SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT YEAR ENDED 30 JUNE 2012
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
CONTENTS
ANNUAL MEETING
The 2012 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 19 October 2012, commencing at 10.00am.
This report is dated 17 September 2012 and is signed on behalf
of the board of directors of SKYCITY Entertainment Group
Limited by:
Rod McGeoch
Chairman
Chris Moller
Director
FINANCIAL STATEMENTS
Independent Auditors’ Report
Income Statements
Statements of Comprehensive Income
Balance Sheets
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
CORPORATE GOVERNANCE
AND OTHER DISCLOSURES
Corporate Governance
Shareholder Information
Director and Employee Remuneration
Directors’ Disclosures
Noteholder Information
Company Disclosures
Other Information
Directory
2
4
5
6
7
8
9
48
56
58
59
61
62
63
IBC
For further information on the business operations and performance of SKYCITY Entertainment Group during the year ended
30 June 2012, please refer to the SKYCITY Shareholder Review which has been sent to shareholders and is available in the Investor
Centre section of the company’s website at www.skycityentertainmentgroup.com.
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
FINANCIAL STATEMENTS AND NOTES
FOR THE YEAR ENDED 30 JUNE 2012
PG 1
INDEPENDENT AUDITORS’ REPORT
to the shareholders of SKYCITY Entertainment Group Limited
report on the Financial Statements
We have audited the financial statements of SKYCITY Entertainment Group Limited (“the Company”) on pages 4 to 46,
which comprise the balance sheets as at 30 June 2012, the income statements, statements of comprehensive income,
statements of changes in equity and statements of cash flows for the year then ended, and the notes to the financial
statements that include a summary of significant accounting policies and other explanatory information for both the
Company and the Group. The Group comprises the Company and the entities it controlled at 30 June 2012 or from time to
time during the financial year.
Directors’ responsibility for the Financial Statements
The Directors are responsible for the preparation of these financial statements in accordance with generally accepted
accounting practice in New Zealand and that give a true and fair view of the matters to which they relate and for such
internal controls as the Directors determine are necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing (New Zealand) and International Standards on Auditing. These
standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors
consider the internal controls relevant to the Company and Group’s preparation of financial statements that give a true and
fair view of the matters to which they relate, in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company and the Group’s internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
We have no relationship with, or interests in, SKYCITY Entertainment Group Limited or any of its subsidiaries other than in
our capacities as auditors and providers of accounting, tax, other assurance and advisory services. These services have not
impaired our independence as auditors of the Company and the Group.
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
PG 2
INDEPENDENT AUDITORS’ REPORT
C o n t I n u e D
opinion
In our opinion, the financial statements on pages 4–46:
(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 financial position of the Company and the Group as at 30 June 2012, and their financial
performance and cash flows for the year then ended.
report on other legal and regulatory requirements
We also report in accordance with Sections 16(1)(d) and 16(1)(e) of the Financial Reporting Act 1993. In relation to our audit of
the financial statements for the year ended 30 June 2012:
(i) we have obtained all the information and explanations that we have required; and
(ii) in our opinion, proper accounting records have been kept by the Company as far as appears from an examination of
those records.
restriction on Distribution or use
This report is made solely to the Company’s shareholders, as a body, in accordance with Section 205(1) of the Companies
Act 1993. Our audit work has been undertaken so that we might state to the Company’s shareholders those matters which
we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders, as a body, for
our audit work, for this report or for the opinions we have formed.
Chartered Accountants
15 August 2012
Auckland
PG 3
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
For the year enDeD 30 June 2012
Total receipts including GST
Less non‑gaming GST
Gaming win plus non‑gaming revenue
Less gaming GST
Revenue
revenue
Other income
Shares of net profits of associates
Employee benefits expense
Other expenses
Direct consumables
Gaming taxes and levies
Marketing and communications
Directors’ fees
Depreciation and amortisation expense
Restructuring costs
Finance costs – net
Impairment of Christchurch Casino
profit before income tax
ConSolIDateD
parent
noteS
2012
$’000
2011
$’000
2012
$’000
2011
$’000
3
3
3
3
3
3
4
5
5
5
6
15
960,203
(26,398)
933,805
(82,275)
902,381
(22,562)
879,819
(76,674)
851,530
803,145
851,530
1,928
5,447
(276,642)
(100,354)
(62,190)
(64,039)
(49,909)
(1,034)
(72,770)
(4,274)
(48,861)
–
803,145
1,261
5,976
(260,676)
(92,623)
(52,607)
(61,275)
(44,886)
(741)
(69,710)
(3,298)
(43,772)
(15,000)
–
–
–
–
–
–
110,178
–
(22,117)
(3,782)
–
–
(441)
(1,034)
(5,561)
(2,093)
(4,171)
–
–
–
–
–
–
–
100,133
–
(18,458)
(6,391)
–
–
(1,197)
(741)
(5,958)
–
(3,908)
–
178,832
165,794
70,979
63,480
Tax expense pre 2010 Government Budget changes
7
(39,962)
(48,226)
–
–
profit for the year before tax expense relating to
2010 Government Budget changes
138,870
117,568
70,979
63,480
Tax expense relating to 2010 Government Budget changes
–
5,435
–
–
profit for the year
Income tax expense
Attributable to:
profit attributable to shareholders of the company
Non controlling interest
138,870
123,003
70,979
63,480
(39,962)
(42,791)
–
–
24
138,534
336
122,960
43
70,979
–
138,870
123,003
70,979
63,480
–
63,480
earnings per share for profit attributable to the shareholders of the company:
Basic earnings per share
Diluted earnings per share
8
8
24.0
23.8
21.4
20.9
noteS
CentS
CentS
The above income statements should be read in conjunction with the accompanying notes.
PG 4
Income StatementS
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
STATEMENTS OF COMPREHENSIVE INCOME
For the year enDeD 30 June 2012
noteS
2012
$’000
2011
$’000
2012
$’000
2011
$’000
ConSolIDateD
parent
profit for the year
138,870
123,003
70,979
63,480
other comprehensive income
Exchange differences on translation of overseas subsidiaries
Movement in cash flow hedges
Income tax relating to components of other comprehensive income
Other comprehensive income for the year
23
23
23
(4,517)
(1,375)
360
5,397
(13,733)
4,133
(5,532)
(4,203)
–
593
(166)
427
–
(593)
166
(427)
total comprehensive income for the year, net of tax
133,338
118,800
71,406
63,053
total comprehensive income for the year is attributable to:
Shareholders of the company
Non controlling interest
24
133,002
336
118,757
43
133,338
118,800
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
PG 5
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
bALANCE SHEETS
ConSolIDateD
parent
noteS
2012
$’000
2011
$’000
2012
$’000
2011
$’000
9
10
11
12
11
13
30
14
15
12
16
17
11
12
18
19
20
12
41,400
26,974
6,876
35,503
480
104,577
30,900
6,970
36,637
272
1
153,629
–
–
–
111,233
179,356
153,630
31,550
1,064,418
–
410,645
75,266
23,154
27,789
991,331
–
410,412
73,782
–
–
7,532
618,775
10,031
–
–
1
87,376
–
–
–
87,377
–
7,054
618,775
10,696
–
–
1,605,033
1,503,314
636,338
636,525
1,716,266
1,682,670
789,968
723,902
107,186
–
7,972
664
110,851
247,267
5,349
10,102
344,768
–
–
–
250,997
–
–
113
115,822
373,569
344,768
251,110
604,902
56,414
84,571
45,415
350,202
56,400
94,290
33,393
–
56,414
–
–
791,302
534,285
56,414
–
56,400
–
–
56,400
907,124
907,854
401,182
307,510
809,142
774,816
388,786
416,392
22
23(a)
23(b)
727,598
(1,850)
81,690
728,616
3,682
41,150
727,598
–
(338,812)
728,616
(427)
(311,797)
807,438
773,448
388,786
416,392
24
1,704
1,368
–
–
809,142
774,816
388,786
416,392
aS at 30 June 2012
ASSETS
Current assets
Cash and bank balances
Receivables and prepayments
Inventories
Tax prepayment
Derivative financial instruments
Total current assets
non‑current assets
Tax prepayment
Property, plant and equipment
Investment in subsidiaries
Intangible assets
Investments in associates
Derivative financial instruments
Total non‑current assets
total assets
LIABILITIES
Current liabilities
Payables
Interest bearing liabilities
Current tax liabilities
Derivative financial instruments
Total current liabilities
non‑current liabilities
Interest bearing liabilities
Subordinated debt ‑ capital notes
Deferred tax liabilities
Derivative financial instruments
Total non‑current liabilities
total liabilities
net assets
EQUITY
Share capital
Reserves
Retained profits/(losses)
Parent entity interest
Non controlling interest
total equity
The above balance sheets should be read in conjunction with the accompanying notes.
PG 6
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
STATEMENTS OF CHANGES IN EqUITy
For the year enDeD 30 June 2012
noteS
Share
CapItal
$’000
heDGInG
reServeS
$’000
ForeIGn
CurrenCy
tranSlatIon
reServe
$’000
retaIneD
proFItS
$’000
MInorIty
IntereSt
$’000
total
equIty
$’000
CONSOLIDATED
Balance as at 1 July 2010
total comprehensive income/(expense)
Dividends
Shares issued under dividend reinvestment plan
Share rights issued for employee services
Net purchase of treasury shares
Balance as at 30 June 2011
Balance as at 1 July 2011
total comprehensive income/(expense)
Dividends
Shares issued under dividend reinvestment plan
Share rights issued for employee services
Net purchase of treasury shares
732,910
(2,740)
10,625
17,397
1,325
759,517
–
–
6,101
1,047
(11,442)
(9,600)
–
–
–
–
5,397
–
–
–
–
122,960
(99,207)
–
–
–
43
–
–
–
–
118,800
(99,207)
6,101
1,047
(11,442)
728,616
(12,340)
16,022
41,150
1,368
774,816
728,616
(12,340)
16,022
41,150
1,368
774,816
–
–
4,736
1,426
(7,180)
(1,015)
–
–
–
–
(4,517)
–
–
–
–
138,534
(97,994)
–
–
–
336
–
–
–
–
133,338
(97,994)
4,736
1,426
(7,180)
25
22
22
22
25
22
22
22
Balance as at 30 June 2012
727,598
(13,355)
11,505
81,690
1,704
809,142
For the year enDeD 30 June 2012
noteS
Share
CapItal
$’000
heDGInG
reServeS
$’000
retaIneD
loSSeS
$’000
PARENT
Balance as at 1 July 2010
total comprehensive income/(expense)
Shares issued under dividend reinvestment plan
Dividends
Share rights issued for employee services
Net purchase of treasury shares
Balance as at 30 June 2011
Balance as at 1 July 2011
total comprehensive income/(expense)
Shares issued under dividend reinvestment plan
Dividends
Share rights issued for employee services
Net purchase of treasury shares
Balance as at 30 June 2012
732,910
–
6,101
–
1,047
(11,442)
728,616
–
(427)
–
–
–
–
(427)
(276,070)
63,480
–
(99,207)
–
–
(311,797)
728,616
(427)
(311,797)
–
4,736
–
1,426
(7,180)
727,598
427
–
–
–
–
‑
70,979
–
(97,994)
–
–
(338,812)
22
25
22
22
22
25
22
22
The above statements of changes in equity should be read in conjunction with the accompanying notes.
total
equIty
$’000
456,840
63,053
6,101
(99,207)
1,047
(11,442)
416,392
416,392
71,406
4,736
(97,994)
1,426
(7,180)
388,786
PG 7
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
STATEMENTS OF CASH FLOwS
For the year enDeD 30 June 2012
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Gaming tax paid
Income taxes paid
ConSolIDateD
parent
noteS
2012
$’000
2011
$’000
2012
$’000
2011
$’000
854,348
(490,574)
795,231
(469,413)
–
(25,785)
–
(26,204)
363,774
325,818
(25,785)
(26,204)
3,968
167
(56,841)
(49,325)
747
192
(54,896)
(62,496)
–
–
–
–
–
–
–
–
net cash inflow / (outflow) from operating activities
33
261,743
209,365
(25,785)
(26,204)
Cash flows from investing activities
Purchase of/proceeds from property, plant and equipment
Payments for intangible assets
Loan repayment from Christchurch Hotels Limited
Dividend from subsidiaries
(153,689)
(11,008)
1,110
–
(74,822)
(1,893)
194
–
–
–
–
110,178
–
–
–
100,133
net cash (outflow) / inflow from investing activities
(163,587)
(76,521)
110,178
100,133
Cash flows from financing activities
Cash flows associated with derivatives
Repayment of borrowings
New borrowings
Advances from subsidiaries
Net purchase of treasury shares
Dividends paid to company shareholders
Interest paid
12
29
22
11,283
(264,450)
241,314
–
(7,180)
(93,258)
(49,042)
(20,884)
(362,359)
401,799
–
(11,442)
(93,106)
(44,781)
–
–
–
19,700
(7,180)
(93,258)
(3,655)
–
–
9,408
25,547
(11,442)
(93,106)
(4,336)
net cash (outflows) from financing activities
(161,333)
(130,773)
(84,393)
(73,929)
net (decrease) / increase in cash and bank balances
Cash and bank balances at the beginning of the year
(63,177)
104,577
2,071
102,506
Cash and cash equivalents at end of year
9
41,400
104,577
–
1
1
–
1
1
The above statements of cash flows should be read in conjunction with the accompanying notes.
PG 8
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
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
gaming/entertainment, hotel and convention, hospitality,
recreation, and tourism sectors. The Group has operations in
New Zealand and Australia.
SKYCITY is a limited liability company incorporated and
domiciled in New Zealand. The address of its registered office is
Federal House, 86 Federal Street, Auckland. The company is
dual‑listed on the New Zealand and Australian stock exchanges.
These financial statements have been approved for issue by the
board of directors on 15 August 2012.
2 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
These general purpose financial statements for the year ended
30 June 2012 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
this financial 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 financial statements of
SKYCITY also comply with International Financial Reporting
Standards (IFRS).
entities reporting
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of the Group as at 30 June 2012
and the results of all subsidiaries and associates for the year
then ended.
The financial statements of the ‘Parent’ are for the company
as a separate legal entity.
The Parent company and the Group are designated as
profit‑oriented entities for financial reporting purposes.
The Parent company has a negative net working capital balance.
The Parent’s subsidiaries will continue to support it as required.
The Group has a small negative working capital balance. The
Group has significant available undrawn banking facilities totalling
$340 million as at 30 June 2012 (refer to note 18) and has the
ability to fully pay all debts as they fall due.
Statutory Base
SKYCITY is a company registered under the New Zealand
Companies Act 1993 and is an issuer in terms of the Securities
Act 1978 (New Zealand).
These financial statements have been prepared in accordance
with the requirements of the Financial Reporting Act 1993
(New Zealand) and the Companies Act 1993 (New Zealand).
Measurement Basis
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation financial
assets and liabilities (including derivative instruments) at fair
value through profit or loss.
Critical accounting estimates and Judgements
The preparation of financial 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. Estimates are used in the following areas:
impairment testing of goodwill, indefinite life casino licences and
assessing the probability of utilisation of unused tax losses.
The Group tests annually whether goodwill and indefinite
licences have suffered any impairment, in accordance with the
accounting policy stated in note 2(i). The recoverable amounts of
cash‑generating units have been determined based on value in
use calculations. These calculations require the use of estimates
(refer note 14).
There is significant headroom between the value in use
calculations and the carrying value of the remaining assets such
that reasonably possible changes in the assumptions used would
not result in an impairment.
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 (refer note 20). Certain judgements are
made in calculating these temporary differences.
(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 financial
and operating policies to obtain benefits generally accompanying
a shareholding of more than one half of the voting rights.
PG 9
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group and are not consolidated
from the date that control ceases.
after initially being recognised at cost. The Group’s investment in
associates includes goodwill (net of any accumulated impairment
loss) identified on acquisition.
The Group financial statements consolidate the financial
statements of subsidiaries, using the acquisition method.
The acquisition method of accounting is used to account for
the acquisition of subsidiaries and businesses by the Group.
The consideration transferred in a business is measured at fair
value, which is calculated as the sum of the acquisition‑date fair
value of the assets transferred by the acquirer, the liabilities
incurred by the acquirer to former owners of the acquiree and
the equity interest issued by the acquirer. It includes any asset
or liability arising from a contingent consideration arrangement.
Acquisition related costs are expensed as incurred. Each
identifiable asset and liability is generally measured at its
acquisition‑date fair value except if an NZ IFRS requires another
measurement basis. The excess of the consideration transferred
over the Group’s share of the net of the acquisition‑date amounts
of the identifiable assets acquired and the liabilities assumed is
recognised as goodwill. If the consideration transferred is less
than the acquisition‑date fair value of identifiable assets
acquired and liabilities assumed, a gain is recognised directly in
profit or loss.
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.
Non controlling interests in the results and equity of subsidiaries
are shown separately in the consolidated Income Statement and
Balance Sheet respectively.
Subsidiaries are accounted for at cost less any impairment
within the parent entity financial statements.
(ii) transactions with non‑controlling interests
The Group treats transactions with non‑controlling interests
as transactions with equity owners of the Group. For purchases
from non‑controlling interests, the differences between
consideration paid and the relevant share acquired of the
carrying value of net assets of the subsidiary is recorded in
equity. Gains or losses on disposals to non‑controlling
interests are also recorded in equity.
(iii) associates
Associates are all entities over which the Group has significant
influence 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 financial
statements using the cost method and in the consolidated
financial statements using the equity method of accounting,
The Group’s share of its associates’ post acquisition profits 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.
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.
(c) Segment Reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the chief operation decision
maker. The chief operating decision maker has been identified
as the Chief Executive Officer/Managing Director.
(d) Foreign Currency Translation
(i) Functional and presentation Currency
Items included in the financial statements of each of the
company’s operations are measured using the currency of the
primary economic environment in which the entity operates
(‘functional currency’). The consolidated and parent financial
statements are presented in New Zealand dollars, which is the
company’s functional and 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
flow hedges and qualifying net investment hedges.
Translation differences on non‑monetary items, such as
equities held at fair value through profit or loss, are reported
as part of the fair value gain or loss. Translation differences
on non‑monetary items, such as equities classified as available
for sale financial assets, are included in the fair value reserve
in equity.
PG 10
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
NOTES TO THE FINANCIAL STATEMENTS
C o n t I n u e D
(iii) Foreign operations
The results and financial position of foreign entities (none of
which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency
are translated into the presentation currency below:
•
•
•
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 summarised below.
(i) operating revenue
Operating revenues include casino, hotel, food and beverage,
convention centre, tower admissions and other revenues. Gaming
revenues represent the net gaming 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.
(iv) loyalty programme
A portion of revenue is allocated to the loyalty points scheme
and is recognised when customers redeem their loyalty points.
(f) Income Tax
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 financial statements and changes
in unused tax losses.
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 profit or
taxable profit 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.
(g) Goods and Services Tax (GST)
The Income Statement, Cash Flow Statement and Statement
of Changes in Equity have been prepared so that all components
are stated exclusive of GST. All items in the Balance Sheet are
stated net of GST, with the exception of receivables and
payables, which include GST invoiced.
(h) Leases
(i) the Group is the lessee
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified 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.
(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.
(i) Impairment of Non‑Current Assets
Goodwill and Intangible Assets that have an indefinite useful
life are not subject to amortisation and are tested annually
for impairment. Assets that are subject to depreciation or
PG 11
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
amortisation (property, plant and equipment and intangibles that
have a finite useful life) are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount exceeds its recoverable amount. 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 identifiable cash
flows (cash generating units).
(j) Cash and bank balances
Cash and bank balances include cash on hand, deposits held at
call with financial 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 insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in
current liabilities on the Balance Sheet.
(k) Trade Receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost, less provision for
doubtful debts.
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 those receivables.
(l) Inventories
Inventories, all of which are finished goods, are stated at the
lower of cost and net realisable value determined on a first in,
first out basis.
(m) Investments and Other Financial Assets
The Group classifies its investments in the following categories:
financial assets at fair value through profit or loss and loans and
receivables. The classification depends on the purpose for which
the investments were acquired. The company determines the
classification of its investments at initial recognition and
re‑evaluates this designation at each reporting date.
Investments are initially recognised at fair value plus transactions
costs for all financial assets not carried at fair value through profit
or loss. Financial assets carried at fair value through profit or loss
are initially recognised at fair value, and transaction costs are
expensed in the income statement. Financial assets are
derecognised when the rights to receive cash flows from the
investments have expired or have been transferred and the
Group has transferred substantially all risks and rewards of
ownership.
(i) Financial assets at Fair value through profit or loss
This category has two sub‑categories: financial assets classified as
held for trading and financial assets designated as at fair value
through profit or loss on initial recognition. A financial asset is
classified as held for trading if acquired principally for the
purpose of selling in the short term. Derivatives are also classified
as held for trading unless they are designated as hedges. The
Group does not hold any assets that are designated as at fair
value on initial recognition. Financial assets at fair value through
profit or loss are classified as current assets if they are either held
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 financial assets with
fixed 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 classified as non‑current assets. Loans and
receivables are included in receivables in the Balance Sheet.
(n) 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 firm commitment (fair value hedges) or hedges of exposures to
variability in cash flows associated with recognised assets or
liabilities or highly probable forecast transactions (cash flow
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 flows 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 flow 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 profit
PG 12
Notes to the fiNaNcial statemeNtsCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
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‑financial asset (for example,
inventory) or a non‑financial 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
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 in the Income
Statement.
(o) Property, Plant and Equipment
Property, plant and equipment 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 flow
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 benefits associated with the item
will flow 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 financial period in which they are
incurred.
Land is not depreciated. Depreciation on other assets is
calculated using the straight line method to allocate their cost,
net of their residual values, over their estimated useful lives, as
below:
•
•
Buildings and fit‑out
5–75 years
Plant and equipment
2–75 years
• Motor vehicles
3 years
•
Fixtures and fittings
3–20 years
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(i)).
Gains and losses on disposals are determined by comparing
proceeds with carrying amount.
(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 identifiable 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 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 finite 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 life.
The casino licences that have been determined to have an
indefinite useful life are not amortised but rather are tested for
impairment annually or more frequently if events or changes in
circumstances indicate that they might be impaired, and are
carried at cost less accumulated impairment losses.
(iii) acquired Software
Acquired computer software licences are capitalised on the basis
of the costs incurred to acquire and bring to use the specific
software. These costs are amortised over their estimated useful
lives (three to seven years).
(q) Payables
Payables are stated at fair value or estimated liability where
accrued.
(r) borrowings
Borrowings, including capital notes and the Group’s Adjustable
Coupon Exchangeable Securities (SKYCITY ACES ‑ now
redeemed), 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 classified 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.
(s) borrowing Costs
Borrowing costs are expensed, except for costs incurred for the
construction of any qualifying asset which are capitalised during
PG 13
Notes to the fiNaNcial statemeNtsCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
the period of time that is required to complete and prepare the
asset for its intended use or sale.
(t) Employee benefits
(i) Wages, Salaries and annual leave
Liabilities for wages and salaries, including non‑monetary benefits
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‑market
vesting conditions (for example, profitability 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.
(u) Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares
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.
(v) Dividends
Provision is made for the amount of any dividend declared on
or before the end of the financial year but not distributed at
balance date.
(w) Earnings Per Share
(i) Basic earnings per Share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the company by the weighted
average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares
issued during the year.
(ii) Diluted earnings per Share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account the after income tax effect of interest and other
financing 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.
(x) Statement of Cash Flows
Cash flows associated with derivatives that are part of a hedging
relationship are off‑set against cash flows associated with the
hedged item.
(y) Standards, amendments and interpretations to existing
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 2012
or later periods, but which the Group has not early adopted. The
significant items are:
• nZ IFrS 9, Financial Instruments (effective from annual
periods beginning on or after 1 January 2015). This standard
replaces the parts of IAS 39 Financial Instruments:
Recognition and Measurement that relates to the
classification and measurement of financial instruments.
All financial assets are required to be classified into two
measurement categories: at fair value and at amortised cost.
The determination is based on the entity’s business model
for managing the financial assets and the contractual cash
flow characteristics of the financial asset.
For financial liabilities, the standard retains most of the IAS
39 requirements. An additional presentational requirement
has been added for liabilities designated at fair value through
profit and loss. Where the fair value option is taken, the part
of a fair value change due to an entity’s own credit risk is
recorded in other comprehensive income.
This standard is not expected to significantly impact
the Group.
• nZ IFrS 13, Fair value measurement (effective from annual
periods beginning on or after 1 January 2013). NZ IFRS 13
replaces the fair value measurement guidance contained in
individual NZ IFRSs with a single source of fair value
measurement guidance. It defines fair value, establishes a
framework for measuring fair value and sets out disclosure
requirements for fair value measurements. It explains how to
measure fair value when it is required or permitted by other
NZ IFRSs. It does not introduce new requirements to
measure assets or liabilities at fair value, nor does it eliminate
the practicability exceptions to fair value measurements that
currently exist in certain standards. This standard is not
expected to significantly impact the Group.
(z) New Accounting Standards Adopted in the year
There have been no significant changes in accounting policies
during the current year. Accounting policies have been applied
on a basis consistent with prior year.
PG 14
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
3 REVENUE
Total receipts including GST
Less non‑gaming GST
Gaming win plus non‑gaming revenue
Less gaming GST
total revenue
Gaming
Non‑gaming
total revenue
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
960,203
(26,398)
933,805
(82,275)
902,381
(22,562)
879,819
(76,674)
851,530
803,145
658,713
192,817
628,051
175,094
851,530
803,145
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Non‑gaming revenue includes revenues from hotels, food and beverage, convention centre, car parking, property rentals, Sky Tower,
and other non‑gaming activities.
Included within consolidated gaming revenue is revenue relating to loyalty action points of $11,621,000 (30 June 2011: $10,486,000).
Included within consolidated non‑gaming revenue is revenue relating to loyalty action points of $266,000 (30 June 2011: $306,000).
Gaming win represents the gross cash inflows associated with gaming activities. “Total receipts including GST” and “Gaming win plus
non‑gaming revenue” do not represent revenue as defined by NZ IAS 18 Revenue. The Group has decided to disclose these amounts
as they give shareholders and interested parties a better appreciation for the scope of the Group’s gaming activities and is consistent
with industry practice adopted by casino operations in Australia.
4 OTHER INCOME
Net gain on disposal of property, plant and equipment
Interest income ‑ Christchurch Hotels Limited
Dividend income
Dividends from wholly‑owned entities
ConSolIDateD
parent
2012
$’000
1,756
167
5
–
1,928
2011
$’000
1,065
192
4
–
2012
$’000
2011
$’000
–
–
–
110,178
–
–
–
100,133
1,261
110,178
100,133
PG 15
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
5 EXPENSES
profit before income tax includes the following specific expenses:
Depreciation
Buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total depreciation
amortisation
Casino licences (Adelaide)
Computer software
Total amortisation
Total depreciation and amortisation
other expenses includes:
Utilities, insurance and rates
Community Trust donations
Minimum lease payments relating to operating leases
Other property expenses
Other items (including International commissions)
Provision for bad and doubtful debts
restructuring costs
Redundancy and other staff payments
Other restructuring costs
Auditors’ fees
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
24,777
34,215
7,366
400
24,198
31,402
6,834
404
66,758
62,838
2,682
3,330
6,012
2,736
4,136
6,872
72,770
69,710
21,683
3,143
4,535
16,045
54,905
43
19,616
3,185
4,408
15,302
50,031
81
100,354
92,623
2,581
1,693
4,274
2,471
827
3,298
–
2,593
–
–
2,593
–
2,968
2,968
5,561
99
–
–
–
3,683
–
3,782
2,093
–
2,093
–
2,125
–
–
2,125
–
3,833
3,833
5,958
106
–
–
–
6,285
–
6,391
–
–
–
400
–
80
480
75
–
45
120
600
During the year the following fees were paid or are payable for services provided by the auditor of the parent entity, its related
practices and non‑related audit firms.
(a) Assurance services
audit services
PricewaterhouseCoopers
Audit of Group financial statements
Audit of subsidiary financial statements
Half year review
Total remuneration for audit services
other assurance services provided by pricewaterhouseCoopers
Accounting advice and assistance
Systems assurance
Tax compliance services
Total remuneration for other assurance services
Total remuneration for assurance services
PG 16
418
92
84
594
85
75
91
251
845
400
94
80
574
75
–
73
148
722
418
–
84
502
85
–
40
125
627
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
(b) Other services
PricewaterhouseCoopers
Taxation and other advisory services
Total remuneration for taxation services
Total fees paid or payable to auditors
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
266
266
318
318
1,111
1,040
169
169
796
168
168
768
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. For other work, the company’s External Audit Independence Policy requires that advisers
other than PricewaterhouseCoopers are engaged, unless otherwise approved by the Board’s Audit and Risk Committee.
6 FINANCE COSTS – NET
Finance costs
Interest and finance charges
Exchange gains
Interest income
Gain on funding reorganisation (note 18)
Total finance costs
7
INCOME TAX EXPENSE
(a) Income Tax Expense
Current tax
Deferred tax
Deferred tax (note 20)
Origination and reversal of temporary differences
Change in New Zealand corporate tax rate and building depreciation
Total deferred tax
PG 17
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
53,167
(582)
(3,724)
–
50,280
(2,105)
(2,783)
(1,620)
48,861
43,772
4,171
–
–
–
4,171
3,908
–
–
–
3,908
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
49,176
(9,214)
39,570
3,221
39,962
42,791
(9,214)
–
(9,214)
8,656
(5,435)
3,221
–
–
–
–
–
–
–
–
–
–
–
–
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
7
INCOME TAX EXPENSE (continued)
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
(b) Numerical Reconciliation of Income Tax Expense to
Prima Facie Tax Payable
Profit from continuing operations before income tax expense
178,832
165,794
70,979
Tax at the New Zealand tax rate of 28% (2011: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
50,073
49,738
19,874
Inter‑company eliminations
Net non‑deductible items
Share of net profit of associates
Impairment of Christchurch Casino
Foreign exchange rate differences
Exempt dividends received
Share of partnership expenditure
Tax losses not previously recognised
Differences in overseas tax rates
Over provision in prior years
Tax expense pre Government Budget changes
Change in New Zealand tax building depreciation
Change in New Zealand corporate tax rate
Tax expense relating to Government Budget changes
Income tax expense
–
1,491
(1,525)
–
1,336
–
(7,071)
(284)
773
(4,831)
39,962
–
–
–
1,427
(1,793)
4,500
1,591
–
(7,180)
(27)
–
(30)
48,226
(5,522)
87
–
(5,435)
39,962
42,791
10,830
146
–
–
–
(30,850)
–
–
–
–
–
–
–
–
–
63,480
19,044
10,909
87
–
–
–
(30,040)
–
–
–
–
–
–
–
–
–
The weighted average applicable tax rate was 22.3% (2011: 25.8%) (excluding the impact of building tax depreciation changes and
Christchurch Casinos impairment 22.3% (2011: 26.7%)).
The New Zealand corporate tax rate reduced from 30% to 28% and tax depreciation for buildings with an estimated life of 50 or
more years was disallowed. Both of these changes were effective for the Group from 1 July 2011. The initial impact of these
changes ($39,700,000) was included within the 2010 results. A $5,435,000 partial reversal in 2011 relates to adjustments to the 2010
estimated impact.
PG 18
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
8 EARNINGS PER SHARE
Basic earnings per share
Profit for the year before tax expense relating to Government Budget changes and Christchurch Casino impairment
Profit attributable to the ordinary equity holders of the company
Diluted earnings per share
Profit attributable to the ordinary equity holders of the company
(a) Reconciliations of Earnings used in calculating Earnings Per Share
Basic earnings per share
Profit from continuing operations
Profit attributable to minority interests
ConSolIDateD
2012
CentS
2011
CentS
24.0
24.0
23.0
21.4
23.8
20.9
ConSolIDateD
2012
$’000
2011
$’000
138,870
(336)
123,003
(43)
Profit attributable to the ordinary equity holders of the company used in calculating basic earnings per share
138,534
122,960
Diluted earnings per share
Profit attributable to the ordinary equity holders of the company used in calculating basic earnings per share
Interest savings on capital notes
Interest savings on SKYCITY ACES
Tax on the above
138,534
4,160
–
(1,165)
122,960
3,837
4,476
(2,494)
Profit attributable to the ordinary equity holders of the company used in calculating diluted earnings per share
141,529
128,779
(b) weighted Average number of shares used as the denominator
ConSolIDateD
2012
nuMBer
2011
nuMBer
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
576,958,340 575,574,000
SKYCITY ACES
Capital notes
–
16,592,208
25,622,391
14,501,611
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
593,550,548 615,698,002
(c) Information concerning the classification of Securities
(i) SKyCIty aCeS
The SKYCITY ACES were considered to be potential ordinary shares in 2011 and were therefore included in the determination
of diluted earnings per share.
(ii) Capital notes
Capital notes are considered to be potential ordinary shares and are therefore included in the determination of diluted earnings
per share from their date of issue. The capital notes have not been included in the determination of basic earnings per share.
Details relating to the capital notes are set out in note 19.
PG 19
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
9 CASH AND bANK bALANCES
Cash at bank
Cash in house
10 RECEIVAbLES AND PREPAyMENTS
Trade receivables
Advance to Christchurch Hotels Limited (note 29)
Sundry receivables
Prepayments
Amounts due from subsidiaries (note 30)
There are no significant receivables past due date or impaired.
11 NET TAX RECEIVAbLES
Tax prepayment – current
Tax prepayment– non current
Current tax liabilities
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
2,538
38,862
55,690
48,887
41,400
104,577
1
–
1
1
–
1
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
13,551
5,125
4,864
3,434
–
9,285
6,235
11,244
4,136
–
–
–
227
1,193
152,209
26,974
30,900
153,629
–
–
112
2,041
85,223
87,376
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
35,503
31,550
(7,972)
36,637
27,789
(5,349)
59,081
59,077
–
–
–
–
–
–
–
–
Tax is typically paid in advance in New Zealand to ensure the Group has positive imputation credits as at 31 March of each year.
PG 20
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
12 DERIVATIVE FINANCIAL INSTRUMENTS
Current assets
Forward foreign currency contracts
Total current derivative financial instrument assets
non‑current assets
Cross‑currency interest rate swaps – cash flow hedges
Total non‑current derivative financial instrument assets
Current liabilities
Cross‑currency interest rate swap – cash flow hedges*
Forward foreign currency contracts
Cross‑currency interest rate swaps – fair value hedges*
Interest rate swaps – cash flow hedges
Total current derivative financial instrument liabilities
non‑current liabilities
Interest rate swaps – cash flow hedges
Cross‑currency interest rate swaps – cash flow hedges *
FaIr value
notIonal prInCIpal
2012
$’000
2011
$’000
2012
$’000
2011
$’000
480
480
23,154
23,154
519
145
–
–
664
272
272
50,576
50,576
6,911
6,911
–
–
258,548
258,548
4,981
113
1,998
3,010
31,876
13,018
–
–
–
–
83,227
5,785
19,492
97,000
10,102
44,894
205,504
42,877
2,538
14,514
18,879
396,705
59,751
399,184
300,906
Total non‑current derivative financial instrument liabilities
45,415
33,393
456,456
700,090
During the year, $3,927,289 of losses (2011: $3,545,228 gains) on hedged items were offset in the Income Statement by $4,153,420 of
gains (2011: $3,739,485 losses) on derivatives in fair value hedging relationships.
There is no cash flow hedge ineffectiveness in either the current or prior year.
* The comparative period fair value amounts are net of collateral payments made of $11,283,153. When the fair value of the cross‑currency interest
rate swaps exceeds certain levels, a payment is received from (if the CCIRS is an asset) or made to (if the CCIRS is a liability) the counter‑party.
The collateral payment outstanding at 30 June 2011 was repaid during the current year, there are no collateral payments outstanding
at 30 June 2012.
The parent has no derivatives at 30 June 2012 (2011: fair value of negative $113,000).
PG 21
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
13 PROPERTy, PLANT AND EqUIPMENT
lanD
$’000
BuIlDInGS
anD FItout
$’000
plant anD
equIpMent
$’000
FIxtureS
anD
FIttInGS
$’000
Motor
vehICleS
$’000
CapItal
WorK In
proGreSS
$’000
total
$’000
CONSOLIDATED
at 30 June 2010
Cost
Accumulated depreciation
179,986
–
809,872
(176,884)
361,350
(272,223)
103,794
(70,455)
2,243
(1,259)
16,755 1,474,000
(520,821)
–
Net book value
179,986
632,988
89,127
33,339
984
16,755
953,179
Movements in the year ended 30 June 2011
Opening net book value
Exchange differences
Net additions/transfers
Depreciation charge
179,986
959
(992)
–
632,988
8,185
9,418
(24,198)
89,127
1,893
28,395
(31,402)
33,339
317
1,389
(6,834)
984
28
217
(404)
16,755
652
50,529
–
953,179
12,034
88,956
(62,838)
Closing net book value
179,953
626,393
88,013
28,211
825
67,936
991,331
at 30 June 2011
Cost
Accumulated depreciation
179,953
–
826,639
(200,246)
390,080
(302,067)
102,810
(74,599)
2,520
(1,695)
67,936 1,569,938
(578,607)
–
Net book value
179,953
626,393
88,013
28,211
825
67,936
991,331
Movements in the year ended 30 June 2012
Opening net book value
Exchange differences
Net additions/transfers
Depreciation charge
Closing net book value
at 30 June 2012
Cost
Accumulated depreciation
179,953
(255)
10,226
–
626,393
(2,165)
45,337
(24,777)
88,013
(493)
47,916
(34,215)
28,211
(78)
13,433
(7,366)
825
(7)
329
(400)
67,936
(258)
25,860
–
991,331
(3,256)
143,101
(66,758)
189,924
644,788
101,221
34,200
747
93,538 1,064,418
189,924
–
864,635
(219,847)
350,639
(249,418)
98,191
(63,991)
2,697
(1,950)
93,538 1,599,624
(535,206)
–
Net book value
189,924
644,788
101,221
34,200
747
93,538 1,064,418
PG 22
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
13 PROPERTy, PLANT AND EqUIPMENT (continued)
PARENT COMPANY
at 30 June 2010
Cost
Accumulated depreciation
Net book value
Movements in the year ended 30 June 2011
Opening net book value
Net additions/transfers
Depreciation charge
Closing net book value
at 30 June 2011
Cost
Accumulated depreciation
Net book value
Movements in the year ended 30 June 2012
Opening net book value
Net additions/transfers
Depreciation charge
Closing net book value
at 30 June 2012
Cost
Accumulated depreciation
Net book value
plant anD
equIpMent
$’000
CapItal
WorK In
proGreSS
$’000
total
$’000
28,171
(23,564)
4,607
4,607
3,839
(2,125)
6,321
32,011
(25,690)
6,321
6,321
2,023
(2,593)
5,751
27,496
(21,745)
5,751
2,655
–
2,655
2,655
(1,922)
–
733
733
–
733
733
1,048
–
1,781
1,781
–
1,781
30,826
(23,564)
7,262
7,262
1,917
(2,125)
7,054
32,744
(25,690)
7,054
7,054
3,071
(2,593)
7,532
29,277
(21,745)
7,532
Borrowing costs of $2,129,123 have been capitalised in the current year relating to the Auckland and Adelaide capital projects and
Darwin resort (2011: $346,722) using the Group’s weighted average cost of debt.
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.
The SKYCITY Hamilton site is subject to the normal rights that the Crown reserves in respect of minerals and mining in relation to the
sub‑soil areas. 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.
PG 23
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
14 INTANGIbLE ASSETS
CONSOLIDATED
at 30 June 2010
Cost
Accumulated amortisation
Net book amount
Movements in the year ended 30 June 2011
Opening net book amount
Exchange differences
Additions
Amortisation charge
Closing net book amount
at 30 June 2011
Cost
Accumulated amortisation
Net book amount
Movements in the year ended 30 June 2012
Opening net book amount
Exchange differences
Additions
Amortisation charge
Closing net book amount
at 30 June 2012
Cost
Accumulated amortisation
Net book amount
Casino Licence Contract Term
GooDWIll
$’000
CaSIno
lICenCeS
$’000
CoMputer
SoFtWare
$’000
total
$’000
151,949
–
261,318
(29,468)
58,153
(44,726)
471,420
(74,194)
151,949
231,850
13,427
397,226
151,949
6,048
–
–
231,850
12,101
–
(2,736)
13,427
16
1,893
(4,136)
397,226
18,165
1,893
(6,872)
157,997
241,215
11,200
410,412
157,997
–
274,924
(33,709)
60,234
(49,034)
493,155
(82,743)
157,997
241,215
11,200
410,412
157,997
(1,605)
–
–
241,215
(3,156)
–
(2,682)
11,200
(3)
11,009
(3,330)
410,412
(4,764)
11,009
(6,012)
156,392
235,377
18,876
410,645
156,392
–
271,314
(35,937)
60,027
(41,151)
487,733
(77,088)
156,392
235,377
18,876
410,645
Darwin
Adelaide
Auckland
Hamilton
The casino and associated operations are carried out by SKYCITY Darwin under a casino licence/operator agreement
(the Casino Operator’s Agreement) with the Northern Territory Government. The current licence term was extended in
2011 and now expires on 30 June 2031. The Casino Operator’s Agreement is subject to extension for a further 5 years
once its period to maturity reaches 15 years. These licence extensions apply on a continuing five year basis so that,
subject to certain criteria being met, the licence period is never less than 15 years.
The casino and associated operations are carried out by SKYCITY Adelaide under a casino licence (the Approved
Licensing Agreement (“ALA”)) dated October 1999 (as amended). The expiry date of the ALA is June 2085. The term of
the ALA can be renewed for a further fixed term pursuant to section 9 of the Casino Act 1997 (SA). The carrying value
of the Adelaide licence is amortised over the life of the agreement.
SKYCITY Auckland Limited holds a Casino Premises Licence for the Auckland premises. The Casino Premises Licence
is for an initial 25 year term from 2 February 1996. The licence can be renewed for further periods of 15 years pursuant
to s138 of the Gaming Act 2003 (NZ). As the licence was initially granted to the company for nil consideration there is
no associated carrying value.
SKYCITY Hamilton Limited holds a Casino Premises Licence for the Hamilton premises. The Casino Premises Licence
is for an initial 25 year term from 19 September 2002. The licence can be renewed for further periods of 15 years
pursuant to s138 of the Gaming Act 2003 (NZ). As the licence was initially granted to the company for nil consideration
there is no associated carrying value.
PG 24
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
14 INTANGIbLE ASSETS (continued)
PARENT COMPANY
at 30 June 2010
Cost
Accumulated amortisation
Net book amount
Movements in the year ended 30 June 2011
Opening net book amount
Additions
Amortisation charge
Closing net book amount
at 30 June 2011
Cost
Accumulated amortisation
Net book amount
Movements in the year ended 30 June 2012
Opening net book amount
Additions
Amortisation charge
Closing net book amount
at 30 June 2012
Cost
Accumulated amortisation
Net book amount
CoMputer
SoFtWare
$’000
total
$’000
50,813
(37,760)
50,813
(37,760)
13,053
13,053
13,053
1,476
(3,833)
13,053
1,476
(3,833)
10,696
10,696
52,289
(41,593)
52,289
(41,593)
10,696
10,696
10,696
2,303
(2,968)
10,696
2,303
(2,968)
10,031
10,031
45,583
(35,552)
45,583
(35,552)
10,031
10,031
(a) Impairment Tests for Intangibles with Indefinite Lives
Goodwill and licences with indefinite lives are allocated to the Group’s cash‑generating units (CGU’s) identified below.
2012
Goodwill
Casino Licence
2011
Goodwill
Casino Licence
SKyCIty
haMIlton*
$’000
SKyCIty
DarWIn
$’000
total
$’000
35,786
–
120,606
40,459
156,392
40,459
35,786
161,065
196,851
35,786
–
122,211
40,997
157,997
40,997
35,786
163,208
198,994
The recoverable amount of a CGU is determined based on value in use calculations. These calculations use cash flow 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 indefinite life assets and value in use
calculations.
* SKYCITY Hamilton is included within the “Rest of New Zealand” segment in note 27.
PG 25
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
14 INTANGIbLE ASSETS (continued)
(b) Key Assumptions used for Value in Use Calculations of Cash Generating Units
eBItDa MarGIn
GroWth rate
DISCount rate
SKYCITY Hamilton
SKYCITY Darwin
41.8
29.4
42.6
30.5
2.0
4.7
2.0
3.0
10.0
10.0
2012
%
2011
%
2012
%
2011
%
2012
%
2011
%
10.0
10.0
These assumptions are consistent with past experience adjusted for economic indicators. The discount rates are post‑tax and reflect
specific risks relating to the relevant operating segment.
The company does not expect a reasonably possible change in key assumptions would reduce recoverable amount below
carrying amount.
15 INVESTMENTS IN ASSOCIATES
Carrying Amounts
Information relating to associates is set out below.
naMe oF CoMpany
prInCIpal aCtIvItIeS
oWnerShIp IntereSt
ConSolIDateD
parent
2012
%
2011
%
2012
$’000
2011
$’000
2012
$’000
2011
$’000
Christchurch Casinos Limited Group
Casino operator
50.0
50.0
75,266
73,782
75,266
73,782
–
–
–
–
Christchurch Casinos Limited Group (CCL) is incorporated in New Zealand and has a 31 March balance date.
Following the Canterbury earthquakes in the prior year, a value in use impairment test was completed on the Group’s investment in
Christchurch Casinos resulting in a $15 million impairment. The underlying assumptions used included an initial drop in earnings,
returning to 2010 levels by 2014, a discount rate of 10% (post tax) and a terminal growth rate of 2.3%.
No adjustment has been made to the impairment charge in the current year. Increasing or decreasing the underlying assumed growth
rate by 5% would result in a $4.8 million reduction or increase in the current carrying value.
(a) Movements in carrying amounts
Balance at the beginning of the year
Share of profits after income tax
Dividends received/receivable
Impairment
Balance at 30 June
(b) Impairment losses recognised in profit or loss
Impairment losses in associates accounted for using the equity method in the income statement
PG 26
ConSolIDateD
2012
$’000
2011
$’000
73,782
5,447
(3,963)
–
83,549
5,976
(743)
(15,000)
75,266
73,782
–
–
15,000
15,000
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
15 INVESTMENTS IN ASSOCIATES (continued)
(c) Summarised financial information of associates
2012
Christchurch Casinos Limited Group
2011
Christchurch Casinos Limited Group
Group’S Share oF:
aSSetS
$’000
lIaBIlItIeS
$’000
revenueS
$’000
proFIt
$’000
14,428
14,428
14,852
14,852
1,982
1,982
1,691
1,691
18,570
18,570
14,867
14,867
4,200
4,200
3,269
3,269
The above are based on SKYCITY’s direct equity interest in Christchurch Casinos Limited of 33.3% (2011: 33.3%).
16 PAyAbLES
Trade payables
Deferred income
Accrued expenses
Employee benefits
Amounts due to subsidiaries (note 30)
17 CURRENT LIAbILITIES – INTEREST bEARING LIAbILITIES
unsecured
United States Private Placement (USPP)
Total unsecured current interest bearing borrowings
Fair value disclosures
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
18,034
3,520
42,144
43,488
–
31,044
3,097
39,805
36,905
–
–
–
7,025
–
337,743
–
–
5,480
–
245,517
107,186
110,851
344,768
250,997
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
–
–
247,267
247,267
–
–
–
–
Details of the fair value of interest bearing liabilities for the Group are set out in note 18.
PG 27
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
18 NON‑CURRENT LIAbILITIES – INTEREST bEARING LIAbILITIES
Refer to (note 17) for details of current portions of these liabilities.
unsecured
United States Private Placement (USPP)
Syndicated bank facility
Deferred funding expenses
Total unsecured non‑current interest bearing borrowings
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
365,848
240,627
(1,573)
350,202
–
–
604,902
350,202
–
–
–
–
–
–
–
–
In 2011, a gain of $1,620,000 resulted from a reorganisation of funding structures and refinancing of SKYCITY ACES with USPP.
(a) United States Private Placement (USPP)
On 15 March 2005, SKYCITY borrowed NZ$96,571,000, A$74,900,000 and US$274,500,000 with maturities between 2012 and 2020
from private investors (primarily US based) on an unsecured basis.
The USPP fixed rate US dollar borrowings have been converted to New Zealand dollar floating rate borrowings by use of cross
currency interest rate swaps to eliminate foreign exchange exposure within the Income Statement.
In March 2011, additional US$175,000,000 of USPP debt was raised, US$100,000,000 with 10 year maturity and US$75,000,000
with 7 years.
In March 2012, USPP borrowings of US$85,000,000, A$74,900,000 and NZ$47,275,000 matured and were repaid.
Other movements in the USPP from 30 June 2011 relate to foreign exchange movements.
The offsetting value of the cross currency interest rate swaps are included within derivative financial instruments in note 12.
(b) Syndicated bank Facility
At 30 June 2012, SKYCITY had in place a NZ$485,000,000 revolving credit (2011: NZ$400,000,000) and Australian $75,000,000 term
facility (2011: nil) on an unsecured, negative pledge basis in two tranches of NZ$200,000,000 each maturing January 2015 and June
2016, and two tranches maturing March 2019 of NZ$85,000,000 and Australian $75,000,000 . The funding syndicate is comprised of
ANZ National Bank Limited, Bank of New Zealand Limited, Commonwealth Bank of Australia and Westpac New Zealand Limited.
The facility is a revolving credit facility with the exception of the Australian $75,000,000 tranche which is a term loan.
(c) Fair values
Fair value of long term fixed rate USPP debt is estimated at $341 million (2011: $424 million) compared to a carrying value of $317
million (2011: $404 million). Fair value has been calculated based on the present value of future principal and interest cash flows, using
market interest rates and credit margins at balance date.
The carrying value of floating rate debt approximates its fair value.
PG 28
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
19 SUbORDINATED DEbT – CAPITAL NOTES
Balance at the beginning of the year
Issued/(matured) during the year
Balance at the end of the year
Deferred expense
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
56,451
–
56,451
47,043
9,408
56,451
56,451
–
56,451
37
51
37
47,043
9,408
56,451
51
Net capital notes at the end of the year
56,414
56,400
56,414
56,400
In May 2010, the capital notes were renewed for a new term of five years to 15 May 2015. The notes were reissued on the same terms
and conditions except at a lower interest rate of 7.25% (previously 8.0%).
In October 2010, 9,408,000 capital notes were sold from treasury stock.
Prior to the next election date (15 May 2015), the company will 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 modifications
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 ordinary shares.
The company 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 a
SKYCITY ordinary share on the New Zealand stock exchange during the 15 trading days prior to the election dates.
The capital notes do not carry voting rights. Capital noteholders are not entitled to any distributions made by SKYCITY 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 SKYCITY’s
issued shares.
As at 30 June 2012, there were 150,000,000 (2011: 150,000,000) capital notes on issue, of which 93,549,500 (2011: 93,549,500)
are held as treasury stock by the company.
The capital notes are listed on the NZX. As at 30 June 2012, the closing price was $1.0425 per $1 note (2011: $1.0182). The capital
notes are carried at amortised cost.
PG 29
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
20 DEFERRED TAX LIAbILITIES
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
the balance comprises temporary differences attributable to:
Prepayments and receivables
Provision and accruals
Depreciation
Foreign exchange differences
Tax losses
Other
Cash flow hedges
529
(14,174)
97,622
6,903
(1,486)
605
(5,428)
47
(9,799)
96,231
14,378
(2,263)
613
(4,917)
Net deferred tax liabilities
84,571
94,290
Movements:
Balance at the beginning of the year
(Credited)/charged to the Income Statement (note 7)
Debited to equity reserves
Change in New Zealand corporate tax rate and building depreciation (note 7)
Foreign exchange differences
Closing balance at 30 June
Within 12 months
In excess of 12 months
94,290
(9,214)
(360)
–
(145)
95,347
8,656
(4,133)
(5,435)
(145)
84,571
94,290
(15,512)
100,083
(8,979)
103,269
84,571
94,290
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The Group has not recognised deferred tax assets of $1.3 million (2011: $1.6 million) in respect of losses that can be carried forward
against future taxable income.
21 IMPUTATION CREDITS (New Zealand)
Balance at the beginning of the year
Tax payments, net of refunds
Credits attached to dividends paid
Credits attached to dividends received
Balance at end of year
Imputation credits available directly and indirectly
to shareholders of the parent company, through:
Parent company
Subsidiaries
Balance at end of year
ConSolIDateD
2012
$’000
2011
$’000
(7,708)
26,284
(18,069)
1,672
(6,260)
32,327
(33,797)
22
2,179
(7,708)
2,179
–
2,179
(7,708)
–
(7,708)
As required by relevant tax legislation, the imputation credit account had a credit balance as at 31 March 2012.
PG 30
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
22 SHARE CAPITAL
Opening balance of ordinary shares issued
Share rights issued for employee services
Employee share entitlements issued
Treasury shares issued
Net purchase of treasury shares
Shares issued under dividend reinvestment plan
2012
ShareS
2011
ShareS
2012
$’000
2011
$’000
576,958,340 575,114,687
–
–
275,034
674,251
(275,034)
(2,092,762)
–
–
1,843,653
1,418,511
728,616
1,426
–
–
(7,180)
4,736
732,910
1,047
–
–
(11,442)
6,101
576,958,340 576,958,340
727,598
728,616
All ordinary shares rank equally with one vote attached to each fully‑paid ordinary share.
Included within the number of shares is treasury shares of 4,517,313 (2011: 4,351,766) held by the company. The movement in
treasury shares during the year related to the issuance of shares under the employee incentive plans and purchases of shares by an
external trustee as part of the new executive long term incentive plan (refer note 28). Treasury shares may be used to issue shares
under the company’s employee incentive plans or upon the exercise of share rights/options.
23 RESERVES AND RETAINED PROFITS/(LOSSES)
(a) Reserves
Hedging reserve – cash flow hedges
Foreign currency translation reserve
Hedging reserve – cash flow hedges
Balance at the beginning of the year
Revaluation
Transfer to net profit
Deferred tax
Balance 30 June
Foreign currency translation reserve
Balance at the beginning of the year
Exchange difference on translation of overseas subsidiaries
Balance 30 June
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
(13,355)
11,505
(12,340)
16,022
(1,850)
3,682
(12,340)
16,635
(18,010)
360
(2,740)
(77,025)
63,292
4,133
(13,355)
(12,340)
16,022
(4,517)
10,625
5,397
11,505
16,022
–
–
–
(427)
–
593
(166)
–
–
–
–
(427)
–
(427)
–
(593)
–
166
(427)
–
–
–
(i) hedging reserve – Cash Flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in
equity, as described in note 2(n). Amounts are recognised in the Income Statement when the associated hedged transaction affects
the Income Statement.
(ii) 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.
PG 31
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
23 RESERVES AND RETAINED PROFITS/(LOSSES) (continued)
(b) Retained Profit/(Losses)
Movements in retained profits were as follows:
Balance at the beginning of the year
Profit attributable to shareholders of the company
Dividends
Balance at the end of the year
24 NON CONTROLLING INTEREST
Balance at the beginning of the year
Share of surpluses/(deficit) of subsidiaries
Balance at the end of the year
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
41,150
138,534
(97,994)
17,397
122,960
(99,207)
(311,797)
70,979
(97,994)
(276,070)
63,480
(99,207)
81,690
41,150
(338,812)
(311,797)
ConSolIDateD
2012
$’000
1,368
336
1,704
2011
$’000
1,325
43
1,368
The non controlling interest relates to the 40% of Queenstown Casinos Limited which is not owned by SKYCITY.
25 DIVIDENDS
Prior year final dividend
Current year interim dividend
Total dividends provided for or paid
Prior year final dividend (per share)
Current year interim dividend (per share)
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
46,079
51,915
53,198
46,009
46,079
51,915
97,994
99,207
97,994
8.00¢
9.00¢
9.25¢
8.00¢
8.00¢
9.00¢
53,198
46,009
99,207
9.25¢
8.00¢
On 14 August 2012, the directors resolved to declare a final dividend of 8 cents per share in respect of the year ended 30 June 2012
(refer to note 34 for further details).
PG 32
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
26 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risks (interest rate, currency and electricity price), liquidity
risk, and credit risk. The Group’s overall risk management programme recognises the nature of these risks and seeks to minimise
potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain
risk exposures.
Risk management is carried out by a central treasury department under a formal Treasury Policy approved annually by the board of
directors. Treasury policy sets out written principles for overall risk management, as well as policies covering specific areas such as
foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non‑derivative financial instruments,
and investment of excess funds. The Treasury Policy sets conservative limits for allowable risk exposures which are formally reviewed
at least annually.
(a)
Market Risk
(i) Currency risk
The Group operates internationally and is exposed to currency risk, primarily with respect to Australian and US dollars. Exposure to
the Australian dollar arises from the Group’s net investment in its Australian operations. Exposure to the US dollar arises from funding
denominated in that currency.
The Group utilises natural hedges wherever possible (i.e. Australian dollar funding is used to partially hedge the net investment in
Australian operations) with forward foreign exchange contracts used to manage any significant residual risk to the Income Statement.
The Group’s exposure to the US dollar (refer to US dollar US Private Placement debt detailed in notes 17 and 18) has been fully
hedged by way of cross‑currency interest rate swaps (CCIRS), hedging US dollar exposure on both principal and interest. The CCIRS
correspond in amount and maturity to the US dollar borrowings with no residual US dollar exposure.
Movement in exchange rates will have very limited impact on the parent accounts as there are minimal currency exposures in that entity.
(ii) Interest rate risk
The Group’s interest rate exposures arise from long‑term borrowings.
Interest rate swaps (IRS) and CCIRS are utilised to modify the interest repricing profile of the Group’s debt to match the profile
required by Treasury Policy. All IRS and CCIRS are in designated hedging relationships that are highly effective.
As the Group has no significant interest‑bearing assets, the Group’s revenue is substantially independent of changes in market interest
rates.
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.
PG 33
Notes to the fiNaNcial statemeNtsCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
26 FINANCIAL RISK MANAGEMENT (continued)
2012
Cash and deposits
Advance to Christchurch Hotels
Bank facility
US Private Placement
Capital notes (NZ)
IRS/CCIRS*
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
2.50
2.90
4.99
5.06
7.25
2,538
5,125
–
–
–
–
–
–
–
–
–
–
2,538
5,125
(240,627)
(49,296)
–
80,153
–
–
–
(31,876)
–
(59,751)
(56,451)
(4,599)
–
–
–
(35,500)
–
(34,325)
–
(3,675)
–
(222,476)
–
(4,503)
(240,627)
(365,848)
(56,451)
–
(202,107)
(31,876)
(120,801)
(35,500)
(38,000)
(226,979)
(655,263)
Weighted average debt interest rate
6.97%
2011
Cash and deposits
Advance to Christchurch Hotels
US Private Placement
Capital notes (NZ)
IRS/CCIRS *
2.50
2.68
4.82
7.25
55,690
6,235
–
–
(296,563)
–
98,278
–
–
(32,300)
(136,360)
(32,300)
–
–
–
–
–
–
–
–
–
–
–
–
55,690
6,235
(56,798)
(56,451)
(7,552)
–
–
(35,840)
(244,108)
–
(22,586)
(597,469)
(56,451)
–
(120,801)
(35,840)
(266,694)
(591,995)
Weighted average debt interest rate
7.36%
* Interest rate swaps and cross‑currency interest rate swaps, notional principal amounts.
For both 2012 and 2011 capital notes are the only interest‑bearing debt within the parent entity. The parent had no derivatives as at
30 June 2012 (2011: forward foreign exchange contract with fair value of negative $113,000).
(iii) Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk and foreign
exchange risk. The sensitivity analysis considers reasonably possible changes in each risk with all other variables held constant, taking
into account all underlying exposures and related hedges at the reporting date. The impact calculated is based on a full year impact of
each change. Sensitivities have been selected based on the current level of interest rates and exchange rates, volatility observed on
an historical basis and market expectations for future movements.
IntereSt rate rISK
ForeIGn exChanGe rISK
–100BpS
+100BpS
–5%
+5%
proFIt
$’000
equIty
$’000
proFIt
$’000
equIty
$’000
proFIt
$’000
equIty
$’000
proFIt
$’000
equIty
$’000
CONSOLIDATED
30 June 2012
NZD/AUD movements
NZ interest rate movement
Australian interest rate movement
–
1,331
246
–
(8,634)
(7,325)
–
(1,331)
(246)
–
8,274
6,816
total increase/ (decrease)
1,577
(15,959)
(1,577)
15,090
78
–
–
78
17,951
–
–
17,951
(86)
–
–
(16,241)
–
–
(86)
(16,241)
PG 34
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
26 FINANCIAL RISK MANAGEMENT (continued)
IntereSt rate rISK
ForeIGn exChanGe rISK
–100BpS
+100BpS
–5%
+5%
proFIt
$’000
equIty
$’000
proFIt
$’000
equIty
$’000
proFIt
$’000
equIty
$’000
proFIt
$’000
equIty
$’000
CONSOLIDATED
30 June 2011
NZD/AUD movements
NZ interest rate movement
Australian interest rate movement
–
645
80
–
(10,207)
(7,086)
–
(645)
(80)
–
9,685
6,586
total increase/ (decrease)
725
(17,293)
(725)
16,271
558
–
–
558
10,030
–
–
(505)
–
–
(9,075)
–
–
10,030
(505)
(9,075)
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its financial
obligations. SKYCITY is largely a cash‑based business and its material credit risks arise mainly from financial instruments utilised in
funding and International Business play.
Financial instruments (other than International Business discussed below) that potentially create a credit exposure can only be
entered into with counterparties that are explicitly approved by the board. Maximum credit limits for each of these parties are
approved on the basis of long‑term credit rating (Standard and Poor’s or Moody’s). A minimum long‑term rating of A+ (S&P) or A1
(Moody’s) is required to approve individual counterparties.
The maximum credit risk of any financial instrument at any time is the fair value where that instrument is an asset. All derivatives are
carried at fair value in the balance sheet. Trade receivables are presented net of an allowance for estimated doubtful receivables.
International players are managed in accordance with accepted industry practise. Settlement risk associated with international
players is minimised through credit checking and a formal review and approval process.
There are no significant concentrations of credit risk in the Group.
(c) Liquidity risk
Liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of unutilised
committed credit facilities. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and
maintaining flexibility in funding by keeping committed credit lines available with a variety of counterparties and maturities.
Maturities of Committed Funding Facilities
The tables below analyse the Group’s maturity profile of committed funding. The bank facility revolving credit tranches of NZ$485
million (2011: NZ$400 million) were drawn down by NZ$145,000,000 as at 30 June 2012 (2011: nil drawn down). The bank facility term
tranche of A$75 million was fully drawn.
leS S than 6
MonthS
$’000
6 – 12
MonthS
$’000
BetWeen 1
anD 2 yearS
$’000
BetWeen 2
anD 3 yearS
$’000
BetWeen 3
anD 5 yearS
$’000
over 5
yearS
$’000
total
FaCIlIty
$’000
CONSOLIDATED
at 30 June 2012
Bank facility
Capital notes
US Private Placement
total debt facilities
Payables
Total drawn debt
Future contracted interest on drawn debt
Future contracted interest on CCIRS/IRS
–
–
–
–
60,178
–
15,350
5,997
–
–
–
–
–
–
14,576
5,878
PG 35
–
–
–
–
200,000
56,451
87,920
200,000
–
34,325
180,627
–
243,603
580,627
56,451
365,848
344,371
234,325
424,230 1,002,926
–
–
29,152
11,621
–
289,371
27,342
10,849
–
34,325
40,715
16,331
–
339,230
42,495
17,399
60,178
662,926
169,630
68,075
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
26 FINANCIAL RISK MANAGEMENT (continued)
leS S than 6
MonthS
$’000
6 – 12
MonthS
$’000
BetWeen 1
anD 2 yearS
$’000
BetWeen 2
anD 3 yearS
$’000
BetWeen 3
anD 5 yearS
$’000
over 5
yearS
$’000
total
FaCIlIty
$’000
CONSOLIDATED
at 30 June 2011
Bank facility
Capital notes
US Private Placement
total debt facilities
Payables
Total drawn debt
Future contracted interest on drawn debt
Future contracted interest on CCIRS/IRS
(d) Fair value estimation
–
–
–
–
73,669
–
17,775
8,063
–
–
247,267
247,267
–
247,267
13,951
6,952
–
–
–
–
200,000
–
–
200,000
56,451
84,967
–
–
265,235
400,000
56,451
597,469
200,000
341,418
265,235 1,053,920
–
–
22,567
12,340
–
–
22,567
12,232
–
141,418
35,032
20,686
–
265,235
44,901
28,146
73,669
653,920
156,793
88,419
The table below analyses for financial instruments that are measured in the balance sheet at fair value by level of the fair value
measurement hierarchy:
– Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
–
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is,
as prices) or indirectly (that is, derived from prices) (level 2).
–
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
CONSOLIDATED
at 30 June 2012
Assets
Financial assets at fair value through profit or loss
– Forward foreign currency contracts
Derivatives used for hedging
total assets
liabilities
Financial liabilities at fair value through profit or loss
– Forward foreign currency contracts
Derivatives used for hedging
total liabilities
level 1
$’000
level 2
$’000
level 3
$’000
total
BalanCe
$’000
–
–
–
–
–
–
480
23,154
23,634
145
45,934
46,079
–
–
–
–
–
–
480
23,154
23,634
145
45,934
46,079
PG 36
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
26 FINANCIAL RISK MANAGEMENT (continued)
CONSOLIDATED
at 30 June 2011
assets
Financial assets at fair value through profit or loss
– Forward foreign currency contracts
total assets
liabilities
Financial liabilities at fair value through profit or loss
– Forward foreign currency contracts
Derivatives used for hedging
total liabilities
Further details on derivatives are provided in note 12.
level 1
$’000
level 2
$’000
level 3
$’000
total
BalanCe
$’000
–
–
–
–
–
272
272
113
43,382
43,495
–
–
–
–
–
272
272
113
43,382
43,495
The fair value of financial instruments that are not traded in an active market (for example, over‑the‑counter derivatives) is determined
by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as
little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument
is included in level 2.
Specific valuation techniques used to value financial instruments include:
– The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable
yield curves.
– The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date,
with the resulting value discounted back to present value.
– Other techniques, such as discounted cash flow analyses, are used to determine fair value for the remaining financial instruments.
At year end the parent company has no derivatives (2011: $113,000 liability).
PG 37
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
26 FINANCIAL RISK MANAGEMENT (continued)
(e) Financial instruments by category
CONSOLIDATED
at 30 June 2012
Cash and bank balances
Trade receivables
Advance to Christchurch Hotels Limited
Sundry receivables
Derivative financial instruments (net)
Interest‑bearing liabilities
Capital notes
Payables
at 30 June 2011
Cash and bank balances
Trade receivables
Advance to Christchurch Hotels Limited
Sundry receivables
Derivative financial instruments (net)
Interest‑bearing liabilities
Capital notes
Payables
(f) Capital Risk Management
aSSetS /
(lIaBIlItIeS) at
FaIr value
throuGh the
InCoMe
StateMent
$’000
loanS anD
reCeIvaBleS
$’000
DerIvatIveS
uSeD For
heDGInG
$’000
lIaBIlItIeS at
aMortISeD
CoSt
$’000
41,400
13,551
5,125
4,864
–
–
–
–
64,940
104,577
9,288
6,235
11,244
–
–
–
–
131,344
–
–
–
–
335
–
–
–
335
–
–
–
–
159
–
–
–
159
–
–
–
–
(22,780)
–
–
–
–
–
–
–
–
(604,902)
(56,414)
(60,178)
(22,780)
(721,494)
–
–
–
–
(43,382)
–
–
–
–
–
–
–
–
(597,469)
(56,400)
(70,849)
(43,382)
(724,718)
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern and to maximise returns for
shareholders and benefits for other stakeholders over the long term.
In order to optimise its capital structure, the Group manages actual and forecast operational cash flows, capital expenditure and
equity distributions.
The Group primarily manages capital on the basis of gearing ratios measured on the basis of net debt to EBITDA (Earnings before
Interest, Tax, Depreciation and Amortisation) and interest coverage (EBITDA relative to net interest cost).
The primary ratios were as follows at 30 June:
Gearing ratio
Interest coverage
2012
2011
2.1 x
6.3 x
2.0 x
6.2 x
These types of ratios are consistent with the financial covenants in the Group’s various funding facilities. Actual gearing as at 30 June
2012 was within covenant limits on funding facilities.
Although the New Zealand capital notes include the right for SKYCITY to convert them to equity they are treated as debt for capital
management and financial reporting purposes.
The Group does not have any externally‑imposed capital requirements.
PG 38
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
27 SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer/Managing
Director that are used to assess performance and allocate resources.
The Group is organised into the following main operating segments:
SKyCIty auckland
SKYCITY Auckland includes casino operations, hotels and convention, food and beverage, carparking and Sky Tower and a number of
other related activities.
rest of new Zealand
Rest of New Zealand includes the Group’s interest in SKYCITY Hamilton, SKYCITY Queenstown Casino and Christchurch Casino.
SKyCIty adelaide
SKYCITY Adelaide includes casino operations and food and beverage.
SKyCIty Darwin
SKYCITY Darwin includes casino operations, food and beverage and hotel.
International Business
International Business includes commission and complimentary play. The international business segment is made up of customers
sourced mainly from Asia, and the rest of the world. The revenue is generated at SKYCITY’s Auckland, Darwin, Adelaide and
Queenstown locations.
Corporate / Group
Head office functions including legal and regulatory, group finance, human resources and information technology, the Chief
Executive’s office and directors.
SKyCIty
auCKlanD
$’000
reSt oF neW
ZealanD
$’000
SKyCIty
aDelaIDe
$’000
SKyCIty
DarWIn
$’000
Inter ‑
natIonal
BuSIneSS
$’000
Corporate /
Group
$’000
total
$’000
2012
Revenue from external customers and other income 433,648
Shares of net profits of associates
–
Less
Expenses
Depreciation and amortisation
(228,335)
(39,868)
53,929
5,447
182,043
–
140,021
–
43,817
–
–
–
853,458
5,447
(30,609)
(5,284)
(137,182)
(10,678)
(95,275)
(11,358)
(35,294)
–
(31,747)
(5,582)
(558,442)
(72,770)
165,445
23,483
34,183
33,388
8,523
(37,329)
227,693
Segment profit/EBIT
Finance costs
Profit before income tax
Segment assets
Investment in associates
720,271
136,039
269,973
382,648
–
75,266
–
–
Net additions to non‑current assets
(other than financial assets and deferred tax)
91,805
5,295
9,749
42,320
PG 39
(48,861)
178,832
–
–
–
207,335 1,716,266
–
75,266
4,940
154,109
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
27 SEGMENT INFORMATION (continued)
SKyCIty
auCKlanD
$’000
reSt oF neW
ZealanD
$’000
SKyCIty
aDelaIDe
$’000
SKyCIty
DarWIn
$’000
Inter ‑
natIonal
BuSIneSS
$’000
Corporate /
Group
$’000
total
$’000
2011
Revenue from external customers and other income 396,208
Shares of net profits of associates
–
Less
Expenses
Impairment of Christchurch Casino
Depreciation and amortisation
(205,522)
–
(35,089)
49,652
5,976
180,436
–
136,539
–
41,571
–
–
–
804,406
5,976
(28,343)
(15,000)
(5,619)
(135,629)
–
(10,976)
(91,840)
–
(12,030)
(25,356)
–
–
(29,416)
–
(5,996)
(516,106)
(15,000)
(69,710)
155,597
6,666
33,831
32,669
16,215
(35,412)
209,566
Segment profit/EBIT
Finance costs
Profit before income tax
Segment assets
Investment in associates
676,827
134,885
290,570
373,840
–
73,782
–
–
Net additions to non‑current assets
(other than financial assets and deferred tax)
62,036
3,456
7,464
17,552
Breakdown of the revenue from all services is as follows:
(43,772)
165,794
–
–
–
206,549 1,682,671
–
73,782
4,140
94,648
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
revenue – products and services
Local gaming
International business
Non gaming
total revenue
revenue – geographic
New Zealand
Australia
total revenue
non‑current asset additions – geographic
New Zealand
Australia
total non‑current asset additions
non‑current assets excluding financial instruments – geographic
New Zealand
Australia
615,246
43,817
192,467
586,480
41,571
175,094
851,530
803,145
520,081
331,449
479,958
323,187
851,530
803,145
102,040
52,069
69,632
25,016
154,109
94,648
947,867
634,012
910,978
611,927
total non‑current assets excluding financial instruments
1,581,879
1,522,905
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
PG 40
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
28 SHARE‑bASED PAyMENTS
Executive Share Rights Plan 2005
The Executive Share Rights Plan (Rights Plan) was approved by directors in December 2004 and commenced on 1 July 2005. 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 five years. 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.
Chief Executive Officer Long Term Incentive Plan 2008
The Chief Executive Officer Long Term Incentive Plan (CEO LTI) was approved by shareholders at the 31 October 2008 Annual
Meeting. Share rights are granted under the CEO LTI and (if exercisable) may be exercised at no cost. If exercised each share right
corresponds to one fully paid ordinary share in the company. Share rights only become exercisable when performance hurdles set
by the board of directors are met.
491,132 rights were issued in the year ended 30 June 2009 of which 152,251 (2011: 275,034) have converted to shares in the
current year.
Executive Long Term Incentive Plan 2008
The Executive Long Term Incentive Plan (Executive LTI) was approved by directors in December 2008. Share rights are granted under
the Executive LTI and (if exercisable) may be exercised at no cost. If exercised each share right corresponds to one fully paid ordinary
share in the company. Share rights only become exercisable when performance hurdles set by the board of directors are met.
Chief Executive Officer and Executive Long Term Incentive Plan 2009
During 2010, the Group implemented a new long term incentive plan for a limited number of senior executives (including the Chief
Executive Officer). This plan replaced the share based Chief Executive Officer Long Term Incentive Plan 2008 and the Executive Long
Term Incentive Plan 2008.
Under the new plan, executives purchase SKYCITY shares funded by an interest free loan from the Group. The shares purchased by
the executives are held by a trustee company with executives entitled to exercise the voting rights attached to the shares and receive
dividends, the proceeds of which are used to repay the interest free loan.
At the end of the restricted period (3 to 4 years), the Group will pay a bonus to each executive to the extent their performance targets
have been met which is sufficient to repay the initial interest free loan associated with the shares which vest. The shares upon which
performance targets have been met will then fully vest to the executives. The loan owing on shares upon which performance targets
have not been met (the forfeited shares) will be novated from the executives to the trustee company and will be fully repaid by the
transfer of the forfeited shares. Performance targets relate to total shareholder return.
At 30 June 2012, the interest free loan on the CEO Long Term Incentive Plan is $5,582,817 (2011: $5,846,428) and on the Executive
Long Term Incentive Plan totals $6,996,545 (2011: $5,300,645).
PG 41
Notes to the fiNaNcial statemeNtsCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
28 SHARE‑bASED PAyMENTS (continued)
Movements in the number of share rights outstanding are as follows:
‑
‑
78,000
‑
‑
‑
‑
78,000
‑
333,000
216,098
‑
‑
‑
‑
Grant Date
expIry Date
exerCISe prICe
CONSOLIDATED AND PARENT – 2012
04/09/06
01/03/08
01/07/08
02/09/09
31/08/10
02/03/11
31/08/11
total
04/09/11
01/03/12
01/07/12
02/09/13
31/08/14
02/03/15
31/08/15
CONSOLIDATED AND PARENT – 2011
BalanCe at
Start oF the
year
nuMBer
GranteD
DurInG the
year
nuMBer
exerCISeD /
ConverteD
DurInG the
year
nuMBer
expIreD DurInG
the year
nuMBer
BalanCe at enD
oF the year
nuMBer
exerCISaBle at
enD oF the
year
nuMBer
333,000
216,098
600,000
902,425
1,216,195
1,544,291
‑
‑
‑
‑
‑
‑
‑
790,200
‑
(152,251)
(522,000)
‑
‑
‑
‑
(333,000)
(63,847)
‑
‑
(50,250)
(150,000)
(30,000)
‑
‑
78,000
902,425
1,165,945
1,394,291
760,200
4,812,009
790,200
(674,251)
(627,097)
4,300,861
05/09/05
04/09/06
01/03/08
01/07/08
02/09/09
31/08/10
02/03/11
total
05/09/10
04/09/11
01/03/12
01/07/12
02/09/13
31/08/14
02/03/15
$4.81
$5.15
231,000
333,000
491,132
600,000
960,175
‑
‑
‑
‑
‑
‑
‑
1,266,445
1,544,291
‑
‑
(275,034)
‑
‑
‑
‑
(231,000)
‑
‑
‑
(57,750)
(50,250)
‑
‑
333,000
216,098
600,000
902,425
1,216,195
1,544,291
2,615,307
2,810,736
(275,034)
(339,000)
4,812,009
549,098
exercise price
The rights granted from 2008 onwards do not have an exercise price.
The weighted average remaining contractual life of options and rights outstanding at the end of the period was 2.26 years
(2011: 2.55 years).
Fair value of share rights granted
The assessed fair value at grant date of the rights granted 31 August 2011 is $1.17 (31 August 2010 is 96.0 cents).
The valuation inputs for the rights granted 31 August 2011 included:
(a) rights are granted for no consideration
(b) exercise price: nil (2011: nil)
(c) grant date: 31 August 2011 (2011: 31 August 2010)
(d) expiry date: 31 August 2015 (2011: 31 August 2014)
(e) share price at valuation date $3.42 (2011: $2.87)
The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the term of the right.
PG 42
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
28 SHARE‑bASED PAyMENTS (continued)
The assessed fair value at grant date of the rights granted 2 March 2011 is $1.11.
The valuation inputs for the rights granted 2 March 2011 included:
(a) rights are granted for no consideration
(b) exercise price: nil
(c) grant date: 2 March 2011
(d) expiry date: 2 March 2015
(e) share price at valuation date: $3.34
The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the term of the right.
Expenses arising from Share‑based Payment Transactions
Total expenses arising from share‑based payment transactions recognised during the period as part of employee benefit expense
were as below.
Rights issued under Share Rights Plans
29 RELATED PARTy TRANSACTIONS
ConSolIDateD
parent
2012
$’000
1,426
1,426
2011
$’000
1,047
1,047
2012
$’000
1,426
1,426
2011
$’000
1,047
1,047
There are no bad or doubtful debts associated with any related party of the Group or parent entity (2011: nil).
(a) Key Management and Personnel Compensation
Key management compensation for the years ended 30 June 2012 and 2011 is set out below. The key management personnel are all
the directors of the company, the Chief Executive Officer and the direct reports to the Chief Executive Officer.
2012
2011
Short‑terM
BeneFItS
$’000
Share‑BaSeD
payMentS
$’000
10,532
8,242
1,192
835
total
$’000
11,724
9,077
(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
over page.
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 arms‑length commercial basis.
PG 43
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
29 RELATED PARTy TRANSACTIONS (continued)
(c) Subsidiaries
Interests in subsidiaries are set out in note 30.
(d) Parent
The majority of the parent entity’s transactions are with its subsidiaries including the payment of dividends of $110.2 million (2011:
$100.1 million) and provision of employee services of $22.1 million (2011: $18.5 million) on normal commercial terms.
Advances to and from subsidiaries are repayable on demand and are on normal commercial terms within a group and are disclosed in
the relevant asset or liability note.
(e) Associates
The Group has loaned Christchurch Hotels Limited $5,125,251 (2011: $6,235,251) as set out in note 10 on normal commercial terms.
30 SUbSIDIARIES
The consolidated financial 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 significant partly‑owned subsidiaries have balance dates of 30 June.
equIty holDInG
naMe oF entIty
Queenstown Casinos 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 Australia Limited
SKYCITY Investments Christchurch Limited
SKYCITY Investments Queenstown Limited
SKYCITY Management Limited
SKYCITY Metro 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
SKYCITY Australia Treasury Pty Limited
SKYCITY Darwin Pty Limited
Country oF
InCorporatIon
ClaSS oF
ShareS
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2012
%
60
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2011
%
60
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
PG 44
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
31 CONTINGENCIES
There are no significant contingencies at year end (2011: nil).
32 COMMITMENTS
Capital Commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as set out below.
Property, plant and equipment
Operating Lease Commitments
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
27,268
59,695
–
–
The Group leases various offices and other premises under non‑cancellable operating leases. These leases have varying terms,
escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
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 five years
Later than five years
Commitments not recognised in the financial statements
6,974
18,074
322,136
5,482
13,419
318,673
347,184
337,574
–
–
–
–
–
–
–
–
The above operating lease summary includes a large number of leases, the most significant of which are:
SKYCITY Auckland – Hobson and Federal Streets sub soil lease. This lease is for a period of 999 years from 31 January 1996 with rent
reviews every five years.
SKYCITY Adelaide – Casino building lease. The initial lease term is until 3 March 2025 with 3 further rights of renewal for 20 years
each and annual rent reviews.
PG 45
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
33 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOw FROM OPERATING ACTIVITIES
Profit for the year
Non‑controlling interest
Depreciation and amortisation
Finance costs net
Current period employee share entitlement
Current period share options expense
Gain on sale of fixed assets
Dividend from subsidiary
Impairment of Christchurch Casino
Share of profits of associates not received as dividends
Change in operating assets and liabilities
Decrease/(increase) in receivables and prepayments
Decrease/(increase) in inventories
(Decrease)/increase in payables and accruals
(Decrease)/increase in deferred tax liability
(Increase) in tax receivable
Capital items included in working capital movements
Subsidiary funding transactions
ConSolIDateD
parent
2012
$’000
2011
$’000
2012
$’000
2011
$’000
138,534
336
72,770
48,861
–
1,426
(1,756)
–
–
(1,484)
3,928
94
(3,666)
(9,719)
(4)
12,423
–
122,960
43
69,710
43,772
–
1,047
(1,065)
–
15,000
(5,233)
(7,720)
192
9,052
(1,057)
(22,781)
(14,555)
–
70,979
–
5,561
4,171
–
1,426
–
(110,178)
–
–
(66,253)
–
91,708
–
–
–
(23,199)
63,480
–
5,958
3,908
–
1,047
–
(100,133)
–
–
7,621
–
20,779
–
–
–
(28,864)
Net cash inflow from operating activities
261,743
209,365
(25,785)
(26,204)
34 EVENTS OCCURRING AFTER THE bALANCE SHEET DATE
Dividend
On 14 August 2012, the directors resolved to provide for a final dividend to be paid in respect of the year ended 30 June 2012. The
partially (60%) imputed, partially franked (60%) dividend of 8 cents per share will be paid on 5 October 2012 to all shareholders on
the company’s register at the close of business on 28 September 2012.
PG 46
Notes to the fiNaNcial statemeNtsCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
CORPORATE GOVERNANCE
AND OTHER DISCLOSURES
FOR THE YEAR ENDED 30 JUNE 2012
PG 47
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
CORPORATE GOVERNANCE
SKYCITY Entertainment Group Limited is committed to maintaining
the highest standards of corporate behaviour and responsibility,
and has adopted governance policies and procedures reflecting this.
In establishing its governance policies and procedures, the
SKYCITY board has adopted ten governance parameters as the
cornerstone principles of its corporate governance charter. As a
New Zealand company listed on the Australian and New Zealand
stock exchanges, these cornerstone principles, set out below and
on the following pages, reflect the Listing Rules and Corporate
Governance Best Practice Code of NZX Limited (NZX), the
Listing Rules of ASX Limited (ASX), the Corporate Governance
Principles and Recommendations of the ASX Corporate
Governance Council, and the New Zealand Securities
Commission’s Governance Principles and Guidelines.
SKYCITY’s corporate governance framework is fully detailed in
the Investor Centre section of the company’s website at
www.skycityentertainmentgroup.com.
1. 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 and 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 defined,
that the letter and intent of all applicable company and casino
law and regulation are complied with, and that the company is
well managed for the benefit of its shareholders and other
stakeholders. The board also oversees management’s risk
profiling 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 Officer 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 Officer 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
defines the responsibilities which are delegated to the Chief
Executive Officer 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.
2. STRUCTURE THE bOARD TO ADD VALUE
Board effectiveness requires the efficient 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 to stand for election by
shareholders at annual meetings.
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. As at 30 June 2012, the board
comprised six non‑executive directors and a managing director.
As at 30 June 2012, the board had also approved the
appointment of one further non‑executive director subject to
approval by regulatory authorities in each of the jurisdictions in
which the company operates its gaming activities. These
approvals were obtained subsequent to the end of the
2011/2012 year. Biographical details of individual directors are
set out in the company’s 2012 Shareholder Review.
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 board has established the Governance and Nominations
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 satisfied the extensive probity requirements of each
jurisdiction in which the company holds gaming licences.
PG 48
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
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 Officer position. Directors are required to
ensure all relationships and appointments bearing on their
independence are disclosed to the Governance and Nominations
Committee on a timely basis. In determining the independence of
directors, the board has adopted the definition of independence
set out in the NZX Corporate Governance Best Practice Code
and has taken into account the independence guidelines (ASX
Independence Guidelines) as recommended in the ASX
Corporate Governance Council’s Corporate Governance
Principles and Recommendations.
At its 18 June 2012 meeting, the board reviewed the status of
each director in accordance with the independence specification
of the NZX Code and taking into account the ASX Independence
Guidelines and determined that all current non‑executive
directors are independent.
Access to Information and Advice
New directors participate in an individual induction programme,
tailored to meet their particular information requirements.
Directors receive regular reports and comprehensive information
on the company’s operations before each meeting and have
unrestricted access to any other information they require.
Senior management is available at and outside each meeting to
address queries. 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. Directors are provided
with updates on industry developments, and undertake regular visits
to the company’s key operations. The board also undertakes
periodic educational trips to observe and receive briefings from
other companies in the gaming and entertainment industries.
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
notified the board chairperson of their intention to do so.
Indemnities and Insurance
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 four formally appointed committees, being
the Audit and Risk Committee, Governance and Nominations
Committee, Human Resources Committee (formerly the
Remuneration Committee) and the recently established
Corporate Social Responsibility Committee. The non‑executive
directors of the board appoint the chairperson of each
committee.
The current members and chairperson of each committee are
set out in the company’s 2012 Shareholder Review and on the
company’s website.
Each committee operates under a charter document as
agreed by the board. The charters, which are available on the
company’s website, set out the role and responsibilities
of each committee. Each committee charter and the
performance of each committee are subject to formal review
by the board on an annual basis.
Meeting Attendance
The following table shows attendances at board and committee
meetings by directors during the year ended 30 June 2012.
Nine board meetings were scheduled during the year.
appoIntMent
to oFFICe
BoarD
SCheDuleD
BoarD
unSCheDuleD
BoarD
total
auDIt
anD rISK reMuneratIon(4)
GovernanCe
anD
noMInatIonS
Corporate
SoCIal
reSponSIBIlIty
NUMBER OF MEETINGS HELD
R H McGeoch
P D Cullinane(1)
P B Harman
C J D Moller
N B Morrison
Sir Dryden Spring(2)
B J Carter
S H Suckling(3)
20 September 2002
26 March 2008
18 December 2008
18 December 2008
18 December 2008
31 October 2003
12 October 2010
9 May 2011
9
8
9
9
9
9
2
9
8
1
1
1
1
1
1
‑
1
1
10
9
10
10
10
10
2
10
9
3
2
‑
‑
3
‑
1
3
2
4
3
2
4
‑
‑
1
‑
3
1
1
1
1
1
1
‑
1
1
0
‑
‑
‑
‑
‑
‑
‑
‑
(1) PD Cullinane retired as a member of the Remuneration Committee on 20 April 2012 and was appointed a member of the Corporate Social
Responsibility Committee on 20 April 2012.
(2) Sir Dryden Spring retired as a director on 30 September 2011.
(3) S H Suckling retired as a member of the Audit and Risk Committee on 20 April 2012.
(4) The Remuneration Committee was renamed the Human Resources Committee in August 2012.
PG 49
Corporate governanCeCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
3.
INTEGRITy, ETHICAL bEHAVIOUR AND DIVERSITy
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, officers and
employees who have the opportunity to materially influence
the integrity, strategy and operations of the business and its
financial performance) and encouraging the observance of
those standards; and
communicating the requirements relating to trading in the
company’s securities by directors and employees.
The Governance and Nominations 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, suppliers, customers, community groups and
employees. All senior managers are required annually to provide
a confirmation to the company that to the best of their knowledge
the company has complied with the Code of Business Practice
and all other ethical responsibilities during the financial year.
The company maintains a Securities Trading Policy for directors
and employees that sets out guidelines in respect of trading in,
or giving recommendations concerning, the company’s securities.
In addition, prior consent must be obtained from the company
secretary before directors and certain employees who may have
access to material information undertake any trading in the
company’s securities.
Details of any securities trading by directors or executives who
are subject to the company’s Securities Trading Policy are
notified to the board.
Officers of the company must formally disclose their SKYCITY
shareholdings and other securities holdings to the NZX within five
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.
SKYCITY believes that diversity contributes to competitive
advantage and sustainable business success. The company is
committed to an inclusive workplace that fosters and promotes
workplace diversity at all levels.
The company recognises that to deliver outstanding service and
breakthrough solutions to its diverse customer community, it too
must be diverse. SKYCITY values and respects the contributions,
ideas and experiences of people from all backgrounds.
The board has set the following measurable objectives to ensure
SKYCITY’s commitment to diversity is maintained:
•
•
•
•
reference and celebrate SKYCITY’s commitment to diversity
in the company’s recruitment materials, staff policies,
induction and leadership development programmes;
increase the company’s talent pool of diverse qualified
candidates for executive and senior management roles by
providing career mentoring and skills‑development
programmes for women and staff in underrepresented groups
– these programmes being specifically tailored to the needs of
these groups;
develop career plans for identified high potential staff in
these groups that provide pathways into senior management
and executive roles; and
source best practice diversity representation benchmarks
and strive to achieve top quartile performance against
appropriate peer comparator companies.
As at 30 June 2012, the proportion of women at SKYCITY
(including amongst directors and officers) was as follows:
total WorKForCe
SenIor exeCutIve
DIreCtorS
47%
18%
14%
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 confidence in the integrity of
the company’s financial reporting.
The Audit and Risk Committee has responsibility for oversight of
the quality, reliability, and accuracy of the company’s internal and
external financial 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
sufficient inquiry of the company’s management and the
company’s internal and external auditors in order to enable them
to be satisfied as to the validity and accuracy of the company’s
financial reporting. The Chief Executive Officer and the Chief
Financial Officer are required to confirm in writing to the Audit
and Risk Committee that the annual and interim financial
statements present a true and fair view of the company’s financial
condition and results of operations, and comply with relevant
accounting standards.
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.
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Corporate governanCeCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
The Committee has formally reviewed the independence status
of PricewaterhouseCoopers and is satisfied that its objectivity
and independence is not compromised as a consequence of
non‑audit work undertaken for the company.
PricewaterhouseCoopers has confirmed 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 2011/12 year
are set out in note 5 to the financial statements. Fees for audit
and tax compliance work in the 2011/12 year represent 62% of
total PricewaterhouseCoopers fees.
5. TIMELy AND bALANCED DISCLOSURE
The board is committed to ensuring timely and balanced
disclosure of all material matters 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 financial
situation, performance, ownership and governance; and
•
company announcements are factual and comprehensive.
The company is committed to presenting its financial 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.
Peter Treacy, General Counsel, is Company Secretary and the
Disclosure Officer 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.
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.
Representatives of the company’s external auditors are also
invited to attend the company’s annual meeting to answer any
shareholder questions concerning their audit and external audit
report. As for last year, this year the company has also provided
all shareholders with a Shareholder Review, which contains much
of the information previously included in the annual report in a
more accessible document.
7. RECOGNISE AND MANAGE RISK
The company maintains a programme for the identification,
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 financial,
operational and management controls across the Group.
Management is required to report to the Audit and Risk
Committee on the effectiveness of the company’s management
of its material business risks, with the most recent report being
provided in June 2012.
The Audit and Risk Committee approves the internal audit
programme, with results and performance of the control
environments regularly reviewed by both the committee and the
external auditors. The Chief Executive Officer and the Chief
Financial Officer are required to confirm in writing to the Audit
and Risk Committee that the statement in respect of the integrity
of the company’s financial statements referred to above is
founded on a sound system of risk management and internal
compliance and control which implements the policies of the
board, and that the company’s risk management and internal
compliance and control systems are operating efficiently and
effectively in all material respects. The most recent confirmations
were provided by the Chief Executive Officer and the Chief
Financial Officer in August 2012.
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. PERFORMANCE EVALUATION
The board and committee charters require an evaluation of the
board and the committee performance on an annual basis. The
Governance and Nominations 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 2011 was conducted
by the chairman of the board (Rod McGeoch) and completed in
February 2012. The review involved a formal response/feedback
process with a one‑on‑one meeting involving the chairman and
each director individually.
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Corporate governanCeCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
The board undertakes the performance review of the Chief
Executive Officer and those reporting directly to that position in
accordance with the company’s performance review procedures,
with the last review conducted in August 2012.
9. REMUNERATE FAIRLy AND RESPONSIbLy
The board‑approved Remuneration Policy (which is available in
the Investor Centre section of the company’s website at www.
skycityentertainmentgroup.com) recognises that to achieve
business objectives SKYCITY needs high quality, committed
people and the aim of the Policy is, therefore, to attract, retain
and motivate high‑calibre executives capable of achieving the
objectives of the company and encourage superior performance
and creation of shareholder value.
The guiding principles that underpin SKYCITY’s remuneration
policies are:
•
•
•
•
•
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 significant at‑risk component of total
remuneration which drives performance to achieve company
goals and strategy;
to manage remuneration within levels of cost efficiency and
affordability; and
to align remuneration for senior executives with the interests
of shareholders.
A range of benchmark reports and other market data is used
to ensure market relativity, including a report commissioned
by the Human Resources Committee and produced by
PricewaterhouseCoopers regarding the relativity of SKYCITY’s
key executive remuneration, by role, in respect to a key
comparator group.
Non‑Executive Director Remuneration
Shareholders at the annual meeting determine the total
remuneration available to non‑executive directors.
At the 2011 annual meeting, shareholders approved, effective
from 1 July 2011, a total remuneration amount for non‑executive
directors of $1,300,000 per annum (plus GST, if any).
Current annual fees are $250,000 for the chairperson of the
board, $150,000 for the deputy chairperson and $120,000 each
for other non‑executive directors. In addition, each ordinary
member of the Audit and Risk, Human Resources and Corporate
Social Responsibility Committees receives $15,000 per annum.
The chairperson of the Audit and Risk Committee receives
$35,000 per annum and the chairperson of each of the Human
Resources Committee and the Corporate Social Responsibility
Committee receives $25,000 per annum.
For those directors who were in office 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. Sir Dryden Spring retired on
30 September 2011 and received a retirement allowance of
$3,350.93. Rod McGeoch is now the only director eligible for
the retirement allowance, currently $22,913.24. Retirement
allowances accrued as at 30 June 2004 do not carry any interest
entitlement between 1 July 2004 and the date of payment.
SKYCITY’s policy on non‑executive director remuneration
was developed in 2011 by the Remuneration Committee (now
renamed the Human Resources Committee) and subsequently
approved by the board. It is available in the Investor Centre of
the company’s website at www.skycityentertainmentgroup.com.
Chief Executive Officer Remuneration
employment agreement
Nigel Morrison has an employment agreement (which is available
in the Investor Centre section of the company’s website at
www.skycityentertainment.com) as Chief Executive Officer that
commenced on 1 March 2008. The agreement is not a fixed term
contract. The terms of the agreement reflect standard conditions
that are appropriate for a senior executive of a listed
Australasian company.
Mr Morrison’s remuneration package is a combination of fixed
salary plus incentive payments for short and long term performance.
The short term incentive (STI) payments are determined by the
company’s financial performance against budget as well as a
number of specific strategic, non‑financial performance targets.
An outline of the STI is included in the company’s Remuneration
Policy and Mr Morrison’s employment agreement, both of which
are available in the Investor Centre of the company’s website.
Mr Morrison may resign at any time giving six months’ notice.
SKYCITY may terminate Mr Morrison’s employment with twelve
months’ notice (or make a payment of the total base
remuneration he would have received during such period in lieu
of such notice).
The agreement may be terminated by Mr Morrison on three
months’ notice if there is a fundamental change so that there is a
substantial diminution of his role, status and responsibility,
including where he is no longer the Chief Executive Officer of a
listed public company, and he will be entitled to receive payment
as if SKYCITY had terminated his employment with notice as set
out above.
If SKYCITY terminates Mr Morrison’s employment on notice, or
his employment terminates in the event of a fundamental change
noted above, entitlements under the Long Term Incentive (LTI)
PG 52
Corporate governanCeCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
Plan referred to below that would otherwise be eligible to vest
during the notice period will vest subject to satisfaction of the
applicable performance hurdles.
In the event of termination of Mr Morrison’s employment for
serious misconduct or a serious breach of his employment
agreement, no notice period will apply and Mr Morrison will
not be eligible to receive any entitlements other than base
remuneration then due, any accrued holiday pay, any accrued or
vested STI which has been awarded but not yet paid, and any LTI
where the vesting conditions have been satisfied but not yet tested.
Except as set out above, any additional entitlement to STI or LTI
on the termination of employment is at the discretion of the
board, subject to the rules for those schemes.
There is no redundancy entitlement under the agreement.
long term Incentive plan
The company operates a Long Term Incentive (LTI) Plan in favour
of Mr Morrison. Under the Chief Executive Officer Long Term
Incentive Plan approved by shareholders at the company’s 2009
annual meeting, Mr Morrison is provided with financial assistance
by way of an interest‑free loan by a subsidiary of the company to
acquire shares in the company. A trustee holds legal title to the
relevant shares on behalf of Mr Morrison for a restrictive period of
at least three years until certain performance hurdles are met. The
performance hurdles involve comparison of the total shareholder
return (TSR) achieved by SKYCITY against the shareholder returns
achieved by a group of comparable Australasian companies
(comparator group), and by the companies whose securities are in
the NZSX50 index (index group).
For the shares to vest in Mr Morrison, the company must achieve
a TSR equal to or greater than the average of the comparator and
index groups’ TSRs. The number of shares that will vest depend
on where the SKYCITY TSR is relative to the Average Medium
TSR (at which point 50% of the shares vest) and the average of
the TSRs representing the 75th percentiles of the TSRs achieved
by the comparator group and the index group (at which point
100% of the shares vest). In addition, the board has discretion to
determine that up to 25% of the shares will vest if the company’s
TSR for the relevant period does not exceed the Average Median
TSR, but exceeds one or other of the TSRs representing the 50th
percentile of TSRs of the members of the comparator group and
of the index group.
Performance will be assessed three years after the issue of the
shares, and (provided the shares have not lapsed and all
performance hurdles have not been satisfied) after a further six
and twelve months. Special assessment may occur in the event of a
takeover offer, amalgamation or scheme of arrangement involving
the company. Shares which have not previously been vested will
lapse to the extent performance hurdles have not been fully satisfied
in respect of the period to the fourth anniversary of the issue date.
remuneration
Mr Morrison’s base salary and STI in respect of the year ended 30
June 2012 was $2,947,535 comprising base salary of $1,712,000
plus a performance‑related STI payment of $1,235,535 relating to
the 2011/12 financial year (being 72% of his base salary as per
the formula set by the board at the commencement of the
2011/12 financial year) which was paid in August 2012. The
amount of the STI payment was determined by assessing the
company’s NPAT financial performance over the 2011/12
financial year against budget and Mr Morrison’s achievement
against a number of specific strategic, non‑financial performance
targets, which had been set by the board at the start of the
financial year.
During the year, Mr Morrison was also paid a performance‑
related STI of $1,108,800 relating to the prior 2010/2011
financial year (being 69% of his then applicable base salary),
which reflected the board’s assessment of his achievement
against the STI criteria set for the 2010/2011 financial year.
Mr Morrison was previously issued 491,132 share rights under
the Chief Executive Officer Long Term Incentive Plan 2008
approved by shareholders at the company’s 2008 annual meeting.
Share rights become exercisable when performance hurdles set
by the board are met and, if exercised, each share right
corresponds to one SKYCITY share. On 16 March 2011, 275,034
share rights converted to 275,034 SKYCITY shares. On 23
September 2011, a further 88,404 share rights converted to
88,404 shares. On 15 March 2012, a further 63,847 share rights
converted to 63,847 shares and the balance of 63,847 share
rights lapsed in accordance with the terms of the Plan.
Mr Morrison’s shareholding in the company and LTI entitlements
are detailed on pages 60 and 63 of this annual report.
SKyCITy Employee Remuneration
All salaried roles within SKYCITY are job‑sized using a recognised
methodology to measure the impact, accountability, and
complexity of each role as it contributes to the organisation.
Remuneration data is obtained from a number of sources to
determine remuneration ranges by job band or level to ensure
competitiveness at both base salary and total remuneration levels.
Individual remuneration is set within the appropriate range taking
into account such matters as individual performance, scarcity/
availability of resource/skill, internal relativities and specific
business needs. This process ensures internal equity between
roles and allows comparison with the overall market. Remuneration
ranges are reviewed annually to reflect market movements.
The Human Resources Committee approves remuneration
increases for the senior executive group.
PG 53
Corporate governanCeCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
Short Term Incentive Arrangements
Salaried Incentive plans
Senior executive StI
To drive outstanding company and individual performance,
SKYCITY operates a Short Term Incentive (STI) Plan for the
senior executive group. For each individual, 80% of their STI
target is linked to the achievement of company financial targets
with the remaining component dependent on the achievement of
individual, largely non‑financial strategic objectives.
For the year ended 30 June 2012, a total of $1,556,804 was paid
under the Senior Executive STI Plan to ten executives – an
amount equivalent to 32% of combined base salary for this group.
Salaried employee StI and Individual Bonus plan
To drive outstanding company and individual performance,
SKYCITY operates a Short Term Incentive (STI) Plan for selected
senior salaried employees and those with operational
accountability for a department or business unit. For each
individual, a minimum of 60% of their STI target is linked to the
achievement of minimum financial targets with the remaining
percentage dependent on the achievement of individual,
role‑specific targets.
Payments under the Salaried STI Plan have a minimum trigger point
based on company and business unit financial targets and increase
according to the degree by which the company performs relative
to these financial targets. For the year ended 30 June 2012,
284 salaried staff participated in the Salaried STI Plan. Based on
achievement of individual and financial targets, 283 staff received
an average STI payment of 13% of their fixed salaries.
All other permanent salaried employees who were not eligible to
participate in the Salaried STI Plan participated in a discretionary
bonus plan known as the Individual Bonus (IB) Plan. Under this
plan, bonuses were awarded to those outstanding staff that
consistently exceeded the key performance indicators that were
set for them at the commencement of the financial year.
In total, 142 SKYCITY salaried personnel were paid incentives
totalling $340,000 under the Salaried STI and IB Plans.
The board has approved the continuation of the Senior
Executive and Salaried STI Plans and the IB Plan for 2012/13
with minimal changes.
Long Term Incentive Arrangements
executive Share plan 2009
A new Long Term Incentive Plan (LTI Plan 2009) for senior
executives was introduced in 2009, which is similar to the Long
Term Incentive Plan approved for the Chief Executive Officer at
the annual meeting in 2009.
The LTI Plan 2009 replaced the Rights Plan 2008 referred to
below with effect from 1 July 2009 for the 2009/10 financial year
and subsequent years.
The LTI Plan 2009 differs from the Rights Plan 2008 in two key
respects. Firstly, it includes the provision of financial assistance
to selected senior executives by way of an interest‑free loan by a
subsidiary of the company and, secondly, it includes the
immediate issue, or acquisition on‑market, of shares in the
company by such participants rather than the issue of share
rights (being rights to acquire ordinary shares in the company).
A trustee holds legal title to the relevant shares on behalf of such
participants for a restrictive period until certain performance
hurdles are met. In all other material respects, the LTI Plan 2009
is unchanged from the Rights Plan 2008.
Details of the shares issued under the LTI Plan 2009 and
outstanding as at 10 September 2012 are set out on page 63 of
this annual report.
executive Share rights plan 2008
The Long Term Incentive Plan (Rights Plan 2008) for senior
executives was introduced in respect of the 2008/09 financial
year, which was similar to the Long Term Incentive Plan approved
for the Chief Executive Officer at the annual meeting in 2008.
Under the Rights Plan 2008, selected senior executives were
issued share rights entitling them to receive shares based on
the company’s achievement of designated performance hurdles.
The performance hurdles involved comparison of the total
shareholder return (TSR) achieved by SKYCITY against the
shareholder returns achieved by a group of comparable
Australasian companies (comparator group), and by the companies
whose securities are in the NZSX50 index (index group).
In accordance with the terms of the Rights Plan 2008, performance
was assessed on 1 July 2011, 1 January 2012 and, finally, on 1 July
2012. All remaining rights under the Rights Plan 2008 which had not
previously become exercisable lapsed following the final performance
testing date of 1 July 2012 on the basis that the relevant performance
hurdles had not been fully satisfied. Accordingly, no share rights
are currently issued and outstanding under the Rights Plan 2008.
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.
PG 54
Corporate governanCeCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
COMPLIANCE wITH NZX bEST PRACTICE CODE AND ASX
CORPORATE GOVERNANCE COUNCIL PRINCIPLES AND
RECOMMENDATIONS
SKYCITY confirms that other than as set out below it has
complied with the NZX Corporate Governance Best Practice
Code and the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations during the
2011/12 year:
•
•
•
The company has not included the biographical details of its
current directors, or details of current members and
chairpersons of its board committees, in this annual report.
Their details are contained in the company’s 2012
Shareholder Review and are available at all times on the
company’s website.
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 the SKYCITY senior
executive rights and share plans. The Executive Share Rights
Plan 2008 was approved by the board in December 2008.
As noted above, on 1 July 2012, all remaining rights under
this Plan which had not become exercisable lapsed. The
Executive Share Rights Plan 2008 was similar to the Long
Term Incentive Plan approved for the Chief Executive
Officer at the annual meeting in 2008. The Executive Share
Rights Plan 2008 set out a remuneration structure for senior
executives entitling them to receive shares based on the
company’s achievement of designated performance hurdles,
which involved comparison of the total shareholder return
achieved by SKYCITY against the shareholder returns
achieved by a group of comparable Australasian companies,
and by the companies whose securities were in the NZSX50
index. The Executive Share Rights Plan 2008 imposed a three
year restriction before benefits could be realised by
participants. The Executive Share Plan 2009 (which replaced
the Executive Share Rights Plan 2008) was approved by the
board in September 2009 in respect of the 2009/10 financial
year and subsequent years and, other than the two key
differences detailed above, the terms remain unchanged
from the Executive Share Rights Plan 2008.
PG 55
Corporate governanCeCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
SHAREHOLDER INFORMATION
TwENTy LARGEST SHAREHOLDERS AS AT 15 AUGUST 2012
JP Morgan Chase Bank NA
1. HSBC Nominees (New Zealand) Limited A/C State Street
2.
3. Accident Compensation Corporation
4. National Nominees Limited
5. HSBC Nominees (New Zealand) Limited
6. National Nominees New Zealand Limited
7.
JP Morgan Nominees Australia Limited
8. Citibank Nominees (New Zealand) Limited
9. RBC Investor Services Australia Nominees Pty Limited
10. New Zealand Superannuation Fund Nominees Limited
11. HSBC Custody Nominees (Australia) Limited
12. Premier Nominees Limited – Onepath Wholesale Australasian Shr Fund
13. BNP Paribas Nominees (NZ) Limited
14. AMP Investments Strategic Equity Growth Fund
15. NZGT Nominees Limited – AIF Equity Fund
16. Private Nominees Limited
17. TEA Custodians Limited
18. Westpac NZ Shares 2002 Wholesale Trust
19. FNZ Custodians Limited
20. BNP Paribas Noms Pty Ltd
nuMBer oF
ShareS
%
oF ShareS
38,424,447
35,262,840
32,650,213
27,683,960
27,522,161
27,412,465
24,645,190
21,729,736
18,680,198
17,726,279
16,964,551
11,253,730
9,728,928
7,088,705
6,920,608
6,463,208
5,796,988
5,561,753
5,303,093
5,269,253
6.66%
6.11%
5.66%
4.80%
4.77%
4.75%
4.27%
3.77%
3.24%
3.07%
2.94%
1.95%
1.69%
1.23%
1.20%
1.12%
1.00%
0.96%
0.92%
0.91%
total
352,088,306
61.02%
Total shares on issue as at 15 August 2012 were 576,958,340 of which 4,517,313 were held by Public Trust on behalf of eligible and
future participants pursuant to the Chief Executive Officer Long Term Incentive Plan 2009 and the Executive Long Term Incentive
Plan 2009. No shares were held by the company directly as treasury stock.
PG 56
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
DISTRIbUTION OF ORDINARy SHARES AND REGISTERED SHAREHOLDINGS AS AT 15 AUGUST 2012
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
> 100,000
total
nuMBer oF
ShareholDerS
nuMBer
oF ShareS
3,562
9,381
3,603
3,235
1,397,126
25,981,893
25,556,641
72,809,489
179 451,213,191
19,960 576,958,340
As at 15 August 2012, there were 1,259 shareholders (with a total of 88,440 shares) holding less than a marketable parcel of shares
under the ASX Listing Rules, based on the closing share price of A$2.74. The ASX Listing Rules define a marketable parcel of shares as
a parcel of shares of not 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 15 August 2012 that
they were substantial security holders in the company and held a relevant interest in the number of ordinary shares shown below.
Accident Compensation Corporation
Investors Mutual Limited
Date oF
SuBStantIal
SeCurIty
notICe
relevant
IntereSt In
nuMBer oF
ShareS
% oF ShareS
helD at
Date oF
notICe
2 July 2012
34,673,549
8 August 2012
28,927,533
6.01%
5.01%
No further substantial security holder notices had been received as at 10 September 2012.
PG 57
Shareholder informationCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
DIRECTOR AND EMPLOyEE REMUNERATION
REMUNERATION OF DIRECTORS
Non‑Executive Directors
Remuneration paid to directors for services in their capacity as
directors of SKYCITY Entertainment Group Limited during the
year ended 30 June 2012 is as listed below:
R H McGeoch (Chairman)
P D Cullinane
P B Harman
C J D Moller
Sir Dryden Spring (1)
B J Carter
S H Suckling
$250,000
$136,972
$145,000
$155,000
$37,500
$162,339
$147,042
(1) Sir Dryden Spring retired as a director on 30 September 2011. In addition
to remuneration paid for services in his capacity as a director, he was
paid $3,350.93 as a retirement payment in October 2011 following
retirement from the board.
Richard Didsbury received total remuneration of $86,625 during
the 2011/12 year. Richard Didsbury was appointed a director of
the company following the end of the 2011/2012 year on 20 July
2012. From 20 July 2012, remuneration payable to Richard
Didsbury will be in respect of services provided in his capacity as
a director. Prior to his appointment as a director, Richard
Didsbury provided consultancy services to the Group and
remuneration paid was in respect of consultancy services.
No other non‑executive director of the Group or parent company
has, since the end of the financial year, received or become
entitled to receive a benefit other than director’s fees for the
2011/2012 financial year or reimbursement of expenses incurred
in relation to company matters, or as is disclosed elsewhere in
this annual report.
Other Directorships
Christchurch Casinos Limited, in which SKYCITY has a 50%
interest, paid director’s fees of $40,000 each for A B Ryan and
N B Morrison. These fees were paid to SKYCITY and were not
received personally by either Messrs Ryan or Morrison.
Queenstown Casinos Limited, in which SKYCITY has a 60%
interest, paid director’s fees of $7,500 each for A B Ryan and P A
Treacy. These fees were paid to SKYCITY and were not received
personally by either Messrs Ryan or Treacy.
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 benefits in their capacity as
employees, the value of which was in excess of $100,000 and was
paid to those employees during the financial year ended 30 June
2012, are listed below.
Remuneration includes salary, incentive payments under the
SKYCITY performance pay incentive plan and short term cash
bonuses and, where applicable, the value of executive share
options, rights and shares expensed during the year ended 30
June 2012. Remuneration shown below also includes settlement
payments and payments in lieu of notice with respect to certain
employees upon their departure from the company.
reMuneratIon
eMployeeS
$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
$220,000–$229,999
$230,000–$239,999
$240,000–$249,999
$250,000–$259,999
$260,000–$269,999
$270,000–$279,999
$290,000–$299,999
$300,000–$309,999
$380,000–$389,999
$390,000–$399,999
$400,000–$409,999
$410,000–$419,999
$560,000–$569,999
$620,000–$629,999
$640,000–$649,999
$660,000–$669,999
$690,000–$699,999
$710,000–$719,999
$770,000–$779,999
$800,000–$809,999
$1,120,000–$1,129,999
total
46
29
24
20
12
10
5
4
7
6
4
3
3
3
2
1
1
1
1
2
1
2
1
1
1
1
1
1
2
1
1
1
198
PG 58
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
DIRECTORS’ DISCLOSURES
INTERESTS REGISTER
Disclosure of Directors’ Interests
p B harman
G R Media Holdings Limited and certain subsidiaries Director
Section 140(1) of the New Zealand 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 2012
(notices given by directors during the year ended 30 June 2012
are marked with an asterisk):
Harman Consulting Limited
Harman Investments Limited
Metlifecare Limited
C J D Moller
ICC Development (International) Limited
International Cricket Council
Meridian Energy Limited
New Zealand Cricket (Inc.)
New Zealand Transport Agency
NZX Limited
Rugby New Zealand 2011 Limited
Victoria University of Wellington Foundation
Westpac New Zealand Limited
Westpac Regional Stadium Trust
S h Suckling
Acemark Holding Limited
Barker Fruit Processors and certain subsidiaries
ECL Group Limited
HSR Governance Limited
New Zealand Qualifications Authority
Oxford Clinic Hospital Limited
Oxford Health Group Limited
Restaurant Brands New Zealand Limited
Takeovers Panel
r h McGeoch
BGP Holdings plc (Malta)
BGP Investments S.a.r.l (Luxembourg)
Destination New South Wales Limited
McGeoch Holdings Pty Limited
Ramsay Health Care Limited
Sydney Cricket and Sports Ground Trust
Vantage Private Equity Growth Limited
B J Carter
ASC Pty Limited
Badge Management Pty Limited
Cobbadah Pty Limited
Eudunda Farmers Limited
Ferrier Hodgson
Genesee & Wyoming Australia Pty Limited
RSC Nominees Pty Limited
Territory Insurance Office
p D Cullinane
Director
Director
Director*
Chair
Director
Trustee
Chair
Director
Director
Director
Director
Partner
Director
Director
Chair
Assignment Group New Zealand Limited
Director
Low Flying Kiwis Limited
STW Communications Group Limited
The Antipodes Water Company Limited
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Director
Director
Director
Chair
Chair
Chair
Director
Director
Trustee
Director
Trustee
Managing
Director*
Chair
Chair
Managing
Director*
Chair
Director
Director
Director
Member
The following details included in the Interests Register as at 30
June 2011, or entered during the year ended 30 June 2012, have
been removed during the year ended 30 June 2012:
•
•
R H McGeoch is no longer a director of Events New South
Wales Pty Limited or a member of the NSW Board of Advice
for Aon New Zealand.
S H Suckling is no longer chairperson of Stretton Publishing
Company Limited, acting chairperson of Basketball
New Zealand or a director of Stretton Clothing Company
Limited and Carter Price Rennie Limited.
PG 59
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
DIRECTORS’ DISCLOSURES
C o n t I n u e D
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 New Zealand Companies Act 1993, the following acquisitions and disposals of
relevant interests in SKYCITY shares during the period to 30 June 2012:
B J Carter
N B Morrison
Date oF
aCquISItIon/
DISpoSal
DurInG perIoD
ConSIDeratIon
7 October 2011 (1)
NZ$2,309.41
23 September 2011
23 September 2011
15 March 2012
15 March 2012
Nil(2)
Nil(2)
Nil(2)
Nil(2)
ShareS
aCquIreD/
(DISpoSeD)
692
(88,404)
88,404
(127,694)(3)
63,847
(1)
Shares held by Tarquay Pty Limited on trust for Tarquay Superannuation Fund.
(2) Share rights converted to shares under the Chief Executive Officer Long Term Incentive Plan 2008.
(3) 63,847 share rights converted to shares and balance of 63,847 share rights lapsed in accordance with the terms of the Chief Executive Officer Long Term
Incentive Plan 2008.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARES, OPTIONS AND CAPITAL NOTES
Directors disclosed the following relevant interests in SKYCITY shares as at 30 June 2012:
ShareS
BeneFICIally helD
69,091(1)
31,418(2)
17,250
22,273(3)
10,000(4)
26,915(5)
627,285
82,233(6)
1,876,536(7)
R H McGeoch
B J Carter
P D Cullinane
P B Harman
C J D Moller
N B Morrison
(1)
Shares held by McGeoch Holdings Pty Limited.
(2) Shares held by Tarquay Pty Limited on trust for Tarquay Superannuation Fund.
(3) Shares held by Forbar Nominees Limited.
(4) Shares held by Investment Custodial Services Limited.
(5) Shares held by First NZ Capital Limited.
(6) Shares held by Perpetual Limited.
(7) Shares acquired under the Chief Executive Officer Long Term Incentive Plan 2009 and held by Public Trust.
S H Suckling did not have any relevant interest in SKYCITY shares as at 30 June 2012.
PG 60
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
NOTEHOLDER INFORMATION
CAPITAL NOTES
In May 2000, SKYCITY Entertainment Group Limited issued 150 million unsecured subordinated capital notes for a five year term at
an issue price of $1.00. In May 2005, the capital notes were reissued for a new term of five years at a fixed interest rate of 8.0% per
annum. In May 2010, the capital notes were reissued for a further term of five years at a fixed interest rate of 7.25% per annum. For
further information refer note 19 of the financial statements.
As at 15 August 2012, SKYCITY was the holder of 93,549,500 capital notes as treasury stock. The capital notes held by SKYCITY are
not included in the table below.
TwENTy LARGEST CAPITAL NOTEHOLDERS AS AT 15 AUGUST 2012
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
FNZ Custodians Limited
Investment Custodial Services Limited – A/C C
Custodial Services Limited – A/C 3
FNZ Custodians Limited – DRP NZ A/C
Invercargill Licensing Trust
Custodial Services Limited – A/C 4
Custodial Services Limited – A/C 2
Forsyth Barr Custodians Limited – 1–17.5
Hugh McCracken Ensor & Vivienne Margaret Ensor ‑ HMVE Family A/C
Frimley Foundation
H B Williams Turanga Trust – HB Williams Turanga A/C
Resolution Investments Ltd
Forsyth Barr Custodians Limited – 1–30
Forsyth Barr Custodians Limited – 1–33
Custodial Services Limited – A/C 6
John Archer & Pearl Archer
Fraser Smith Holdings Limited
JBWere (NZ) Nominees Limited – A/C 31873
Kings College Foundation
John Richard Matthews & Rosemary Jennifer Matthews & Bruce Redvers Perkins ‑ Matthews A/C
total
DISTRIbUTION OF CAPITAL NOTE HOLDINGS AS AT 15 AUGUST 2012
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
> 100,000
total
nuMBer oF
CapItal noteS
% oF
CapItal noteS
4,063,000
1,589,000
997,000
892,000
500,000
484,000
370,000
316,000
300,000
300,000
300,000
300,000
275,000
246,000
240,000
200,000
200,000
200,000
200,000
200,000
12,172,000
2.71%
1.06%
0.66%
0.59%
0.33%
0.32%
0.25%
0.21%
0.20%
0.20%
0.20%
0.20%
0.18%
0.16%
0.16%
0.13%
0.13%
0.13%
0.13%
0.13%
8.08%
nuMBer oF
noteholDerS
nuMBer oF
CapItal noteS
1
232
447
1,080
250
1,160,000
4,181,500
35,645,750
43 109,012,500
1,803 150,000,000
PG 61
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
COMPANy DISCLOSURES
STOCK EXCHANGE LISTINGS
• Directors: D D Christian, N B Morrison, P A Treacy and R H
SKYCITY Entertainment Group Limited is listed on both the
New Zealand and Australian stock exchanges.
SKYCITY Entertainment Group Limited has been designated as
‘Non‑Standard’ by the NZX due to the nature of the company’s
constitution. In particular, the constitution places restrictions on
the transfer of shares in the company in certain circumstances
and provides that votes and other rights attached to shares may
be disregarded and shares may be sold if these restrictions are
breached, as more particularly described on pages 63 and 64 of
this annual report.
SKyCITy ENTERTAINMENT GROUP LIMITED
The following persons held office as directors of SKYCITY
Entertainment Group Limited as at the end of the 2011/2012
financial year, being 30 June 2012: R H McGeoch, B J Carter,
P D Cullinane, P B Harman, C J D Moller, S H Suckling and
N B Morrison.
Sir Dryden Spring retired as a director of SKYCITY
Entertainment Group Limited on 30 September 2011.
SUbSIDIARy COMPANIES
Subsidiary Company Directorships
The following persons held office as directors of subsidiaries of
SKYCITY Entertainment Group Limited as at the end of the
2011/2012 financial year, being 30 June 2012:
• Directors: N B Morrison and P A Treacy:
Planet Hollywood (Civic Centre) 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 Australia Limited
SKYCITY Investments Christchurch Limited
SKYCITY Investments Queenstown Limited
SKYCITY Management Limited
SKYCITY Metro Limited
SKYCITY Wellington Limited
Sky Tower Limited
Toptown Nominees Limited
McGeoch:
SKYCITY Adelaide Pty Limited
SKYCITY Australia Finance Pty Limited
SKYCITY Australia Pty Limited
• Directors: N B Morrison, P A Treacy and R H McGeoch:
SKYCITY Treasury Australia Pty Limited
• Directors: N B Morrison, P A Treacy and B K Morgan:
SKYCITY Darwin Pty Limited
Changes to Non‑wholly Owned Company Directorships
The changes to SKYCITY executives on the boards of non‑wholly
owned subsidiaries in the 12 month period ended 30 June 2012
are set out below:
• A B Ryan resigned as a director of the following companies
on 30 June 2012:
Christchurch Casinos Limited
Christchurch Hotels Limited
Premier Hotels (Christchurch) Limited
Queenstown Casinos Limited
•
P A Treacy was appointed as a director of the following
companies on 30 June 2012:
Christchurch Casinos Limited
Christchurch Hotels Limited
Premier Hotels (Christchurch) Limited
• N B Morrison was appointed as a director of Queenstown
Casinos Limited on 30 June 2012.
Non‑wholly Owned Company Directorships
At 30 June 2012, SKYCITY also had an interest in, and was
represented by SKYCITY executives on the boards of, the
companies listed below:
•
SKYCITY representatives on the board – N B Morrison and P
A Treacy:
Christchurch Casinos Limited
Christchurch Hotels Limited
Premier Hotels (Christchurch) Limited
Queenstown Casinos Limited
•
SKYCITY representative on the board – N B Morrison:
Force Location Limited
PG 62
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
OTHER INFORMATION
wAIVERS FROM THE NEw ZEALAND AND AUSTRALIAN
STOCK EXCHANGES
SKYCITY needs to ensure when it participates in gaming
activities that:
No waivers were sought from either of the NZX or ASX Listing
Rules within the 12 month period preceding the date two months
before the date of this annual report. For the same period the
company relied upon the following waiver:
•
on 9 February 2011, NZX granted a waiver from LR 7.11.1
(relating to the requirement for allotment to occur within five
business days following the latest date on which applications
for securities close) in relation to the allotment of shares
pursuant to the company’s dividend reinvestment plan.
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.
SHARE AND SHARE RIGHTS HOLDERS
As at 10 September 2012, shares and share rights on issue were
as detailed below:
•
•
1,876,536 shares issued under the Chief Executive Officer
Long Term Incentive Plan approved by shareholders at the
2009 annual meeting, held by Public Trust on behalf of the
Chief Executive Officer. The shares have been purchased by
Mr Morrison under the Chief Executive Officer Long Term
Incentive Plan with the assistance of interest‑free loans and
are held on behalf of Mr Morrison by Public Trust for a
restrictive period. The shares vest in Mr Morrison only when
performance hurdles set by the board of directors are met;
and
2,217,325 shares issued under the Executive Long Term
Incentive Plan approved by directors in September 2009,
held by Public Trust on behalf of 18 participants. The shares
have been purchased by the participants under the
Executive Long Term Incentive Plan with the assistance of
interest‑free loans and are held on behalf of the participants
by Public Trust for a restrictive period. The relevant shares
vest in a participant only when performance hurdles set by
the board of directors are met.
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); and
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.
•
•
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 significant influence 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 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 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 satisfied 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.
PG 63
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
OTHER INFORMATION
C o n t I n u e D
OTHER DISCLOSURES
SKYCITY Entertainment Group Limited has no securities subject
to an escrow arrangement.
From time to time, the Public Trust acquires shares in the
company on‑market for the purposes of the Chief Executive
Officer Long Term Incentive Plan 2009 and Executive Long Term
Incentive Plan 2009 as referred to above. In addition, SKYCITY
(or a nominee or agent of SKYCITY) may, from time to time,
acquire existing shares in the company to satisfy its obligations
to participating shareholders under the company’s Dividend
Reinvestment Plan established in February 2011. As at
17 September 2012, the company does not have in place
an on‑market share buy‑back programme.
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 15 August 2012 in respect of the year ended
30 June 2012 and this annual report.
As at the date of this annual report, SKYCITY Entertainment
Group Limited has a Standard & Poor’s BBB– rating with a
stable outlook.
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 transferees.
DONATIONS
Donations of $33,522 were made by the company during the
12 month period ended 30 June 2012 ($1,035,664 during the
12 months ended 30 June 2011).
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 following paragraphs.
Other than the provisions noted on pages 63 and 64, the only
significant restrictions or limitations in relation to the acquisition
of securities are those imposed by New Zealand laws relating to
takeover, overseas investment and competition.
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
Office is likely to be required when an ‘overseas person’ acquires
shares or an interest in shares in SKYCITY Entertainment Group
Limited that amount to 25% or more 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.
PG 64
SKYCITY ENTERTAINMENT GROUP LIMITED
annual report 2012
DIRECTORy
REGISTERED OFFICE
SKyCIty
entertainment
Group limited
Level 6
Federal House
86 Federal Street
PO Box 6443
Wellesley Street
Auckland
New Zealand
Telephone:
+64 9 363 6000
Facsimile:
+64 9 363 6140
Email: sceginfo@skycity.co.nz
www.skycityentertainmentgroup.com
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
russell Mcveagh
Vero Centre
48 Shortland Street
PO Box 8
Auckland
Minter ellison
rudd Watts
Lumley Centre
88 Shortland Street
PO Box 3798
Auckland
Bell Gully
vero Centre
48 Shortland Street
PO Box 4199
Auckland
Finlaysons
81 Flinders Street
GPO Box 1244
Adelaide
South Australia
AUDITOR
pricewaterhouseCoopers
188 Quay Street
Auckland City
Private Bag 92162
Auckland
REGISTRARS
NEw ZEALAND
Computershare
Investor Services
limited
Level 2
159 Hurstmere Road
Takapuna
Private Bag 92119
Auckland
Telephone:
+64 9 488 8700
Facsimile:
+64 9 488 8787
2
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n
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i
s
e
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AUSTRALIA
Computershare
Investor Services
pty limited
Level 3
60 Carrington Street
Sydney NSW 2000
GPO Box 7045
Sydney NSW 2000
Telephone:
+61 2 8234 5000
Facsimile:
+61 2 8235 8150
bANKERS
anZ national Bank
Commonwealth Bank of australia
Bank of new Zealand
Westpac new Zealand
CAPITAL NOTES TRUSTEE
the new Zealand
Guardian trust
Company limited
Vero Centre
48 Shortland Street
PO Box 1934
Auckland
Telephone:
+64 9 377 7300
Facsimile:
+64 9 377 7470
We would like to thank the following SKyCIty staff members for their time and use of their images within this year’s annual report:
Nava Fedaeff, Eugene Yan, Liam Mundt, Carl Maunder, Jim Tully, Yi Jun (Aileen) Zhu, Raine Liu, Jared Holt, Rebekah Bird.
www.skycity.co.nz