Aspinalls
$’000
Wager-
ing
$’000
Unall-
ocated
$’000
Crown
Group
$’000
Adjust-
ment(1)
$’000
Significant
Items (3)
$’000
Operating revenue
Main floor gaming
1,090,583
498,004
-
VIP program play
706,610
249,333
104,668
-
-
Wagering & Non gaming
436,689
227,967
942
89,751
Intersegment
-
-
-
1,588,587
-
1,060,611
61,065
755,349
(611)
-
-
Operating revenue
2,233,882
975,304
105,610
89,751
-
3,403,936
61,065
Interest revenue
Total revenue
Segment result
Gaming taxes,
commissions & other
2,233,882
975,304
105,610
89,751
-
3,423,688
61,065
19,752
-
(735,960)
(299,831)
(48,769)
-
- (1,084,560)
(107,874)
Operating expenses
(835,840)
(421,090)
(25,083)
(105,728)
(107,349)
(1,495,090)
611
-
-
662,082
254,383
31,758
(15,977)
(107,349)
824,897
(46,809)
(188,132)
(62,896)
(1,136)
(6,872)
(3,841)
(262,877)
-
473,950
191,487
30,622
(22,849)
(111,190)
562,020
(46,809)
-
-
(61,342)
161,253
(39,195)
(112,336)
-
(92,201)
6,917
-
-
-
Intersegment
Earnings before interest,
tax, depreciation and
amortisation "EBITDA"
Depreciation and
amortisation
Earnings before interest
and tax "EBIT"
Asset Impairments
Equity accounted share
of associates' net profit/
(loss)
Net interest income/
(expense)
Income tax benefit/
(expense)
Profit/(loss)
after tax
Non-controlling interest
Profit/(loss)
attributable to equity
holders of the Parent
473,950
191,487
30,622
(22,849)
(111,190)
518,736
(79,087)
(61,342)
378,307
6,740
-
-
6,740
473,950
191,487
30,622
(22,849)
(111,190)
525,476
(79,087)
(61,342)
385,047
(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 and asset impairments. 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 $3,484.8 million includes $0.3 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 asset impairments of $61.3m, relating primarily to Crown’s investment in Cannery. Refer note 3.
-
-
-
-
-
-
-
-
-
-
-
-
-
Actual
Crown
Group
$’000
1,588,587
1,121,676
755,349
(611)
3,465,001
19,752
3,484,753(2)
(1,192,434)
(1,495,090)
611
778,088
(262,877)
515,211
(61,342)
122,058
(112,336)
(85,284)
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
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
Net gain on sale of MCE
(c) Expenses
Cost of sales
Operating activities
Asset impairment/(reversal)
Proposed demerger related costs
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
Early debt retirement costs
Operating leases
Superannuation expense
Other employee benefits expense
Net foreign currency (gains)/losses
(e) Significant items - income / (expense)
Net gain on sale of MCE
Early debt retirement costs (net of tax)
Asset (impairment)/reversal
Proposed demerger related costs
Tax provision - amended assessments
2016
$'000
2015
$'000
3,161,944
394,642
16,332
12,345
30,889
3,616,152
3,044,876
389,023
19,752
-
30,753
3,484,404
1,605
601,988
603,593
349
-
349
142,042
2,765,185
(35,465)
9,033
115,610
2,996,405
141,346
2,697,254
61,342
-
111,190
3,011,132
91,739
161,070
252,809
88,325
148,686
237,011
20,335
9,631
29,966
282,775
18,298
7,568
25,866
262,877
201,321
(43,385)
157,936
57,735
215,671
8,361
61,575
920,022
(7,762)
601,988
(40,786)
35,465
(9,033)
(32,400)
555,234
161,490
(29,402)
132,088
-
132,088
4,889
57,890
836,042
(17,584)
-
-
(61,342)
-
-
(61,342)
N
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t
e
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o
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94
FINANCIAL REPORT 2016 CONTINUED
4. Dividends Paid and Declared
(a) Dividends declared and paid during the financial year
Prior year final dividend (paid 9 October 2015)
2016
$'000
2015
$'000
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t
a
t
S
l
Paid at 19.0 cents (2014: 19.0 cents) per share franked at 50% (2014: 50% franked) at the
Australian tax rate of 30% (2014: 30%)
138,395
138,395
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a
n
F
e
h
t
o
t
240,370
131,111
378,765
269,506
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o
N
Current year interim dividend (paid 6 April 2016)
Paid at 33.0 cents (2015: 18.0 cents) per share franked at 50% (2015: 50% franked) at the
Australian tax rate of 30% (2015: 30%)
Total dividends appropriated
(b) Dividends declared and not recognised as a liability
Current year final dividend (expected to be paid 7 October 2016)
Declared at 39.5 cents (2015: 19.0 cents) per share and franked at 70% (2015: 50% franked)
at the Australian tax rate of 30% (2015: 30%)
287,716
138,395
(c) Franking credits
The tax rate at which the final dividend will be franked is 30% (2015: 30%). The franking
account disclosures have been calculated using the franking rate applicable at 30 June
2016.
The amount of franking credits available for the subsequent financial year:
Franking account balance as at the end of the financial year at 30% (2015: 30%)
287,958
44,701
Franking credits that will arise from the payment of income taxes payable as at the end of
the financial year
Total franking credits
The amount of franking credits available for future reporting periods:
Impact on the franking account of dividends announced before the financial report was
authorised for issue but not recognised as a distribution to equity holders during the financial
year
Total franking credits available for future reporting periods
7,047
83,626
295,005
128,327
(86,315)
(29,656)
208,690
98,671
95
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
5. Income Tax
N
o
t
e
s
2016
$'000
2015
$'000
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(a) Income tax expense
The prima facie tax expense, using the Australian tax rate multiplied by profit differs from
income tax provided in the financial statements as follows:
Profit before income tax
1,048,930
463,591
Prima facie income tax expense on profit at the Australian rate of 30% (2015: 30%)
314,679
139,077
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Tax effect of:
Non deductible depreciation and amortisation
Share of associates’ net losses/(profits)
Differences in foreign tax rates
Deferred tax balances not previously brought to account
Income tax (over)/under provided in prior years
Non-deductible/(non-assessable) significant item
Revenue losses not brought to account
Other items - net
Income tax expense
Income tax expense comprises:
Current expense
Deferred expense/(benefit)
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
Losses available for offsetting against future taxable income
Other receivables
Other provisions
Prepaid casino tax
Licences and intangibles
Land and buildings
Property, plant & equipment
Revaluation of investment to fair value
Other
Net deferred income tax assets/(liabilities)
96
1,655
1,851
(12,378)
(36,617)
3,056
4,452
(102,905)
(36,325)
52,799
(155,754)
803
3,399
(6,705)
18,402
5,185
(4,036)
105,354
85,284
137,891
136,612
(100,787)
52,799
15,451
(66,717)
15,389
-
105,354
85,284
330,964
205,109
(219,035)
(192,916)
111,929
12,193
62,990
35,828
46,220
4,376
53,939
(15,390)
43,506
32,710
16,440
5,606
44,688
(15,838)
(98,842)
(101,317)
(87,338)
10,146
108,372
(8,372)
111,929
(82,716)
16,131
51,678
1,305
12,193
FINANCIAL REPORT 2016 CONTINUED
5. Income Tax 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
Other
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
Foreign capital 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
2016
$'000
2015
$'000
12,193
(58,227)
100,787
-
(1,051)
66,717
4,068
(365)
111,929
12,193
622,301
622,301
625,674
718,351
257,712
249,215
1,505,687
1,589,867
399,419
525,338
At 30 June 2016, there is no recognised or unrecognised deferred income tax liability (2015: $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.
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97
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
6. Trade and Other Receivables
Current
Trade receivables
Provision for doubtful debts (a)
Other receivables
2016
$’000
2015
$’000
550,239
520,847
(234,974)
(161,481)
315,265
359,366
17,935
18,266
333,200
377,632
(a) Allowance for Doubtful Debts
Trade receivables 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 receivable
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
Opening balance on acquisition
Exchange differences
(1) Amounts are included in other expenses
Ageing analysis of trade receivables
2016- consolidated
Current
Past due not impaired
Considered impaired
2015- consolidated
Current
Past due not impaired
Considered impaired
2016
$’000
2015
$’000
(161,481)
(102,812)
(78,730)
2,829
-
2,408
(77,271)
21,271
(1,234)
(1,435)
(234,974)
(161,481)
0-30 days
>30 days
$’000
$’000
Total
$’000
91,250
-
91,250
-
17
224,015
224,015
234,957
234,974
91,267
458,972
550,239
77,672
-
77,672
-
28
281,694
281,694
161,453
161,481
77,700
443,147
520,847
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98
FINANCIAL REPORT 2016 CONTINUED
6. Trade and Other Receivables continued
Non-current
Loans to associated entities
Other receivables
7. Inventories
Current
Finished goods (at cost)
8. Other Financial Assets
Current
Receivable on forward exchange contracts
Non-current
Receivable on forward exchange contracts
Receivable on cross currency swaps
2016
$’000
2015
$’000
-
139,894
141,488
11,390
141,488
151,284
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F
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o
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2016
$’000
2015
$’000
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16,296
14,861
2016
$’000
2015
$’000
9,639
9,639
16,032
16,032
1,592
13,544
15,136
1,278
9,396
10,674
Details of the Group’s exposure to interest rate risk and foreign currency changes are provided in note 35.
9. Investments
At fair value
Shares - listed (USA)
Shares - unlisted (North America)
2016
$’000
2015
$’000
49,743
39,683
2,017
2,235
51,760
41,918
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 35 for further information regarding the valuation
techniques.
99
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
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 (MCE) (1)
2016
$’000
2015
$’000
241,184
-
1,373,702
1,965,717
1,614,886
1,965,717
2,275,258
4,749,769
2,275,258
4,749,769
(1) Reflects MCE 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 MCE carrying amount does not exceed its recoverable amount.
Share of profits of associates
Melco Crown Entertainment Ltd
Aggregate share of profit from non material associates
Investments in Associates
Reporting
Date
Melco Crown Entertainment Ltd
31 Dec(2)
Principal Activity
Resort/Casino and gaming
machine operator
Nobu Group
31 Dec(2)
Restaurants/Hospitality
Aspers Holdings (Jersey) Ltd
30 June
Casino and gaming
machine operator
Principal
Place of
Business
Macau(3)
USA
UK
Chill Gaming Pty Ltd
30 June
Gaming software developer
Australia
Draftstars Pty Ltd
30 June
Daily fantasy sports
Australia
Ellerston Leisure Pty Ltd
30 June
Accommodation/Recreation
Australia
Zengaming Inc
31 Dec(2)
eSports social network
USA
(2) The Group uses 30 June results to equity account for the investments.
(3) Melco Crown Entertainment Ltd was incorporated in the Cayman Islands.
2016
$’000
2015
$’000
42,676
122,042
(1,415)
16
41,261
122,058
% Interest
30 June
2016
30 June
2015
27.4
20.0
50.0
50.0
50.0
50.0
30.0
34.3
-
50.0
-
-
-
-
The associates outlined above are accounted for using the equity method in these consolidated financial statements. The
investment in Aspers Holdings (Jersey) Ltd (Aspers) was previously written down to $nil. As a result of recent strong
operating results and a debt refinance, Crown has reversed the prior net impairment loss (after taking into account
unbooked losses) of £19.8m ($35.5m), which has been accounted for as a significant item. From 1 July, 2016, Crown will
re-commence equity accounting its share of Aspers net profit/loss.
In May 2016, Crown entered into an agreement with MCE for the repurchase of 155 million ordinary shares in MCE which
generated proceeds of $1,067.1 million resulting in a net gain on sale of $602.0 million, which is reported as a significant
item. Crown continues to hold a 27.4% interest in MCE at 30 June 2016.
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100
FINANCIAL REPORT 2016 CONTINUED
10. Investments in Associates continued
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 amount:
Proportion of Crown’s ownership interest in MCE
Crown’s share of net assets
Non-controlling interest
Adjustment in proportional share of net assets on partial disposal
Other
Carrying amount of investment
Carrying amount of investment in Melco Crown Entertainment Ltd
Balance at the beginning of the financial year
Share of associates’ net profit/(loss) for the year
Partial disposal of MCE shares
Foreign exchange movements
Dividends received
2016
$’000
2015
$’000
6,926,977
6,288,928
125,392
370,882
(4,767)
(6,713)
120,625
364,169
2016
$’000
2015
$’000
2,532,487
3,914,968
9,606,850
9,707,178
(1,602,737)
(1,435,636)
(5,454,800)
(5,665,827)
5,081,800
6,520,683
27.4%
34.3%
1,392,413
2,236,594
(194,093)
(307,379)
142,696
-
32,686
36,502
1,373,702
1,965,717
2016
$’000
2015
$’000
1,965,717
1,539,776
42,676
122,042
(523,948)
-
69,926
356,477
(180,669)
(52,578)
Carrying amount of investment in Melco Crown Entertainment Ltd at the end of
the financial year
1,373,702
1,965,717
Impairment Testing
Given that the fair market value of the investment in Melco Crown Entertainment Ltd exceeds the carrying value, there have
been no indicators of impairment during the period, and no indicators of impairment existed at 30 June 2016. As a result
there has been no impairment charge during the year (2015: $nil).
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101
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
11. Property, Plant and Equipment
Freehold
land and
buildings
Buildings
on
leasehold
land
Plant &
equipment
Construction
work in
progress
Leased
plant &
equipment
Total
property,
plant and
equipment
$’000
$’000
$’000
$’000
$’000
$’000
1,542,579
939,091
632,624
491,947
84,256
3,690,497
1,544
39,416
158,688
415,713
52,273
667,634
-
-
(57,115)
Year ended 30 June 2016
At 1 July 2015, net of
accumulated depreciation and
impairment
Additions
Disposals
Depreciation expense
(29,745)
(61,994)
(148,116)
Acquisition of subsidiary
Exchange differences
Reclassification/ transfer
-
18,434
45,582
-
(1,116)
(672)
5,147
(643)
22,515
(67,425)
-
-
-
(993)
-
(57,115)
(12,954)
(252,809)
-
-
-
5,147
15,682
-
At 30 June 2016, net of
accumulated depreciation
and impairment
At 30 June 2016
1,578,394
914,725
613,100
839,242
123,575
4,069,036
Cost (gross carrying amount)
1,938,829
1,593,200
2,124,667
839,242
138,085
6,634,023
Accumulated depreciation and
impairment
(360,435)
(678,475)
(1,511,567)
-
(14,510)
(2,564,987)
Net carrying amount
1,578,394
914,725
613,100
839,242
123,575
4,069,036
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102
FINANCIAL REPORT 2016 CONTINUED
11. Property, Plant and Equipment continued
Freehold
land and
buildings
Buildings
on
leasehold
land
Plant &
equipment
Construction
work in
progress
Leased
plant &
equipment
Total
property,
plant and
equipment
$’000
$’000
$’000
$’000
$’000
$’000
1,223,459
960,861
745,496
155,850
10,669
3,096,335
343,800
34,792
84,779
363,457
74,267
901,095
Year ended 30 June 2015
At 1 July 2014, net of
accumulated depreciation and
impairment
Additions
Disposals
Depreciation expense
(29,548)
(58,777)
(148,006)
Acquisition of subsidiary
Exchange differences
-
-
1,009
1,206
12,590
286
-
-
(85,013)
-
-
-
-
-
(85,013)
(680)
(237,011)
-
-
-
13,599
1,492
-
Reclassification/ transfer
4,868
-
22,492
(27,360)
At 30 June 2015, net of
accumulated depreciation
and impairment
At 30 June 2015
1,542,579
939,091
632,624
491,947
84,256
3,690,497
Cost (gross carrying amount)
1,873,268
1,563,767
2,053,140
491,947
85,812
6,067,934
Accumulated depreciation and
impairment
(330,689)
(624,676)
(1,420,516)
-
(1,556)
(2,377,437)
Net carrying amount
1,542,579
939,091
632,624
491,947
84,256
3,690,497
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103
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
12. Licences
N
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Year ended 30 June 2016
At 1 July 2015, net of accumulated amortisation and impairment
Amortisation expense
At 30 June 2016, net of accumulated amortisation and impairment
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At 30 June 2016
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
Year ended 30 June 2015
At 1 July 2014, net of accumulated amortisation and impairment
Additions
Amortisation expense
At 30 June 2015, net of accumulated amortisation and impairment
At 30 June 2015
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
Casino
Licenses
$’000
1,130,623
(16,664)
1,113,959
1,297,020
(183,061)
1,113,959
647,039
497,121
(13,537)
1,130,623
1,297,020
(166,397)
1,130,623
The casino licences are carried at cost and amortised on a straight line basis over their useful lives.
The Crown Melbourne licence is being amortised until 2050. The Crown Perth licence is assessed as having an indefinite
useful life and no amortisation is charged. Amortisation will commence on the Crown Sydney licence once the property is
operational.
104
FINANCIAL REPORT 2016 CONTINUED
13. Other Intangible Assets
Year ended 30 June 2016
At 1 July 2015, net of accumulated amortisation and
impairment
Business acquisitions
Additions
Exchange differences
Amortisation expense
Casino
Management
Agreement (1)
Goodwill (1)
$’000
$’000
Other
$’000
Total
$’000
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l
132,848
204,911
-
(10,423)
130,016
157,980
420,844
-
-
-
-
204,911
4,997
-
4,997
(10,423)
(11,811)
-
(3,671)
(8,140)
At 30 June 2016, net of accumulated amortisation
and impairment
327,336
126,345
154,837
608,518
At 30 June 2016
Cost (gross carrying amount)
327,336
245,279
169,891
742,506
Accumulated amortisation and impairment
-
(118,934)
(15,054)
(133,988)
Net carrying amount
327,336
126,345
154,837
608,518
Year ended 30 June 2015
At 1 July 2014, net of accumulated amortisation and
impairment
Business acquisitions
Additions
Exchange differences
Amortisation expense
91,987
34,248
-
6,613
-
134,777
-
-
-
5,044
21,422
137,176
-
(4,761)
(5,662)
231,808
55,670
137,176
6,613
(10,423)
At 30 June 2015, net of accumulated amortisation
and impairment
132,848
130,016
157,980
420,844
At 30 June 2015
Cost (gross carrying amount)
132,848
245,279
164,894
543,021
Accumulated amortisation and impairment
-
(115,263)
(6,914)
(122,177)
Net carrying amount
132,848
130,016
157,980
420,844
(1) Purchased as part of business combinations
Goodwill is considered to have an indefinite life and is tested annually for impairment (see note 14). The goodwill balance at
30 June 2016 is allocated to Crown Melbourne $26.9 million (2015: $26.9 million), Crown Perth $11.9m (2015: $11.9 million),
Crown Aspinalls $52.5 million (2015: $59.9 million) and Wagering & Online $236.0 million (2015: $34.1 million).
The useful life of the Crown Melbourne casino management agreement is amortised on a straight line basis to 2050.
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105
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
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% (2015: 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
2016
$’000
2015
$’000
100,800
100,800
(49,500)
(48,009)
51,300
52,791
9,394
8,473
60,694
61,264
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106
FINANCIAL REPORT 2016 CONTINUED
16. Trade and Other Payables
Current - unsecured
Trade and other payables
Deferred income
Non-current - unsecured
Casino licence payable
Deferred income
Contingent consideration
Other
17. Interest-Bearing Loans and Borrowings
Current
Bank Loans - unsecured
Capital Markets Debt - unsecured
Finance Lease - secured
Non-current
Bank Loans - unsecured
Capital Markets Debt - unsecured
Finance Lease - secured
Assets pledged as security
2016
$’000
2015
$’000
473,505
450,107
1,735
1,486
475,240
451,593
154,136
149,894
9,004
154,094
6,115
-
22,255
15,486
339,489
171,495
2016
$’000
2015
$’000
75,552
155,900
-
10,163
17,421
15,463
85,715
188,784
-
106,682
2,057,968
2,297,604
117,643
68,947
2,175,611
2,473,233
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 35.
Financial Risk Management
Information about the Group’s exposure to interest rate and foreign currency changes is provided in note 35.
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107
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
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:
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Facility Type
Bank Facilities
Facility
Amount
$’000
Drawn
Amount
Letters of
Credit Issued
Available
$’000
$’000
$’000
Expiry
Dates
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Bilateral Multi Option Facilities
220,000
75,552
33,914
110,534
Oct 16 / Feb 17
Syndicated Revolving Facilities
1,000,000
GBP Syndicated Facility
Letter of Credit Facility
178,763
185,000
-
-
-
-
-
1,000,000
2020 - 2021
178,763 Aug 19 / Aug 20
185,000
-
Jun 21
1,583,763
75,552
218,914
1,289,297
Debt Capital Markets
Euro Medium Term Notes
Australian Medium Term Notes
174,634
750,000
174,634
750,000
AUD Subordinated Notes
1,133,334
1,133,334
2,057,968
2,057,968
-
-
-
-
-
-
Jul 36
Jul 17 / Nov 19
- Sep 72 / Apr 75
-
Total at 30 June 2016
3,641,731
2,133,520
218,914
1,289,297
Total at 30 June 2015
4,268,388
2,577,607
212,961
1,477,820
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 25(b) for a summary of Crown’s overdraft facilities.
108
FINANCIAL REPORT 2016 CONTINUED
18. Provisions
At 1 July 2015
Arising during the year
Utilised during the year
Balance on acquisition
At 30 June 2016
Current 2016
Non-current 2016
At 30 June 2016
Current 2015
Non-current 2015
At 30 June 2015
19. Other Financial Liabilities
Current
Payables on forward exchange contracts
Payables on interest rate swaps
Non-current
Payables on interest rate swaps
Other financial liabilities are outlined in note 35.
Employee
Entitlements
$’000
176,807
152,570
(122,104)
19
Other
$’000
28,728
8,316
(4,189)
450
Total
$’000
205,535
160,886
(126,293)
469
207,292
33,305
240,597
162,103
45,189
207,292
146,770
30,037
176,807
19,914
13,391
33,305
22,404
6,324
28,728
2016
$’000
-
-
-
22,060
22,060
182,017
58,580
240,597
169,174
36,361
205,535
2015
$’000
137
489
626
9,950
9,950
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109
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
20. Contributed Equity
Issued share capital
Ordinary shares fully paid
Shares held in Trust
Balance at beginning of the financial year
Shares transferred under 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
2016
$’000
2015
$’000
446,763
446,763
-
(8,886)
(8,886)
2016
No.
(1,918)
1,918
-
2015
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 2016, the Group paid dividends of $378.8 million (2015: $269.5 million). The Group’s dividend policy is to pay 100%
of normalised net profit after tax (before minorities and excluding profits from associates but including dividends received
from associates).
21. Reserves and Retained Earnings
Foreign currency translation reserve
Employee equity benefits reserve
Net unrealised gains reserve
Cash flow hedge reserve
2016
$’000
147,453
16,198
631,079
1,900
2015
$’000
154,919
13,010
636,158
16,130
796,630
820,217
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110
FINANCIAL REPORT 2016 CONTINUED
21. Reserves and Retained Earnings continued
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
Net foreign exchange reclassified to profit or loss
Non-controlling interest
Balance at the end of the financial year
Employee Equity Benefits Reserve
The employee equity benefits reserve is used to record share based remuneration
obligations to executives in relation to ordinary shares.
Balance at the beginning of the financial year
Movement for the period
Balance at the end of the financial year
Net Unrealised Gains Reserve
The net unrealised gains reserve records the movement from changes in ownerships
interest in a subsidiary, investments and associates equity.
2016
$’000
2015
$’000
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154,919
65,751
(70,576)
(2,641)
(229,576)
388,950
-
(4,455)
147,453
154,919
13,010
3,188
16,198
13,010
-
13,010
Balance at the beginning of the financial year
Change ownership interest in subsidiary without loss of control
Balance at the end of the financial year
636,158
(5,079)
631,079
628,908
7,250
636,158
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
Retained Earnings
Balance at the beginning of the financial year
Net profit after tax attributable to equity holders of the parent
Total available for appropriation
Dividends provided for or paid
Balance at the end of the financial year
16,130
(11,621)
4,148
(6,757)
1,900
(17,745)
(7,895)
23,265
18,505
16,130
3,257,760
3,142,219
948,823
385,047
4,206,583
3,527,266
(378,765)
(269,506)
3,827,818
3,257,760
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111
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
22. Material Partly-Owned Subsidiaries
Details of ownership interests in all partly owned subsidiaries are outlined in note 32. Financial information of subsidiaries
that have material non-controlling interests is provided below:
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Alon Group
Principal place of business
Non-controlling interest percentage
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Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net Assets
Attributable to non-controlling interests
Revenue
Profit / (Loss)
Profit attributable to non-controlling interests
Cash flows from operating activities
Cash flows from investment activities
Cash flows from financing activities (dividends to NCI: nil)
Effect of exchange rate changes on cash
Net increase/(decrease) in cash and cash equivalents
23. Business Combinations
Acquisition of subsidiaries in current period
2016
$’000
USA
26%
50,640
532,515
(9,620)
(3,025)
570,510
80,906
-
(718)
(187)
-
(64,219)
-
5,194
(59,025)
2015
$’000
USA
26%
111,108
444,971
(7,612)
(38)
548,429
78,416
-
(33)
(8)
-
(365,021)
454,882
18,660
108,521
On 2 July 2015, Crown acquired 60% of DGN Games LLC (DGN) for US$32.5 million (A$42.5 million). Subsequently on 23
December 2015, Crown increased its shareholding in DGN to 70% by investing a further US$15m (A$20.8 million) in return
for new units in the company.
On 23 December 2015, Crown through its majority owned subsidiary DGN, acquired 100% of Winners Club Limited (and
subsidiaries) for US$10 million (A$13.8 million).
The fair value of the identifiable assets and liabilities as at the dates of acquisition were:
Cash and cash equivalents
Other current assets
Property, plant and equipment
Trade and other payables
Other current liabilities
Fair value of identifiable net assets
112
Consolidated fair value
at acquisition date
$’000
6,814
2,586
5,147
14,547
1,823
168
1,991
12,556
FINANCIAL REPORT 2016 CONTINUED
23. Business Combinations continued
Acquisition of subsidiaries in current period continued
Goodwill arising on acquisition
Consideration transferred on acquisition
Contingent consideration
Fair value of identifiable net assets
Minority interest in identifiable net assets
Goodwill
$’000
56,337
157,801
(12,556)
3,329
204,911
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Based on the fair values, DGN and Winners Club’s identifiable net assets at the date of acquisition were $12.6 million,
resulting in goodwill of $204.9 million. The goodwill is attributable to the skills and experience of the management team, as
well as the synergies that will be obtained through the integration of the two businesses. Goodwill will be deductible for US
Federal tax purposes when there has been a payment for the goodwill. Goodwill on payment of the contingent
consideration (refer below) may be deductible in the future. The Group incurred $1.8 million of acquisition costs which have
been expensed in the Statement of Profit or Loss.
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Crown’s consolidated financial statements include the results of DGN and Winners Club from their respective acquisition
dates. If the acquisitions had taken place at the beginning of the financial year, revenue from DGN and Winners Club would
have been $21.9 million and profit before tax would have been $3.8 million.
Crown has elected to measure the non-controlling interest on acquisition in DGN at fair value.
Contingent consideration
As part of the purchase agreement with the previous owners of Winners Club, there may be additional contingent
consideration payments based on future earnings of the DGN Group. These potential cash payments are due in
December 2017 and December 2020, based on the 2017 and 2020 earnings. As at the acquisition date, the fair value of
the contingent consideration was estimated to be $157.8 million. The fair value was determined using the probability-
weighted approach, discounted to present value.
A significant increase (decrease) in the future earnings of the DGN Group would result in a higher (lower) fair value of the
contingent consideration liability.
Net Cash Flow - Acquisition of subsidiaries
Cash paid
Cash acquired
Net Cash Flow - Acquisition of subsidiaries
$’000
56,337
(6,814)
49,523
113
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
23. Business Combinations continued
Acquisition of subsidiaries in prior period
On 12 August 2014, Crown acquired the remaining 50% of shares of Betfair Australasia Pty Ltd and its subsidiaries (the
Betfair Group) for $10 million. Prior to this, Crown held a 50% interest in the Betfair Group and equity accounted its
investment as an associate of the Crown Group. Upon acquisition of the remaining 50%, Betfair became a wholly owned
Crown subsidiary.
On 16 December 2014, Crown acquired CrownBet Pty Ltd (formerly BetEasy Pty Ltd) for $12.2 million via the issuance of
shares in a newly formed holding company (forming the CrownBet group). Betfair’s sportsbook business and cash was
transferred to the newly formed holding company and the BetEasy founders contributed cash in exchange for equity in the
newly formed holding company. Consequently, Crown owned 67% of the CrownBet Group, with the remaining interest
held by the original founders of BetEasy. Subsequent to this, Crown divested 5% of its interest in the CrownBet group,
resulting in a reduction of Crown’s ownership from 67% to 62%.
The fair value of the identifiable assets and liabilities as at the date of acquisition were:
Consolidated fair value
at acquisition date
Cash and cash equivalents
Other current assets
Property, plant and equipment
Identifiable intangibles
Deferred tax assets
Other non-current assets
Trade and other payables
Provisions
Deferred tax liabilities
Fair value of identifiable net assets/(liabilities)
$’000
17,729
15,166
13,599
21,422
8,581
1,770
78,267
62,488
13,138
4,513
80,139
(1,872)
CrownBet’s net assets recognised in the 30 June 2015 financial statements was based on a provisional fair value
assessment. The final assessment had not been completed by the date the 2015 financial statements were approved for
issue by the Board of Directors.
The fair value assessment has now been finalised and therefore the 30 June 2015 comparative information has been
updated to reflect adjustments to the provisional amounts. As a result, intangible assets increased by $8.9 million,
payables increased by $20.3 million, prepayments decreased by $0.9 million, deferred tax assets increased by $3.0 million,
deferred tax liabilities decreased by $0.7 million and goodwill increased by $8.6 million.
Goodwill arising on acquisition
Consideration transferred
Fair value of pre-existing interest
Fair value of identifiable net liabilities
Goodwill
$’000
22,226
10,000
1,872
34,098
Betfair’s and CrownBet’s identifiable net liabilities at the date of acquisition were $1.9 million, resulting in goodwill of
$34.1 million. The goodwill is attributable to the skills and experience of the management team, as well as the synergies
that will be obtained through the combination of the Sportsbook businesses. Opportunities exist to grow the customer
base through leveraging Crown’s assets to provide additional services and benefits to customers. None of the goodwill
recognised is expected to be deductible for income tax purposes.
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114
FINANCIAL REPORT 2016 CONTINUED
23. Business Combinations continued
Acquisition of subsidiaries in prior period continued
The remeasurement to fair value of the Group’s existing 50% interest in Betfair resulted in a gain of $8.1 million, which was
recognised in the Statement of Profit or Loss in the year ended 30 June 2015. The Group incurred $1.1 million of
acquisition costs which have been expensed in the Statement of Profit or Loss.
Crown has elected to measure the non-controlling interest on acquisition in CrownBet at fair value.
Net Cash Flow - Acquisition of subsidiaries
Cash paid
Repayment of loan to Betfair UK
Cash acquired
Net Cash Flow - Acquisition of subsidiaries
24. Expenditure Commitments
(a) Capital expenditure commitments
Estimated capital expenditure contracted for at balance date, but not
provided for:
Payable within one year
Payable after one year but not more than five years
$’000
10,000
11,700
(17,729)
3,971
2016
$’000
2015
$’000
217,758
974,427
1,192,185
314,504
95,599
410,103
At 30 June 2016, 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
2016
$’000
15,766
55,184
519,028
589,978
2015
$’000
12,390
46,820
534,592
593,802
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 8 years (2015: 8 years) excluding the land leases
detailed below. Operating leases include telecommunications rental agreements and leases on assets including motor
vehicles, land and buildings and items of plant and equipment. Renewal terms are included in certain contracts, whereby
renewal is at the option of the specific entity that holds the lease. On renewal, the terms of the leases are usually
renegotiated. There are no restrictions placed upon the lessee by entering into these leases.
In addition, in 1993 Crown Melbourne entered into a ninety-nine year lease agreement for the site upon which Crown
Melbourne Entertainment Complex is located. For years one to forty inclusive the annual rent payable by the parent entity
is one dollar per annum. For years forty-one to ninety-nine inclusive the annual rent payable will be the then current market
rent for the site. The aggregate lease expenditure contracted for at balance date but not provided for which is disclosed in
this report does not include an estimate for the rent payable for years forty-one to ninety-nine inclusive due to the
uncertainty of these amounts.
Crown through its majority owned subsidiary, Alon, holds the operating lease on the leasehold portion of the land in Las
Vegas which expires in 2097. The above operating lease commitment table includes the scheduled payments until 2097.
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115
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
24. Expenditure Commitments continued
(c) Non-cancellable finance lease commitments
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Payable within one year
Payable after one year but not more than five years
Payable more than five years
2016
$’000
10,163
51,099
66,544
127,806
2015
$’000
15,463
30,129
38,818
84,410
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.
25. Cash Flow Statement Reconciliation
(a) Cash balance represents:
Cash on hand and at bank
Deposits at call
2016
$’000
412,123
37,540
449,663
2015
$’000
222,125
118,859
340,984
The above closing cash balances includes $151.0 million (2015: $144.3 million) of cash on the company’s premises and
cash held in bank accounts (including deposits on call) needed to run the day to day operations of the businesses and
cash of $298.7 million (2015: $196.7 million) for other purposes.
(b) Reconciliation of the profit/(loss) after tax to the net cash flows
from operating activities
Profit after tax
Non cash items and items dealt with separately:
- Depreciation and amortisation
- Asset impairment/(reversal)
- Share of associates’ net (profit)/loss
- Net foreign exchange (gain)/loss
- Net mark-to-market (gain)/loss on investments
Cash items not included in profit after tax:
- Dividends received from associates
Items classified as investing/financing activities:
- (Profit)/loss on sale of property, plant and equipment
- Profit on sale of MCE shares
Working capital changes:
- (Increase) / decrease in trade receivables and other assets
- (Increase) / decrease in inventories
- (Decrease) / increase in tax provisions
- (Decrease) / increase in trade and other payables, accruals and provisions
Net cash flows from operating activities
2016
$’000
2015
$’000
943,576
378,307
282,775
(35,465)
(41,261)
(7,762)
(8,432)
262,877
61,342
(122,058)
(14,358)
2,034
183,568
52,578
(1,605)
(601,988)
(139,535)
(1,435)
(114,834)
25,080
482,682
(349)
-
(53,186)
(1,960)
(31,741)
101,090
634,576
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FINANCIAL REPORT 2016 CONTINUED
25. Cash Flow Statement Reconciliation continued
Bank Overdraft Facilities
The Group has bank overdraft facilities available as follows:
Bank
ANZ Banking Group Limited
Citibank NA
Royal Bank of Scotland PLC
2016
2015
A$20 million
A$20 million
US$10 million
US$10 million
£20 million
£20 million
As at 30 June 2016 there were no drawn down amounts on the overdraft facilities (2015: £2.2 million).
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26. Events After the Reporting Period
Subsequent to 30 June 2016, the directors of Crown declared a final dividend on ordinary shares in respect of the year
ending 30 June 2016. The total amount of the dividend is $287.7 million, which represents a dividend of 39.5 cents per
share franked at 70%. The unfranked portion of the dividend has been declared to be conduit foreign income.
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27. Contingent Liabilities and Related Matters
On 15 February 2016 Crown was issued with amended assessments and notice of penalty by the Australian Taxation
Office for a total of approximately $362 million which comprises primary tax, interest and penalties. The amended
assessments are in respect of income tax paid for the financial years ending 30 June 2009 to 30 June 2014 (inclusive) and
relate to the tax treatment of some of the financing for Crown’s investment in Cannery Casino Resorts and other
investments in North America. Crown considers that it has paid the correct amount of tax and intends to pursue all
available avenues of objection (including, if necessary, court proceedings) to the amended assessments.
The group has no other contingent liabilities at 30 June 2016.
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.
28. Auditors’ Remuneration
Amounts received, or due and receivable, by Ernst & Young (Australia) for:
Auditing the accounts
Taxation services
Consulting and assurance related services
Amounts received, or due and receivable, by other member firms of Ernst
& Young International for:
Auditing the accounts
Taxation services
2016
$’000
1,113
7,701
200
298
2,791
12,103
2015
$’000
932
8,109
-
137
211
9,389
Amounts received, or due and receivable, by non Ernst & Young audit
firms for:
Auditing services
22
98
117
Crown Resorts Limited Annual Report 2016
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Notes to the Financial Statements continued
For the year ended 30 June 2016
29. Earnings Per Share (EPS)
The following reflects the income and share data used in the calculations
of basic and diluted EPS:
Net profit / (loss) after tax used in calculating basic and diluted EPS ($’000)
948,823
385,047
Weighted average number of ordinary shares used in calculating basic and diluted
EPS (‘000)
728,394
728,394
2016
2015
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.
30. Key Management Personnel Disclosures
(a) Details of key management personnel
(i) Directors
Robert J Rankin
James D Packer
Chairman (appointed Non-Executive Director 30 July 2015, Chairman from 12 August 2015)
Non-Executive Director (Chairman until 12 August 2015,
Non-Executive Director until 21 December 2015)
John H Alexander
Executive Deputy Chairman
Benjamin A Brazil
Non-Executive Director
Helen A Coonan
Rowen B Craigie
Non-Executive Director
Chief Executive Officer and Managing Director
Rowena Danziger
Non-Executive Director
Andrew Demetriou
Non-Executive Director
Geoffrey J Dixon
John S Horvath
Non-Executive Director
Non-Executive Director
Michael R Johnston
Non-Executive Director
Harold C Mitchell
Non-Executive Director
(ii) Executives
Kenneth M Barton
Chief Financial Officer
Barry J Felstead
W Todd Nisbet
Chief Executive Officer – Australian Resorts
Executive Vice President – Strategy and Development
(b) Remuneration of key management personnel
Total remuneration for key management personnel for the Group and Parent Entity during the financial year are set out below:
Remuneration by category
Short term benefits
Post employment benefits
Long term incentives
Further details are contained in the Remuneration Report.
118
2016
$
2015
$
14,717,236
13,621,359
112,230
105,132
7,537,500
(1,442,500)
22,366,966
12,283,991
FINANCIAL REPORT 2016 CONTINUED
31. 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 32.
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, have a relative interest in 53.01% (2015: 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 30, 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 $0.2 million during
the year (2015: $0.2 million). CPH paid costs on behalf of Crown to third parties totalling $1.0 million during the year (2015:
$1.1 million). At 30 June 2016 there were no amounts owing to CPH (2015: $34,000).
Crown and its controlled entities provided CPH with hotel and banqueting services of $0.1 million during the year (2015:
$17,000). At 30 June 2016 there were no amounts owing from CPH (2015: $nil).
(ii) Associates
Crown provided MCE IT and related services of $1.8 million (2015: $1.2 million) at cost during the year. During the year
Crown paid no costs on behalf of MCE to third parties (2015: $0.6 million). At 30 June 2016 Crown had no amounts owing
from MCE (2015: $nil).
During the year Mr Nisbet received a fee of US$0.1 million (2015: US$0.1 million) for acting as a director of Melco Crown
(Philippines) Resorts Corporation, being an indirect majority owned subsidiary of MCE. In addition, during the year, Mr
Craigie, Mr Nisbet and Mr Packer received share based compensation of US$0.1 million, US$0.6 million and US$1.0 million
respectively from Melco Crown for acting as directors of Melco Crown or any of its subsidiaries.
MCE provided $22,000 (2015: $8,000) in Hotel and other services to Crown during the year. In addition, MCE paid costs of
$17,000 (2015: $0.1 million) on behalf of Crown during the year which has subsequently been reimbursed in full.
During the year Aspers Holdings (Jersey) Ltd made loan repayments of $131.9 million to Crown (2015: $9.9 million). Interest
charged on loans advanced to Aspers was $12.1 million for the year (2015: $16.4 million). At 30 June 2016 there were no
amounts owed by Aspers (2015: $139.9 million). At 30 June 2016 there were no amounts owing to Aspers (2015: $nil).
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
32. 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 Resorts Limited
ALON Las Vegas Financeco, LLC
ALON Las Vegas Holdings, LLC
ALON Las Vegas Landco, LLC
ALON Leisure Management, LLC
Artra Pty Ltd
Aspinall’s Club Limited
Betfair Pty Ltd
Betfair Australasia Pty Ltd
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 (Ellerston Leisure) Holdings Pty Ltd
Crown Entertainment Group Holdings Pty Ltd
Crown (Gaming Technology) Holdings Pty Ltd
Crown Gateway Luxembourg Pty Ltd
Crown Group Finance Limited
Crown Group Securities Ltd
Crown Investment Holdings LLC
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
Footnote
2016
2015
Country of
Incorporation
Beneficial Interest
Held by the
Consolidated Entity(1)
2016 %
2015 %
Australia
Parent Entity
USA
USA
USA
USA
Australia
United Kingdom
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
Australia
Australia
Australia
Australia
USA
Australia
USA
Australia
Australia
Australia
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
74
74
74
55
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
74
74
74
55
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
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
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FINANCIAL REPORT 2016 CONTINUED
32. Investment in Controlled Entities continued
Crown Sydney Property Pty Ltd
Crown US Investments LLC
Crown UK Investments Ltd
Crown (Western Australia) Pty Ltd
Crown (Western Australia) Finance Holdings Pty Ltd
Crown (Western Australia) Finance Pty Ltd
CrownBet Pty Ltd
CrownBet Holdings Pty Ltd
DGN Games LLC
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 Pty Ltd
Pennwin Pty Ltd
Publishing and Broadcasting (Finance) Ltd
Crown International Holdings Ltd
Renga Pty Ltd
Footnote
2016
2015
Country of
Incorporation
Australia
USA
United Kingdom
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
Australia
Australia
Australia
Australia
Australia
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Bahamas
Australia
Beneficial Interest
Held by the
Consolidated Entity(1)
2016 %
2015 %
100
100
100
100
100
100
62
62
70
100
100
100
100
100
100
100
100
100
100
100
-
100
100
-
100
62
62
-
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 33).
33. Deed of Cross Guarantee
Certain controlled entities of Crown Resorts Limited, as detailed in note 32, 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
2016
$’000
1,463,462
(218,595)
1,244,867
3,307,569
(378,765)
2015
$’000
599,641
(145,763)
453,878
3,123,197
(269,506)
Retained earnings / (accumulated losses) at the end of the financial year
4,173,671
3,307,569
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
33. Deed of Cross Guarantee continued
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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
122
Closed Group
2016
$’000
291,182
266,237
15,472
25,255
9,639
2015
$’000
204,578
298,123
14,321
23,430
16,032
607,785
556,484
2,213,288
1,480,580
2,837,265
2,768,530
2,017
1,409,167
3,416,365
2,235
1,965,717
3,188,258
1,013,959
1,030,623
194,039
165,773
58,583
197,657
128,685
60,820
11,310,456
10,823,105
11,918,241
11,379,589
379,500
85,715
133,086
170,348
-
383,340
171,363
149,704
158,650
626
768,649
863,683
163,294
156,161
3,529,667
3,798,394
202,341
58,580
22,060
183,487
36,361
9,950
3,975,942
4,184,353
4,744,591
5,048,036
7,173,650
6,331,553
2,180,793
2,180,793
(8,886)
828,072
-
843,191
4,173,671
3,307,569
7,173,650
6,331,553
FINANCIAL REPORT 2016 CONTINUED
34. Parent Entity Disclosures
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
Crown Resorts Limited
2016
$’000
2015
$’000
516,023
285,584
-
-
516,023
285,584
2,290
1,918
14,575,150
14,459,877
14,577,440
14,461,795
135,972
161,436
4,703,798
4,699,946
4,839,770
4,861,382
9,927,204
9,927,204
13,010
(202,544)
13,010
(339,801)
9,737,670
9,600,413
On 15 February 2016 Crown was issued with amended assessments and notice of penalty by the Australian Taxation
Office for a total of approximately $362 million which comprises primary tax, interest and penalties. The amended
assessments are in respect of income tax paid for the financial years ending 30 June 2009 to 30 June 2014 (inclusive) and
relate to the tax treatment of some of the financing for Crown’s investment in Cannery Casino Resorts and other
investments in North America. Crown considers that it has paid the correct amount of tax and intends to pursue all
available avenues of objection (including, if necessary, court proceedings) to the amended assessments.
There are no other contingent liabilities for the parent entity at 30 June 2016 (2015: $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 2016 (2015: $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 32 and 33.
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
35. 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.
(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
USD deposits at call
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
2016
$’000
136,426
28,064
47,387
220
76,778
9,746
2015
$’000
67,220
22,546
(11,560)
75
22,085
96,314
298,621
196,680
20,000
333,334
127,806
55,552
-
536,692
(238,071)
20,000
682,835
84,410
69,218
20,396
876,859
(680,179)
As at balance date, the Group maintained floating rate liabilities of $536.7 million (2015: $876.9 million) that were not
hedged by interest rate swaps. The associated interest rate risk is partially mitigated by total financial assets of $298.6
million (2015: $196.7 million). Under the financial liabilities outstanding, for AUD facilities, the Group pays the Bank Bill
Swap rate (BBSW) plus a margin of between 270 and 500 basis points, for the finance lease liabilities, the Group pays
BBSW or USD LIBOR plus a margin of between 160 and 200 basis points, and for HKD facilities, the Group pays HIBOR
plus a margin of 47.5 basis points.
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FINANCIAL REPORT 2016 CONTINUED
35. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
(i)
Interest rate risk – cash flow continued
Of the AUD cash on hand and at bank $136.4 million is interest bearing and is invested at approximately BBSW. Deposits
at call of $28.1 million are invested at approximately BBSW. The Group maintains cash and cash equivalents on hand of
$151.0 million for operational purposes and is non interest bearing (2015: $144.3 million).
As at balance date, the Group maintained no floating rate borrowings in GBP (2015: $20.4 million) and had cash and cash
equivalents of $47.4 million (2015: -$11.6 million) which is interest bearing and accrues at the UK daily cash rate.
As at balance date, the Group maintained floating rate borrowings in HKD of $55.6m (2015: $69.2m) and had minimal
interest earning cash and cash equivalents (2015: minimal).
As at balance date, the Group had USD cash on hand and at bank of $76.8 million which is interest bearing and is invested
at approximately US LIBOR (2015: $22.1 million). In addition, the Group had USD deposits at call of $9.7 million, which is
invested at approximately US LIBOR (2015: $96.3 million). The Group maintained no floating rate borrowings in USD (2015:
$nil).
As at balance date, the Group maintained no floating rate borrowings in EUR (2015: $nil) and had minimal cash and cash
equivalents (2015: minimal).
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 $0.9 million (2015: $3.3 million). As a result of a decrease of 50 basis points in AUD interest rates, and a
decrease of 25 basis points in USD, GBP, EUR and HKD interest rates, the Group’s post-tax-profit for the year would have
increased by $1.0 million (2015: $2.4 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
2016
$’000
-
800,000
174,634
974,634
2015
$’000
136,682
416,286
174,634
727,602
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
35. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
(i)
Interest rate risk – cash flow continued
As at balance date the key terms of the interest rate swap contracts were as follows:
Hedge Type
Maturity Date
Received
Paid
$’(000)
Interest Rate
Interest Rate Swap Contract
Fair Value of
Year Ended 30 June 2016
Interest Rate Swap Contract
Interest Rate Swap Contract
Interest Rate Swap Contract
Interest Rate Swap Contract
March 2019
March 2020
December 2019
December 2020
BBSW
BBSW
BBSW
BBSW
3.04%
3.18%
2.43%
2.55%
Cross Currency Swap Contract
June 2036
USD 4.91%
AUD 7.05%
Year Ended 30 June 2015
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
Interest Rate Swap Contract
March 2016
June 2017
March 2018
June 2018
March 2019
March 2020
December 2015
December 2016
BBSW
BBSW
BBSW
BBSW
BBSW
BBSW
LIBOR
LIBOR
3.20%
3.26%
3.50%
3.39%
3.04%
3.18%
1.00%
1.19%
Cross Currency Swap Contract
June 2036
USD 4.91%
AUD 7.05%
(3,311)
(4,618)
(3,893)
(10,238)
13,544
(375)
(1,537)
(1,608)
(2,327)
(1,999)
(2,255)
(114)
(224)
9,396
The terms of each of the swap contracts are matched directly against the appropriate loan and interest expense and as
such are highly effective.
(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 $1,724.6 million (2015: $1,785.1 million). As at balance date, the
carrying amounts of the Group’s fixed rate debt were not materially different from the fair values (2015: not material).
As at balance date the Group had no interest rate swaps in place to hedge fixed rate debt issuances.
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FINANCIAL REPORT 2016 CONTINUED
35. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
(iii) Foreign exchange risk
The Group has currency exposure as a result of capital expenditure and investments/sales in currencies other than the
Group’s functional currency.
The Group uses forward exchange contracts to minimise the currency exposure on any significant receivables or payables
as is deemed appropriate.
All forward exchange contracts must be in the same currency as the firm commitment and the Group negotiates the terms
of the hedges to exactly match the underlying commitment to maximise hedge effectiveness. As at balance date, the
Group had hedged the majority of its foreign currency receivables and payables that are firm commitments.
As at balance date, the Group had the following material foreign exchange exposures that were not designated as cash
flow hedges:
USD Exposure
Financial assets
Cash and cash equivalents
Total financial assets
Financial liabilities
US Private Placement
Total financial liabilities
Net exposure
GBP Exposure
Financial assets
Cash and cash equivalents
Loans to associates
Total financial assets
Financial liabilities
GBP Loan Facilities
Total financial liabilities
Net exposure
2016
$’000
23,879
23,879
2015
$’000
10,026
10,026
-
-
257,556
257,556
23,879
(247,530)
2016
$’000
4,356
-
4,356
-
-
4,356
2015
$’000
6,283
139,894
146,177
173,363
173,363
(27,186)
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Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
35. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
(iii) Foreign exchange risk continued
HKD Exposure
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
HKD Debt Facilities
Total financial liabilities
Net exposure
SGD Exposure
Financial assets
Cash and cash equivalents
Total financial assets
Net exposure
Group sensitivity – USD
2016
$’000
19,811
64,466
84,277
23,386
55,552
78,938
5,339
2016
$’000
80
80
80
2015
$’000
9,091
94,761
103,852
32,284
69,218
101,502
2,350
2015
$’000
1,240
1,240
1,240
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 not be material as at balance date (2015: $27.6 million
higher or $35.8 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 $3.7 million higher or $2.8 million lower (2015: $1.5 million higher or $1.2 million lower).
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 not be material as at balance date (2015: $3.1 million
higher or $3.8 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 be $0.4 million higher or $0.4 million lower (2015: $0.7 million higher or $0.6 million lower).
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 (2015: 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 $0.5 million higher or $0.4 million lower (2015: not material).
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FINANCIAL REPORT 2016 CONTINUED
35. Financial Risk Management Objectives and Policies continued
(a) Market Risk continued
(iii) Foreign exchange risk continued
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 (2015: 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 (2015: not material).
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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.
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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
Sell USD/Buy AUD
Maturity under 1 year
Closing Balance
Notional Amounts
Average Rate
2016
$’000
70,225
12,063
82,288
-
-
2015
$’000
166,243
11,918
178,161
16,809
16,809
2016
$’000
0.8402
0.8290
0.8385
-
-
2015
$’000
0.8383
0.8391
0.8383
0.7734
0.7734
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
2016
$’000
49,743
2,017
51,760
2015
$’000
39,683
2,235
41,918
129
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
35. Financial Risk Management Objectives and Policies continued
(b) Price Risk continued
(i) Equity Securities Price Risk continued
Group sensitivity
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 $2.6 million (2015: $2.1 million).
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 not be
material (2015: not material).
(ii) Commodity Price Risk
Neither the Group nor the parent entity is exposed to commodity price risk.
(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 3.8% or $85.7 million of the Group’s interest bearing liabilities will mature in less than 12 months (2015:
7.1%).
As at balance date the Group had $1,289 million in undrawn committed bank lines (2015: $1,478 million).
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FINANCIAL REPORT 2016 CONTINUED
35. 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
2016
2015
2016
$’000
$’000
$’000
2015
$’000
2016
$’000
2015
$’000
2016
$’000
2015
$’000
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Financial assets
Cash and cash
equivalents
449,663 340,984
-
-
Receivables - trade
333,200
377,632
16,108
11,390
Receivables - associates
Receivables - other
Forward exchange
contracts receivable
Cross currency interest
rate swaps receivable
-
-
-
-
-
139,894
125,380
-
79,195
197,698
13,423
12,980
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-
-
-
-
-
-
-
-
-
449,663
340,984
349,308
389,022
-
139,894
125,380
-
92,618
210,678
8,322
8,047
33,286
32,189
124,823
128,754
166,431
168,990
Total financial assets
870,380 924,361
188,197
196,453
124,823
128,754
1,183,400
1,249,568
Financial liabilities
Trade and other payables
475,240
451,593
182,329
21,601
157,160
149,894
814,729
623,088
Finance lease liabilities
10,163
15,463
51,099
30,129
66,544
38,818
127,806
84,410
Capital markets
Bank loans
Forward exchange
contracts payable
Interest rate swaps
payable
Cross currency interest
rate swaps payable
-
17,421
750,000
990,135
1,307,968
1,307,469
2,057,968
2,315,025
75,552
155,900
-
106,682
70,225
183,118
12,063
11,917
5,215
5,321
14,502
10,140
-
-
-
-
-
-
75,552
262,582
82,288
195,035
19,717
15,461
12,312
12,312
49,248
49,248
184,675
196,987
246,235
258,547
Total financial liabilities
648,707
841,128
1,059,241
1,219,852
1,716,347
1,693,168
3,424,295
3,754,148
Net maturity
221,673
83,233 (871,044) (1,023,399) (1,591,524) (1,564,414) (2,240,895) (2,504,580)
131
Crown Resorts Limited Annual Report 2016
Notes to the Financial Statements continued
For the year ended 30 June 2016
35. 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 values at balance date with
the exception of trade receivables. The fair value of trade receivables at balance date approximates the carrying value of
trade receivables of $230.3 million calculated under the lifetime expected loss model. From 1 July 2016 Crown will apply
the lifetime expected loss model in evaluating the carrying value of trade receivables as detailed in Note 1b.
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level One
Level Two
–
–
the fair value is calculated using quoted prices in active markets;
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.
At 30 June 2016, the Group held the following classes of financial instruments at fair value:
Year ended 30 June 2016
Financial Assets
Foreign currency forward contracts
Cross currency swap contracts
Equity instruments
Financial Liabilities
Contingent consideration
Interest rate swap contracts
Year ended 30 June 2015
Financial Assets
Foreign currency forward contracts
Cross currency swap contracts
Equity instruments
Financial Liabilities
Foreign currency forward contracts
Interest rate swap contracts
Quoted
market price
Level One
$’000
Valuation Technique
Observable
inputs
Level Two
$’000
Non market
observable
Level Three
$’000
-
-
49,743
49,743
11,231
13,544
-
24,775
-
-
2,017
2,017
Total
$’000
11,231
13,544
51,760
76,535
-
-
-
-
-
39,683
39,683
-
-
-
-
154,094
22,060
22,060
-
154,094
154,094
22,060
176,154
17,310
9,396
-
26,706
137
10,439
10,576
-
-
2,235
2,235
-
-
-
17,310
9,396
41,918
68,624
137
10,439
10,576
There have been no transfers between fair value measurement levels during the financial year ended 30 June 2016.
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FINANCIAL REPORT 2016 CONTINUED
35. Financial Risk Management Objectives and Policies continued
(e) Fair Value of Financial Instruments continued
Reconciliation of Level Three fair value movements:
Financial Assets
Opening balance
Profit and Loss
Other Comprehensive Income
Closing Balance - Financial Assets
Financial Liabilities
Opening balance
Acquisition of Subsidiary
Other Comprehensive Income
Closing Balance - Financial Liabilities
Valuation techniques
2016
$'000
2,235
(218)
-
2,017
-
157,801
(3,710)
154,091
2015
$'000
50,789
(55,874)
7,320
2,235
-
-
-
-
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.
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 not be material at balance date (2015: not material).
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Crown Resorts Limited Annual Report 2016
Shareholder Information
Substantial shareholders as at 5 September 2016
The following information is extracted from substantial shareholder notices received by Crown.
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Shareholder
Consolidated Press Holdings Pty Limited
Perpetual Limited
Holders of each class of securities
Number of
ordinary
Shares
351,111,955
46,856,958
% of Issued
Capital
48.20%
6.43%
Crown only has ordinary shares on issue. The total number of ordinary shares on issue is 728,394,185 held by 67,085
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 5 September 2016
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
44,209
20,260
1,784
766
66
67,085
1,615
2.48
5.90
1.73
2.11
87.78
100
134
FINANCIAL REPORT 2016 CONTINUED
Shareholder Information continued
The 20 largest shareholders as at 5 September 2016
Name
1. CPH CROWN HOLDINGS PTY LTD
2. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3.
J P MORGAN NOMINEES AUSTRALIA LIMITED
4. NATIONAL NOMINEES LIMITED
5. CITICORP NOMINEES PTY LIMITED
6. BNP PARIBAS NOMS PTY LTD
7. UBS NOMINEES PTY LTD
8. RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
9. BNP PARIBAS NOMINEES PTY LTD
10. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3,776,638
11. CITICORP NOMINEES PTY LIMITED
12. AMP LIFE LIMITED
13. ARGO INVESTMENTS LIMITED
14. BNP PARIBAS NOMINEES PTY LTD
15.
IOOF INVESTMENT MANAGEMENT LIMITED
16. CS FOURTH NOMINEES PTY LIMITED
17. RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
18. BNP PARIBAS NOMS (NZ) LTD
19. RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
20. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 3
3,145,241
3,058,680
2,609,184
2,095,000
1,743,794
1,653,793
1,622,368
1,462,784
1,366,438
1,291,958
Total
Other
623,197,089
105,197,096
85.56
14.44
Details of equity securities
Crown has 728,394,185 shares currently on issue, all of which are quoted.
No. of Shares
% of Issued
Capital
342,418,106
91,152,395
64,056,983
29,380,327
20,179,449
17,814,511
17,208,223
11,475,529
5,685,688
47.01
12.51
8.79
4.03
2.77
2.45
2.36
1.58
0.78
0.52
0.43
0.42
0.36
0.29
0.24
0.23
0.22
0.20
0.19
0.18
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Crown Resorts Limited Annual Report 2016
Additional Information
Shareholder enquiries
Shareholders may access their details by visiting the Share Registry’s website at www.investorcentre.com. For security
reasons, shareholders need to enter their Security holder Reference Number (SRN) or Holding Identification Number (HIN)
and postcode to access personal information. Security holding information may be updated online. Alternatively, download
the relevant forms and have the completed forms mailed to the Share Registry. Shareholders with queries about their
shareholdings should contact the Share Registry, Computershare Investor Services, on telephone number 1300 659 795,
or if calling from outside Australia (61 3) 9415 4000 or by fax (61 3) 9473 2500.
Electronic shareholder communications
Receiving shareholder communications electronically, instead of by post enables you to:
• Receive important shareholder and company information faster
• Reduce your impact on the environment
• Securely store important shareholder documents online, reducing clutter in your home or office
• Access all documents conveniently 24/7
Shareholders who wish to receive email alerts informing them of Annual Report, Notice of Meeting, Issuer Holding
Statements, Payment Advices and other company related information on Crown’s website, www.crownresorts.com.au may
either contact the Share Registry or lodge such instructions online at the Share Registry’s website at www.investorcentre.
com.
Change of address
Issuer sponsored shareholders should notify the Share Registry immediately in writing or by telephone upon any change in
their address quoting their SRN. Changes in addresses for broker sponsored holders should be directed to the sponsoring
brokers with the appropriate HIN.
Direct payment to shareholders’ accounts
Dividends may be paid directly to any bank, building society or credit union account in Australia. Payments are
electronically credited on the dividend date with advisory confirmation containing payment details mailed to shareholders.
Shareholders who wish to have their dividends paid directly to their account may advise the Share Registry in writing or
may update their payment instructions online on www.investorcentre.com prior to the dividend record date.
Tax File Numbers
Crown is obliged to deduct tax at the top marginal rate plus Medicare levy from unfranked or partially franked dividends
paid to Australian resident shareholders who have not supplied their Tax File Number (TFN) or exemption details. If you
wish to provide your TFN or exemption details, please contact the Share Registry.
Consolidation of multiple holdings
If you have multiple holdings which you wish to consolidate, please advise the Share Registry in writing. If your holdings are
broker sponsored, please contact the sponsoring broker directly.
Crown website
Crown has a dedicated corporate website, www.crownresorts.com.au which includes Crown’s Annual Report, disclosures
made to the ASX and Notices of Meeting and other Explanatory Memoranda.
Investment Warning
All information provided in the Annual Report is provided as of the date stated or otherwise as at the date of the Report.
The Annual Report has not taken into account any particular investor’s investment objectives or other circumstances.
Investors are encouraged to make an independent assessment of Crown or seek independent professional advice.
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FINANCIAL REPORT 2016 CONTINUED
Corporate Information
Directors
• Robert J Rankin BEc, LLB Chairman
• John H Alexander BA Executive Deputy Chairman
• Rowen B Craigie BEc (Hons) Chief Executive Officer and Managing Director
• Benjamin Brazil BCom, LLB
• The Honourable Helen A Coonan BA, LLB
• Rowena Danziger BA, TC, MACE
• Andrew Demetriou BA, BED
• Geoffrey J Dixon
• John S Horvath AO, MB, BS (Syd), FRACP
• Michael R Johnston BEc, CA
• Harold C Mitchell AC
Company Secretaries
• Michael J Neilson BA, LLB
• Mary Manos BCom, LLB (Hons), GAICD
Crown’s registered office and principal corporate office
Level 3
Crown Towers
8 Whiteman Street
Southbank VIC 3006
Australia
Phone: (61 3) 9292 8824
Share Registry
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
Phone: 1300 659 795 (within Australia)
Fax:
(61 3) 9415 4000 (outside Australia)
(61 3) 9473 2500
Website: www.computershare.com.au
Stock Exchange Listing
Crown’s ordinary shares are listed on the Australian Stock Exchange under the code “CWN”. Crown’s Subordinated Notes
I are listed on the Australian Stock Exchange under the code “CWNHA”. Crown’s Subordinated Notes II are listed on the
Australian Stock Exchange under the code “CWNHB”. The home exchange is Melbourne.
Website
Visit our website www.crownresorts.com.au for media releases and financial information.
Auditor
Ernst & Young
Banker
Australia and New Zealand Banking Group Limited
w
crownresorts.com.au