SKYCITY ENTERTAINMENT GROUP LIMITED
ANN UAL
RE PORT
2 014
YEAR ENDED 30 JUNE
CONTENTS
GENERAL
ANNUAL MEETING
The 2014 Annual Meeting of SKYCITY Entertainment Group
Limited will be held on Friday 17 October 2014 in the
New Zealand Room, Level 5, SKYCITY Auckland Convention
Centre, 88–96 Federal Street, Auckland, commencing at
10.00am (New Zealand time).
This report is dated 12 September 2014 and is signed on
behalf of the board of directors of SKYCITY Entertainment
Group Limited by:
Chris Moller
Chairman
Bruce Carter
Deputy Chairman
Chairman and Chief Executive Officer’s Review
Our Company
New Zealand International Convention Centre
Our Board
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
RECONCILIATION
Reconciliation of Reported Results
to Normalised Results
CORPORATE GOVERNANCE
AND OTHER DISCLOSURES
Corporate Governance
Shareholder Information
Director and Employee Remuneration
Directors’ Disclosures
Noteholder Information
Company Disclosures
Other Information
Directory
4
18
20
22
26
28
29
30
31
32
33
71
74
82
84
85
87
88
89
91
Unless otherwise stated, all dollar amounts in this annual report are expressed in New Zealand dollars. An electronic copy of
this annual report is available in the Investor Centre section of the company’s website at www.skycityentertainmentgroup.com.
2
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014
CONTENTS
3
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
A YEAR OF
TRANS FORMATION
4
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
TRANS FORMATION
LAYING THE FOUNDATIONS
FOR GROWTH AND
BUILDING MOMENTUM
The 2014 financial year was very much
a pivotal year for SKYCITY – a year
in which much was achieved in laying
the foundations for growth in
Auckland, Adelaide and in our
International Business:
• We executed agreements with the
New Zealand and South Australian
Governments and saw the passing of
enabling legislation in both
jurisdictions that extend two of our
casino licences and provide for tax
certainty, which will see our
businesses in Auckland and Adelaide
significantly expand. The Auckland
casino venue licence was extended
to 2048 and Adelaide Casino’s
exclusivity period for casino gaming
in South Australia was extended
to 2035. These agreements provide
the certainty we need to invest
with confidence.
and position the Adelaide Casino to
realise the benefits of the concessions
negotiated. This precipitated an
extensive renovation of the property
that was significantly disruptive to
day-to-day trading and short term
trading results, particularly over the
second half of the financial year.
This disruption will continue for the
rest of the 2014 calendar year while
we continue to substantially improve
and enhance the property,
positioning the Adelaide Casino for
future growth. Over the next year,
we will focus on planning and
designing the substantial expansion
of the Adelaide Casino, which will
see the development of the
announced 6-star hotel, new
Horizon gaming salons and villas
and additional signature restaurants
and bars.
• Following the agreement with the
South Australian Government, we
took deliberate steps to transition
• Significant progress has been made
with the design and planning of the
New Zealand International
Convention Centre (NZICC) in
5
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
NIGEL MORRISON
MANAGING DIRECTOR
AND CHIEF EXECUTIVE OFFICER
THE INVESTMENTS
WE HAVE MADE
OVER RECENT YEARS,
INCLUDING OUR NEW
SIGNATURE RESTAURANTS
IN FEDERAL STREET, OUR
VIP GAMING ROOMS
AND OUR HOTEL
REFURBISHMENTS ARE
NOW PAYING OFF.
6
Auckland and, earlier in the year, SKYCITY
and the New Zealand Government agreed
the concept design for the NZICC. We are
now finalising the preliminary design,
which will be lodged with the Auckland
Council before the end of the 2014 calendar
year as part of our resource consent
applications. All going well, we expect to
enter into a construction contract for the
NZICC by the end of the 2015 financial
year. Upon signing that construction
contract, the regulatory concessions
negotiated with the New Zealand
Government will become operative.
We are very excited by the concept design
and believe the architects have delivered a
truly outstanding facility that both
Auckland and New Zealand will be proud
of. As part of our master plan for the
NZICC site, we have also announced the
addition of a new 300-room 5-star
international hotel, a hospitality laneway
running from Hobson Street to Nelson
Street and the expansion of the NZICC
car park to cater for up to 1,350 vehicles.
• During the year, we repositioned our
International Business with the
recruitment of five additional relationship
managers in South East Asia and further
afield, doubling the size of our offshore
based personnel. We also increased our
maximum table differential for our
international customers, resulting in
increased volatility as the volumes grew
to a level to bring the win rate back
towards the theoretical win rate. While
these initiatives added cost and volatility
to the trading results during the year,
they position us to continue to grow our
International Business going forward.
International Business turnover grew
by more than 14% this year and, for the
first six weeks of the 2015 financial year,
has continued to experience strong
growth returning us back to the
theoretical win rate.
• Pleasingly, the results for our flagship
Auckland property went from strength to
strength with strong normalised revenue
and earnings before interest, taxes,
depreciation and amortisation (EBITDA)
growth in the second half - up 9% and
7.4% respectively on the second half of
the 2013 financial year. This momentum
has continued through into the start of
the 2015 financial year with 9% revenue
growth over the same period last year
(through to 10 August 2014). The
investments we have made over recent
years (including our new signature
restaurants in Federal Street, our VIP
private gaming rooms, the SKYCITY
Grand Hotel and SKYCITY Hotel
refurbishments and new systems and
technologies) and a strong management
team led by SKYCITY Auckland
General Manager John Mortensen are
all paying off.
• However, clearly not everything is within
our control and, this year, as was the case
last year, our results were hit by a
continually rising New Zealand dollar.
When translating the results of our
Australian businesses to New Zealand
dollars, our revenues were hit by more
than $40 million and our EBITDA by
$9.9 million.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
We look forward to updating you further on
each of these key areas at the company’s 2014
Annual Meeting on 17 October.
will underpin our strategic growth over the
next five plus years and contribute to
economic growth.
We now outline the year’s results and
achievements in more detail.
Normalised net profit after tax (NPAT) of
$123.2 million was in line with market
expectations, but down on last year’s result.
Because we report in New Zealand dollars,
the 13% appreciation of the currency over
the course of the year (from NZ$1=A$0.80
cents to NZ$1=A$0.90 cents) wrote $9.9
million off our normalised EBITDA gains.
We were significantly impacted too by
the sheer scale of changes made to the
Adelaide Casino.
Reported NPAT of $98.5 million was down
$28.8 million on last year due to being
significantly affected by a below average win
rate in our International Business and the
appreciation of the New Zealand dollar. A
return to theoretical International Business
win rates would have improved reported
NPAT by $15.4 million.
However, excluding the Adelaide disruptions
and the currency translation hit, the
underlying results of the Group were
pleasing. The year saw strong performances
in our International Business, particularly in
the second half of the year, and in Auckland
where gaming was up and our Federal Street
restaurant and bar offerings went from
strength to strength.
A TRACK RECORD WITH CITIES
We are on a journey to transform
SKYCITY from a yield stock to one
with a strong growth trajectory as well
as strong dividend flows.
SKYCITY is the biggest private sector
investor in the Adelaide Riverbank precinct
and the sole partner in the NZICC. Both
initiatives represent opportunities to add
new vitality to places that must compete
for visitors and investment against an
increasingly global and competitive
backdrop. They continue our commitment
to the cities we do business in and the
Governments we partner with. Both projects
At the same time, the new regulatory
framework will enable SKYCITY to
continue to grow and deliver to shareholders
in return for the risks we are taking over
sustained periods of time. Shareholders
should be well assured by the successes of our
Darwin Lagoon Resort and the continuing
success of our award-winning restaurants
in the Auckland Federal Street precinct
that we are a company adept at managing
urban-based transformation.
A NEW ENVIRONMENT IN ADELAIDE
In July 2013, after four years of negotiation,
the changes to the gaming legislation in
South Australia passed through Parliament
paving the way for us to finalise our
agreements with the South Australian
Government. That legislation received Royal
Assent in August 2013 and, two months later,
we executed final agreements for a revised
taxation and regulatory framework with the
South Australian Government.
WE ARE ON A JOURNEY
TO TRANSFORM SKYCITY
FROM A YIELD STOCK
TO ONE WITH A STRONG
GROWTH TRAJECTORY
AS WELL AS STRONG
DIVIDEND FLOWS.
CHRIS MOLLER
CHAIRMAN
7
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
OUR EXCLUSIVITY TO
OPERATE CASINO
GAMING IN SOUTH
AUSTRALIA HAS BEEN
EXTENDED FOR A
FURTHER 20 YEARS
AND WE CAN NOW
COMPETE NATIONALLY
AND INTERNATIONALLY
FROM ADELAIDE FOR
THE FIRST TIME.
The new arrangements, which came into effect
on 14 February 2014, deliver a completely new
environment. They have created a level playing
field for us amongst our competitor casino
peers and enabled us to introduce a larger range
of contemporary gaming product and systems.
Our exclusivity to operate casino gaming in
South Australia has also been extended for a
further 20 years until 30 June 2035. We can
now compete nationally and internationally
from Adelaide for the first time.
This year we took the opportunity to refurbish
and reconfigure the current facilities, adding
new rooms and systems in order to provide
an improved range of facilities which will
significantly enhance the customer experience.
These included a new Baccarat Pavilion for our
most popular table games and a new Platinum
Electronic Gaming Machine Room linked to
the Grange Room. We also refurbished the
entire main gaming floor and introduced new
automated table games. In May, we opened the
Barossa Room, a new entry level premium
area, redefining the gaming experience in the
city. While the new facilities have proven very
popular, it will not be until we complete the
remaining redevelopment works within the
Railway Station Building, including the
development of our first two signature
restaurants, at the end of this year that we will
be well placed to reintroduce the property to
Adelaide and other Australian cities. To date,
we have spent A$30–35 million of the A$50
million earmarked for the refurbishment
within the existing building.
Of course, such an ambitious programme has
not been without its challenges in a heritage
building. Up to 80% of the public areas have
been affected in some way, which has led to
significant disruption for our customers. At any
one time, up to 40% of the floor and/or 40% of
our product have been unavailable during the
8
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
staged works. We expect the first phase of
the redevelopment and refurbishment of the
Adelaide Casino to continue until the end of
the 2014 calendar year. Our approach has
been to progress these changes as soon as
possible so we can get back to business,
rather than extending out this phase which
may have limited the impact, but required a
much longer time period.
Over the next few months in Adelaide, we
will open the new BLACK Room, a VIP
bar, lounge and casual restaurant catering
to the Grange and Platinum Rooms and
supporting the new BLACK Room and a
new signature restaurant by Sean Connolly,
“Sean’s Kitchen”, to replace the existing
North Restaurant. The new restaurant will
include extensive private dining facilities
and open at the end of September 2014.
We are also replacing the Loco Bar with a
new colonial Asian restaurant/bar featuring
the culinary delights of our award-winning
chef at MASU in Auckland, Nic Watt.
This new restaurant will open at the end of
the 2014 calendar year. All these changes
will contribute to our future growth in
Adelaide and justify our ongoing
investment in this vibrant city.
THE NEXT PHASE IN ADELAIDE
At the same time that these changes have
been taking place, we have also been
preparing for the second phase of the
Adelaide Casino development – the
development of a A$300 million expansion
which will complete the transformation
into a world-class integrated entertainment
complex in the heart of the new Adelaide
Riverbank precinct, complementing the
billions of dollars of investment earmarked
by the South Australian Government
within 1.5 kilometres of our site over the
years ahead. Our complex will include
Adelaide’s first 6-star boutique hotel,
expanded gaming facilities, Horizon VIP
gaming salons and villas and signature bars
and restaurants and will be complemented
by a new 1,400 space car park development
as part of the Festival Plaza development.
We expect to finalise our plans by the end
of this calendar year, with early works
starting next year and construction
completed in late 2017.
ARTIST’S IMPRESSION OF THE NEW ZEALAND INTERNATIONAL CONVENTION CENTRE
Nearby, the completion of the
redevelopment of the Adelaide Oval and
the new Torrens Footbridge have already
transformed that sporting venue into one
of the premier sporting ovals for AFL and
cricket in Australia with a 50,000 seat
capacity. These developments will
complement our redeveloped facilities
once completed.
NEW ZEALAND INTERNATIONAL
CONVENTION CENTRE
SKYCITY has played a significant role in
the revitalisation of Auckland and our
ambition is to continue to do so. We will be
creating a building of national significance
on our expanded Auckland site that will be
able to host a full range of events and is
expected to attract many hundreds of
thousands of local and international visitors
each year. The 1.4 hectare site will be
packed with experiences that will add to
living in the city for residents and form a
must-see for visitors to the country. It’s
exciting to see what the world-class design
team tasked with bringing the NZICC to
life is creating.
The NZICC will feature a plenary
conference centre, dozens of meeting spaces,
a huge exhibition centre and generous car
parking, which will significantly increase the
foot traffic within the precinct year-round
and further endorse SKYCITY Auckland
and Federal Street as the city’s vibrant
entertainment destination. A laneway will
provide a pedestrian experience for visitors -
featuring retail and restaurant offerings,
it will run down the face of the NZICC
between Hobson and Nelson Streets. A plaza
on Hobson Street will abut the NZICC and
provide a place of welcome, rest and
relaxation. Together, these spaces will
provide SKYCITY Auckland with a
cumulative presence running east to west
for three city blocks.
All of this will come to life at the very time
that Auckland itself is in growth mode.
Sizeable investments are being made
elsewhere across the CBD to step the city up
to world-class status. It’s exciting to think
that, with the NZICC, New Zealand will be
able to compete with the world in the area of
international conventions.
9
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
FY15
REVENUE
FY15 REVENUE CONTINUES
TO SHOW GOOD GROWTH
hotel will be built in the Nelson and Hobson
Streets block and will be linked by an air
bridge to the main SKYCITY Auckland site,
enabling guests to enjoy the best in New
Zealand dining, bars, entertainment and the
unique Sky Tower within a short, covered
walk from their hotel room.
FEDERAL STREET HAS
BEEN TRANSFORMED
A few years ago, Auckland’s Federal Street
was little more than a right-of-way generating
no revenue. Today, we have world-class chefs
offering amazing and diverse food at street
level to more than 50 storeys up the Sky
Tower. With the opening of MASU by
Nic Watt, Peter Gordon’s The Sugar Club,
Al Brown’s Federal Delicatessen and Sean
Connolly’s Gusto at the Grand, together with
existing restaurants Depot, The Grill by Sean
Connolly and Bellota, we have continued to
develop the precinct as the culinary
destination of the city.
The $10 million redevelopment of Federal
Street, completed in July 2014, sees Federal
Street completely revamped at street level
with trees, green walls and inviting seating.
We have worked closely with the Auckland
Council on this project and the impressive
pedestrian/alfresco streetscape has added to
the enticement of eating, socialising and
relaxing here. The co-operative venture has
delivered Aucklanders a new, safe, pedestrian-
focused shared space that works well with our
existing facilities, will complement our plans
for the NZICC and adds to the experiences
being created by the Auckland Council and
others right around the inner city. Perhaps
the greatest compliment our local
government partners in this venture can
pay us is that they have chosen to shortly
move to Federal Street themselves.
UP
7%
AUCKLAND SECOND-HALF
NORMALISED EBITDA GROWTH
progressing well and we have now reached
the point where we are close to lodging
resource consent applications and finalising
the preliminary design.
It has taken longer than we had hoped to get
to this point and we now expect that the
construction contract (which will activate the
regulatory concessions) will, subject to a
smooth resource consent process, be signed
towards the end of the 2015 financial year.
We are working in partnership with the
New Zealand Government to have
construction completed by mid-2018.
A NEW 5-STAR INTERNATIONAL
HOTEL IN AUCKLAND
There’s a compelling and demanding case to
be made for building an additional 5-star
hotel with another 300 rooms on the
expanded NZICC site in Auckland. With the
opening of the NZICC, experts have advised
us that there will be real demand for
additional rooms in an adjacent location.
With our track record of running the very
successful SKYCITY Hotel and SKYCITY
Grand Hotel at near-capacity, it makes sense
for SKYCITY to own and manage an
additional hotel facility. This would mean
SKYCITY could, between the three hotels,
make nearly 1,000 hotel rooms available to
visitors on any given day. The new 5-star
UP
14%
INTERNATIONAL BUSINESS
TURNOVER TO $6.5 BILLION
The NZICC is not a conventional private-
public partnership (PPP). Instead, it’s an
inspiring and robust example of public and
state sector parties working together to
deliver a national asset. We will own this
vitally important piece of national economic
infrastructure and be responsible for its
operations, but at the same time we will be
working closely with our partners over the
coming decades to ensure the country
receives the greatest benefit. The NZICC
will beautifully integrate with the spaces
around it and revitalise the inner city by
bringing people back to the Nelson and
Hobson Street areas.
Simon Jamieson, General Manager NZICC
Development and Tourism, and his team have
been leading our discussions with the
New Zealand Government and other
stakeholders for the NZICC. The process is
10
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
A FEW YEARS AGO, AUCKLAND’S FEDERAL STREET WAS
LITTLE MORE THAN A RIGHT-OF-WAY GENERATING
NO REVENUE. TODAY, WE HAVE WORLD-CLASS CHEFS
OFFERING AMAZING AND DIVERSE FOOD AT STREET
LEVEL TO MORE THAN 50 STOREYS UP THE SKY TOWER.
TOP OF THEIR GAME
(FROM LEFT TO RIGHT):
AL BROWN - FEDERAL
DELICATESSEN AND
DEPOT, NIC WATT -
MASU, PETER GORDON
- THE SUGAR CLUB
AND BELLOTA, SEAN
CONNOLLY - GUSTO
AT THE GRAND AND
THE GRILL
11
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
CONTINUING MOMENTUM
IN AUCKLAND
Our Auckland property made strong gains in
the second half of the year, building
momentum through the third and fourth
quarters on the back of a more buoyant macro
economy as John Mortensen (General
Manager SKYCITY Auckland) and Matt
Ballesty (Assistant General Manager
SKYCITY Auckland) worked well together
to optimise the investments made in the
property over recent years and lift
performance and control costs.
Auckland’s normalised EBITDA improved
3.9% to $218 million over the year, with
good growth in the second half of the year
with normalised revenue and EBITDA up
9.0% and 7.4% respectively on the second half
of the 2013 financial year.
Auckland is seeing strong momentum in both
gaming and non-gaming revenues. This,
combined with tight cost control, has seen
pleasing growth in Auckland’s EBITDA
and an improving margin. Auckland has
continued to trade well into the 2015
financial year (through to 10 August 2014)
with 9% revenue growth.
Both the SKYCITY Grand Hotel and
SKYCITY Hotel continued to perform well
with record occupancy and increased average
daily rates. The SKYCITY Grand Hotel and
SKYCITY Hotel achieved 85% and 93%
occupancy respectively for the year.
Three new gaming rooms were added to the
Auckland property in the 2014 financial year.
The new BLACK room is going well,
achieving return visits from domestic players
and lots of international play. We have also
introduced sales teams into Melbourne and
Sydney to drive business for our BLACK
rooms in Auckland, Darwin and soon-to-be
Adelaide. The new Baccarat Room has
opened, linked by an escalator to the main
gaming floor. The main gaming floor has also
TRACK
RECORD
Auckland is seeing strong momentum in both gaming
and non-gaming revenues. This, combined with tight
cost control, has seen pleasing growth in Auckland’s
EBITDA and an improving margin.
FY14:
Normalised EBITDA improved 3.9% to $218 million
FY14 Second Half:
Normalised revenue and EBITDA up 9.0%
and 7.4% respectively
12
been revitalised, with half the gaming
tables and machines having moved and the
installation of new lighting and creation of
different spaces. We also opened the new
Rouge area behind the bar on the main
gaming floor in June 2014 and added
new facilities for our top end players
in September 2014 by expanding the
Platinum Room.
INTERNATIONAL BUSINESS
GROWTH
Our International Business experienced
strong growth in the second half and made a
sound contribution to the Group’s
normalised results for the year, after what
was a sluggish first half. Some sense of the
level and speed of growth can be gained
from the fact that International Business
revenue now represents around 12% of total
gaming revenue compared to 5% four years
ago. To encourage that growth further, we
have now embedded new personnel in
Guangzhou, Beijing, Chengdu and Hong
Kong on top of the personnel we already
have in Malaysia, Thailand, Singapore and
Shanghai. We also engaged another person
in Shanghai. Together, these new
appointments will grow our profile in these
key regional markets.
International Business turnover increased
significantly in the second half, up over 41%
compared with the same period last year.
This contrasted with a 12% downturn in the
first half compared to the same period in the
prior year. Our commitment to building
strong relationships with the people who
play with us added to our resilience.
Overall, turnover was up almost 15% on last
year and now looks promising right through
the 2015 financial year. Our Horizon
offering in Auckland continued to do well
and enjoyed positive feedback in
Queenstown. Introducing gaming in Hong
Kong dollars in Darwin has helped us
market to Macanese high rollers. Volumes in
our VIP salons have also increased in
Adelaide, which further encourages us to
develop Horizon gaming salons and villas at
that property in due course.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
THE LUXURY LAGOON
RESORT IN DARWIN
HAS CONTINUED TO
OPERATE AT CLOSE
TO FULL OCCUPANCY,
ATTRACTING BOTH LOCAL
AND INTERNATIONAL
PLAYERS ALIKE.
THE LUXURY LAGOON RESORT IN DARWIN
DARWIN LAGOON RESORT
The luxury Lagoon Resort in Darwin has
continued to operate at close to full
occupancy, attracting both local and
international players alike. This year, we
completed the redevelopment of the Sky
Room for local VIPs and increased automated
table gaming. We have also introduced
ticket-in-ticket-out (TITO) gaming in
the Sky Room and Diamond Room and on
the main gaming floor. This gives us a clear
competitive advantage locally and means we
are now able to compete with other casinos.
In August 2014, we completed a
refurbishment of the ground floor of the main
hotel and introduced a new reception area to
bring the property up to resort quality. A new
sports bar, unique in Darwin, will be open by
the end of the 2014 calendar year.
HAMILTON AND QUEENSTOWN
Hamilton did not have a great first half, but
enjoyed a slightly better second half with
revenue from machines up due to new
product and promotions.
Richard Callander (General Manager
Queenstown) took over the management
of our Queenstown operations in April 2014,
following Michelle Baillie’s appointment
to the role of General Manager SKYCITY
Hamilton. While SKYCITY Queenstown
Casino had a good year, with good interest
in Baccarat and a Horizon experience that
matches gaming levels in Auckland, our
second property, SKYCITY Wharf Casino,
did not fare so well. A key challenge in
the year ahead will be to differentiate the
two sites so that they are well positioned
in the market.
13
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
A STRONG SENSE OF CORPORATE
RESPONSIBILITY
Achieving the right mix of reward and
responsibility is crucial to our
commitment to the places we do
business in and to maintaining strong
and healthy relationships with
Government. Our Corporate Social
Responsibility (CSR) programme
and our commitment to operating
responsibly are how we retain our
social licence to operate. Being a
socially responsible business lies at
the heart of our business strategy
and we have world-leading
programmes that ensure our
venues are some of the safest
places to gamble.
That commitment continues to
permeate all of our operations
and governance practices. Oversight of these
responsibilities extends all the way to board
level with our CSR Committee, which is
chaired by director Peter Cullinane and
and Australians. We aim to excel at the
standards society expects of us, while at the
same time balancing our customers’ personal
freedom and personal responsibility.
overseen at executive level by Peter Treacy
(General Counsel and General Manager
Government and Industry Affairs), who
directs our interactions on regulation, and
Graínne Troute (General Manager
Corporate Services), who is responsible
for Human Resources and community.
To ensure we continue to be a leader in
this area, we have been working closely
with our regulators. We are in
discussion with them to evolve our
Host Responsibility programmes to
ensure we remain at the forefront of
international best practice and
continue to meet the changing
expectations of New Zealanders
We take pride in our industry leadership in
Host Responsibility. It is an area where we
continue to introduce initiatives in addition
to the millions of dollars we already invest to
help make our venues as safe and as fun as
possible. With the appointment of a team of
Customer Service Ambassadors in Auckland
this year, we took further measures alongside
the priorities established in our CSR charter
to help us personalise the interactions we
have with our customers. These Ambassadors
quietly interact with people on the main
gaming floor, checking that they are okay and
helping with any problems that arise. The
initiative recognises the difficulties in keeping
track of un-carded machine players across a
14
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
complex where approximately 30,000 people
come and go on a daily basis. It represents
one more way, alongside our other Host
Responsibility initiatives that lead the
world, that we can ensure our customers
enjoy a safe environment.
An exciting new development this year was
our Restaurants and Bars Journey project
aimed at helping the long-term unemployed,
which has been a great success with two
thirds of the participants now employed
by SKYCITY.
Through our strong employer brand and our
active leadership and talent development
programmes, we are crafting a company with
strong capacity to respond to changes in our
entertainment sector.
As a strong endorser of diversity in the
workplace, we welcome people with the right
talents from all sorts of backgrounds. Our
support of the Rainbow Tick programme
further extends our commitment to safe and
supportive workplaces, adding our corporate
voice to those who believe that work should
be a place where people can thrive.
We are also working hard to improve safety
and wellbeing and our significant reduction
in both the number and severity of incidents
shows that we are making very good progress.
Our Community Trusts in Auckland,
Hamilton and Queenstown continue our
support of initiatives in the community to
proactively assist New Zealanders to be more
financially secure. A total of $2,339,780 was
allocated to 256 community groups this year
with a particular focus on financial literacy
and employment-related issues. Since the
Trusts were established, their combined
SOCIALLY
RESPONSIBLE
Being a socially responsible
business lies at the heart of our
business strategy and we have
world-leading programmes that
ensure our venues are some of
the safest places to gamble.
HOST RESPONSIBILITY
INITIATIVES
This is an area where we continue to
introduce initiatives in addition to the
millions of dollars we already invest to
help make our venues as safe and as
fun as possible.
CUSTOMER SERVICE
AMBASSADORS
These Ambassadors quietly interact
with people on the main gaming floor,
checking that they are okay and
helping with any problems that arise.
LEADERSHIP AND TALENT
DEVELOPMENT PROGRAMMES
Help us better respond to changes in
our entertainment sector.
DIVERSITY IN THE WORKPLACE
Our support of the Rainbow Tick
programme further extends our
commitment to safe and supportive
workplaces.
RESTAURANTS AND BARS
JOURNEY PROJECT
Aimed at helping the long-term
unemployed, which has been a
great success with two thirds of
the participants now employed
by SKYCITY.
COMMUNITY TRUSTS
Supporting families to thrive and
communities to prosper.
15
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
ALLOCATED TO…
$2,339,780
256
COMMUNITY GROUPS THIS YEAR
COMBINED CONTRIBUTIONS TO DATE HAVE REACHED…
SHARED ACROSS…
$39,607,836
3,650
COMMUNITY GROUPS
contributions to communities have reached
$39,607,836, shared across 3,650
organisations. We would like to take this
opportunity to thank retiring SKYCITY
Auckland Community Trust Chair Arthur
Loo for all his hard work. Arthur has been
a member of the SKYCITY Auckland
Community Trust since 2006 and Chair
since 2010.
CONSISTENT DIVIDEND
The final dividend for the 2014 financial year
is unchanged on last year’s final dividend of 10
cents per share. This dividend will be paid on
3 October 2014 to shareholders on the register
as at 19 September 2014. The final dividend is
100% imputed at the company’s tax rate of
28% in New Zealand and not franked for
Australian purposes. The SKYCITY Dividend
Reinvestment Plan (DRP) will be reactivated
for the final dividend at a 2% discount.
Subject to available credits, the interim
dividend for the 2015 financial year will
be franked in Australia.
When combined with the interim dividend of
10 cents per share, shareholders have received
a total of 20 cents per share in dividends this
year, unchanged on last year. The upward
revision of our dividend policy and
reactivation of the DRP last year and this
year’s total pay-out in dividends are clear
signals that we are committed to delivering
shareholders competitive returns.
GOOD PROGRESS
The agreements for the NZICC and Adelaide
Casino redevelopment secure the long-term
future of the Group and provide us with the
confidence we need to invest by extending
key licences under which we operate,
expanding our gaming capacity, deregulating
16
constraining operational parameters and
offering tax certainty. Renewal of the
SKYCITY Auckland venue licence is not
required until 2048, while in South
Australia Adelaide Casino’s exclusivity as
a casino venue in the state has been
extended to 2035. Our focus is now on
executing and maximising the potential
of the agreements negotiated with
both Governments.
As we indicated last year, we remain
confident that existing debt facilities,
including undrawn committed facilities of
approximately $330 million, together with
operational cash flows and other potential
debt facilities, will enable us to complete
our Auckland and Adelaide growth projects
whilst maintaining our current dividend
policy and without needing to raise further
shareholder funds (other than by way of
the DRP).
Investors have already demonstrated their
approval of our strategy. In December
2013, we were included in the ASX200
Index for the first time by virtue of the
increased volumes of shares being traded on
the Australian Stock Exchange. Our
standing as a Trans-Tasman investment is
reinforced by the increasing proportion of
Australian resident SKYCITY shareholders.
THANKS
We would like to take this opportunity to
thank our fellow directors for their
guidance, support and advice throughout
the year and to bid a warm farewell and
offer our best wishes and thanks to Rod
McGeoch whom we have both worked
alongside in his capacities as Chairman and
a director for a number of years. While
Rod will retire from the board on the eve
of the company’s 2014 Annual Meeting, he
will attend the Annual Meeting to farewell
shareholders. His deep experience and
diverse skills have helped guide our
company through good times and more
challenging eras. We thank him sincerely
and warmly for his contributions
and wish him the very best in his
future endeavours.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
Subject to regulatory approvals, Rod will be
replaced on the board by Richard Tsiang.
Richard is a Chinese-Australian based in
Melbourne and Hong Kong. He has
previously worked for casino conglomerates
Melco Crown and MGM Grand in Macau
and also Yahoo in Hong Kong. The board is
particularly pleased to have attracted the
services of Richard given that it is the first
time in its history that the company has had a
non-executive director with international
gaming experience.
Our thanks to the Executive Team who
have, once again, provided leadership and
guidance in a year that will be remembered
both for its workload and for the significance
of what was achieved. We were sad to lose
James Burrell, Chief Financial Officer,
towards the end of the financial year after he
made the decision to return home to
England. Our thanks to him for his service
and we wish him well. In August, we
announced the appointment of Rob
Hamilton as the company’s new Chief
Financial Officer. Rob is a respected leader of
the investment banking and finance
community with more than 20 years’
experience at First NZ Capital, where he was
Managing Director and Head of Investment
Banking. Rob is also on the board of the
New Zealand Olympic Committee. We look
forward to working together with Rob when
he joins the SKYCITY Senior Executive
team in October 2014.
Finally, on every site and in many different
ways, our people have excelled this year. As
an entertainment-focused group, we are only
as competitive as the experiences we provide
ONCE AGAIN, OUR PEOPLE
HAVE WORKED HARD TO MAKE
SKYCITY THE PEOPLE’S CHOICE
IN BARS AND RESTAURANTS,
GAMING, ACCOMMODATION,
EVENTS, FUNCTIONS AND
CONFERENCES. OUR THANKS TO
EACH AND EVERY ONE OF YOU
FOR GOING THE EXTRA MILE.
and this year, once again, our people have
worked hard to make SKYCITY the people’s
choice in bars and restaurants, gaming,
accommodation, events, functions and
conferences. Our thanks to each and every
one of you for going the extra mile.
At our upcoming 2014 Annual Meeting on 17
October, Brent Harman and Sue Suckling
will be seeking re-election as directors. We
will also provide a further update about the
company’s activities at that time.
CHRIS MOLLER
CHAIRMAN ON BEHALF OF THE
SKYCITY BOARD
NIGEL MORRISON
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
17
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM OUR COMPANY
OUR
COMPANY
We have always had ambitions for the cities we operate in. Our business is about creating world-class
entertainment and accommodation destinations that will bring greater vibrancy to our cities.
This has been a highly significant year for
SKYCITY. We moved into detailed planning,
design and implementation phases on our
three key developments. These developments
will drive growth for our business, our
partners, our investors and the wider
community and economy.
In Auckland, we have developed Federal
Street into a busy food and entertainment
destination. In Adelaide, the Adelaide Casino
will become part of an amazing integrated
entertainment precinct with a 6-star
boutique hotel and signature restaurants.
announced another major project for
Auckland - a new 300-room hotel to sit
alongside the NZICC.
We’re working with our stakeholders to
develop a conference and exhibition centre in
Auckland that the whole country can be
proud of. We are close to lodging resource
consent applications and unveiling the
designs for the New Zealand International
Convention Centre (NZICC). We have also
Our commitment is to continue to bring flair,
excitement, variety and energy to the cities
we operate in; to offer safe, fun entertainment;
and to operate responsibly so as to benefit
all our stakeholders. Our business celebrates
the best of what it means to live in great
cities today.
NEW ZEALAND
1 AUCKLAND
3 QUEENSTOWN (TWO SITES)
RESTAURANTS / BARS
GAMING MACHINES
TABLE GAMES
EMPLOYEES
4
159
18
107
1
2
RESTAURANTS / BARS / CAFES
HOTEL ROOMS
GAMING MACHINES
TABLE GAMES
EMPLOYEES
2 HAMILTON
RESTAURANTS / BARS / CAFES
GAMING MACHINES
TABLE GAMES
EMPLOYEES
* includes full time, part time and casual
20
635
1,647
110
3,165
7
339
23
407*
4
AUSTRALIA
4 DARWIN
5 ADELAIDE
RESTAURANTS / BARS / CAFES
HOTEL ROOMS
RESORT ROOMS
GAMING MACHINES
TABLE GAMES
EMPLOYEES
13
120
30
730
30
1,248*
RESTAURANTS / BARS / CAFES
GAMING MACHINES
TABLE GAMES
EMPLOYEES
9
990
90
1,172
* includes full time, part time and casual
As at 1 September 2014
5
3
18
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 OUR COMPANY
EVERYONE’S
A WINNER
SKYCITY Grand Hotel awarded
New Zealand’s Best
Business Hotel
at World Travel Awards 2013,
nominated 2014
SKYCITY Grand Hotel and
SKYCITY Hotel both received
Certificates of Excellence
from TripAdvisor in 2013 and 2014
SKYCITY Grand Hotel also received
a TripAdvisor Traveller’s
Choice Award in 2014
The SKYCITY Darwin Lagoon
Resort’s iconic pool awarded
Best Resort Hotel
Swimming Pool
in Australia by Gourmet Traveller
in 2014. The magazine also named
our Darwin property
one of the top 50 hotels
in Australia in 2014
DELIVERING IN
AUCKLAND
F Y14
IN
316,364
PEOPLE STAYED AT ONE OF OUR HOTELS
413,789
PEOPLE VISITED THE SKY TOWER
500,000
PEOPLE PLAYED ON OUR TABLE GAMES*
ADELAIDE
PEOPLE PLAYED OUR GAMING MACHINES*
1.3M
2.5M
PEOPLE VISITED THE MAIN CASINO FLOOR4.1M
PEOPLE ENJOYED A DRINK AND/OR A MEAL
* Based on carded activity
1. INTERIM REDEVELOPMENT
3. CAR PARK AND PLAZA
• Re-configuration and redevelopment of
existing facilities
• Modernisation, new gaming products and
technologies, segmented customer offerings
• Ticket-in-ticket-out (TITO), cashless gaming and
other new regulatory and taxation reforms
Development of a 1,400 space car park and civic
plaza redevelopment on the adjacent Adelaide
Festival Plaza site. SKYCITY will lease 1,000 car
parks for its exclusive use.
2. EXPANSION
• 6-star boutique hotel
• Additional gaming capacity
• Horizon gaming suites and villas
• Signature restaurants, bars and
entertainment venues
ADELAIDE’S FIRST 6-STAR
BOUTIQUE HOTEL
SEAN’S KITCHEN - OPENING LATE SEPTEMBER 2014
19
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM NEW ZEALAND INTERNATIONAL CONVENTION CENTRE
NEW ZEALAND
INTERNATIONAL
CONVENTION
CENTRE
For the first time, the New Zealand International
Convention Centre (NZICC) will attract lucrative
conventions and events to New Zealand. These are
opportunities the country is currently missing out
on. As a serious player in the business events industry,
New Zealand will be able to compete with Sydney,
Melbourne, Brisbane, Adelaide and parts of South
East Asia for international conventions.
The NZICC will play a critical role in
enabling valuable knowledge transfer. It will
enable us to showcase our national talent,
products, research and development facilities
and tertiary networks to the world,
positioning New Zealand as a smart and
innovative country to knowledge intensive
industries and global thought leaders.
The NZICC will reinforce Auckland’s
reputation as a leading and vibrant
international city. It will enhance the
rejuvenation of the western edge of the CBD
and provide a catalyst for further visitor and
entertainment development in the ‘Victoria
Quarter’ and ‘Federal Street Precinct’.
At an impressive 34,000 square metres,
this will be the largest and most versatile
conference, exhibition and entertainment
space in New Zealand.
•
•
•
•
•
1,000 square metres of elevated views
for banquet style setting.
Mezzanine levels with panoramic
views that can easily be converted from
meeting and exhibition to banquet and
performance functions.
A dedicated, flexible plenary theatre
configurable in multiple modes for
up to 3,000 people.
3,000 square metres of meeting and
breakout spaces, easily configured in
modules with larger rooms divisible
into smaller spaces.
Exhibition space – roughly the size
of Eden Park.
20
The concept has been developed to enable
the building to play a vital role in a living,
breathing precinct that Aucklanders will use
and enjoy. The design of a generous plaza
entry off Hobson Street, leading to a through
site laneway, will provide social, retail and
hospitality experiences for Aucklanders and
visitors alike:
•
•
•
A welcoming plaza
Laneway between Hobson Street
and Nelson Street with cafes and
places to visit
Four levels of underground car parking.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 QUAY ST
CUSTOMS ST WEST
FORT ST
SHORTLAND ST
N
M L
A
H
R
U
D
C H A N C E R Y S T
T
S
H
G
I
H
DARBY ST
T
T S
LIO
L
E
T
N S
E
E
U
Q
VICTORIA ST EAST
T
E S
N
R
O
L
T
R S
E
N
E
H
C
KIT
F A N S H A W E S T
GORE ST LN
SWANSON ST
WYNDHAM ST
KINGSTON ST
NEW ZEALAND INTERNATIONAL CONVENTION CENTRE
T
N S
O
S
L
E
N
T
N S
O
S
B
O
H
FEDERAL
STREET
1 FEDERAL
•
DELICATESSEN
Metro Restaurant of the
Year 2014 Top 50
2 DEPOT
•
Cuisine New Zealand Good
Food Awards 2013, One Hat
Cuisine New Zealand Good
Food Awards 2014, One Hat
Cuisine New Zealand Good
Food Awards 2014, Personality
of the Year (Gatlin Avery)
Metro Restaurant of the
Year 2014 Top 50
•
•
•
SKYCITY
THEATRE
VICTORIA ST WEST
SKY TOWER
1
2
SKYCITY
GRAND
HOTEL
4
T
T S
R
E
B
L
A
T
L S
A
R
E
D
E
F
3
5
•
•
3 MASU BY NIC WATT
Metro Restaurant of the
•
Year 2014 Supreme Winner
Metro Restaurant of the Year
2014 Best New Restaurant
Metro Restaurant of the
Year 2014 Best Drinks List
Metro Restaurant of the
Year 2014 Top 50
Cuisine New Zealand Good
Food Awards 2014, Best
New Restaurant
•
•
4 GUSTO AT THE GRAND
Metro Restaurant of the Year
•
2014 Top 50
5 THE GRILL BY
•
•
•
•
SEAN CONNOLLY
Cuisine New Zealand Good
Food Awards 2013, Two Hats
Metro Restaurant of the
Year 2013 Top 50
Cuisine New Zealand Good
Food Awards 2014, Two Hats
Metro Restaurant of the Year
2014 Top 50
WELLESLEY ST WEST
In FY14, approximately
4 million covers were
served in Auckland with
diners enjoying:
of pastries
and poultry
580 tonnes of meat
1.5M servings
135,000 oysters
39 tonnes
13 tonnes
950 tonnes of fruit
and vegetables
of prawns
of coffee
21
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
OUR BOARD
OUR
BOARD
THE SKYCITY board draws on the diverse skills of
highly-respected directors with years of experience
in leadership and governance across a range of sectors.
1
4
7
22
2
5
8
3
6
9
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 OUR BOARD
1 CHRIS MOLLER - Chairman
4 BRENT HARMAN - Director
7 RICHARD DIDSBURY - Director
Member of the Audit and Financial Risk Committee,
Member of the Remuneration and Human Resources
Committee, Member of the Corporate Social
Responsibility Committee and Chairman of the
Governance and Nominations Committee. Appointed
a Director of SKYCITY in December 2008.
Chris Moller is currently Chairman of Meridian Energy
Limited and the New Zealand Transport Agency and a
director of Westpac New Zealand Limited. In his
previous role as CEO of the New Zealand Rugby
Union, Chris jointly led New Zealand’s successful bid
to host the 2011 Rugby World Cup. Chris’ career has
included senior posts with the New Zealand Dairy
Board, including global Chief Financial Officer and
Managing Director of NZMP, the international
ingredients business of the New Zealand Dairy Board
and subsequently Fonterra, where he also held the
position of Deputy Chief Executive of Fonterra. His
early career was in the finance and banking sectors. He
is a Fellow of the Institute of Chartered Accountants.
2 BRUCE CARTER - Deputy Chairman
Chairman of the Audit and Financial Risk Committee
and Member of the Governance and Nominations
Committee. Appointed a Director of SKYCITY in
October 2010.
Based in Adelaide, Australia, Bruce Carter is a
Consultant to Ferrier Hodgson in Adelaide and was
one of the founding partners of the Adelaide practice
in 1992. He was formerly a partner at Ernst & Young
and has more than 30 years’ experience in corporate
restructuring and insolvency. Bruce is currently
Chairman of ASC Pty Ltd (Australian Submarine
Corporation) and a director of Bank of Queensland
Limited as well as a number of private companies and
government bodies. He is a Fellow of the Institute of
Chartered Accountants.
3 ROD MCGEOCH - Director*
Member of the Audit and Financial Risk Committee
and Member of the Governance and Nominations
Committee. Appointed a Director of SKYCITY in
September 2002.
Based in Sydney, Australia, Rod McGeoch is a director
of Ramsay Health Care Limited and the Chairman of
the Mediaworks Group of companies. He is also
Chairman of Vantage Private Equity Growth Limited,
BGP Holdings plc (Malta) and BGP Investment s.à.r.l
(Luxembourg). He is the Honorary Chairman of the
Trans-Tasman Business Circle and the Co-Chairman
of the Australia New Zealand Leadership Forum. In
2013, Rod was awarded an Officer of the Order of
Australia for distinguished service to the Community
through contributions to a range of organisations and
to sport, particularly through leadership in securing
the Sydney Olympic Games.
* Rod McGeoch will retire on the eve of SKYCITY’s forthcoming 2014
Annual Meeting.
Chairman of the Remuneration and Human
Resources Committee and Member of the
Governance and Nominations Committee.
Appointed a Director of SKYCITY in
December 2008.
Brent Harman is an experienced broadcaster and
company director with a background in managing
publicly listed companies in Australia and the
United Kingdom. Brent has held senior positions
in the broadcast and new media industries in
New Zealand, the United Kingdom and Australia.
5 PETER CULLINANE - Director
Chairman of the Corporate Social Responsibility
Committee and Member of the Governance and
Nominations Committee. Appointed a Director of
SKYCITY in March 2008.
Peter Cullinane has led the development of some of
New Zealand’s most iconic brands, applying strategic
and creative thinking both locally and internationally,
which led to his previous appointment as Chief
Operating Officer, Saatchi & Saatchi Worldwide.
Since returning to New Zealand and establishing
Assignment Group, Peter has specialised in strategic
advice to a wide range of New Zealand and
international clients. He is a director of STW
Communications Group Limited, one of Australasia’s
largest marketing communications groups, a director
of APN News & Media Limited and a founder and
director of Lewis Road Creamery Limited.
6 SUE SUCKLING - Director
Member of the Remuneration and Human
Resources Committee and Member of the
Governance and Nominations Committee.
Appointed a Director of SKYCITY in May 2011.
Sue is responsible for leading the board’s
agenda on health and safety and ensuring that
health and safety is monitored and that
appropriate issues are addressed as necessary.
Sue Suckling is a director and consultant with
over 25 years’ experience in corporate
governance. Sue is currently the Chair of the
New Zealand Qualifications Authority, Barker
Fruit Processors Limited, the Callaghan
Innovation Board, Jacobsen Pacific Limited and
ECL Group Limited. She is a director of
Restaurant Brands New Zealand Limited and a
member of the New Zealand Takeovers Panel.
Previous governance roles include chairing
NIWA, AgriQuality Limited, and as a director of
Westpac Investments Limited and the New
Zealand Dairy Board. In 1996, she was awarded
an OBE for her contribution to New Zealand
business. Sue is a Fellow of the New Zealand
Institute of Directors and a Companion of the
Royal Society of New Zealand.
Member of the Corporate Social Responsibility
Committee and Member of the Governance and
Nominations Committee. Appointed a Director of
SKYCITY in July 2012.
Richard Didsbury graduated as an Engineer from
Auckland University and has enjoyed a distinguished
career in property investment and development.
Richard founded, and is currently a director of, the
Kiwi Income Property Trust (KIPT), which is now the
largest property vehicle listed on the NZX. He is well
known for his work as a past president of the Property
Council of New Zealand and is currently Chairman of
Committee for Auckland Limited. He is a director of
Auckland International Airport Limited and
Hobsonville Land Company Limited, which is
developing a major new waterfront community in
Auckland’s north-west. His previous governance roles
include being a director of Infrastructure Auckland
and Tourism Auckland.
8 NIGEL MORRISON - Managing Director
Appointed a Director of SKYCITY in December
2008.
Nigel Morrison joined SKYCITY as Managing Director
and Chief Executive in 2008 having had over 18 years’
experience in the gaming industry throughout
Australasia and Asia. Prior to being appointed Chief
Executive Officer of SKYCITY, Nigel was the Group
Chief Financial Officer of Galaxy Entertainment
Group, a leading publicly-listed Hong Kong-based
group operating and developing casinos in Macau. He
has also held positions as CEO of the Federal Group,
Australia’s largest private gaming group and Chief
Operating Officer of Crown Limited. Before
embarking on a career in casinos in 1993, Nigel was a
Corporate Finance Partner with Ernst & Young in
Melbourne, specialising in the gaming industry. In
2009, Nigel was awarded professional accountancy
organisation CPA Australia’s highest acknowledgment
for career achievement.
9 RICHARD TSIANG **
Based in both Melbourne, Australia, and Hong Kong,
Richard Tsiang currently sits on the Advisory Board
(The Racing Club) of The Hong Kong Jockey Club. He
was formerly Chief Development Officer of Melco
Crown Entertainment in Macau from 2007 to 2011
and Group Chief Financial Officer of MGM Grand
Macau from 2006 to 2007. Prior to that time, he was
Managing Director of Cendant Corporation in Asia, a
US Fortune 500 company, involved in real estate,
travel distribution, hospitality and vehicle rental
companies, Avis and Budget. From 2000 to 2004,
Richard was Chief Financial Officer and Head of
Strategy for Yahoo Asia, based in Hong Kong. His early
career was spent in Australia as a qualified chartered
accountant working for PricewaterhouseCoopers.
** The appointment of Richard Tsiang remains subject to regulatory
approvals being obtained.
23
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM FINANCIAL STATEMENTS AND NOTES
FINANCIAL STATEMENTS AND NOTES
FOR THE YEAR ENDED 30 JUNE 2014
24
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 FINANCIAL STATEMENTS AND NOTES
25
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM 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 28 to 70, which comprise
the balance sheets as at 30 June 2014, 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 2014 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.
26
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 INDEPENDENT AUDITORS’ REPORT
Opinion
In our opinion, the financial statements on pages 28 to 70:
(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 2014, 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 2014:
(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
13 August 2014
Auckland
27
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM INCOME STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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
2014
$’000
2013
$’000
2014
$’000
2013
$’000
4
4
4
4
4
4
5
6
6
6
7
16
928,228
(26,694)
901,534
(81,051)
970,651
(26,148)
944,503
(84,954)
820,483
859,549
820,483
1,000
–
(280,009)
(121,007)
(68,028)
(55,361)
(30,343)
(1,130)
(80,769)
(9,170)
(48,049)
934
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
– –
– –
– –
– –
– –
– –
122,969
– –
(13,578)
(7,705)
– –
– –
(1,520)
(1,130)
(5,667)
(792)
(4,902)
– –
113,484
(15,048)
(6,904)
(1,452)
(1,123)
(5,593)
(1,694)
(4,178)
128,551
167,920
87,675
77,492
8
(30,014)
(40,538)
(384)
(1,479)
98,537
127,382
87,291
76,013
25
98,537
–
127,289
93
87,291
– –
76,013
98,537
127,382
87,291
76,013
Earnings per share for profit attributable to the
shareholders of the company:
Basic earnings per share
Diluted earnings per share
NOTES
CENTS
CENTS
9
9
17.0
17.0
22.1
22.1
The above income statements should be read in conjunction with the accompanying notes.
28
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
NOTES
2014
$’000
2013
$’000
2014
$’000
2013
$’000
CONSOLIDATED
PARENT
Profit for the year
98,537
127,382
87,291
76,013
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
Total comprehensive income for the year, net of tax
Total comprehensive income for the year is attributable to:
Shareholders of the company
Non-controlling interest
24
24
24
25
(27,102)
(4,546)
1,375
(24,213)
10,878
(3,118)
(30,273)
(16,453)
– –
– –
– –
– –
68,264
110,929
87,291
76,013
68,264
–
110,836
93
68,264
110,929
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
29
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
BALANCE SHEETS
AS AT 30 JUNE 2014
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
Derivative financial instruments
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Interest bearing liabilities
Derivative financial instruments
Subordinated debt – capital notes
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Subordinated debt – capital notes
Deferred tax liabilities
Derivative financial instruments
Deferred licence value
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained profits/(losses)
Total equity
CONSOLIDATED
PARENT
NOTES
2014
$’000
2013
$’000
2014
$’000
2013
$’000
10
11
12
13
12
14
30
15
13
17
18
13
20
54,052
18,810
7,871
33,158
769
51,131
20,398
7,416
38,227
692
1
53,227
– –
– –
– –
1
53,278
114,660
117,864
53,228
53,279
21,183
1,141,947
–
537,648
15,889
16,624
1,093,982
–
389,639
33,910
– –
7,227
628,387
11,046
– –
7,287
623,595
10,231
1,716,667
1,534,155
646,660
641,113
1,831,327
1,652,019
699,888
694,392
119,500
81,724
10,753
76,441
105,399
–
304
–
278,823
– –
– –
76,441 –
273,746
288,418
105,703
355,264
273,746
18, 19
20
21
13
15
498,935
–
75,715
28,833
165,541
558,806
56,427
87,603
30,589
–
769,024
733,425
– –
–
1,863
– –
– –
1,863
56,427
1,479
57,906
1,057,442
839,128
357,127
331,652
773,885
812,891
342,761
362,740
23
24(a)
24(b)
737,546
(48,576)
84,915
729,395
(18,303)
101,799
737,546
– –
(394,785)
729,395
(366,655)
773,885
812,891
342,761
362,740
The above balance sheets should be read in conjunction with the accompanying notes.
30
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2014
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 2012
Total comprehensive income/(expense)
Dividends
Share rights issued for employee services
Repayment of non-controlling interest
Acquisition of non-controlling interest
Net purchase of treasury shares
Balance as at 30 June 2013
Balance as at 1 July 2013
Total comprehensive income/(expense)
Dividends
Shares issued under dividend reinvestment plan
Share rights issued for employee services
Net purchase of treasury shares
26
23
25
25
23
26
23
23
23
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)
–
729,395
(5,595)
(12,708)
101,799
729,395
(5,595)
(12,708)
101,799
–
–
20,126
1,238
(13,213)
(3,171)
–
–
–
–
(27,102)
–
–
–
–
98,537
(115,421)
–
–
–
–
–
–
–
–
–
–
–
Balance as at 30 June 2014
737,546
(8,766)
(39,810)
84,915
FOR THE YEAR ENDED 30 JUNE 2014
NOTES
PARENT
Balance as at 1 July 2012
Total comprehensive income/(expense)
Dividends
Share rights issued for employee services
Net purchase of treasury shares
Balance as at 30 June 2013
Balance as at 1 July 2013
Total comprehensive income/(expense)
Dividends
Share rights issued for employee services
Net purchase of treasury shares
Shares issued under dividend reinvestment plan
Balance as at 30 June 2014
26
23
23
26
23
23
23
SHARE
CAPITAL
$’000
727,598
–
–
1,394
403
729,395
729,395
–
–
1,238
(13,213)
20,126
737,546
The above statements of changes in equity should be read in conjunction with the accompanying notes.
RETAINED
LOSSES
$’000
(338,812)
76,013
(103,856)
–
–
(366,655)
(366,655)
87,291
(115,421)
–
–
–
(394,785)
110,929
(103,856)
1,394
(121)
(5,000)
403
812,891
812,891
68,264
(115,421)
20,126
1,238
(13,213)
773,885
TOTAL
EQUITY
$’000
388,786
76,013
(103,856)
1,394
403
362,740
362,740
87,291
(115,421)
1,238
(13,213)
20,126
342,761
31
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
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
2014
$’000
2013
$’000
2014
$’000
2013
$’000
820,259
(501,268)
861,559
(515,501)
– –
(26,124)
(25,252)
318,991
346,058
(26,124)
(25,252)
5
–
(48,206)
(40,017)
1,616
69
(54,402)
(36,394)
– –
– –
– –
– –
Net cash inflow / (outflow) from operating activities
33
230,773
256,947
(26,124)
(25,252)
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
(156,164)
(11,899)
–
–
–
(111,785)
(11,489)
(121)
(5,000)
527
– –
– –
– –
– –
– –
–
1,440
–
4,598
75,402
–
– –
– –
122,969
113,484
Net cash inflow /(outinflow) from investing activities
(166,623)
(47,868)
122,969
113,484
Cash flows from financing activities
Cash flows associated with derivatives
Drawdown/(repayment) of borrowings
Proceeds from sale of capital notes
Advances from subsidiaries
Net purchase of treasury shares
Dividends paid to company shareholders
Interest paid
Net cash (outflows) from financing activities
Net increase / (decrease) in cash and bank balances
Cash and bank balances at the beginning of the year
Cash and cash equivalents at end of year
13
29
23
26
10
9,202
67,193
20,000
–
(13,213)
(95,295)
(49,116)
(3,695)
(43,000)
–
–
403
(103,856)
(49,200)
– –
– –
20,000 –
(3,621)
(13,213)
(95,295)
(4,716)
19,397
403
(103,856)
(4,176)
(61,229)
(199,348)
(96,845)
(88,232)
2, 921
51,131
54,052
9,731
41,400
51,131
– –
1
1
1
1
The above statements of cash flows should be read in conjunction with the accompanying notes.
32
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
1 GENERAL INFORMATION
SKYCITY Entertainment Group Limited (SKYCITY or the
company and its subsidiaries or the Group) operates in the
gaming/entertainment, hotel and convention, hospitality,
recreation, and tourism sectors. The Group has operations in
New Zealand and Australia.
SKYCITY is a limited liability company incorporated and domiciled
in New Zealand. The address of its registered office is Federal
House, 86 Federal Street, Auckland. The company is dual-listed
on the New Zealand and Australian stock exchanges.
These financial statements have been approved for issue by the
board of directors on 13 August 2014.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These general purpose financial statements for the year ended 30
June 2014 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
2014 and the results of all subsidiaries and associates for the
year then ended.
The financial statements of the ‘Parent’ are for the company as
a separate legal entity.
The Parent company and the Group are designated as profit-
oriented entities for financial reporting purposes.
The Parent company has a negative net working capital balance.
The Parent’s subsidiaries will continue to support it as required.
The Group has a negative working capital balance as the capital
notes and some of the USPP debt mature within the next twelve
months. The Group has significant available undrawn committed
banking facilities totalling $330 million as at 30 June 2014
(refer to note 19) and has the ability to fully pay all debts as
they fall due.
Statutory Base
SKYCITY is a company registered under the New Zealand
Companies Act 1993 and is an issuer in terms of the Securities
Act 1978 (New Zealand).
These financial statements have been prepared in accordance
with the requirements of the Financial Reporting Act 1993
(New Zealand) and the Companies Act 1993 (New Zealand).
Measurement Basis
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
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.
(i) Impairment Testing
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 15).
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.
(ii) Deferred Tax
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
33
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM NOTES TO THE FINANCIAL STATEMENTS
taxable amounts will be available to utilise those temporary
differences and losses (refer note 21). Certain judgements are
made in calculating these temporary differences.
(iii) Fair Value of Regulatory Reforms
Regulatory reforms were granted to the Group in relation to the
Adelaide Casino licence. These reforms were measured at fair
value using a discounted cashflow model. This calculation requires
the use of estimates (refer note 15).
(b) Principles of Consolidation
(i) Subsidiaries
Subsidiaries are all entities (including structured entities) over
which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the
date that control ceases.
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.
(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.
(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
34
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 NOTES TO THE FINANCIAL STATEMENTS
• 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
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.
(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
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
35
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM 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.
(i) Financial Assets at Fair Value Through Profit or Loss
This category has two sub-categories: financial assets classified as
held for trading and financial assets designated as at fair value
through profit or loss on initial recognition. A financial asset is
classified as held for trading if acquired principally for the purpose
of selling in the short term. Derivatives are also classified as held
for trading unless they are designated as hedges. The Group does
not hold any assets that are designated as at fair value on initial
recognition. Financial assets at fair value through profit or loss are
classified as current assets if they are either held for trading or
are expected to be realised within 12 months of the balance
sheet date.
services directly to a debtor with no intention of selling the
receivable. They are included in current assets, except for those
with maturities greater than 12 months after the balance sheet
date which are classified as non-current assets. Loans and
receivables are included in receivables in the Balance Sheet.
(n) Derivatives
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently
remeasured to their fair value. The method of recognising the
resulting gain or loss depends on whether the derivative is
designated as a hedging instrument and, if so, the nature of the
item being hedged. The Group designates certain derivatives as
either hedges of the fair value of recognised assets or liabilities
or a firm commitment (fair value hedges) or hedges of exposures
to variability in cash flows associated with recognised assets
or liabilities or highly probable forecast transactions
(cash flow hedges).
At the inception of the transaction, SKYCITY documents the
relationship between hedging instruments and hedged items, as
well as its risk management objective and strategy for undertaking
various hedge transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of
whether the derivatives that are used in hedging transactions have
been and will continue to be highly effective in offsetting changes
in fair values or cash flows of hedged items.
(i) Fair Value Hedge
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges are recognised in the Income
Statement together with any changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk.
(ii) Cash Flow Hedge
The effective portion of changes in the fair value of derivatives that
are designated and qualify as cash flow hedges is recognised in equity
in the hedging reserve. The gain or loss relating to the ineffective
portion is recognised immediately in the Income Statement.
Amounts accumulated in equity are recycled in the Income
Statement in the periods when the hedged item will affect profit
or loss (for instance when the forecast sale that is hedged takes
place). However, when the forecast transaction that is hedged
results in the recognition of a non-financial asset (for example,
inventory) or a non-financial liability, the gains and losses
previously deferred in equity are transferred from equity and
included in the measurement of the initial cost or carrying amount
of the asset or liability.
(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
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
36
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014 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)).
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) Other 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) Regulatory Reforms Associated with Casino Licences
Regulatory reforms granted which are specific to the Group are
initially recognised at their fair value where there is a reasonable
assurance that the reforms will be received and the Group will
comply with all conditions attached.
Regulatory reforms are recognised as an intangible asset and
included within the value of casino licences. Where a regulatory
reform is related to property, plant and equipment the carrying
value of property, plant and equipment is reduced by the value of
the regulatory reforms once constructed. Prior to construction of
the related property, plant and equipment it is accounted for as a
regulatory reform in advance.
(iv) 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.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount.
(r) Borrowings
(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
Borrowings, including capital notes, 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.
37
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM (ii) Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
(x) Statement of Cash Flows
Cash flows associated with derivatives that are part of a hedging
relationship are off-set against cash flows associated with the
hedged item.
(y) Standards, Amendments and Interpretations to Existing
Standards that are not yet Effective
Certain new standards, amendments and interpretations to
existing standards have been published that are mandatory for the
Group’s accounting periods beginning on or after 1 July 2014 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 2018).
This standard replaces IAS 39 Financial Instruments:
Recognition and Measurement.
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 NZ 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.
NZ IFRS 9 (2013) is a revised version of NZ IFRS 9. The
revised standard incorporates new hedge accounting
requirements including changes to hedge effectiveness
testing, treatment of hedging costs, risk components that
can be hedged and disclosures.
NZ IFRS 9 (2014) Financial Instruments requires the use of the
expected credit losses model when calculating impairment of
financial instruments.
This standard is not expected to significantly impact the Group.
(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.
(t) Employee Benefits
(i) Wages, Salaries and Annual Leave
Liabilities for wages and salaries, including non-monetary benefits
and annual leave expected to be settled within 12 months of the
reporting date, are recognised in other payables in respect of
employees’ services up to the reporting date and are measured at
the amounts expected to be paid when the liabilities are settled.
(ii) Share-Based Payments
SKYCITY operates an equity settled, share-based compensation
plan. The fair value of the employee services received in exchange
for the grant of the share rights or shares is recognised as an
expense. The total amount to be expensed over the vesting period
is determined by reference to the fair value of the share rights or
shares granted, excluding the impact of any non-market vesting
conditions (for example, profitability and sales growth targets).
Non-market vesting conditions are included in assumptions about
the number of share rights or shares that are expected to be
distributed. At each balance sheet date, the entity revises its
estimates of the number of shares expected to be distributed. It
recognises the impact of the revision of original estimates, if any, in
the Income Statement, and a corresponding adjustment to equity
over the remaining vesting period.
(u) Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares
are shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the company’s equity share
capital, the consideration paid, including any directly attributable
incremental costs (net of income taxes), is deducted from equity
attributable to the company’s equity holders.
(v) Dividends
Provision is made for the amount of any dividend declared on
or before the end of the financial year but not distributed at
balance date.
(w) Earnings Per Share
(i) Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the company by the weighted
average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares
issued during the year.
38
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014 • NZ IFRS 15, Revenue from contracts with customers,
(effective for annual periods beginning on or after
1 January 2017)
NZ IFRS 15 addresses recognition of revenue from contracts
with customers. It replaces the current revenue recognition
guidance in NZ IAS 18 Revenue and NZ IAS 11 Construction
contracts and is applicable to all entities with revenue. It sets
out a 5 step model for revenue recognition to depict the
transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.
The Group has yet to assess NZ IFRS 15’s full impact. The
Group will apply this standard from 1 July 2017.
(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.
The Group has adopted External Reporting Board Standard A1
Accounting Standards Framework (For-profit Entities Update)
(XRB A1). XRB A1 establishes a for-profit tier structure and
outlines which suite of accounting standards entities in different
tiers must follow. The Group is a Tier 1 entity. There was no impact
on the current or prior year financial statements.
During the period the Group adopted NZ IFRS 13 Fair Value
Measurement. As a result a limited number of disclosures have
been added to these financial statements. There has been no
material impact on the Income Statement or Balance Sheet.
3 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.
• SKYCITY Darwin
SKYCITY Darwin includes casino operations, food and
beverage and hotel.
The Group is organised into the following main operating
segments:
• SKYCITY Auckland
SKYCITY Auckland includes casino operations, hotels and
convention, food and beverage, car parking, 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, SKYCITY Wharf and
Christchurch Casino (sold December 2012).
• SKYCITY Adelaide
SKYCITY Adelaide includes casino operations and food
and beverage.
•
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.
39
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM 3 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
2014
Revenue from external customers and other income 430,519
Shares of net profits of associates
–
Expenses
(226,366)
Depreciation and amortisation
(44,898)
53,949
934
(35,426)
(5,269)
150,504
–
(118,465)
(11,508)
130,704
–
(90,298)
(13,425)
55,807
–
(58,083)
–
–
–
(36,410)
(5,669)
159,255
14,188
20,531
26,981
(2,276)
(42,079)
821,483
934
(565,048)
(80,769)
176,600
(48,049)
128,551
726,167
62,786
454,450
339,401
17,417
7,849
47,899
8,691
–
–
248,523 1,831,327
73,192
155,048
Segment profit/EBIT
Finance costs
Profit before income tax
Segment assets
Net additions to non current assets
(other than financial assets and deferred tax)
2013
Revenue from external customers and other income 418,011
Shares of net profits of associates
–
(221,202)
Expenses
(41,179)
Depreciation and amortisation
54,052
2,304
(31,605)
(4,883)
173,687
–
(129,691)
(11,422)
147,106
–
(100,344)
(13,704)
67,715
–
(55,818)
–
–
–
(30,248)
(5,596)
Segment profit/EBIT
Finance costs
Profit before income tax
155,630
19,868
32,574
33,058
11,897
(35,844)
860,571
2,304
(568,908)
(76,784)
217,183
(49,263)
167,920
Segment assets
Net additions to non current assets
(other than financial assets and deferred tax)
759,425
61,341
262,063
381,612
69,452
9,148
15,590
28,097
–
–
187,578
1,652,019
5,043
127,330
Breakdown of the revenue from all services is as follows:
CONSOLIDATED
2014
$’000
2013
$’000
570,532
55,807
194,144
820,483
598,969
67,715
192,865
859,549
Revenue - products and services
Local gaming
International business
Non-gaming
Total revenue
40
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
3 SEGMENT INFORMATION (continued)
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
4 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
2014
$’000
2013
$’000
522,133
298,350
820,483
98,459
56,589
155,048
520,330
339,219
859,549
83,643
43,687
127,330
934,789
765,960
888,338
611,908
1,700,749
1,500,246
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
928,228
(26,694)
901,534
(81,051)
970,651
(26,148)
944,503
(84,954)
820,483
859,549
626,339
194,144
666,684
192,865
820,483
859,549
– –
– –
– –
– –
– –
– –
– –
– –
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 $1,342,000 (30 June 2013: $1,945,000).
Included within consolidated non-gaming revenue is revenue relating to loyalty action points of $728,000 (30 June 2013: $931,000).
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.
41
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
5 OTHER INCOME
Net gain on disposal of property, plant and equipment
Interest income – Christchurch Hotels Limited
Dividend income
Dividends from wholly-owned entities
6 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
Adelaide transformation costs
Strategic projects and development costs
Other restructuring costs
42
CONSOLIDATED
PARENT
2014
$’000
995
–
5
–
2013
$’000
947
69
6
–
2014
$’000
2013
$’000
– –
– –
– –
122,969
113,484
1,000
1,022
122,969
113,484
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
24,421
37,915
9,516
403
72,255
3,115
5,399
8,514
24,980
35,751
8,001
417
69,149
2,618
5,017
7,635
80,769
76,784
23,002
2,635
4,382
14,035
75,944
1,009
24,169
2,919
4,589
15,760
69,282
2,728
121,007
119,447
2,303
4,262
1,373
1,232
9,170
1,566
–
982
687
3,235
–
2,363
–
–
2,363
–
3,304
3,304
5,667
170
–
–
–
7,535
–
7,705
180
–
–
612
792
–
2,323
–
–
2,323
–
3,270
3,270
5,593
186
–
–
–
6,718
–
6,904
952
–
–
742
1,694
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
6 EXPENSES (continued)
Auditors’ fees
During the year the following fees were paid or are payable for services provided by the auditor of the parent entity and its related
practices.
(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
Compliance reviews
Tax compliance services
Total remuneration for other assurance services
Total remuneration for assurance services
(b) Other services
PricewaterhouseCoopers
Taxation advisory services*
Executive benchmarking assistance
Total remuneration for taxation services
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
436
102
87
625
42
40
106
188
813
295
156
451
436
102
87
625
51
39
115
205
830
217
92
309
1,264
1,139
436
–
87
523
42
40
43
125
648
–
113
113
761
436
–
87
523
51
39
43
133
656
8
92
100
756
*Tax Services in relation to ad-hoc queries covering a range of tax related matters.
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.
43
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
7 FINANCE COSTS – NET
Finance costs
Interest and finance charges
Exchange (gains) /losses
Interest income
Total finance costs
8
INCOME TAX EXPENSE
(a) Income Tax Expense
Current tax
Deferred tax
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
50,130
(125)
(1,956)
51,661
249
(2,647)
48,049
49,263
4,902
– –
– –
4,902
4,178
4,178
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
39,952
(9,938)
30,014
39,882
656
40,538
– –
384
384
1,479
1,479
77,492
21,698
11,212
345
(31,776)
(b) Numerical Reconciliation of Income Tax Expense
to Prima Facie Tax Payable
Profit from continuing operations before income tax expense
128,551
167,920
87,675
Tax at the New Zealand tax rate of 28% (2013: 28%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
35,994
47,018
24,549
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
–
717
(262)
98
–
(6,546)
–
(372)
385
–
1,409
(629)
381
(3)
(6,934)
(1,174)
423
47
10,172
94
– –
– –
(34,431)
– –
– –
– –
– –
Income tax expense
30,014
40,538
384
1,479
The weighted average applicable tax rate was 23.3% (2013: 24.1%).
44
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
9 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
Profit attributable to the ordinary equity holders of the company used in calculating basic earnings per share
(b) Weighted Average Number of Shares used as the Denominator
CONSOLIDATED
2014
CENTS
17.0
17.0
2013
CENTS
22.1
22.1
CONSOLIDATED
2014
$’000
98,537
–
98,537
2013
$’000
127,382
(93)
127,289
2014
NUMBER
2013
NUMBER
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
579,706,028
576,958,340
(c) Information Concerning the Classification of Securities
There are no dilutive potential ordinary shares and therefore basic and diluted earnings per share are the same.
45
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
10 CASH AND BANK BALANCES
Cash at bank
Cash in house
11 RECEIVABLES AND PREPAYMENTS
Trade receivables (net)
Sundry receivables
Prepayments
Amounts due from subsidiaries (note 30)
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
12,056
41,996
54,052
10,196
40,935
51,131
1
– –
1
1
1
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
13,643
2,286
2,881
–
18,810
13,096
3,837
3,465
–
20,398
– –
443
1,506
51,278
53,227
560
1,414
51,304
53,278
The provision for bad and doubtful debts was increased by $1,009,000 (30 June 2013: $2,728,000) during the year.
The fair value of receivables and amounts due to subsidiaries approximates the carrying amount as they are of a short term nature.
12 NET TAX RECEIVABLES
Tax prepayment – current
Tax prepayment – non-current
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
33,158
21,183
54,341
38,227
16,624
54,851
– –
–
– –
2013
$’000
–
Tax is typically paid in advance in New Zealand to ensure the Group has positive imputation credits as at 31 March of each year.
46
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
13 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 *
Total non-current derivative financial instrument assets
Current liabilities
Forward foreign currency contracts
Interest rate swaps – cash flow hedges
Cross-currency 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 *
Total non-current derivative financial instrument liabilities
FAIR VALUE
NOTIONAL PRINCIPAL
2013
$’000
692
692
2014
$’000
2013
$’000
180,491
180,491
70,587
70,587
208
33,702
80,000
108,464
80,000
251,337
33,910
188,464
331,337
68
236
–
304
28,329
91,176
53,555
173,060
48,574
29,758
–
78,332
30,589
–
410,317
116,226
384,334
60,372
30,589
526,543
444,706
2014
$’000
769
769
252
15,637
15,889
415
836
9,502
10,753
24,039
4,794
28,833
During the year there were no fair value hedges.
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 $7,339,042 (2013: $3,695,421). 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 2014 (2013: nil).
47
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
14 PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
At 30 June 2012
Cost
Accumulated depreciation
Net book value
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
Movements in the year ended 30 June 2014
Opening net book value
Exchange differences
Net additions/transfers
Depreciation charge
Closing net book value
At 30 June 2014
Cost
Accumulated depreciation
Net book value
LAND
$’000
BUILDINGS
AND FITOUT
$’000
PLANT AND
EQUIPMENT
$’000
FIXTURES AND
FITTINGS
$’000
MOTOR
VEHICLES
$’000
CAPITAL
WORK IN
PROGRESS
$’000
TOTAL
$’000
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)
189,924
644,788
101,221
34,200
747
93,538
1,064,418
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
(3,115)
(16,864)
–
1,064,418
(18,445)
117,158
(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
192,075
(2,907)
439
–
675,387
(19,137)
29,362
(24,421)
112,498
(3,600)
44,367
(37,915)
38,132
(917)
20,048
(9,516)
2,331
(44)
298
(403)
73,559
(810)
53,121
–
1,093,982
(27,415)
147,635
(72,255)
189,607
661,191
115,350
47,747
2,182
125,870
1,141,947
189,607
–
913,655
(252,464)
378,384
(263,034)
112,352
(64,605)
4,679
(2,497)
125,870 1,724,547
(582,600)
–
189,607
661,191
115,350
47,747
2,182
125,870
1,141,947
48
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
14 PROPERTY, PLANT AND EQUIPMENT (continued)
PARENT
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
Movements in the year ended 30 June 2014
Opening net book value
Net additions/transfers
Depreciation charge
Closing net book value
At 30 June 2014
Cost
Accumulated depreciation
Net book value
PLANT AND
EQUIPMENT
$’000
CAPITAL WORK
IN PROGRESS
$’000
TOTAL
$’000
27,496
(21,745)
5,751
5,751
2,873
(2,323)
6,301
30,369
(24,068)
6,301
6,301
2,402
(2,363)
6,340
32,771
(26,431)
6,340
1,781
–
1,781
1,781
(795)
–
986
986
–
986
986
(99)
–
887
887
–
887
29,277
(21,745)
7,532
7,532
2,078
(2,323)
7,287
31,355
(24,068)
7,287
7,287
2,303
(2,363)
7,227
33,658
(26,431)
7,227
Borrowing costs of $765,208 have been capitalised in the current year relating to capital projects (2013: $838,507) using the Group’s
weighted average cost of debt of 6.92% (2013: 6.97%).
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.
49
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
15 INTANGIBLE ASSETS
CONSOLIDATED
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
Net book amount
Movements in the year ended 30 June 2014
Opening net book amount
Exchange differences
Additions
Amortisation charge
Closing net book amount
At 30 June 2014
Cost
Accumulated amortisation
Net book amount
GOODWILL
$’000
CASINO
LICENCES
$’000
COMPUTER
SOFTWARE
$’000
TOTAL
$’000
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
148,381
(11,091)
–
–
217,249
(21,401)
181,945
(3,115)
24,009
(370)
7,440
(5,399)
389,639
(32,862)
189,385
(8,514)
137,290
374,678
25,680
537,648
137,290
–
410,219
(35,541)
74,635
(48,955)
622,144
(84,496)
137,290
374,678
25,680
537,648
Casino
Licence
SKYCITY
Darwin Casino
Contract Term
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.
Adelaide
Casino
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.
50
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
15 INTANGIBLE ASSETS (continued)
Effective 14 February 2014, the ALA and associated agreements were amended to (a) extend Adelaide Casino’s
exclusivity period for casino gaming in South Australia for a further 20 years until 30 June 2035 (during which period no
other casino gaming is permitted, except for interactive gambling); (b) permit the implementation of account based
cashless gaming and ticket in ticket out gaming systems; (c) permit an increase in the number of both gaming machines
and gaming tables; (d) reflect new taxation rates; and (e) implement various other operational improvements. As part of
the agreement with the South Australian Government, SKYCITY Adelaide has agreed to undertake a A$350 million
casino expansion and hotel development project to be completed by 30 June 2019.
These reforms are exclusive to the Group and have therefore been recorded at fair value based on the estimated
incremental benefit of the reforms over the life of the reforms. The fair value has been determined using a discounted
cashflow model falling within level 3 of the fair value hierarchy over the life of the reforms.
Key assumptions used in determining the fair value are as follows:
• Discount rate 13.5%
• Operating margins (net of labour costs, direct costs, comps/commissions and launch marketing) are calculated based
on an internal view of the structural changes to the cost base required to support the incremental revenue and the
expanded property.
• New tax rates:
Non-VIP Electronic Gaming Machines: 41.00% (was 34.41%)
VIP Electronic Gaming Machines: 10.91% (was 34.41%)
Fully Automated Tables: 10.91% (was 0.91%)
Semi Automated Tables: 3.41% (was 0.91%)
Non-VIP Tables: 3.41% (was 0.91%)
VIP Tables: 0.91% (was 0.91%); and
Interstate Tables / International Tables: 0.91% (was 0.91%)
• Increase in number of gaming machines to 1,500 and tables to 200
The asset is amortised over 20 years or 70 years depending on whether the incremental benefit is associated with the
exclusivity period or the full licence period.
Deferred Licence Value included within non-current liabilities will be transferred to property, plant and equipment as the
Adelaide redevelopment is completed.
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.
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.
SKYCITY
Auckland
Casino
SKYCITY
Hamilton
Casino
SKYCITY
Queenstown
Casino
Queenstown Casinos Limited holds a Casino Premises Licence for these 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 section138 of the Gambling Act 2003 (NZ). As the licence was initially granted to the company for nil
consideration, there is no associated carrying value.
SKYCITY
Wharf Casino
(Queenstown)
Otago Casinos Limited holds a Casino Premises Licence for these Queenstown premises. The Casino Premises Licence is
for an initial 25 year term from 11 September 1999. The licence can be renewed for further periods of 15 years pursuant
to section138 of the Gambling Act 2003 (NZ).
51
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
COMPUTER
SOFTWARE
$’000
TOTAL
$’000
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
10,231
4,119
(3,304)
10,231
4,119
(3,304)
11,046
11,046
53,173
(42,127)
53,173
(42,127)
11,046
11,046
15 INTANGIBLE ASSETS (continued)
PARENT COMPANY
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
Net book amount
Movements in the year ended 30 June 2014
Opening net book amount
Additions
Amortisation charge
Closing net book amount
At 30 June 2014
Cost
Accumulated amortisation
Net book amount
52
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
15 INTANGIBLE ASSETS (continued)
(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 4
Goodwill
Casino Licence
2013
Goodwill
Casino Licence
OTAGO CASINOS
LIMITED*
$’000
SKYCITY
HAMILTON*
$’000
SKYCITY
DARWIN
$’000
TOTAL
$’000
–
4,391
4,391
–
–
–
35,786
–
101,504
34,051
137,290
38,442
35,786
135,555
175,732
35,786
–
112,595
37,771
148,381
37,771
35,786
150,366
186,152
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 and Otago Casinos Limited are included within the “Rest of New Zealand” segment in note 3.
(b) Key Assumptions used for Value in Use Calculations of Cash Generating Units
SKYCITY Hamilton
SKYCITY Darwin
EBITDA MARGIN
GROWTH RATE
DISCOUNT RATE
2014
%
35.5
27.3
2013
%
40.2
28.5
2014
%
2.0
3.0
2013
%
2.0
3.5
2014
%
10.0
10.0
2013
%
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.
53
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
16 INVESTMENTS IN ASSOCIATES
The Group previously held a 50% interest in Christchurch Casinos Limited. This interest was sold effective 20 December 2012 for
$80 million cash (including repayment of the loan to Christchurch Hotels Limited of $4.598 million). As a result of this disposal a gain
of $59,000 was recognised in the prior year results. In the current year additional proceeds of $934,000 have been recognised as a
further gain on disposal as a result of the final insurance claim.
(a) 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
17 PAYABLES
Trade payables
Deferred income
Accrued expenses
Employee benefits
Amounts due to subsidiaries (note 30)
CONSOLIDATED
2014
$’000
2013
$’000
75,266
2,245
(1,610)
(75,901)
–
–
–
–
– –
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
21,965
2,600
53,415
41,520
–
18,571
2,917
40,558
43,353
–
– –
– –
4,652
– –
274,171
7,143
266,603
119,500
105,399
278,823
273,746
The fair value of payables, accruals, and amounts due to subsidiaries approximates the carrying amount as they are of a short term nature.
18 CURRENT LIABILITIES – INTEREST BEARING LIABILITIES
Unsecured
United States Private Placement (USPP)
Total unsecured current interest bearing borrowings
Refer note 19 for details concerning the US Private Debt.
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
81,724
81,724
–
–
– –
– –
Fair value disclosures
Details of the fair value of interest bearing liabilities for the Group are set out in note 19.
54
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
19 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
2014
$’000
2013
$’000
2014
$’000
2013
$’000
251,300
249,673
(2,038)
369,142
191,275
(1,611)
498,935
558,806
– –
– –
– –
– –
On 15 March 2005, SKYCITY borrowed NZ$96.571 million, A$74.9 million and US$274.5 million with maturities between 2012 and
2020 from private investors (primarily US based) on an unsecured basis.
In March 2011, additional US$175 million of USPP debt was raised, US$100 million with 10 year maturity and US$75 million with
7 years.
In July and August 2009, USPP borrowings of US$115.5 million were repaid and in March 2012 USPP borrowings of US$85 million,
A$74.9 million and NZ$47.275 million matured and were repaid.
Maturities of US$47 million and NZ$28.169 million in March 2015 are recognised as current liabilities.
Movements in the total USPP debt from 30 June 2013 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 13.
(b) Syndicated Bank Facility
As at 30 June 2014, SKYCITY had in place revolving credit facilities of NZ$285 million (2013: NZ$485 million) comprised of
NZ$200 million maturing October 2018 and NZ$85 million maturing March 2020, plus A$200 million maturing February 2019.
SKYCITY also has a A$75 million (2013: A$75 million) term loan. The syndicated banking facility is provided by ANZ (New Zealand
and Australia), Commonwealth Bank of Australia, Bank of New Zealand Limited, National Australia Bank and Westpac (New Zealand
and Australia).
The facility is a revolving credit facility with the exception of a A$75 million tranche which is a term loan.
(c) Fair values
Fair value of long term fixed rate USPP debt is estimated at NZ$373 million (2013: NZ$398 million) compared to a carrying value of
NZ$333 million (2013: NZ$369 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.
Fair value is calculated using inputs other than quoted prices that are observable for the liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) - this is a level 2 valuation.
55
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
20 SUBORDINATED DEBT – CAPITAL NOTES
Balance at the end of the year
Deferred expense
Net capital notes at the end of the year
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
76,451
10
56,451
24
76,451
10
76,441
56,427
76,441
56,451
24
56,427
Capital notes are a current liability in 2014 and were a non-current liability in 2013.
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%).
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 2014, there were 150 million (2013: 150 million) capital notes on issue, of which 73,549,500 (2013: 93.549 million)
are held as treasury stock by the company. In November 2013, 20 million of capital notes were sold from treasury stock.
The capital notes are listed on the New Zealand stock exchange. As at 30 June 2014, the closing price was $1.021 per $1 note (2013:
$1.0290). The capital notes are carried at amortised cost.
The total fair value is $78m, and is a level 1 valuation, as they are listed on the New Zealand stock exchange.
56
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
21 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 8)
Debited to equity reserves (note 24)
Foreign exchange differences
Closing balance at 30 June
Within 12 months
In excess of 12 months
22 IMPUTATION CREDITS (NEW ZEALAND)
Balances available for use in subsequent reporting periods
Imputation credit account
Franking credit account
As required by relevant tax legislation, the imputation credit account had a credit balance as at 31 March 2014.
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
211
(11,560)
102,679
(10,726)
(937)
(500)
(3,452)
445
(12,573)
101,978
1,466
(2,089)
566
(2,190)
75,715
87,603
87,603
(9,938)
(1,276)
(674)
84,571
656
3,118
(742)
75,715
87,603
(24,772)
100,487
(9,597)
97,200
75,715
87,603
–
(336)
2,199
– –
– –
– –
– –
1,863
1,479 –
384
– –
– –
1,863
(336)
2,199
1,863
67
(771)
2,183
1,479
1,479
1,479
(106)
1,585
1,479
CONSOLIDATED
2014
$’000
2013
$’000
13,523
8,054
2,658
26,615
57
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
23 SHARE CAPITAL
Opening balance of ordinary shares issued
Share rights issued for employee services
Employee share entitlements issued
Treasury shares issued
Net (purchase)/issue of treasury shares
Shares issued under dividend reinvestment plan
2014
SHARES
2013
SHARES
2014
$’000
2013
$’000
576,958,340 576,958,340
–
432,162
(432,162)
–
–
–
746,714
(746,714)
–
5,129,754
729,395
1,238
– –
– –
(13,213)
20,126 –
727,598
1,394
403
582,088,094 576,958,340
737,546
729,395
All ordinary shares rank equally with one vote attached to each fully paid ordinary share.
Included within the number of shares is 6,776,574 treasury shares (2013: 4,085,151) 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 executive long term incentive plan (refer note 28). Treasury shares may be used to issue shares under the
company’s employee incentive plans or upon the exercise of share rights/options.
24 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 - finance costs (net)
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
2014
$’000
2013
$’000
2014
$’000
2013
$’000
(8,766)
(39,810)
(5,595)
(12,708)
(48,576)
(18,303)
(5,595)
(40,294)
35,748
1,375
(13,355)
10,782
96
(3,118)
(8,766)
(5,595)
(12,708)
(27,102)
11,505
(24,213)
(39,810)
(12,708)
– –
– –
– –
– –
– –
– –
– –
– –
– –
– –
– –
(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. Cashflows are in line with the maturity of the hedged items (refer to note 27).
(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.
58
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
24 RESERVES AND RETAINED PROFITS/(LOSSES) (continued)
(b) Retained Profit/(Losses)
Movements in retained profits were as follows:
Balance at the beginning of the year
Profit attributable to shareholders of the company
Dividends
Acquisition of non-controlling interest – refer note 24
Balance at the end of the year
25 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
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
101,799
98,537
(115,421)
–
81,690
127,289
(103,856)
(3,324)
(366,655)
87,291
(115,421)
– –
(338,812)
76,013
(103,856)
84,915
101,799
(394,785)
(366,655)
CONSOLIDATED
2014
$’000
–
–
–
–
– –
2013
$’000
1,704
93
(121)
(1,676)
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 million. The purchase consideration in excess of the carrying value
of the non-controlling interest being $3.324 million is recognised in retained profits.
26 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
2014
$’000
2013
$’000
2014
$’000
2013
$’000
57,461
57,960
46,171
57,685
57,461
57,960
46,171
57,685
115,421
103,856
115,421
103,856
10.00¢
10.00¢
8.00¢
10.00¢
10.00¢
10.00¢
8.00¢
10.00¢
On 13 August 2014, the directors resolved to declare a final dividend of 10 cents per share in respect of the year ended 30 June 2014
(refer to note 33 for further details).
59
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
27 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. The 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 19) 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.
2014
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
3.25
5.00
4.96
7.25
12,056
(249,673)
(102,851)
(76,450)
260,143
–
–
–
–
(31,462)
–
–
(30,766)
–
(7,234)
–
–
(85,460)
–
(50,197)
–
–
–
–
(90,731)
–
–
(113,947)
–
(80,519)
12,056
(249,673)
(333,024)
(76,450)
–
(156,775)
(31,462)
(38,000)
(135,657)
(90,731)
(194,466)
(647,091)
Weighted average debt interest rate**
6.75%
60
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
27 FINANCIAL RISK MANAGEMENT (continued)
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
2013
Cash and deposits
Advance to Christchurch Hotels
Bank borrowings
US Private Placement
Capital notes (NZ)
IRS/CCIRS*
2.50
–
4.85
5.21
7.25
10,196
–
(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)
10,196
–
(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%
* Interest rate swaps and cross-currency interest rate swaps, notional principal amounts.
For both 2014 and 2013, capital notes were the only interest-bearing debt within the parent entity.
The parent had no derivatives as at 30 June 2014 (2013: nil).
** As at 30 June, including the impact of interest rate hedging.
(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.
CONSOLIDATED
INTEREST RATE RISK
FOREIGN EXCHANGE RISK
30 JUNE 2014
NZD/AUD movements
NZ interest rate movement
Australian interest rate movement
-100bps
+100bps
-5%
+5%
PROFIT
$’000
EQUITY
$’000
PROFIT
$’000
EQUITY
$’000
PROFIT
$’000
EQUITY
$’000
PROFIT
$’000
EQUITY
$’000
–
1,799
286
–
(5,759)
(6,728)
–
(1,799)
(286)
–
5,465
6,368
(305)
–
–
8,624
–
–
338
–
–
(7,803)
–
–
CONSOLIDATED
INTEREST RATE RISK
FOREIGN EXCHANGE RISK
30 JUNE 2013
NZD/AUD movements
NZ interest rate movement
Australian interest rate movement
-100bps
+100bps
-5%
+5%
PROFIT
$’000
EQUITY
$’000
PROFIT
$’000
EQUITY
$’000
PROFIT
$’000
EQUITY
$’000
PROFIT
$’000
EQUITY
$’000
–
1,037
215
–
(6,777)
(7,333)
–
(1,037)
(215)
–
6,534
6,865
8
–
–
14,522
–
–
(9)
–
–
(13,139)
–
–
61
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
27 FINANCIAL RISK MANAGEMENT (continued)
(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.
(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$285
million and A$200 million (2013: NZ$485 million) were drawn down by NZ$137 million and A$30 million as at 30 June 2014 (2013:
$102 million). The bank facility term tranche of A$75 million was fully drawn.
CONSOLIDATED - AT 30 JUNE 2014
Bank facility
Capital notes
US Private Placement
Total debt facilities
Payables
Total drawn debt
Future contracted interest on drawn debt
Future contracted interest on CCIRS/IRS
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
–
–
–
–
75,380
–
14,333
5,934
–
76,450
81,724
158,174
–
158,174
11,278
5,134
–
–
–
–
–
–
30,766
414,615
–
85,460
165,481
–
135,074
580,096
76,450
333,024
30,766
500,075
300,555
989,570
–
–
17,770
8,476
–
30,766
17,254
7,849
–
254,652
26,417
12,856
–
215,555
14,827
10,806
75,380
659,147
101,879
51,055
62
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
27 FINANCIAL RISK MANAGEMENT (continued)
CONSOLIDATED - AT 30 JUNE 2013
Bank facility
Capital notes
US Private Placement
Total debt facilities
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
–
–
–
–
–
–
–
–
–
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
On 11 February 2014, SKYCITY converted a NZ$200 million tranche of its revolving credit bank facilities to A$200 million and
extended the maturity date from February 2017 to February 2019. SKYCITY also extended a NZ$85 million revolving credit tranche
from March 2019 to March 2020 and A$75 million term loan tranche from March 2019 to March 2020.
(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).
CONSOLIDATED - AT 30 JUNE 2014
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
LEVEL1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
–
–
–
–
–
–
769
15,889
16,658
415
39,171
39,586
–
–
–
–
–
–
TOTAL
BALANCE
$’000
769
15,889
16,658
415
39,171
39,586
63
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
27 FINANCIAL RISK MANAGEMENT (continued)
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
LEVEL1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
–
–
–
–
–
–
692
33,910
34,602
68
30,825
30,893
–
–
–
–
–
–
TOTAL
BALANCE
$’000
692
33,910
34,602
68
30,825
30,893
Further details on derivatives are provided in note 13.
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 and cross-currency interest rates 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.
• At year end the parent company has no derivatives (2013: nil).
(e) Financial instruments by category
CONSOLIDATED - AT 30 JUNE 2014
Cash and bank balances
Trade receivables
Sundry receivables
Derivative financial instruments – assets
Derivative financial instruments – liabilities
Interest bearing liabilities
Capital notes
Payables
Total
64
LOANS AND
RECEIVABLES
$’000
ASSETS / (LIABILITIES)
AT FAIR VALUE THROUGH THE
INCOME STATEMENT
$’000
DERIVATIVES USED
FOR HEDGING
$’000
LIABILITIES
AT AMORTISED COST
$’000
54,052
6,216
9,713
–
–
–
–
–
69,981
–
–
–
769
(415)
–
–
–
354
–
–
–
15,889
(39,171)
–
–
–
(23,282)
–
–
–
–
–
(498,935)
(76,441)
(75,134)
(650,510)
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
27 FINANCIAL RISK MANAGEMENT (continued)
CONSOLIDATED - AT 30 JUNE 2013
Cash and bank balances
Trade receivables
Sundry receivables
Derivative financial instruments – assets
Derivative financial instruments – liabilities
Interest bearing liabilities
Capital notes
Payables
Total
(f) Capital Risk Management
LOANS AND
RECEIVABLES
$’000
ASSETS / (LIABILITIES)
AT FAIR VALUE THROUGH THE
INCOME STATEMENT
$’000
DERIVATIVES USED
FOR HEDGING
$’000
LIABILITIES
AT AMORTISED COST
$’000
51,131
11,512
5,421
–
–
–
–
–
68,064
–
–
–
692
(68)
–
–
–
624
–
–
–
33,910
(30,825)
–
–
–
3,085
–
–
–
–
–
(558,806)
(56,427)
(59,129)
(674,362)
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
2014
2.3 x
6.4 x
2013
2.0 x
6.2 x
These types of ratios are consistent with the financial covenants in the Group’s various funding facilities. Actual gearing as at 30 June
2014 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.
65
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
28 SHARE BASED PAYMENTS
2008 Executive Long Term Incentive Plan
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.
2009 and 2013 Chief Executive Officer Long Term Incentive Plans and 2009 Executive Long Term Incentive Plan
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.
As at 30 June 2014, the interest free loan under the CEO Long Term Incentive Plans is $8,319,048 (2013: $4,764,895) and under the
Executive Long Term Incentive Plan total $10,183,719 (2013: $9,109,306).
Movements in the number of share rights outstanding are as follows:
GRANT DATE
EXPIRY DATE
CONSOLIDATED AND PARENT – 2014
02/09/09
31/08/10
02/03/11
31/08/11
29/08/12
28/08/13
Total
02/09/13
31/08/14
02/03/15
31/08/15
29/08/16
28/08/17
CONSOLIDATED AND PARENT – 2013
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
408,263
1,082,195
1,394,291
705,200
999,800
–
–
–
–
–
–
2,851,758
–
(746,714)
–
–
–
–
(408,263)
(15,578)
–
–
319,903
319,903
(250,000) 1,144,291 1,144,291
–
670,200
(35,000)
–
(235,000)
764,800
–
(285,000) 2,566,758
4,589,749
2,851,758
(746,714) (1,228,841) 5,465,952
1,464,194
01/07/12
02/09/13
31/08/14
02/03/15
31/08/15
29/08/16
78,000
902,425
1,165,945
1,394,291
760,200
–
–
–
–
–
–
1,034,800
–
(432,162)
–
–
–
–
(78,000)
(62,000)
(83,750)
–
(55,000)
(35,000)
–
408,263
1,082,195
1,394,291
705,200
999,800
–
408,263
–
–
–
–
4,300,861
1,034,800
(432,162)
(313,750)
4,589,749
408,263
01/07/08
02/09/09
31/08/10
02/03/11
31/08/11
29/08/12
Total
66
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
28 SHARE BASED PAYMENTS (continued)
The weighted average remaining contractual life of options and rights outstanding at the end of the period was 2.08 years
(2013: 1.83 years).
Fair Value of Share Rights Granted
The assessed fair value at grant date of the rights granted on 28 August 2013 is $1.14 (29 August 2012 is $1.22). This has been
calculated using the single index model.
The valuation inputs for the rights granted on 28 August 2013 included:
(a) rights are granted for no consideration
(b) exercise price: nil (2013: nil)
(c) grant date: 28 August 2013 (2013: 29 August 2012)
(d) expiry date: 28 August 2017 (2013: 29 August 2016)
(e) share price at valuation date $3.93 (2013: $3.84)
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.
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
1,238
1,238
1,393
1,393
1,238
1,238
1,393
1,393
Rights issued under Share Rights Plans
29 RELATED PARTY TRANSACTIONS
There are no bad or doubtful debts associated with any related party of the Group or parent entity (2013: nil).
(a) Key Management and Personnel Compensation
Key management compensation for the years ended 30 June 2014 and 2013 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.
67
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
29 RELATED PARTY TRANSACTIONS (continued)
2014
2013
SHORT-TERM
BENEFITS
$’000
SHARE-BASED
PAYMENTS
$’000
10,685
11,263
1,291
1,270
TOTAL
$’000
11,976
12,533
(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.
(c) Subsidiaries
Interests in subsidiaries are set out in note 30.
(d) Parent
The majority of the parent entity’s transactions are with its subsidiaries including the payment of dividends of $123.0 million (2013:
$113.5 million) and provision of employee services of $13.8 million (2013: $16.0 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.
30 SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 2(b):
All wholly-owned subsidiary companies and significant partly-owned subsidiaries have balance dates of 30 June.
EQUITY HOLDING
NAME OF ENTITY
COUNTRY OF
INCORPORATION
CLASS OF
SHARES
2014
%
New Zealand International Convention Centre Limited
Otago Casinos Limited
Queenstown Casinos Limited
Sky Tower Limited
SKYCITY Action Management Limited
SKYCITY Auckland Holdings Limited
SKYCITY Auckland Limited
SKYCITY Casino Management Limited
SKYCITY Hamilton Limited
SKYCITY International Holdings Limited
SKYCITY Investments Australia Limited
68
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100 –
100
100
100
100
100
100
100
100
100
2013
%
100
100
100
100
100
100
100
100
100
100
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014
30 SUBSIDIARIES (continued)
NAME OF ENTITY
SKYCITY Investments Christchurch Limited
SKYCITY Investments Queenstown Limited
SKYCITY Management Limited
SKYCITY Metro Limited
SKYCITY Wellington Limited
Toptown Nominees Limited
SKYCITY Adelaide Pty Limited
SKYCITY Australia Finance Pty Limited
SKYCITY Australian Limited Partnership
SKYCITY Australia Pty Limited
SKYCITY Darwin Pty Limited
SKYCITY Treasury Australia Pty Limited
SKYCITY Investment Holdings Limited
31 CONTINGENCIES
EQUITY HOLDING
COUNTRY OF
INCORPORATION
CLASS OF
SHARES
2014
%
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
–
100
100
100
100
100
100
100 –
2013
%
100
100
100
100
100
100
100
100
100
100
100
100
There are no significant contingences at year end (2013: nil).
32 COMMITMENTS
Capital Commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as set out below.
Property, plant and equipment
Operating Lease Commitments
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
17,084
15,805
– –
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:
CONSOLIDATED
PARENT
2014
$’000
2013
$’000
2014
$’000
2013
$’000
Within one year
Later than one year but not later than five years
Later than five years
Commitments not recognised in the financial statements
5,561
15,813
293,627
7,191
16,216
310,051
315,001
333,458
– –
– –
– –
– –
69
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
32 COMMITMENTS (continued)
This 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.
33 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Profit for the year
Non-controlling interest
Depreciation and amortisation
Finance costs net
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 in receivables and prepayments
Increase in inventories
Increase/(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
2014
$’000
2013
$’000
2014
$’000
2013
$’000
98,537
–
80,769
48,049
(934)
1,238
(995)
–
–
1,081
(455)
14,102
(11,888)
510
759
–
127,289
93
76,784
49,263
(59)
1,394
(947)
–
(635)
7,135
(540)
(1,787)
3,032
4,230
(8,305)
–
87,291
– –
5,667
4,730
–
1,238
–
(122,969)
– –
51
– –
5,077
384
– –
– –
(7,593)
76,013
5,593
4,178
–
1,394
–
(113,484)
100,351
(71,022)
1,479
(29,754)
Net cash inflow from operating activities
230,773
256,947
(26,124)
(25,252)
33 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
Dividend
On 13 August 2014, the directors resolved to provide for a final dividend to be paid in respect of the year ended 30 June 2014. The
100% imputed, unfranked dividend of 10 cents per share will be paid on 3 October 2014 to all shareholders on the company’s register
at the close of business on 19 September 2014.
70
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2014 RECONCILIATION
RECONCILIATION OF REPORTED RESULTS TO NORMALISED RESULTS
2014
2013
REVENUE
$’000
EBITDA
$’000
EBIT
$’000
NPAT
$’000
REVENUE
$’000
EBITDA
$’000
Reported
Adelaide transformation costs
NZICC
Strategic project and development costs
Restructuring cost
Profit from sale of Christchurch
Auckland transformation costs
Total adjustments
Adusted
Provision for IB debtors
International business at theoretical
Normalised Christchurch
Results from Christchurch Casino
902.5
–
–
–
–
–
–
–
902.5
–
24.8
927.3
–
256.5
4.3
0.3
1.4
2.3
–
0.9
9.2
265.7
0.2
21.7
175.7
4.3
0.3
1.4
2.3
–
2.1
10.4
186.1
0.2
21.7
98.5
3.0
2.8
1.0
1.7
(0.9)
1.5
9.1
107.6
0.2
15.4
947.8
–
–
–
–
–
–
–
947.8
–
0.2
293.9
–
–
1.6
1.6
–
–
3.2
297.1
2.4
3.3
287.6
208.0
123.2
–
–
–
948.0
(2.3)
302.8
(2.3)
Normalised
927.3
287.6
208.0
123.2
945.7
300.5
224.5
EBIT
$’000
217.1
–
–
1.6
1.6
–
0.8
4.0
NPAT
$’000
127.3
–
2.0
1.4
1.1
(0.1)
0.6
5.0
221.1
132.3
2.4
3.3
226.8
(2.3)
1.7
2.3
136.3
(2.3)
134.0
•
SKYCITY’s objective of producing normalised financial information is to provide data that is useful to the investment community in
understanding the underlying operations of the Group
• Gaming Revenue figures reflect gaming win (inclusive of gaming GST). This facilitates Australasian comparisons and is consistent
with the treatment adopted by major Australian casinos
• Non-gaming Revenues are net of GST
•
•
Total Revenues are gaming win plus Non-gaming Revenues
Key Adjustments are:
−
−
−
−
−
−
Adelaide transformation costs – business transformation and launch costs for Adelaide
NZICC – Interest on purchase of New Zealand International Convention Centre (NZICC) land bank calculated using the
Group’s average cost of debt of 6.92% on an average balance of $52m and other costs specific to this project
Strategic project and development costs - The Wharf acquisition, Brisbane, Gold Coast, Philippines and other miscellaneous
items
Restructuring costs – costs associated with changing the staffing structures designed to create future efficiencies
Profit from sale of Christchurch – insurance recoveries from 2011 earthquake damage
Auckland transformation costs – business transformation and launch costs related to Auckland facilities
•
IB win rate at 0.97% for FY14 (FY13: 1.35%).
Normalisation adjustments have been calculated in a consistent manner in FY14 and FY13.
71
SKYCITY ENTERTAINMENT GROUP LIMITEDSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
AND OTHER DISCLOSURES
FOR THE YEAR ENDED 30 JUNE 2014
72
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CORPORATE GOVERNANCE
73
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM 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 2014, the board comprised
seven non-executive directors and a managing director. Biographical
details of individual directors are set out on pages 22 and 23 of this
annual report.
As at the date of this annual report, the board had approved the
appointment of an additional non-executive director, Richard Tsiang,
to replace Rod McGeoch (who will be retiring from the board
before the company’s upcoming 2014 Annual Meeting), but his
appointment remains subject to approval by regulatory authorities
in each of the jurisdictions in which the company operates its
gaming activities. Biographical details of Mr Tsiang are set out on
page 23 of this annual report.
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.
74
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CORPORATE GOVERNANCE
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.
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 June 2014 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 Office 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 on pages 22 and 23 of this annual report 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 2014.
Eight 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
Chris Moller
Bruce Carter
Rod McGeoch
Brent Harman
Peter Cullinane
Sue Suckling
Richard Didsbury
Nigel Morrison
18 December 2008
12 October 2010
20 September 2002
18 December 2008
26 March 2008
9 May 2011
20 July 2012
18 December 2008
8
8
8
6
8
7
7
7
8
1
1
1
1
1
1
1
1
1
9
9
9
7
9
8
8
8
9
4
4
4
3
-
-
-
-
-
6
6
-
-
6
-
5
-
-
1
1
1
1
1
1
1
1
1
4
4
-
-
-
4
-
4
-
75
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
CORPORATE GOVERNANCE
3.
INTEGRITY, ETHICAL BEHAVIOUR AND DIVERSITY
SKYCITY actively promotes ethical and responsible behaviour and
decision-making by:
•
•
clarifying and promoting observance of its guiding values;
clarifying the standards of ethical behaviour required of
company directors and key executives (that is, officers and
employees who have the opportunity to materially influence
the integrity, strategy and operations of the business and its
financial performance) and encouraging the observance of
those standards; and
•
communicating the requirements relating to trading in the
company’s securities by directors and employees.
The 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.
•
•
•
•
continue to strive to ensure strong female candidates are
identified in the recruitment process for all board and senior
executive roles;
implement an annual audit of gender pay parity as a core
function of the company’s annual remuneration review cycle;
illustrate the company’s commitment to the Rainbow
community by achieving Rainbow Tick accreditation; and
roll-out inclusiveness training to all management.
As at 30 June 2014, 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
47%
17%
SENIOR
EXECUTIVE
30%
BOARD OF
DIRECTORS
14%
Comparatively, the proportion of women at SKYCITY (including
amongst directors and officers) as at 30 June 2013 was as follows:
SENIOR EXECUTIVE
(CEO’S DIRECT
REPORTS AND
SITE GENERAL
MANAGERS ONLY)
TOTAL
WORKFORCE
47%
19%
SENIOR
EXECUTIVE
29%
BOARD OF
DIRECTORS
14%
SKYCITY performed well against the measurable objectives set by
the board for the 2013/2014 financial year (as reported in the
company’s 2013 annual report):
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 is proud to have a diverse workforce and believes it offers
an opportunity to enhance the company’s competitive advantage
and provide long term sustainable business success. The company is
committed to an inclusive workplace that enhances and promotes
workplace diversity across the business.
•
•
The company recognises that to deliver outstanding service and
breakthrough solutions to its diverse customer community, it too
must be diverse. SKYCITY values and respects the contributions,
ideas and experiences of people from all backgrounds.
The board has set measurable objectives for the 2014/2015
financial year to ensure SKYCITY’s commitment to diversity is
maintained. SKYCITY will:
76
a full gender pay equity profile was completed on all salaried
roles. Whilst there were no issues of material concern,
improvements to reporting and processes were made to ensure
greater manager awareness of gender pay variations and trends
and better auditing of gender pay trends prior to approval of
final reviews. These changes, along with enhanced reporting
functionality, resulted in SKYCITY being recognised as a Silver
Award winner in the 2014 YWCA Equal Pay Awards;
SKYCITY’s internal talent pool of diverse qualified candidates
has continued to grow over the past year. The company’s
recruitment team has expanded its advertising into diverse
media, including the Rainbow community. SKYCITY is also
working with specialist organisations such as DiverseNZ,
Rainbow Tick, the Equal Employment Opportunities (EEO)
Trust, the BEST Pasifika Leadership Academy and the UN
Global Women’s Initiative to form and roll out focused
development programmes for under-represented groups at
SKYCITY; and
•
female candidates were identified and considered for all senior
executive appointments during the year.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CORPORATE GOVERNANCE
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.
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 2013/2014
financial year are set out in note 6 to the financial statements.
Fees for audit and tax compliance work in the 2013/2014 financial
year represent 58% 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
meetings to answer any shareholder questions concerning their
audit and external audit report.
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 and
board on the effectiveness of the company’s management of its
material business risks, with the most recent report being provided
in August 2014.
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
77
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CORPORATE GOVERNANCE
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 Acting Chief Financial Officer
in August 2014.
The company maintains business continuity, material damage and
liability insurance covers to ensure that the earnings of the business
are well protected from adverse circumstances.
8. PERFORMANCE EVALUATION
The board and committee charters require an evaluation of the
board and the committee performance on an annual basis. The
Governance and Nominations Committee determines and oversees
the process for evaluation which includes assessment of the role
and responsibilities, performance, composition, structure, training,
and membership requirements of the board and its committees.
The performance review of the board for 2013 was conducted by
the chairman of the board (Chris Moller) and completed in April
2014. 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 2014.
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
•
•
•
•
78
•
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
by PricewaterhouseCoopers regarding the relativity of SKYCITY’s
key executive remuneration, by role, in respect to a key
comparator group.
Non-Executive Director Remuneration
Shareholders at the annual meeting determine the total
remuneration available to non-executive directors.
At the 2011 Annual Meeting, shareholders approved, effective
from 1 July 2011, a total remuneration amount for non-executive
directors of $1,300,000 per annum (plus GST, if any).
Current annual fees are $250,000 for the chairperson of the board,
$150,000 for the deputy chairperson and $120,000 each for other
non-executive directors. In addition, each ordinary member of the
Audit and 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.
To continue to attract and retain qualified, highly capable directors
from a pan-Australasian talent pool for the purpose of driving value
and maintaining the highest standards of corporate governance on
behalf of shareholders, it is proposed to seek approval from
shareholders to increase the maximum total remuneration amount
for the non-executive directors to $1,365,000 (plus GST, if any) at
the company’s upcoming Annual Meeting in October 2014. In
seeking such approval, the board has considered a paper prepared
by PricewaterhouseCoopers for the Remuneration and Human
Resources Committee – the purpose of which was to benchmark
fees paid by SKYCITY to non-executive directors with a relevant
comparator group of Australian/New Zealand large listed
companies. If approved, it is proposed that:
•
•
the annual fees be $275,000 for the chairperson of the board,
$157,500 for the deputy chairperson of the board and
$126,000 each for other non-executive directors; and
the fee for the chair of the Remuneration and Human
Resources Committee be increased to $35,000 per annum (in
line with the fee for the chair of the Audit and Financial Risk
Committee), with no change to the fees for each ordinary
member of the Audit and Financial Risk Committee,
Remuneration and Human Resources Committee or Corporate
Social Responsibility Committee or for chairing either the Audit
and Financial Risk Committee or Corporate Social
Responsibility Committee.
For those directors who were in office on or before 1 May 2004,
SKYCITY’s constitution permits the company, at the discretion of
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CORPORATE GOVERNANCE
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.
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 Chief Executive Officer Long Term
Incentive (LTI) Plans referred to below that would otherwise be
eligible to vest during the notice period will vest subject to the rules
of the Plans.
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.
Effective from 18 October 2013, in the event of termination of
Mr Morrison’s employment due to medical incapacity, permanent
disability or death, any unvested LTI entitlements under the 2013
Chief Executive Officer Long Term Incentive Plan referred to below
will vest to Mr Morrison on a proportionate straight-line basis
(calculated taking into account the length of time from the
acquisition of those LTI entitlements until the cessation of Mr
Morrison’s employment as a proportion of the restrictive period
referred to below, excluding any notice period where the company
elects to pay remuneration in lieu of notice) and will not be subject
to satisfaction of the applicable performance hurdles.
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 Plans
The company operates two LTI plans in favour of Mr Morrison – the
2009 Chief Executive Officer Long Term Incentive Plan approved
by shareholders at the company’s 2009 Annual Meeting and the
2013 Chief Executive Officer Long Term Incentive Plan approved
by shareholders at the company’s 2013 Annual Meeting (together
the Plans). Under the Plans:
•
•
•
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).
Except as amended by a resolution approved at the company’s
2013 Annual Meeting, 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
79
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CORPORATE GOVERNANCE
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 was on 8 November 2013 (with an effective
acquisition date of 28 August 2013) under the 2013 Chief
Executive Officer Long Term Incentive Plan and are currently held
on behalf of Mr Morrison by a trustee. Mr Morrison’s LTI
entitlements and shareholding in the company are detailed on
pages 86 and 89 of this annual report.
Remuneration
During the 2013/2014 financial year Mr Morrison received a base
salary of $1,850,000 and a performance-related STI payment of
$1,387,313 relating to the prior 2012/2013 financial year. 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.
In relation to the 2013/2014 financial year, the board assessed that
Mr Morrison was not eligible for his financial STI, but that he had
achieved a number of specific strategic, non-financial targets and, in
addition, achieved an extension to the Auckland casino venue
licence, tax certainty in New Zealand and a number of critically
important regulatory reforms in South Australia. Accordingly, the
board resolved unanimously to award Mr Morrison a bonus of
$975,000, which was paid in August 2014.
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, a percentage 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. As was the case
with the Chief Executive Officer, the lower than budget profit
performance for the 2013/2014 financial year resulted in a number
of executives not achieving their financial STI targets.
For the year ended 30 June 2014, a total of $1,158,002 was paid
under the Senior Executive STI Plan to eleven executives – an
amount equivalent to 20.5% 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 2014, 311
salaried staff participated in the Salaried STI Plan. Based on
achievement of individual and financial targets, 290 staff received
an average STI payment of 9% 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, 444 SKYCITY salaried personnel were paid incentives
totalling $3,112,587 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 2014/2015 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 Chief
Executive Officer Long Term Incentive Plan approved by
shareholders for the Chief Executive Officer at the company’s
2009 Annual Meeting.
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.
80
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 CORPORATE GOVERNANCE
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 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 15 August 2014 are set out on page 89 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.
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 2013/2014
financial year.
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.
81
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM SHAREHOLDER INFORMATION
TWENTY LARGEST SHAREHOLDERS AS AT 15 AUGUST 2014
JP Morgan Chase Bank NA
JP Morgan Nominees Australia Limited
1. HSBC Nominees (New Zealand) Limited A/C State Street
2.
3.
4. National Nominees Limited
5. HSBC Nominees (New Zealand) Limited
6. HSBC Custody Nominees (Australia) Limited
7. Citibank Nominees (New Zealand) Limited
8. National Nominees New Zealand Limited
9. RBC Investor Services Australia Nominees Pty Limited
10. Accident Compensation Corporation
11. New Zealand Superannuation Fund Nominees Limited
12. BNP Paribas Nominees (NZ) Limited
13. BNP Paribas Noms Pty Ltd
14. Private Nominees Limited
15. Citicorp Nominees Pty Limited
16. ANZ Wholesale Australasian Share Fund
17. Public Trust
18. Citicorp Nominees Pty Limited
19. Masfen Securities Limited
20. RBC Investor Services Australia Nominees Pty Limited
NUMBER OF
SHARES
%
OF SHARES
47,990,641
40,794,473
39,567,297
38,689,837
35,779,705
28,939,040
26,675,935
22,280,288
18,013,407
15,055,638
10,337,946
10,333,771
9,429,557
8,116,698
7,760,196
7,144,063
5,953,485
5,444,395
4,956,260
4,769,164
8.25%
7.01%
6.80%
6.65%
6.15%
4.97%
4.58%
3.83%
3.10%
2.59%
1.78%
1.78%
1.62%
1.39%
1.33%
1.23%
1.02%
0.94%
0.85%
0.82%
Total
388,031,796
66.66%
Total shares on issue as at 15 August 2014 were 582,088,094 of which 6,776,574 were held in aggregate by Public Trust on behalf
of eligible and future participants pursuant to the 2009 and 2013 Chief Executive Officer Long Term Incentive Plans and Executive
Long Term Incentive Plan. No shares were held by the company directly as treasury stock.
82
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 SHAREHOLDER INFORMATION
DISTRIBUTION OF ORDINARY SHARES AND REGISTERED SHAREHOLDINGS AS AT 15 AUGUST 2014
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
> 100,000
Total
NUMBER OF
SHAREHOLDERS
NUMBER
OF SHARES
3,866
9,237
3,469
3,038
1,545,657
25,441,738
24,626,989
69,387,210
163 461,086,500
19,773 582,088,094
As at 15 August 2014, there were 1,146 shareholders (with a total of 65,065 shares) holding less than a marketable parcel of shares
under the ASX Listing Rules, based on the closing share price of A$3.45. The ASX Listing Rules define a marketable parcel of shares
as a parcel of shares of not less than A$500.
SUBSTANTIAL SECURITY HOLDERS
In accordance with section 26(1) of the Securities Markets Act 1988, the following persons had given notice as at 15 August
2014 that they were substantial security holders in the company and held a relevant interest in the number of ordinary shares
shown below.
DATE OF
SUBSTANTIAL
SECURITY
NOTICE
RELEVANT
INTEREST IN
NUMBER OF
SHARES
% OF SHARES
HELD AT
DATE OF
NOTICE
BlackRock Group (BlackRock Inc. and certain subsidiaries)
25 June 2014
46,914,904
8.06%
No further substantial security holder notices had been received as at 8 September 2014.
83
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
DIRECTOR AND EMPLOYEE REMUNERATION
REMUNERATION OF DIRECTORS
EMPLOYEE REMUNERATION
Remuneration paid to, and other benefits received by,
non-executive directors for services in their capacity as
directors of SKYCITY Entertainment Group Limited during
the year ended 30 June 2014 are as listed below:
BOARD AND COMMITTEE FEES
OTHER
Chris Moller (Chairman)
Bruce Carter (Deputy Chairman)
Rod McGeoch
Brent Harman
Peter Cullinane
Sue Suckling
Richard Didsbury
$250,000
$185,000
$135,000
$145,000
$145,000
$135,000
$135,000
$2,449.20(1)
$705.45(1)
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
2014, are listed below.
Remuneration includes salary, short term cash bonuses and, where
applicable, health insurance premiums and the value of share
rights and shares expensed during the year ended 30 June 2014.
Remuneration shown below also includes settlement payments
and payments in lieu of notice with respect to certain employees
upon their departure from the company.
The figures shown are gross amounts and exclude GST where applicable.
(1) Being premiums paid to SKYCITY’s health insurance provider during
the period for the relevant director, who 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).
In addition to the amounts above:
• SKYCITY meets the expenses incurred by directors in relation
to company matters, which are incidental to the performance
of their duties, including travel; and
• SKYCITY paid $2,400 (plus GST) and $4,800 (pus GST) to
Brent Harman and Richard Didsbury respectively during the
year ended 30 June 2014 in connection with consultancy
services provided by each of those directors to SKYCITY in
relation to the New Zealand International Convention Centre,
which were provided as additional services outside of their
capacity as a director of the company.
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
2013/2014 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.
REMUNERATION
$100,000–$109,999
$110,000–$119,999
$120,000–$129,999
$130,000–$139,999
$140,000–$149,999
$150,000–$159,999
$160,000–$169,999
$170,000–$179,999
$180,000–$189,999
$190,000–$199,999
$200,000–$209,999
$210,000–$219,999
$220,000–$229,999
$230,000–$239,999
$240,000–$249,999
$250,000–$259,999
$260,000–$269,999
$290,000–$299,999
$310,000–$319,999
$330,000–$339,999
$350,000–$359,999
$410,000–$419,999
$440,000–$449,999
$480,000–$489,999
$490,000–$499,999
$540,000-$549,999
$600,000-$609,999
$650,000-$659,999
$670,000-$679,999
$690,000-$699,999
$760,000-$769,999
$790,000-$799,999
$920,000-$929,999
Total
84
EMPLOYEES
40
31
22
21
12
8
6
8
4
10
1
1
3
2
1
1
2
1
2
1
2
1
1
1
1
1
2
2
1
1
1
2
1
194
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014
DIRECTORS’ DISCLOSURES
Peter Cullinane
APN News & Media Limited
Assignment Group New Zealand Limited
Lewis Road Butters Limited
Lewis Road Creamery Limited
Low Flying Kiwis Limited
STW Communications Group Limited
Sue Suckling
Acemark Holdings Limited
Director*
Director
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Managing
Director
Barker Fruit Processors and certain subsidiaries Chair
Chair
Callaghan Innovation
Chair
ECL Group Limited
Chair
Jacobsen Pacific Limited
Director
New Zealand Health Innovation Hub
Chair
New Zealand Qualifications Authority
Director
Oxford Clinic Hospital Limited
Director
Oxford Health Group Limited
Director
Restaurant Brands New Zealand Limited
Member
Takeovers Panel
Richard 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
Director
Director
Trustee
Trustee
Director
Chair
Director
Director
Director
The following details included in the Interests Register as at 30
June 2013, or entered during the year ended 30 June 2014, have
been removed during the year ended 30 June 2014:
• Chris Moller is no longer Chair of New Zealand Cricket (Inc.) or
a director of ICC Development (International) Limited or the
International Cricket Council.
• Rod McGeoch is no longer a consultant to the G. R. Media
Holdings Limited Banking Syndicate.
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 2014
(notices given by directors during the year ended 30 June 2014
are marked with an asterisk):
Chris Moller (Chairman)
Cricket World Cup 2015 Ltd
Meridian Energy Limited
New Zealand Transport Agency
Westpac New Zealand Limited
Observer*
Chair
Chair
Director
Chair
Director
Bruce Carter (Deputy Chairman)
ASC Pty Limited
Badge Management Pty Limited
Bank of Queensland Limited and
Director*
certain subsidiaries
Director*
BBRC Funds Management Pty Ltd
Director
Cobbadah Pty Limited
Director
Eudunda Farmers Limited
Consultant
Ferrier Hodgson
Director*
Fortis Ago Pty Ltd
Director
Genesee & Wyoming Australia Pty Limited
RSC Nominees Pty Limited
Director
Stichting Administratiekantoor Manadel (Holland) Director*
Territory Insurance Office
Chair
Rod McGeoch
BGP Holdings plc (Malta)
BGP Investments S.a.r.l (Luxembourg)
Destination New South Wales Limited
McGeoch Holdings Pty Limited
MediaWorks Holdings Limited
MediaWorks Investments Limited and
certain subsidiaries
Ramsay Health Care Limited
Sydney Cricket and Sports Ground Trust
Transfusion Services Pty Limited
Vantage Private Equity Growth Limited
Brent Harman
Harman Consulting Limited
Harman Investments Limited
Chair
Chair
Director
Chair
Chair*
Director*
Director
Trustee
Consultant
Chair
Director and
Shareholder
Director and
Shareholder
• Bruce Carter is no longer a director of Invest in South Australia.
• Peter Cullinane is no longer a director of The Antipodes Water
Company Limited.
85
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
DIRECTORS’ DISCLOSURES
DIRECTORS’ AND OFFICERS’ INDEMNITIES
Indemnities have been given to directors and senior managers of the company and its subsidiaries to cover acts or omissions of those
persons in carrying out their duties and responsibilities as directors and senior managers.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARE TRANSACTIONS
Directors disclosed, pursuant to section 148 of the New Zealand Companies Act 1993, the following acquisitions and disposals of
relevant interests in SKYCITY shares during the period to 30 June 2014:
DATE OF
ACQUISITION/
DISPOSAL
DURING PERIOD
CONSIDERATION
SHARES
ACQUIRED/
(DISPOSED)
Nigel Morrison
8 November 2013 NZ$5,000,000 1,279,258(1)
(1) Shares acquired under the 2013 Chief Executive Officer Long Term Incentive Plan and held by Public Trust.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARES AND CAPITAL NOTES
Directors disclosed the following relevant interests in SKYCITY shares as at 30 June 2014:
Chris Moller (Chairman)
Bruce Carter (Deputy Chairman)
Rod McGeoch
Brent Harman
Peter Cullinane
Sue Suckling
Richard Didsbury
Nigel Morrison
(1) Shares held by FNZ Custodians Limited.
(2) Shares held by Tarquay Pty Limited on trust for Tarquay Superannuation Fund.
(3) Shares held by McGeoch Holdings Pty Limited.
(4) Shares held by Forbar Nominees Limited.
(5) Shares held by Investment Custodial Services Limited.
(6) Shares held by Perpetual Limited.
(7) Shares acquired under the 2009 and 2013 Chief Executive Officer Long Term Incentive Plans and held by Public Trust.
SHARES
BENEFICIALLY HELD
61,915(1)
42,477(2)
69,091(3)
30,000(4)
10,000(5)
29,250
30,714
5,000
1,112,089
82,233(6)
2,502,492(7)
86
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014
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 20 of the financial statements.
As at 15 August 2014, SKYCITY was the holder of 73,549,500 capital notes as treasury stock. The capital notes held by SKYCITY
are not included in the table below.
TWENTY LARGEST CAPITAL NOTEHOLDERS AS AT 15 AUGUST 2014
Investment Custodial Services Limited
1. FNZ Custodians Limited
2. Masfen Securities Limited
3. Custodial Services Limited
4. Forsyth Barr Custodians Limited
5. Custodial Services Limited
6. FNZ Custodians Limited
7. Custodial Services Limited
8. Forsyth Barr Custodians Limited
9.
10. Custodial Services Limited
11. Forsyth Barr Custodians Limited
12. Custodial Services Limited
13. Citibank Nominees (New Zealand) Limited - NZCSD
14. Invercargill Licensing Trust
15. Forsyth Barr Custodians Limited
16. Custodial Services Limited
17. Frimley Foundation
18. HB Williams Turanga Trust
19. Collin Francis McGregor Post & Christopher Dan Williams
20. Custodial Services Limited
NUMBER OF
CAPITAL NOTES
% OF
CAPITAL NOTES
7,912,000
3,000,000
2,793,000
2,053,000
1,274,000
1,273,000
1,107,000
1,076,000
1,044,000
882,000
595,000
579,000
550,000
500,000
387,500
305,000
300,000
300,000
300,000
225,000
5.28%
2.00%
1.86%
1.37%
0.85%
0.85%
0.74%
0.72%
0.70%
0.59%
0.40%
0.39%
0.37%
0.33%
0.26%
0.20%
0.20%
0.20%
0.20%
0.15%
Total
26,455,500
17.64%
DISTRIBUTION OF CAPITAL NOTEHOLDINGS AS AT 15 AUGUST 2014
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
> 100,000
Total
NUMBER OF
NOTEHOLDERS
NUMBER OF
CAPITAL NOTES
1
236
442
1,114
250
1,180,000
4,137,500
37,981,250
64 106,701,000
1,857 150,000,000
87
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
COMPANY DISCLOSURES
STOCK EXCHANGE LISTINGS
• Directors: David Christian, Nigel Morrison, Peter Treacy and
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 89 and 90 of
this annual report.
Rod McGeoch:
SKYCITY Adelaide Pty Limited
SKYCITY Australia Finance Pty Limited
SKYCITY Australia Pty Limited
• Directors: Nigel Morrison, Peter Treacy and Rod McGeoch:
SKYCITY Treasury Australia Pty Limited
• Directors: Nigel Morrison, Peter Treacy and Brad Morgan:
SKYCITY Darwin Pty Limited
SKYCITY ENTERTAINMENT GROUP LIMITED
The following persons held office as directors of SKYCITY
Entertainment Group Limited as at the end of the 2013/2014
financial year, being 30 June 2014: Chris Moller (Chairman),
Bruce Carter (Deputy Chairman), Rod McGeoch, Brent
Harman, Peter Cullinane, Sue Suckling, Richard Didsbury
and Nigel Morrison.
Non-wholly Owned Company Directorships
At 30 June 2014, 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 – Nigel Morrison:
Force Location Limited
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
2013/2014 financial year, being 30 June 2014:
• Directors: Nigel Morrison and Peter Treacy:
New Zealand International Convention Centre Limited
Otago Casinos 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 Investment 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
88
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014 OTHER INFORMATION
WAIVERS FROM THE NEW ZEALAND AND AUSTRALIAN
STOCK EXCHANGES
The following waivers from the NZX and ASX Listing Rules were
either granted and published by NZX Limited (NZX) or ASX
Limited (ASX) (as the case may be) within, or relied upon by the
company during, the 12 month period preceding the balance date:
•
•
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; and
on 19 August 2013, ASX granted SKYCITY a waiver from
ASX Listing Rule 10.15.2 (which requires a company’s notice
of annual meeting to state the maximum number of shares
that may be acquired by a person for whom approval is
required) in relation to a resolution contained in the
company’s 2013 notice of annual meeting seeking
shareholder approval pursuant to ASX Listing Rule 10.14 for
the grant of shares under the 2013 Chief Executive Long
Term Incentive Plan to Nigel Morrison.
All other waivers granted prior to the 12 month period preceding
the balance date had ceased to have effect or were not relied
upon during the period.
LIMITATIONS ON ACQUISITIONS 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.
LONG TERM INCENTIVE SHARES
As at 15 August 2014, shares on issue were as detailed below:
•
•
2,502,492 shares issued under the 2009 and 2013 Chief
Executive Officer Long Term Incentive Plans (approved by
shareholders at the 2009 and 2013 Annual Meetings
respectively) and held by Public Trust on behalf of the
Chief Executive Officer. The shares have been purchased by
Mr Morrison under the respective Plan with the assistance of
interest-free loans and are held on behalf of Mr Morrison by
Public Trust for a restrictive period. The shares vest in
Mr Morrison only when performance hurdles set by the
board of directors are met; and
2,518,460 shares issued under the Executive Long Term
Incentive Plan (initially approved by directors in September
2009) and held by Public Trust on behalf of 21 participants.
The shares have been purchased by the participants under
the 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.
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
89
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
OTHER INFORMATION
– the transferee and the persons associated with that
transferee dispose of such number of SKYCITY shares as
will result in their combined holding falling below 5% or, if
the regulatory authorities approve in respect of the
transferee and the persons associated with that
transferee a higher percentage, the lowest such
percentage approved by the regulatory authorities.
If a regulatory authority does not grant its approval to the
proposed transfer, SKYCITY may sell such number of the
shares held by the transferee and by any persons associated
with that transferee, as may be necessary to reduce their
combined shareholding to a level that will not result in the
transferee and the persons associated with that transferee
being an associated person of that casino licence holder.
The power of sale can only be exercised if SKYCITY has given
one month’s notice to the transferee of its intention to exercise
that power and the transferee has not, during that one month
period, transferred the requisite number of shares in SKYCITY
to a person who is not associated with the transferees.
DONATIONS
Donations of $17,482 were made by the company during the
12 month period ended 30 June 2014 ($24,978 during the
12 months ended 30 June 2013).
REVIEW OF OPERATIONS AND ACTIVITIES
A detailed review of the operations and activities of the
company for the year ended 30 June 2014 is set out in the
Chairman and Chief Executive Officer’s Report on pages 4 to
17 of this annual report.
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 89 and 90 of this
annual report, 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.
90
The New Zealand Overseas Investment Act 2005 and the
Overseas Investment Regulations 2005 regulate certain
investments in New Zealand by overseas persons. In general
terms, the consent of the New Zealand Overseas Investment
Office is likely to be required when an ‘overseas person’ acquires
shares or an interest in shares in SKYCITY Entertainment Group
Limited that amount to 25% or more of the shares issued by the
company, or if the overseas person already holds 25% or more,
the acquisition increases that holding.
The New Zealand Commerce Act 1986 is likely to prevent a
person from acquiring shares in SKYCITY if the acquisition would
have, or would be likely to have, the effect of substantially
lessening competition in a market.
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 Plans and Executive Long Term Incentive Plan 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 15 August 2014, 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 13 August 2014 in respect of the year ended 30
June 2014 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 2014, a final dividend of
10 cents per share will be paid on 3 October 2014 to all
shareholders on the company’s register at the close of business on
19 September 2014. The company’s Dividend Reinvestment Plan
(established in February 2011) will apply to this final dividend with
a 2% discount. The closing date for electing to participate in the
Dividend Reinvestment Plan for this final dividend is 5.00pm
(New Zealand time) on 22 September 2014. 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.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2014
REGISTERED OFFICE
SKYCITY
Entertainment
Group Limited
Level 6
Federal House
86 Federal Street
PO Box 6443
Wellesley Street
Auckland
New Zealand
Telephone:
+64 9 363 6000
Facsimile:
+64 9 363 6140
Email: sceginfo@skycity.co.nz
www.skycityentertainmentgroup.com
Registered Office in Australia
c/o Finlaysons
81 Flinders Street
GPO Box 1244
Adelaide
South Australia
Telephone:
+61 8 8235 7400
Facsimile:
+61 8 8232 2944
SOLICITORS
Russell McVeagh
Vero Centre
48 Shortland Street
PO Box 8
Auckland
Minter Ellison
Rudd Watts
Lumley Centre
88 Shortland Street
PO Box 3798
Auckland
Bell Gully
Vero Centre
48 Shortland Street
PO Box 4199
Auckland
Finlaysons
81 Flinders Street
GPO Box 1244
Adelaide
South Australia
AUDITOR
PricewaterhouseCoopers
188 Quay Street
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
DIRECTORY
AUSTRALIA
Computershare
Investor Services
Pty Limited
Level 4
60 Carrington Street
Sydney NSW 2000
GPO Box 7045
Sydney NSW 2000
Telephone:
+61 2 8234 5000
Facsimile:
+61 2 8234 5050
BANKERS
ANZ National Bank
Commonwealth Bank of Australia
Bank of New Zealand
Westpac Banking Corporation
CAPITAL NOTES TRUSTEE
The New Zealand
Guardian Trust
Company Limited
Level 13
191 Queen Street
PO Box 1934
Auckland
Telephone:
+64 9 366 3290
Facsimile:
+64 9 366 3299
91
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM skycityentertainmentgroup.com