SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT YEAR ENDED 30 JUNE 2013
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
CONTENTS
ANNUAL MEETING
The 2013 annual meeting of SKYCITY Entertainment Group
Limited will be held at the SKYCITY Theatre, Level 3,
SKYCITY Auckland, corner of Victoria and Federal Streets,
Auckland, on Friday 18 October 2013, commencing at 10.00am
(New Zealand time).
This report is dated 13 September 2013 and is signed on behalf
of the board of directors of SKYCITY Entertainment Group
Limited by:
Chris Moller
Chairman
Bruce Carter
Deputy Chairman
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
65
For further information on the business operations and performance of SKYCITY Entertainment Group during the year ended
30 June 2013, please refer to the 2013 SKYCITY Shareholder Review which has been provided 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 2013
FINANCIAL STATEMENTS AND NOTES
FOR THE YEAR ENDED 30 JUNE 2013
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 on pages 4 to 46, which comprise the
balance sheet as at 30 June 2013, the income statements, statements of comprehensive income, the 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 2013 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 to 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 2013, and its 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 2013:
(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
14 August 2013
Auckland
PG 3
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
FOR THE YEAR ENDED 30 JUNE 2013
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
Gain on disposal of associate
Profit before income tax
Tax expense
Profit for the year
Attributable to:
Profit attributable to shareholders of the company
Non controlling interest
CONSOLIDATED
PARENT
NOTES
2013
$’000
2012
$’000
2013
$’000
2012
$’000
3
3
3
3
3
3
4
5
5
5
6
15
970,651
(26,148)
944,503
(84,954)
960,203
(26,398)
933,805
(82,275)
859,549
851,530
859,549
1,022
2,245
(281,281)
(119,447)
(67,453)
(61,573)
(34,796)
(1,123)
(76,784)
(3,235)
(49,263)
59
851,530
1,928
5,447
(276,642)
(100,354)
(62,190)
(64,039)
(49,909)
(1,034)
(72,770)
(4,274)
(48,861)
–
–
–
–
–
–
–
113,484
–
(20,156)
(1,796)
–
–
(1,452)
(1,123)
(5,593)
(1,694)
(4,178)
–
–
–
–
–
–
–
110,178
–
(22,117)
(3,782)
–
–
(441)
(1,034)
(5,561)
(2,093)
(4,171)
–
167,920
178,832
77,492
70,979
7
(40,538)
(39,962)
(1,479)
–
127,382
138,870
76,013
70,979
23
127,289
93
138,534
336
76,013
–
127,382
138,870
76,013
70,979
–
70,979
Earnings per share for profit attributable to the shareholders of the company:
Basic earnings per share
Diluted earnings per share
8
8
22.1
22.1
24.0
23.8
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 2013
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
NOTES
2013
$’000
2012
$’000
2013
$’000
2012
$’000
CONSOLIDATED
PARENT
Profit for the year
127,382
138,870
76,013
70,979
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
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
22
22
22
(24,213)
10,878
(3,118)
(4,517)
(1,375)
360
(16,453)
(5,532)
–
–
–
–
–
593
(166)
427
Total comprehensive income for the year, net of tax
110,929
133,338
76,013
71,406
Total comprehensive income for the year is attributable to:
Shareholders of the company
Non controlling interest
23
110,836
93
133,002
336
110,929
133,338
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
PG 5
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
BALANCE SHEETS
CONSOLIDATED
PARENT
NOTES
2013
$’000
2012
$’000
2013
$’000
2012
$’000
9
10
11
12
11
13
29
14
15
12
16
11
12
17
18
19
12
51,131
20,398
7,416
38,227
692
41,400
26,974
6,876
35,503
480
1
53,278
–
–
–
1
153,629
–
–
–
117,864
111,233
53,279
153,630
16,624
1,093,982
–
389,639
–
33,910
31,550
1,064,418
–
410,645
75,266
23,154
–
7,287
623,595
10,231
–
–
–
7,532
618,775
10,031
–
–
1,534,155
1,605,033
641,113
636,338
1,652,019
1,716,266
694,392
789,968
105,399
–
304
107,186
7,972
664
273,746
–
–
344,768
–
–
105,703
115,822
273,746
344,768
558,806
56,427
87,603
30,589
604,902
56,414
84,571
45,415
–
56,427
1,479
–
733,425
791,302
57,906
–
56,414
–
–
56,414
839,128
907,124
331,652
401,182
812,891
809,142
362,740
388,786
21
22(a)
22(b)
729,395
(18,303)
101,799
727,598
(1,850)
81,690
729,395
–
(366,655)
727,598
–
(338,812)
812,891
807,438
362,740
388,786
23
–
1,704
–
–
812,891
809,142
362,740
388,786
AS AT 30 JUNE 2013
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
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 2013
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013
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 2011
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 2012
Balance as at 1 July 2012
Total comprehensive income/(expense)
Dividends
Shares issued under dividend reinvestment plan
Share rights issued for employee services
Repayment of non controlling interest
Acquisition of non controlling interest
Net purchase of treasury shares
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)
727,598
(13,355)
11,505
81,690
1,704
809,142
727,598
(13,355)
11,505
81,690
1,704
809,142
–
–
–
1,394
–
–
403
7,760
–
–
–
–
–
–
(24,213)
–
–
–
–
–
–
127,289
(103,856)
–
–
–
(3,324)
–
93
–
–
–
(121)
(1,676)
–
110,929
(103,856)
–
1,394
(121)
(5,000)
403
24
21
21
21
24
21
21
23
23
21
Balance as at 30 June 2013
729,395
(5,595)
(12,708)
101,799
–
812,891
FOR THE YEAR ENDED 30 JUNE 2013
NOTES
SHARE
CAPITAL
$’000
HEDGING
RESERVES
$’000
RETAINED
LOSSES
$’000
PARENT
Balance as at 1 July 2011
728,616
(427)
(311,797)
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 2012
Balance as at 1 July 2012
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 2013
24
21
21
21
24
21
21
21
–
–
4,736
1,426
(7,180)
727,598
727,598
–
–
–
1,394
403
729,395
427
–
–
–
–
–
–
–
–
–
–
–
–
70,979
(97,994)
–
–
–
(338,812)
(338,812)
76,013
(103,856)
–
–
–
(366,655)
The above statements of changes in equity should be read in conjunction with the accompanying notes.
TOTAL
EQUITY
$’000
416,392
71,406
(97,994)
4,736
1,426
(7,180)
388,786
388,786
76,013
(103,856)
–
1,394
403
362,740
PG 7
STATEMENTS OF CASH FLOWS
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013
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
2013
$’000
2012
$’000
2013
$’000
2012
$’000
861,559
(515,501)
854,348
(490,574)
–
(25,252)
–
(25,785)
346,058
363,774
(25,252)
(25,785)
1,616
69
(54,402)
(36,394)
3,968
167
(56,841)
(49,325)
–
–
–
–
–
–
–
–
Net cash inflow / (outflow) from operating activities
32
256,947
261,743
(25,252)
(25,785)
Cash flows from investing activities
Purchase of/proceeds from property, plant and equipment
Payments for intangible assets
Non controlling interest share repurchase
Purchase of non controlling interest in Queenstown Casinos Limited
Loan repayment from Christchurch Hotels Limited
Loan repayment from Christchurch Hotels Limited
as part of the disposal
Proceeds from sale of Christchurch Casinos Limited
Dividend from subsidiaries
(111,785)
(11,489)
(121)
(5,000)
527
4,598
75,402
–
(153,689)
(11,008)
–
–
1,110
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
113,484
–
–
110,178
Net cash (outflow) / inflow from investing activities
(47,868)
(163,587)
113,484
110,178
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
28
21
24
(3,695)
(43,000)
–
–
403
(103,856)
(49,200)
11,283
(264,450)
241,314
–
(7,180)
(93,258)
(49,042)
–
–
–
19,397
403
(103,856)
(4,176)
–
–
–
19,700
(7,180)
(93,258)
(3,655)
Net cash (outflows) from financing activities
(199,348)
(161,333)
(88,232)
(84,393)
Net increase / (decrease) in cash and bank balances
Cash and bank balances at the beginning of the year
9,731
41,400
(63,177)
104,577
Cash and cash equivalents at end of year
9
51,131
41,400
–
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 2013
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.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These general purpose financial statements for the year
ended 30 June 2013 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 2013
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.
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).
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 14 August 2013.
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 19). 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 2013
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 2013
(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
NOTES TO THE FINANCIAL STATEMENTSCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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 transaction
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.
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.
(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
Amounts accumulated in equity are recycled in the Income
Statement in the periods when the hedged item will affect profit
or loss (for instance when the forecast sale that is hedged takes
PG 12
NOTES TO THE FINANCIAL STATEMENTSCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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 are 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
the period of time that is required to complete and prepare the
asset for its intended use or sale.
PG 13
NOTES TO THE FINANCIAL STATEMENTSCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
(t) Employee Benefits
(x) Statement of Cash Flows
(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.
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 2013
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 relate 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 2013
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
2013
$’000
2012
$’000
2013
$’000
2012
$’000
970,651
(26,148)
944,503
(84,954)
960,203
(26,398)
933,805
(82,275)
859,549
851,530
666,684
192,865
658,713
192,817
859,549
851,530
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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 $1,945,000 (30 June 2012: $11,621,000).
Included within consolidated non-gaming revenue is revenue relating to loyalty action points of $931,000 (30 June 2012: $266,000).
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
2013
$’000
947
69
6
–
2012
$’000
1,756
167
5
–
2013
$’000
2012
$’000
–
–
–
113,484
–
–
–
110,178
1,022
1,928
113,484
110,178
PG 15
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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
2013
$’000
2012
$’000
2013
$’000
2012
$’000
24,980
35,751
8,001
417
24,777
34,215
7,366
400
69,149
66,758
2,618
5,017
7,635
2,682
3,330
6,012
76,784
72,770
24,169
2,919
4,589
15,760
69,282
2,728
21,683
3,143
4,535
16,045
54,905
43
119,447
100,354
1,566
1,669
3,235
2,581
1,693
4,274
–
2,323
–
–
2,323
–
3,270
3,270
5,593
186
–
–
–
1,610
–
1,796
952
742
1,694
–
2,593
–
–
2,593
–
2,968
2,968
5,561
99
–
–
–
3,683
–
3,782
2,093
–
2,093
418
–
84
502
85
–
40
125
627
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
436
102
87
625
90
–
115
205
830
418
92
84
594
85
75
91
251
845
436
–
87
523
90
–
43
133
656
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
(b) Other services
PricewaterhouseCoopers
Taxation and other advisory services
Total remuneration for taxation services
Total fees paid or payable to auditors
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
309
309
266
266
1,139
1,111
100
100
756
169
169
796
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 Financial Risk Committee.
6 FINANCE COSTS – NET
Finance costs
Interest and finance charges
Exchange losses/(gains)
Interest income
Total finance costs
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
51,661
249
(2,647)
53,167
(582)
(3,724)
49,263
48,861
4,178
–
–
4,178
4,171
–
–
4,171
PG 17
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
7
INCOME TAX EXPENSE
(a) Income Tax Expense
Current tax
Deferred tax
Deferred tax (note 19)
Origination and reversal of temporary differences
Total deferred tax
(b) Numerical Reconciliation of Income Tax Expense
to Prima Facie Tax Payable
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
39,882
656
49,176
(9,214)
40,538
39,962
656
656
(9,214)
(9,214)
–
1,479
1,479
1,479
1,479
–
–
–
–
–
70,979
19,874
10,830
146
–
–
(30,850)
–
–
–
–
Profit from continuing operations before income tax expense
167,920
178,832
77,492
Tax at the New Zealand tax rate of 28% (2012: 28%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
47,018
50,073
21,698
Inter-company eliminations
Net non-deductible items
Share of net profit of associates
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
–
1,409
(629)
381
(3)
(6,934)
(1,174)
423
47
–
1,491
(1,525)
1,336
–
(7,071)
(284)
773
(4,831)
11,212
345
–
–
(31,776)
–
–
–
–
Income tax expense
40,538
39,962
1,479
–
The weighted average applicable tax rate was 24.1% (2012: 22.3%).
PG 18
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
8 EARNINGS PER SHARE
Basic earnings per share
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
Profit for the year
Profit attributable to minority interests
CONSOLIDATED
2013
CENTS
2012
CENTS
22.1
22.1
24.0
23.8
CONSOLIDATED
2013
$’000
2012
$’000
127,382
(93)
138,870
(336)
Profit attributable to the ordinary equity holders of the company used in calculating basic earnings per share
127,289
138,534
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
Tax on the above
127,289
–
–
138,534
4,160
(1,165)
Profit attributable to the ordinary equity holders of the company used in calculating diluted earnings per share
127,289
141,529
(b) Weighted Average number of shares used as the denominator
2013
NUMBER
2012
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:
576,958,340 576,958,340
Capital notes
–
16,592,208
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
576,958,340 593,550,548
(c) Information concerning the classification of Securities
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. In 2013 the capital notes were not dilutive and therefore basic and diluted earning per share are the
same. 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 18.
PG 19
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
9 CASH AND BANK BALANCES
Cash at bank
Cash in house
10 RECEIVABLES AND PREPAYMENTS
Trade receivables (net)
Advance to Christchurch Hotels Limited (note 28)
Sundry receivables
Prepayments
Amounts due from subsidiaries (note 29)
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
10,196
40,935
2,538
38,862
51,131
41,400
1
–
1
1
–
1
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
11,512
–
5,421
3,465
–
13,551
5,125
4,864
3,434
–
–
–
560
1,414
51,304
–
–
227
1,193
152,209
20,398
26,974
53,278
153,629
The provision for bad and doubtful debts was increased by $2,728,000 during the year.
11 NET TAX RECEIVABLES
Tax prepayment – current
Tax prepayment – non current
Current tax liabilities
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
38,227
16,624
–
35,503
31,550
(7,972)
54,851
59,081
–
–
–
–
–
–
–
–
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 2013
12 DERIVATIVE FINANCIAL INSTRUMENTS
Current assets
Forward foreign currency contracts
Total current derivative financial instrument assets
Non current assets
Interest rate swaps – cash flow hedges
Cross-currency interest rate swaps – cash flow hedges
FAIR VALUE
NOTIONAL PRINCIPAL
2013
$’000
2012
$’000
2013
$’000
2012
$’000
692
692
480
480
70,587
70,587
50,576
50,576
208
33,702
–
23,154
80,000
251,337
–
258,548
Total non-current derivative financial instrument assets
33,910
23,154
331,337
258,548
Current liabilities
Cross currency interest rate swap – cash flow hedges*
Forward foreign currency contracts
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 *
–
68
236
304
519
145
–
664
–
48,574
29,758
78,332
31,876
13,018
–
44,894
30,589
–
42,877
2,538
384,334
60,372
396,705
59,751
Total non-current derivative financial instrument liabilities
30,589
45,415
444,706
456,456
During the year there were no fair value hedges. In 2012, $3,927,289 of losses on hedged items were offset in the Income Statement
by $4,153,420 of gains on derivatives in fair value hedging relationships.
There is no cash flow hedge ineffectiveness in either the current or prior year.
* The fair value amounts are net of collateral payments made of $3,695,421 (2012: nil). 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 parent has no derivatives at 30 June 2013 (2012: nil).
PG 21
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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 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
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)
Closing net book value
189,924
644,788
101,221
34,200
747
93,538 1,064,418
At 30 June 2012
Cost
Accumulated depreciation
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
Movements in the year ended 30 June 2013
Opening net book value
Exchange differences
Net additions/transfers
Depreciation charge
Closing net book value
At 30 June 2013
Cost
Accumulated depreciation
Net book value
189,924
(1,950)
4,101
–
644,788
(10,738)
66,317
(24,980)
101,221
(2,281)
49,309
(35,751)
34,200
(337)
12,270
(8,001)
747
(24)
2,025
(417)
93,538 1,064,418
(18,445)
(3,115)
117,158
(16,864)
(69,149)
–
192,075
675,387
112,498
38,132
2,331
73,559 1,093,982
192,075
–
907,564
(232,177)
353,796
(241,298)
95,265
(57,133)
4,547
(2,216)
73,559 1,626,806
(532,824)
–
192,075
675,387
112,498
38,132
2,331
73,559 1,093,982
PG 22
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
13 PROPERTY, PLANT AND EQUIPMENT (continued)
PARENT
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
Movements in the year ended 30 June 2013
Opening net book value
Net additions/transfers
Depreciation charge
Closing net book value
At 30 June 2013
Cost
Accumulated depreciation
Net book value
PLANT AND
EQUIPMENT
$’000
CAPITAL
WORK IN
PROGRESS
$’000
TOTAL
$’000
32,011
(25,690)
6,321
6,321
2,023
(2,593)
5,751
27,496
(21,745)
5,751
733
–
733
32,744
(25,690)
7,054
733
1,048
–
1,781
1,781
–
1,781
7,054
3,071
(2,593)
7,532
29,277
(21,745)
7,532
5,751
2,873
(2,323)
1,781
(795)
–
7,532
2,078
(2,323)
6,301
986
7,287
30,369
(24,068)
6,301
986
–
986
31,355
(24,068)
7,287
Borrowing costs of $838,507 have been capitalised in the current year relating to the Auckland and Adelaide casino and food and
beverage capital projects and Darwin resort (2012: $2,129,123) using the Group’s weighted average cost of debt of 6.97% (2012: 7.16%).
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 2013
14 INTANGIBLE ASSETS
CONSOLIDATED
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
Movements in the year ended 30 June 2013
Opening net book amount
Exchange differences
Additions
Amortisation charge
Closing net book amount
At 30 June 2013
Cost
Accumulated amortisation
Closing net book amount
Casino Licence Contract Term
GOODWILL
$’000
CASINO
LICENCES
$’000
COMPUTER
SOFTWARE
$’000
TOTAL
$’000
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
156,392
(8,011)
–
–
235,377
(15,510)
–
(2,618)
18,876
(22)
10,172
(5,017)
410,645
(23,543)
10,172
(7,635)
148,381
217,249
24,009
389,639
148,381
–
253,293
(36,044)
70,024
(46,015)
471,698
(82,059)
148,381
217,249
24,009
389,639
Darwin
Adelaide
Auckland
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). Unless terminated earlier, 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 section 138 of the Gambling 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 2013
14 INTANGIBLE ASSETS (continued)
Casino Licence Contract Term
Hamilton
Queenstown
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 section 138 of the Gambling Act 2003 (NZ). As the licence was initially granted to the company
for nil consideration there is no associated carrying value.
Queenstown Casinos Limited holds a Casino Premises Licence for the Queenstown premises. The Casino
Premises Licence is for an initial 25 year term from 7 December 2000. The licence can be renewed for further
periods of 15 years pursuant to section 138 of the Gambling Act 2003 (NZ). As the licence was initially granted to
the company for nil consideration there is no associated carrying value.
COMPUTER
SOFTWARE
$’000
TOTAL
$’000
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
10,031
3,470
(3,270)
10,031
3,470
(3,270)
10,231
10,231
49,053
(38,822)
49,053
(38,822)
10,231
10,231
PARENT COMPANY
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
Movements in the year ended 30 June 2013
Opening net book amount
Additions
Amortisation charge
Closing net book amount
At 30 June 2013
Cost
Accumulated amortisation
Closing net book amount
PG 25
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
14 INTANGIBLE ASSETS
(a) Impairment Tests for Intangibles with Indefinite Lives
Goodwill and licences with indefinite lives are allocated to the Group’s cash generating units (CGUs) identified below.
201 3
Goodwill
Casino Licence
2012
Goodwill
Casino Licence
SKYCITY
HAMILTON*
$’000
SKYCITY
DARWIN
$’000
TOTAL
$’000
35,786
–
112,595
37,771
148,381
37,771
35,786
150,366
186,152
35,786
–
120,606
40,459
156,392
40,459
35,786
161,065
196,851
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 26.
(b) Key Assumptions used for Value in Use Calculations of Cash Generating Units
SKYCITY Hamilton
SKYCITY Darwin
EBITDA MARGIN
GROWTH RATE
DISCOUNT RATE
2013
%
40.2
28.5
2012
%
41.8
29.4
2013
%
2.0
3.5
2012
%
2.0
4.7
2013
%
10.0
10.0
2012
%
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.
PG 26
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
15 INVESTMENTS IN ASSOCIATES
(a) Carrying amounts
Information relating to associates is set out below.
NAME OF COMPANY
PRINCIPAL ACTIVITIES
OWNERSHIP INTEREST
CONSOLIDATED
PARENT
2013
%
2012
%
2013
$’000
2012
$’000
2013
$’000
2012
$’000
Christchurch Casinos Limited Group Casino operator
–
50.0
–
–
75,266
75,266
–
–
–
–
Christchurch Casinos Limited Group (CCL) is incorporated in New Zealand and has a 31 March balance date.
The Group previously held a 50% interest in Christchurch Casinos Limited. This interest was sold effective 20 December 2012 for
$80,000,000 cash (including repayment of the loan to Christchurch Hotels Limited of $4,598,000). As a result of this disposal a gain
of $59,000 has been recognised in the current year results.
(b) Movements in carrying amounts
Balance at the beginning of the year
Share of profits after income tax
Dividends received/receivable
Disposal
Balance at 30 June
16 PAYABLES
Trade payables
Deferred income
Accrued expenses
Employee benefits
Amounts due to subsidiaries (note 29)
CONSOLIDATED
2013
$’000
2012
$’000
75,266
2,245
(1,610)
(75,901)
73,782
5,447
(3,963)
–
–
75,266
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
18,571
2,917
40,558
43,353
–
18,034
3,520
42,144
43,488
–
–
–
7,143
–
266,603
–
–
7,025
–
337,743
105,399
107,186
273,746
344,768
PG 27
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
17 NON-CURRENT LIABILITIES – INTEREST BEARING LIABILITIES
Unsecured
United States Private Placement (USPP)
Syndicated bank facility
Deferred funding expenses
Total unsecured non current interest bearing borrowings
(a) United States Private Placement (USPP)
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
369,142
191,275
(1,611)
365,848
240,627
(1,573)
558,806
604,902
–
–
–
–
–
–
–
–
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.
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 July and August 2009, USPP borrowings of US$115,500,000 were repaid and in March 2012 USPP borrowings of US$85,000,000,
A$74,900,000 and NZ$47,275,000 matured and were repaid.
Movements in the USPP from 30 June 2012 relate to foreign exchange movements.
The USPP fixed rate US dollar borrowings have been converted to New Zealand or Australian dollar floating rate borrowings by use
of cross currency interest rate swaps to eliminate foreign exchange exposure within the Income Statement.
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 2013, SKYCITY had in place a NZ$485,000,000 revolving credit (2012: NZ$485,000,000) and Australian $75,000,000
term (2012: A$75,000,000) facility on an unsecured, negative pledge basis in two tranches of NZ$200,000,000 each maturing
June 2016 and February 2017, 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 $398 million (2012: $341 million) compared to a carrying value of $369 million
(2012: $317 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 2013
18 SUBORDINATED DEBT – CAPITAL NOTES
Balance at the end of the year
Deferred expense
Net capital notes at the end of the year
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
56,451
24
56,451
37
56,451
24
56,427
56,414
56,427
56,451
37
56,414
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 of 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 2013, there were 150,000,000 (2012: 150,000,000) capital notes on issue, of which 93,549,000 (2012: 93,549,000) are
held as treasury stock by the company.
The capital notes are listed on the NZX. As at 30 June 2013, the closing price was $1.0290 per $1 note (2012: $1.0425). The capital
notes are carried at amortised cost.
PG 29
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
19 DEFERRED TAX LIABILITIES
The balance comprises temporary differences attributable to:
Prepayments and receivables
Provision and accruals
Depreciation
Foreign exchange differences
Tax losses
Other
Cash flow hedges
Net deferred tax liabilities
Movements:
Balance at the beginning of the year
(Credited)/charged to the Income Statement (note 7)
Debited to equity reserves
Foreign exchange differences
Closing balance at 30 June
Within 12 months
In excess of 12 months
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
445
(12,573)
101,978
1,466
(2,089)
566
(2,190)
529
(14,174)
97,622
6,903
(1,486)
605
(5,428)
87,603
84,571
84,571
656
3,118
(742)
94,290
(9,214)
(360)
(145)
87,603
84,571
(9,597)
97,200
(15,512)
100,083
87,603
84,571
67
(771)
2,183
–
–
–
–
1,479
–
1,479
–
–
1,479
(106)
1,585
1,479
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The Group has not recognised deferred tax assets of $nil (2012: $1.3 million) in respect of losses that can be carried forward against
future taxable income.
PG 30
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
20 IMPUTATION CREDITS
Balances
Imputation credit account
Franking credit account
Imputation credit account
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
Franking credit account
Balance at beginning of year
Tax payments, net of refunds
Credits attached to dividends paid
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
2013
$’000
2012
$’000
2,658
26,615
2,179
28,844
2,179
8,172
(17,368)
9,675
(7,708)
26,284
(18,069)
1,672
2,658
2,179
28,844
16,966
(19,195)
36,008
12,676
(19,840)
26,615
28,844
2,658
–
2,658
2,179
–
2,179
As required by relevant tax legislation, the imputation credit account had a credit balance as at 31 March 2013.
21 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
2013
SHARES
2012
SHARES
2013
$’000
2012
$’000
576,958,340 576,958,340
–
–
674,251
432,162
(2,092,762)
(432,162)
–
–
1,418,511
–
727,598
1,394
–
–
403
–
728,616
1,426
–
–
(7,180)
4,736
576,958,340 576,958,340
729,395
727,598
All ordinary shares rank equally with one vote attached to each fully paid ordinary share.
Included within the number of shares is 4,085,151 treasury shares (2012: 4,517,313) 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 27). Treasury shares may be used to issue shares under the
company’s employee incentive plans or upon the exercise of share rights/options.
PG 31
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
22 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
2013
$’000
2012
$’000
2013
$’000
2012
$’000
(5,595)
(12,708)
(13,355)
11,505
(18,303)
(1,850)
(13,355)
10,782
96
(3,118)
(12,340)
16,635
(18,010)
360
(5,595)
(13,355)
11,505
(24,213)
16,022
(4,517)
(12,708)
11,505
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(427)
–
593
(166)
–
–
–
–
(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.
(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
Acquisition of non controlling interest – refer note 23
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
81,690
127,289
(103,856)
(3,324)
41,150
138,534
(97,994)
–
(338,812)
76,013
(103,856)
–
(311,797)
70,979
(97,994)
–
Balance at the end of the year
101,799
81,690
(366,655)
(338,812)
PG 32
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
23 NON CONTROLLING INTEREST
Balance at the beginning of the year
Share of profits of subsidiaries
Repayment of non controlling interest
Acquisition of non controlling interest
Balance at the end of the year
CONSOLIDATED
2013
$’000
1,704
93
(121)
(1,676)
–
2012
$’000
1,368
336
–
–
1,704
The non controlling interest related to the 40% of Queenstown Casinos Limited which was not previously owned by SKYCITY.
Effective 20 December 2012 this interest was purchased by the group for $5,000,000. The purchase consideration in excess of the
carrying value of the non controlling interest being $3,324,000 is recognised in retained profits.
24 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
2013
$’000
2012
$’000
2013
$’000
2012
$’000
46,171
57,685
46,079
51,915
46,171
57,685
103,856
97,994
103,856
8.00¢
10.00¢
8.00¢
9.00¢
8.00¢
10.00¢
46,079
51,915
97,994
8.00¢
9.00¢
On 14 August 2013, the directors resolved to declare a final dividend of 10 cents per share in respect of the year ended 30 June 2013
(refer to note 33 for further details).
PG 33
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
25 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 note 17) 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 34
NOTES TO THE FINANCIAL STATEMENTSCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
25 FINANCIAL RISK MANAGEMENT (continued)
2013
Cash and deposits
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
10,196
–
–
–
–
–
10,196
4.85
5.21
7.25
(191,275)
(49,296)
–
64,488
–
(60,373)
(56,451)
(33,735)
–
–
–
(33,807)
–
(34,682)
–
(3,318)
–
(96,339)
–
78,239
–
(128,452)
–
(71,867)
(191,275)
(369,142)
(56,451)
–
(165,887)
(150,559)
(33,807)
(38,000)
(18,100)
(200,319)
(606,672)
Weighted average debt interest rate
7.02%**
2012
Cash and deposits
Advance to Christchurch Hotels
2.50
2.90
2,538
5,125
Bank borrowings
4.99
(240,627)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,538
5,125
(240,627)
US Private Placement
Capital notes (NZ)
IRS/CCIRS *
5.06
7.25
(49,296)
–
80,153
–
–
(31,876)
(59,751)
(56,451)
(4,599)
–
–
(35,500)
(34,325)
–
(3,675)
(222,476)
–
(4,503)
(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%**
* Interest rate swaps and cross currency interest rate swaps, notional principal amounts.
** As at 30 June. Includes the impact of interest rate hedging.
For both 2013 and 2012 capital notes were the only interest bearing debt within the parent entity. The parent had no derivatives as at
30 June 2013 (2012: nil).
(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.
PG 35
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
25 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 2013
NZD/AUD movements
NZ interest rate movement
Australian interest rate movement
–
1,037
215
–
(6,777)
(7,333)
–
(1,037)
(215)
–
6,534
6,865
Total increase/ (decrease)
1,252
(14,110)
(1,252)
13,399
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
8
–
–
8
78
–
–
78
14,522
–
–
14,522
17,951
–
–
17,951
(9)
–
–
(9)
(13,139)
–
–
(13,139)
(86)
–
–
(16,241)
–
–
(86)
(16,241)
(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 practice. 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.
PG 36
NOTES TO THE FINANCIAL STATEMENTSCONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
25 FINANCIAL RISK MANAGEMENT (continued)
(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 (2012: NZ$485 million) were drawn down by NZ$102,000,000 as at 30 June 2013 (2012: $145,000,000). The bank facility term
tranche of A$75 million was fully drawn.
LESS 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 2013
Bank facility
Capital notes
US Private Placement
Total debt facilities
–
–
–
–
–
–
–
–
–
56,451
88,542
200,000
–
–
200,000
–
131,021
174,275
–
149,579
574,275
56,451
369,142
144,993
200,000
331,021
323,854
999,868
Payables
Total drawn debt
Future contracted interest on drawn debt
Future contracted interest on CCIRS/IRS
59,129
–
14,619
5,529
–
–
14,128
5,457
–
144,993
26,438
10,063
–
102,000
19,723
7,598
–
131,021
35,448
12,595
–
238,854
24,676
9,190
59,129
616,868
135,032
50,432
At 30 June 2012
Bank facility
Capital notes
US Private Placement
Total debt facilities
–
–
–
–
–
–
–
–
–
–
–
–
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
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
–
–
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
On 12 August 2013, SKYCITY extended $200 million of the bank facility from June 2016 to October 2018.
PG 37
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
25 FINANCIAL RISK MANAGEMENT (continued)
(d) Fair value estimation
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).
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
BALANCE
$’000
CONSOLIDATED
At 30 June 2013
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
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
–
–
–
–
–
–
–
–
–
–
–
–
692
33,910
34,602
68
30,825
30,893
480
23,154
23,634
145
45,934
46,079
–
–
–
–
–
–
–
–
–
–
–
–
692
33,910
34,602
68
30,825
30,893
480
23,154
23,634
145
45,934
46,079
Further details on derivatives are provided in note 12.
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 (2012: nil).
PG 38
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
25 FINANCIAL RISK MANAGEMENT (continued)
(e) Financial instruments by category
CONSOLIDATED
At 30 June 2013
Cash and bank balances
Trade receivables
Sundry receivables
Derivative financial instruments (net)
Interest bearing liabilities
Capital notes
Payables
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
(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
51,131
11,512
5,421
–
–
–
–
68,064
41,400
13,551
5,125
4,864
–
–
–
–
64,940
–
–
–
624
–
–
–
624
–
–
–
–
335
–
–
–
335
–
–
–
3,085
–
–
–
–
–
–
–
558,806
56,427
59,129
3,085
674,362
–
–
–
–
(22,780)
–
–
–
–
–
–
–
–
(604,902)
(56,414)
(60,178)
(22,780)
(721,494)
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
2013
2012
2.0 x
6.2 x
2.1 x
6.3 x
These types of ratios are consistent with the financial covenants in the Group’s various funding facilities. Actual gearing as at 30 June
2013 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 39
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
26 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, 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
2013
Revenue from external customers and other income 418,011
Shares of net profits of associates
–
Less
Expenses
Depreciation and amortisation
(221,202)
(41,179)
54,052
2,304
173,687
–
147,106
–
67,715
–
–
–
860,571
2,304
(31,605)
(4,883)
(129,691)
(11,422)
(100,344)
(13,704)
(55,818)
–
(30,248)
(5,596)
(568,908)
(76,784)
Segment profit/EBIT
Finance costs
Profit before income tax
155,630
19,868
32,574
33,058
11,897
(35,844)
217,183
(49,263)
167,920
Segment assets
759,425
61,341
262,063
381,612
Net additions to non current assets
(other than financial assets and deferred tax)
69,452
9,148
15,590
28,097
–
–
187,578 1,652,019
5,043
127,330
PG 40
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
26 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
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
Breakdown of the revenue from all services is as follows:
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
Total non-current assets excluding financial instruments
PG 41
(48,861)
178,832
–
–
–
207,335 1,716,266
–
75,266
4,940
154,109
CONSOLIDATED
2013
$’000
2012
$’000
598,969
67,715
192,865
615,246
43,817
192,467
859,549
851,530
520,330
339,219
520,081
331,449
859,549
851,530
83,643
43,687
102,040
52,069
127,330
154,109
888,338
611,908
947,867
634,012
1,500,246
1,581,879
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
27 SHARE BASED PAYMENTS
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 previous plans.
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 2013, the interest free loan on the CEO Long Term Incentive Plan is $4,764,895 (2012: $5,582,817) and on the Executive
Long Term Incentive Plan total $9,109,306 (2012: $6,996,545).
Movements in the number of share rights outstanding are as follows:
GRANT DATE
EXPIRY DATE
CONSOLIDATED AND PARENT – 2013
01/07/08
02/09/09
31/08/10
02/03/11
31/08/11
29/08/12
Total
01/07/12
02/09/13
31/08/14
02/03/15
31/08/15
29/08/16
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
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
78,000
902,425
1,165,945
1,394,291
760,200
–
–
–
–
–
– 1,034,800
–
(432,162)
–
–
–
–
–
(78,000)
(62,000)
408,263
(83,750) 1,082,195
– 1,394,291
705,200
999,800
(55,000)
(35,000)
–
408,263
–
–
–
–
4,300,861 1,034,800
(432,162)
(313,750) 4,589,749
408,263
333,000
216,098
600,000
902,425
1,216,195
1,544,291
–
–
–
–
–
–
–
790,200
–
(152,251)
(522,000)
–
–
–
–
(333,000)
(63,847)
–
–
–
–
78,000
902,425
(50,250) 1,165,945
(150,000) 1,394,291
760,200
(30,000)
–
–
78,000
–
–
–
–
4,812,009
790,200
(674,251)
(627,097) 4,300,861
78,000
PG 42
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
27 SHARE BASED PAYMENTS (continued)
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 1.83 years
(2012: 2.26 years).
Fair value of share rights granted
The assessed fair value at grant date of the rights granted on 29 August 2012 is $1.22 (31 August 2011 is $1.17).
The valuation inputs for the rights granted on 29 August 2012 included:
(a) rights are granted for no consideration
(b) exercise price: nil (2012: nil)
(c) grant date: 29 August 2012 (2011: 31 August 2011)
(d) expiry date: 29 August 2016 (2011: 31 August 2015)
(e) share price at valuation date $3.84 (2012: $3.42)
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
28 RELATED PARTY TRANSACTIONS
CONSOLIDATED
PARENT
2013
$’000
1,393
1,393
2012
$’000
1,426
1,426
2013
$’000
1,393
1,393
2012
$’000
1,426
1,426
There are no bad or doubtful debts associated with any related party of the Group or parent entity (2012: nil).
(a) Key Management and Personnel Compensation
Key management compensation for the years ended 30 June 2013 and 2012 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.
2013
2012
SHORT-TERM
BENEFITS
$’000
SHARE-BASED
PAYMENTS
$’000
11,263
10,532
1,270
1,192
TOTAL
$’000
12,533
11,724
(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, are set out below.
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 2013
28 RELATED PARTY TRANSACTIONS (continued)
(c) Subsidiaries
Interests in subsidiaries are set out in note 29.
(d) Parent
The majority of the parent entity’s transactions are with its subsidiaries including the payment of dividends of $113.5 million
(2012: $110.2 million) and provision of employee services of $21.1 million (2012: $22.1 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 had a loan with Christchurch Hotels Limited which was repaid during the year (2012: $5,125,251) as set out in note 10 on
normal commercial terms.
29 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
COUNTRY OF
INCORPORATION
CLASS OF
SHARES
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
New Zealand International Convention Centre Limited
SKYCITY Adelaide Pty Limited
SKYCITY Australia Finance Pty Limited
SKYCITY Australia Limited Partnership
SKYCITY Australia Pty Limited
SKYCITY Treasury Australia Pty Limited
SKYCITY Darwin Pty Limited
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
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
Ordinary
PG 44
2013
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2012
%
60
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
30 CONTINGENCIES
There are no significant contingences at year end (2012: nil).
31 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
2013
$’000
2012
$’000
2013
$’000
15,805
27,268
–
2012
$’000
–
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.
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
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
7,191
16,216
310,051
6,974
18,074
322,136
333,458
347,184
–
–
–
–
–
–
–
–
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 2013
32 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
Net (gain) on sale of associate
Current period employee share expense
Gain on sale of fixed assets
Dividend from subsidiary
Share of profits of associates not received as dividends
Change in operating assets and liabilities
Decrease/(increase) in receivables and prepayments
(Increase)/decrease in inventories
(Decrease) in payables and accruals
Increase/(decrease) in deferred tax liability
Decrease/(increase) in tax receivable
Capital items included in working capital movements
Subsidiary funding transactions
CONSOLIDATED
PARENT
2013
$’000
2012
$’000
2013
$’000
2012
$’000
127,289
93
76,784
49,263
(59)
1,394
(947)
–
(635)
7,135
(540)
(1,787)
3,032
4,230
(8,305)
–
138,534
336
72,770
48,861
–
1,426
(1,756)
–
(1,484)
3,928
94
(3,666)
(9,719)
(4)
12,423
–
76,013
–
5,593
4,178
–
1,394
–
(113,484)
–
100,351
–
(71,022)
1,479
–
–
(29,754)
70,979
–
5,561
4,171
–
1,426
–
(110,178)
–
(66,253)
–
91,708
–
–
–
(23,199)
Net cash inflow from operating activities
256,947
261,743
(25,252)
(25,785)
33 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
Dividend
On 14 August 2013, the directors resolved to provide for a final dividend to be paid in respect of the year ended 30 June 2013.
The 100% imputed, unfranked dividend of 10 cents per share will be paid on 4 October 2013 to all shareholders on the company’s
register at the close of business on 20 September 2013.
Purchase of Subsidiary
On 23 July 2013, SKYCITY acquired 100% of the share capital of Otago Casinos Limited which operates The Wharf Casino in
Queenstown for approximately $5 million.
Bank Facility Extension
On 12 August 2013, SKYCITY extended $200 million of the bank facility from June 2016 to October 2018.
New Zealand International Convention Centre
On 8 July 2013, SKYCITY signed the full Project and Licensing Agreement with the New Zealand Government to design, build, own
and operate the New Zealand International Convention Centre (NZICC).
The Agreement is subject to a number of conditions, including the passing of the legislation giving effect to the regulatory concessions
in the Agreement.
There is no impact on these financial statements of this Agreement.
Adelaide Redevelopment
On 25 July 2013, the South Australian Parliament passed legislation to enable the South Australian Government to execute a new
Approved Licensing Agreement (ALA) and Casino Duty Agreement (CDA) with SKYCITY on the terms previously agreed and
announced on 19 December 2012.
There is no impact on these financial statements from this legislation.
PG 46
NOTES TO THE FINANCIAL STATEMENTSCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
CORPORATE GOVERNANCE
AND OTHER DISCLOSURES
FOR THE YEAR ENDED 30 JUNE 2013
PG 47
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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 eleven 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
laws and regulations 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 the 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 on the directors by law and the 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 2013, the board
comprised seven non-executive directors and a managing
director. Biographical details of individual directors are set out in
the company’s 2013 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
NZX and 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 2013
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 3 July 2013 meeting, the board reviewed the status of each
director in accordance with the independence specification of
the NZX Corporate Governance Best Practice Code and taking
into account the ASX Independence Guidelines and determined
that all current non-executive directors were independent at the
balance date. The managing director, Nigel Morrison, was not
independent at the balance date by virtue of the fact that he was
also the Chief Executive Officer of the company.
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 member of senior management 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 Financial Risk Committee, Governance and
Nominations Committee, Remuneration and Human Resources
Committee and 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 2013 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 2013.
Six board meetings were scheduled during the year.
APPOINTMENT
TO OFFICE
BOARD
SCHEDULED
BOARD
UNSCHEDULED
BOARD
TOTAL
AUDIT AND
FINANCIAL
RISK
REMUNERATION
AND HUMAN
RESOURCES
GOVERNANCE
AND
NOMINATIONS
CORPORATE
SOCIAL
RESPONSIBILITY
NUMBER OF MEETINGS HELD
C J D Moller(1)
R H McGeoch(2)
P D Cullinane
P B Harman
N B Morrison
B J Carter
S H Suckling
R J Didsbury
18 December 2008
20 September 2002
26 March 2008
18 December 2008
18 December 2008
12 October 2010
9 May 2011
20 July 2012
6
6
6
6
6
6
6
6
6
1
1
1
1
1
1
1
1
1
7
7
7
7
7
7
7
7
7
3
3
3
–
–
–
3
–
–
3
2
1
–
3
–
–
3
–
1
1
1
1
1
1
1
–
1
5
1
3
5
–
–
–
–
5
(1) C J D Moller was appointed as a member of the Remuneration and Human Resources Committee and the Corporate Social Responsibility
Committee on 19 October 2012.
(2) R H McGeoch retired as a member of the Remuneration and Human Resources Committee and the Corporate Social Responsibility Committee
on 18 October 2012.
PG 49
CORPORATE GOVERNANCECONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
3.
INTEGRITY, ETHICAL BEHAVIOUR AND DIVERSITY
SKYCITY actively promotes ethical and responsible behaviour
and decision-making by:
The board has set measurable objectives for the 2013/2014
financial year to ensure SKYCITY’s commitment to diversity is
maintained. SKYCITY will:
•
•
•
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 Corporate Social Responsibility 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.
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.
strive to ensure strong female candidates are identified
in the recruitment process for all board and senior
executive roles;
review gender remuneration parity across all key roles within
the business and address any areas of material concern; and
increase our internal 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 under-represented
groups – these programmes being specifically tailored to
the needs of these groups.
As at 30 June 2013, the proportion of women at SKYCITY
(including amongst directors and officers) was as follows:
SENIOR
EXECUTIVE (CEO’S
DIRECT REPORTS
AND SITE GENERAL
MANAGERS ONLY)
TOTAL
WORKFORCE
SENIOR
EXECUTIVE
BOARD OF
DIRECTORS
47%
19%
29%
14%
Comparatively, the proportion of women at SKYCITY (including
amongst directors and officers) as at 30 June 2012 was as follows:
SENIOR
EXECUTIVE (CEO’S
DIRECT REPORTS
AND SITE GENERAL
MANAGERS ONLY)
TOTAL
WORKFORCE
SENIOR
EXECUTIVE
BOARD OF
DIRECTORS
47%
18%
27%
14%
The company performed well against the measurable objectives
set for the 2012/2013 financial year as outlined in the company’s
2012 annual report. SKYCITY is proud to be involved with
thought-leading diversity initiatives such as the BEST Pasifika
leadership development programme for high-potential Pasifika
employees, UN Global Woman Initiative and Diverse NZ Inc.
All SKYCITY materials (internal and external) have been
reviewed and, where appropriate, updated to reflect our
commitment to diversity.
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 Financial 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.
PG 50
CORPORATE GOVERNANCECONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
The Audit and Financial 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 Financial 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 Audit and Financial Risk 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
Authority Policy that sets out the framework for assessing and
maintaining audit independence.
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 2012/2013
financial year are set out in note 5 to the financial statements.
Fees for audit and tax compliance work in the 2012/2013 financial
year represent 65% 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 Financial 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 Financial Risk
Committee on the effectiveness of the company’s management
of its material business risks, with the most recent report being
provided in July 2013.
The Audit and Financial 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 Financial 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 2013.
PG 51
CORPORATE GOVERNANCECONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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.
by PricewaterhouseCoopers regarding the relativity of
SKYCITY’s key executive remuneration, by role, in respect to a
key comparator group.
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 2012 was conducted by
the chairman of the board (Chris Moller) and completed in
February 2013. The review involved a formal response/feedback
process with a one-on-one meeting involving the chairman and
each director individually.
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 2013.
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
Remuneration and Human Resources Committee and produced
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 Financial Risk, Remuneration and
Human Resources and Corporate Social Responsibility
Committees receives $15,000 per annum. The chairperson of the
Audit and Financial Risk Committee receives $35,000 per annum
and the chairperson of each of the Remuneration and 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. Rod McGeoch is now
the only director eligible for the retirement allowance, and will be
entitled to $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 Remuneration and 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.
PG 52
CORPORATE GOVERNANCECONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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)
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.
The last shares acquired by Mr Morrison with the assistance of an
interest-free loan under the Chief Executive Officer Long Term
Incentive Plan approved by shareholders at the 2009 annual
meeting was in 2011 and are currently held on behalf of Mr
Morrison by a trustee.
NZX Listing Rule 7.3.2(a) requires that any issue of shares to Mr
Morrison be completed within 36 months after approval was
obtained by shareholders. Accordingly, shareholder approval will
be sought at the company’s annual meeting in October 2013 for
the participation of, and acquisition of SKYCITY shares by, Mr
Morrison in a new Chief Executive Long Term Incentive Plan, the
terms of which are materially the same as the terms approved by
shareholders at the company’s 2009 annual meeting. The changes
are detailed in the company’s notice of annual meeting and more
closely align Mr Morrison’s long term incentive arrangements with
shareholder interests and enhances the company’s ability to
ensure stability in this critical role.
Remuneration
During the 2012/2013 financial year:
• Mr Morrison received a base salary of $1,750,000 and a
performance-related STI payment of $1,235,535 relating to
the prior 2011/2012 financial year. The amount of the STI
payment was determined by assessing the company’s NPAT
financial performance over the 2011/2012 financial year
against budget and Mr Morrison’s achievement against a
PG 53
CORPORATE GOVERNANCECONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
number of specific strategic, non-financial performance
targets, which had been set by the board at the start of the
financial year; and
•
190,476 SKYCITY shares vested in Mr Morrison on
21 September 2012 and a further 7,326 SKYCITY shares
vested in Mr Morrison on 28 May 2013 in accordance with
the terms of the Chief Executive Officer Long Term Incentive
Plan approved by shareholders at the company’s 2009
annual meeting.
Following the end of the 2012/2013 financial year, Mr Morrison
was awarded a performance-related STI bonus of $1,387,313
relating to the 2012/2013 financial year. This payment was
accrued in the company’s financial statements for the 2012/2013
financial year and was paid in July/August 2013. The amount of
the STI payment was determined by assessing the company’s
NPAT financial performance over the 2012/2013 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.
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 Remuneration and Human Resources Committee approves
remuneration increases for the senior executive group.
Short Term Incentive Arrangements
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 2013, a total of $1,091,462 was paid
under the Senior Executive STI Plan to ten executives – an
amount equivalent to 22% 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 2013, 306 salaried staff participated in the Salaried
STI Plan. Based on achievement of individual and financial
targets, 290 staff received an average STI payment of 7% 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, 443 SKYCITY salaried personnel were paid incentives
totalling $2,568,398 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 the 2013/2014
financial year with minimal changes.
Long Term Incentive Arrangements
A Long Term Incentive Plan (Executive LTI Plan) for senior
executives was introduced in 2009 for the 2009/2010 financial
year and subsequent years, which is similar to the 2009 Long
Term Incentive Plan approved by shareholders for the Chief
Executive Officer at the annual meeting in 2009.
Under the Executive LTI Plan, selected senior executives are
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
those senior executives 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 a participant under the Executive
LTI Plan, 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
PG 54
CORPORATE GOVERNANCECONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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
2012/2013 financial 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 2013
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.
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.
Details of the shares issued under the Executive LTI Plan and
outstanding as at 30 August 2013 are set out on page 63 of this
annual report.
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 55
CORPORATE GOVERNANCECONTINUED SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
SHAREHOLDER INFORMATION
TWENTY LARGEST SHAREHOLDERS AS AT 9 AUGUST 2013
1. HSBC Nominees (New Zealand) Limited A/C State Street
2. National Nominees Limited
3.
JP Morgan Chase Bank NA
4. HSBC Nominees (New Zealand) Limited
5.
JP Morgan Nominees Australia Limited
6. National Nominees New Zealand Limited
7. Accident Compensation Corporation
8. Citibank Nominees (New Zealand) Limited
9. HSBC Custody Nominees (Australia) Limited
10. BNP Paribas Nominees (NZ) Limited
11. RBC Investor Services Australia Nominees Pty Limited
12. New Zealand Superannuation Fund Nominees Limited
13. Premier Nominees Ltd – Onepath Wholesale Australasian Shr Fund
14. Private Nominees Limited
15. FNZ Custodians Limited
16. Westpac NZ Shares 2002 Wholesale Trust
17. Tea Custodians Limited
18. Citicorp Nominees Pty Limited
19. Masfen Securities Limited
20. BNP Paribas Noms Pty Ltd
NUMBER OF
SHARES
%
OF SHARES
47,832,269
37,605,804
36,026,132
32,338,808
29,863,153
24,565,406
24,052,395
23,237,817
20,914,124
18,913,713
17,328,027
13,376,986
9,600,193
7,126,974
5,822,529
5,369,953
5,329,121
5,026,127
4,956,260
4,892,164
8.29%
6.52%
6.24%
5.61%
5.18%
4.26%
4.17%
4.03%
3.63%
3.28%
3.00%
2.32%
1.66%
1.24%
1.01%
0.93%
0.92%
0.87%
0.86%
0.85%
Total
374,177,955
64.85%
Total shares on issue as at 9 August 2013 were 576,958,340 of which 4,085,151 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 2013
DISTRIBUTION OF ORDINARY SHARES AND REGISTERED SHAREHOLDINGS AS AT 9 AUGUST 2013
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
> 100,000
Total
NUMBER OF
SHAREHOLDERS
NUMBER
OF SHARES
3,689
9,321
3,592
3,138
1,465,104
25,892,956
25,566,841
70,684,767
172 453,348,672
19,912 576,958,340
As at 9 August 2013, there were 1,092 shareholders (with a total of 59,263 shares) holding less than a marketable parcel of shares
under the ASX Listing Rules, based on the closing share price of A$3.67. 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 20 August 2013 that
they were substantial security holders in the company and held a relevant interest in the number of ordinary shares shown below.
Lazard Asset Management Pacific Co.
Investors Mutual Limited
DATE OF
SUBSTANTIAL
SECURITY
NOTICE
RELEVANT
INTEREST IN
NUMBER OF
SHARES
% OF SHARES
HELD AT
DATE OF
NOTICE
30 April 2013
29,761,766
19 August 2013
29,545,487
5.158%
5.12%
No further substantial security holder notices had been received as at 30 August 2013.
PG 57
SHAREHOLDER INFORMATIONCONTINUED
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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 2013 is as listed below:
C J D Moller (Chairman)
B J Carter (Deputy Chairman)
R H McGeoch
P B Harman
P D Cullinane
S H Suckling
R Didsbury(1)
$221,653.22
$179,032.25
$169,314.51
$145,000.00
$145,000.00
$135,000.00
$128,105.00
(1) Richard Didsbury received total remuneration of $135,000 during the
2012/2013 financial year, of which $6,895 was paid to him in respect
of consultancy services provided to the Group for the period from
1 – 19 July 2012 (inclusive) prior to his appointment as a director on
20 July 2012.
During the year ended 30 June 2013, Brent Harman received the
benefit of a health insurance plan that SKYCITY offers to all of its
employees (either at no cost or at a discounted rate). SKYCITY
paid premiums totalling $2,873.46 to the health insurance
provider during the year ended 30 June 2013 in respect of
Mr Harman.
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
2012/2013 financial year, reimbursement of expenses incurred in
relation to company matters, by way of health insurance or as is
disclosed elsewhere in this annual report.
Other Directorships
Christchurch Casinos Limited, in which SKYCITY had a 50%
interest up until 20 December 2012 when it sold its shareholding,
paid total directors’ fees of $37,753.58 for Nigel Morrison and
Peter Treacy. These fees were paid to SKYCITY and were not
received personally by Messrs Morrison or Treacy.
Queenstown Casinos Limited, in which SKYCITY had a 60%
interest up until 20 December 2012 when it acquired a 100%
interest, paid total directors’ fees of $15,000 for Nigel Morrison
and Peter Treacy. These fees were paid to SKYCITY and were
not received personally by Messrs Morrison 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
2013, are listed below.
Remuneration includes salary, short term cash bonuses and,
where applicable, the value of share options, rights and shares
expensed during the year ended 30 June 2013. 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
$210,000–$219,999
$220,000–$229,999
$230,000–$239,999
$250,000–$259,999
$260,000–$269,999
$270,000–$279,999
$280,000–$289,999
$300,000–$309,999
$320,000–$329,999
$330,000–$339,999
$340,000–$349,999
$380,000–$389,999
$430,000–$439,999
$440,000–$449,999
$450,000–$459,999
$640,000–$649,999
$710,000-$719,999
$730,000-$739,999
$750,000-$759,999
$810,000-$819,999
$830,000-$839,999
$840,000-$849,999
$1,060,000-$1,069,999
Total
58
36
21
24
15
5
7
3
7
7
5
1
3
2
2
1
2
1
1
2
1
1
1
1
2
1
1
1
1
1
1
2
1
1
219
PG 58
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
DIRECTORS’ DISCLOSURES
INTERESTS REGISTER
Disclosure of Directors’ Interests
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 2013
(notices given by directors during the year ended 30 June 2013
are marked with an asterisk):
C J D Moller
ICC Development (International) Limited
International Cricket Council
Meridian Energy Limited
New Zealand Cricket (Inc.)
New Zealand Transport Agency
Westpac New Zealand Limited
R H McGeoch
BGP Holdings plc (Malta)
BGP Investments S.a.r.l (Luxembourg)
Destination New South Wales Limited
Director
Director
Chair
Chair
Chair
Director
Chair
Chair
Director
STW Communications Group Limited
The Antipodes Water Company Limited
P B Harman
Harman Consulting Limited
Harman Investments Limited
S H Suckling
Acemark Holdings Limited
Barker Fruit Processors Limited
and certain subsidiaries
Callaghan Innovation
ECL Group Limited
Jacobsen Pacific Limited
New Zealand Health Innovation Hub
New Zealand Qualifications Authority
Oxford Clinic Hospital Limited
Oxford Health Group Limited
G. R. Media Holdings Limited Banking Syndicate Consultant*
Restaurant Brands New Zealand Limited
McGeoch Holdings Pty Limited
Ramsay Health Care Limited
Sydney Cricket and Sports Ground Trust
Chair
Director
Trustee
Transfusion Services Pty Limited
Consultant*
Vantage Private Equity Growth Limited
Chair
B J Carter
ASC Pty Limited
Badge Management Pty Limited
Cobbadah Pty Limited
Eudunda Farmers Limited
Ferrier Hodgson
Genesee & Wyoming Australia Pty Limited
Invest in South Australia
RSC Nominees Pty Limited
Territory Insurance Office
P D Cullinane
Chair
Director
Director
Director
Consultant
Director
Director*
Director
Chair
Assignment Group New Zealand Limited
Director
Lewis Road Butters Limited
Lewis Road Creamery Limited
Low Flying Kiwis Limited
Director and
Shareholder*
Director and
Shareholder*
Director and
Shareholder
PG 59
Takeovers Panel
R J Didsbury
Auckland International Airport Limited
Brick Bay Wines Limited
Brick Bay Development Trust
Brick Bay Investments Trust
Brick Bay Trustee Limited
Committee for Auckland Limited
Hobsonville Land Company Limited
Kiwi Income Properties Limited
Whisper Cove Heights Limited
The following details included in the Interests Register as at
30 June 2012, or entered during the year ended 30 June 2013,
have been removed during the year ended 30 June 2013:
• S H Suckling is no longer managing director of HSR
Governance Limited or governance administrator of Swimming
New Zealand Incorporated.
• C J D Moller is no longer a director of NZX Limited, Rugby
New Zealand 2011 Limited or Westpac Regional Stadium Trust
or a trustee of Victoria University of Wellington Foundation.
• P B Harman is no longer a director of G. R. Media Holdings
Limited and certain subsidiaries or Metlifecare Limited.
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Managing
Director
Chair
Chair*
Chair
Chair*
Director*
Chair
Director
Director
Director
Member
Director*
Director*
Trustee*
Trustee*
Director*
Chair*
Director*
Director*
Director*
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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 2013:
N B Morrison
DATE OF
ACQUISITION/
DISPOSAL
DURING PERIOD
21 September 2012
21 September 2012
28 May 2013
28 May 2013
CONSIDERATION
NZ$623,999.37(1)
NZ$623,999.37(1)
NZ$23,999.98(1)
NZ$23,999.98(1)
SHARES
ACQUIRED/
(DISPOSED)
(190,476)
190,476
(7,326)
7,326
(1)
Shares vested under the Chief Executive Officer Long Term Incentive Plan 2009.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARES AND CAPITAL NOTES
Directors disclosed the following relevant interests in SKYCITY shares as at 30 June 2013:
SHARES
BENEFICIALLY HELD
69,091(1)
31,418(2)
17,250
22,273(3)
10,000(4)
26,915(5)
825,087
82,233(6)
1,678,734(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 FNZ Custodians 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.
Neither S H Suckling nor R J Didsbury had a relevant interest in SKYCITY shares as at 30 June 2013.
PG 60
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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 18 of the financial statements.
As at 9 August 2013, 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 9 AUGUST 2013
NUMBER OF
CAPITAL NOTES
% OF
CAPITAL NOTES
3,992,000
1,502,000
1,215,000
1,044,000
514,000
500,000
447,000
445,000
364,000
333,000
300,000
300,000
300,000
279,000
250,000
220,000
200,000
200,000
200,000
200,000
12,805,000
2.66%
1.00%
0.81%
0.70%
0.34%
0.33%
0.30%
0.30%
0.24%
0.22%
0.20%
0.20%
0.20%
0.19%
0.17%
0.15%
0.13%
0.13%
0.13%
0.13%
8.54%
NUMBER OF
NOTEHOLDERS
NUMBER OF
CAPITAL NOTES
1
235
435
1,059
250
1,174,000
4,070,500
34,983,750
44 109,771,500
1,774 150,000,000
Investment Custodial Services Limited
1. FNZ Custodians Limited
2.
3. Custodial Services Limited
4. FNZ Custodians Limited
5. Custodial Services Limited
6.
Invercargill Licensing Trust
7. Forsyth Barr Custodians Limited
8. Custodial Services Limited
9. Forsyth Barr Custodians Limited
10. Custodial Services Limited
11. Frimley Foundation
12. HB Williams Turanga Trust
13. Resolution Investments Limited
14. Custodial Services Limited
15. Custodial Services Limited
16. Forsyth Barr Custodians Limited
17. John Archer & Pearl Archer
18. Fraser Smith Holdings Limited
19. JBWere (NZ) Nominees Limited
20. Kings College Foundation
Total
DISTRIBUTION OF CAPITAL NOTEHOLDINGS AS AT 9 AUGUST 2013
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
> 100,000
Total
PG 61
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
COMPANY DISCLOSURES
STOCK EXCHANGE LISTINGS
• Directors: D D Christian, N B Morrison, P A Treacy and
R H 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 2013
are set out below:
•
P A Treacy and N B Morrison each resigned as a director of
the following companies on 20 December 2012 following the
sale of SKYCITY’s interest in those companies:
Christchurch Casinos Limited
Christchurch Hotels Limited
Premier Hotels (Christchurch) Limited
Non-wholly Owned Company Directorships
At 30 June 2013, SKYCITY also had an interest in, and was
represented by SKYCITY executives on the boards of, the
companies listed below:
•
SKYCITY representative on the board – N B Morrison:
Force Location Limited
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 2012/2013
financial year, being 30 June 2013: C J D Moller, R H McGeoch,
B J Carter, P D Cullinane, P B Harman, S H Suckling, R J Didsbury
and N B Morrison.
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
2012/2013 financial year, being 30 June 2013:
• Directors: N B Morrison and P A Treacy:
New Zealand International Convention Centre Limited
Planet Hollywood (Civic Centre) Limited
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
PG 62
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
OTHER INFORMATION
WAIVERS FROM THE NEW ZEALAND AND AUSTRALIAN
STOCK EXCHANGES
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 SKYCITY a waiver
from NZX Listing Rule 7.11.1 (which requires 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.
Subsequently, on 19 August 2013, ASX granted SKYCITY a
waiver from ASX Listing Rule 10.15.2 (which requires a notice of
meeting to approve the acquisition of securities to state a
maximum number of securities that may be acquired) in relation
to the company’s 2013 notice of meeting.
LONG TERM INCENTIVE SHARES
As at 30 August 2013, shares on issue were as detailed below:
•
•
1,678,734 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
3,589,949 shares issued under the Executive Long Term
Incentive Plan initially approved by directors in September
2009, held by Public Trust on behalf of 17 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.
SKYCITY needs to ensure when it participates in gaming
activities that:
•
•
it has the power under its constitution to take such action as
may be necessary to ensure that its suitability to do so in a
particular jurisdiction is not affected by the identity or
actions (including share dealings) of a shareholder; and
there are appropriate protections to ensure that persons
do not gain positions of 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 2013
OTHER INFORMATION
C O N T I N U E D
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.
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 30 August
2013, 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 14 August 2013 in respect of the year ended 30 June
2013 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.
In respect of the year ended 30 June 2013, a final dividend of
10 cents per share will be paid on 4 October 2013 to all
shareholders on the company’s register at the close of business
on 20 September 2013. The company’s Dividend Reinvestment
Plan (established in February 2011) will apply to this final
dividend with no discount. The closing date for electing to
participate in the Dividend Reinvestment Plan for this final
dividend is 5.00pm (New Zealand time) on 20 September 2013.
Full details of the company’s Dividend Reinvestment Plan are
available in the Investor Centre section of the company’s website
at www.skycityentertainmentgroup.com.
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 $24,987 were made by the company during the
12 month period ended 30 June 2013 ($33,522 during the
12 months ended 30 June 2012).
REVIEW OF OPERATIONS AND ACTIVITIES
A detailed review of the operations and activities of the
company for the year ended 30 June 2013 is set out in the
company’s 2013 Shareholder Review, which is available in
the Investor Centre section of the company’s website at
www.skycityentertainmentgroup.com.
OTHER LEGISLATION/REQUIREMENTS
General limitations on the acquisition of 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
PG 64
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 New Zealand
Commonwealth Bank of Australia
Bank of New Zealand
Westpac Banking Corporation
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
SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL REPORT 2013
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
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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
PG 65
www.skycity.co.nz