ANNUAL REPORT
2007
NOTES FROM
THE BOARDROOM
DISTRIBUTION
Total distributions for the 2006/07 year are 21.0 cents per share. The fi nal 2006/07 distribution
of 12.0 cents per share will be made on 5 October 2007 to those shareholders on the SKYCITY
register as at 5.00pm on 10 September 2007.
ANNUAL MEETING
The 2007 annual meeting of SKYCITY Entertainment Group Limited will be held in the New Zealand
Room, SKYCITY Auckland Convention Centre, 88 Federal Street, Auckland, on Friday 26 October
2007, commencing at 10.00am.
The notice of meeting, including the agenda, will be mailed to shareholders on 10 October 2007.
This report is dated 20 September 2007 and is signed on behalf of the board of directors of
SKYCITY Entertainment Group Limited by:
R H McGEOCH
CHAIRMAN
20 September 2007
E TOIME
EXECUTIVE DIRECTOR
2 I SKYCITY
PERFORMANCE 2007
CHAIRMAN’S REPORT
EXECUTIVE DIRECTOR’S REPORT
BLUEPRINT FOR FUTURE SUCCESS
BOARD OF DIRECTORS
EMPOWERING OUR PEOPLE
REVITALISING OUR CUSTOMER EXPERIENCE
CARING FOR CUSTOMER WELFARE
CONNECTING WITH OUR COMMUNITIES
CORPORATE GOVERNANCE
FINANCIALS
OTHER INFORMATION AND DISCLOSURES
DIRECTORY
5
6
10
16
20
22
34
46
52
64
76
130
143
SKYCITY I 3
“Over the next 12 to 18 months, SKYCITY’s success will be
determined by its ability to streamline and reinvigorate the
business for growth. We’ve made a good start: we have
refreshed our leadership talent, concentrated on our core
strengths, and have a clear understanding on what we must
do to deliver growth. The result is a simplifi ed, revitalised and
focused business.
We are committed to drive this change and momentum.
We know to whom it matters: our shareholders, our
customers, our people and the communities in which we work.
Whilst the job is far from complete, I am confi dent SKYCITY
is well placed to continue its place as a strong and dynamic
leader in gaming and entertainment. ”ELMAR TOIME
EXECUTIVE DIRECTOR
4 I SKYCITY
4 I SKYCITY
PERFORMANCE
2007
GROUP SUMMARY
Earnings before Interest, Tax, Depreciation and Amortisation
2007
$m
2006
$m
Movement
%
Auckland
Hamilton
Other New Zealand Operations
Adelaide
Darwin
Corporate/Unallocated
Total Group EBITDA
Depreciation and Amortisation
Funding
Tax
Minority Interests
Net Profi t after Tax
209.1
19.6
23.5
A$25.4
A$35.3
(24.7)
297.2
72.3
93.4
33.1
-
98.4
-7.9%
12.6%
63.2%
-7.0%
5.1%
-5.0%
-1.3%
11.2%
11.3%
227.0
17.4
14.4
A$27.3
A$33.6
(26.0)
301.2
65.0
83.9
32.6
0.4
120.1
-18.1%
NZ$m NET PROFIT AFTER TAX
cps* DISTRIBUTIONS/DIVIDENDS
150
120
90
60
30
0
m
1
.
0
2
1
$
m
4
.
8
9
$
m
2
.
7
0
1
$
m
4
.
6
0
1
$
m
2
.
0
0
1
$
m
3
.
8
6
$
m
2
.
7
5
$
01
02
03
04
05
06
07
30
25
20
15
10
5
0
c
5
.
6
2
c
0
.
6
c 2
0
.
4
2
c
5
.
3
2
c
0
.
1
2
c
0
.
9
1
c
8
.
5
1
01
02
03
04
05
06
07
* cents per share
SKYCITY I 5
The board acknowledges that 2006/07 has
been a disappointing year for shareholders
in terms of SKYCITY’s fi nancial performance.
The company has faced a range of
challenges and is currently engaged in a
restructuring programme designed to better
position the business for improved returns
in 2007/08 and beyond.
ROD McGEOCH
CHAIRMAN
6 I SKYCITY
CHAIRMAN’S REPORT
2006/07 In Retrospect
Whilst a number of SKYCITY’s operations
performed well during the 2006/07 fi nancial year,
the key driver of the Group’s overall outcome,
the Auckland business, signifi cantly under
performed against previous years. The Cinemas
business also disappointed due to fl at revenues
but against an expanded cost base.
The board is actively engaged with
management in developing and confi rming
actions to ensure that the company’s net profi t
outcome for 2007/08 and thereafter shows
improvement on 2006/07.
SKYCITY shareholders have enjoyed sustained
growth in distributions from start-up in 1996
through until 2004 (26.5 cents per share:cps)
although, in the most recent three years, returns
to shareholders have been mixed with 26cps
maintained in 2006 but lower distributions
of 24cps and 21cps in 2005 and 2007,
respectively.
The company’s profi t distribution plan,
introduced in February 2006, has proved popular
with New Zealand retail shareholders. However,
due to the higher than expected take-up rate by
shareholders and the accumulating effect on the
number of shares on issue, the board has, in the
interests of all shareholders, decided to remove
the 2.5% discount incorporated within the strike
price calculation from the fi nal FY07 distribution
of 12cps payable on 5 October and from future
distributions under the plan.
As a new company in a new sector in New
Zealand, SKYCITY experienced strong growth
during its fi rst ten year period but is now at a
stage in its development cycle where the priority
during the next 12 month period is to see the
business consolidate its position, strengthen
its core business activities, rebuild its internal
capabilities, and put in place the initiatives that will
achieve renewal in the company’s revenues and
earnings streams, with a particular emphasis on
the Auckland property.
The board is confi dent that return to growth can
be achieved given the strength of the company’s
markets, operations and assets, and its strong
licensed positions in New Zealand, South
Australia and the Northern Territory of Australia.
Chief Executive Position
Following the departure of SKYCITY’s founding
chief executive Evan Davies in late June 2007,
the board was fortunate in being able to place
non-executive director Elmar Toime into the role
of Executive Director during the period between
the departure of Mr Davies and the appointment
of a new chief executive. Just as importantly,
the board was able to ensure, through Mr
Toime’s appointment, a continuing momentum
to the company’s restructuring imperatives and
to maintain close contact with the existing and
emerging issues within the key business units.
Elmar Toime brings to the role the experience
of having been the chief executive of a large
commercial organisation (New Zealand Post)
and the knowledge acquired as a SKYCITY
non-executive director since 1996. Mr Toime has
been mandated by the board to ensure that the
restructuring plan announced in May 2007 is
implemented effectively and expeditiously and to
SKYCITY I 7
ensure that the business is placed on a sound
footing prior to the arrival of the new chief
executive.
One of the most important decisions a board
makes is the selection of the company’s chief
executive. The best available candidate must
be identifi ed and recruited to implement board
policy, develop and recommend the strategic
direction of the business, ensure operational
and fi nancial effi ciency, interact effectively with
government, regulators and the community, and
to lead and inspire management and staff.
The board is currently in interview phase
for a new chief executive and is confi dent
a candidate of high quality will be able to
be secured to continue the company’s
consolidation programme and to guide the
business back onto a sustained growth path for
the future. The board expects to be in a position
to announce a high calibre appointment within a
relatively short timeframe.
2007/08 Profi t Guidance
Guidance for the 2007/08 year has been
provided in conjunction with the 2006/07
fi nancial result and confi rms the board’s
confi dence in the resumption of a growth path
for the business. Based on the existing business
model being continued (refer asset reviews
in the following section of this report) and the
company’s current and planned strategies being
effective in the competition for the discretionary
entertainment dollar, reported tax-paid earnings
have been projected to increase by between 10-
12% in the forthcoming year.
This profi t projection remains conditional
upon international rebate business being at
normalised outcomes, main gaming fl oor
construction disruption being no worse than
has been experienced to date (until expected
completion by March 2008) and smoking bans
in Adelaide during the post-implementation
period (from 1 November 2007) being no worse
than experienced in New Zealand during the
corresponding post-implementation period.
Given that international rebate business is less
than 5% of total revenues, this business sector
is not, under normal circumstances, expected
to generate signifi cant volatility in terms of the
overall 2007/08 outcome.
Asset Reviews: Adelaide and Cinemas
SKYCITY’s existing business model comprises
gaming entertainment facilities in Auckland,
Hamilton and Queenstown, a 40.5% share in
Christchurch Casino, Adelaide and Darwin in
Australia, and cinema exhibition operations in
New Zealand. Subsequent to the strategic
asset review process announced in May 2007,
the company has advised that it is interested in
receiving offers for its SKYCITY Adelaide and
cinema exhibition businesses.
During the 2006/07 year, the SKYCITY Metro
Centre in downtown Auckland was sold for $55
million, with the sale proceeds used to fully fund
the acquisition of the 50% Village Roadshow
share of the Village/SKYCITY Cinemas joint
venture.
Darwin Casino Licence
A key achievement during 2006/07 was the
extension of the Darwin casino licence term
beyond 2015. A fully exclusive casino licence
extension, negotiated with the Northern Territory
Government, provides SKYCITY Darwin with
an effective 15/20 year renewable licence term.
As part of the license negotiation, SKYCITY has
agreed to commit A$30 million of capital works
which will accommodate the strong growth
trends projected for this business.
Board of Directors
Following the retirement of Rob McLeod and
the resignation of Evan Davies, both in June
2007, the board was reduced in size from six
non-executive directors plus the Managing
Director to four non-executive directors plus
Elmar Toime as Executive Director.
8 I SKYCITY
Acknowledgement: Evan Davies
On behalf of the board, I would like to formally
acknowledge the contribution made by
SKYCITY’s founding chief executive Evan
Davies to the growth and development of the
company. During Mr Davies’ tenure SKYCITY
has grown from a concept plan to a multi-site
(New Zealand and Australia) and dual-listed
(NZX and ASX) major scale corporate with an
enterprise value in excess of NZ$3 billion and
employing more than 4,500 people.
Annual Report
Shareholders will be aware that, for the fi rst time
this year, the primary reference for the company’s
annual report is at the Investor Centre section of
the company’s website, with shareholders who
wish to continue to receive a printed copy able to
nominate that preference. SKYCITY encourages
shareholders to give consideration to receiving
the annual report via electronic format as this will
result in production cost savings and reduced
consumption of physical resources.
Annual Meeting
The directors look forward to meeting
shareholders at the company’s annual
meeting to be held at the SKYCITY Auckland
Convention Centre on Friday 26 October 2007,
commencing at 10:00am.
ROD McGEOCH
CHAIRMAN
The directors are actively seeking to appoint
two additional non-executive directors to rebuild
the board complement. Those appointments
are expected to be confi rmed, subject to
regulatory approval processes, within the next
few months. Regulatory approval can be an
extended process and somewhat diffi cult to
predict as to timing but, in the interim, the new
directors to be appointed will be invited to
attend the company’s board meetings.
Bill Trotter and myself retire by rotation at this
year’s annual meeting and offer ourselves for
re-election. SKYCITY’s board charter requires
that where a director has completed two
terms in offi ce since fi rst being appointed by
shareholders, they must be formally invited by
the board to stand for re-election. At its August
2007 meeting, the board unanimously invited
Bill Trotter and myself to stand for re-election.
Bill Trotter is standing for re-election for a further
term of one year in order to ensure that the
board maintains an appropriate structure during
its transition process. Mr Trotter intends to
retire at the 2008 annual meeting by which time
new directors will have been appointed and
board strength will have been renewed.
The directors confi rm that Bill Trotter and Rod
McGeoch are effective board and committee
members and the board unanimously supports
both directors standing for re-election at the
company’s annual meeting in October.
Corporate Governance
SKYCITY has in place an extensive and
comprehensive set of governance protocols
and procedures which align closely with the
corporate governance principles of both the
New Zealand and Australian stock exchanges.
Details of the governance standards and the
company’s compliance therewith are included in
this annual report.
SKYCITY I 9
EXECUTIVE
DIRECTOR’S REPORT
I am pleased to make this report to shareholders
on the performance and status of the business.
In late June 2007 I was asked by the board to
take up the role of Executive Director in order
to provide ongoing leadership during a critical
phase of the company’s operations.
As a non-executive director, I had been involved
at the strategic and stewardship levels in the
opportunities and challenges of the various
SKYCITY businesses. Accordingly, I had a clear
understanding of the issues and risks facing
the company and during my tenure to date have
acted, with the board’s decisive support, to
address these.
I will report on these matters later in this review
and more detail about them and their impact on
the future prospects for SKYCITY is provided
throughout the commentary included in this
annual report.
Earnings Performance
Although overall revenues were up 7% to $816
million, the SKYCITY Group disappointed at
the earnings lines, with operating earnings (as
measured by EBITDA: earnings before interest,
tax, depreciation and amortisation) down 1.3%
on the prior year from $301 million to $297
million and reported net profi t after tax down
18% from $120.1 million to $98.4 million.
Among the issues to be addressed there
were some specifi c challenges which warrant
comment in this report in order to facilitate
shareholder understanding of the company’s
fi nancial performance and its future direction.
These issues included the following:
•
restructuring of senior management for
greater effectiveness
• allocating and embedding the announced
cost reduction programme into management
budgets to ensure ownership and
commitment
• advancing the asset review process
•
reviewing and assessing at an in-depth
level the performance and challenges of the
Auckland property
increasing the depth of disclosure of some
key business elements within the company’s
public reporting.
•
The 2006/07 result refl ected organic revenue
growth in most business units and cost
reductions in Auckland and corporate offi ce,
offset by reduced gaming revenues and
earnings in Auckland, reduced income from the
international rebate business across the Group,
and lower than expected cinema earnings as the
result of lower performing fi lm product coupled
with a higher cost base due to an increase in the
number of sites.
Darwin, Adelaide, Hamilton, Queenstown, and
the Auckland attractions operations (hotel,
convention, restaurants and bars, Sky Tower,
parking) all increased EBITDA in the 2006/07
year and corporate costs were reduced.
However, these increased earnings and reduced
costs were more than offset by reduced earnings
from SKYCITY Auckland’s gaming operations
and from Cinemas.
10 I SKYCITY
Key Factors Affecting the 2006/07 Result
The key factors affecting the 2006/07 fi nancial
result included the following:
•
signifi cant disruption to the customer
experience as a consequence of the main
gaming fl oor refurbishment project in
Auckland (commenced September 2006 and
programmed through to March 2008)
strong attractions revenues in Auckland in
hotels, convention, and food and beverage
reduced overhead costs: Auckland and
corporate offi ce
•
•
• continued revenue growth in Hamilton and
Darwin with revenues up 14% and 9%
respectively
static performance in Adelaide, and
fl at cinema revenues but from a higher cost
base (more sites, increased number of
screens).
•
•
Underlying or Normalised Earnings
Whilst reported net profi t was down 18% on
prior year, underlying or normalised net profi t was
up 7%. Reported net profi t includes transactions
which are not expected to recur and/or which
relate to non-trading activities and these can be
removed to better identify the underlying trading
performance of the business.
At the operating earnings (EBITDA) line ,
underlying or normalised Group earnings for
the gaming entertainment operations (excluding
cinema operations) produced a 4% improvement
in the year ended 30 June 2007, up from $273
million in FY06 to $285 million in FY07. It should
be noted that Cinema operations have been
excluded from this assessment given that this
was the fi rst year in which the Group had 100%
ownership of that business, up from 50% in the
previous year.
The focus on EBITDA (representing the
underlying operating performance of the
business) is important because it refl ects
business operations and removes the impact of
fi nancing, tax and other transactions. A proper
understanding of the trends of the business
involves evaluating the underlying EBITDA year
on year movements.
Further clarity in the company’s reporting has
been provided in the 2006/07 annual result
SKYCITY I 11
through separation of corporate or central
costs from those of the Auckland business and
identifi cation of the international rebate business
(IRB) sector as a subset within table games.
IRB performance is clearly identifi ed within the
2006/07 result and it is proposed that IRB will
be reported as a separate business segment in
the 2007/08 year.
The principal adjustments to derive underlying
or normalised earnings from reported earnings
included the following:
• adjustment of IRB to theoretical/normalised
• elimination of gains on sale of properties
•
removal of one-off restructuring costs
• elimination of fi nancial restructuring gains/
losses and tax rate changes.
Share Price
SKYCITY’s current share price does not show
any signifi cant gain since mid 2004. The board
and management are resolved to improve the
earnings performance of the business so that
can then be refl ected in improved share price.
The disappointing share price performance,
despite a strong yield from continuation of
the company’s 90% profi t distribution policy,
is due to a combination of both internal and
external factors.
During the last three years some signifi cant
constraints have affected the earnings potential of
the New Zealand businesses, including the $20
note acceptor limitation in March 2004, a new
regulatory environment from July 2004, smoking
bans from December 2004, the Auckland
main gaming fl oor refurbishment project since
September 2006, and sustained higher interest
rates during the last 12 months which have
inevitably restricted the discretionary spending
power of the New Zealand customer base.
Looking Forward
Looking forward, we expect the following:
Hamilton and Darwin to continue their revenue
growth and cost management progress, Auckland
gaming to progressively regain lost ground as the
main fl oor refurbishment and other initiatives start
to take effect, Adelaide earnings to be held back
by smoking bans from 1 November 2007, and
cinema earnings to improve on the back of better
performing fi lm product.
Future investment in Adelaide and Cinemas
will depend on the outcome of the market
testing processes currently under way, as to
retention or sale of these assets.
Christchurch Casino offers scope for enhanced
earnings once the proposed refurbishment of
that property has been completed.
Finally, the company looks forward to
developing closer working relationships
with government, regulators, police, service
providers and other community agencies
in a collaborative effort to mitigate customer
risk and to help ensure a continuing safe
environment for customers.
Performance Summary
Set out below are summary comments relating
to each of the SKYCITY operations for the
2006/07 year. The full SKYCITY FY07 result
presentation, dated 20 August 2007, can be
found on the company’s website at www.
skycitygroup.co.nz under the section header
‘Investor Centre’. The result presentation
included on the website provides more
extensive detail on the FY07 result than can
be accommodated in this review summary.
Auckland
SKYCITY Auckland’s 2006/07 fi nancial result
shows an 8% gross margin reduction in
local gaming operations, partially offset by
increased attractions (non-gaming) gross margin
performance in hotels (occupancies and room
rates up), conventions, and food and beverage,
and through reduced overhead costs.
12 I SKYCITY
EBITDA performance for the local business
operations (exclusive of international rebate
business) was down 2.9%, or $6.3 million,
compared to the previous year.
Whilst machine play kept pace with growth in the
broader gaming market, up 3.5%, this was offset
by local table games and food and beverage
revenues down 2.6% and 3.6% respectively.
Auckland gaming performance is the primary
contributor to the overall SKYCITY Group result.
As a consequence, management attention
has been focused on how to reverse the FY07
downturn in local Auckland gaming revenue
and enhance the gaming customer experience.
Once completed, the new main fl oor renovation
will add signifi cantly to that experience (with
early indications positive that this will be
achieved) and a range of supporting initiatives
will be deployed during the next 12 months.
The in-depth Auckland gaming operations
review, conducted in July 2007, identifi ed fi ve
key focus areas for performance improvement
which are listed below:
• change the mix of machine game product
to better refl ect the preferences of the
Auckland market
• create zones within the gaming fl oor layout
to better serve higher value players to retain
and grow this segment
•
• optimise the remaining components of the
main gaming fl oor refurbishment project
improve customer communications and
service, and
relaunch the ACTION customer loyalty
programme.
•
Management is focused on ensuring that
the Auckland business provides a superior
total customer experience in conjunction with
completion of the gaming fl oor renewal.
Adelaide
SKYCITY Adelaide’s 2006/07 local gaming and
international rebate revenues were up marginally
but were offset by reduced non-gaming
revenues and a 2% increase in expenses,
leading to a contraction in operating earnings
of 7% compared to prior year.
The extended delay in obtaining approval
from the South Australian Government for
the carpark component of the redevelopment
project has seriously hampered the company’s
ability to optimise the potential of its Adelaide
business by extending the property’s competitive
disadvantage against the pub and club market.
South Australia continues to be a diffi cult region
for business growth and development, and
the delays experienced in the redevelopment
project now make it diffi cult for the company to
mitigate the impact of the smoking bans which
are being introduced from 1 November.
As a consequence of the challenging investment
and operating environment in South Australia,
SKYCITY is testing market interest in its Adelaide
property with formal bids invited from interested
parties. A comprehensive strategic plan for
the Adelaide property has been developed
based around the redevelopment options for
the property. This plan, if delivered successfully,
will have the potential to add substantive value
to SKYCITY’s Adelaide business. However, if
another party is of the view that it can achieve
signifi cantly greater value than SKYCITY’s
strategic value, then the board will consider
divestment of its Adelaide business. The board
will be careful to evaluate the various options
to make sure that shareholder interests will be
best served.
Darwin
SKYCITY Darwin continues to perform well,
having added signifi cant value to SKYCITY’s
asset portfolio since acquisition in July 2004.
During this three year period, Darwin has
delivered strong revenue and earnings growth,
with all sectors of the business mix contributing.
The Darwin expansion project (gaming, restaurant,
SKYCITY I 13
bar and outdoor facilities), due to commence
in October 2007 with completion scheduled for
December 2008, will allow the Darwin business to
continue on its growth path.
entertainment footprint. As a consequence,
we have announced that the SKYCITY Cinemas
business is available for sale with interested
parties invited to submit formal offers.
Worth noting during the 2006/07 year were the
successful negotiation of the casino licence
extension with the Northern Territory Government
and purchase of the adjoining Little Mindil land.
This acquisition will increase the Darwin property’s
entertaining capacity, with outdoor events at
SKYCITY Darwin being a mainstay of the Darwin
social calendar and a signifi cant contributor to the
business’s food and beverage revenues.
Hamilton
SKYCITY Hamilton has achieved consistent
revenue and earnings growth since opening in
September 2002, with growth trends projected
to continue. Gaming revenues for 2006/07 were
up strongly on the prior year, complemented by
growth in food and beverage revenues as the
new bar and restaurant facilities came on stream.
Cinemas
SKYCITY Cinemas disappointed during
2006/07 on the back of low performing fi lm
product and a less than satisfactory initial
operating performance by the new nine screen
Queensgate multiplex in Lower Hutt.
The cyclical nature of cinema product quality
and the high demand for capital expenditure to
keep pace with competitive pressures has led to
an unsatisfactory outcome in terms of return on
assets employed. This downward trend in return
on investment has eroded the benefi ts that the
company anticipated would fl ow from customer
synergies and a broadening of the SKYCITY
Other Operations
Christchurch and Queenstown casinos both
performed well during the 2006/07 year,
with signifi cant upside potential anticipated
from Christchurch Casino once the intended
renovations to this property have been
introduced.
Customer Welfare and Regulatory
There has been considerable public interest in
recent months in how casinos deal with a range
of customer welfare issues including problem
gambler identifi cation, elimination of loan-
sharking activity from casino premises, potential
money laundering, and the detection and
elimination of other undesirable activity.
SKYCITY is highly committed to ensuring that
its casino operations have the confi dence of the
general public and the regulatory agencies in
each of its jurisdictions and to a proactive and
co-operative approach to these challenges.
Detecting suspicious and/or undesirable activity
is a signifi cant challenge. In addition to the
company’s own observations and monitoring, we
also rely on information provided to us by others
and, with more than 30,000 visitors per day on
average to our fi ve casino properties, most of
which are operating on a full 24/7 basis, it is
not possible to achieve a 100% detection rate
at all times. However, SKYCITY and its staff, in
conjunction with other agencies and interested
parties, will continuously strive to ensure that a
14 I SKYCITY
very high detection percentage is achieved and
that, in all instances, an appropriate response
is made to each situation identifi ed by and/or
reported to us.
As a matter of policy and good governance,
SKYCITY does not see any inherent confl ict
in its desire to maintain public confi dence in
its operations and the creation of shareholder
wealth over time. Occasional external
commentary that suggests there is a confl ict is
not warranted and not well founded. The main
diffi culty for the company and its staff arises at
the practical level when intervention is sometimes
required in an environment of uncertainty relating
to the interpretation of observed behaviours.
SKYCITY’s training and refresher programmes
are designed to develop and then enhance the
observation, detection and appropriate response
skills in its employees at all levels.
People
I would like to take the opportunity of this annual
report to acknowledge the efforts of all SKYCITY
people during 2006/07 in what has been a
challenging year. We look forward to their
continued enthusiasm and commitment to the
challenges and opportunities that the 2007/08
year will present.
SKYCITY relies on the efforts and skills of its
more than 4,500 employees in New Zealand
and Australia who are committed to customer
service delivery on a 24/7 basis. Because
SKYCITY delivers an experience to its customers
rather than a physical product, the service
ethos of our staff is critical to the enjoyment of
their experience by our customers and, as a
consequence, their propensity to spend and
return again. In 2007/08 management plans to
be fully engaged with customer-facing staff at
all levels of the operation, with the objective of
further enhancing service attitude and delivery,
customer satisfaction ratings and, in turn, the
earnings potential of the business.
As sometimes occurs in a company whose
history has been one of sustained growth, costs
and organisational structures evolve into forms
not necessarily best suited to a more challenging
business environment. Since late June the
senior management structure has been simplifi ed
and a number of executives and support staff
have left the business. While it is never pleasing
to let good people go, falling profi t margins have
necessitated a rethink of the company’s cost
base and a reprioritisation of support activities.
Conclusion
SKYCITY continues to be a strong business,
notwithstanding its relatively weaker performance
in FY07. Whilst I am pleased with the direction
the business is heading, that is not to say things
will be easy, but the tremendous creativity and
dedication of the many people in the company
augurs well.
ELMAR TOIME
EXECUTIVE DIRECTOR
SKYCITY I 15
SKYCITY has a blueprint for
performance: we are focused
on the action we need to
take to improve the business.
• working with machine vendors to broaden the
mix of gaming product to better refl ect New
Zealand gaming preferences, and
• personalising our offering to high value
customers, to ensure they get a premium
service and experience.
In the past nine months, we have undertaken
a comprehensive review and restructure of our
operations. Our focus has been to put in place
the systems, the resources and the people to
maximise our effi ciency and effectiveness.
Progress has been good to date: we have
identifi ed $33 million in cost savings, and
streamlined both systems and structures for
greater effi ciency. We will continue to look for
improvement; our priorities for the year ahead are
very clear.
Consolidate our core business
Gaming is the centre of SKYCITY’s entertainment
offering. While by no means the only facet of
our activities, it remains the pivotal element of
our business. With its world-class gaming fl oor,
our Auckland casino, SKYCITY Auckland, is our
fl agship operation.
SKYCITY’s performance was disappointing in
2007. While Auckland remains strongly profi table,
operating earnings were down 2.9% in the
2006/7 year. It was evident that the renovation
programme for the main gaming fl oor, had a
greater impact on customers than had been
expected. Customer visits were relatively fl at
against the previous year, but spending fell.
Our priorities for Auckland gaming now, following
a fresh look at our offering, will be to add value to
the customer experience by:
•
redesigning our gaming environment,
customising playing areas and offering a
broader range of experiences
Results to date show positive progress. Our
customers have provided us with great feedback
to Auckland’s new Baccarat Room and our
enhanced VIP amenities. We have confi dence
that we are injecting new excitement and energy
into the SKYCITY experience and, in return, will
deliver stronger results.
Enhance the customer experience and
customer welfare
Our vision is to do the best we can to give
customers a happy, safe and entertaining time
when they visit our properties.
We have been building an in-depth
understanding of what our customers want
today as well as how their needs and tastes
are evolving. We are investing in new systems
and tools to provide that insight and we are
upgrading our Action loyalty programme and
marketing to recognise these needs.
Providing a safe and enjoyable entertainment
environment for customers is a priority for us. Not
only does it enhance the customer experience,
but it creates sustainable shareholder value.
We are continuing to evolve our policies and
programmes through:
• an external review of practices and
procedures
• enhanced training programmes in host
•
responsibility, and
leading a working party with government
agencies to continually improve information-
sharing practices.
18 I BLUEPRINT FOR FUTURE SUCCESS
Cost reduction programme for greater
effi ciency and effectiveness
SKYCITY as a business cannot stand still – our
leadership depends on our ability to innovate,
anticipate change and respond quickly.
To this end, we are streamlining the business.
We have reviewed and simplifi ed our leadership
and management structures, providing clear
reporting lines and accountability for better
decision making. We have reviewed our
underperforming assets to determine their
long term value for shareholders.
A review of our back offi ce systems and
processes means we have been able to
centralise a number of Group functions. In
addition, we are introducing smart sourcing
strategies and a shared services operating
model.
These cost saving activities commenced in the
second quarter of the FY07 fi nancial year and
have continued. Collectively these changes
will have removed $33 million in costs from
the business when the programme concludes
in 2008. This will assist to recover our
performance levels. However, we are committed
to ensuring we do not lower the standard of
customer service or welfare, both of which
remain of paramount importance to us.
Encourage and reward high performance
We know that our people are at the heart of a
great SKYCITY experience. Service industries
face signifi cant competition for employees and
SKYCITY is no exception. While we have a strong
base of talented, hard-working and committed
staff, employee turnover levels are unacceptably
high in some of our front of house areas.
We will be revisiting employee climate surveys
so that we can better understand the factors
that might be inhibiting peak performance. To
encourage people we are recognising talent by
promoting from within where we can. Our leaders
are being asked to create work environments that
encourage and reward high performance and so
keep SKYCITY as an employer of choice.
Future growth
SKYCITY has much to be proud of, as a well-
established, profi table trans-Tasman business.
There is strong leadership energy. We are
connecting with our customers in new ways.
We have clarity about what we must do to
deliver performance and growth from our
existing businesses.
In short, we understand that to earn our
reputation as a leading company in our sector,
we will create value for our shareholders through
attention to customer service, community welfare
and employee development.
BLUEPRINT FOR FUTURE SUCCESS I 19
BOARD OF DIRECTORS
Rod McGeoch
Chairman of Directors
Chairman of the Nomination Committee and member of the
Governance and Remuneration Committee
Rod McGeoch was appointed a director in September 2002 and
Chairman of the company on 1 April 2004. Mr McGeoch is an
independent non-executive director based in Sydney, Australia. He
is a director of Telecom Corporation of New Zealand Limited, LIPA
Pharmaceuticals Limited and Ramsay Health Care Limited, and chairman
of Saatchi & Saatchi’s Trans-Tasman Advisory Board and Vantage Private
Equity Growth Limited. Mr McGeoch is an Australian Prime Ministerial
appointment to the Australia and New Zealand Leadership Forum and a
trustee of the Sydney Cricket and Sports Ground Trust.
Elmar Toime
Executive Director
Member of the Audit and Risk Committee and member of the
Nomination Committee
Former chief executive of New Zealand Post and credited with leading
New Zealand Post through its transformation into one of the top-rated
postal services internationally, Elmar Toime has extensive international
experience in running large companies. His experience at both
management and board level serves to provide the company with sound
guidance while the global search for a new chief executive is undertaken.
Mr Toime was appointed a director in February 1996 and Executive
Director on 25 June 2007.
20 I BOARD OF DIRECTORS
Patsy Reddy
Deputy Chairperson of Directors
Chairperson of the Governance and Remuneration Committee
and member of the Nomination Committee
Patsy Reddy is an independent non-executive director and was
appointed in 1994. Ms Reddy is also a director of Telecom
Corporation of New Zealand Limited and Active Equities Limited
and is a member of NZX Discipline. She is a trustee of the New
Zealand International Festival of the Arts, Victoria University of
Wellington Art Collection Trust, SKYCITY Auckland Community
Trust and a member of the Adam Art Gallery Advisory Board.
Sir Dryden Spring
Chairman of the Audit and Risk Committee and member of the
Nomination Committee
Sir Dryden Spring is an independent non-executive director and
was appointed in October 2003. He is chairman of ANZ National
Bank Limited and certain subsidiaries. He is a director of Fletcher
Building Limited, Port of Tauranga Limited and Northport Limited.
Sir Dryden is also a trustee of the New Zealand Business and
Parliamentary Trust.
Bill Trotter
Member of the Governance and Remuneration and
Nomination Committees
Bill Trotter was appointed a director in March 2000. Mr Trotter is
an independent non-executive director under the NZX Corporate
Governance Best Practice Code and a non-executive director
under the ASX Corporate Governance Principles and Best
Practice Recommendations. Mr Trotter is executive chairman of
First NZ Capital Holdings Limited and FNZ Holdings Limited and
certain subsidiaries.
Other Information
Evan Davies resigned as Managing Director and Chief Executive Offi cer on 25 June 2007 and Rob McLeod
retired as a director on 30 June 2007. The company is in the process of identifying two new directors for
appointment to the board and also a new Chief Executive Offi cer. Announcement of these appointments
will be made later this year, subject to regulatory approval processes.
Following the retirement of Mr McLeod on 30 June 2007, Mr McGeoch was appointed a member of the
Audit and Risk Committee and Sir Dryden Spring was appointed chairperson of that committee.
BOARD OF DIRECTORS I 21
Our people bring the SKYCITY experience to
life. We defi ne, evolve, and drive the SKYCITY
brand through our recruitment and development
practices; fi nding great people and encouraging
them to stay and grow with the company gives
us a distinct advantage as we focus on building
an energetic, adaptable company.
We are proud to be one
of Australasia’s most diverse
workplaces, comprising
over 4,500 employees
from 80 nationalities.
We work in over 800 different types of jobs and
10% of us have been part of SKYCITY since the
day we opened, moving and growing with the
business.
In all our diversity, we share a common
purpose: to understand our customers, to
engage and provide them with great service.
To support this, we are:
• making our structures simpler, our systems
more effi cient and offering new challenges
and targets to our management teams
• enhancing our commitment to fair and
consistent employment by providing strong
leadership and developing our people to
their full potential, and
• continuing to recognise and reward superior
individual and team performance.
Simplifi ed structure, stronger leadership
One of the fi rst changes we have made is to
streamline our senior management structure.
We have removed layers and reduced
duplication which means we are more focused
and effi cient. We expect our managers to lead
with clear purpose and accountability, and to
have the right tools and authority to do their job.
Communication is more open and simple. Staff
initiatives from different parts of the business
are better able to complement and support
each other. And there is greater transparency -
people know where the company is going, and
how they contribute to that progress.
EMPOWERING OUR PEOPLE I 25
SKYCITY EXECUTIVE TEAM
We are building the right team of senior executives: leaders who will direct the progress of
SKYCITY in the coming years. The current team provides a depth of internal and industry
expertise with a breadth of international experience and best practice.
Jane Hastings, General Manager Group Marketing and Sales
Jane is an internationally experienced marketer who joined SKYCITY
in early 2007. Jane understands the societies and business cultures of
Australasia - SKYCITY’s business backyard. She also understands what
motivates customers and keeps them loyal in the highly competitive
entertainment industry. Jane is focused on growing business revenues
for the group by enhancing the customer experience with a fresh range
of broad sales and marketing initiatives. Jane is a recognised force in the
Asia-Pacifi c marketing industry and brings extensive experience from the
service sector as well as leading listed and Fortune 500 global brands,
including AIG, American Express, Shell and Singapore Airlines.
David Sullivan, Chief Financial Offi cer
David has been leading SKYCITY’s fi nancial operations since October
2006. He holds a crucial role as the company goes through its
streamlining process of shared services to drive greater effi ciencies
and improve operational performance. David is well respected in the
fi nancial community with a truly international background, having worked
extensively in China, Australia, the UK and Europe as well as in New
Zealand. He leads a management team responsible for fi nance strategy
and operations as well as information services across the group. He
became a director of the Christchurch Casino Limited in August 2007.
Before joining SKYCITY, David was Vodafone New Zealand’s fi nance
director and prior to that held senior positions at Baycorp Advantage
and Lion Nathan.
26 I EMPOWERING OUR PEOPLE
Alistair Ryan, General Manager Corporate
Alistair joined SKYCITY in 1995 and has extensive knowledge
of the company’s development as a leading NZX and ASX-
listed corporate. As General Manager Corporate and Company
Secretary for the SKYCITY Group, he is responsible for the
regulatory and corporate compliance functions including the
company’s stock exchange listings in New Zealand and Australia,
business protection and risk management, customer welfare and
host responsibility, government and regulatory relationships and
policy, and for the company’s corporate governance regime.
Alistair is also a director of Christchurch Casinos Limited,
Christchurch Hotels Limited (the owner of the Christchurch
Crowne Plaza Hotel), Queenstown Casinos Limited and other
SKYCITY subsidiary companies. Prior to joining SKYCITY, Alistair
was a fi nancial services partner with international accounting fi rm
Ernst and Young.
Gillian Gibson, General Manager Group Human Resources
Gillian Gibson has ultimate responsibility for SKYCITY’s people
- attracting and retaining the best people, and remunerating and
rewarding them in the right way while giving them the right tools
and incentives - empowering them to perform. She has been a
driving force behind human resources at SKYCITY since 1998,
most recently as General Manager of Human Resources for
the SKYCITY Group. Gillian has previously held senior human
resources roles with Telecom New Zealand, Lion Nathan and KFC.
EMPOWERING OUR PEOPLE I 27
SKYCITY GENERAL
MANAGEMENT TEAM
David Christian, General Manager SKYCITY Auckland
David Christian took up SKYCITY Auckland’s management
in mid-2006. He has a broad understanding of the Auckland
business and community, having previously held responsibility for
gaming at SKYCITY Auckland. His extensive SKYCITY experience
includes the general management of SKYCITY Hamilton. David
has more than 20 years experience in hospitality, hotel and casino
management including working in several Australian states and
in Singapore. David was previously General Manager of the
Wrest Point Hotel Casino and General Manager Operations of the
Country Club Casino, both in Tasmania.
Geoff Hogg, General Manager SKYCITY Hamilton
Geoff has been with SKYCITY since 1996. He has a wealth of experience
and knowledge of the industry and SKYCITY’s operations. He developed
his skills in operations, business development and management of the
SKYCITY business and the New Zealand gaming industry over the last
decade. Geoff’s SKYCITY experience has seen him gain considerable
expertise in managing staff teams for both table and machine gaming,
at SKYCITY Auckland and previously at Christchurch Casino.
Mary Whelan, General Manager SKYCITY Queenstown
Mary has been General Manager of SKYCITY Queenstown Casino since
May 2006. Mary commenced in the gaming industry over 20 years
ago and has since built a strong career including senior positions in
many Australian casinos. She joined SKYCITY as VIP Services Manager
for SKYCITY Adelaide in 2004, going on to manage the international
business team in Melbourne where she established the SKYCITY offi ce.
28 I EMPOWERING OUR PEOPLE
Andrew Wilson, General Manager SKYCITY Darwin
Andrew has managed the Darwin property since 2001 when it
was owned by MGM Mirage. Since being purchased by SKYCITY
in 2004, Andrew has been directly responsible for the day to
day operations and performance of SKYCITY Darwin as well as
overseeing growth and development plans for the property. He
has a strong background in hospitality and casino management
including 15 years with Burswood International Resort Casino
in Perth where he was chief operating offi cer. Andrew is a board
member of the Northern Territory Chamber of Commerce and
Industry and the Australian Technical College.
Matthew Liebmann, General Manager SKYCITY Cinemas
Matthew has been General Manager of SKYCITY Cinemas since
October 2006, and brings more than 12 years experience in the
entertainment and media industry to the position, including six
years in a variety of roles in cinema exhibition for Village Roadshow.
Prior to SKYCITY, Matthew was a Director in the Entertainment and
Media practice at PricewaterhouseCoopers in Sydney, where he
was a specialist entertainment and media consultant.
SKYCITY Adelaide
Kevin Brewer was the General Manager of SKYCITY Adelaide effective to 10 September 2007. Simon
Jamieson is acting as General Manager whilst the business recruits a suitable candidate to lead the Adelaide
property. With over 25 years of commercial experience, Simon brings a wealth of corporate and operational
skills to SKYCITY. Simon became director of food and beverage in Penang, Malaysia and Christchurch,
New Zealand for the Parkroyal Group. He then moved into General Manager roles for the Duxton and Aroma
Groups in New Zealand prior to joining SKYCITY.
EMPOWERING OUR PEOPLE I 29
PLANNING FOR
PERFORMANCE
SKYCITY is focused on maintaining the right
competencies, skills and experience for the
success of business today, and for our future
performance and growth. We have long
specialised in developing talent and promoting
people from within the organisation, while
attracting and retaining people with specifi c
expertise from outside the SKYCITY Group.
This combination of ongoing recruitment of
outside talent and upskilling and continual
development of internal resources gives us a
distinct edge in our growth planning.
We are creating new collaborative opportunities
to share ideas and best-practice examples
across our business. We have introduced an
internal peer review process focused on the
gaming areas of our business and we have
established a think tank of gaming unit leaders
from all SKYCITY casinos.
Fast-tracking a young leader’s
development
Entering the trainee programme with a
Bachelor degree, Kate Lilly underwent
hands-on exposure to all parts of the
SKYCITY business. In her second year
Kate joined SKYCITY Adelaide where she
spent eight months in Human Resources,
followed by a six-month placement with
VIP Services. Kate discovered a passion
for gaming service and on returning to
SKYCITY Auckland was appointed Area
Manager on the main gaming fl oor. Kate
now has responsibility for 12 people
on any given shift. “These two years
have given me a breadth of training and
experience which helps me focus on the
right career path,” says Kate.
30 I EMPOWERING OUR PEOPLE
Training for success
SKYCITY’s commitment is to help people
realise their potential. We do this by providing
targeted learning and development initiatives
and supporting personal career goals.
SKYCITY’s programmes focus on training
and assessing our people within their
workplace, in parallel with the work they
undertake. This allows learning to be
delivered effi ciently, in familiar surroundings
with colleagues and managers.
Developing great careers in hospitality
From fast food to fi ne dining, from gaming
to housekeeping, SKYCITY’s development
programmes are playing a big role in
the career growth of many young New
Zealanders in the hospitality industry.
In 2006/07 we enhanced the SKYCITY
Leadership Trainee Programme to meet the
changing needs of the business, aiming to
provide trainees with broad experience of
SKYCITY and develop operational managers
within two years.
Training and development - a focus on
realising potential
• Senior managers across the business
are exposed to world-class leadership
training through Mercer Delta
Consulting. The focus is on balancing
leaders’ personal aspirations with the
evolving needs of the company.
• The New Zealand Modern
Apprenticeship Scheme continues
to provide a balance of practical and
academic experience for the young
apprentices entering the business.
SKYCITY has recruited seven front-line
apprentices under this scheme.
• SKYCITY is seeing the benefi ts of the
literacy programme piloted in Auckland
in 2006/07. In the coming year we will
make this opportunity available to even
more Auckland staff.
• SKYCITY has introduced the Level 3
NZQA qualifi cation for security offi cers.
To date, fi ve people have completed the
qualifi cation and a further 77 offi cers will
complete the qualifi cation over the next
12 months.
• SKYCITY trains all new employees to
Level 3 NZQA qualifi cations for table
games. We intend to assess and train all
existing employees against this standard
so that they can gain formal recognition
for their competency and achieve a
nationally recognised qualifi cation.
• SKYCITY’s ‘Total Rewards’ strategy
was revised in 2007 to ensure our
internal development programmes are
aligned with our business strategy and
organisational values. The key principles
include attraction, retention and
motivation of employees, driving and
recognising improved performance, and
building talent within the business.
EMPOWERING OUR PEOPLE I 31
EMPOWERING OUR PEOPLE I 31
SKYCITY Dining for a Difference 2007
Opportunity for apprentice
chefs second to none
SKYCITY had the privilege of being the
main sponsor for Peter Gordon’s gourmet
extravaganza to raise money for the Leukaemia
and Blood Foundation. Twelve world-renowned
chefs joined Peter Gordon for the fabulous dinner
that raised $200,000. The event - SKYCITY
Dining for a Difference - was also used as the
platform to launch the Foundation’s initiative
‘Every Day Counts’.
The event also gave 13 SKYCITY apprentice
chefs a once in a lifetime experience working
with world-class culinary specialists. A total of 39
chefs, sous chefs and apprentice chefs prepared
1,080 dishes for the 270 guests.
SKYCITY, in conjunction with the government,
launched the fi rst Modern Apprentice chef
programme in New Zealand. It has been a hugely
successful programme and has continued to
grow since the concept was launched in 2000.
The SKYCITY Modern Apprentice Chef
Programme is a way for trainee chefs to avoid
student debt by offering a full-time paid three
year in-house culinary apprenticeship.
“What an unbelievable opportunity for us
to work with the likes of Wellington’s
Al Brown, Australian Christine Manfi eld
and Californian Govind Armstrong.”
Chris Williams, apprentice to LA
celebrity chef and Table 8 restaurant
owner Govind Armstrong.
32 I EMPOWERING OUR PEOPLE
Commitment to a culture of safety
In 2006/07 we developed and implemented
the Group-wide health and safety policy to
enhance our commitments to this area as part
of everyday work-life.
Our health and safety audit tool, KEA (Key
Elements Assessment), was launched across the
Group. Managers and supervisors from all parts of
the business have worked together to enhance an
organisational culture built around this.
This has seen a reduction in lost time injuries
and associated claims costs.
The ACC Partnership Programme audit was
completed in Hamilton and Queenstown, with
the retention of ACC partnership accreditation
at a secondary level. Elected health and safety
representatives are offered training that enables
them to gain NZQA credits towards a National
Certifi cate in Occupational Health and Safety.
EMPOWERING OUR PEOPLE I 33
SKYCITY Entertainment Group entertains more
than 30,000 people every day, in our casinos,
cinemas, hotels, restaurants and attractions.
The diversity is vast: our
guests are drawn from many
countries, cultures, age
groups and backgrounds.
Through our Las Vegas-based design partners,
we are creating an environment that is opulent
and warm, with more than a dash of Las Vegas
glamour. We are shifting from a general décor to
one of themed and customised ‘zones’, offering
tailored gaming experiences.
Each one has their own view of what will attract,
excite and entertain them.
And it is resonating with customers in Auckland:
we have had a great response to our new Aces
and Deli bars, and the Baccarat Room.
The work will be completed by March 2008. It
is a best-in-class design by international casino
standards and we are proud of the experience it
will deliver.
“We are proud to be involved with this major
refurbishment of SKYCITY Entertainment
Group’s main gaming fl oor in Auckland that
will see the biggest casino in New Zealand
transformed and modernised to the highest
international standards.
“The concept design we created will provide a
range of more intimate and tailored customer
experiences across the fl oor. ”
Main gaming fl oor architects:
Friedmutter Group Architecture and Design
Yet, for all the diversity, we’d like to share with
our customers a common goal: an entertainment
experience that lives beyond the moment.
Bringing new excitement and a more personal
sense of customer engagement are essential
elements of our plans.
Every point of customer contact is being
reviewed and modifi ed: what we offer, how
we work together and the way we reach our
guests. We want to enrich our unique range of
entertainment options to meet the breadth of our
customers’ personal, professional, leisure and
family entertainment needs.
Our aim is to have our customers return at a
regular frequency that is comfortable for them.
That means our priority is to continually enhance
our offering, to make each visit memorable.
Enhancing our gaming areas
The $40 million redesign of Auckland’s main
gaming fl oor is giving our customers greater
choice in what they play, how they play
and where.
REVITALISING CUSTOMER EXPERIENCES I 37
Bellota, SKYCITY Auckland
Lifting our game
We have been working with vendors to broaden
our mix of gaming product, whilst ensuring their
compliance with new regulations. Along with
greater product diversity, we are undertaking
new communication efforts to help customers
understand which new product complements
that style.
This fresh focus on individual customers’ needs
means we are also engaging them in new ways.
We are developing new and rewarding customer
experiences across different times of the day
and different days of the week. We want our
customers in each of our properties to feel as if
they have a relevant experience waiting for them.
•
Some examples of this in Auckland include a very
popular daytime bingo programme introduced
in the Atrium, and a new ‘Corporate Table’
programme for company nights out, where
staff can square off against the boss in a game
of poker or learn table games as a group. No
money is involved – it is just an entertaining way of
learning something new.
and games are most popular by time of
day and how machines are performing – a
living ‘heatmap’ of activity. This window into
customer behaviour helps us to fi ne tune what
we do and make better use of our facilities
• new customer relationship management
software is, for the fi rst time, creating a single
Group-wide database of all customer contact
data and associated behaviour. This detailed
insight into how our customers use all our
entertainment offerings across all SKYCITY’s
properties helps us understand customer
profi tability and develop more appealing and
relevant marketing campaigns
integral to this is our plan to launch an
upgrade to the ACTION loyalty programme in
early 2008. The focus for this is on rewarding
the various entertainment experiences and
enhancing the recognition of our high-value
customers.
Caring for the customer
In providing a safe and enjoyable entertainment
environment for customers we are creating
sustainable shareholder value.
We are introducing new tools and programmes to
help us lift our game.
• new award-winning software by Compudigm
allows us to track, in real-time, activity on
the gaming fl oor. We can see what areas
There are many strategies employed by SKYCITY
to provide for customer welfare, including our
leading host responsibility and harm minimisation
programmes. As part of that, we are improving
how we use customer loyalty data to assess risk
38 I REVITALISING CUSTOMER EXPERIENCES
SKYCITY Darwin
and harm. The challenge is how to mine that
data so that it supports our harm minimisation
programme in a meaningful way. We are seeking
international advice on this to ensure our offering
is best in class.
By exploring new ways of applying this data, we
can help support our customers in having a great
time in a manner that is safe and responsible.
SKYCITY Darwin’s A$30 million makeover
We are bringing a fresh face to SKYCITY Darwin,
with a $30 million upgrade and extension of our
existing building and facilities.
Work on the 12 month programme begins in
October 2007, and is designed to open up and
maximise SKYCITY Darwin’s beachfront position
and spectacular views over the Arafura Sea. The
extensions include new decks, new restaurants
and bars, and upgraded gaming facilities.
“The refurbishment will ensure SKYCITY Darwin
is a world-class resort destination that attracts
tourists in its own right, as well as appealing
to your regular customers. The Buchan Group
is delighted to work on this project and we’re
confi dent SKYCITY’s customers and guests will
enjoy a fresh, stylish and contemporary gaming
and entertainment experience.”
Connie Kontogiannis
Associate, The Buchan Group, Melbourne
Winning loyal cinema fans
SKYCITY Cinemas’ loyalty programme, Film
Squad, leads the industry and was a winner at
the Marketing 2006 New Zealand Post RSVP
Awards. As an indication of its popularity, Film
Squad is set to welcome its 100,000th member
following its launch in May 2006.
The SKYCITY Cinemas’ website is New
Zealand’s leading fi lm site, with 100,000
page impressions and 33,000 unique visitors
per week.
“Film Squad has given us the ability to foster a
strong community built around a shared love of
the movies. From watchlists through to ratings
and reviews, My Film Squad encourages
movie-goers to start and fi nish their SKYCITY
Cinemas experience online in a way that
encourages the next cinema visit.
“It allows our customers to expand their movie-
going experience beyond the time they spend
in the cinema. It allows us to treat them as
individuals, offering them the kind of features
and benefi ts that make them want to visit our
cinemas more frequently.”
Matthew Liebmann
General Manager SKYCITY Cinemas
REVITALISING CUSTOMER EXPERIENCES I 39
SHOWCASING OUR ASSETS
Sky Tower’s 10th birthday celebration
This year our Sky Tower held a 10th birthday
party that was celebrated right across
New Zealand.
We expected 3,500 friends and families – over
10,000 came. People of every age and nationality,
many of them locals, fl ocked to share together the
unparalleled 360° views of Auckland’s skyline.
Photographers published stylish, inspirational
and often quirky photos of the Sky Tower in its
many moods and colours. We threw open our
doors to the community, offering children free
entrance to the Tower.
“..The Sky Tower is a familiar friend. The fi rst
sight of it after trips away is comforting – like
turning the key in your door after a holiday.”
Greg Roughan, Sunday Star-Times,
5 August 2007
“The Tower has made itself more
than the top of the Auckland
skyline. Never failing to dress for
the occasion and erupt in fi reworks
at the right moment, it has become
a beacon of the city’s events, a
thermometer of its moods, a focus
for celebrations, a point of pride.
“After ten years it would be hard to
imagine Auckland without it … it has
become an icon, a generous one to
the city whenever something should
be celebrated.”
Editorial, NZ Herald,
4 August 2007
This celebration of SKYCITY
underscores who we are and what
we have become: a true emblem of
Auckland and New Zealand, and an
integral part of the community.
The New Zealand Herald Photo Essay Competition winner
Amateur photographer Mark Rosser’s striking Sky Tower night-
time refl ection photo was named winner of the Sky Tower 10th
birthday (August 2007) photo competition.
40 I REVITALISING CUSTOMER EXPERIENCES
Living life on the edge
In late 2007, SKYCITY is launching a heart-
stopping challenge to all thrill seekers: to
walk the circumference of the Sky Tower on a
narrow platform 190 metres above the ground
and just 1.2 metres wide, with only a harness
to keep them on track.
SkyWalk 360 will be SKYCITY Auckland’s
latest urban adventure, offering 100%
exhilaration in 100% safety. SkyWalk 360
customers will be dressed in protective
clothing and harnessed to an overhead railing.
It means SkyWalkers can move freely and
experience the adrenalin of being part of the
Auckland skyline but in absolute security.
“SkyWalk 360 was one of the most daunting
challenges I’ve faced to date! It’s a pretty
nerve-wracking experience, stepping out
on to a narrow causeway, suspended high
above ground, with no rails, nothing to hang
on to, just a safety harness. But the views
are spectacular and the sheer sense of
exhilaration and liberty is defi nitely worth the
pacing and sweaty palms beforehand.”
Dominic Bowden,
New Zealand Television Personality
SKYCITY’s a winner!
Our leadership in entertainment has continued
to be recognised and awarded across all of our
properties – our restaurants, our accommodation
and our staff
SKYCITY Auckland
SKYCITY Auckland has been voted the city’s favourite
attraction by visitors.
• Winner: SKYCITY Grand Hotel, Best Hotel in New
Zealand award, HotelClub Australia and New
Zealand Hotel Awards 2007
• Winner: Auckland’s favourite attraction/activity,
Arrival Magazine Traveller’s Choice Award.
• Winner: Bellota Tapas Bar, Urbis Architectural
Award
• Winner: dine by Peter Gordon, ‘Best Dessert’ and
fi nalist in Metro Magazine Restaurant of the Year
Awards
• Finalist: dine by Peter Gordon in Cuisine
Restaurant of the Year Awards 2007
• Finalist: Orbit Restaurant, M2 Restaurant of the
Year Awards
• 2006 TVNZ and the New Zealand Herald
Sponsorship Awards
• Winner: Best Provincial Sports Sponsorship
Award, for SKYCITY’s sponsorship of
Auckland Rugby
• Finalist: ‘Best Provincial Sports Sponsorship’,
SKYCITY sponsorship of Auckland Racing
Club
• Finalist: ‘Best First Year’, SKYCITY
sponsorship of Auckland Racing Club
World Travel Awards
• Finalist: Australasia/New Zealand’s Leading
Business Hotel - SKYCITY Grand Hotel
• Finalist: Australasia/New Zealand’s Leading
Conference Hotel - SKYCITY Grand Hotel
• Finalist: New Zealand’s Leading Suite - The Grand
Suite
• Finalist: Australasia’s Leading Casino Resort
- SKYCITY Auckland
• Finalist: Australia’s Leading Casino Resort -
SKYCITY Adelaide and SKYCITY Darwin
SKYCITY Darwin
• Winner: Best Hotel in the Northern Territory
award, HotelClub Australia and New Zealand
Hotel Awards 2007
• Winner: Territory Cuisine Challenge 2006
• Winner: Best Luxury Accommodation, Northern
Territory’s Brolga Awards
• Winner: Best Tourism Restaurant and Catering
Services
• Winner: Best Superior Accommodation: Australia
Hotel Association Awards for Excellence 2006
SKYCITY Adelaide
• Winner: New York International Advertising
Awards, for SKYCITY World Cup Soccer
• Bronze medal: 2007 Nestle Golden Chefs Hat
Awards, South Australia.
SKYCITY Hamilton
• Winner: Excellence in Food Safety Awards 2006
REVITALISING CUSTOMER EXPERIENCES I 41
REVITALISING CUSTOMER EXPERIENCES I 41
Development for growth
• SKYCITY Hamilton expanded, with the
launch of the sports bar, Zone, in October,
and restaurant, Rebo, in May.
• Also in Hamilton, SKYCITY Cinemas
launched its new complex, Chartwell, in
May 2007. This has tapped into demand
from one of New Zealand’s biggest
cinema-going regions.
•
In November, our new sophisticated tapas
bar, Bellota, opened in Auckland to rave
reviews and awards.
• We announced plans for a new urban
adventure for thrill seekers – SkyWalk 360
– to the international tourism industry at
TRENZ.
• At SKYCITY Adelaide, we won
long-sought approval to develop an
underground carpark. The carpark will
greatly improve the amenities the property
provides and will increase convenience
tremendously. High-quality carparking
facilities are fundamental to any
successful entertainment facility.
• Finally, we took our fi rst steps in the
expansion and upgrade of our Darwin
property, in response to strong, sustained
tourist demand and economic growth.
Unrivalled excellence on a Grand scale
The fi ve star SKYCITY Grand Hotel is an oasis
of luxury in the heart of Auckland City, and was
recently named as one of the top three hotels
in New Zealand, as voted by consumers in the
2007 HotelClub Awards.
Conceived by some of the best architectural
and interior design minds in the Pacifi c Rim,
the SKYCITY Grand Hotel has a commitment
to service and excellence that is unrivalled.
42 I REVITALISING CUSTOMER EXPERIENCES
From top left: Zone Bar, SKYCITY Hamilton; Bellota, SKYCITY Auckland;
SKYCITY Adelaide; Foyer, SKYCITY Grand Hotel
Darwin becomes Australia’s
Belle of the Ball
SKYCITY Darwin has emerged as Australasia’s
unmatched leader in memorably grand-scale
events. In August 2007, we hosted more than
2,800 guests at the prestigious Qantas Darwin
Turf Club Gala Ball. This is Australia’s largest
outdoor seated event, generating attention
and stature surpassing many of the top social
calendar events.
This climax to SKYCITY Darwin’s Season
of Sunsets and Stars saw guests enjoy a
sumptuous buffet prepared by SKYCITY
Darwin’s award-winning chefs, an incredible
fi reworks display and entertainment under the
stars amidst the tropical beachside gardens at
SKYCITY Darwin. And this was just one of the
great grand-scale events of the year. Others
included:
•
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the V8 Supercars convoy
the Sunset Jazz series, which this year
included jazz legend James Morrison
the Ninth Annual Winemakers Dinner series
•
• a return engagement for the Acrobatic
•
Troupe of Imperial China
the Arafura Games, featuring a spectacular
closing ceremony.
SKYCITY Darwin Belle of the Ball, August 2007
Adelaide hosts World Series of Poker
Satellite tournaments
SKYCITY Adelaide has long been known as the
capital of poker in Australia, and is the only South
Australian venue in which poker can be played
with cash. Players and enthusiasts fl ock in from all
over the country for the various tournaments and
events held at the casino.
In recognition of the passion for the game, the
Adelaide property has, for the last two years
held the World Series of Poker Satellite (WSOP)
tournaments. The WSOP is the world’s richest
poker tournament, with prize winnings of up to
US$12 million. It is open to qualifi ers from around
the world, and Adelaide’s offi cial tournament
serves as a feeder for the event.
SKYCITY Adelaide is widely regarded by many as
the original ‘Home of Australian Poker’ since the
Adelaide Casino fi rst introduced Texas Hold’em to
Australia in 1987. The venue has hosted many of
Australia’s top international players during major
tournaments, including Joe Hachem.
Since then, the sport has seen enormous growth.
In response to customer interest and demand, the
casino has been busy with further enhancements,
expanding its Poker Zone playing area and
introducing an array of new tournaments,
including a ‘Ladies Only’ Series, all in response to
the ever-growing poker craze in the country and
around the world.
REVITALISING CUSTOMER EXPERIENCES I 43
REVITALISING CUSTOMER EXPERIENCES I 43
Auckland offers World Class
Convention Centre
SKYCITY has world-class facilities – and we
want to make sure the world knows about it.
SKYCITY Auckland Convention Centre is
the most advanced in New Zealand – our
exhibition, conference and banqueting facility
cannot be matched for the scale and range
of facilities. We are now actively marketing
the convention centre internationally, and this
year won several 500-plus corporate and
association conferences, with more in the
pipeline. Examples in 2007 included:
• The ‘Big Boat Dinner’ 1,000 passengers
from the visiting QE2 ship
• The Westpac Halberg Awards - New
Zealand’s premier sporting awards - 800
guests
• Assorted real estate conferences:
Harcourts - 900 guests, Bayleys - 550
guests, Barfoot & Thompson - 1700
guests, Harveys - 300 guests, Ray White
- 750 guests
• Microsoft Tech Ed (third year with
SKYCITY) – 1,900 guests
•
Intel Solutions Summit - 700 guests
• Bakers Delight event for 1,000 Australian
and New Zealand delegates
DID YOU KNOW
Since opening in 2004, SKYCITY Auckland Convention
Centre staff have served more than 60,000 kilograms of
beef fi llet, 240,000 litres of mineral water, used 339,000
linen tablecloths, and spent more than 9,000 hours
polishing cutlery and glassware.
This year, we have proactively marketed our outcatering
service, which has resulted in catering for international
performing arts troupe Cirque du Soleil and securing the
Auckland Museum events contract.
44 I REVITALISING CUSTOMER EXPERIENCES
• Allstate Insurance Canada - 250
Canadian conference delegates on their
fi rst trip to New Zealand
• Harley Davidson POT Group ‘private
offi cer training’ conference for 250 Harley
owners, with new bikes on display
• SKYCITY Dining for a Difference - 270
guests, 13 chefs cooking four courses for
two tables each, over $200,000 raised for
the Leukaemia and Blood Foundation
• Starship Ball - 450 guests, over $100,000
raised for the Starship Children’s Hospital
Foundation
•
In the Pink - 660 guests, over $100,000
raised for the NZ Breast Cancer
Foundation
• MEETINGS 07 - the leading New Zealand
conference and incentives industry forum
• Retail and media launches of the new
second generation BMW X5 which
included craning two cars seven storeys
into the air, up and over the Convention
Centre and on to the Level 7 Terrace of
the SKYCITY Grand Hotel.
From top right: The New Zealand Room; The Starship Charity Ball;
Dining for a Difference
REVITALISING CUSTOMER EXPERIENCES I 45
SKYCITY is committed to providing a safe
and enjoyable environment for its customers.
We work hard to be a successful, sustainable
and socially responsible business that provides
popular entertainment choices without harm.
Preventing and minimising gambling and alcohol-
related harm is a critical part of SKYCITY’s focus
on caring for our customers’ welfare.
Our business is highly
regulated and carries
strong social responsibilities.
We will continue to prioritise
this part of the business and
to enhance our practices.
We believe we must demonstrate leadership
in meeting, and exceeding, our obligations for
the future of our business, our brand, and our
communities.
sharking behaviour and the need for collaborative
solutions, which SKYCITY wholeheartedly
supports. SKYCITY is proactive in this area with a
formal policy and procedures to follow when illegal
or undesirable activity is suspected or identifi ed.
We will promptly investigate any such activity
and seek a close working relationship with DIA’s
casino inspectors and the police on these issues.
In 2007/08 we will be undertaking a review of
security and surveillance practices so that we
can identify opportunities to keep improving
our effectiveness in this area. We welcome the
chance to work more closely with the sector so
we can all do better.
And our efforts are working. At a recent hearing
of the New Zealand Gambling Commission,
it was noted that the Auckland Host
Responsibility Programme is “impressive” and,
by national and international comparison, “the
best they’ve seen”.
We have been working behind the scenes to
create a solid foundation of policies, and to get
a range of new initiatives under way that assist
customers to gamble and consume alcohol
safely and to ensure they receive appropriate
assistance if they are experiencing problems.
Providing a safe and enjoyable
entertainment environment
To ensure customers enjoy themselves in a
safe environment considerable effort goes on
behind the scenes to deliver the right training
and support for employees, to provide effective
security and surveillance with follow-up
investigations when required, and to operate an
effective host responsibility programme.
Loan-sharking has been identifi ed as a broader
community problem which needs a greater
focus through closer co-operation between
government agencies, problem gambling
treatment services, communities, and the gaming
industry. The Department of Internal Affairs (DIA)
has highlighted the challenge of identifying loan
The Harm Minimisation Framework
The Harm Minimisation Framework is SKYCITY’s
statement of our commitment to preventing
and minimising gambling and alcohol-related
harm, and how this is to be achieved through
a strategic, co-ordinated approach over the
long term. The Framework draws on the
latest research and international public health
models and extends well beyond the company’s
legal obligations. It has been developed with
extensive input from across the business and
from external stakeholders. The emphasis is
on both preventing harm from occurring in the
fi rst place so customers are able to gamble
responsibly, and minimising harm when it
is occurring through early identifi cation and
effective host responsibility interactions.
Measuring and demonstrating the success of
these initiatives is critical. This year SKYCITY
commissioned an independent evaluation of
its Adelaide host responsibility programme by
external research agency Evolution Research.
Their report identifi ed some opportunities for
improvement (which will be addressed), as well
as a number of strengths as referred to below:
“…the service has enhanced the organisation’s
credibility as a responsible host. In addition, the
staff in the programme are highly regarded by
internal and external stakeholders.”
CARING FOR CUSTOMER WELFARE I 49
“Host responsibility contributes to sustainable
business.”
New developments in host responsibility
As part of its Harm Minimisation Framework,
SKYCITY has developed a tool that provides
a more systematic way of assessing the
level of risk or harm that a customer may be
experiencing. This assessment is then matched
with a timely and appropriate response from
host responsibility. This could be something
quite informal such as speaking with the
customer on a one to one basis – often this is
all that is required and customers appreciate
the enquiry – to an escalated response when
the concern is more serious. This could lead to
the customer acknowledging there is a problem
and agreeing to be excluded for a period of up
to two years.
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follow sound policies and processes
train staff, particularly on how to identify the
warning signs
• provide useful information for customers and
staff, and
• evaluate what we do so we can always do
better.
Staying at the cutting edge
The key projects within the Harm Minimisation
Framework for the coming year include:
•
loyalty data is being reviewed by international
experts who will provide advice about
how we can apply this information more
proactively and accurately to assess whether
a customer is at risk of experiencing harm
• staff training will be increased – both the
theory in the classroom and on-the-job
practice
• new and better information resources about
The company’s Escalation Response Model
clearly identifi es the components we need to have
in place in order to get host responsibility right:
• collect the right information to make informed
responsible gambling and seeking help will be
developed and provided through a range of
channels, for customers and staff, and
• an integrated, incident noting and tracking
assessments
system will be implemented.
50 I CARING FOR CUSTOMER WELFARE
New developments regarding responsible
service of alcohol
Responsible service of alcohol continues to
be a key area of focus within the business.
This year we collaborated on a range of inter-
sectoral initiatives, with positive feedback from
customers and the relevant agencies and a
special award. Highlights included:
• SKYCITY Hamilton’s introduction of
‘yellow and red penalty cards’ into the
Zone sports bar
• SKYCITY Adelaide’s active participation in
the local Central Business District Liquor
Accord
the ‘designated driver campaign’ for
SKYCITY customers in Auckland, and
•
• SKYCITY Darwin won the Northern
Territory award for Responsible Service
of Alcohol.
“Life’s sweet - Drive sober”
In this campaign for the Auckland
community, SKYCITY encouraged
designated drivers to stay sober by offering
them free non-alcoholic drinks while on
SKYCITY’s premises over the Christmas,
Easter and Queen’s Birthday periods.
SKYCITY worked with Auckland City
Council, Auckland Police and Coca-Cola
to create a campaign connecting staff and
customers with positive host responsibility
messages. The success of the Auckland
campaign has inspired similar initiatives at
other SKYCITY sites in New Zealand.
“Working together to give people a
‘Drive Sober’ message was paramount.
SKYCITY Auckland has over 18 bars and
restaurants plus convention facilities and
large CBD car parks, so they created huge
momentum behind this campaign.
We look forward to partnering with
SKYCITY on future projects.”
Claire Dixon
Senior Road Safety Co-ordinator
Auckland City Council
CARING FOR CUSTOMER WELFARE I 51
SKYCITY Starlight Symphony volunteer
SKYCITY believes in sharing the excitement and
spirit of our customer experiences with
our communities.
We create opportunities
for celebration.
Whether it is a winning game for SKYCITY-
sponsored rugby teams in Auckland and
Waikato, lighting up the community for Diwali, or
cheering on the winner of the SKYCITY Adelaide
Cup, we are there - supporting, sharing, and
creating memorable experiences.
Along with the celebrations, we are listening,
identifying, and contributing to areas of need.
SKYCITY is fi nding meaningful ways to support
important causes that make a difference in our
communities.
We are also making a difference at a grassroots
level, which we do through the SKYCITY
Community Trusts and our local community
relations programmes.
In 2006/07 SKYCITY’s
three independent Trusts
in New Zealand made 253
grants, totalling $2,907,207.
Trust contributions to date total $19.5 million
excluding problem gambling levies.
Through Community Trusts in Auckland,
Hamilton and Queenstown, SKYCITY provides
grassroots support for many causes important
to our local communities and through local
community work in Adelaide and Darwin.
SKYCITY Partnerships in 2006/07
Auckland
Air NZ New Zealand Screen Awards
Auckland Festival AK07
Auckland Rugby Union - Air NZ Cup and Super 14
Auckland Rugby Union SKYCITY Cheer team
Celebrity Joker Poker
Chinese Singing Idol
Diwali Festival of Lights
Kidz First Children’s Hospital
Miss Chinese NZ Pageant
New Zealand Breast Cancer Foundation
People’s Choice Awards
SKYCITY Auckland Cup
SKYCITY Starlight Symphony
SPCA
Starship Children’s Hospital
The Lantern Festival
The Leukaemia and Blood Foundation
Tourism Rendezvous New Zealand
V8 Supercars
Vodafone Warriors
Women in Film and Television Awards
Hamilton
New Zealand Breast Cancer Foundation
Te Rapa Raceway
Waikato Rugby Union - Air NZ Cup and Super 14
Adelaide
Adelaide Crows AFL team
Flinders Medical Research Foundation
McGuiness McDermott Foundation
Port Power AFL team
SKYCITY Adelaide Cup
SKYCITY Magic Millions
Darwin
AFL Northern Territory
Arafura Games
Darwin Turf Club Gala Ball
SKYCITY Challenge - NBL - Perth Wildcats
SKYCITY NT Derby Day
SKYCITY Sunset and Stars
SKYCITY V8 Supercar Triple Crown Darwin
Queenstown
National Rugby Sevens
Queenstown Gay Ski Week
Queenstown Jazz Festival
Queenstown Winter Festival
Rocky Horror Picture Show, Rent and Cabaret
Productions
Cinemas
Walking School Bus Programme
Te Omanga Hospice
CONNECTING WITH COMMUNITIES I 55
All Black Doug Howlett and party goer, Kidz First Christmas Party
SKYCITY Community Trust Grants 2006/07
Kidz First – Auckland Rugby collaboration
SKYCITY is a founding sponsor of Kidz First
Children’s Hospital through the South Auckland
Health Foundation. Since 2000 we have
worked alongside Kidz First to tackle signifi cant
community challenges, including burns
prevention and the improvement of oral health
in the South Auckland community. SKYCITY’s
support for Kidz First includes the annual Kidz
First Patient Christmas Party, special fundraising
projects and grants from the SKYCITY Auckland
Community Trust.
SKYCITY is long-term partner of Auckland
Rugby, a partnership that has helped increase
visitation and revenue to the business while
supporting the development of rugby at all levels.
SKYCITY’s relationship with Auckland Rugby
was recently recognised as the Best Provincial
Sports Sponsorship at the 2006 TVNZ/NZ
Herald Sponsorship Awards.
We identifi ed and facilitated an opportunity
for collaboration between these two great
partnerships: SKYCITY works with Auckland
56 I CONNECTING WITH COMMUNITIES
Rugby to support Kidz First through combined
events and initiatives including Auckland Rugby
players acting as mentors for Kidz First ‘Centre
for Youth Health’ teenagers, ‘Kick for Cash’
match events and SKYCITY staff collecting on
behalf of Kidz First during home games.
Giving kids the chance to be kids
Funding from the SKYCITY Auckland Community
Trust assisted the Starship Foundation in
purchasing insulin pumps, a relatively new way
of administering insulin to children with type one
diabetes. Twenty-fi ve children have been given
a chance to lead healthy, active lives, free from
the constraints imposed by their condition. The
pumps provide more effective control of their
condition and lead to a better quality of life.
“The insulin pump means Oliver can live like a
normal eight year old. It’s much easier for him
to be away from us and stay with friends, like
other boys his age are able to do…”
Hilary Van Lent, mother of Oliver, an eight year
old with type one diabetes
Moko Hamiora and his daughter Hemohaere Bishop, Volunteering Waikato
Improving the lives of the young
Art therapy helps Hospice Waikato
SKYCITY Hamilton Community Trust helped
to fund a father and daughter’s efforts to steer
at-risk school students in the right direction.
The Trust grant to Volunteering Waikato funded
the main prize for Moko Hamiora and his
daughter Hemohaere Bishop for dedication to
improving the lives of young people. They were
nominated for the Volunteer Excellence Awards
by Hamilton’s Fraser High School, where they
work, unpaid, every day.
“The funding from SKYCITY Hamilton
Community Trust has enabled us to ensure
that our unsung heroes are recognised,
volunteers carry out numerous tasks in many
parts of Hamilton, simply because they enjoy
helping others…”
Carol Anderson,
Manager of Volunteering Waikato
Last year Hospice Waikato cared for 500
patients who were living with a terminal illness.
As part of Hospice philosophy, holistic care is
provided to help families deal with the loss of
a signifi cant person in their lives. Art therapy
is a method used to help patients and families
express their concerns, share anxieties and work
through the grieving process. Hospice Waikato
offers regular art workshops, where patients and
their families, no matter how ill, work together on
projects such as mosaics and paintings.
SKYCITY Hamilton Community Trust provided
a boost to the arts programme with a grant of
$7,500, which went towards arts supplies.
“We are extremely grateful to SKYCITY as
their grant has meant that we can continue to
support Hospice patients and their families
throughout their illness…”
Elizabeth Bang, CEO of the Waikato
Community Hospice Trust
CONNECTING WITH COMMUNITIES I 57
the long-term health problems created from
childhood obesity. The clinic’s nutritionists,
physiotherapists, psychologists and nursing staff
offer an eight-week programme which educates
the whole family on healthy lifestyle, food options
and exercise programmes, and includes ongoing
monitoring and support. For SKYCITY Adelaide,
this represents a proud and important investment
in the future of its community.
V8 Supercar ceremony fulfi ls special wish
Two young men had their boyhood dream
become reality, when SKYCITY Darwin invited
them to join the welcoming celebrations for the
V8 Supercar Championship series. Tim and
Derek, who both have life-threatening conditions,
are passionate about V8 Supercars, which is
the highlight of the Northern Territory’s sporting
calendar. Through the Make a Wish Foundation,
they were able to form part of the welcoming
SKYCITY Triple Crown Convoy as it drove through
the streets of Darwin, driving alongside their
sporting heroes in the SKYCITY Darwin limousine.
SKYCITY Massed Choir, SKYCITY Starlight Symphony
Closing the learning gap of autism
Funding from the SKYCITY Queenstown Casino
Community Trust gave a positive boost to
learning programmes for children with autism.
The Central and Southern Autism Support Group
assists families with autistic children, sharing
resources and ideas. A grant of $3,200 went
towards registered psychologists designing and
developing individual learning programmes for
eight children in the Queenstown district area.
“The funding provided by SKYCITY has
given us invaluable professional learning and
development support for our kids…”
Jo Wright, parent and member of The Central
and Southern Autism Support Group
A new approach to childhood obesity
A new Children’s Weight Management Clinic
has been launched at the Flinders Medical
Centre in South Australia, supported by a
$100,000 sponsorship from SKYCITY Adelaide.
The clinic, which is the fi rst of its kind in South
Australia, is seeking to intervene early to prevent
58 I CONNECTING WITH COMMUNITIES
Gahu, Queenstown Jazz Festival
Queenstown Jazz Festival
Canine guides and companions
With a $6,000 grant from the SKYCITY
Queenstown Community Trust, this long-running
live music event was expanded by ten extra
days, benefi ting thousands of listeners and
musicians. The Festival is organised and run
by a local charitable trust with the objective of
involving, encouraging, entertaining and inspiring
through live music.
“The grant meant we could keep ticket prices
down so that thousands more people from
Queenstown and the wider community were
able to enjoy the 2006 festival…”
David Cole, Festival Organising Committee
SKYCITY Auckland Community Trust granted
over $40,000 to two organisations which train
a special group of dogs and who provide
guidance, support, help and friendship to
members of our community.
Over $22,000 was given to the Royal New
Zealand Foundation of the Blind to breed, train
and match guide puppies to clients. Guide dogs
assist blind people to get around independently,
confi dently and safely.
Over $18,000 was awarded to the Mobility
Assistance Dogs Trust for a vehicle for
transporting puppies in training. This Trust
provides mobility dogs for people with physical
disabilities and they train the puppies and then
match clients with a suitable dog. The dogs learn
great skills including opening doors, getting the
phone, activating an alarm if required and even
turning on the washing machine.
CONNECTING WITH COMMUNITIES I 59
SKYCITY Auckland Community Trust Grants 2006/07
SKYCITY Auckland
Community Trust
$2.3 million to 109 diverse
local community groups
Grants included:
• $50,000 to the Foundation for Youth
Development to set up a Project K
programme in low-decile schools
around the central Auckland area
• $115,000 to the Starship Foundation
towards the cost of rebuilding the
Oncology Unit at Starship Children’s
Hospital
• $70,000 to The Museum of Transport
and Technology (MOTAT) towards
the upgrade of the Museum’s
science exhibition
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Adventure Specialties Trust
Age Concern Counties Manukau
Age Concern Mid North
Allergy New Zealand
Amitabha Hospice Service Trust
Amputee Society of Auckland and Northland
Arthritis New Zealand
Asthma New Zealand - The Lung Association
Auckland Children’s Christmas Parade Trust
Auckland Dance Festival Trust
Auckland Gay and Lesbian Welfare Group
Auckland Land Search and Rescue
Auckland Malaysian Society
Auckland Somali Community Association
Autism NZ - Auckland Branch
Awataha Marae
Bailey Road Primary and Intermediate School
Bay of Islands Vintage Railway Trust
Bring It On
C.A.R.E. Waitakere Trust
Cantonese Opera Society of NZ
Carlson School for Cerebral Palsy
CCS Auckland
Central Auckland Parent Centre
City of Manukau Education Trust
60 I CONNECTING WITH COMMUNITIES
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Classic Yacht Charitable Trust
Communicare CMA
Computer Clubhouse Trust
Far North Palliative and Cancer Care
Charitable Trust
Foundation for Alcohol and Drug Education
Foundation for Youth Development
Friendship Centre Trust
Girl Guides Association of NZ
Grey Lynn Primary School
Hearing Dogs for Deaf People New Zealand
Herne Bay Play Centre
Home and Family Society
Island Child Charitable Trust NZ
Jane Gifford Restoration Trust
Kaitaia Gymnastic Club
Kerikeri Community Toy Library
Kerikeri Retirement Village
KidsCan Charitable Trust
Leukaemia and Blood Foundation of
New Zealand
Life Education Trust - South East Auckland
LifeLine Auckland
Lopdell House Society
Manaia School
Mercy Missions Trust
Mobility Assistance Dogs Trust
Monte Cecilia Housing Trust
Motutapu Outdoor Education Trust
Mt Richmond Special School
Multiple Sclerosis Auckland
New Zealand National Maritime Museum
New Zealand Parent Teacher Association
New Zealand Sign Language Teachers
Association
New Zealand Taishan Chinese Association
North Shore Hospice Trust
North Shore Hospital Foundation
North Shore LIFE Centre
North Shore Multiple Sclerosis Society
Opera in the Park Limited
Opononi Area School
Outward Bound Trust of New Zealand
Pacifi c Culture and Arts Exchange Centre
Papakura Toy Library
Parent Aid Waitakere
Parents Inc.
SKYCITY Hamilton Community Trust Grants 2006/07
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Play and Learn Education Trust
Refugees as Survivors New Zealand
Relationship Services
Royal New Zealand Plunket Society
(Thames Valley)
Sir Peter Blake Marine Education and
Recreation Centre
South Auckland Rangers Association Football
and Sports Club
SPELD Manukau City
St. Patrick’s Cathedral Heritage Foundation
Starship Foundation
Storylines Children’s Literature Charitable
Trust of New Zealand
Surf Life Saving Northern Region
TaPasefi ka Health Trust
Te Au Vaine Takitumu Trust
Te Kotuku Ki Te Rangi Charitable Trust
Teenadders
Thames Womens Resource Centre
The Brain Injury Association of Auckland
The Centre at Kerikeri
The House of Bethany
The MARCO Trust
The Museum of Transport and Technology
(MOTAT)
The NBR New Zealand Opera
The Neurological Foundation of New Zealand
The Northern Cochlear Implant Trust
The Operating Theatre Trust
The RNZYS Youth Training Programme
The South Auckland Health Foundation
The Southern Cross Korean Performing
Arts Group
TYLA Trust
Unitec New Zealand
Waikowhai Scouts
Waipu Playcentre
Waitakere Branch of the New Zealand
Society of Genealogists
Waitakere Community Outreach
Wellsford Plunket Toy Library
West Auckland Hospice Homecare
Western Refuge Society
Wings Trust 1986
Women’s Refuge Auckland
WONS: Nursing, Education and Health
SKYCITY Hamilton
Community Trust
$492,022 to 120 diverse
local community groups
Grants included:
• $25,000 to Pohlen Foundation Trust
for the purchase of a new endoscope
machine
• $10,000 to Waikato River Trails Trust for
the construction of a bridge to improve
accessibility to the Waikato River Trails
by disabled persons
• $10,000 to Taiohi Toa Trust for their Big
Brother Big Sister programme to reduce
youth offending
Promotion Services
Age Concern Hamilton
Aotearoa Maori Tennis Association
Arya Samaj Waikato
Autism NZ Waikato Branch
Awhina Society
Balloons over Waikato Charitable Trust
Birthright (Waikato)
Business and Professional Women Huntly
and District Club
Cambridge Brass Band
Campus Services Ltd, University of Waikato
Cochlear Implant Foundation of NZ
Coromandel Flying Club Society
Counselling Services North King Country
Country Section NZ Indian Assoc
Drury Lane Youth in Performance Group
Eastern Bay of Plenty Scout District
Endometriosis Waikato
ESOL Home Tutors (Waikato)
Fairfi eld Amateur Swimming Club
Future Te Aroha
Goldfi elds Railway Society
Habitat for Humanity (Waikato)
Hamilton Abuse Intervention Project
Hamilton BMX Club
Hamilton Budgeting Advisory Trust
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CONNECTING WITH COMMUNITIES I 61
SKYCITY Hamilton Community Trust Grants 2006/07 continued
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Hamilton Floral Art Club
Hamilton Gardens Summer Festival
Foundation
Hamilton Multicultural Services Trust
Hamilton Operatic Society
Hamilton Refuge and Support Services
Hamilton Rowing Club
Hamilton Yacht Club
Healing and Rape Crisis Centre
Huntly Community Advice Centre
Invitation to a Voyage Trust
Kawerau Blue Light Venture
Kawhia Tourism
Kihikihi Waikato Eventing
King Country Search & Rescue Organisation
Lifeline Waikato
Link House Agency
Mairoa History Committee
Maori Women’s Welfare League
Matamata Community Resource Trust
McKenzie Centre
Morrinsville Community House
Multiple Sclerosis Waikato Trust
Nga Mana Toopu o Kirikiriroa Trust
Ngaruawahia Community Care and
Crisis Support
North Waikato Blue Light Venturers
Northern Daffodil Club
Order of St John Midland
Otorohanga Zoological Society
Overdale Community Centre
Parenting with Confi dence
Parentline Charitable Trust
Philips Search and Rescue Trust
Piako Brass Band
Piopio College
Pohlen Foundation Trust
Pokuru School
Positive Paeroa
Pride in Putaruru
Prisoner’s Aid and Rehabilitation Society of
the Waikato District
Project Kiwiana Festival
Rahui Pokeka Maatua Whangai Trust
Raglan Community Arts Council
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Raglan Community Vehicle Trust
Riverlea Theatre
Rostrevor House
Sri Lankan Friendship Society Waikato
Synergy Trust
Tainui Waka Cultural Trust
Taiohi Toa Trust
Tairua Information and Community
Services Society
Taranaki Safer Family Trust
Taupo Budget Advisory Services
Te Araroa Waikato
Te Aroha & District Museum Society
Te Aroha & Districts Riding for the Disabled
Te Aroha Mountain Railway Society
Te Aroha Springs Community Trust
Te Awamutu Competitions Society of the
Performing Arts
Te Kohango Reo o Nga Kuaka
Te Kuiti Swimming Pool
Te Puru School
Te Runanga o Kirikiriroa
Te Whakaruruhau Refuge
Te Whare o Te Ata/Fairfi eld Chartwell
Community House
The Altrusa Club of Hamilton
The Bush Tramway Club
The Institute of Child Protection Studies
The Pacifi c Rose Festival Trust
The Refugee Orientation Centre Trust
True Colours Charitable Trust
United Nations Association of NZ (Waikato)
United Youth Orchestra
Victoria Battery Tramway Society
Volunteering Waikato
Waihi Beach Life Guard Service
Waihi Community Resource Centre
Waihi Drama Society
Waihi Summer Festival
Waikato Asthma and Respiratory Society
Waikato Community Broadcasting Charitable
Trust
Waikato Community Hospice Trust
Waikato Family Centre Trust
Waikato Hospital Chaplains
62 I CONNECTING WITH COMMUNITIES
SKYCITY Queenstown Community Trust Grants 2006/07
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Waikato Orchestral Society
Waikato Paraplegic and Physically Disabled
Association
Waikato River Trails Trust
Waikato Rowing Club
Waikato Society of Arts
Waikato Winter Show Association
Whakatane Astronomical Society
Whiritoa Rural Volunteer Fire Force
Whitianga Community Services Trust
Xtreme Waste Society
Young Women’s Christian Association
of Hamilton
SKYCITY Queenstown
Casino Community Trust.
$95,022 to 24 diverse
local community groups
Grants included:
• $10,530 to Wakatipu Search and
Rescue to equip their team with highly
visible Goretex jackets and pants
• $2,500 to the Arrowtown Village
Association to rebuild the historic
Sawpit Gully walking track
• $6,000 to the Queenstown JazzFest
Trust for its 2006 community festival
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Alzheimers Society Southland
Arrowtown Village Association
Barnardos Southland
Central and Southern Autism Support Group
Destination Queenstown (Winter Festival)
Frankton Volunteer Fire Brigade
Happiness House
Makarora Valley Community
Public Sculpture Trust of Queenstown
Queenstown Lakes Family Centre
Queenstown Playcentre
Southern Lakes Arts Festival Trust
Southern Lakes Diabetes Youth
St John Wakatipu
The Gibbston Community Association
The Queenstown JazzFest Trust
Upper Clutha Women’s Support Group
Wakatipu Abuse Prevention Network
Wakatipu District Youth Trust
Wakatipu Kindergarten
Wakatipu Performance Festival
Wakatipu Search and Rescue
Wakatipu Toy Library
Wakatipu Victim Support
CONNECTING WITH COMMUNITIES I 63
SKYCITY’s corporate governance framework is
fully detailed in the investor centre section of the
company’s website at www.skycitygroup.co.nz
The board charter is the
principal specifi cation of
the governance framework
within which SKYCITY
conducts its affairs.
The board charter and its supporting charters
and policy documents (refer below) combine
together to comprise SKYCITY’s governance
framework. These documents can be accessed
on the company’s website.
• Audit and Risk Committee Charter
• Governance and Remuneration Committee
Charter
• Nomination Committee Charter
• Terms of Appointment/Terms of Reference
for Directors
• Director Independence Guidelines
• Code of Business Practice
In establishing its governance policies and
procedures the SKYCITY board has adopted
ten governance parameters as the cornerstone
principles of its corporate governance charter.
These cornerstone principles, set out below and
on the following pages, refl ect the Corporate
Governance Best Practice Code of the New
Zealand Stock Exchange (NZX), Corporate
Governance Guidelines of the Australian Stock
Exchange (ASX) and the New Zealand Securities
Commission’s governance recommendations.
The ten cornerstone principles set by the
board are:
1. ESTABLISH A CLEAR FRAMEWORK
FOR OVERSIGHT AND MANAGEMENT
OF THE COMPANY’S OPERATIONS
AND FOR DEFINING THE RESPECTIVE
ROLES AND RESPONSIBILITIES OF
THE BOARD AND MANAGEMENT
SKYCITY’s procedures are designed to:
• enable the board to provide strategic
guidance for the company and effective
oversight of management,
• clarify the respective roles and
responsibilities of board members and
senior executives in order to facilitate board
and management accountability to both the
company and its shareholders, and
• ensure a balance of authority so that no
single individual has unfettered powers.
The board establishes the company’s
objectives, the major strategies for achieving
those objectives, the overall policy framework
within which the business of the company
is conducted, and monitors management’s
performance with respect to these matters.
The board is also responsible for ensuring
that the company’s assets are maintained
under effective stewardship, that decision-
making authorities within the organisation
are clearly defi ned, that the letter and intent
of all applicable company and casino law
and regulation is complied with, and that the
company is well managed for the benefi t of its
shareholders and other stakeholders. The board
also oversees management’s risk profi ling and
business continuity plans.
The board has responsibility for the affairs and
activities of the company, which in practice
is achieved through delegation to the chief
executive offi cer and others (including SKYCITY-
appointed directors on subsidiary company
boards) who are charged with the day-to-day
leadership and management of the company.
The chief executive offi cer also has responsibility
to manage and oversee the interfaces between
the company and the public and to act as the
principal representative of the company.
The board maintains a formal set of
delegated authorities that clearly defi nes the
responsibilities which are delegated to the
chief executive offi cer and management and
those which are retained by the board. These
delegated authorities are approved by the board
and are subject to annual review by the board.
CORPORATE GOVERNANCE I 67
2. STRUCTURE THE BOARD TO BE
EFFECTIVE IN DISCHARGING ITS
RESPONSIBILITIES AND DUTIES
Board effectiveness requires the effi cient
discharge of the duties imposed by law on the
directors and addition of value to the company. To
achieve this the SKYCITY board is structured to:
• have a sound understanding of, and
competence to deal with, the current and
emerging issues of the business
• effectively review and challenge the
performance of management and exercise
independent judgement, and
• assist in the selection of candidates for
shareholder vote.
Board composition
The board ensures that it is of an effective
composition and size to adequately discharge
its responsibilities and duties and to add value to
the company’s decision-making.
In order to meet these requirements, the
board membership comprises a range of skills
and experience to ensure that it has a proper
understanding of and competence to deal
with the current and emerging issues of the
business, to effectively review and challenge the
performance of management, and to exercise
independent judgement.
Directors are appointed under the company’s
Terms of Appointment and Terms of Reference
for Directors and board charter for a term of
three years and are subject to re-election by
shareholders in accordance with the rotation
requirements of the NZX and the ASX.
The non-executive directors elect the
chairpersons of the board and its committees.
The board has established the Nomination
Committee to make recommendations on the
board’s size, selection and removal of directors,
on appropriate procedures for director and
board evaluation and performance review,
the induction, orientation and training of new
directors in the company’s operations and the
gaming/entertainment sector generally, and on
the board’s succession planning.
The company’s constitution also requires
all potential directors to have satisfi ed the
extensive probity requirements of each
jurisdiction in which the company holds gaming
licences.
Director independence
The board charter requires that the board
contains a majority of its number who are
independent directors. SKYCITY also supports
the separation of the role of board chairperson
from the chief executive offi cer position. In
determining the independence of directors,
the board has adopted the defi nition of
independence set out in the NZX Corporate
Governance Best Practice Code and has taken
into account the independence guidelines as
recommended in the ASX Principles of Good
Corporate Governance.
At its 21 June 2007 meeting, the board
reviewed the status of each director
in accordance with the independence
specifi cation of the NZX Code and determined
that all current directors are independent. On
25 June 2007 Elmar Toime was appointed
Executive Director and is not independent
under the NZX and ASX defi nitions.
At its 21 June meeting, the board noted that,
under the ASX Independence Guidelines, each
of the non-executive directors except Mr Trotter
(and subsequently Mr Toime) are considered
independent. Mr Trotter is not independent under
the ASX Guidelines, given his relationship with
First NZ Capital Limited, which is a consultant and
advisor to the company. Mr Trotter is Executive
Chairman of First NZ Capital Group Limited.
68 I CORPORATE GOVERNANCE
Directors are entitled to obtain independent
professional advice (at the expense of the
company) on any matter relating to their
responsibilities as a director or with respect to any
aspect of the company’s affairs, provided they
have previously notifi ed the board chairperson of
their intention to do so.
The company provides a deed of indemnity in
favour of each director and senior management
personnel and provides professional indemnity
insurance cover for directors and executives
acting in good faith in the conduct of the
company’s affairs.
Board committees
The board has three formally-appointed
committees, being the Audit and Risk Committee,
Governance and Remuneration Committee
and Nomination Committee. The non-executive
directors of the board appoint the chairperson of
each committee.
Each committee operates under a charter
document as agreed by the board. Each
committee charter and the performance of each
committee are subject to formal review by the
board on an annual basis.
The following table shows attendances at board
and committee meetings by directors during the
year ended 30 June 2007.
3. SET STANDARDS OF BEHAVIOUR
EXPECTED OF COMPANY PERSONNEL
SKYCITY actively promotes ethical and
responsible behaviour and decision-making by:
• clarifying and promoting observance of its
guiding values
• clarifying the standards of ethical
behaviour required of company directors
and key executives (that is, offi cers and
employees who have the opportunity to
materially infl uence the integrity, strategy
and operation of the business and its
fi nancial performance) and encouraging the
observance of those standards, and
• communicating the requirements relating to
trading in company’s securities by directors
and employees.
The Governance and Remuneration Committee
is responsible for monitoring the organisational
integrity of business operations to ensure the
maintenance of a high standard of ethical
behaviour. This includes ensuring that SKYCITY
operates in compliance with its Code of
Business Practice which sets out the guiding
principles of its relationships with stakeholder
groups such as regulators, shareholders,
customers, community groups and employees.
Board
Audit & Risk
Governance &
Remuneration
Nomination
Number of meetings held
Rod McGeoch
Patsy Reddy
Sir Dryden Spring
Elmar Toime
Bill Trotter
Evan Davies (resigned 25/6/07)
Rob McLeod (retired 30/6/07)
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3
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1
1
1
CORPORATE GOVERNANCE I 69
The company maintains a code of practice for
directors and senior executives that sets out
the procedures that must be followed before
trading in the company’s securities. Prior
consent must be obtained from the company
secretary before undertaking any trading in the
company’s securities.
Details of any share trading by directors or
executives who are subject to the company’s
Insider Trading Policy and Code for Securities
Transactions are notifi ed to the board. The
company’s Policy and Code are supported by
education for directors and executives about
their obligations when trading in the company’s
securities.
Offi cers of the company (currently comprising
14 senior executives) must formally disclose
their SKYCITY shareholdings and other
securities holdings to the NZX within fi ve
business days of any change in their holding of
such securities.
Directors and employees are not permitted to
participate in any gaming or wagering activity
at SKYCITY-operated properties or at a related
property, including Christchurch Casino.
4. SAFEGUARD THE INTEGRITY OF THE
COMPANY’S FINANCIAL REPORTING
The board is responsible for ensuring that
effective policies and procedures are in place
to provide confi dence in the integrity of the
company’s fi nancial reporting.
The board has established an Audit and Risk
Committee. This committee comprises three
directors, two of whom are independent non-
executive directors and Mr Toime who is an
executive director on a temporary basis until a
new chief executive offi cer has been appointed.
All members of the Audit and Risk Committee
are fi nancially literate.
The Audit and Risk Committee has responsibility
for oversight of the quality, reliability, and accuracy
of the company’s internal and external fi nancial
statements, the quality of the company’s
external result presentations, its internal control
environment and risk management programmes,
and for its relationships with its internal and
external auditors.
The Audit and Risk Committee and the board
undertake suffi cient inquiry of the company’s
management and the company’s internal and
external auditors in order to enable them to be
satisfi ed as to the validity and accuracy of the
company’s fi nancial reporting.
The Committee oversees the independence of
the company’s internal and external auditors
and monitors the scope and quantum of work
undertaken and fees paid to the auditors for other
than audit work. The Committee has adopted an
External Audit Independence Policy that sets out
the framework for assessing and maintaining audit
independence.
The Committee has formally reviewed the
independence status of PricewaterhouseCoopers
and is satisfi ed that its objectivity and
independence is not compromised as a
consequence of other than audit work undertaken
for the company. PricewaterhouseCoopers has
confi rmed to the Committee that it is not aware of
any matters that could affect its independence in
performing its duties as auditor of the company.
Fees paid to PricewaterhouseCoopers during the
2006/07 year are set out in note 6 to the fi nancial
statements. Fees for audit and tax compliance
work in the 2006/07 year represent 55% of total
PricewaterhouseCoopers fees.
5. ENSURE TIMELY AND BALANCED
DISCLOSURE
The board is committed to ensuring timely
and balanced disclosure of all material matters
70 I CORPORATE GOVERNANCE
concerning the company to ensure compliance
with the letter and intent of NZX and ASX Listing
Rules such that:
• all investors have equal and timely access
to material information concerning the
company, including its fi nancial situation,
performance, ownership and governance,
and
• company announcements are factual and
presented in a clear and balanced way.
The company is committed to presenting its
fi nancial and key operational performance results
in a clear, effective, balanced and timely manner
to the stock exchanges on which the company’s
securities are listed, and to its shareholders,
analysts and other market commentators, and
ensures that such information is available on the
company’s website.
Alistair Ryan, General Manager Corporate, is
Company Secretary and the Disclosure Offi cer
for SKYCITY Entertainment Group Limited and
is responsible for bringing to the attention of
the board any matter relevant to the company’s
disclosure obligations.
6. RESPECT AND FACILITATE THE RIGHTS
OF SHAREHOLDERS
The company’s shareholder communications
strategy is designed to facilitate the effective
exercise of shareholder rights by:
• communicating effectively with shareholders
• providing shareholders with ready access to
balanced and understandable information
about the company and corporate proposals,
and
facilitating participation by shareholders in
general meetings of the company.
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The company achieves this by ensuring that
information about the company is available
to all shareholders by means of personal
and/or website communication and through
encouraging shareholders to attend general
meetings of the company and making
appropriate time available at such meetings for
shareholders to ask questions of directors and
management.
7. RECOGNISE AND MANAGE RISK
The company maintains a programme for the
identifi cation, assessment, monitoring and
management of risk to the company’s business.
The risk management programme is approved
and overseen by the Audit and Risk Committee.
SKYCITY maintains an independent, centrally-
managed internal audit function which evaluates
and reports on fi nancial, operational and
management controls across the Group.
The function is resourced jointly by SKYCITY and
Ernst and Young.
The Audit and Risk Committee approve the
internal audit programme, with results and
performance of the control environments
regularly reviewed by both the committee and
the external auditors.
The company maintains business continuity,
material damage and liability insurance covers to
ensure that the earnings of the business are well
protected from adverse circumstances.
8. ENCOURAGE BOARD AND
MANAGEMENT EFFECTIVENESS
Directors are provided with all information
required for the performance of their duties.
Detailed information to facilitate the decision-
making process is included in the board papers
and is supported by access to senior managers.
Directors are expected to maintain an up to
date knowledge of the company’s business
operations and of the industry sectors within
which the company operates.
The board and committee charters require an
evaluation of the board and the committee
CORPORATE GOVERNANCE I 71
performance on an annual basis. The Nomination
Committee determines and oversees the process
for evaluation which includes assessment of
the role and responsibilities, performance,
composition, structure, training, and membership
requirements of the board and its committees.
The performance review of the board for 2006
was conducted by the chairman of the board
(Rod McGeoch) during the November/December
2006 period. The review involved a formal
response/feedback process with a one on one
meeting involving the chairman and each director
individually. The chairman reported the fi ndings
of the review to the December Nomination
Committee and board meetings.
The Governance and Remuneration Committee
undertakes the performance review of the chief
executive offi cer and those reporting directly
to that position in accordance with the
company’s performance review procedures.
These performance reviews are reported to the
board for fi nal approval.
9. REMUNERATE FAIRLY AND
RESPONSIBLY
The Governance and Remuneration Committee’s
responsibilities include the review of SKYCITY’s
remuneration policies and procedures.
The guiding principles that underpin SKYCITY’s
remuneration policies are:
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to be market competitive at all levels to ensure
the company can attract and retain the best
available talent
to be performance-oriented so that
remuneration practices recognise and reward
high levels of performance and to avoid an
entitlement culture
to provide a signifi cant at-risk component of
total remuneration which drives performance
to achieve company goals and strategy
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to manage remuneration within levels of cost
effi ciency and affordability, and
to align remuneration for senior executives
with the interests of shareholders.
Non-Executive Director remuneration
Shareholders at the annual meeting determine
the total remuneration available to non-
executive directors. At the 2006 annual
meeting, shareholders approved, effective from
1 July 2006, a total remuneration amount for
non-executive directors of $750,000 per annum
(plus GST if any).
Fees are currently $90,000 for non-executive
directors, $200,000 for the chairperson of the
board, an additional $20,000 for Audit and Risk,
and Governance and Remuneration committee
chairpersons and an additional $10,000 for
members of those two committees.
For those directors who were in offi ce on or
before 1 May 2004, SKYCITY’s constitution
permits the company, at the discretion of the
board, to make a retirement payment to a
director (or to his or her dependants), provided
that the total amount of the payment does not
exceed the total remuneration of the director
in his or her capacity as a director in any three
years chosen by the company.
Retirement allowances for SKYCITY directors
were discontinued at 30 June 2004 with
retirement allowances accrued to that date
frozen as to amount. Retirement allowances
accrued as at 30 June 2004 will not carry any
interest entitlement between 1 July 2004 and
the date of payment.
Managing Director/Executive Director
remuneration
Remuneration details for Evan Davies,
Managing Director until 25 June 2007, and
Elmar Toime, Executive Director from 25 June
2007, are included in the disclosures section of
this annual report at page 132.
72 I CORPORATE GOVERNANCE
SKYCITY employee remuneration
All salaried roles within SKYCITY are job-sized
using internationally recognised methodology
to measure the impact, accountability, and
complexity of each role as it contributes to
the organisation. Advice is then sought as to
remuneration ranges by job band or level being
paid by the market to ensure competitiveness
at both base and total remuneration levels.
Individual remuneration is set within the
appropriate range taking into account such
matters as individual capability, scarcity/
availability of resource/skill, and specifi c
business needs. This process ensures internal
equity between roles and allows comparison
with the overall market. Remuneration ranges
are reviewed annually to refl ect market
movements.
The Governance and Remuneration Committee
approves remuneration increases for the senior
executive group.
Performance Pay Incentive Plan (PPI)
SKYCITY operates an at-risk component of
total remuneration for all salaried employees
titled Performance Pay Incentive (PPI). To
enable payment of any at-risk incentive
component, the business must achieve
minimum fi nancial targets. If those targets are
not met no bonus incentive is paid. In addition
to overall fi nancial achievement, all salaried staff
have a number of individual targets that they
must achieve which account for up to 50% of
their at-risk remuneration.
Payments under PPI have a minimum trigger
point based on company fi nancial targets and
increase according to the degree by which the
company performs relative to these fi nancial
targets. In this way the PPI incentive links
individual reward to business performance
and shareholder interests.
Staff who participate in PPI are paid 40% in
cash and 60% in SKYCITY shares. The shares
components of a PPI bonus are issued in three
equal tranches over a two year period.
For the 2006/07 year, a total of 325
SKYCITY salaried personnel received
PPI bonuses totalling $1.95 million (an average
bonus payment of $5,985 per bonus-earning
participant).
Customer Experience Incentive (CEI)
SKYCITY also has an incentive remuneration
plan for waged staff, titled Customer Experience
Incentive (CEI). This scheme refl ects the
company’s commitment to providing favourable
experiences for customers. Waged staff can earn
additional bonus remuneration depending on the
achievement of fi nancial targets and customer
satisfaction targets based on focused surveys
conducted by independent survey companies.
CEI is only paid when the company’s (or
business unit’s) predetermined fi nancial and
customer service targets have been met.
For the 2006/07 year 2,160 waged employees
received total CEI bonuses of $853,200 (an
average bonus payment of $395 per bonus-
earning participant).
Equity-based executive remuneration:
Long-term incentive
Executive Share Rights Plan
The SKYCITY Executive Share Rights Plan
(Rights Plan) commenced on 1 July 2005,
following expiry of the Executive Share Option
Plan 2002. Share rights are issued to a group of
approximately 25 senior executives. Rights are
issued as a long-term incentive to encourage
retention and value creation. The number
of rights issued to executives is determined
based on a rights valuation calculated by
CORPORATE GOVERNANCE I 73
Deloitte Corporate Finance using the binomial
methodology. The Deloitte valuation is subject
to independent review by the company’s
auditor, PricewaterhouseCoopers.
reduced number of shares being issued for the
equivalent benefi t. The Rights Plan, which was
approved by the board in December 2004, is
for a three year period to 30 June 2008.
The Executive Share Rights Plan is structured
to align executive interests with shareholder
interests, to motivate executives to drive
company performance and to reward
executives for loyalty and commitment.
Rights issued under the Executive Share Rights
Plan, except in special circumstances, cannot
be exercised until three years from the date of
issue. Rights issued under the Plan lapse if not
exercised on or before the fi fth anniversary of
their date of issue.
The exercise price of executive share rights is
structured so that the employee benefi ts only
if the total return received by the company’s
shareholders, measured as the combination
of share price appreciation and dividends/
distributions, exceeds the company’s cost of
equity over the same period. The company’s
cost of equity used in the calculation is
equivalent to the market’s return expectations for
a company with the risk profi le and prospects of
SKYCITY Entertainment Group Limited.
The base exercise price for executive share
rights is the average closing price of SKYCITY
shares on the NZSX over the ten trading days
following release of the company’s result to the
NZX and the ASX for the fi nancial year to 30
June. The base exercise price is escalated by
the company’s estimated cost of equity capital
adjusted for dividends/distributions between the
date the right was issued and its exercise date.
At exercise, the net benefi t of the share right
is calculated and then the required number of
shares are issued. The Rights Plan provides the
same incentive for the senior executive group
as the Options Plan (refer below) but results in a
Executive Share Option Plan
Share options have also been issued to senior
executives under the Executive Share Option
Plan (Option Plan) that expired in 2005.
The Option Plan operates in much the same
way as the Rights Plan, using the same cost of
equity less dividends/distributions structure for
determining the base price multiplier, except that
shares are issued for each option exercised.
10. RECOGNISE THE OBLIGATIONS TO
ALL STAKEHOLDERS
SKYCITY acknowledges legal and other
obligations to non-shareholder stakeholders
such as employees, suppliers, customers,
regulators, and the community as a whole.
The SKYCITY Code of Business Practice
sets out the company’s commitment to the
community and the standards of behaviour that
can be expected by all stakeholders, including
employees and shareholders.
SKYCITY is aware that its business may be
associated with gambling and alcohol-related
harm for some customers. Effective and
pro-active customer care are the cornerstone
principles of SKYCITY’s approach to host
responsibility which and is discussed in the
Caring for Customer Welfare section of this
annual report.
COMPLIANCE
SKYCITY confi rms that, other than as set
out below, it has complied with the NZX
Corporate Governance Best Practice Code and
the ASX Corporate Governance Principles and
Best Practice Recommendations during the
2006/07 year.
74 I CORPORATE GOVERNANCE
• The company does not disclose
the remuneration of its fi ve highest-
paid executives. This is an Australian
Corporations Act requirement that
is included in the ASX Corporate
Governance Principles and Best Practice
Recommendations. SKYCITY makes the
remuneration disclosures required of a New
Zealand company under the New Zealand
Companies Act 1993 and considers that
such disclosure is appropriate in the New
Zealand context.
• The ASX Corporate Governance Principles
and Best Practice Recommendations and
NZX Corporate Governance Best Practice
Code recommend that all members of
the Audit and Risk Committee be non-
executive directors. Mr Toime, who has
been a member of the Audit and Risk
Committee since 1996 was appointed
Executive Director on 25 June 2007 on a
temporary basis until a new chief executive
offi cer is appointed. The company believes
Mr Toime’s experience is valuable to
the committee and that his temporary
appointment as Executive Director does not
affect the operation or independence of the
committee. Mr Toime is not the chairman of
the Audit and Risk Committee and the other
two members are non-executive directors.
• The company does not make available to
external parties certain internal policies
and procedures. SKYCITY believes that
the board charter and the comprehensive
references to governance in this annual
report and on the company’s website
provide good disclosure of the company’s
internal processes and mechanisms
and that the underlying intention of the
ASX Corporate Governance Council’s
recommendations on reporting of internal
mechanisms have been met.
• Shareholders have not approved extensions
of the SKYCITY senior executive options/
rights plans. The original SKYCITY executive
share option plan was approved by
shareholders at the 1999 annual meeting
of the company and was subsequently
extended by the board in August 2002. The
major difference in the 2002 renewal was
that the period prior to exercise of options
was extended from one year to three years.
The Executive Share Rights Plan 2005
(which replaces the Executive Share Option
Plan 2002) was approved by the board in
December 2004 and is essentially a renewal
of the company’s longer-term incentive
remuneration structure for senior executives
but, due to changes in the mechanism
within the Plan, is a preferred structure in
that the number of new shares that will be
issued (for the same benefi t to executives)
will be signifi cantly reduced. The Executive
Share Rights Plan continues to impose a
three year restriction before benefi ts under
the Plan can be realised by participants.
CORPORATE GOVERNANCE I 75
SUMMARY EARNINGS
STATEMENTS
YEARS ENDED 30 JUNE
SKYCITY Auckland
Gaming revenue
Non-gaming revenue
Total revenue
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation expenses
Earnings before interest and tax
2007
$000
2006
$000
MOVEMENT
%
315,238
102,382
417,620
209,073
334,761
92,685
427,446
227,095
(41,259)
(39,472)
167,814
187,623
-5.8%
+10.5%
-2.3%
-7.9%
+4.5%
-10.6%
Auckland fi gures exclude corporate/unallocated costs. The 2006 fi gures have been restated to be consistent with the
2007 presentation. Corporate/unallocated costs net of interest received were $25.0 million (FY06 $26.3 million).
SKYCITY Hamilton
Gaming revenue
Non-gaming revenue
Total revenue
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation expenses
Earnings before interest and tax
Other New Zealand Operations
Gaming revenue
Non-gaming revenue
Total revenue
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation expenses
Earnings before interest and tax
2007
$000
2006
$000
MOVEMENT
%
33,298
6,398
39,696
19,568
(4,835)
14,733
29,749
5,160
34,909
17,368
(4,318)
13,050
+11.9%
+24.0%
+13.7%
+12.7%
+12.0%
+12.9%
2007
$000
2006
$000
MOVEMENT
%
6,459
85,518
91,977
23,549
(6,766)
16,783
4,909
44,022
48,931
14,405
+31.6%
+94.3%
+88.0%
+63.5%
(3,365)
+101.1%
11,040
+52.0%
Other New Zealand Operations include SKYCITY Queenstown, Christchurch Casino and SKYCITY Cinemas.
78 I FINANCIALS
SUMMARY EARNINGS
STATEMENTS
YEARS ENDED 30 JUNE
SKYCITY Adelaide
Gaming revenue
Non-gaming revenue
Total revenue
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation expenses
Earnings before interest and tax
SKYCITY Darwin
Gaming revenue
Non-gaming revenue
Total revenue
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation expenses
Earnings before interest and tax
2007
A$000
2006
A$000
MOVEMENT
%
117,175
16,229
133,404
25,358
(9,905)
15,453
114,368
16,787
131,155
27,335
(10,215)
17,120
+2.5%
-3.3%
+1.7%
-7.2%
-3.0%
-9.7%
2007
A$000
2006
A$000
MOVEMENT
%
75,205
19,354
94,559
35,255
(6,694)
28,561
72,161
16,817
88,978
33,650
(5,628)
28,022
+4.2%
+15.1%
+6.3%
+4.8%
+18.9%
+1.9%
FINANCIALS I 79
FIVE YEAR SUMMARY
CONSOLIDATED INCOME STATEMENTS
YEARS ENDED 30 JUNE
Revenue
Other income/revenue
Total revenue
Operating expenses
2007
$000
2006
$000
2005
$000
2004
$000
2003
$000
798,575
752,369
669,928
590,479
556,493
17,522
12,207
13,081
3,678
7,820
816,097
764,576
683,009
594,157
564,313
(518,954)
(463,257)
(398,910)
(334,492)
(310,395)
Earnings before interest, tax, depreciation
and amortisation
297,143
301,319
284,099
259,665
253,918
Depreciation and amortisation expenses
(72,227)
(65,016)
(58,783)
(47,677)
(46,032)
Earnings before interest and tax
224,916
236,303
225,316
211,988
207,886
Funding costs
Profi t before income tax
Income tax expense
(Profi t)/loss attributable to minority interests
Profi t after tax & minority interest
before non-recurring items
Non-recurring items (1)
Net profi t after tax
(93,361)
(83,965)
(79,713)
(48,563)
(49,266)
131,555
152,338
145,603
163,425
158,620
(33,125)
(32,590)
(38,078)
(40,400)
(51,117)
(28)
381
(1,111)
(1,899)
(286)
98,402
120,129
106,414
121,126
107,217
-
-
-
(20,904)
-
98,402
120,129
106,414
100,222
107,217
The above income statements have been prepared to show the key features of the operating performance achieved.
They are not the fi nancial statements of SKYCITY Entertainment Group Limited and therefore do not contain all the
details and disclosures which are included in the company’s fi nancial statements.
In the fi nancial statements interest received and gains on some fi nancial transactions are included as other revenue.
In previous fi ve year summaries these items have been netted off against funding costs to identify the net cost of the
company’s funding arrangement. To avoid the differential with the fi nancial statements the above summaries now
include these items in other revenue. The fi ve year income statement is based on NZ IFRS (2005 to 2007) and on
previous NZ GAAP (2003 to 2004).
(1) Non-recurring item relates to the write-off of investment in Canbet Limited.
80 I FINANCIALS
CONSOLIDATED BALANCE SHEETS
AS AT 30 JUNE
ASSETS
Current assets
Cash and bank balances
Inventories
Receivables and prepayments
Tax receivables
Derivative fi nancial instruments
Assets classifi ed as held-for-sale
Total current assets
Non-current assets
Property, plant and equipment
Investment properties
Other investments (including associates)
Intangible assets
Available-for-sale fi nancial assets
Tax receivables
Deferred tax assets
Derivative fi nancial instruments
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Interest-bearing liabilities
Derivative fi nancial instruments
Total current liabilities
Non-current liabilities
Interest-bearing liabilities
Subordinated debt - capital notes
Subordinated debt - SKYCITY ACES
Deferred tax liabilities
Derivative fi nancial instruments
Convertible notes
Other term liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained profi ts
Shareholders’ equity
Minority interests
Total equity
FIVE YEAR SUMMARY
2007
$000
2006
$000
2005
$000
2004
$000
2003
$000
71,537
5,523
30,996
25,971
334
-
134,361
940,106
8,845
80,831
433,469
2,514
-
15,978
26,865
-
1,508,608
1,642,969
74,098
5,241
30,803
-
1,477
52,400
164,019
935,123
8,593
78,304
426,011
2,622
47,438
26,667
37,055
-
1,561,813
1,725,832
62,849
5,382
37,158
-
-
-
105,389
917,967
52,500
79,820
377,016
-
12,905
13,675
-
-
1,453,883
1,559,272
53,272
3,017
53,106
-
-
-
109,395
750,267
-
78,280
212,373
-
9,999
-
-
14,645
1,065,564
1,174,959
119,501
-
-
119,501
100,776
-
25
100,801
97,005
100,758
-
197,763
753,002
123,756
161,410
52,992
50,774
-
-
1,141,934
1,261,435
381,534
950,904
123,720
177,956
60,596
3,072
-
-
1,316,248
1,417,049
308,783
956,795
121,510
-
45,438
-
-
-
1,123,743
1,321,506
237,766
364,068
(16,069)
31,044
379,043
2,491
381,534
281,735
(8,171)
32,756
306,320
2,463
308,783
226,726
(5,159)
13,355
234,922
2,844
237,766
93,619
101,000
-
194,619
579,967
149,644
-
-
-
8,910
27,216
765,737
960,356
214,603
225,871
(7,510)
(7,274)
211,087
3,516
214,603
57,264
2,898
6,780
-
-
-
66,942
636,990
-
21,586
207,844
-
315
-
-
3,151
869,886
936,828
64,836
1,000
-
65,836
437,116
149,266
-
-
-
13,365
24,680
624,427
690,263
246,565
246,518
1,932
(7,492)
240,958
5,607
246,565
The balance sheet set out above is based on NZ IFRS (2005 to 2007) and on previous NZ GAAP (2003 to 2004).
FINANCIALS I 81
FIVE YEAR SUMMARY
FINANCIAL RATIOS
EBITDA/Revenue
Profi t after tax/Revenue
Revenue/Total assets
Return on total assets
Earnings per share(1)
2007
2006
2005
2004
2003
36.4%
12.1%
49.7%
6.0%
39.4%
15.7%
44.3%
7.0%
41.6%
15.6%
43.8%
6.8%
43.7%
16.9%
50.6%
8.5%
45.0%
19.0%
60.2%
11.4%
22.3cps
28.5cps
25.5cps
24.0cps
25.5cps
Net tangible assets per share(1)
($0.12)
($0.28)
($0.33)
$0.01
$0.09
Dividends/Distributions paid(2)
21.0cps
26.0cps
24.0cps
26.5cps
33.5cps
Interest coverage
3.2x
3.6x
3.6x
5.3x
5.2x
(1) Weighted average number of shares on issue used. Adjusted for 1 for 1 share split in November 2003
(2) The dividend paid in the 2002/03 year of 33.5cps included a special additional dividend of 10.0cps
The fi nancial ratios have been restated to be consistent with the presentation of the fi ve year income statements and
balance sheets.
82 I FINANCIALS
AUDITOR’S REPORT
TO THE SHAREHOLDERS OF SKYCITY ENTERTAINMENT GROUP LIMITED
We have audited the fi nancial statements on pages 84 to 129. The fi nancial statements provide information about the
past fi nancial performance and cash fl ows of the Company and Group, comprising SKYCITY Entertainment Group
Limited and its subsidiaries for the year ended 30 June 2007 and their fi nancial position as at that date.
This information is stated in accordance with the accounting policies set out on pages 88 to 94.
DIRECTORS’ RESPONSIBILITIES
The Company’s Directors are responsible for the preparation and presentation of the fi nancial statements which
give a true and fair view of the fi nancial position of the Company and Group as at 30 June 2007 and their fi nancial
performance and cash fl ows for the year ended on that date.
AUDITOR’S RESPONSIBILITIES
We are responsible for expressing an independent opinion on the fi nancial statements presented by the Directors and
reporting our opinion to you.
BASIS OF OPINION
An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the fi nancial
statements. It also includes assessing:
(a) the signifi cant estimates and judgements made by the Directors in the preparation of the fi nancial statements; and
(b) whether the accounting policies are appropriate to the circumstances of the Company and Group, consistently
applied and adequately disclosed.
We conducted our audit in accordance with generally accepted auditing standards in New Zealand. We planned
and performed our audit so as to obtain all the information and explanations which we considered necessary to
provide us with suffi cient evidence to give reasonable assurance that the fi nancial statements are free from material
misstatements, whether caused by fraud or error. In forming our opinion we also evaluated the overall adequacy of
the presentation of information in the fi nancial statements.
We have no relationship with or interests in the Company or any of its subsidiaries other than in our capacity as
auditors, tax and accounting advisors.
UNQUALIFIED OPINION
We have obtained all the information and explanations we have required.
In our opinion:
(a) proper accounting records have been kept by the Company as far as appears from our examination of those
records; and
(b) the fi nancial statements on pages 84 to 129:
(i) comply with generally accepted accounting practice in New Zealand;
(ii) comply with International Financial Reporting Standards; and
(iii) give a true and fair view of the fi nancial position of the Company and Group as at 30 June 2007 and their
fi nancial performance and cash fl ows for the year ended on that date.
Our audit was completed on 20 August 2007 and our unqualifi ed opinion is expressed as at that date.
Chartered Accountants
Auckland
FINANCIALS I 83
INCOME STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2007
NOTES
Revenue
Other income
Share of net profi ts of associates
Employee benefi ts expense
Depreciation and amortisation expense
Other expenses
Marketing and communications
Direct consumables and fi lm hire costs
Gaming taxes
Directors’ fees
Restructuring costs
Finance costs
Profi t before income tax
Income tax expense
Profi t before minority interest
(Profi t)/loss attributable to minority interest
Profi t attributable to shareholders of the
company
Earnings per share for profi t attributable to the
shareholders of the company
Basic earnings per share (cents)
Diluted earnings per share (cents)
3
4
16
5
5
5
5
7
8
8
CONSOLIDATED
PARENT
2007
$000
2006
$000
798,575
752,369
2007
$000
-
2006
$000
-
13,068
4,454
7,891
4,316
111,097
109,353
-
-
(230,701)
(225,049)
(15,904)
(15,941)
(72,227)
(65,016)
(121,219)
(105,512)
(55,959)
(55,709)
(50,326)
(718)
(4,322)
(93,361)
131,555
(33,125)
98,430
(28)
(44,509)
(39,468)
(48,134)
(585)
-
(83,965)
152,338
(32,590)
119,748
381
(254)
(12,255)
(3,878)
-
-
(718)
(4,322)
(10,127)
63,639
-
(157)
(6,388)
(4,427)
-
-
(585)
-
(9,983)
71,871
-
63,639
71,871
-
-
98,402
120,129
63,639
71,871
22.3
22.1
28.5
26.9
14.4
13.9
17.1
16.1
The above income statements should be read in conjunction with the accompanying notes.
84 I FINANCIALS
AS AT 30 JUNE 2007
ASSETS
Current assets
Cash and bank balances
Receivables and prepayments
Inventories
Tax receivables
Derivative fi nancial instruments
Assets classifi ed as held for sale
Total current assets
Non-current assets
Property, plant and equipment
Investment properties
Investment in subsidiaries
Intangible assets
Available-for-sale fi nancial assets
Investments in associates
Tax receivables
Deferred tax assets
Derivative fi nancial instruments
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Derivative fi nancial instruments
Total current liabilities
Non-current liabilities
Interest-bearing liabilities
Subordinated debt-capital notes
Subordinated debt-SKYCITY ACES
Deferred tax liabilities
Derivative fi nancial instruments
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained profi ts
Shareholders’ equity
Minority interest
Total equity
BALANCE SHEETS
CONSOLIDATED
2007
$000
2006
$000
PARENT
2007
$000
2006
$000
NOTES
9
10
11
12
13
14
15
16
21
10
17
10
18
19
20
22
10
24
25(a)
25(b)
26
71,537
30,996
5,523
25,971
334
-
74,098
30,803
5,241
-
1,477
52,400
2
2
31,395
34,166
-
-
-
-
-
-
-
-
134,361
164,019
31,397
34,168
940,106
8,845
-
935,123
8,593
1,533
-
1,961
-
-
724,949
724,949
433,469
426,011
156
147
2,514
80,831
-
15,978
26,865
2,622
78,304
47,438
26,667
37,055
-
-
-
-
-
-
-
-
-
-
1,508,608
1,642,969
1,561,813
1,725,832
726,638
758,035
727,057
761,225
119,501
100,776
369,290
416,952
-
25
-
-
119,501
100,801
369,290
416,952
753,002
123,756
161,410
52,992
50,774
1,141,934
1,261,435
381,534
364,068
(16,069)
31,044
379,043
2,491
381,534
950,904
123,720
177,956
60,596
3,072
1,316,248
1,417,049
308,783
281,735
(8,171)
32,756
306,320
2,463
308,783
-
-
123,756
123,720
-
-
-
123,756
493,046
264,989
364,068
3,526
(102,605)
264,989
-
-
-
-
123,720
540,672
220,553
281,735
4,948
(66,130)
220,553
-
264,989
220,553
The above balance sheets should be read in conjunction with the accompanying notes.
FINANCIALS I 85
STATEMENTS OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2007
NOTES
Total equity at the beginning of the year
Restatement on adoption of NZ IAS 39
CONSOLIDATED
2007
$000
2006
$000
PARENT
2007
$000
2006
$000
308,783
237,766
220,553
193,683
-
(4,073)
-
-
Restated total equity at the beginning of the year
308,783
233,693
220,553
193,683
Available for sale fi nancial assets
Movement in cash fl ow hedge reserve
Exchange differences on translation of foreign
operations
Net income recognised directly in equity
Profi t for the year
Total recognised income and expense for the year
25
25
25
Exercise of share options
Shares issued under profi t distribution plan
Buyback of shares under profi t distribution plan
Buyback and cancellation of shares under profi t
distribution plan
Share rights issued for employee services
Employee share entitlements issued
Shares issued under dividend reinvestment plan
Distributions to owners
Movement in employee share entitlement reserve
Change in minority interest
Amalgamations
Total equity at the end of the year
24
27
25
26
154
27,400
(34,030)
(6,476)
98,402
91,926
5,956
(21,246)
(5,403)
786
2,126
-
(69)
(22,161)
21,552
(678)
120,129
119,451
10,009
50,450
-
(14,894)
874
2,139
6,431
-
-
-
-
63,639
63,639
5,956
100,114
(21,246)
(5,403)
786
2,126
-
-
-
-
-
71,871
71,871
10,009
50,450
-
(14,894)
874
2,139
6,431
(100,114)
(100,667)
(100,114)
(100,667)
(1,422)
28
-
(19,175)
381,534
1,678
(381)
-
(44,361)
308,783
(1,422)
-
-
(19,203)
264,989
1,678
-
(1,021)
(45,001)
220,553
24
100,114
The above statements of changes in equity should be read in conjunction with the accompanying notes.
86 I FINANCIALS
FOR THE YEAR ENDED 30 JUNE 2007
Cash fl ows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Other taxes paid
Income taxes paid
Net cash fl ows from operating activities
Cash fl ows from investing activities
Purchase of business, net of cash acquired
Purchase of/proceeds from property, plant
and equipment
Payments for investment property
Payments for intangible assets
Proceeds from sale of available for sale assets
Dividends from subsidiaries
Net cash fl ows from investing activities
Cash fl ows from fi nancing activities
Exercise of share options
Proceeds from borrowings
Cash fl ows associated with closed derivatives
Buyback and cancellation of shares
Repayment of borrowings
Advances from subsidiaries
Dividends paid to company shareholders
Interest paid
Net cash fl ows from fi nancing activities
CASH FLOW
STATEMENTS
CONSOLIDATED
2007
$000
2006
$000
PARENT
2007
$000
NOTES
798,393
758,729
(467,925)
(418,559)
330,468
340,170
4,429
6,336
(53,000)
(20,750)
3,444
3,583
(50,884)
(45,538)
-
(33,523)
(33,523)
-
208
-
-
2006
$000
-
(21,166)
(21,166)
-
971
-
-
36
267,483
250,775
(33,315)
(20,195)
31
(34,285)
(69,307)
(252)
(14,790)
52,400
-
-
(57,851)
(8,593)
(14,527)
-
-
(66,234)
(80,971)
-
273
-
-
-
-
(1,452)
-
-
-
100,311
100,584
106,251
104,799
5,956
-
-
(5,403)
(93,052)
-
(21,246)
(90,065)
10,009
157,550
8,098
(14,890)
(182,754)
-
(43,790)
(92,773)
(203,810)
(158,550)
(2,561)
74,098
-
11,254
62,849
(5)
5,956
-
-
10,009
2,210
-
(5,403)
(14,890)
-
(36,648)
(21,246)
(9,928)
(67,269)
-
(29,111)
(43,790)
(9,033)
(84,605)
-
2
-
2
(1)
3
-
2
FINANCIALS I 87
Net (decrease)/increase in cash and cash equivalents
Cash and bank balances at the beginning of the year
Effects of exchange rate changes on cash and
cash equivalents
Cash and cash equivalents at end of year
71,537
74,098
The above cash fl ow statements should be read in conjunction with the accompanying notes.
NOTES TO THE
FINANCIAL STATEMENTS
1. GENERAL INFORMATION
SKYCITY Entertainment Group Limited (SKYCITY or the
company and its subsidiaries or the Group) operates in
the entertainment, leisure and recreation, and tourism
sectors. The Group has operations in New Zealand and
Australia.
The company is a limited liability company incorporated
and domiciled in New Zealand. The address of its
registered offi ce is Federal House, 86 Federal Street,
Auckland. The company has its primary listing on the
New Zealand stock exchange.
These consolidated fi nancial statements have been
approved for issue by the board of directors on 20
August 2007.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
These general-purpose fi nancial statements for the
year ended 30 June 2007 have been prepared in
accordance with New Zealand generally accepted
accounting practice (NZ GAAP). They comply with New
Zealand equivalents to International Financial Reporting
Standards (NZ IFRS), and other applicable New Zealand
Financial Reporting Standards.
(a) Basis of Preparation
The principal accounting policies adopted in the
preparation of the fi nancial report are set out below.
These policies have been consistently applied to all the
periods presented, unless otherwise stated.
Compliance with IFRS
The separate and consolidated fi nancial statements
of SKYCITY also comply with International Financial
Reporting Standards (IFRS).
Entities Reporting
The consolidated fi nancial statements incorporate the
assets and liabilities of all subsidiaries of the Group
as at 30 June 2007 and the results of all subsidiaries,
joint ventures and associates for the year then
ended. SKYCITY Entertainment Group Limited and its
subsidiaries together are referred to in these fi nancial
statements as the Group.
The fi nancial statements of the ‘Parent’ are for the
company as a separate legal entity.
The Parent company and the Group are designated as
profi t-oriented entities for fi nancial reporting purposes.
Statutory Base
SKYCITY is a company registered under the Companies
Act 1993 and is an issuer in terms of the Securities Act
1978. The fi nancial statements have been prepared
in accordance with the requirements of the Financial
Reporting Act 1993 and the Companies Act 1993.
Historical Cost Convention
These fi nancial statements have been prepared under the
historical cost convention, as modifi ed by the revaluation
of available-for-sale fi nancial assets, fi nancial assets and
liabilities (including derivative instruments) at fair value
through profi t or loss and investment property.
Critical Accounting Estimates
The preparation of fi nancial statements requires the use
of certain critical accounting estimates. It also requires
the company to exercise its judgement in the process of
applying the Group’s accounting policies.
(b) Principles of Consolidation
(i) Subsidiaries
Subsidiaries are all those entities (including special-
purpose entities) over which the company has the power
to govern the fi nancial and operating policies, generally
accompanying a shareholding of more than one-half of
the voting rights.
Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
The purchase method of accounting is used to account
for the acquisition of subsidiaries by the Group. The
cost of an acquisition is measured as the fair value of
the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs
directly attributable to the acquisition. Identifi able assets
acquired and liabilities and contingent liabilities assumed in
a business combination are measured initially at their fair
values at the acquisition date, irrespective of the extent of
any minority interest. The excess of the cost of acquisition
over the fair value of the Group’s share of the identifi able
net assets acquired is recorded as goodwill. If the cost
of acquisition is less than the fair value of the net assets
of the subsidiary acquired, the difference is recognised
directly in the Income Statement.
88 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
Inter-company transactions, balances and unrealised
gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure
consistency with the policies adopted by the company.
Minority interests in the results and equity of subsidiaries
are shown separately in the consolidated Income
Statement and Balance Sheet respectively.
(ii) Associates
Associates are all entities over which the Group has
signifi cant infl uence but not control, generally evidenced
by holdings of between 20% and 50% of the voting
rights. Investments in associates are accounted for in
the Parent entity’s fi nancial statements using the cost
method, and in the consolidated fi nancial statements
using the equity method of accounting, after initially
being recognised at cost. The Group’s investment in
associates includes goodwill (net of any accumulated
impairment loss) identifi ed on acquisition.
The Group’s share of its associates’ post-acquisition
profi ts or losses is recognised in the Income Statement,
and its share of post-acquisition movements in reserves
is recognised in reserves. The cumulative post-
acquisition movements are adjusted against the carrying
amount of the investment. Dividends received from
associates are recognised in the Parent entity’s income
statement, while in the consolidated fi nancial statements
they reduce the carrying amount of the investment.
When the Group’s share of losses in an associate
equals or exceeds its interest in the associate, including
any other unsecured receivables, the Group does
not recognise further losses, unless it has incurred
obligations or made payments on behalf of the
associate.
Unrealised gains on transactions between the Group
and its associates are eliminated to the extent of the
Group’s interest in the associates. Unrealised losses
are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed
where necessary to ensure consistency with the policies
adopted by the Group.
(iii) Joint Ventures
The proportionate interests in the assets, liabilities and
expenses of a jointly controlled operation have been
incorporated in the fi nancial statements under the
appropriate headings.
(c) Segment Reporting
A geographical segment is engaged in providing
products or services within a particular economic
environment and may be subject to risks and returns that
are different from those of segments operating in other
economic environments. A business segment is a group
of assets and operations engaged in providing products
or services that may be subject to risks and returns
that are different to those of other business segments.
SKYCITY has determined that its primary segments are
geographical and its secondary are business segments.
(d) Foreign Currency Translation
(i) Functional and Presentation Currency
Items included in the fi nancial statements of each of
the company’s operations are measured using the
currency that best refl ects the economic substance of
the underlying events and circumstances relevant to that
operation (‘functional currency’). The consolidated and
Parent fi nancial statements are presented in New Zealand
dollars, which is the Group’s presentation currency.
(ii) Transactions and Balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign
currencies are recognised in the Income Statement,
except when deferred in equity as qualifying cash fl ow
hedges and qualifying net investment hedges.
Translation differences on non-monetary items, such
as equities held at fair value through profi t or loss, are
reported as part of the fair value gain or loss. Translation
differences on non-monetary items, such as equities
classifi ed as available-for-sale fi nancial assets, are
included in the fair value reserve in equity.
(iii) Foreign Operations
The results and fi nancial position of foreign entities
(none of which has the currency of a hyperinfl ationary
FINANCIALS I 89
NOTES TO THE
FINANCIAL STATEMENTS
economy) that have a functional currency different from
the presentation currency are translated into the
presentation currency as follows:
• assets and liabilities for each Balance Sheet
presented are translated at the closing rate at the
date of that balance sheet;
income and expenses for each Income Statement
are translated at average exchange rates; and
•
• all resulting exchange differences are recognised as
a separate component of equity.
Exchange differences arising from the translation of any
net investment in foreign entities, and of borrowings
and other currency instruments designated as hedges
of such investments, are taken to shareholders’ equity.
Goodwill and fair value adjustments arising on the
acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at
the closing rate.
(e) Revenue Recognition
Revenue is recognised as follows:
(i) Operating Revenue
Operating revenues include casino, hotel, food and
beverage, tower admissions, cinema admissions and
other revenues. Casino revenues represent the net win
to the casino from gaming activities, being the difference
between amounts wagered and amounts won by casino
patrons. Revenues exclude the retail value of rooms,
food, beverage and other promotional allowances
provided on a complimentary basis to customers.
(ii) Interest Income
Interest income is recognised on a time-proportion basis
using the effective interest method.
(iii) Dividend Income
Dividend income is recognised when the right to receive
payment is established.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are
settled, based on those tax rates which are enacted or
substantively enacted for each jurisdiction. The relevant
tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure
the deferred tax asset or liability. An exception is
made for certain temporary differences arising from the
initial recognition of an asset or a liability. No deferred
tax asset or liability is recognised in relation to these
temporary differences if they arose in a transaction,
other than a business combination, that at the time of
the transaction did not affect either accounting profi t or
taxable profi t or loss.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and
tax bases of investments in foreign operations where
the company is able to control the timing of the reversal
of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to
amounts recognised directly in equity are also recognised
directly in equity.
The Group is the Lessee
(g) Leases
(i)
Leases in which a signifi cant portion of the risks and
rewards of ownership are retained by the lessor are
classifi ed as operating leases. Payments made under
operating leases (net of any incentives received from the
lessor) are charged to the Income Statement on a straight-
line basis over the period of the lease.
Income Tax
(f)
The income tax expense for the period is the tax payable
on the current period’s taxable income, based on the
income tax rate for each jurisdiction. This is then adjusted
by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the fi nancial
statements, and changes in unused tax losses.
(ii) The Group is the Lessor
Assets leased to third parties under operating leases are
included in property, plant and equipment in the Balance
Sheet. They are depreciated over their expected useful
lives on a basis consistent with similar owned property,
plant and equipment. Rental income (net of any incentives
given to lessees) is recognised on a straight-line basis over
the lease term.
90 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
(h) Impairment of Assets
Intangible assets that have an indefi nite useful life are
not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher
of an asset’s 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
identifi able cash fl ows (cash-generating units).
(i) Cash and Bank Balances
Cash and bank balances include cash on hand, deposits
held at call with fi nancial institutions, other short-term,
highly liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an insignifi cant
risk of changes in value, and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities
on the Balance Sheet.
(j) Trade Receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost, less provision
for doubtful debts.
and re-evaluates this designation at each reporting date.
(i) Financial Assets at Fair Value Through Profi t
or Loss
This category has two subcategories: fi nancial assets held
for trading, and those designated at fair value through
profi t or loss on initial recognition. A fi nancial asset is
classifi ed in this category if acquired principally for the
purpose of selling in the short term or if so designated by
the company. The policy of the company is to designate
a fi nancial asset at fair value through profi t and loss if
there exists the possibility it will be sold in the short term
and the asset is subject to frequent changes in fair value.
Derivatives are categorised as held for trading unless
they are designated as hedges. Assets in this category
are classifi ed as current assets if they are held either for
trading or are expected to be realised within 12 months of
the Balance Sheet date.
(ii) Loans and Receivables
Loans and receivables are non-derivative fi nancial assets
with fi xed or determinable payments that are not quoted
in an active market. They arise when the Group provides
money, goods or services directly to a debtor with no
intention of selling the receivable. They are included in
current assets, except for those with maturities greater
than 12 months after the balance sheet date which are
classifi ed as non-current assets. Loans and receivables
are included in receivables in the Balance Sheet.
Collectibility of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectible are
written off. A provision for doubtful debts is established
when there is objective evidence that the Group will not
be able to collect all amounts due according to the original
terms of receivables.
(iii) Held-to-Maturity Investments
Held-to-maturity investments are non-derivative fi nancial
assets with fi xed or determinable payments and fi xed
maturities that the Group has the positive intention and
ability to hold to maturity.
Inventories
(k)
Inventories, all of which are fi nished goods, are stated at
the lower of cost and net realisable value determined on a
fi rst in, fi rst out basis.
(l) Investments and Other Financial Assets
The Group classifi es its investments in the following
categories: fi nancial assets at fair value through
profi t or loss, loans and receivables, held-to-maturity
investments, and available-for-sale fi nancial assets. The
classifi cation depends on the purpose for which the
investments were acquired. The company determines
the classifi cation of its investments at initial recognition
(iv) Available for Sale Financial Assets
Available or sale fi nancial assets, comprising principally
marketable equity securities, are non-derivative assets that
are either designated in this category or not classifi ed in
any of the other categories. They are included in non-
current assets unless the company intends to dispose of
the investment within 12 months of the balance sheet date.
Available for sale fi nancial assets and fi nancial assets at
fair value through profi t and loss are carried at fair value.
Loans and receivables and held-to-maturity investments
are carried at amortised cost using the effective interest
method. Realised and unrealised gains and losses arising
from changes in the fair value of the fi nancial assets at
FINANCIALS I 91
NOTES TO THE
FINANCIAL STATEMENTS
fair value through profi t or loss category are included in
the Income Statement in the period in which they arise.
Unrealised gains and losses arising from changes in the
fair value of non-monetary securities classifi ed as available
for sale are recognised in equity in the available for sale
investments revaluation reserve. When securities classifi ed
as available for sale are sold, the accumulated fair value
adjustments are included in the Income Statement as
gains and losses from investment securities.
The fair values of quoted investments are based on current
bid prices.
(m) Derivatives
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value. The method of recognising
the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and
if so, the nature of the item being hedged. The Group
designates certain derivatives as either hedges of the
fair value of recognised assets or liabilities or a fi rm
commitment (fair value hedges) or hedges of exposures to
variability in cash fl ows associated with recognised assets
or liabilities or highly probable forecast transactions (cash
fl ow hedges).
At the inception of the transaction, SKYCITY documents
the relationship between hedging instruments and hedged
items, as well as its risk management objective and
strategy for undertaking various hedge transactions.
The Group also documents its assessment, both at
hedge inception and on an ongoing basis, of whether the
derivatives that are used in hedging transactions have
been and will continue to be highly effective in offsetting
changes in fair values or cash fl ows of hedged items.
(i) Fair Value Hedge
Changes in the fair value of derivatives that are designated
and qualify as fair value hedges are recognised in the
Income Statement, together with any changes in the fair
value of the hedged asset or liability that are attributable to
the hedged risk.
(ii) Cash Flow Hedge
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash fl ow
hedges is recognised in equity in the hedging reserve. The
gain or loss relating to the ineffective portion is recognised
immediately in the Income Statement.
Amounts accumulated in equity are recycled in the Income
Statement in the periods when the hedged item will
affect profi t or loss (for instance when the forecast sale
that is hedged takes place). However, when the forecast
transaction that is hedged results in the recognition of
a non-fi nancial asset (for example, inventory) or a non-
fi nancial liability, the gains and losses previously deferred
in equity are transferred from equity and included in the
measurement of the initial cost or carrying amount of the
asset or liability.
When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets the criteria
for hedge accounting, any cumulative gain or loss existing
in equity at that time remains in equity and is recognised
in the Income Statement when the forecast transaction
is ultimately recognised in the Income Statement. When
a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is
immediately transferred to the Income Statement.
(iii) Derivatives that Do Not Qualify for Hedge
Accounting
Changes in the fair value of any derivative instrument that
does not qualify for hedge accounting are recognised
immediately in the Income Statement.
(n) Property, Plant and Equipment
Property, plant and equipment (except for investment
properties refer to note 2(o)) is stated at historical cost less
depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items. Cost
may also include transfers from equity of any gains/
losses on qualifying cash fl ow hedges of foreign currency
purchases of property, plant and equipment.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefi ts
associated with the item will fl ow to the Group and the
cost of the item can be measured reliably. All other repairs
and maintenance are charged to the Income Statement
during the fi nancial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is
calculated using the straight-line method to allocate
92 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
their cost, net of their residual values, over their estimated
useful lives, as follows:
• Buildings
• Building fi t-out
• Plant and equipment
• Vehicles
• Fixtures and fi ttings
5-75 years
10 years
2-75 years
3 years
3-20 years
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount (note 2(h)).
Gains and losses on disposals are determined by
comparing proceeds with carrying amount.
(o) Investment Property
Investment property is held for long-term rental yields
and is not occupied by the Group. Investment property
is carried at fair value, representing open-market value
determined annually by independent external valuers.
Changes in fair values are recorded in the Income
Statement as part of other income.
(p) Intangible Assets
(i) Goodwill
Goodwill represents the excess of the cost of an
acquisition over the fair value of the Group’s share of the
net identifi able assets of the acquired business/associate
at the date of acquisition. Goodwill on acquisitions of
businesses is included in intangible assets. Goodwill on
acquisitions of associates is included in investments in
associates. Goodwill acquired in business combinations is
not amortised. Instead, goodwill is tested for impairment
annually or more frequently if events or changes in
circumstances indicate that it might be impaired, and is
carried at cost less accumulated impairment losses. Gains
and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the
purpose of impairment testing.
(ii) Casino Licences
The casino licences that have a fi nite useful life are carried
at cost less accumulated amortisation. Amortisation of
these casino licences is calculated on a straight-line basis
so as to expense the cost of the licences over their legal
lives. The casino licences that have been determined to
have an indefi nite useful life for amortisation purposes are
not amortised but rather are reviewed for impairment on an
annual basis.
(iii) Acquired Software
Acquired computer software licences are capitalised on
the basis of the costs incurred to acquire and bring to use
the specifi c software. These costs are amortised over their
estimated useful lives (three to seven years).
(q) Borrowings
Borrowings, including capital notes and Adjustable
Coupon Exchangeable Securities (SKYCITY ACES),
are initially recognised at fair value, net of transaction
costs incurred. Borrowings are subsequently measured
at amortised cost unless part of an effective hedging
relationship. Any difference between the proceeds (net
of transaction costs) and the redemption amount is
recognised in the Income Statement over the period of the
borrowings using the effective interest method.
Borrowings are classifi ed as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
(r) Borrowing Costs
Borrowing costs are expensed, except for costs incurred
for the construction of any qualifying asset which are
capitalised during the period of time that is required to
complete and prepare the asset for its intended use or
sale.
(s) Employee Benefi ts
(i) Wages, Salaries and Annual Leave
Liabilities for wages and salaries, including non-monetary
benefi ts and annual leave expected to be settled within
12 months of the reporting date, are recognised in other
payables in respect of employees’ services up to the
reporting date and are measured at the amounts expected
to be paid when the liabilities are settled.
(ii) Share-Based Payments
SKYCITY operates an equity-settled, share-based
compensation plan. The fair value of the employee
services received in exchange for the grant of the share
rights or shares is recognised as an expense. The total
amount to be expensed over the vesting period is
determined by reference to the fair value of the share
rights or shares granted, excluding the impact of any non-
FINANCIALS I 93
NOTES TO THE
FINANCIAL STATEMENTS
market vesting conditions (for example, profi tability and
sales growth targets). Non-market vesting conditions are
included in assumptions about the number of share rights
or shares that are expected to be distributed. At each
balance sheet date, the entity revises its estimates of the
number of shares expected to be distributed. It recognises
the impact of the revision of original estimates, if any, in the
Income Statement, and a corresponding adjustment to
equity over the remaining vesting period.
(t) Share Capital
Ordinary shares are classifi ed as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
Where any Group company purchases the company’s
equity share capital, the consideration paid, including
any directly attributable incremental costs (net of income
taxes), is deducted from equity attributable to the
company’s equity holders.
(u) Dividends/Distributions
Provision is made for the amount of any dividend/
distribution declared on or before the end of the fi nancial
year but not distributed at balance date.
(v) Earnings Per Share
(i) Basic Earnings Per Share
Basic earnings per share is calculated by dividing the
profi t attributable to equity holders of the company by the
weighted average number of ordinary shares outstanding
during the fi nancial year, adjusted for bonus elements in
ordinary shares issued during the year.
(ii) Diluted Earnings Per Share
Diluted earnings per share adjusts the fi gures used in the
determination of basic earnings per share to take into
account the after-income-tax effect of interest and other
fi nancing costs associated with dilutive potential ordinary
shares and the weighted average number of shares
assumed to have been issued for no consideration in
relation to dilutive potential ordinary shares.
(w) Standards, Interpretations and Amendments to
Published Standards that are Not Yet Effective
Certain new standards, amendments and interpretations
to existing standards have been published that are
mandatory for the Group’s accounting periods beginning
on or after 1 July 2007 or later periods but which the
Group has not early adopted:
• NZ IFRIC 13, Customer loyalty programmes
(effective from annual periods beginning on or after 1
July 2008). NZ IFRIC 13 requires SKYCITY to allocate
a portion of gaming revenue to the loyalty points
scheme as a liability. Currently the Group treats this
amount as an expense. There is not expected to be a
signifi cant impact on net profi t.
The Group will apply NZ IFRIC 13 from 1 July 2007.
• NZ IFRS 7, Financial Instruments: Disclosures
and a complementary Amendment to NZ IAS 1,
Presentation of Financial Statements Capital
Disclosures (effective from annual periods beginning on
or after 1 January 2007). NZ IFRS 7 introduces new
disclosures to improve the information about fi nancial
instruments. It requires the disclosure of qualitative
and quantitative information about exposure to risks
arising from fi nancial instruments, including specifi ed
minimum disclosures about credit risk, liquidity risk
and market risk, including sensitivity analysis to market
risk. It replaces NZ IAS 30, Disclosures in the Financial
Statements of Banks and Similar Financial Institutions,
and disclosure requirements in NZ IAS 32, Financial
Instruments: Disclosure and Presentation. The
amendment to NZ IAS 1 introduces disclosures about
the level of an entity’s capital and how it manages
capital. The Group assessed the impact of NZ IFRS 7
and the amendment to NZ IAS 1 and concluded that
the main additional disclosures will be the sensitivity
analysis to market risk and the capital disclosures as
required by the amendment of NZ IAS 1. The Group
will apply NZ IFRS 7 and the amendment to NZ IAS 1
from 1 July 2007.
(x) Changes in Accounting Policies
There have been no signifi cant changes in accounting
policies during the current year. Accounting policies have
been applied on a basis consistent with prior years.
Certain comparatives have been restated in order to
conform to current year presentation. The nature of
these changes is to increase the level of disclosure
around expenses, to align fi xed asset classifi cations
between years and to amend 2006 segmental
disclosures. There is no impact on net profi t.
94 I FINANCIALS
3. REVENUE
Gaming
Non-gaming
NOTES TO THE
FINANCIAL STATEMENTS
CONSOLIDATED
2007
$000
576,023
222,552
798,575
2006
$000
578,391
173,978
752,369
PARENT
2007
$000
-
-
-
2006
$000
-
-
-
Non-gaming revenue includes revenues from hotels, cinemas, food and beverage, convention centre, car parking,
property rentals and Sky Tower.
4. OTHER INCOME
Interest income
Dividend income
Net gain on disposal of property, plant and equipment
Transfer from foreign currency translation reserve
Fair value gains on fi nancial assets at fair value
through profi t or loss
Fair value adjustment to investment property (note 13)
Other income
Dividends from wholly-owned entities
CONSOLIDATED
PARENT
2007
$000
6,336
4
3,383
3,345
-
-
-
-
2006
$000
3,583
367
-
-
4,107
(166)
-
-
13,068
7,891
2007
$000
208
-
-
-
-
-
2006
$000
971
-
-
-
-
-
10,578
100,311
111,097
2,131
106,251
109,353
FINANCIALS I 95
NOTES TO THE
FINANCIAL STATEMENTS
5. EXPENSES
Profi t before income tax includes the following
specifi c expenses:
Depreciation
Buildings
Plant and equipment
Other
Furniture and fi ttings
Motor vehicles
Total depreciation
Amortisation
Casino licences
Software
Total amortisation
Finance costs
CONSOLIDATED
2007
$000
2006
$000
PARENT
2007
$000
18,704
39,200
25
5,968
256
18,081
33,889
57
6,534
275
-
155
-
-
-
2006
$000
-
131
-
-
-
64,153
58,836
155
131
2,452
5,622
8,074
2,341
3,839
6,180
-
99
99
-
26
26
Interest and fi nance charges paid/payable
Exchange losses/(gains) on foreign currency
borrowings
93,295
66
94,263
(10,298)
10,128
(1)
9,983
-
Total fi nance costs
93,361
83,965
10,127
9,983
Rental expense relating to operating leases
Lease payments
Total rental expense relating to operating leases
Other expenses
Utilities, insurance and rates
Community funding and gaming levies
Property expenses
Other
Total other expenses
Restructuring costs
Restructuring costs
14,331
14,331
21,257
8,715
32,207
59,040
8,076
8,076
19,580
8,467
21,591
55,874
121,219
105,512
-
-
262
-
-
-
-
219
-
-
15,871
16,133
10,597
10,816
4,322
-
4,322
-
Restructuring costs relate to redundancy and other payments.
96 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
6. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity,
its related practices and non-related audit fi rms:
CONSOLIDATED
2007
$000
2006
$000
PARENT
2007
$000
(a) Assurance Services
Audit services
PricewaterhouseCoopers
Compliance audit fees
Statutory audit fees
Other audit fi rms for the audit or review of fi nancial
reports of subsidiaries
Total remuneration for audit services
Other assurance services provided by
PricewaterhouseCoopers
Accounting advice and assistance
Financial due diligence
Systems assurance
IFRS accounting assistance
Tax compliance services
Total remuneration for other assurance services
66
721
9
796
116
-
39
25
184
364
36
619
55
710
242
382
68
73
223
988
Total remuneration for assurance services
1,160
1,698
(b) Other Services
PricewaterhouseCoopers
Taxation advisory services
Business process and effi ciency review
Total other services
459
170
629
1,429
-
1,429
66
125
-
191
112
-
-
-
-
112
303
-
170
170
2006
$000
36
111
-
147
242
-
68
73
42
425
572
617
-
617
The Group employs PricewaterhouseCoopers on assignments additional to their statutory audit duties where
PricewaterhouseCoopers’ expertise and experience with the Group are important and auditor independence is
not impaired. These assignments are principally tax advice and due diligence reporting on acquisitions. In other
circumstances other external advisers are used.
FINANCIALS I 97
NOTES TO THE
FINANCIAL STATEMENTS
7.
INCOME TAX EXPENSE
(a) Income Tax Expense
Current tax
Deferred tax
Under/(over) provided in prior years
Income tax expense
Deferred income tax/(revenue) expense included in
income tax expense comprises:
Decrease/(increase) in deferred tax assets (note 21)
(Decrease)/increase in deferred tax liabilities (note 22)
(b) Numerical Reconciliation of Income Tax Expense to
Prima Facie Tax Payable
Profi t from continuing operations before income tax
expense
CONSOLIDATED
2007
$000
2006
$000
PARENT
2007
$000
2006
$000
40,999
(8,234)
360
33,125
1,919
(10,153)
(8,234)
22,880
10,218
(508)
32,590
(5,744)
15,962
10,218
-
-
-
-
-
-
-
-
-
-
-
-
-
-
131,555
152,338
63,639
71,871
Tax at the New Zealand tax rate of 33% (2006: 33%)
43,413
50,272
21,001
23,717
Tax effect of amounts which are not deductible/
(taxable) in calculating taxable income:
Inter-company eliminations
Expenditure not deductible for tax
Share of net profi t of associates
Change in NZ corporate tax rate (refer below)
Foreign exchange rate differences (refer below)
Non-taxable income
Exempt dividends received
Share of partnership expenditure
Non-taxable gain on disposal of fi xed assets
Other
Difference in overseas tax rates
Under/(over) provision in prior years
Income tax expense
-
1,964
(1,470)
(3,681)
4,591
(417)
-
(3,640)
(3,890)
(1,050)
35,820
(3,150)
455
(2,695)
33,125
-
2,034
(1,424)
-
(8,781)
(58)
-
(3,639)
-
(754)
37,650
(4,651)
(409)
(5,060)
32,590
11,969
133
11,147
199
-
-
-
-
-
-
-
-
(33,103)
(35,063)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The weighted average applicable tax rate was 25.2% (2006: 21.4%). The increase in tax rate from 2006 to 2007
was primarily due to movements in the New Zealand dollar against the Australian dollar which resulted in tax
assessable items but no associated profi t before tax impact, partially offset by accounting for the lowering of the New
Zealand corporate tax rate effective from 1 July 2008.
98 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
8. EARNINGS PER SHARE
(a) Reconciliations of Earnings Used in
Calculating Earnings Per Share
Basic earnings per share
Profi t attributable to the ordinary equity holders of the
company used in calculating basic earnings per share
Diluted earnings per share
Profi t attributable to the ordinary equity holders of the
company used in calculating basic earnings per share
Interest on capital notes
Interest on SKYCITY ACES
Tax on the above
Profi t attributable to the ordinary equity holders of the
company used in calculating diluted earnings per share
CONSOLIDATED
PARENT
2007
$000
2006
$000
2007
$000
2006
$000
98,402
120,129
63,639
71,871
98,402
10,064
10,253
(6,705)
120,129
9,892
6,379
(5,369)
63,639
10,064
-
71,871
9,892
-
(3,321)
(3,264)
112,014
131,031
70,382
78,499
(b) Weighted Average Number of Shares Used as the Denominator
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
SKYCITY ACES
Options/share rights
Capital notes
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted earnings per share
2007
NUMBER
2006
NUMBER
440,556,530
421,218,240
33,939,147
33,942,891
6,945,011
9,207,463
24,382,354
22,937,474
505,823,042
487,306,068
(c) Information Concerning the Classifi cation of Securities
(i) SKYCITY ACES
SKYCITY ACES are considered to be potential ordinary shares and have been included in the determination of diluted
earnings per share from their date of issue. The SKYCITY ACES have not been included in the determination of basic
earnings per share. Details relating to the SKYCITY ACES are set out in note 20.
(ii) Options/Share Rights
Options and rights granted to employees under the SKYCITY Executive Share Option and Rights Plans are considered
to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent
to which they are dilutive. The options and rights have not been included in the determination of basic earnings per
share. Details relating to the options and rights are set out in note 29.
(iii) Capital Notes
Capital notes are considered to be potential ordinary shares and have been included in the determination of diluted
earnings per share from their date of issue. The notes have not been included in the determination of basic earnings
per share. Details relating to the notes are set out in note 19.
FINANCIALS I 99
NOTES TO THE
FINANCIAL STATEMENTS
9. RECEIVABLES AND PREPAYMENTS
CONSOLIDATED
PARENT
Trade receivables
2007
$000
6,921
2006
$000
6,330
Advance to Christchurch Hotels Limited
16,415
16,422
Sundry receivables
Prepayments
Amounts due from subsidiaries
5,298
2,362
-
5,933
2,118
-
30,996
30,803
2007
$000
-
-
34
691
2006
$000
-
-
92
170
30,670
31,395
33,904
34,166
10. DERIVATIVE FINANCIAL INSTRUMENTS
Current assets
Interest rate swaps - cash fl ow hedges
Total current derivative fi nancial instrument assets
Non-current assets
Interest rate swaps - cash fl ow hedges
Cross-currency interest rate swaps - cash fl ow hedges
Cross-currency interest rate swaps - fair value hedges
Total non-current derivative fi nancial instrument assets
Current liabilities
Forward foreign currency contracts
Total current derivative fi nancial instrument liabilities
Non-current liabilities
Interest rate swaps - cash fl ow hedges
Cross-currency interest rate swaps - cash fl ow hedges
Cross-currency interest rate swaps - fair value hedges
Total non-current derivative fi nancial instrument liabilities
FAIR VALUE
NOTIONAL PRINCIPAL
2007
$000
334
334
2006
$000
1,477
1,477
2007
$000
2006
$000
48,006
120,000
48,006
120,000
26,865
2,089
622,529
-
-
33,071
1,895
-
-
313,236
365,028
21,592
26,865
37,055
622,529
699,856
-
-
-
47,861
2,913
50,774
25
25
7,701
7,701
12,195
12,195
3,072
-
264,958
-
-
3,072
365,028
21,592
386,620
-
-
264,958
The Group is subject to currency risk, interest rate risk and credit risk as a result of its operations. To manage and
limit the effects of those fi nancial risks, the board of directors has approved policy guidelines and authorised the
use of various fi nancial instruments. The policies approved and the fi nancial instruments being utilised at balance
date are outlined on the following page.
100 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
10. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
Currency Risk
Currency risk arises from movements in foreign exchange rates and can impact cash fl ows.
Payments to overseas suppliers are made using the currency conversion rate at the date of payment. The value of
such transactions has been and will continue to be at a relatively low level.
For certain more signifi cant committed expenditure it is the Group’s policy to enter into forward foreign exchange
contracts to manage the exposure to fl uctuations in currency rates. There were no forward foreign exchange contracts
hedging expenditure commitments as at 30 June 2007 (2006: nil).
The currency risk and interest rate risk in foreign currencies relates to funding facilities and Australian investments. To
manage these, the Group utilises cross-currency interest rate swaps, forward foreign exchange contracts and interest
rate swap contracts within parameters set out in the Group treasury policy.
Credit Risk
Credit risk is the risk of the failure of a debtor or counterparty to honour its contractual obligation.
Financial assets, which potentially subject the Group and parent company to concentrations of credit risk, consist
principally of cash, short-term deposits, trade receivables, interest rate swaps, cross-currency interest rate swaps and
forward foreign exchange contracts. The maximum credit risk at 30 June 2007 is the fair value of the fi nancial asset/
liability. The Group and parent company’s cash equivalents and short-term deposits are placed with high credit quality
fi nancial institutions. Trade receivables are presented net of the allowance for estimated doubtful receivables. Credit
risk with respect to trade receivables is limited due to the relatively low value of receivables at any given time as the
nature of the business is cash oriented. Concentration of credit exposure is managed within a Group policy approved
by the directors.
Interest Rate Risk
To ensure the Group’s cost of funds is reasonably predictable from year to year, it is the Group’s policy that fl oating rate
debt does not exceed 50% of total debt. Furthermore, of fi xed rate debt 30% to 70% must re-price within one to fi ve
years, 30% to 70% in fi ve to ten years and 0% to 20% in ten to fi fteen years. The Group uses interest rate and cross-
currency interest rate swaps to manage its interest rate risk. The interest on debt is either converted from fi xed to fl oating
or fl oating to fi xed through entering into interest rate swaps or cross-currency interest rate swap agreements.
Gains and losses on derivatives which are part of an effective cash fl ow hedging relationship are recognised in the
cash fl ow hedge reserve. The balance in the reserve is expected to be released to the Income Statement over the
maturity profi le of the underlying debt as detailed in note 18.
Refer to note 18 for the Group’s exposure to interest rate risk.
11. ASSETS CLASSIFIED AS HELD FOR SALE
SKYCITY Metro Centre
On 11 June 2007 SKYCITY sold the SKYCITY Metro Centre.
CONSOLIDATED
PARENT
2007
$000
-
2006
$000
52,400
2007
$000
-
2006
$000
-
FINANCIALS I 101
NOTES TO THE
FINANCIAL STATEMENTS
12. PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
At 30 June 2005
Cost
LAND
$000
BUILDINGS
$000
PLANT &
EQUIPMENT
$000
FIXTURES &
FITTINGS
$000
MOTOR
VEHICLES
$000
CAPITAL
WORK IN
PROGRESS
$000
TOTAL
$000
163,146
627,829
225,981
82,044
811
98,494 1,198,305
Accumulated depreciation
-
(92,523)
(144,377)
(42,989)
(449)
-
(280,338)
Net book value
163,146
535,306
81,604
39,055
362
98,494
917,967
Movements in the year
ended 30 June 2006
Opening net book value
163,146
535,306
81,604
39,055
362
98,494
917,967
Exchange differences
Net additions
Depreciation charge
Transfers
1,564
6,354
12,027
81,917
2,705
48,118
-
-
(18,081)
(33,889)
-
-
457
(2,860)
(6,534)
-
Closing net book value
171,064
611,169
98,538
30,118
At 30 June 2006
Cost
171,064
723,882
278,122
80,172
Accumulated depreciation
-
(112,713)
(179,584)
(50,054)
40
3,216
20,009
318
-
133,847
(275)
-
445
1,207
(762)
(57)
(58,836)
(77,864)
(77,864)
23,789
935,123
23,789 1,278,236
-
(343,113)
Net book value
171,064
611,169
98,538
30,118
445
23,789
935,123
Movements in the year
ended 30 June 2007
Opening net book value
171,064
611,169
Exchange differences
(1,477)
(10,875)
98,538
(3,486)
30,118
445
23,789
935,123
(653)
(26)
(258)
(16,775)
Net additions
(3,421) 21,649
44,657
2,047
108
20,871
85,911
Depreciation charge
-
(18,704)
(39,200)
Closing net book value
166,166
603,239
100,509
(5,968)
25,544
(256)
271
(25)
(64,153)
44,377
940,106
At 30 June 2007
Cost
166,166
718,792
307,831
76,738
1,246
44,377 1,315,150
Accumulated depreciation
-
(115,553)
(207,322)
(51,194)
Net book value
166,166
603,239
100,509
25,544
(975)
271
-
(375,044)
44,377
940,106
102 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
12. PROPERTY, PLANT AND EQUIPMENT (continued)
PARENT
At 30 June 2005
Cost
Accumulated depreciation
Net book value
Movements in the year ended 30 June 2006
Opening net book value
Additions
Depreciation charge
Closing net book value
At 30 June 2006
Cost
Accumulated depreciation
Net book value
Movements in the year ended 30 June 2007
Opening net book value
Net additions
Depreciation charge
Closing net book value
At 30 June 2007
Cost
Accumulated depreciation
Net book value
PLANT &
EQUIPMENT
$000
CAPITAL WORK
IN PROGRESS
$000
520
(244)
276
276
493
(131)
638
988
(350)
638
638
136
(155)
619
1,105
(486)
619
512
-
512
512
811
-
1,323
1,323
-
1,323
1,323
(409)
-
914
914
-
914
TOTAL
$000
1,032
(244)
788
788
1,304
(131)
1,961
2,311
(350)
1,961
1,961
(273)
(155)
1,533
2,019
(486)
1,533
Borrowing costs in relation to the funding of the Auckland Main Gaming Floor refurbishment, cinema construction and
car park building purchases (2006: car park building purchases) have been capitalised to these projects, $1,141,522
(2006: $1,223,659). Total capitalised interest and facility fees included in the cost of land and buildings at 30 June 2007
is $47,903,810 (2006: $46,762,288). Interest is capitalised based on the interest rate on the syndicated bank facility.
A memorandum of encumbrance is registered against the title of land for the Auckland casino in favour of Auckland City
Council. Auckland City Council requires prior written consent before any transfer, assignment or disposition of the land.
The intent of the covenant is to protect the council’s rights under the resource consent, relating to the provision of the
bus terminus, public car park and the provision of public footpaths around the complex.
A further encumbrance records the Council’s interest in relation to the sub soil areas under Federal and Hobson Streets
used by SKYCITY as car parking and a vehicle tunnel. The encumbrance is to notify any transferee of the council’s
interest as lessor of the sub soil areas.
FINANCIALS I 103
NOTES TO THE
FINANCIAL STATEMENTS
12. PROPERTY, PLANT AND EQUIPMENT (continued)
The Hamilton site is subject to the normal rights that the Crown reserves in respect of minerals and mining in relation
to the subsoil areas. Furthermore, the land title is subject to Section 27B of the State Owned Enterprises Act 1986
which does not provide for the owner of the land to be heard in relation to any recommendations of the Waitangi
Tribunal for the resumption of the land. At balance date the company was not aware of any matters pertaining to
the land under the State Owned Enterprises Act 1986. Drainage rights have been granted over parts of the land
appurtenant to Lot 2 Plan 5.23789 (CT22C/1428). There is also a right of way granted over part of Lot 1 and part of
Lot 2 DP580554.
13. INVESTMENT PROPERTIES
At fair value
Balance at the beginning of the year
Acquisitions
Capitalised subsequent expenditure
Net (loss) from fair value adjustment
Transfer to assets held for sale
Balance at the end of the year
CONSOLIDATED
2007
$000
8,593
-
252
-
-
8,845
2006
$000
52,500
8,593
66
(166)
(52,400)
8,593
Rental income
Direct operating expenses from property that
generated rental income
CONSOLIDATED
2007
$000
406
2006
$000
4,663
2
953
PARENT
2007
$000
-
-
On 29 June 2006 the Group purchased 97-101 Hobson Street in Auckland for $8,593,000 (including costs).
Investment properties are not depreciated and are required to be accounted for at fair value each year. 97-101
Hobson Street was valued as at 30 June 2007 by DTZ New Zealand Limited, which employs registered valuers and
members of the New Zealand Property Institute. The basis of valuation is fair value being the estimated amount
for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arms
length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without
compulsion.
The SKYCITY Metro Centre in Auckland was originally classifi ed as an investment property. In 2006 SKYCITY
announced its intention to sell the SKYCITY Metro Centre and as a result this building was transferred to assets held
for sale in 2006.
104 I FINANCIALS
PARENT
2007
$000
2006
$000
-
-
-
-
-
-
-
-
-
-
-
-
2006
$000
-
-
14. INTANGIBLE ASSETS
CONSOLIDATED
At 30 June 2005
Cost
Accumulated depreciation
Net book amount
Movements in the year ended 30 June 2006
Opening net book amount
Exchange differences
Additions
Amortisation charge
Closing net book amount
At 30 June 2006
Cost
Accumulated amortisation
Net book amount
Movements in the year ended 30 June 2007
Opening net book amount
Exchange differences
Additions
Amortisation charge
Closing net book amount
At 30 June 2007
Cost
Accumulated amortisation
Net book amount
NOTES TO THE
FINANCIAL STATEMENTS
GOODWILL
$000
CASINO
LICENCES
$000
COMPUTER
SOFTWARE
$000
TOTAL
$000
153,655
232,610
-
(14,737)
153,655
217,873
153,655
217,873
12,180
25,326
2,608
44
-
(2,341)
168,443
240,902
168,443
259,926
-
(19,024)
168,443
240,902
21,008
(15,520)
5,488
5,488
189
14,828
(3,839)
16,666
38,043
(21,377)
16,666
407,273
(30,257)
377,016
377,016
37,695
17,480
(6,180)
426,011
466,412
(40,401)
426,011
168,443
240,902
16,666
426,011
(11,452)
(23,817)
37,659
-
-
(2,452)
(391)
13,533
(5,622)
(35,660)
51,192
(8,074)
194,650
214,633
24,186
433,469
194,650
234,120
51,260
-
(19,487)
(27,074)
194,650
214,633
24,186
480,030
(46,561)
433,469
FINANCIALS I 105
NOTES TO THE
FINANCIAL STATEMENTS
14. INTANGIBLE ASSETS (continued)
PARENT
Movements in the year ended 30 June 2006
Opening net book amount
Additions
Amortisation charge
Closing net book amount
At 30 June 2006
Cost
Accumulated amortisation and impairment
Net book amount
Movements in the year ended 30 June 2007
Opening net book amount
Additions
Amortisation charge
Closing net book amount
At 30 June 2007
Cost
Accumulated amortisation
Net book amount
COMPUTER
SOFTWARE
$000
TOTAL
$000
-
173
(26)
147
173
(26)
147
147
108
(99)
156
227
(71)
156
-
173
(26)
147
173
(26)
147
147
108
(99)
156
227
(71)
156
Impairment Tests for Intangibles with Indefinite Lives
(a)
Goodwill and licences with indefi nite lives are allocated to the Group’s cash-generating units (CGUs) identifi ed below.
REST OF
NEW ZEALAND
$000
SKYCITY
DARWIN
$000
90,578
104,072
-
34,912
90,578
138,984
52,919
115,524
-
38,798
52,919
154,322
TOTAL
$000
194,650
34,912
229,562
168,443
38,798
207,241
2007
Goodwill
Casino licence
2006
Goodwill
Casino licence
106 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
14. INTANGIBLE ASSETS (continued)
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash
fl ow projections approved by directors covering a three year period. The growth rate does not exceed the long-term
average growth rate for the business in which the CGU operates. There is a surplus between the carrying values of
indefi nite life assets and value-in-use calculation.
(b) Key Assumptions Used for Value-in-Use Calculations of Cash-Generating Units
Rest of New Zealand
SKYCITY Darwin
GROSS MARGIN
GROWTH RATE
DISCOUNT RATE
2007
%
44.4
49.9
2006
%
49.4
47.4
2007
%
3.0
3.0
2006
%
3.0
3.0
2007
%
8.7
8.7
2006
%
8.6
8.6
15. AVAILABLE-FOR-SALE FINANCIAL ASSETS
CONSOLIDATED
PARENT
Balance at the beginning of the year
2007
$000
2,622
2006
$000
-
Adjustment on adoption of NZ IAS 32 and NZ IAS 39
-
2,578
Exchange differences
Revaluation surplus transfer to equity
Balance at the end of the year
(262)
154
113
(69)
2,514
2,622
-
-
-
-
-
2007
$000
2006
$000
Listed equity securities
Unlisted equity securities
CONSOLIDATED
PARENT
2007
$000
1,492
1,022
2,514
2006
$000
1,600
1,022
2,622
2007
$000
-
-
-
Transition to NZ IAS 32 and NZ IAS 39
The Group had taken the exemption available under NZ IFRS 1 First-time Adoption of New Zealand Equivalents to
International Financial Reporting Standards to apply NZ IAS 32 Financial Instruments: Disclosure and Presentation and
NZ IAS 39 Financial Instruments: Recognition and Measurement from 1 July 2005. At the date of transition to these
standards (1 July 2005) the Group reclassifi ed the investments in Christchurch Hotels Limited and International All
Sports Limited previously recognised as other investments.
FINANCIALS I 107
-
-
-
-
-
2006
$000
-
-
-
NOTES TO THE
FINANCIAL STATEMENTS
16. INVESTMENTS IN ASSOCIATES
(a)
Carrying Amounts
Information relating to associates is set out below.
NAME OF COMPANY
Unlisted
Vista Entertainment
Solutions Limited
Christchurch Casinos Limited
PRINCIPAL AC-
TIVITY
OWNERSHIP
INTEREST
CONSOLIDATED
PARENT
2007
%
2006
%
2007
$000
2006
$000
2007
$000
2006
$000
Ticket
software
systems
Casino
operator
50
41
25
41
2,903
254
77,928
80,831
78,050
78,304
-
-
-
-
-
-
Vista Entertainment Solutions Limited is incorporated in New Zealand and has a 31 December balance date.
The directors are not aware of any signifi cant events or transactions since Vista Entertainment Solutions Limited’s
balance date.
Christchurch Casinos Limited is incorporated in New Zealand and has a 31 March balance date. The directors are not
aware of any signifi cant events or transactions since Christchurch Casinos Limited’s balance date.
(b) Movements in Carrying Amounts
Balance at the beginning of the year
Share of profi ts after income tax
Elimination of inter-entity profi ts
Christchurch Casinos Limited
Purchase of a further 25% interest in Vista Entertainment Solutions
as part of the Village acquisition
Dividends received/receivable
Carrying amount at the end of the fi nancial year
(including goodwill $55,269,000 (2006: $53,127,000))
(c)
Summarised Financial Information of Significant Associates
2007
$’000
78,304
4,661
(209)
2006
$’000
281
4,316
-
-
76,784
2,500
-
(4,425)
(3,077)
80,831
78,304
GROUP’S SHARE OF
ASSETS
$000
LIABILITIES
$000
REVENUES
$000
PROFIT
$000
16,236
16,236
16,774
16,774
1,118
1,118
1,712
1,712
22,743
22,743
19,803
19,803
4,200
4,200
4,316
4,316
2007
Christchurch Casinos Limited
2006
Christchurch Casinos Limited
108 I FINANCIALS
17. PAYABLES
Trade payables
Accrued expenses
Employee benefi ts
Amounts due to subsidiaries
NOTES TO THE
FINANCIAL STATEMENTS
CONSOLIDATED
PARENT
2007
$000
19,165
71,579
28,757
-
2006
$000
11,995
58,295
30,486
-
119,501
100,776
2007
$000
-
5,288
-
2006
$000
-
3,061
-
364,002
369,290
413,891
416,952
18. NON-CURRENT LIABILITIES - INTEREST BEARING LIABILITIES
CONSOLIDATED
PARENT
Secured
Bank loans - SKYCITY Cinemas Group
Unsecured
United States private placement
Syndicated bank facility
Deferred funding expenses
2006
$000
2007
$000
2006
$000
2007
$000
-
52
534,639
640,408
221,000
314,007
(2,637)
(3,563)
-
-
-
-
-
-
-
-
-
-
-
-
Total unsecured non-current interest-bearing borrowings
753,002
950,852
Total non-current interest-bearing liabilities
753,002
950,904
SKYCITY Cinemas Group
At balance date, SKYCITY Rialto JV had a bank facility of $250,000 (2006: $500,000) which was undrawn, secured by
registered mortgage debenture over Rialto Cinemas Limited. SKYCITY has a 50% interest in Rialto Cinemas Limited.
Syndicated Bank Facility
At 30 June 2007, SKYCITY had in place a $500,000,000 (2006: $500,000,000) facility on an unsecured, negative
pledge basis maturing April 2009. The funding syndicate is comprised of ANZ National Bank Limited, Bank of New
Zealand Limited and Commonwealth Bank of Australia, New Zealand Branch. As at 30 June 2007, the undrawn
amount was $279,000,000 (2006: $186,000,000).
United States Private Placement
On 15 March 2005, SKYCITY borrowed NZ$96,571,000, A$74,900,000 and US$274,500,000 with maturity between
2012 and 2020 from private investors (primarily US based) on an unsecured basis.
The movement in the US Private Placement debt from 2006 relates to foreign exchange movement. The US Private
Placement fi xed rate US dollar borrowings have been converted to New Zealand dollar fl oating rate borrowings by use
of cross-currency interest rate swaps.
FINANCIALS I 109
NOTES TO THE
FINANCIAL STATEMENTS
18. NON-CURRENT LIABILITIES - INTEREST BEARING LIABILITIES (continued)
Interest Rate Risk
The following table sets out the Group’s exposure to interest rate risk, including the contractual repricing dates and the
effective weighted average interest rate.
PRINCIPAL - INTEREST RATE REPRICING
2007
Bank
Borrowings
Capital notes
IRS/CCIRS*
Repricing gap
2006
Bank
Borrowings
Capital notes
SKYCITY ACES
6.03 (165,035)
-
298,858
(48,007)
(27,506)
8.00 43,764
7.90 (398,960)
8.00
-
1 YEAR
OR LESS
$000
1-2
YEARS
$000
2-3
YEARS
$000
3-4
YEARS
$000
%
-
-
-
-
-
-
-
-
-
-
(123,860)
-
-
4-5
YEARS
$000
-
OVER 5
YEARS
$000
TOTAL
$000
-
43,764
(260,525)
(96,154)
(755,639)
-
-
-
-
(123,860)
(165,035)
(42,979)
(180,366)
-
(221,373)
(48,007)
(27,506)
(123,860)
(303,504)
(276,520)
(1,000,770)
PRINCIPAL - INTEREST RATE REPRICING
1 YEAR
OR LESS
$000
%
1-2
YEARS
$000
2-3
YEARS
$000
3-4
YEARS
$000
4-5
YEARS
$000
OVER 5
YEARS
$000
TOTAL
$000
7.26 42,624
7.65 (502,098)
8.00
-
-
-
-
-
-
-
-
-
-
-
(123,860)
-
SKYCITY ACES
5.75 (183,195)
IRS/CCIRS*
Repricing gap
-
191,576
(51,639)
(15,000)
(24,426)
(451,093)
(51,639)
(15,000)
(148,286)
* Interest rate swaps and cross-currency interest rate swaps. Notional principal amounts.
-
-
-
-
-
-
-
42,624
(452,369)
(954,467)
-
-
(123,860)
(183,195)
(100,511)
-
(552,880)
(1,218,898)
For both 2007 and 2006 capital notes are the only interest-bearing debt within the parent entity. The parent entity is
not party to any derivatives.
Fair Values
The fair value of interest-bearing liabilities, capital notes and SKYCITY ACES is not materially different from the carrying
values.
110 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
19. SUBORDINATED DEBT - CAPITAL NOTES
CONSOLIDATED
PARENT
2007
$000
2006
$000
2007
$000
2006
$000
Balance at the beginning of the year
123,860
121,688
123,860
121,688
Reissued during the year
Balance at the end of the year
Deferred expenses at cost
Accumulated amortisation
Balance at the end of the year
-
2,172
-
2,172
123,860
123,860
123,860
123,860
178
(74)
104
178
(38)
140
178
(74)
104
178
(38)
140
Net capital notes at the end of the year
123,756
123,720
123,756
123,720
In May 2000, SKYCITY Entertainment Group Limited issued 150 million unsecured subordinated capital notes at an
issue price of $1.00 per note.
On 16 May 2005, the capital notes were reissued for a new term of fi ve years to 15 May 2010. The notes were
reissued on the same terms and conditions except for the new coupon interest rate of 8.0% (previously 9.25%).
Prior to the next election date (15 May 2010), the company must notify holders of the proportion of their capital notes
it will redeem (if any) and, if applicable, the new conditions (including as to interest rate, interest dates, new election
date, and other modifi cations to the existing conditions) that will apply to the capital notes from the election date.
Holders may then choose either to retain some or all of their capital notes on the new terms, and/or to convert some
or all of their capital notes into SKYCITY Entertainment Group Limited ordinary shares. SKYCITY Entertainment Group
Limited may elect to redeem or purchase some or all of the capital notes that holders have elected to convert, at an
amount equal to the principal amount plus any accrued but unpaid interest.
If capital notes are converted, holders will receive ordinary shares equal in value to the aggregate of the principal
amount of the notes plus any accrued but unpaid interest. The value of the shares is determined on the basis of 95%
of the weighted average sale price of an ordinary share on the New Zealand exchange during the 15 days prior to the
election dates.
The capital notes do not carry voting rights. Capital note holders are not entitled to any distributions made by
SKYCITY Entertainment Group Limited in respect of its ordinary shares prior to the conversion date of the capital
notes, and do not participate in any change in value of the issued shares of SKYCITY Entertainment Group Limited.
As at 30 June 2007, there were 150,000,000 (2006: 150,000,000) capital notes on issue, of which 123,859,750
(2006: 123,859,750) are issued with 26,140,250 (2006: 26,140,250) held as treasury stock by SKYCITY
Entertainment Group Limited.
FINANCIALS I 111
NOTES TO THE
FINANCIAL STATEMENTS
20. SUBORDINATED DEBT - SKYCITY ACES
SKYCITY ACES
Deferred expenses
CONSOLIDATED
PARENT
2007
$000
2006
$000
165,035
183,195
(3,625)
(5,239)
161,410
177,956
2007
$000
-
-
-
2006
$000
-
-
-
In October 2005, SKYCITY Investments Australia Limited issued in Australia 1.5 million unsecured subordinated
perpetual reset exchangeable securities (SKYCITY ACES) at an issue price of A$100.00 per note. The SKYCITY ACES
offer holders a fully franked variable rate coupon until the fi rst reset date of 15 December 2010. The coupon is reset
quarterly at the Australian 90-day bank bill rate (BBSW) plus 2.25%, net of the Australian corporate tax rate (30%) with
franking credits attached.
On any reset date (the fi rst being 15 December 2010 and every fi ve years thereafter), the issuer may elect to exchange
or redeem the SKYCITY ACES or change the coupon rate and certain other terms. The holder can request exchange
of the SKYCITY ACES at any reset date. If the holder requests exchange the issuer may elect to exchange for ordinary
shares or redeem or repurchase for cash.
Coupons are payable unless the directors of the issuer determine that a coupon not be paid. If a coupon is not paid
for this reason, the holder has no right to receive that coupon, as coupons are non-cumulative. However, if a coupon
is not paid, SKYCITY Entertainment Group Limited will be prohibited from paying dividends on its ordinary shares until
certain conditions are satisfi ed.
The SKYCITY ACES do not carry voting rights and holders are not entitled to any distributions made by SKYCITY
Entertainment Group Limited in respect of its ordinary shares prior to exchange. There is a minimum exchange ratio
so a SKYCITY ACES holder participates in any increase in the SKYCITY Entertainment Group Limited ordinary share
price above A$7.40.
The movement in the SKYCITY ACES debt from 2006 relates to foreign exchange movements and is offset by
changes in the foreign currency translation reserve.
112 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
CONSOLIDATED
PARENT
2007
$000
2006
$000
2007
$000
2006
$000
21. DEFERRED TAX ASSETS
THE BALANCE COMPRISES TEMPORARY DIFFERENCES
ATTRIBUTABLE TO:
Amounts recognised in profi t or loss
Provision and accruals
Fixed assets
Foreign exchange differences
Tax rate change
Tax losses
Other
Amounts recognised directly in equity
Cash fl ow hedges
Deferred tax assets
MOVEMENTS
11,205
14,096
263
(2,788)
(808)
7,120
525
26
(4,322)
-
6,510
1,889
15,517
18,199
461
8,468
15,978
26,667
Balance at the beginning of the year
26,667
13,675
Under provided in prior years
Credited (charged) to the income statement (note 7)
Credited to equity
Change in NZ corporate tax rate
Foreign exchange differences
Balance at the end of the year
EXPECTED SETTLEMENT
Within 12 months
In excess of 12 months
(190)
(1,111)
(8,468)
(808)
(112)
-
5,744
8,468
-
(1,220)
15,978
26,667
3,309
12,669
15,978
4,237
22,430
26,667
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
FINANCIALS I 113
NOTES TO THE
FINANCIAL STATEMENTS
22. DEFERRED TAX LIABILITIES
THE BALANCE COMPRISES TEMPORARY
DIFFERENCES ATTRIBUTABLE TO:
Amounts recognised in profi t or loss
Provisions and prepayments
Depreciation
Tax rate change
Foreign exchange
Amounts recognised directly in equity
Cash fl ow hedges
Deferred tax liabilities
MOVEMENTS
Balance at the beginning of the year
Charged to the income statement (note 7)
Credited to equity
Change in NZ corporate tax rate
Foreign exchange differences
Balance at the end of the year
EXPECTED SETTLEMENT
Within 12 months
In excess of 12 months
23. IMPUTATION CREDITS
Balance at the beginning of the year
Tax payments, net of refunds
Credits attached to dividends/distributions paid
Balance at the end of the year
CONSOLIDATED
PARENT
2007
$000
2006
$000
2007
$000
2006
$000
1,173
2,314
55,783
54,818
(4,635)
(2,097)
-
4,869
50,224
62,001
2,768
(1,405)
52,992
60,596
60,596
(5,518)
3,842
(4,635)
(1,293)
45,438
15,962
(1,405)
-
601
52,992
60,596
329
52,663
52,992
2,891
57,705
60,596
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
CONSOLIDATED
2007
$’000
(2,663)
9,341
(8,676)
(1,998)
2006
$’000
(17,325)
36,499
(21,837)
(2,663)
As required by relevant tax legislation, the imputation credit account had a credit balance as at 31 March 2007. The
current debit balance is a result of imputation credits attached to the interim distribution paid in April 2007.
114 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
24. SHARE CAPITAL
2007
SHARES
2006
SHARES
2007
$000
2006
$000
Opening balance of ordinary shares issued
429,287,177 417,613,974
281,735
226,726
Shares issued under dividend reinvestment plan
Shares issued under profi t distribution plan
-
1,353,016
-
21,421,910 10,320,187
100,114
Exercise of share rights/options
Issue of share rights/options
650,667
2,785,202
-
Shares issued under employee bonus scheme
480,583
479,704
Shares repurchased and not cancelled
-
5,956
786
2,126
(21,246)
-
-
6,431
50,450
10,009
874
2,139
-
Shares repurchased and cancelled
(1,131,250)
(3,264,906)
(5,403)
(14,894)
Closing balance of ordinary shares issued
450,709,087 429,287,177
364,068
281,735
All ordinary shares rank equally with one vote attached to each fully-paid ordinary share.
Repurchase and Cancellation of Shares
There has been no on-market share buyback programme in the current year.
25. RESERVES AND RETAINED PROFITS
(a) Reserves
Available-for-sale investments revaluation reserve
Hedging reserve - cash fl ow hedges
Foreign currency translation reserve
Employee share entitlement reserve
AVAILABLE-FOR-SALE INVESTMENTS
REVALUATION RESERVE
Movements
Balance at the beginning of the year
Revaluations
Balance at the end of the year
CONSOLIDATED
PARENT
2007
$000
85
2006
$000
(69)
1,227
(26,173)
(20,907)
13,123
3,526
4,948
(16,069)
(8,171)
2007
$000
-
-
-
3,526
3,526
2006
$000
-
-
-
4,948
4,948
CONSOLIDATED
PARENT
2007
$’000
2006
$’000
2007
$’000
2006
$’000
(69)
154
85
-
(69)
(69)
-
-
-
-
-
-
FINANCIALS I 115
NOTES TO THE
FINANCIAL STATEMENTS
25. RESERVES AND RETAINED PROFITS (continued)
CONSOLIDATED
PARENT
2007
$000
2006
$000
2007
$000
2006
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
HEDGING RESERVE - CASH FLOW HEDGES
Movements
Balance at the beginning of the year
(26,173)
-
Adjustment on adoption of NZ IAS 32 and NZ IAS 39
-
(4,012)
Revaluation
Transfer to net profi t
Deferred tax
Balance at the end of the year
FOREIGN CURRENCY TRANSLATION RESERVE
Movements
(62,179)
24,048
101,755
(56,082)
(12,176)
9,873
1,227
(26,173)
Balance at the beginning of the year
13,123
(8,429)
Exchange difference on translation of overseas
subsidiaries
Effect of hedging the net investment of overseas
subsidiaries
Release to income statement
Balance at the end of the year
EMPLOYEE SHARE ENTITLEMENT RESERVE
Movements
Balance at the beginning of the year
Less value of shares issued during the year
Plus value of share entitlements for the year
Balance at the end of the year
(36,820)
29,953
6,135
(3,345)
(8,401)
-
(20,907)
13,123
4,948
(2,126)
704
3,526
3,270
(2,139)
3,817
4,948
4,948
(2,126)
704
3,526
3,270
(2,139)
3,817
4,948
(i) Available-for-Sale Investments Revaluation Reserve
Changes in the fair value of investments, such as equities, classifi ed as available-for-sale fi nancial assets, are taken to
the available-for-sale investments revaluation reserve, as described in note 2(l). Amounts are recognised in profi t and
loss when the associated assets are sold or impaired.
(ii) Hedging Reserve - Cash Flow Hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash fl ow hedge that are
recognised directly in equity, as described in note 2(m). Amounts are recognised in the income statement when the
associated hedged transaction affects the income statement.
(iii) Foreign Currency Translation Reserve
Exchange differences arising on translation of foreign controlled entities are taken to the foreign currency translation
reserve, as described in note 2(d). The reserve is recognised in the income statement when the net investment is
disposed of. The release to income statement relates to a restructure of the capital structure of certain foreign
operations which is deemed to be a partial disposal.
116 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
25. RESERVES AND RETAINED PROFITS (continued)
(iv) Employee Share Entitlement Reserve
Under the SKYCITY Performance Pay Incentive Plan (PPI), selected employees have been eligible for
performance-related bonuses in respect of each of the fi nancial years ending 30 June 2000 through 30 June 2007.
The employee share entitlement reserve represents the value of ordinary shares to be issued in respect of the plan for
the years ended 30 June 2005 through 30 June 2007.
Shares are issued at the average closing price of SKYCITY Entertainment Group Limited’s shares on the New Zealand
Stock Exchange on the ten business days following the release to the New Zealand Stock Exchange of the SKYCITY
Entertainment Group Limited’s annual result for the relevant year of the Plan.
Shares issued have the same rights as existing ordinary shares and are issued as soon as possible after the tenth
business day following the release of SKYCITY Entertainment Group Limited’s annual result.
Shares under the PPI are issued in three equal instalments, being one-third of the shares on the bonus declaration
date, and provided eligibility criteria continue to be met, one-third on the next entitlement date (approximately 12
months later) and one third on the fi nal entitlement date (approximately 24 months later).
(b) Retained Profi ts
Movements in retained profi ts were as follows:
Balance at the beginning of the year
Net profi t for the year
Distributions/dividends
Adjustment on adoption of NZ IAS 39
Amalgamations accounted for at cost
Balance at the end of the year
CONSOLIDATED
PARENT
2007
$000
2006
$000
2007
$000
2006
$000
32,756
13,355
(66,130)
(36,313)
98,402
120,129
63,639
71,871
(100,114)
(100,667)
(100,114)
(100,667)
-
-
(61)
-
-
-
-
(1,021)
31,044
32,756
(102,605)
(66,130)
FINANCIALS I 117
NOTES TO THE
FINANCIAL STATEMENTS
26. MINORITY INTEREST
Balance at the beginning of the year
Share of surpluses of subsidiaries
Balance at the end of the year
CONSOLIDATED
2007
$000
2,463
28
2,491
2006
$000
2,844
(381)
2,463
The minority interest relates to the 40% of Queenstown Casinos Limited which is not owned by SKYCITY
Entertainment Group Limited.
27. DISTRIBUTIONS/DIVIDENDS
Prior year’s fi nal distribution/dividend
Interim distribution/dividend
Total distribution/dividends
CONSOLIDATED
PARENT
2007
$000
60,292
39,822
2006
$000
50,217
50,450
2007
$000
60,292
39,822
2006
$000
50,217
50,450
100,114
100,667
100,114
100,667
On 28 February 2007, the directors resolved to make a pro rata issue of bonus shares in respect of the six month
period ended 31 December 2006. The bonus shares were issued to all shareholders on the company’s register at the
close of business on Wednesday, 14 March 2006. The number of bonus shares issued was calculated as 9.0 cents
per share divided by the strike price. The strike price was set as the weighted average price of shares traded on the
NZSX during the fi ve days from 15 to 21 March inclusive, less a 2.5% discount. Shareholders were able to elect to
have the company buy back some or all of the bonus shares on the day of issue at the strike price. The proceeds
received by the shareholder as a result of having elected to sell some or all of the bonus shares were fully imputed by
the company. The bonus shares were issued and buyback proceeds paid to shareholders on Friday, 13 April 2007.
Of the interim distribution shareholders retained $26,358,194 in shares.
On 20 August 2007, the directors resolved to make a pro rata issue of bonus shares in respect of the year ended 30
June 2007 (refer to note 37 for further details).
118 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
28. SEGMENT INFORMATION
(a) Description of Segments
Geographic Segments
The Group is organised on a global basis into the following main geographic areas:
SKYCITY Auckland
SKYCITY Auckland includes casino operations, hotels, food and beverage, convention centre, carparking and
Sky Tower.
Rest of New Zealand
Rest of New Zealand includes the Corporate Offi ce and the Group’s interest in SKYCITY Hamilton, SKYCITY
Queenstown Casino, Christchurch Casino and SKYCITY Cinemas.
SKYCITY Adelaide
SKYCITY Adelaide includes casino operations and food and beverage.
SKYCITY Darwin
SKYCITY Darwin includes casino operations, food and beverage, and hotel.
Business Segments
Although the Group is managed on a geographical basis, it operates in the following business segments:
Gaming machines
A gaming machine is a device where the outcome is electronically determined, totally or partly mechanically or
electronically operated and designed for use in casino gaming.
Table games
Table games are card, dice, tiles, roulette or money wheel games typically played on a table or like station rather
than on a gaming machine or other like device.
Cinemas
New Zealand and Fiji cinema operations including any associated buildings.
Other
Other includes hotels, food and beverage, convention centre, car parking, property rentals and Sky Tower.
FINANCIALS I 119
NOTES TO THE
FINANCIAL STATEMENTS
28. SEGMENT INFORMATION (continued)
(b) Primary Reporting Format - Geographic Segments
2007
Revenue from external customers
Shares of net profi ts of associates
Other revenue/income
Total segment revenue/income
Segment result
Finance costs
Profi t before income tax
Income tax expense
Minority interest
Net profi t for the year
Segment assets*
Segment liabilities*
Investments in associates
Acquisitions of property, plant and equipment, intangibles
and other non-current segment assets
Depreciation and amortisation expense
2006
Revenue from external customers
Shares of net profi ts of associates
Other revenue
Total segment revenue/income
Segment result
Finance costs
Profi t before income tax
Income tax expense
Minority interest
Net profi t for the year
Segment assets*
Segment liabilities*
Investments in associates
SKYCITY
AUCKLAND
REST
OF NEW
ZEALAND
SKYCITY
ADELAIDE
SKYCITY
DARWIN
$000
$000
$000
$000
TOTAL
$000
417,915
118,164
153,712
108,784 798,575
-
4,454
-
-
4,454
(295)
13,903
(385)
(155)
13,068
417,620
136,521
153,327
108,629 816,097
167,814
6,425
17,911
32,766 224,916
(93,361)
131,555
(33,125)
(28)
98,402
900,515
237,433
166,053
338,968 1,642,969
121,671 1,104,466
12,747
22,551 1,261,435
-
80,831
-
-
80,831
48,582
41,621
65,933
7,051
9,485 131,051
11,552
11,374
7,680
72,227
SKYCITY
AUCKLAND
REST
OF NEW
ZEALAND
SKYCITY
ADELAIDE
SKYCITY
DARWIN
$000
$000
$000
$000
TOTAL
$000
427,444
78,438
146,889
99,598
752,369
-
4,316
2
7,889
-
-
-
-
4,316
7,891
427,446
90,643
146,889
99,598
764,576
187,623
(2,192)
19,348
31,524
236,303
(83,965)
152,338
(32,590)
381
120,129
809,129
333,186
272,195
311,322 1,725,832
65,239 1,299,092
20,184
32,534 1,417,049
-
78,304
-
-
78,304
Acquisitions of property, plant and equipment, intangibles
and other non-current segment assets
100,010
20,372
41,154
11,676
173,212
Depreciation and amortisation expense
40,174
7,504
11,045
6,293
65,016
* The difference between segment assets and segment liabilities does not refl ect the Group’s net investment in each segment.
120 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
28. SEGMENT INFORMATION (continued)
(c) Secondary Reporting Format - Business Segments
SEGMENT REVENUES FROM
EXTERNAL CUSTOMERS
SEGMENT ASSETS
ACQUISITIONS OF
PROPERTY, PLANT AND
EQUIPMENT, INTANGIBLES
AND OTHER NON-CURRENT
SEGMENT ASSETS
2007
$000
353,986
222,037
74,605
147,947
798,575
2006
$000
345,865
232,526
2007
$000
27,972
10,529
37,669
106,430
2006
$000
36,225
3,999
90,357
136,309
1,498,038
1,595,251
2007
$000
8,608
919
58,731
62,793
752,369
1,642,969
1,725,832
131,051
2006
$000
26,446
1,972
9,583
135,211
173,212
Gaming machines
Table games
Cinemas
Other
Inter-segment transactions
Segment revenues, expenses and results include transactions between segments. Such transactions are accounted
for in accordance with the Group’s internal transfer pricing policies and are eliminated on consolidation.
29. SHARE-BASED PAYMENTS
Executive Share Option Plan 1999
Options issued prior to 2002 are pursuant to the Executive Share Option Plan approved by shareholders at the annual
meeting of the company held on 28 October 1999. Options issued under the 1999 Plan are not exercisable until one
year after the date of issue provided the terms and conditions of the Plan are met, and lapse if not exercised within
fi ve years of issue.
Executive Share Option Plan 2002
Options have also been issued pursuant to the Executive Share Option Plan approved by the board in August 2002.
Options issued to executives under the 2002 Plan are exercisable after the third anniversary of the date of issue
provided the terms and conditions of the Plan are met, and lapse if not exercised within fi ve years of issue.
The exercise price of options issued under both the 1999 and 2002 Plans is the relevant base exercise price of the
option (as defi ned in the plans), adjusted for the company’s estimated cost of equity and dividends/distributions
between the issue date and the exercise date of the options.
As a result of one-for-one share splits on 16 November 2001 and 14 November 2003, the 2000 and 2001 options
converted to four shares upon exercise, and the 2002 and 2003 options, with the exception of the 450,000 tranche
issued on 9 September 2003, convert to two shares upon exercise.
The 450,000 options issued on 9 September 2003 and the 2004 and 2005 options convert to one share upon
exercise.
FINANCIALS I 121
NOTES TO THE
FINANCIAL STATEMENTS
29. SHARE-BASED PAYMENTS (continued)
Executive Share Rights Plan 2005
The Executive Share Rights Plan (Rights Plan) was approved by the directors in December 2004 and commenced on
1 July 2005 following expiry of the 2002 Executive Share Option Plan. Share rights issued under the Rights Plan are
exercisable after the third anniversary of their date of issue provided the terms and conditions of the Plan are met, and
lapse if not exercised within fi ve years. As for the 1999 and 2002 option plans, the exercise price of the share rights is
the base exercise price adjusted for the company’s estimated cost of equity and dividends/distributions between the
issue date and the exercise date of the rights.
Movements in the number of share options outstanding under the 1999 and 2002 Executive Share Option Plans and
2005 Executive Share Rights Plan are as follows:
GRANT
DATE
EXPIRY
DATE
EXERCISE
PRICE
BALANCE AT
START OF
THE YEAR
NUMBER
GRANTED
DURING THE
YEAR
NUMBER
EXERCISED
DURING THE
YEAR
NUMBER
EXPIRED
DURING THE
YEAR
NUMBER
BALANCE AT
END OF THE
YEAR
NUMBER
EXERCISABLE
AT END OF THE
YEAR
NUMBER
Consolidated and Parent - 2007
04/09/01
04/09/06
$11.61 150,000
10/09/02
10/09/07
$7.05 2,678,530
09/09/03
09/09/08
$8.83 617,000
09/09/03
09/09/08
$4.42 450,000
08/09/04
08/09/09
$4.42 1,331,167
05/09/05
05/09/10
$4.81 1,466,000
-
-
-
-
-
-
04/09/06
04/09/11
$5.15
-
2,528,970
(150,000)
-
-
-
(105,500)
(39,000) 2,534,030
2,534,030
(94,000)
(75,000)
448,000
448,000
(450,000)
-
-
(22,667)
(443,333)
865,167
-
-
(639,333)
826,667
(412,000) 2,116,970
-
-
-
-
Total
6,692,697
2,528,970
(822,167)
(1,608,666) 6,790,834
2,982,030
Weighted average exercise
price per share
$4.39
$5.15
$4.47
$5.04
$4.75
$4.12
GRANT
DATE
EXPIRY
DATE
EXERCISE
PRICE
BALANCE AT
START OF
THE YEAR
NUMBER
GRANTED
DURING THE
YEAR
NUMBER
EXERCISED
DURING THE
YEAR
NUMBER
EXPIRED
DURING THE
YEAR
NUMBER
BALANCE AT
END OF THE
YEAR
NUMBER
EXERCISABLE
AT END OF
THE YEAR
NUMBER
Consolidated and Parent - 2006
04/09/01
04/09/06
$11.61
459,000
10/09/02
10/09/07
$7.05 3,238,863
09/09/03
09/09/08
$8.83
865,667
09/09/03
09/09/08
$4.42
450,000
08/09/04
08/09/09
$4.44 1,824,500
-
-
-
-
-
(309,000)
(560,333)
-
-
150,000
150,000
2,678,530
2,678,530
(133,334)
(115,333)
617,000
-
-
450,000
(149,333)
(344,000)
1,331,167
-
-
-
-
05/09/05
05/09/10
$4.81
-
1,585,000
-
(119,000)
1,466,000
Total
6,838,030
1,585,000
(1,152,000)
(578,333)
6,692,697
2,828,530
Weighted average exercise
price per share
$4.04
$4.81
$3.80
$4.70
$4.39
$3.74
The weighted average exercise price at the date of exercise of options exercised during the year ended 30 June 2007
was $4.47 (2006: $3.80).
The weighted average remaining contractual life of options outstanding at the end of the period was 2.16 years (2006:
2.40 years).
122 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
29. SHARE-BASED PAYMENTS (continued)
Fair Value of Share Rights Granted
The assessed fair value at grant date of share rights granted during the year ended 30 June 2007 was 34.0 cents
per share right (2006: 38.0 cents). The fair value at grant date is prepared by Deloitte Corporate Finance using a
binomial option pricing model that takes into account the exercise price, the term of the rights, the vesting criteria,
the impact of dilution, the non-tradeable nature of the option, the share price at grant date and the volatility of the
returns on the underlying share and the risk-free interest rate for the term of the right. The valuation is reviewed by
PricewaterhouseCoopers as external auditors.
The model inputs for share rights granted during the year ended 30 June 2007 included:
share price at grant date: $5.20 (2006: $4.95)
(a) rights are granted for no consideration
(b) exercise price: $5.15 (2006: $4.81)
(c) grant date: 4 September 2006 (2006: 5 September 2005)
(d) expiry date: 4 September 2011 (2006: 5 September 2010)
(e)
(f) expected price volatility of the company’s shares: 19% (2006: 20%)
(g) expected dividend yield: 5.0% (2006: 4.6%)
(h) risk-free interest rate: 6.2% (2006: 5.6%).
The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the
term of the right.
Non-Executive Director Share Options
Pursuant to the Non-Executive Directors’ Share Option Plan (2000), approved by shareholders at the annual meeting
of the company on 26 October 2000, 57,892 options (issued in September 2002) remain on issue to non-executive
directors as at 30 June 2007 (2006: 57,892).
Options lapse if not exercised within fi ve years of issue. The exercise price of the options issued under the Plan is the
relevant base exercise price of the option (as defi ned in the Plan), adjusted for the company’s estimated cost of equity
and dividends between the issue date and the exercise date of the options.
The Non-Executive Directors’ Share Option Plan (2000) expired in 2003 and was not renewed.
Movements in the number of share options outstanding under the Non-Executive Directors’ Share Option Plan are as
below.
GRANT
DATE
EXPIRY
DATE
EXERCISE
PRICE
Consolidated and Parent - 2007
BALANCE AT
START OF
THE YEAR
NUMBER
GRANTED
DURING THE
YEAR
NUMBER
EXERCISED
DURING THE
YEAR
NUMBER
EXPIRED
DURING THE
YEAR
NUMBER
BALANCE AT
END OF THE
YEAR
NUMBER
EXERCISABLE
AT END OF
THE YEAR
NUMBER
10/09/02
10/09/07
$7.05
57,892
Total
Weighted average exercise
price per share
57,892
$3.78
-
-
-
-
-
-
57,892
57,892
57,892
57,892
$3.93
$3.93
FINANCIALS I 123
NOTES TO THE
FINANCIAL STATEMENTS
29. SHARE-BASED PAYMENTS (continued)
GRANT
DATE
EXPIRY
DATE
EXERCISE
PRICE
Consolidated and Parent - 2006
BALANCE AT
START OF
THE YEAR
NUMBER
GRANTED
DURING THE
YEAR
NUMBER
EXERCISED
DURING THE
YEAR
NUMBER
EXPIRED
DURING THE
YEAR
NUMBER
BALANCE AT
END OF THE
YEAR
NUMBER
EXERCISABLE
AT END OF
THE YEAR
NUMBER
10/09/02
10/09/07
$7.05
62,892
Total
Weighted average exercise
price per share
62,892
$3.65
-
-
(5,000)
(5,000)
$3.64
-
-
57,892
57,892
57,892
57,892
$3.78
$3.78
There were no non-executive director options exercised during the year. The weighted average exercise price at the
date of exercise of options exercised regularly during the year ended 30 June 2006 was $3.64.
The weighted average remaining contractual life of share options outstanding at the end of the period was 0.20 years
(2006: 1.20 years).
As a result of the one-for-one share split 14 November 2003, the 2002 options will convert to two shares, when
exercised.
Performance Pay Incentive Plan (PPI)
Salaried employees are eligible for performance-related bonus partially paid in shares. Details of this Plan are provided
in note 25.
Expenses Arising from Share-Based Payment Transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee
benefi t expense were as below.
Rights issued under the Executive Share Rights Plan
Value of shares entitlements for the year under
employee incentive share plan
CONSOLIDATED
PARENT
2007
$’000
786
704
1,490
2006
$’000
684
4,007
4,691
2007
$’000
786
202
988
2006
$’000
684
1,733
2,417
30. RELATED PARTY TRANSACTIONS
(a) Key Management and Personnel Compensation
Key management personnel compensation for the years ended 30 June 2007 and 2006 is set out below. The key
management personnel are all the directors of the company and the direct reports to the Managing Director.
REMUNERATION
$
TERMINATION
PAYMENTS
$
SHARE-BASED
PAYMENTS
$
TOTAL
$
5,812,762
3,568,954
717,310
10,099,026
5,614,741
-
1,617,072
7,231,813
2007
2006
124 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
30. RELATED PARTY TRANSACTIONS (continued)
(b) Other Transactions with Key Management Personnel or Entities Related to Them
Information on transactions with key management personnel or entities related to them, other than compensation, is
set out below.
Key management personnel exercised options previously granted as part of their compensation.
Fees in the amount of $5,540 (2006: $82,503) were paid to First NZ Capital Group Limited (FNZC) on normal commercial
terms. W R Trotter, who is a director of SKYCITY Entertainment Group Limited, is executive chairman of FNZC.
Certain directors have relevant interests in a number of companies with which SKYCITY has transactions in the normal
course of business. A number of SKYCITY directors are also non-executive directors of other companies. Any
transactions undertaken with these entities have been entered into on an arm’s-length commercial basis.
(c) Subsidiaries
Interests in subsidiaries are set out in note 32.
31. BUSINESS COMBINATIONS
Summary of the Effect of Acquisition of Significant Subsidiaries
With effect from 1 July 2006, SKYCITY Entertainment Group Limited acquired all of Village Roadshow Limited’s
interest in the Village SKYCITY joint venture.
Purchase consideration
Cash paid
Payable to the vendor
Direct costs relating to the acquisition
Total purchase consideration
Fair value of net identifi able assets acquired
Goodwill (note 14)
The assets and liabilities arising from the acquisition are as follows:
Property, plant and equipment
Working capital
Investment in associate
Other investments
Net identifi able assets acquired
$000
32,925
21,300
135
54,360
18,545
35,815
FAIR VALUE
$000
17,138
(1,360)
2,500
267
18,545
FINANCIALS I 125
NOTES TO THE
FINANCIAL STATEMENTS
32. SUBSIDIARIES
The consolidated fi nancial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2(b).
All wholly-owned subsidiary companies and signifi cant partly-owned subsidiaries have balance dates of 30 June.
NAME OF ENTITY
COUNTRY OF
INCORPORATION
CLASS OF
SHARES
EQUITY HOLDING
Queenstown Casinos Limited
SKYCITY Action Management Limited
SKYCITY Auckland Holdings Limited
SKYCITY Auckland Limited
SKYCITY Casino Management Limited
SKYCITY Cinemas Holdings Limited
SKYCITY Cinemas Limited
SKYCITY Cinemas New Plymouth Limited
SKYCITY Cinemas Nominees Limited
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
2007
%
60
100
100
100
100
100
100
100
100
SKYCITY Hamilton Construction Limited (amalgamated)
New Zealand
Ordinary
-
SKYCITY Hamilton Limited
SKYCITY International Holdings Limited
SKYCITY Investments (Australia) Limited
SKYCITY Investments (Christchurch) Limited
SKYCITY Management Limited
SKYCITY Metro Limited
SKYCITY Queenstown Investments Limited
SKYCITY Wellington Limited
Sky Tower Limited
Toptown Nominees Limited
SKYCITY Adelaide Pty Limited
SKYCITY Australia Finance Pty Limited
SKYCITY Australia Limited Partnership
SKYCITY Australia Pty Limited
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
Australia
Ordinary
Australia
Ordinary
Australia
Ordinary
Australia
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
SKYCITY Darwin Holdings Pty Limited (amalgamated)
Australia
Ordinary
-
SKYCITY Darwin Pty Limited
Territory Property Trust (amalgamated)
SKYCITY International ApS
SKYCITY Cinemas (Fiji) Limited
Australia
Ordinary
100
Australia
Ordinary
-
Denmark
Ordinary
Fiji
Ordinary
100
100
2006
%
60
100
100
100
100
100
100
-
50
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
126 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
33. INTERESTS IN JOINT VENTURES
Name of entity
Village SKYCITY Cinemas JV*
Rialto Cinemas JV
Principal activities
Cinema owner/operator
Cinema owner/operator
Damodar Village SKYCITY Fiji Cinemas JV
Cinema owner/operator
INTERESTS HELD BY THE GROUP
2007
%
-
50
67
2006
%
50
25
33
Share of partnership’s revenue, expenses
and results
Revenues
Expenses
Net contribution to Group operating surplus
Total share of assets employed in joint venture
CONSOLIDATED
PARENT
2007
$000
2006
$000
2007
$000
2006
$000
8,576
(8,123)
453
8,539
31,721
(27,550)
4,171
38,454
-
-
-
-
-
-
-
-
* With effect from 1 July 2006, SKYCITY Entertainment Group Limited purchased Village Roadshow Limited’s interest
in the above joint venture. As a result the Village SKYCITY Cinemas joint venture became part of a subsidiary
company.
34. CONTINGENCIES
There are no signifi cant contingences at year end.
35. COMMITMENTS
Capital Commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Property, plant and equipment
CONSOLIDATED
PARENT
2007
$000
2006
$000
70,643
10,888
2007
$000
-
2006
$000
-
Operating Leases
The Group leases various offi ces and other premises under non-cancellable operating leases. The leases have varying
terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
FINANCIALS I 127
NOTES TO THE
FINANCIAL STATEMENTS
35. COMMITMENTS (continued)
Commitments for minimum lease payments in relation
to non-cancellable operating leases are payable as
follows:
Within one year
Later than one year but not later than fi ve years
Later than fi ve years
CONSOLIDATED
PARENT
2007
$000
2006
$000
2007
$000
2006
$000
16,583
55,603
316,691
388,877
7,335
26,759
259,039
293,133
-
-
-
-
-
-
-
-
36. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
Profi t for the year
Minority interest
Depreciation and amortisation
Interest expense
Current period employee share entitlement
Current period share options expense
Gain on sale of fi xed assets
Release from foreign currency translation reserve
Dividend from subsidiary
Fair value adjustment to investment property
Fair value adjustment on fi nancial assets at fair value
through profi t or loss
Subsidiary funding transactions
Share of profi ts of associates not received as dividends
or distributions
Change in operating assets and liabilities
(Increase)/decrease in receivables and prepayments
(Increase)/decrease in inventories
Increase/(decrease) in future income tax benefi t
Increase/(decrease) in payables and accruals
CONSOLIDATED
PARENT
2007
$000
2006
$000
2007
$000
2006
$000
98,402
120,129
63,639
71,871
28
72,226
92,633
704
786
(3,383)
(3,345)
-
-
-
-
(381)
65,016
74,838
3,818
874
-
-
-
166
(4,107)
-
254
9,964
704
786
-
-
-
131
9,033
3,818
874
-
-
(100,311)
(106,251)
-
-
-
-
-
36,540
(97,909)
(24)
(1,239)
-
-
(193)
(282)
6,355
141
10,689
(10,283)
2,771
(31,242)
-
-
-
-
18,725
3,771
(47,662)
129,480
(Decrease)/increase in provision for deferred income tax
(7,604)
22,319
21,467
(34,533)
(33,346)
3,891
267,483
250,775
(33,315)
(20,195)
-
-
-
-
-
-
Decrease/(increase) in provision for income taxes
receivable
Capital items included in working capital movements
Net cash infl ow from operating activities
128 I FINANCIALS
NOTES TO THE
FINANCIAL STATEMENTS
37. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
Profi t Distribution Plan
On 20 August 2007, the directors resolved to make a pro-rata issue of bonus shares in respect of the year ended 30
June 2007. The bonus shares will be issued to all shareholders on the company’s register at the close of business on
Monday, 10 September 2007. The number of bonus shares to be issued is calculated as 12 cents per share divided
by the strike price. The strike price is set as the weighted average price of shares traded on the NZSX during the fi ve
days from 11 to 17 September. Shareholders will be able to elect to have the company buy back some or all of the
bonus shares on the day of issue at the strike price. The proceeds received by the shareholder as a result of having
elected to sell some or all of the bonus shares will be fully imputed by the company.
The bonus shares will be issued and buyback proceeds paid to shareholders on Friday, 5 October 2007.
FINANCIALS I 129
SHAREHOLDER
INFORMATION
TWENTY LARGEST SHAREHOLDERS AS AT 20 AUGUST 2007
1
2
3
UBS Global Asset Management Group*
Investors Mutual Limited
AXA Group
4 Westpac Equity Investments NZ Limited
5
6
7
8
9
AMP Capital Investors
Barclays Global Investors Group
State Street Global Advisors Group
Accident Compensation Corporation
Tyndall Investment Management NZ Limited
10 Commonwealth Bank Group/Colonial First State Global Asset Management
11 Brook Asset Management Limited
12 Columbia Wanger Asset Management
13 ABN AMRO Craigs Ltd (Private Clients)
14 Nomura Asset Management
15 First NZ Securities (Private Clients)
16 Tower Asset Management
17 ING Group
18 PM Capital Limited
19 Sumitomo Mitsui Asset Management Co Limited
20 UBS Wealth Management (Private Clients)*
TOTAL
NUMBER
OF SHARES
34,791,849
31,749,220
14,344,548
14,062,000
11,013,263
10,387,763
10,104,616
9,565,891
9,105,618
8,437,387
8,084,332
7,873,349
7,696,619
7,386,190
6,928,785
6,788,846
5,870,184
5,533,320
4,085,471
3,565,928
% OF
SHARES
7.72%
7.04%
3.18%
3.12%
2.44%
2.30%
2.24%
2.12%
2.02%
1.87%
1.79%
1.75%
1.71%
1.64%
1.54%
1.51%
1.30%
1.23%
0.91%
0.79%
217,375,179
48.22%
* Refer to UBS substantial security holder information on the following page.
The analysis as set out above has been compiled based on information provided by Thomson Financial Pty Limited.
As at 20 August 2007 SKYCITY was the holder of 3,822,119 ordinary shares, as treasury stock. The shares held by
SKYCITY are not included in the table above.
On 5 September 2007, E W Davies exercised options issued under the Managing Director Share Option Plan 2002,
and as at 14 September 2007 benefi cially held 5,129,725 shares.
Total shares on issue as at 20 August 2007 were 450,709,087. Additional shares have been issued subsequent to 20
August 2007 pursuant to the Managing Director Share Option Plan 2002, Non-Executive Director Share Option Plan
2002, Executive Share Option Plan and the SKYCITY Performance Pay Incentive Plan. All treasury stock held by the
company as at 20 August 2007 has since been applied to the issue of shares under the Performance Pay Incentive
and Option plans. The number of shares on issue as at 14 September 2007 is 452,414,831.
130 I OTHER INFORMATION AND DISCLOSURES
SHAREHOLDER
INFORMATION
DISTRIBUTION OF ORDINARY SHARES AND REGISTERED SHAREHOLDINGS AS AT 20 AUGUST 2007
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
>100,000
TOTAL
NUMBER OF SHAREHOLDERS
NUMBER OF SHARES
3,761
11,442
3,438
3,233
172
22,046
1,561,387
29,899,538
24,259,248
71,606,130
323,382,784
450,709,087
As at 20 August 2007 there were 1,036 holdings of less than 137 shares, being the minimum marketable parcel of
shares under ASX Listing Rules. The ASX Listing Rules defi ne the minimum parcel as having a value of less than
A$500.
SUBSTANTIAL SECURITY HOLDERS
In accordance with section 26(1) of the Securities Markets Act 1988, the following persons had given notice as at 20
August 2007 that they were substantial security holders in the company and held a relevant interest in the number of
ordinary shares shown below.
SHAREHOLDER
DATE OF
SUBSTANTIAL
SECURITY
NOTICE
RELEVANT
INTEREST IN
NUMBER
OF SHARES
UBS Nominees Pty Limited and its related body corporate
3 July 2007
49,993,089
Investors Mutual Limited
16 April 2007
35,152,244
% OF SHARES
HELD AT DATE
OF NOTICE
11.09%
7.28%
The UBS substantial security holder notice relates to shares held by UBS Global Asset Management Group, UBS AG
Custodian Group, UBS Wealth Management Group, UBS Fund Management Group and UBS Private Client/Private
Banking Group.
No further substantial security holder notices had been received as at 14 Septemebr 2007.
OTHER INFORMATION AND DISCLOSURES I 131
DIRECTOR AND
EMPLOYEE REMUNERATION
REMUNERATION OF DIRECTORS
Non-Executive Directors
Remuneration paid to non-executive directors for
services in their capacity as non-executive directors of
SKYCITY Entertainment Group Limited during the year
ended 30 June 2007 was as listed below.
R H McGeoch (Chairman)
P L Reddy
Sir Dryden Spring
E Toime
W R Trotter
R A McLeod (resigned 30 June 2007)
$200,000
$110,000
$102,500
$98,352
$100,000
$107,500
No other non-executive director of the Group or parent
company has, since the end of the fi nancial year,
received or become entitled to receive a benefi t other
than director’s fees for the 2006/07 fi nancial year or
reimbursement of expenses incurred in relation to
company matters, or as is disclosed elsewhere in this
annual report.
Executive Directors
On 25 June 2007 Evan Davies resigned as Managing
Director of the company. During the 2006/07 year Mr
Davies was paid a salary of $1,002,885.
In October 2006 Mr Davies was paid variable
remuneration relative to the 2005/06 fi nancial year in
the amount of $1,045,000. In accordance with the
Managing Director Share Rights Terms and the issue
of Restricted Shares, as approved by shareholders
at the company’s 2005 annual meeting, this variable
component in respect of the 2005/06 year was paid 50%
in cash and 50% in equity, comprising 25% as restricted
shares and 25% as share rights.
No performance incentive was paid to Mr Davies in
respect of the 2006/07 fi nancial year.
On his departure from the company, Mr Davies was
paid three months salary in lieu of notice ($250,000)
plus a settlement payment of $1,769,230, calculated in
accordance with the terms of his employment contract.
Elmar Toime was a non-executive director of the
company until his appointment as Executive Director on
25 June 2007.
Mr Toime’s appointment as Executive Director is for
an initial term of three months on a salary of $100,000
gross per month, with accommodation on a full board
basis and reasonable other costs to be met by the
company. During this period Mr Toime will not receive
director’s fees. The amount shown next to his name
(under Non-Executive Directors - refer table) represents
non-executive director fees paid to Mr Toime prior to his
appointment as Executive Director.
Other Directorships
Christchurch Casinos Limited, in which SKYCITY has a
40.5% interest, paid direcor’s fees of $40,000 each for
E W Davies and A B Ryan. These director’s fees were
paid to SKYCITY and were not recieved personally by
either Messrs Davies and Ryan.
No director remuneration was received by the directors
of Queenstown Casinos Limited or by the directors of
SKYCITY subsidiary companies during the year ended 30
June 2007.
132 I OTHER INFORMATION AND DISCLOSURES
DIRECTOR AND
EMPLOYEE REMUNERATION
EMPLOYEE REMUNERATION
The numbers of employees or former employees of the
company and its subsidiaries, not being directors of the
company, who received remuneration and other benefi ts
in their capacity as employees, the value of which was in
excess of $100,000 and was paid to those employees
during the fi nancial year ended 30 June 2007, are as
listed below.
Remuneration includes salary and incentive payments
under the SKYCITY performance pay incentive plan and
where applicable the value of executive share options
that have vested during the year ended 30 June 2007.
Remuneration shown below also includes settlement
payments nd payments in lieu of notice with respect
to certain employees upon their departure from the
company.
REMUNERATION
$100,000 – $109,999
$110,000 – $119,999
$120,000 – $129,999
$130,000 – $139,999
$140,000 – $149,999
$150,000 – $159,999
$160,000 – $169,999
$170,000 – $179,999
$180,000 – $189,999
$190,000 – $199,999
$200,000 – $209,999
$210,000 – $219,999
$220,000 – $229,999
$240,000 – $249,999
$250,000 – $259,999
$260,000 – $269,999
$270,000 – $279,999
$300,000 – $309,999
$310,000 – $319,999
$320,000 – $329,999
$330,000 – $339,999
$340,000 – $349,999
$350,000 – $359,999
$380,000 – $389,999
$400,000 – $409,999
$430,000 – $439,999
$440,000 – $449,999
$800,000 – $809,999
$870,000 – $879,999
EMPLOYEES
23
12
13
6
8
5
4
6
3
3
2
1
1
1
2
2
1
2
1
1
1
1
1
1
1
2
1
1
1
107
OTHER INFORMATION AND DISCLOSURES I 133
DIRECTORS’ DISCLOSURES
INTERESTS REGISTER
Disclosure of directors’ interests
Section 140(1) of the Companies Act 1993 requires a director of a company to disclose certain interests. Under subsection
(2) a director can make disclosure by giving a general notice in writing to the company of a position held by a director in
another named company or entity. The following are particulars included in the company’s Interests Register as at 30 June
2007. Notices given by directors during the year ended 30 June 2007 are marked with an asterisk.
R H McGeoch
Aon Risk Services Limited
LIPA Pharmaceuticals Limited
McGeoch Holdings Pty Limited
Ramsay Health Care Limited
Saatchi & Saatchi Trans-Tasman Advisory Board
Sydney Cricket and Sports Ground Trust
Telecom Corporation of New Zealand Limited
Vantage Private Equity Growth Limited
P L Reddy
Active Equities Limited
Infi nity Group Limited
SKYCITY Auckland Community Trust
TeamTalk Limited
Telecom Corporation of New Zealand Limited
The New Zealand Exchange Limited
The New Zealand International Festival of the Arts
Sir Dryden Spring
ANZ National Bank Limited
Fletcher Building Limited
New Zealand Business and Parliamentary Trust
Northport Limited
Port of Tauranga Limited
E Toime
Blackbay Limited, London
Deutsche Post A.G., Germany
W R Trotter
Member NSW Board of Advice
Director
Director
Director
Chairman
Trustee
Director
Chairman
Director and Shareholder
Associated Person of Shareholder
Trustee
Associated Person of Shareholder
Director
Member NZX Discipline
Trustee
Chairman
Director
Trustee
Director
Director
Non-Executive Director
Non-Executive Director
First NZ Capital Group Limited and certain subsidiaries
FNZ Holdings Limited and certain subsidiaries*
Executive Chairman
Executive Chairman
The following details included in the Interests Register as at 30 June 2006, or entered during the year ended 30 June 2007,
have been removed during the year ended 30 June 2007.
• R H McGeoch is no longer chairman of Frontiers Group (Australia) Limited or a director of Frontiers Group (UK) Limited,
Gullivers Travel Group Limited and Pacifi c Healthcare Australia Limited
• Sir Dryden Spring is no longer the chairman of Asia 2000 Foundation of New Zealand or of New Zealand APEC
Business Advisory Council.
• E Toime is no longer a director of Maltapost plc.
Subsequent to 30 June 2007 Sir Dryden Spring has been appointed to the Advisory Board of Visy Industries Limited.
134 I OTHER INFORMATION AND DISCLOSURES
DIRECTORS’ DISCLOSURES
DIRECTORS’ AND OFFICERS’ INDEMNITIES
Indemnities have been given to directors and senior managers of the company and its subsidiaries to cover acts or
omissions of those persons in carrying out their duties and responsibilities as directors and senior managers.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARE TRANSACTIONS
Directors disclosed, pursuant to section 148 of the Companies Act 1993 and Rule 10.5.3 of the NZX Listing Rules, the
following acquisitions and disposals of relevant interests in SKYCITY shares during the period to 30 June 2007, as set
out below.
R H McGeoch
P L Reddy
Sir Dryden Spring
E Toime
W R Trotter
E W Davies (resigned 25 June 2007)
R A McLeod (retired 30 June 2007)
DATE OF ACQUISITION/
DISPOSAL
DURING PERIOD
CONSIDERATION
SHARES SHARES
ACQUIRED/
(DISPOSED)
6 October 2006(1)
13 April 2007(1)
6 October 2006(1)
13 April 2007(1)
6 October 2006(1)
6 October 2006(1)
13 April 2007(1)
6 October 2006(1)
13 April 2007(1)
31 August 2006(2)
6 October 2006(1)
30 November 2006(3)
13 April 2007(1)
6 October 2006(1)
8 March 2007
13 April 2007(1)
$1,438
$950
$20,123
$13,315
$3,367
$21,995
$14,555
$94,191
$62,328
$1,896,000
$3,090,000
$57,384
$159,363
$52,647
$2,297
$95,108
$3,322
301
210
4,213
2,942
705
4,605
3,216
19,720
13,772
600,000
(600,000)
12,014
31,808
11,633
481
20,000
734
(1) The transaction shown represents the issue of bonus shares under the SKYCITY Profi t Distribution Plan.
(2) The transaction shown relates to the exercise of 150,000 options granted to Mr Davies pursuant to the Executive
Share Option Plan approved by shareholders at the annual meeting of the company held on 28 October 1999.
These options converted on a 1:4 basis into ordinary shares consequent upon the 1:2 share splits by the
company in November 2001 and November 2003.
(3) The transaction shown relates to the issue of restricted shares under the Managing Director’s incentive remuneration
for the year ended 30 June 2006 as approved by shareholders at the annual meeting of the company held on 28
October 2005.
OTHER INFORMATION AND DISCLOSURES I 135
DIRECTORS’ DISCLOSURES
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARES, OPTIONS AND CAPITAL NOTES
Directors disclosed pursuant to Rule 10.5.3 of the NZX Listing Rules, the following relevant interests in SKYCITY
shares, options and rights as at 30 June 2007, as set out below.
R H McGeoch
P L Reddy
Sir Dryden Spring
E Toime
W R Trotter
SHARES
BENEFICIALLY
HELD
OPTIONS
BENEFICIALLY
HELD
SHARE RIGHTS
BENEFICIALLY
HELD
10,757
150,863
24,705
164,907
706,280
15,964(1)
20,964(1)
-
-
20,964(1)
-
-
-
-
-
E W Davies (resigned 25 June 2007)
R A McLeod (retired 30 June 2007)
462,665(2)
2,338,530(3)
687,970(4)
37,608
-
-
(1) Options held by non-executive directors as at 30 June 2007 have all been exercised subsequent to that date. As
a result, as at 14 September 2007, Mr McGeoch now holds 42,685 shares, Ms Reddy 192,791 shares and Mr
Trotter 748,208 shares.
(2) The 462,665 shares identifi ed above includes 31,808 restricted shares issued to Mr Davies on 30 November
2006. Of the restricted shares issued to Mr Davies, 16,564 cannot be sold prior to 4 September 2008 and
15,244 cannot be sold prior to 4 September 2009.
(3) On 5 September 2007 Mr Davies exercised all 2,338,530 options and as at that date held 5,129,725 shares
(4) Following cessation of employment the share rights issued to Mr Davies under the Managing Director Share
Rights Terms lapse if not exercised within six months after their vesting date. The share rights vest, 303,780 on 4
September 2008 and 384,190 on 4 September 2009.
In addition to the 150,863 shares identifi ed above, Ms Reddy has also disclosed 7,887 shares non-benefi cially held.
No directors held any interest in the capital notes of the company as at 30 June 2007.
Options issued to the non-executive directors in 2002 were issued pursuant to the Non-Executive Director Share
Option Plan approved by shareholders at the annual meeting of the company held on 26 October 2000.
Options issued to Mr Davies were issued pursuant to the Managing Director Share Option Plan approved by
shareholders at the annual meeting of the company held on 30 October 2002.
Share Rights issued to Mr Davies are issued pursuant to the Managing Director Share Rights Terms approved by
shareholders at the annual meeting of the company held on 28 October 2005.
136 I OTHER INFORMATION AND DISCLOSURES
NOTEHOLDER INFORMATION
Capital Notes
In May 2000, SKYCITY Entertainment Group Limited issued 150 million unsecured subordinated capital notes for a
fi ve year term at an issue price of $1.00. In May 2005 the capital notes were reissued for a new term of fi ve years. The
capital notes offer holders a fi xed interest rate of 8.0% until the next election/maturity date, being 15 May 2010. For
further information refer note 19 of the fi nancial statements.
As at 20 August 2007 SKYCITY was the holder of 26,140,250 capital notes, as treasury stock. The capital notes held
by SKYCITY are not included in the table below.
TWENTY LARGEST CAPITAL NOTEHOLDERS AS AT 20 AUGUST 2007
1
2
3
4
5
6
7
8
Private Nominees Limited
Investment Custodial Services Limited
Custodial Services Limited - A/c 3
Forsyth Barr Custodians Limited - A/c 1M
FNZ Custodians Limited
Custodial Services Limited - A/c 2
Forsyth Barr Custodians Limited - A/c 1L
Citibank Nominees (New Zealand) Limited
9 Guardian Trust Investment Nominees (RWT) Limited
10 Custodial Services Limited - A/c 4
11 Forsyth Barr Custodians Limited - A/c 1H
12 Morrow Plastics Limited
13 Public Trust
14 University of Otago
15 Waikimihia Farm Limited
16 Custodial Services Limited - A/c 1
17 Knox Home Trust Board Incorporated
18 Forsyth Barr Custodians Limited - A/c 1E
19 Colin Alfred Carran & Patricia Anne Carran
20 Sargood Bequest Nominee Limited
TOTAL
NUMBER OF
CAPITAL NOTES
12,075,000
6,192,000
4,900,500
3,219,000
2,364,000
1,751,000
1,673,000
1,362,000
748,000
612,000
579,000
500,000
500,000
500,000
500,000
453,000
400,000
395,000
300,000
300,000
% OF SHARES
CAPITAL NOTES
8.05%
4.13%
3.27%
2.15%
1.58%
1.17%
1.12%
0.91%
0.50%
0.41%
0.39%
0.33%
0.33%
0.33%
0.33%
0.30%
0.27%
0.26%
0.20%
0.20%
39,323,500
26.23%
DISTRIBUTION OF CAPITAL NOTE HOLDINGS AS AT 20 AUGUST 2007
NUMBER OF NOTEHOLDERS
NUMBER OF CAPITAL NOTES
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
>100,000
TOTAL
-
372
725
1,996
83
3,176
-
1,856,925
6,741,250
65,584,575
75,817,250
150,000,000
OTHER INFORMATION AND DISCLOSURES I 137
SKYCITY ACES INFORMATION
SKYCITY ACES
In October 2005, SKYCITY Investments Australia Limited issued in Australia 1.5 million unsecured subordinated
perpetual reset exchangeable securities (SKYCITY ACES) at an issue price of A$100 per note. SKYCITY ACES offer
holders a fully franked variable coupon until the fi rst reset date on 15 December 2010. For further information refer note
20 of the fi nancial statements.
TWENTY LARGEST SKYCITY ACES HOLDERS AS AT 20 AUGUST 2007
1
2
3
4
5
6
7
8
9
J P Morgan Nominees Australia Limited
UBS Nominees Pty Limited
Brispot Nominees Pty Limited
RBC Dexia Investor Services Australia Nominees Pty Limited – GSENIP A/c
ANZ Nominees Limited
AMP Life Limited
National Nominees Limited
RBC Dexia Investor Services Australia Nominees Pty Limited – BKCUST A/c
Cogent Nominees Pty Limited – SMP Accounts
10 Goldman Sachs JB Were Capital Markets Limited
11 UBS Wealth Management Australia Nominees Pty Limited
12 Citicorp Nominees Pty Limited
13 Cogent Nominees Pty Limited
14 ANZ Trustees Limited
15 Citicorp Nominees Pty Limited – A/c 14
16 Citicorp Nominees Pty Limited – A/c 5
17 MF Custodians Limited
18 Bond Street Custodians Limited
19 Citicorp Nominees Pty Limited – Australia A/c
20 RPG Management Pty Limited
TOTAL
DISTRIBUTION OF SKYCITY ACES HOLDINGS AS AT 20 AUGUST 2007
NUMBER OF
SKYCITY
ACES
282,950
191,861
102,500
86,924
81,651
71,101
65,000
62,775
52,546
42,380
42,100
40,660
32,285
19,636
18,162
18,000
11,137
10,000
6,000
5,180
% OF
SKYCITY
ACES
18.86%
12.80%
6.83%
5.79%
5.44%
4.74%
4.33%
4.19%
3.50%
2.83%
2.81%
2.71%
2.15%
1.31%
1.21%
1.20%
0.74%
0.67%
0.40%
0.35%
1,242,848
82.86%
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
>100,000
TOTAL
NUMBER OF SKYCITY
ACES HOLDERS
NUMBER OF
SKYCITY ACES
700
41
4
14
3
762
162,691
89,282
26,359
644,357
577,311
1,500,000
138 I OTHER INFORMATION AND DISCLOSURES
COMPANY DISCLOSURES
STOCK EXCHANGE LISTINGS
SKYCITY Entertainment Group Limited is listed on both
the New Zealand and Australian stock exchanges.
SKYCITY ENTERTAINMENT GROUP LIMITED
E W Davies resigned as Managing Director of SKYCITY
Entertainment Group Limited on 25 June 2007 and R A
McLeod resigned as a director effective 30 June 2007.
SUBSIDIARY COMPANIES
The changes to subsidiary company directorships
during the 12 month period ended 30 June 2007 are set
out below.
On 8 December 2006, M J Silberling resigned as a
director and secretary and R H McGeoch was appointed
a director and secretary of SKYCITY Adelaide Pty
Limited, SKYCITY Australia Finance Pty Limited and
SKYCITY Australia Pty Limited.
In relation to the following companies, E W Davies resigned
as a director effective 25 June 2007 and E Toime was
appointed as a director effective 26 June 2007.
Planet Hollywood (Civic Centre) Limited; Queen Street
Operations Limited; Sky Tower Limited; SKYCITY
Action Management Limited; SKYCITY Adelaide Pty
Limited; SKYCITY Auckland Holdings Limited; SKYCITY
Auckland Limited; SKYCITY Australia Finance Pty
Limited; SKYCITY Australia Pty Limited; SKYCITY Casino
Management Limited; SKYCITY Cinema Holdings
Limited; SKYCITY Cinemas Limited; SKYCITY Cinemas
New Plymouth Limited; SKYCITY Cinemas Nominees
Limited; SKYCITY Cinemas Queen Street Nominees
Limited; SKYCITY Darwin Pty Limited; SKYCITY
Hamilton Limited; SKYCITY International ApS; SKYCITY
International Holdings Limited; SKYCITY Investments
Christchurch Limited; SKYCITY Investments Queenstown
Limited; SKYCITY Management Limited; SKYCITY Metro
Limited; SKYCITY Wellington Limited; Toptown Nominees
Limited; Queenstown Casinos Limited.
E W Davies resigned as a director, effective 25 June 2007,
from SKYCITY Investments Australia Limited, Fernbank
Pty Limited and SKYCITY Darwin Holdings Pty Limited,
and as an alternate director effective 25 June 2007 from
the following companies: Victoria Hotels (Christchurch)
Limited, Christchurch Hotels Limited, Premier Hotels
(Christchurch) Limited and Christchurch Casinos Limited.
R A McLeod resigned as a director of SKYCITY
Investments Australia Limited, effective 30 June 2007.
The following held offi ce as directors of subsidiaries of
SKYCITY Entertainment Group Limited as at the end of the
2007 fi nancial year, being 30 June 2007.
Sky Tower Limited; SKYCITY Action Management
Limited; SKYCITY Auckland Holdings Limited; SKYCITY
Auckland Limited; SKYCITY Casino Management Limited;
SKYCITY Hamilton Limited; SKYCITY International
Holdings Limited; SKYCITY Investments Christchurch
Limited; SKYCITY Investments Queenstown Limited;
SKYCITY Management Limited; SKYCITY Wellington
Limited; Toptown Nominees Limited.
Directors: A B Ryan, E Toime.
SKYCITY Adelaide Pty Limited; SKYCITY Australia
Finance. Pty Limited; SKYCITY Australia Pty Limited.
Directors: R H McGeoch, A B Ryan, E Toime.
SKYCITY Darwin Pty Limited.
Directors: A B Ryan, E Toime, T A K Wilson.
SKYCITY Darwin Holdings Pty Limited;
Fernbank Pty Limited.
Directors: A B Ryan, T A K Wilson.
SKYCITY International ApS.
Directors: B Kreiborg, E Toime, J van Rijn.
A B Ryan is an alternate director for E Toime.
OTHER INFORMATION AND DISCLOSURES I 139
COMPANY DISCLOSURES
Queenstown Casinos Limited.
Directors: A B Ryan, E Toime (both SKYCITY
representatives on the board), P J Hensman, B C Thomas.
At 30 June 2007 SKYCITY also had an interest in, and
was represented by SKYCITY executives on the boards
of the companies listed below.
SKYCITY Investments Australia Limited.
Directors: R H McGeoch, P L Reddy, Sir Dryden Spring,
E Toime, W R Trotter.
Christchurch Casinos Limited.
SKYCITY representatives on the board: A B Ryan.
D A Sullivan was appointed a director on 6 August 2007.
Planet Hollywood (Civic Centre) Limited; Queen Street
Operations Limited; SKYCITY Cinema Holdings Limited;
SKYCITY Cinemas Limited; SKYCITY Cinemas New
Plymouth Limited; SKYCITY Cinemas Nominees Limited;
SKYCITY Cinemas Queen St Nominees Limited;
SKYCITY Metro Limited; Toptown Nominees Limited.
Directors: A B Ryan, E Toime.
P J Holdaway is an alternate director for each of
A B Ryan and E Toime.
SKYCITY Cinemas (Fiji) Limited.
Directors: D Damodar, P J Holdaway.
Subsequent to balance date, the following change
occurred in the directorships of the Group companies.
On 24 July 2007, J van Rijn resigned as a director and
C U B Birger-Christensen was appointed a director of
SKYCITY International ApS.
Christchurch Hotels Limited; Premier Hotels Limited;
Victoria Hotels (Christchurch) Limited.
SKYCITY representative on the boards: A B Ryan.
Force Location Limited.
SKYCITY representatives on the board:
P J Holdaway, E Toime.
Rialto Cinemas Limited.
SKYCITY representatives on the board:
K V Brewer, P J Holdaway.
K V Brewer resigned as a director on 10 September 2007.
Vista Entertainment Solutions Limited.
SKYCITY representatives on the board:
K V Brewer, A B Ryan.
K V Brewer resigned as a director on 10 September 2007.
140 I OTHER INFORMATION AND DISCLOSURES
WAIVERS FROM THE NEW ZEALAND EXCHANGE
(NZX) LISTING RULES
The following waivers from the NZX Listing Rules were
either granted and published by NZX within, or relied upon
by the company during, the 12 month period preceding
the date two months before the date of this annual report.
On 5 September 2002, NZX granted waivers from
compliance with Listing Rule (LR) 7.3.6 in respect of
the participation by Ms H R Shotter in the company’s
Performance Pay Incentive Plan (PPI) and the Executive
Share Option Plan (2002).
On 24 June 2005, NZX granted waivers from LRs 8.1.3,
8.1.4, 8.1.5, 8.1.8 and 8.1.9 (general provisions relating
to the issue of securities requiring NZX approval/waiver)
in respect of the company’s Executive Share Rights Plan
2005.
On 16 March 2006, NZX granted waivers from
compliance with LR 7.3.6 in respect of the participation by
Ms H R Shotter in the company’s (renewed) Performance
Pay Incentive Plan 2005.
All other waivers granted prior to the 12 month period
preceding the date two months before the date of this
annual report had ceased to have effect or were not relied
upon during the period. Full details of the waivers referred
to above can be obtained from the Investor Centre/NZX
ASX Announcements subsection of the company’s
website at www.skycitygroup.co.nz
OPTION AND SHARE RIGHTS HOLDERS
As at 14 September 2007, options and share rights on
issue were as detailed below.
• 1,278,834 options issued under the Executive Share
Option Plan approved by directors of the company in
August 2002, held by 14 holders. The options have
no voting rights but 448,000 of the options entitle
the holders to two shares on exercise of each option
and the balance of 830,834 entitle the holders to one
share on exercise of each option. As at 14 September
2007,
the exercise price per option (which escalates by the
cost of equity less distributions) was $10.34 ($5.17
per share) for 448,000 options and $4.96 for 830,834
options.
• 2,536,970 share rights issued under the Executive
Share Rights Plan approved by directors of the
company in December 2004, held by 24 holders. The
OTHER INFORMATION
share rights have no voting rights but each share right
entitles the holder to a number of shares on exercise
calculated according to a formula set out in the Plan,
based on the difference between the market price for
the company’s shares on the NZSX and the exercise
value for the share right (calculated in accordance
with the Plan). As at 14 September 2007, the exercise
value per right (which escalates by the cost of equity
less distributions) was $5.23 for 766,000 rights and
$5.33 for 1,770,970 rights.
LIMITATIONS ON ACQUISITION OF
ORDINARY SHARES
The company’s constitution contains various provisions
which are included to take into account the application of:
•
•
•
•
the Gambling Act 2003 (New Zealand)
the Casino Act 1997 (South Australia)
the Gaming Control Act (Northern Territory)
the legislation providing for the establishment,
operation and regulation of casinos in any other
jurisdiction in which SKYCITY or any of its subsidiaries
may hold a casino licence.
SKYCITY needs to ensure when it participates in
gaming activities that:
•
it has the power under its constitution to take such
action as may be necessary to ensure that its
suitability to do so in a particular jurisdiction is not
affected by the identity or actions (including share
dealings) of a shareholder; and
there are appropriate protections to ensure that
persons do not gain positions of signifi cant infl uence
or control over SKYCITY or its business activities
without obtaining any necessary statutory or
regulatory approvals in those jurisdictions.
•
Accordingly, the constitution contains the following
provisions restricting the acquisition of shares in the
company to achieve this.
TRANSFER OF SHARES
Clause 12.11 of the constitution provides that if a transfer
of shares results in the transferee, and the persons
associated with that transferee:
• holding more than 5% of the shares in SKYCITY, or
•
increasing their combined holding further beyond 5%
if
–
they already hold more than 5% of the shares in
SKYCITY, and
the transferee has not been approved by the
–
OTHER INFORMATION AND DISCLOSURES I 141
OTHER INFORMATION
relevant regulatory authority as an associated
casino person of any casino licence holder,
then the votes attaching to all shares held by the
transferee and the persons associated with that
transferee are suspended unless and until either:
• each regulatory authority advises that approval is
following paragraphs.
Other than the provisions noted on page 141, the
only signifi cant restrictions or limitations in relation to
the acquisition of securities are those imposed by New
Zealand laws relating to takeovers, overseas investment
and competition.
not needed, or
• any regulatory authority which determines that
•
•
its approval is required approves the transferee,
together with the persons associated with that
transferee, as an associated casino person of any
applicable casino licence holder, or
the board of the company is satisfi ed that registration
of the proposed transfer will not prejudice any casino
licence, or
the transferee and the persons associated with that
transferee dispose of such number of SKYCITY
shares as will result in their combined holding
falling below 5% or, if the regulatory authorities
approve in respect of the transferee and the persons
associated with that transferee a higher percentage,
the lowest such percentage approved by the
regulatory authorities.
If a regulatory authority does not grant its approval to
the proposed transfer, SKYCITY may sell such number of
the shares held by the transferee and by any persons
associated with that transferee, as may be necessary to
reduce their combined shareholding to a level that will not
result in the transferee and the persons associated with
that transferee being an associated person of that casino
licence holder.
The power of sale can only be exercised if SKYCITY has
given one month’s notice to the transferee of its intention
to exercise that power and the transferee has not, during
that one month period, transferred the requisite number
of shares in SKYCITY to a person who is not associated
with the transferee.
DONATIONS
Donations of $13,898 ($235,518) were made by the
company during the 12 month period ended 30 June
2007.
OTHER LEGISLATION/REQUIREMENTS
General limitations on the acquisition of the securities
imposed by the jurisdiction in which SKYCITY is
incorporated (i.e. New Zealand law) are outlined in the
The New Zealand Takeovers Code creates a general rule
under which the acquisition of more than 20% of the
voting rights in SKYCITY, or the increase of an existing
holding of 20% or more of the voting rights in SKYCITY,
can only occur in certain permitted ways. These include a
full takeover offer in accordance with the Takeovers Code,
a partial takeover offer in accordance with the Takeovers
Code, an acquisition approved by an ordinary resolution,
an allotment approved by an ordinary resolution, a
creeping acquisition (in certain circumstances), or
compulsory acquisition if a shareholder holds 90% or more
of the shares in the company.
The New Zealand Overseas Investment Act 2005 and the
Overseas Investment Regulations 2005 regulate certain
investments in New Zealand by overseas persons. In
general terms, the consent of the New Zealand Overseas
Investment Offi ce is likely to be required when an
‘overseas person’ acquires shares or an interest in shares
in SKYCITY Entertainment Group Limited that amount to
more than 25% of the shares issued by the company, or
if the overseas person already holds 25% or more, the
acquisition increases that holding.
The New Zealand Commerce Act 1986 is likely to
prevent a person from acquiring shares in SKYCITY if the
acquisition would have, or would be likely to have, the
effect of substantially lessening competition in a market.
OTHER DISCLOSURES
SKYCITY Entertainment Group Limited has no securities
subject to an escrow arrangement.
SKYCITY Entertainment Group Limited is incorporated
in New Zealand and is not subject to Chapters 6, 6A, 6B
and 6C of the Corporations Act (Australia).
There are no material differences between NZX Appendix
1 and ASX Appendix 4E issued by SKYCITY Entertainment
Group Limited on 20 August 2007 in respect of the year
ended 30 June 2007 and this annual report.
142 I OTHER INFORMATION AND DISCLOSURES
REGISTERED OFFICE
AUDITOR
DIRECTORY
SKYCITY Entertainment Group Limited
Level 6
Federal House
86 Federal Street
PO Box 6443
Wellesley Street
Auckland
New Zealand
Telephone +64 9 363 6141
Facsimile +64 9 363 6140
Email sceginfo@skycity.co.nz
Website www.skycitygroup.co.nz
Registered Office in Australia
c/o Finlaysons
81 Flinders Street
GPO Box 1244
Adelaide
South Australia
Telephone +61 8 8235 7400
Facsimile +61 8 8232 2944
SOLICITORS
Bell Gully
HP Tower
171 Featherstone Street
PO Box 1291
Wellington
Minter Ellison Rudd Watts
Lumley Centre
88 Shortland Street
PO Box 3798
Auckland
Finlaysons
81 Flinders Street
GPO Box 1244
Adelaide
South Australia
PricewaterhouseCoopers
188 Quay Street
Auckland City
Private Bag 92162
Auckland
BANKERS
ANZ National Bank
Commonwealth Bank of Australia
Bank of New Zealand
SHARE REGISTRARS
NEW ZEALAND
Computershare Investor Services Limited
Level 2
159 Hurstmere Road
Takapuna
Auckland
Private Bag 92119
Auckland
Telephone +64 9 488 8700
Facsimile +64 9 488 8787
AUSTRALIA
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000
GPO Box 7045
Sydney NSW 1115
Telephone +61 2 8234 5000
Facsimile +61 2 8234 5050
CAPITAL NOTES TRUSTEE
The New Zealand Guardian
Trust Company Limited
48 Shortland Street
PO Box 1934
Auckland
Telephone +64 9 377 7300
Facsimile +64 9 377 7470
OTHER INFORMATION AND DISCLOSURES I 143
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