SKYCITY ENTERTAINMENT GROUP LIMITED
ANNUAL
RE PORT
2 015
YEAR ENDED 30 JUNE
CONTENTS
GENERAL
ANNUAL MEETING
The 2015 annual meeting of SKYCITY Entertainment Group
Limited will be held on Friday 13 November 2015 in the
SKYCITY Theatre, Level 3, SKYCITY Auckland, Corner of
Wellesley and Hobson Streets, Auckland, commencing at
10.00am (New Zealand time).
This report is dated 25 September 2015 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
Brand Campaign
Sponsorship Highlights
New Zealand International Convention Centre
SKYCITY – An Award-Winning Business
Corporate Social Responsibility
Our Board
FINANCIAL STATEMENTS
Independent Auditors’ Report
Income Statement
Statement of Comprehensive Income
Balance Sheet
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Reconciliation of Normalised Results
to Reported Results
CORPORATE GOVERNANCE STATEMENT
AND OTHER DISCLOSURES
Corporate Governance Statement
Shareholder Information
Director and Employee Remuneration
Directors’ Disclosures
Company Disclosures
Other Information
Directory
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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.
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ANNUAL REPORT | YEAR ENDED 30 JUNE 2015
CONTENTS
3
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
MOMENTUM
GROWING
FOLLOWING INVESTMENT
OF PAST FIVE YEARS
4
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
Momentum building, following five years
of solid investment, laying the foundations
for further growth.
The 2015 financial year has been a
positive one for SKYCITY – a year that
has seen excellent results in most parts
of the business following five years of
careful planning and solid, strategic
investment in business initiatives,
capital projects and tourism
infrastructure.
The main highlights include:
• Record revenue for the Group
exceeding $1 billion for the first
time in the Company’s history
•
•
•
•
SKYCITY Auckland was an
outstanding performer in the
Group once again
Another very strong year for
International Business across the
Group – normalised revenue up
42.6%
SKYCITY Hamilton and our
two Queenstown properties
returned to growth
Significant progress made on the
New Zealand International
Convention Centre project,
with construction expected to
start before the end of the year
• Normalised NPAT (net profit after
tax) of $134.1 million was up 8.8%
on the previous corresponding
period
• Reported NPAT for the full year
was $128.7 million, up 30.7% on
the previous period, reflecting an
improved win rate in International
Business of 1.36% in line with the
theoretical win rate
• Dividend policy maintained
with an annual total dividend of
20 cents per share
Normalised revenue (including gaming
GST) was $1,007.7 million and
normalised EBITDA (earnings before
interest, taxes, depreciation and
amortisation) was $304.9 million.
The full year results for 2015 are very
pleasing (with the exception of
Adelaide) with strong and sustained
momentum across the core businesses.
We have continued to achieve strong
growth across our New Zealand
properties and International Business
and have delivered record revenues
exceeding $1 billion for the first time.
This reflects the significant investment
in our underlying businesses, particularly
Auckland, over the past few years and it
is exciting to see the returns now being
achieved.
Auckland continued its positive
momentum exhibited over recent
times, delivering record results with
strong growth across all business
segments. The ongoing success of
SKYCITY’s widely-lauded Federal
Street restaurants, high average
occupancies in both the SKYCITY
Hotel and SKYCITY Grand Hotel,
growth in Sky Tower visitation and
Convention Centre bookings and
the enhancements made to our
international ‘Horizon’ and domestic
5
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
Convention Centre (NZICC) and it is our
expectation to commence construction of this
landmark Auckland tourism facility this year.
Following SKYCITY and the Crown agreeing
on the preliminary design for the NZICC in
May 2015, the Auckland Council announced
that our resource consent application has been
approved. The approval enables SKYCITY to
now seek the amendments necessary to
incorporate the preliminary design changes
that were agreed with the Crown. This is
excellent news for the project and allows
SKYCITY to move ahead with selecting a
construction partner. Plans to activate various
gaming concessions are well advanced and will
come into effect once the building contract is
signed.
The 32,000 square metre building will be
capable of hosting meetings of up to
3,150 people, two concurrent events of
1,200 delegates each and one-off events of
up to 4,200 people. The NZICC will be the
largest purpose-built convention centre in
the country.
SKYCITY plans to construct a new laneway
that will provide Aucklanders and visitors
with a new public space featuring shops, cafés,
bars and quality signature restaurants like
those on nearby Federal Street.
SKYCITY has also committed to building a
new 5-star, 300 room hotel on Hobson Street,
adjacent to the NZICC. Currently we are
exploring partnering options with various
external investors for the development and
ownership of the hotel.
Momentum continues to build on the
NZICC project, bringing jobs, growth
and much-needed economic investment
in Auckland’s CBD.
AUCKLAND
SKYCITY Auckland continues as the standout
performer across the Group, following the
successful business initiatives and capital
investments over the past five years.
Record results at the property saw normalised
revenue up 13.0% to $602.6 million
and normalised EBITDA up 13.7% to
NIGEL MORRISON
MANAGING DIRECTOR
AND CHIEF EXECUTIVE OFFICER
MOMENTUM
CONTINUES TO BUILD
ON THE NZICC PROJECT,
BRINGING JOBS,
GROWTH AND MUCH-
NEEDED ECONOMIC
INVESTMENT IN
AUCKLAND'S CBD.
6
VIP gaming offerings have all contributed to
Auckland’s very pleasing results.
As observed in our interim results, the
disruption to trading from the redevelopment
of the Adelaide Casino over the period was
significant, with the A$50 million
redevelopment of the existing property only
being completed in January this year. While
Adelaide Casino achieved modest revenue
growth for the full year, with normalised
revenue up 4.8% to A$174.1 million,
the disruption and unsatisfactory cost
management over the period delivered a
disappointing EBITDA result - down 19.2%
to A$27.3 million. Management has been
firmly focused on addressing the issues and
looks forward to delivering significantly
improved results this year, notwithstanding
the challenging economic environment in
South Australia.
NEW ZEALAND INTERNATIONAL
CONVENTION CENTRE
We have made very pleasing progress in
relation to the New Zealand International
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 $247.8 million over the period. International
Business normalised revenues at SKYCITY
Auckland were up 38.7% to $81.3 million,
reflecting the quality of SKYCITY’s
international offering and Auckland’s strong
appeal as an international destination.
Auckland has now delivered six consecutive
quarters of EBITDA growth – an outstanding
result.
Both revenue and EBITDA growth were
achieved across all business activities with
notable improvements achieved in the
international and domestic gaming business,
particularly within table games, underpinned
by improved customer segmentation and
experiences and the continued success of our
Federal Street restaurants. Gaming machines
also delivered a robust performance, despite
a relatively strong comparative period.
SKYCITY Auckland’s Federal Street dining
precinct continues to deliver fantastic results,
with Depot winning Metro Magazine’s
Restaurant of the Year 2015 – a great
accolade following on from MASU winning
the very same award the prior year. Six of
Federal Street’s restaurants featured in Metro
magazine’s esteemed ‘2015 Top 50
Restaurants’ list – Depot, Gusto at the Grand,
The Grill by Sean Connolly, MASU, Federal
Delicatessen and The Sugar Club. On top of
this, Gusto and Depot received one chef ’s hat
each in the Cuisine NZ Good Food Awards
2015, with Nic Watt's MASU taking out an
impressive two hats.
Following our co-investment with Auckland
Council to transform Federal Street into a
shared space, our Federal Street dining
precinct continues to grow from strength
to strength, with more restaurants planned
for 2016.
SKYCITY Auckland’s two hotels, the
SKYCITY Hotel and SKYCITY Grand
Hotel, continued to be popular, reflecting
the benefits of being able to offer world-class
integrated casino and entertainment facilities
to our local and international customers.
The Auckland property has hosted some
marquee entertainment events during the
period, including being the primary host to
CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
FIFA during the Under 20 Football World
Cup, reinforcing our position as the premier
entertainment destination in New Zealand.
The strong growth in Auckland is a result
of continued good management under the
leadership of Chief Operating Officer
New Zealand and General Manager
SKYCITY Auckland John Mortensen,
Assistant General Manager SKYCITY
Auckland Matt Ballesty and their team, the
investments we have made in the property
and the precinct, and positive external and
economic factors.
HAMILTON
Our Hamilton property has delivered solid
results, and we are starting to see some
encouraging growth, under the leadership
of General Manager Michelle Baillie who
moved to SKYCITY Hamilton from
SKYCITY Queenstown in April 2014.
Normalised revenue was up 4.5% to
$50.6 million and normalised EBITDA was
SKYCITY AUCKLAND
CONTINUES AS THE
STANDOUT PERFORMER
ACROSS THE GROUP,
FOLLOWING THE
SUCCESSFUL BUSINESS
INITIATIVES AND CAPITAL
INVESTMENTS OVER THE
PAST FIVE YEARS.
CHRIS MOLLER
CHAIRMAN
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SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
up 15.7% to $19.9 million. Normalised
gaming revenue grew 6.9% to $43.4 million.
The positive growth follows recent
investment into the business, including in
the conventions space, which we are already
starting to see tangible results from. A
rejuvenation of the food and beverage
offering, an overhaul of the main gaming
floor and some positive changes to the wider
leadership team have also contributed.
The improved performance has been
underpinned by solid gaming machine and
table games revenue delivered by new
premium gaming spaces, a renewed focus on
customer experiences and the coordinated
delivery of better product, facilities and cost
management.
We recently announced the development of
an exciting new food and beverage precinct at
our Hamilton property in a large-scale
redevelopment of the current atrium area.
The precinct will host five new food and
beverage outlets including a craft beer bar,
gourmet burger outlet, café, new restaurant
and cocktail lounge. The precinct will offer
shared seating under the historic glassed dome
- once part of the Hamilton Post Office
building built in 1940.
SKYCITY Hamilton is well placed to benefit
from the Hamilton City Council’s ‘River
Plan Project’ given the property’s ideal
location and proximity to the planned
tourism infrastructure investment.
QUEENSTOWN
The combined operations of our two
Queenstown sites, SKYCITY Queenstown
and SKYCITY Wharf Casino, have returned
to growth. Normalised revenue was up 34.6%
to $18.3 million and normalised EBITDA
was up 61.1% to $2.9 million, underpinned
by strong International Business volumes.
The medium-term focus for Queenstown
remains on growing our International
Business in this world-renowned tourist
location.
ADELAIDE
Despite modest revenue growth and
improving visitation trends in the second half
of the financial year following the completion
of a significant refurbishment of the property,
Adelaide Casino had a disappointing result for
the year. Adelaide's normalised revenue was
up 4.8% to A$86.8 million. The disruption in
the first half of the year and unsatisfactory
cost management together with the weak
economy in South Australia resulted in a poor
normalised EBITDA result for the year –
down 19.2% to A$27.3 million.
The Adelaide business was significantly
impacted during the redevelopment works,
which were completed in January 2015.
SKYCITY remains firmly focused on
achieving significantly improved performance
from the Adelaide property. Our two new
signature restaurants Sean’s Kitchen by
Sean Connolly, which opened in October
2014, and Madame Hanoi by Nic Watt,
which opened in January 2015, have
commenced trading to great acclaim. Both
restaurants were opened by the Premier of
South Australia, The Hon. Jay Weatherill.
SKYCITY is making good progress on the
plans for the transformation of the Adelaide
Casino into an integrated world-class
entertainment destination, constructing a
new boutique hotel, an expanded gaming
podium and additional signature restaurants.
SKYCITY is close to finalising the concept
design of the development with the South
Australian Government ensuring that the
project best meets the opportunities and
future requirements of the Adelaide and
South Australian markets.
DARWIN
SKYCITY Darwin achieved a pleasing
result despite a challenging local market.
Normalised revenue was marginally up to
A$137.1 million and normalised EBITDA
increased 7.2% to A$38.9 million.
The performance was primarily driven by
recent investments in the property to improve
the customer experience and clearly
differentiate SKYCITY Darwin as an
outstanding tourism and entertainment
destination in Darwin. This included
investing in a new sports bar, Aces, which
opened in April 2015 and is situated adjacent
to the main gaming floor, with multiple
OUR HAMILTON
PROPERTY HAS
DELIVERED SOLID
RESULTS, AND WE
ARE STARTING TO SEE
SOME ENCOURAGING
GROWTH.
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ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
SKYCITY IS MAKING
GOOD PROGRESS ON
THE PLANS FOR THE
TRANSFORMATION
OF THE ADELAIDE
CASINO INTO AN
INTEGRATED WORLD-
CLASS ENTERTAINMENT
DESTINATION.
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MADAME HANOI, ADELAIDE
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
screens and the ability to host live
entertainment. The Vue, a new bar, bistro
and buffet restaurant also opened in July and
features a private dining room, a ‘show’
kitchen, and significantly improved décor to
the previous offering in that space. Located
adjacent to the gaming floor, this is helping
grow visitation to the venue.
On top of the new food and beverage
developments, significant growth in
International Business turnover, reflecting
the attraction of Darwin as a unique
destination for International Business, and a
strong management focus on operating costs
and efficiencies contributed to Darwin’s
overall performance.
In April this year, the Northern Territory
Government announced its plans to impose
a new Community Benefit Levy on the
gross profits of electronic gaming machines
at SKYCITY Darwin. Subsequently, the
Northern Territory Government completed
the gaming tax review for SKYCITY Darwin
in July 2015. The net impact of the new
gaming tax rates (which will apply until June
2025) and the Community Benefit Levy is an
increase in operating costs for Darwin
expected to be less than A$1 million per
annum.
The medium to longer-term growth
prospects for the Darwin property will
depend on further promotion of International
Business play, potential activation of the
Little Mindil site (adjacent to the property)
and any further investment in existing
facilities.
INTERNATIONAL BUSINESS
Growth in International Business turnover
continues to be underpinned by the success of
our expanded sales and marketing team, led
by President of International Business,
Ejaaz Dean, increased recognition of our
Group wide international ‘Horizon’ brand
and offering, a strong focus on relationships
with our VIP customers and continued
growth in the number of Asian VIP
customers visiting New Zealand.
The past few years of investment in our
International Business facilities continued to
deliver record activity during the financial
year across the Group, with turnover of
THERE IS POTENTIAL
FOR FURTHER
SIGNIFICANT GROWTH
IN INTERNATIONAL
BUSINESS AND HENCE
SKYCITY WILL CONTINUE
TO INVEST PRUDENTLY
TO PROVIDE BETTER VIP
CUSTOMER EXPERIENCES
ACROSS OUR CORE
PROPERTIES AND
ACHIEVE ATTRACTIVE
RETURNS.
ACES BAR, DARWIN
THE VUE, DARWIN
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ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REVIEW
$9.3 billion and normalised EBITDA up
35.1% to $26.4 million. The actual win rate
for the period was 1.36%, in line with the
theoretical win rate of 1.35%.
There is potential for further significant
growth in International Business and hence
SKYCITY will continue to invest prudently
to provide better VIP customer experiences
across our core properties and achieve
attractive returns.
OTHER HIGHLIGHTS
SKYCITY welcomed Rob Hamilton to the
role of Chief Financial Officer in October
2014. Rob is a well-respected member of the
New Zealand finance community with more
than 20 years’ experience at First NZ Capital,
where he led the investment banking team
prior to joining SKYCITY.
John Mortensen was promoted to the newly
created position of Chief Operating Officer
New Zealand and General Manager
SKYCITY Auckland in December 2014.
This saw John assume responsibility for
SKYCITY’s Hamilton and Queenstown
operations in addition to his existing
responsibility as General Manager SKYCITY
Auckland. John has made a significant
contribution to the Auckland business since
he joined the team in June 2013, building a
strong team culture, improving staff
engagement, and providing strong leadership.
THANKS
We would like to thank members of the
SKYCITY Board for their ongoing wisdom,
advice and support throughout what has been
a very busy year with some very significant
business decisions being made.
We also bid a warm farewell and offer our
best wishes and thanks to Peter Cullinane,
who will retire from the Board at the
Company’s 2015 Annual Meeting. Peter has
championed the Company’s increasing focus
on corporate social responsibility, branding
and reputation and his experience and insight
will be sorely missed. We thank him sincerely
for his contributions and wish him the very
best in his future endeavours.
We would like to officially welcome Richard
Tsiang to the SKYCITY Board. Richard was
appointed to the Board as a Director in
December 2014, replacing Rod McGeoch,
who retired after a number of years on the
Board, including eight years as Chairman.
Richard was formerly Chief Development
Officer with Melco Crown Entertainment
in Macau and Group Chief Financial Officer
of MGM Grand Macau. His extensive
experience in the casino, entertainment,
hospitality and tourism sectors in Asia is
already proving invaluable in the SKYCITY
boardroom.
Our thanks also to the SKYCITY Executive
Team for their hard work, commitment and
leadership in what has been a very busy year
across each and every part of the business.
We appreciate the hard work that has been
put in by each and every one of you in
striving to achieve good results in your
respective parts of the business. And finally,
to each and every one of our staff across
SKYCITY, thank you for your ongoing
commitment and hard work. We all strive
to ensure SKYCITY continues to be the
leading entertainment destination in the cities
in which we operate, delivering outstanding
experiences for our customers each and every
time they visit. Thank you for everything
you do for SKYCITY – it is very much
appreciated.
CHRIS MOLLER
CHAIRMAN
NIGEL MORRISON
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
NORMALISED
REVENUE
UP
8.7%
EXCEEDING $1 BILLION FOR
THE FIRST TIME
REPORTED
NPAT
UP
30.7%
TO $128.7 MILLION
INTERNATIONAL
BUSINESS TURNOVER
UP
42.6%
TO $9.3 BILLION
AUCKLAND
NORMALISED EBITDA
UP
13.7%
TO $247.8 MILLION
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SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM BRAND CAMPAIGN
BRAND
CAMPAIGN
This year, SKYCITY embarked on a significant brand campaign in New Zealand, titled
‘It All Starts Here’. Partnering with top advertising company Colenso BBDO and production
company Finch, the campaign featured SKYCITY staff explaining in their own words
SKYCITY’s central role across the community - socially, economically and culturally.
M
-
T
G
/
2
9
0
1
Y
K
S
OPPORTUNIT Y.
One of New Zealand’s largest hospitality employers with close to 4,000 staff.
FINE FOOD.
Some of New Zealand’s favourite restaurants at SKYCITY.
GAME TIME.
Proud sponsor of some of New Zealand’s best sports teams.
The campaign is built around four simple
pillars: Opportunity, Community, Fine Food
and Nights Out. It is divided into two equal
parts - SKYCITY as a good citizen, and
SKYCITY as a great place to go out at night.
When we started researching the campaign,
it quickly became clear that while many
people were familiar with our bars and
restaurants they didn’t know we source
over 90% of our products locally, or that we
support Kiwi suppliers such as Akaroa Salmon
in Canterbury and Curious Croppers in
Clevedon.
Some of the best feedback we have had on
the campaign to date has been on our
community focus. Since 1996, SKYCITY
has donated more than $40 million through
its community trusts to charities, community
organisations and those who really need a
helping hand in New Zealand. Most people
had no idea how much money had gone to
these worthy causes or how many groups and
organisations had benefited.
Our staff have been at the forefront of the
brand campaign, telling the public in their
own words why they are proud to work at
SKYCITY. Prominent New Zealanders such
as Olympian Valerie Adams have also lent a
hand, explaining why they head to SKYCITY
when they want to have a great night out, or
show friends and visitors from out of town
around Auckland - including that incredible
view from the top of the Sky Tower, the
Southern Hemisphere’s tallest building.
SKYCITY’s brand campaign is still on
television and will remain there for at least
the rest of 2015. It will also appear on
billboards and bus shelters, in magazines,
and run on the radio.
12
IT ALL STARTS HERE.IT ALL STARTS HERE.IT ALL STARTS HERE.ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 SPONSORSHIP HIGHLIGHTS
SPONSORSHIP
HIGHLIGHTS
SKYCITY BREAKERS
The SKYCITY Breakers had a hugely successful season once again
in 2014/15, taking out the National Basketball League title for the
fourth time.
NEW SPONSORSHIP – SKYCITY MYSTICS
SKYCITY is proud to have come on board as the naming rights
sponsor of the Northern Mystics (now the SKYCITY Mystics),
signing a three-year partnership with the team.
SKYCITY has been a principal sponsor of the SKYCITY Breakers
since 2011 - the largest sponsorship deal in the Breakers’ club history.
As a major sponsor of several top sports teams in New Zealand, this
was the first sponsorship SKYCITY has undertaken in professional
women’s sport.
At the launch of the new partnership, SKYCITY Mystics Chief
Executive Julie Paterson spoke about how the team has worked
extremely hard to be recognised on an equal footing with male
athletes, signalling just how significant SKYCITY’s three-year
sponsorship commitment is for women’s sport in New Zealand.
The new sponsorship means SKYCITY is the home of the
SKYCITY Mystics, with the team staying at the SKYCITY
Grand Hotel before each of their home games. Their 2015 season
launch was held at Gusto at the Grand, and players were also involved
in several activities at SKYCITY throughout the season including a
pasta cooking lesson by Sean Connolly.
SKYCITY BREAKERS
The SKYCITY Mystics made it to the top four in the ANZ
Championship competition for 2015.
SKYCITY MYSTICS
13
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM NEW ZEALAND INTERNATIONAL CONVENTION CENTRE
NEW ZEALAND
INTERNATIONAL
CONVENTION
CENTRE
The New Zealand International Convention Centre
(NZICC) will be the country’s premier convention
centre and the first purpose built centre to cater for
more than 3,000 people, enabling New Zealand to
attract major international conferences.
The NZICC is designed to be a welcoming,
open building complemented by a fresh
new streetscape for local, national and
international visitors to enjoy. The light-filled
building will possess fantastic views of
Auckland in the heart of the CBD. This will
be a flexible and dynamic space connected to
the life of the city, day and night. In addition
to hosting conferences and meetings, the
NZICC has the capability to be set up for
other events such as basketball or boxing,
as well as theatre and musical performances.
events (eg two concurrent events of up
to 1,200 delegates each)
•
2,850 person plenary meeting space
• Can host a public event or meeting of up
to 4,200 people in theatre-style seating
• Up to 8,100 square metres of ground
•
floor exhibition space
Banquet/dining capacity for up to
3,000 people
• Dramatic 100-metre long by 20-metre
high public gallery and entry space
• Up to 1,415 car parking spaces at
basement level
restored and incorporated into the building,
incorporating a striking traditional feature
into the modern design.
EXTERIOR FEATURES
The NZICC’s major spaces will be defined
in a series of tiered structures. These forms
relate to the existing streetscape and
neighbouring buildings.
The gallery and main entries will be marked
by a terracotta-clad ‘spine’ wall, which will
also define the edge of the public laneway.
The NZICC will occupy the southern half of
a full block in Auckland’s CBD bordered by
Nelson, Wellesley and Hobson Streets.
SKYCITY is building the NZICC as part
of an agreement with the New Zealand
Government and investing a minimum of
$430 million in this new facility.
KEY STATISTICS
•
•
32,000 square metres total floor space
Able to host up to 3,150 people for
a single conference or combination of
CHANGES IN THE
SURROUNDING STREETS
The NZICC can be entered on four sides,
with Hobson Street the main accessway.
People can look forward to a pedestrian-
friendly tree-lined boulevard with widened
footpaths. A new laneway will connect
Hobson and Nelson Streets featuring bars,
restaurants and cafe outlets for Aucklanders to
enjoy alongside convention users – much like
Federal Street nearby. The façade of the
former Berlei factory on Nelson Street will be
The building’s main spaces will have floor to
ceiling windows. The transparent glass will
be enhanced by innovative lighting, inviting
people to enter and explore.
Visitors will be able to easily access the
building via four entries, one for each side of
the centre.
INTERIOR FEATURES
There will be five floors of which levels one,
three and five will form the core exhibition,
14
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 NEW ZEALAND INTERNATIONAL CONVENTION CENTRE
ARTIST'S IMPRESSION
ARTIST'S IMPRESSION
meeting and plenary spaces. Key features of
the main floors include:
Level three
• Considered the ‘ground floor’, the main
8,100 square metre exhibition space,
flexible meeting rooms, Wellesley Street
gallery space and main entry gallery.
•
•
The restored façade of Nelson House
will contribute to the character of the
unique west-facing reception area.
Full-height adjustable walls will provide
adaptable, multifunctional spaces, which
lead into a dramatic 100-metre long
gallery and circulation area.
Level five
•
Floor to ceiling windows on the plenary
floor will provide panoramic views from
Waitemataā Harbour around the
Ponsonby ridgeline to the Waitakere
Ranges and back across the City,
intimately connecting visitors to their
experience of Auckland. The Auckland
Harbour Bridge will also be a key
feature of this view.
•
A 2,850 person plenary theatre has a
reception area alongside the Sunset
Room, a banquet and function space for
up to 840 people.
NZICC DESIGN TEAM
The NZICC design team is led by leading
New Zealand architects Warren and
Mahoney. The practice has many decades of
experience in the design of major public and
commercial commissions, including the
Supreme Court and Christchurch Blueprint.
Andrew Barclay is Design Director and
Chairman John Coop is the Project Director.
A key collaborator is Principal Gavin Kain of
Australian-based Woods Bagot Architects.
Gavin Kain’s experience includes the
Melbourne Convention and Exhibition
Centre, advisory services for the A$1 billion
Sydney International Convention Centre and
leading both stages of the A$350 million
redevelopment of the Adelaide Convention
Centre (currently in construction).
Craig Moller of Moller Architects completes
the architectural design leadership team.
Craig Moller has advised SKYCITY for many
years.
Rachel de Lambert leads the Boffa Miskell
urban and landscape design team.
15
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM SKYCITY – AN AWARD-WINNING BUSINESS
SKYCITY –
AN AWARD-WINNING
BUSINESS
SKYCITY AUCKLAND
• 2014 World Travel Awards, Australasia’s Leading
Casino Resort
Grand Hotel
• 2015 TripAdvisor Travellers’ Choice Award
• 2014 World Travel Awards, New Zealand’s Leading Hotel
Suite – Grand Presidential Suite
Sky Tower
• 2015 TripAdvisor Traveller’s Choice Award,
#1 Tourist destination
Depot
• 2015 Metro Restaurant of the Year Awards, Top 50
• 2015 Metro Restaurant of the Year Awards, Supreme Winner
• 2015 Cuisine NZ Good Food Awards, One Chef ’s Hat
Federal Delicatessen
• 2015 Metro Restaurant of the Year Awards, Top 50
The Grill by Sean Connolly
• 2015 Metro Restaurant of the Year Awards, Top 50
• 2015 Cuisine NZ Good Food Awards, One Chef ’s Hat
Gusto at the Grand
• 2015 Metro Restaurant of the Year Awards, Top 50
MASU by Nic Watt
• 2015 Metro Restaurant of the Year Awards, Top 50
• 2015 Cuisine NZ Good Food Awards, Two Chef ’s Hats
• 2015 Lewisham Hospitality Awards, Negociants Outstanding
Wine Service Professional (Meg Abbott-Walker)
The Sugar Club
• Metro Restaurant of the Year Awards, Top 50
• 2015 TripAdvisor Certificate of Excellence
SKYCITY HAMILTON
• 2015 Waikato Culinary Fare Commis Chef of the Year
• 2015 TripAdvisor Certificate of Excellence
SKYCITY DARWIN
• 2015 Best Entertainment Venue - Northern Territory
SKYCITY ADELAIDE
Madame Hanoi
• Savour Australia Restaurant & Catering Awards for
Excellence, Best New Restaurant Finalist
Sean’s Kitchen
• 2015 The City Awards, Best New Restaurant
• Savour Australia Restaurant & Catering Awards for
Excellence, Best New Restaurant Finalist
• Restaurant and Bar Design Awards Finalist
(winner to be announced later this year)
NEW ZEALAND
1 AUCKLAND
RESTAURANTS / BARS / CAFÉS
HOTEL ROOMS
GAMING MACHINES
1
2
TABLE GAMES
EMPLOYEES
NORMALISED REVENUE
NORMALISED EBITDA
20+
635
1,647
110
3,400*
$602.6M
$247.8M
3
2 HAMILTON
RESTAURANTS / BARS / CAFÉS
GAMING MACHINES
TABLE GAMES
EMPLOYEES
NORMALISED REVENUE
NORMALISED EBITDA
3 QUEENSTOWN (TWO SITES)
RESTAURANTS / BARS
GAMING MACHINES
TABLE GAMES
EMPLOYEES
NORMALISED REVENUE
NORMALISED EBITDA
AUSTRALIA
4 DARWIN
4
RESTAURANTS / BARS / CAFÉS
HOTEL ROOMS
RESORT ROOMS
GAMING MACHINES
TABLE GAMES
EMPLOYEES
5
7
339
23
400*
$50.6M
$19.9M
3
156
18
100*
$18.3M
$2.9M
13
120
30
730
30
800*
NORMALISED REVENUE
NORMALISED EBITDA
A$137.1M
A$38.9M
5 ADELAIDE
RESTAURANTS / BARS / CAFÉS
GAMING MACHINES
TABLE GAMES
EMPLOYEES
NORMALISED REVENUE
NORMALISED EBITDA
* Average during the 2015 financial year.
9
990
90
1,200*
A$174.1M
A$27.3M
16
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 CORPORATE SOCIAL RESPONSIBILITY
CORPORATE
SOCIAL RESPONSIBILITY
Our commitment starts at
Board level
To help us define our responsibilities and the
effectiveness of our activities, we maintain
operational supervision of our Corporate
Social Responsibility (CSR) activities
through management as well as governance-
level oversight through our Board CSR
Committee chaired by independent director,
Peter Cullinane. This Committee directs all
our commitment to care activities and is
responsible for developing and maintaining
our CSR policies.
The Committee focuses on the five pillars of
our CSR Strategy being: responsible gaming;
the environment; fair operating practices;
labour practices and human rights; and
community involvement and development.
It’s important to us that our stakeholders are
aware of these commitments and the actions
we take: as a responsible corporate citizen;
through our contributions to the cities and
the economies that we are part of. For
SKYCITY, Corporate Social Responsibility
is a measured journey. We will continue to
refine, to improve and to report on our
progress.
RESPONSIBLE GAMING
SKYCITY has a world-leading responsible
gaming strategy designed to promote
responsible consumption of alcohol and
gaming on our sites. Our Host Responsibility
Programmes are the most comprehensive in
New Zealand and are recognised as amongst
the best of any casino in the world. Through
our world-class programmes, we provide safe
places for our customers to play, eat, drink
and stay.
them requires a comprehensive, systematic
and collective approach.
We invest many millions a year on
Host Responsibility and all staff receive
Host Responsibility training. Our casinos
are highly supervised gaming venues, with
hundreds of CCTV cameras and more
than 130 security and surveillance staff in
Auckland alone, which is how we continue to
provide some of the safest places to gamble.
We offer voluntary pre-commitment on
our gaming machines, enabling our
customers to set their own limits on what
they spend in terms of time and/or money.
In New Zealand, we are the only gaming
operator doing this.
At SKYCITY Auckland our Customer
Service Ambassadors are stationed on the
main gaming floor, quietly interacting with
people, checking that they are okay and
helping with any problems that may arise.
The world-leading initiative recognises the
difficulties of identifying un-carded machine
players across a complex where 30,000 people
come and go on a daily basis. Our VIP
Services Hosts offer the same service in our
VIP areas. At our tables, our dealers and
supervisors watch carefully for any signs that
may indicate hardship.
We remain committed to continually
reviewing and improving our programme to
maintain our world-leading position.
We also see environmental education and
capacity building as fundamental to
promoting the development of sustainable
societies and lifestyles and to helping us
maintain our reputation in communities.
AUCKLAND
The treatment of waste is one of SKYCITY’s
greatest opportunities under the environmental
pillar. In FY15 we commissioned an in-depth
waste audit which identified real opportunities
which are in the process of being evaluated
and addressed by management.
To help reduce our energy levels, we have set
a target of 95% energy-saving LED lighting
across our Auckland site by 2016. So far,
approximately 95% of the Sky Tower, 55% of
the front of house, 50% of the SKYCITY
Grand Hotel and 5% of the back of house
have been converted to LED lighting.
The main site car park ventilation system has
been replaced with an energy-efficient
ventilation system that monitors carbon
monoxide levels in the car park and switches
on ventilation only when it is required.
We anticipate this will save up to 75%
of the current fan use (1,400,000 kWh).
So far, 18 of the 20 main site lifts have been
upgraded or replaced to increase their
efficiency. This has reduced their energy
consumption by 70% on average. The
remaining two lifts will be upgraded by the
end of 2015.
THE ENVIRONMENT
Environmental matters are interconnected
locally, regionally and globally and addressing
We have also made several changes to our
computer systems including replacing printer
and multi-function devices with newer
17
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CORPORATE SOCIAL RESPONSIBILITY
devices that consume less power, and
reducing the number of physical servers,
which in turn has led to a substantial
reduction in power consumption.
we will improve the quality of electricity
supplied and increase the longevity of all
electrical equipment. Voltage reduction will
deliver site wide savings in the order of 10%.
As part of the Federal Street Shared Space
Project, the cobblestones that have been
replaced were sent to a community project
in New Lynn. Heritage kerbs were carefully
removed and returned to Auckland Transport
to re-use around Auckland CBD and
concrete removed from the site was used
for roading projects in Auckland. The
feature green wall includes approximately
3,500 plants and a self-irrigating watering
system, and stormwater run-off has been
designed to direct the water from the
SKYCITY plaza to the planned potential
Victoria Park rain gardens (Victoria Street
Linear Park) in time.
ADELAIDE
Our property management team has been
working with external companies to reduce
overall operating energy costs for mechanical
heating, ventilation and air-conditioning
(HVAC) plant and provide a cleaner system of
air delivery to the gaming floor. Monitoring
is now in place to measure energy usage
across site and water use in the HVAC
systems. Energy efficient lighting has also
now been installed where appropriate and all
new projects have energy efficient lighting
specified.
Primary produce is also pre-prepared to
reduce waste. Glass and scrap metal are
recycled, furniture and other equipment
are auctioned and electronic equipment is
responsibly disposed of through the local
council.
DARWIN
A NABERS (National Australian Built
Environment Rating System) assessment
has identified a number of ways for our
Darwin property to achieve energy savings.
The company is in the early stages of
implementing these projects.
The electricity supply to the whole site can
be conditioned to perform more efficiently
with both power factor correction and
voltage optimisation. Through the significant
investment already earmarked for this project,
Replacing older halogen lighting with newer
LED technology will reduce both the energy
required and the heat given off, meaning less
cooling is required. All areas of the property
that have been refurbished, or earmarked for
future refurbishment, will have this new LED
lighting installed.
Heating, ventilation and air-conditioning
at the property are the largest energy
consumers, using an estimated 53.5% of
total site. Funds have been earmarked to
implement a monitoring system to better
capture the needs of the site.
Solar panels on the roof to heat hot water
required for the hotel and casino coupled
with excess production to be 'sold' back into
the grid will greatly reduce our Darwin
property's energy costs.
HAMILTON
The lighting system at SKYCITY Hamilton
has been upgraded, replacing 700 halogen
lamps with LED. These LED lights were
installed in 2011 and have been operating
24/7 with zero to minimal maintenance.
Parts of the air-conditioning systems were
also reprogrammed to use more filtered
outside air to cool the building rather than
refrigerated air. We are currently working
through plans for the implementation of a
plant maintenance programme which will
see the removal of all R22 refrigerants and
reduce the regular need for maintenance.
QUEENSTOWN
A programme is in place to progressively roll
out LED and power save light globes across
both Queenstown sites. Timers have been
installed to air-conditioning and heating,
shutting down just before closing time and
then starting again one hour before opening,
delivering good energy savings.
Recycling bins are in operation for glass,
plastics and cardboard. Wood pallets are
broken down and gifted to staff as kindling.
Cooking oils are removed and responsibly
disposed of.
The UPS system has been upgraded to a more
efficient, modern system and we have reduced
the temperature at which our boilers operate
to create further energy savings.
The Queenstown property has double glazing
on all windows to improve insulation.
FAIR OPERATING PRACTICES
Relationships with other organisations are
excellent opportunities to promote positive
outcomes by providing leadership and
promoting wider adoption of social
responsibility.
Our procurement practices emphasise
relationships and trust. We look for service,
quality and value through our suppliers and
it is testimony to the strength and loyalty
that exists on both sides that we have a low
turnover of suppliers. We continue to look for
ways to achieve and reward innovation across
our supply chain.
We have included CSR measurements as part
of our supplier selection criteria, covering
areas such as sustainability, packaging and
waste management. These measures protect
our reputation nationally and as a business,
help offset our social impacts and add to our
bottom line efficiency.
Through our Ethical Sourcing Code, we look
to work with suppliers and partners who we
deem to positively influence social, ethical
and environmental performance, including
ethical labour practices such as diversity.
Suppliers must as a minimum comply with
all applicable laws and regulations relating to
the environmental impacts of their business,
and maintain procedures for notifying local
authorities in the event of an environmental
accident. Among the areas where we look for
performance standards: waste management;
packaging and paper; conservation; and
energy use.
We prefer suppliers with an Environmental
Management System and ISO Accreditation.
18
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 MEMBERSHIPS AND
AFFILIATIONS
As part of our efforts to ensure our human
rights environment and initiatives are best
practice, we are:
• A Member of the Sustainable Business
Council NZ (SBC)
• A founding supporter for the Mayor’s
Youth Employability Traction plan
• Part of the COMET Steering
Committee on Youth Employability
• A founding supporter and participant
in the Rainbow Tick programme -
supporting companies to provide safe
and healthy environments for the LGBT
(lesbian, gay, bisexual and transgender)
community)
• A member of the Equal Employment
Opportunities (EEO) Trust
• An ongoing corporate supporter of the
UN Global Women Initiative
• A member of the Aboriginal
Employment Industry Cluster Network
in Adelaide, which aims to provide
employment opportunities for
Aboriginal & Torres Strait Islanders
within the hospitality industry
SKYCITY Darwin is also a signatory to
the Australian Employment Covenant
which focuses on employment of
indigenous Australians and is part of the
Generation One Network.
CORPORATE SOCIAL RESPONSIBILITY
LABOUR PRACTICES AND
HUMAN RIGHTS
HEALTH AND SAFETY AT WORK
Being a good employer complements our
work in being a responsible citizen. Having
found, encouraged and retained the best
people, we have an ongoing responsibility
to keep them safe, happy and well. All our
New Zealand sites are ACC Partnership
Programme certified at tertiary level.
Our Lost Time Incident Frequency (LTIF)
rate increased slightly on the previous year.
However, through early intervention and
recovery at work we were able to reduce the
average lost time per case (a measure of the
severity of the injury) by 29% across the
Group.
In September 2014, our Adelaide site won
the Safety category of the Restaurant and
Catering South Australia Awards.
SKYCITY’s Wellness Programme, Play Well,
is a tailored wellness programme, run in
conjunction with the Auckland Regional
Public Health Service, that aims to encourage
healthier individual behaviours by providing
support, information, skills training and
opportunities. Goals include improving our
employees' health habits, increasing physical
activity, reducing sick leave/absenteeism
amongst our workforce and improving
productivity.
The Wellness Programme itself incorporates
positive parenting, nutrition and work life
balance seminars, initiatives to celebrate
cultural differences, mental wellbeing and
exercise. This year, 200 people from across
our Auckland site with different health
objectives took part in our 70 Day Health
Challenge. Also part of our Play Well
programme was the annual 'Dare the Stairs',
a 1,029-step challenge that sees participants
choosing to walk either up or down the
iconic Sky Tower.
SKYCITY provides fair and equitable
remuneration to all staff saw us recognised
with the Silver Award in the 2014 YWCA
Pay Equity Awards.
Working with YWCA and Pivot Software we
have also shared our journey and the benefits
of having an equal pay remuneration system
to the wider business public via conferences,
blogs, presentations and meetings.
SKYCITY has been a key member of the
Steering Committee of the SBC-led 'Welfare
to Work' programme, focussed on removing
barriers for vulnerable workers (particularly
young mothers) to enter the paid workforce.
We continue to monitor the participation
of female leaders/potential leaders in all
our leadership programmes. This year,
41% of participants in our leadership
development programmes were women.
As an inaugural supporter of the programme,
SKYCITY has continued our strong
commitment to the BEST Pasifika Leadership
Academy, funding and supporting the
participation of 11 Pasifika employees in the
programme over the last four years. This
programme has been an outstanding success
and created opportunities for advancement
into leadership roles for our Pasifika staff.
We continue to receive more than
1,000 registrations each month to become
part of our talent pool, with an average of
3,000 applications for available positions
each month. Today, we have more than
160,000 people looking for work at any one
of our locations. Most of them reach us now
through our SKYCITY Careers website,
and our social media channels (Facebook,
LinkedIn and Twitter). Access to such a rich
variety of experience and knowledge makes
us stronger, more flexible and responsive as
workplaces to the shifting demands of the
entertainment sector.
EMPLOYER OF CHOICE
In the final quarter of the year we completed
a review of our remuneration banding to
ensure it discouraged gender bias. Our
continued focus and efforts to ensure that
Adelaide Casino won the Employer of the
Year award at the South Australia Training
Awards for 2014, the second year running
that the business has been a finalist for this
award. Adelaide Casino was also one of just
19
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CORPORATE SOCIAL RESPONSIBILITY
three finalists for the National Employer of
the Year.
LEADERSHIP DEVELOPMENT
Knowing that growing and retaining high
potential leaders is critical to our continued
success, we have worked with an external
specialist consultancy in Leadership
Development practices to develop an
internally delivered programme entitled
INSPIRE. This defines the values and
expectations of our leaders and is designed
to drive inspirational leadership. Over 200
of our front line and senior leaders have taken
part in this programme through one of five
different development workshops.
COMMUNITY INVOLVEMENT
AND DEVELOPMENT
COMMUNITY PARTNERSHIPS
Variety – The Children's Charity
SKYCITY has supported Variety –
The Children’s Charity since 2004. Since
2013, SKYCITY Auckland has hosted the
Variety of Chefs Dinner, a fundraising dinner
which attracts around 350 guests. This year,
MASU chef Nic Watt teamed up with
Adam D’Sylva, executive chef at Coda and
Tonka in Melbourne, for a trans-Tasman style
cook-off, each producing an entrée, main,
and dessert for a very appreciative crowd.
Guests were encouraged to sponsor a child
or to take part in a charity auction with
quality prizes.
The proceeds from the evening went back to
Variety to help make a difference to the many
New Zealand families in need.
Since 2009, SKYCITY Auckland has hosted
Variety Bingo every Sunday through to
Friday in the SKYCITY Theatre. We also
host Variety Bingo at SKYCITY Hamilton.
All proceeds are donated to Variety. In 2015,
a total of $141,670 was raised, bringing the
total raised through these bingo events since
they began to over $643,660.
Leukaemia & Blood Cancer New Zealand
SKYCITY has supported Leukaemia & Blood
Cancer New Zealand for 10 years. The
partnership has grown in that time and now
includes three iconic fundraising events.
Dining For a Difference, an event inspired by
Peter Gordon (The Sugar Club and Bellota),
has been supported by SKYCITY since 2008.
Each year, 13 invited international chefs
hailing from New Zealand, Australia and the
UK come together in the one kitchen and
prepare a three-course fine dining style menu
for the event’s 280 guests.
Hosted by SKYCITY at the Sky Tower,
the Firefighter Sky Tower Stair Challenge
celebrated its 11th year in 2015. More than
700 courageous firefighters, auxiliary teams
and special guests participated in this
gruelling event, wearing full firefighting kit
weighing in at 25kg. This event now attracts
firefighters from New Zealand, Australia and
the USA and in 2015 raised $1.04 million.
Three years ago, the Sky Tower Corporate
Challenge was launched, building on the
reputation of the Firefighter Challenge.
This event too has been a huge success and
has raised significant funds. In 2015, over
$346,000 was raised.
Kidz First Children’s Hospital
SKYCITY recognises the significant
contribution of the Middlemore Foundation
to the establishment of the Kidz First
Children’s Hospital. We continue to fundraise
to ensure resources and equipment are in
place to help sick kids and support their
families. Each year, SKYCITY hosts the Kidz
First Christmas Party, a wonderful afternoon
dedicated to the children, families and
caregivers. The annual event, which draws
some 250 guests, was first hosted in 2004.
It is held on-site at SKYCITY’s Auckland
venue. At the most recent event, SKYCITY
Breakers, Vodafone Warriors and the Blues
players attended, manning Christmas card
colouring-in and craft stations and face
painting stations, as well as helping with
bubble blowing, gift giving with Santa and
spending time meeting and talking to the
families.
Blue September
‘Blue September’ is an initiative by the
Prostate Cancer Foundation of New Zealand
to raise public awareness about prostate
cancer and the advantages of early detection.
The campaign was launched in 2008 at
SKYCITY. Every September since then,
we have lit the Sky Tower blue for the whole
month to draw attention to the cause. We
also host fundraising events. In 2015, that
event was the ‘Good Man Poker Night’ with
all ticket sales donated to the Prostate Cancer
Foundation of New Zealand.
Auckland RSA – Annual Poppy
Day Appeal
SKYCITY supports the Auckland Returned
and Services Association (RSA) by lighting
the Sky Tower red in the lead up to ANZAC
Day. In 2014, a larger than life image of a
poppy was projected onto the Sky Tower, and
in 2015 SKYCITY hosted a World War One
centennial commemoration display, inviting
visitors to pay their respects by adding a
special poppy sticker to the windows of the
Sky Tower. SKYCITY also promotes the
RSA Poppy Day Appeal across its site and
media channels, with over 20 poppy donation
collection boxes placed around site in our bars
and restaurants to encourage our customers
and visitors to provide their support for the
appeal. SKYCITY Breakers, Vodafone
Warriors and the Blues players help with these
fundraising efforts, volunteering to sell the
distinctive red poppies for a donation
supporting veterans, ex-service people and
their families in need.
AUCKLAND
SKYCITY Auckland Community Trust
distributed more than $2.4 million across
112 community organisations in 2015.
Although this was a smaller number of
organisations than previously, more successful
applicants received the full funding they
had asked for rather than a contribution.
The full list of grants can be found at
www.skycityauckland.co.nz/grants. There
was also a change in the method for
calculating funds this year that reduced the
amount paid as we moved from estimating for
the final quarter to a process based on actual
contributions. We intend to report on a full
12-month contribution distribution basis
next year.
HAMILTON
SKYCITY Hamilton Community Trust
distributed $456,345 across 134 organisations
this year.
20
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 CORPORATE SOCIAL RESPONSIBILITY
In Hamilton, we support a number of smaller
charities and fund-raising initiatives with
bowling and food and beverage vouchers.
We also have a partnership with Hamilton
North School which provides special needs
children with discounted access to The
Bowlevard as part of the school’s community
integration programme.
This year we supported the Hamilton
Christmas Trust, the Round the Bridges
70th Anniversary event and Hamilton’s
150th Birthday, and we sponsored
two categories in the Westpac Waikato
Chamber of Commerce Business Excellence
Awards. We also contributed to smaller
community events that further connect us
with the local community.
QUEENSTOWN
SKYCITY Queenstown Casino
Community Trust distributed $99,726
across 50 community groups this year.
The American Express Queenstown Winter
Festival is a week long celebration to
launch the start of winter in the Southern
Hemisphere. It has been running in
Queenstown for 40 years, and SKYCITY
Queenstown Casino has been sponsoring the
event in some way or another since opening
14 years ago. Other sponsorships this year
have included The DNA Gay Ski Week, the
Queenstown Jazz Festival and the Cromwell
Christmas Races.
ADELAIDE
Adelaide Casino continues to support the
Flinders Medical Centre Foundation
(FMCF). To date, over A$100,000 has been
raised for FMCF through FMCF Bingo
hosted by Adelaide Casino.
We help raise funds for disadvantaged and
sick children in South Australia each year by
participating in the Variety Bash run by
Variety, – the Children’s Charity. This year
we raised more than A$35,000.
RSA – ANNUAL POPPY DAY APPEAL
In addition, we raised over A$3,000 for
OzHarvest, we assist the Red Cross with
disaster relief appeals and regularly donate
unclaimed lost property items to the
Salvation Army.
DARWIN
We donate to the community through our
Cash Donation Charity Box and through
vouchers which are donated as prizes for
events, raffles and fundraising. 'Charity Box'
is a cash donation box on the property
which is regularly rotated amongst charities
RSPCA, Sids and Kids and the Cancer
Council. Restaurant and accommodation
vouchers have been donated for events,
fundraising and raffles to 99 groups including
sporting groups, schools, charities, and local
businesses.
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
3
5
7
22
2
4
6
8
1 CHRIS MOLLER - Chairman
Member of the Audit and Financial Risk Committee
Member of the Remuneration and Human Resources
Committee
Member of the Corporate Social Responsibility
Committee
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 and was appointed as a
Companion of the New Zealand Order of Merit in
January 2015 for services to business and sport.
2 BRUCE CARTER - Deputy Chairman
Chairman of the Audit and Financial Risk Committee
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.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 OUR BOARD
3 BRENT HARMAN - Director
Chairman of the Remuneration and Human
Resources Committee
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
executive and board positions in the broadcast
and news media industries in New Zealand,
the United Kingdom and Australia.
4 PETER CULLINANE - Director*
Chairman of the Corporate Social Responsibility
Committee
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.
* Peter Cullinane will retire at SKYCITY’s upcoming 2015
Annual Meeting.
5 SUE SUCKLING - Director
Member of the Remuneration and Human
Resources Committee
Member of the Governance and Nominations
Committee
Appointed a Director of SKYCITY in May 2011
Sue Suckling 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 is a director and consultant with over
25 years’ experience in corporate governance.
Sue is currently the Chair of the New Zealand
Qualifications Authority, Callaghan Innovation
Research Limited, Jacobsen Holdings 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.
6 RICHARD DIDSBURY - Director
Member of the Corporate Social Responsibility
Committee
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 Property Group Limited
(KPG), 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.
7 RICHARD TSIANG - Director
Member of the Audit and Financial Risk Committee
Member of the Governance and Nominations
Committee
Appointed a Director of SKYCITY in December 2014
Based in both Melbourne, Australia, and
Hong Kong, Richard Tsiang is a Consultant and
Advisory Board member to 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.
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. Nigel
attended and completed the INSEAD Advanced
Management Programme in 2015.
23
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM FINANCIAL STATEMENTS AND NOTES
FINANCIAL STATEMENTS AND NOTES
FOR THE YEAR ENDED 30 JUNE 2015
24
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 FINANCIAL STATEMENTS AND NOTES
25
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM INDEPENDENT AUDITORS’ REPORT
INDEPENDENT AUDITORS’ REPORT
to the shareholders of SKYCITY Entertainment Group Limited
Report on the Financial Statements
We have audited the Group financial statements of SKYCITY Entertainment Group Limited (“the Company”) on pages
28 to 66, which comprise the balance sheet as at 30 June 2015, the income statement, the statement of comprehensive
income, the statement of changes in equity and the statement 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 the
Group. The Group comprises the Company and the entities it controlled at 30 June 2015 or from time to time during the
financial year.
Directors’ Responsibility for the Financial Statements
The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with
New Zealand Equivalents to International Financial Reporting Standards and International Financial Reporting Standards
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’s preparation and fair presentation of the financial statements 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’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.
Our firm carries out other services for the Group in the areas of accounting assistance, tax, and other advisory services.
Appropriate safeguards were applied to reduce the threats to independence from the provision of other services to an
acceptable level. The provision of these other services has not impaired our independence as auditors of the Group.
26
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 INDEPENDENT AUDITORS’ REPORT
Opinion
In our opinion, the financial statements on pages 28 to 66 present fairly, in all material respects, the financial position of
the Group as at 30 June 2015, and its financial performance and cash flows for the year then ended in accordance with
New Zealand Equivalents to International Financial Reporting Standards and International Financial Reporting Standards.
Restriction on Use of our Report
This report is made solely to the Company’s shareholders, as a body, in accordance with the Companies Act 1993.
Our audit work has been undertaken so that we might state 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
12 August 2015
Auckland
27
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
Total receipts including GST
Less non-gaming GST
Gaming win plus non-gaming revenue
Less gaming GST
Revenue
Revenue
Other income
Employee benefits expense
Other expenses
Directors fees
Restructuring costs
Gaming taxes and levies
Direct consumables
Marketing and communications
Gain on disposal of associate
Earnings before interest, taxes, depreciation and amortisation
expenses (EBITDA)
Depreciation and amortisation expense
Earnings before interest and tax (EBIT)
Finance costs - net
Profit before income tax
Income tax expense
Profit for the year
Earnings per share for profit attributable to the
shareholders of the company:
Basic earnings per share
Diluted earnings per share
The above income statement should be read in conjunction with the accompanying notes.
CONSOLIDATED
NOTES
2015
$’000
4
4
4
4
4
4
5
6
6
6
7
8
NOTES
9
9
1,036,966
(29,259)
1,007,707
(91,620)
916,087
916,087
1,356
(302,748)
(137,772)
(1,179)
(4,316)
(56,676)
(75,327)
(35,348)
-
304,077
(89,292)
214,785
(43,927)
170,858
(42,114)
128,744
CENTS
22.0
22.0
2014
$’000
928,228
(26,694)
901,534
(81,051)
820,483
820,483
1,000
(280,009)
(121,007)
(1,130)
(9,170)
(55,361)
(68,028)
(30,343)
934
257,369
(80,769)
176,600
(48,049)
128,551
(30,014)
98,537
CENTS
17.0
17.0
28
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Profit for the year
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
CONSOLIDATED
NOTES
2015
$’000
2014
$’000
128,744
98,537
23
23
23
11,719
(2,805)
768
9,682
138,426
(27,102)
(4,546)
1,375
(30,273)
68,264
138,426
68,264
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
29
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
BALANCE SHEET
FOR THE YEAR ENDED 30 JUNE 2015
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
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
Provisions
Deferred tax liabilities
Derivative financial instruments
Deferred licence value
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained earnings
Total equity
The above balance sheet should be read in conjunction with the accompanying notes.
30
CONSOLIDATED
NOTES
2015
$’000
2014
$’000
10
11
12
13
12
14
15
13
16
17
13
19
17, 18
20
13
15
22
23(a)
23(b)
53,232
16,654
8,362
45,227
32
54,052
18,810
7,871
33,158
769
123,507
114,660
779
1,174,248
556,029
70,998
1,802,054
1,925,561
130,085
–
675
–
130,760
699,092
3,739 –
80,613
33,513
160,922
977,879
21,183
1,141,947
537,648
15,889
1,716,667
1,831,327
119,500
81,724
10,753
76,441
288,418
498,935
75,715
28,833
165,541
769,024
1,108,639
1,057,442
816,922
773,885
758,800
(38,894)
97,016
816,922
737,546
(48,576)
84,915
773,885
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
NOTES
SHARE
CAPITAL
$’000
HEDGING
RESERVES
$’000
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$’000
RETAINED
PROFITS
$’000
TOTAL EQUITY
$’000
CONSOLIDATED
Balance as at 1 July 2013
Total comprehensive income/(expense)
Dividends provided for or paid
Shares issued under dividend reinvestment plan
Share rights issued for employee services
Net purchase of treasury shares
Balance as at 30 June 2014
Balance as at 1 July 2014
Total comprehensive income/(expense)
Dividends provided for or paid
Shares issued under dividend reinvestment plan
Share rights issued for employee services
Net purchase of treasury shares
729,395
(5,595)
(12,708)
101,799
812,891
–
–
20,126
1,238
(13,213)
(3,171)
–
–
–
–
(27,102)
–
–
–
–
98,537
(115,421)
–
–
–
68,264
(115,421)
20,126
1,238
(13,213)
737,546
(8,766)
(39,810)
84,915
773,885
737,546
(8,766)
(39,810)
84,915
773,885
–
–
19,254
1,245
755
(2,037)
–
–
–
–
11,719
–
–
–
–
128,744
(116,643)
–
–
–
138,426
(116,643)
19,254
1,245
755
24
22
22
22
24
22
22
22
Balance as at 30 June 2015
758,800
(10,803)
(28,091)
97,016
816,922
The above statement of changes in equity should be read in conjunction with the accompanying notes.
31
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Gaming tax paid
Income taxes paid
CONSOLIDATED
NOTES
2015
$’000
2014
$’000
918,243
(550,189)
368,054
8
(48,328)
(29,059)
820,259
(501,268)
318,991
5
(48,206)
(40,017)
Net cash inflow from operating activities
31
290,675
230,773
Cash flows from investing activities
Purchase of/proceeds from property, plant and equipment
Payments for intangible assets
Proceeds from sale of Christchurch Casinos Limited
Net cash outflow from investing activities
Cash flows from financing activities
Cash flows associated with derivatives
Drawdown of borrowings
Proceeds from sale of capital notes
Repayment of borrowings
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
The above statement of cash flows should be read in conjunction with the accompanying notes.
(106,310)
(5,724)
–
(112,034)
4,839
128,074
–
(168,751) –
755
(97,389)
(46,989)
(179,461)
(820)
54,052
53,232
(156,164)
(11,899)
1,440
(166,623)
9,202
67,193
20,000
(13,213)
(95,295)
(49,116)
(61,229)
2,921
51,131
54,052
13
22
24
10
32
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015
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 consolidated financial statements were approved for issue
by the board of directors on 12 August 2015.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation
The financial statements of the Group have been prepared in
accordance with Generally Accepted Accounting Practice in
New Zealand (‘NZ GAAP’). They comply with New Zealand
equivalents to International Financial Reporting Standards
(‘NZ IFRS’) and other applicable Financial Reporting Standards,
as applicable for profit-oriented entities. The financial statements
also comply with International Financial Reporting Standards
(‘IFRS’).
Entities Reporting
The Group has a small negative working capital balance. The
Group has significant available undrawn banking facilities totalling
$217 million as at 30 June 2015 (refer to note 18) and has the
ability to fully pay all debts as they fall due.
The Group is designated as a profit-oriented entity for financial
reporting purposes.
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of the Group as at 30 June 2015 and
the results of all subsidiaries for the year then ended.
Statutory Base
SKYCITY Entertainment Group Limited is a company registered
under the Companies Act 1993 and is an FMC reporting entity
under Part 7 of the Financial Markets Conduct Act 2013. The
financial statements of the Group have been prepared in
accordance with the requirements of Part 7 of the Financial
Markets Conduct Act 2013 and the NZX Main Board Listing
Rules. In accordance with the Financial Markets Conduct Act
2013, because group financial statements are prepared and
presented for SKYCITY Entertainment Group Limited and its
subsidiaries, separate financial statements for SKYCITY
Entertainment Group Limited are no longer required to be
prepared and presented.
Measurement Basis
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
available for sale financial assets, financial assets and liabilities
(including derivative instruments) at fair value through profit
or loss.
Critical accounting estimates
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. Judgement is used in the following areas:
estimated impairment of goodwill, indefinite casino licences and
assessing the probability of utilisation of unused tax losses.
The Group tests annually whether goodwill and indefinite
licences have suffered any impairment, in accordance with the
accounting policy stated in note 2(p). The recoverable amounts
of cash-generating units have been determined based on value in
use calculations. These calculations require the use of estimates
(refer notes 6 and 15).
There is sufficient headroom between the value in use
calculations and the carrying value of the remaining assets that
significant changes in the assumptions used would not require
an impairment.
(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.
33
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM NOTES TO THE FINANCIAL STATEMENTS
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition
of a subsidiary is the net fair value of the assets transferred, the
liabilities incurred to the former owners of the acquiree and
the equity interests issued by the Group. The consideration
transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at
the acquisition date. The Group recognises any non-controlling
interest in the acquiree on an acquisition-by-acquisition basis,
either at fair value or at the non-controlling interest’s
proportionate share of the recognised amounts of acquiree’s
identifiable net assets.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated. When necessary, amounts reported by
subsidiaries have been adjusted to conform with the group’s
accounting policies.
(c) Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating 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 that
best reflects the economic substance of the underlying events
and circumstances relevant to that operation (functional
currency). The consolidated financial statements are presented in
New Zealand dollars which is the Group’s presentation currency.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at
year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Income
Statement, except when deferred in equity as qualifying cash 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 hyper-inflationary economy) that have
a functional currency different from the presentation currency
are translated into the presentation currency below:
• assets and liabilities for each Balance Sheet presented are
translated at the closing rate at the date of that balance sheet
•
income and expenses for each Income Statement are
translated at average exchange rates, and
• all resulting exchange differences are recognised as a separate
component of equity.
Exchange differences arising from the translation of any net
investment in foreign entities, and of borrowings and other
currency instruments designated as hedges of such investments,
are taken to shareholders’ equity.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
(e) Revenue Recognition
Revenue is recognised as summarised below.
(i) Operating Revenue
Operating revenues include casino, hotel, food and beverage,
Sky Tower, carparking and other revenues. Casino revenues
represent the net win to the casino from gaming activities, being
the difference between amounts wagered and amounts won by
casino patrons.
Revenues exclude the retail value of rooms, food, beverage and
other promotional allowances provided on a complimentary basis
to customers.
(ii) Interest Income
Interest income is recognised on a time-proportion basis using the
effective interest method.
(iii) Dividend Income
Dividend income is recognised when the right to receive payment
is established.
(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.
34
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 NOTES TO THE FINANCIAL STATEMENTS
The current income tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the balance sheet date in
the countries where the company and its subsidiaries operate and
generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
However, deferred tax liabilities are not recognised if they arise
from the initial recognition of goodwill. Deferred income tax is not
accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred income tax assets are recognised only to the extent that
it is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising
on investments in subsidiaries and associates, except for a deferred
income tax liability where the timing of the reversal of the
temporary difference is controlled by the Group and it is probable
that the temporary difference will not reverse in the foreseeable
future.
(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
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 Financial Assets
Intangible assets that have an indefinite useful life are not subject
to amortisation but are tested annually for impairment. Assets
that are subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows (cash generating units).
(j) Cash and Bank Balances
Cash and bank balances include cash on hand, deposits held at
call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in
current liabilities on the Balance Sheet.
(k) Trade Receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost, less provision for
doubtful debts.
(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 financial assets in the following categories:
at fair value through profit or loss and loans and receivables. The
classification depends on the purpose for which the financial
assets were acquired. Management determines the classification
of its financial assets at initial recognition.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial
assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the
short term. Derivatives are also categorised as held for trading
unless they are designated as hedges. Assets in this category are
classified as current assets if expected to be settled within
12 months, otherwise they are classified as non-current.
(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 are included in current assets, except for maturities
greater than 12 months after the end of the reporting period.
These are classified as non-current assets. The Group’s loans and
receivables comprise ‘cash and cash equivalents’ and ‘trade and
other receivables’ in the balance sheets (notes 2(j) and (k)).
(n) Derivatives
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently
35
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM 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.
When a hedging instrument expires or is sold or terminated, or
when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in equity at that time remains
in equity and is recognised in the Income Statement when the
forecast transaction is ultimately recognised in the Income
Statement. When a forecast transaction is no longer expected to
occur, the cumulative gain or loss that was reported in equity is
transferred to the Income Statement.
(iii) Derivatives that Do Not Qualify for Hedge Accounting
Changes in the fair value of any derivative instrument that does
not qualify for hedge accounting are recognised in the Income
Statement.
(o) Property, Plant and Equipment
Property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Cost may also include
transfers from equity of any gains/losses on qualifying cash flow
hedges of foreign currency purchases of property, plant and
equipment.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. All other
repairs and maintenance are charged to the Income Statement during
the financial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated
using the straight-line method to allocate their cost, net of their
residual values, over their estimated useful lives, as below:
•
•
Buildings and fit-out 5–75 years
Plant and equipment 2–75 years
• Motor vehicles
3 years
•
Fixtures and fittings 3–20 years
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount
Gains and losses on disposals are determined by comparing
proceeds with carrying amount.
(p) Intangible Assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over
the fair value of the Group’s share of the net identifiable assets of
the acquired business/associate at the date of acquisition.
Goodwill on acquisitions of businesses is included in Intangible
Assets. Goodwill acquired in business combinations is not
amortised. Instead, goodwill is tested for impairment annually or
more frequently if events or changes in circumstances indicate
that it might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of
impairment testing.
36
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015 (ii) Casino Licences
The Group’s 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 for amortisation purposes are not amortised
but are reviewed for impairment on an annual basis.
(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, once
constructed the carrying value of that property, plant and
equipment is reduced by the value of the regulatory reforms.
Prior to construction of the related property, plant and
equipment, the value of the regulatory reforms is accounted for
as deferred licence value.
(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
life (three to seven years).
(q) Payables
Payables are stated at fair value or estimated liability where
accrued.
(t) Employee Benefits
(i) Wages, Salaries and Annual Leave
Liabilities for wages and salaries, including non-monetary benefits,
annual leave expected to be settled within 12 months of the
reporting date and redundancy payments 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 shares and/or share rights 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
company 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.
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.
(r) Borrowings
(v) Dividends
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.
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.
(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.
(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
37
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM after 1 January 2018. Early adoption is permitted. The Group
intends to adopt NZ IFRS 9 from 1 July 2015 and it is not
expected to significantly impact the Group.
• NZ IFRS 15, Revenue from Contracts with Customers
(Effective date: periods beginning on or after 1 January
2017). NZ IFRS 15, ‘Revenue from contracts with customers’
deals with revenue recognition and establishes principles for
reporting useful information to users of financial statements
about the nature, amount, timing and uncertainty of revenue
and cash flows arising from an entity’s contracts with
customers. Revenue is recognised when a customer obtains
control of a good or service and thus has the ability to direct
the use and obtain the benefits from the good or service. The
standard replaces NZ IAS 18 ‘Revenue’ and NZ IAS 11
‘Construction contracts’ and related interpretations. The
standard is effective for annual periods beginning on or after
1 January 2017 and earlier application is permitted. The
Group intends to adopt NZ IFRS 15 from 1 July 2017 and is
currently assessing its full impact.
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) 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.
(z) 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 2015
or later periods, but which the Group has not early adopted. The
significant items are:
• NZ IFRS 9, Financial Instruments (Effective date: periods
beginning on or after 1 January 2018). NZ IFRS 9, ‘Financial
instruments’, addresses the classification, measurement and
recognition of financial assets and financial liabilities. The
complete version of NZ IFRS 9 was issued in September
2014. It replaces the guidance in NZ IAS 39 that relates to
the classification and measurement of financial instruments.
NZ IFRS 9 retains but simplifies the mixed measurement
model and establishes three primary measurement categories
for financial assets: amortised cost, fair value through other
comprehensive income and fair value through profit or loss.
The basis of classification depends on the entity’s business
model and the contractual cash flow characteristics of the
financial asset. Investments in equity instruments are required
to be measured at fair value through profit or loss with the
irrevocable option at inception to present changes in fair
value in other comprehensive income not recycling. There is
now a new expected credit losses model that replaces the
incurred loss impairment model used in NZ IAS 39. For
financial liabilities there were no changes to classification and
measurement except for the recognition of changes in own
credit risk in other comprehensive income, for liabilities
designated at fair value through profit or loss. NZ IFRS 9
relaxes the requirements for hedge effectiveness by replacing
the bright line hedge effectiveness tests. It requires an
economic relationship between the hedged item and hedging
instrument and for the ‘hedged ratio’ to be the same as the
one management actually use for risk management purposes.
Contemporaneous documentation is still required but is
different to that currently prepared under NZ IAS 39. The
standard is effective for accounting periods beginning on or
38
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015 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 Adelaide
SKYCITY Adelaide includes casino operations and food and
beverage.
• SKYCITY Darwin
The Group is organised into the following main operating
segments:
SKYCITY Darwin includes casino operations, food and
beverage and hotel.
• SKYCITY Auckland
SKYCITY Auckland includes casino operations, hotels and
convention, food and beverage, carparking, Sky Tower and a
number of other related activities.
• Rest of New Zealand
Rest of New Zealand includes the Group’s interest in SKYCITY
Hamilton, SKYCITY Queenstown Casino and SKYCITY Wharf.
•
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 Officer’s office and directors.
SKYCITY
AUCKLAND
$’000
REST OF NEW
ZEALAND
$’000
SKYCITY
ADELAIDE
$’000
SKYCITY
DARWIN
$’000
INTER-
NATIONAL
BUSINESS
$’000
CORPORATE/
GROUP
$’000
TOTAL
$’000
2015
Revenue from external customers and other income 473,725
Expenses
(245,540)
Depreciation and amortisation
(47,759)
56,157
(34,288)
(5,489)
152,291
(129,069)
(16,319)
123,170
(82,738)
(13,782)
112,100
(82,217)
–
–
(39,514)
(5,943)
917,443
(613,366)
(89,292)
Segment profit/EBIT
Finance costs
Profit before income tax
Segment assets
Net additions to non current assets
(other than financial assets and deferred tax)
2014
180,426
16,380
6,903
26,650
29,883
(45,457)
214,785
(43,927)
170,858
700,918
58,321
493,749
364,967
32,330
3,913
20,023
16,945
–
–
307,606 1,925,561
29,872
103,083
Revenue from external customers and other income 430,519
–
Shares of net profits of associates
(226,366)
Expenses
(44,898)
Depreciation and amortisation
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)
Segment profit/EBIT
Finance costs
Profit before income tax
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
Segment assets
Net additions to non current assets
(other than financial assets and deferred tax)
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
39
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
3 SEGMENT INFORMATION (continued)
Revenue – products and services
Local gaming
International Business gaming
Non-gaming
Total revenue
Revenue – geographic
New Zealand
Australia
Total revenue
Non-current asset additions – geographic
New Zealand
Australia
Total non-current asset additions
Non-current assets excluding financial instruments – geographic
New Zealand
Australia
Total non-current assets excluding financial instruments
CONSOLIDATED
2015
$’000
2014
$’000
591,966
112,100
212,021
916,087
602,074
314,013
916,087
66,115
36,968
103,083
570,532
55,807
194,144
820,483
522,133
298,350
820,483
98,459
56,589
155,048
914,156
816,900
934,818
765,960
1,731,056
1,700,778
40
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
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
2015
$’000
1,036,966
(29,259)
1,007,707
(91,620)
916,087
704,066
212,021
916,087
2014
$’000
928,228
(26,694)
901,534
(81,051)
820,483
626,339
194,144
820,483
Non-gaming revenue includes revenues from hotels, food and beverage, convention centre, car parking, property rentals, Sky Tower,
and other non-gaming activities.
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.
5 OTHER INCOME
Net gain on disposal of property, plant and equipment
Dividend income
CONSOLIDATED
2015
$’000
1,348
8
1,356
2014
$’000
995
5
1,000
41
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
CONSOLIDATED
2015
$’000
2014
$’000
27,359
40,226
10,832
492
78,909
4,402
5,981
10,383
89,292
23,014
3,762
4,675
14,023
92,197
101
24,421
37,915
9,516
403
72,255
3,115
5,399
8,514
80,769
23,002
2,635
4,382
14,035
75,944
1,009
137,772
121,007
1,689
629
–
104
1,576
318
4,316
4,262
344
1,372
–
2,305
887
9,170
6 EXPENSES
Profit before income tax includes the following specific expenses:
Depreciation
Buildings and fitout
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:
Adelaide redevelopment costs
NZICC costs
Strategic projects
Darwin pre-opening costs
Restructuring costs
Auckland project costs
42
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
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
Group Audit
Total remuneration for audit services
Other assurance services provided by PricewaterhouseCoopers
Accounting advice and assistance
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
2015
$’000
2014
$’000
766
766
27
89
116
882
248
30
278
1,160
665
665
42
106
148
813
295
156
451
1,264
*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
CONSOLIDATED
2015
$’000
2014
$’000
47,328
(1,077)
(2,324)
43,927
50,130
(125)
(1,956)
48,049
CONSOLIDATED
2015
$’000
2014
$’000
35,976
6,138
42,114
170,858
47,840
165
–
(948)
(7,045)
742
1,360
39,952
(9,938)
30,014
128,551
35,994
717
(262)
98
(6,546)
(372)
385
42,114
30,014
7 FINANCE COSTS – NET
Finance costs
Interest and finance charges
Exchange gains
Interest income
Total finance costs
8 INCOME TAX EXPENSE
(a) Income Tax Expense
Current tax
Deferred tax
(b) Numerical Reconciliation of Income Tax Expense
to Prima Facie Tax Payable
Profit from continuing operations before income tax expense
Tax at the New Zealand tax rate of 28% (2014: 28%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Net non-deductible items
Share of net profit of associates
Foreign exchange rate differences
Share of partnership expenditure
Differences in overseas tax rates
Under provision in prior years
Income tax expense
The weighted average applicable tax rate was 24.6% (2014: 23.3%).
44
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
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
CONSOLIDATED
2015
CENTS
22.0
22.0
2014
CENTS
17.0
17.0
CONSOLIDATED
2015
$’000
2014
$’000
Profit attributable to the ordinary equity holders of the company used in calculating basic earnings per share
128,744
98,537
(b) Weighted Average Number of Shares used as the Denominator
2015
NUMBER
2014
NUMBER
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
586,071,258
579,706,028
There are no dilutive potential ordinary shares and therefore basic and diluted earnings per share are the same.
10 CASH AND BANK BALANCES
Cash at bank
Cash in house
11 RECEIVABLES AND PREPAYMENTS
Trade receivables (net)
Sundry receivables
Prepayments
2015
$’000
12,302
40,930
53,232
2015
$’000
10,226
3,294
3,134
16,654
CONSOLIDATED
2014
$’000
12,056
41,996
54,052
CONSOLIDATED
2014
$’000
13,643
2,286
2,881
18,810
45
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
12 NET TAX RECEIVABLES
Tax prepayment – current
Tax prepayment – non-current
CONSOLIDATED
2015
$’000
45,227
779
46,006
2014
$’000
33,158
21,183
54,341
Tax is typically paid in advance in New Zealand to ensure the Group has positive imputation credits as at 31 March of each year.
13 DERIVATIVE FINANCIAL INSTRUMENTS
Current assets
Forward foreign exchange 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
CONSOLIDATED
2014
$’000
769
769
252
15,637
15,889
415
836
9,502
10,753
24,039
4,794
28,833
2015
$’000
32
32
–
70,998
70,998
327
348
–
675
33,513
–
33,513
During the year there were no fair value hedges.
There is no cash flow hedge ineffectiveness in either the current or prior year.
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. As at 30 June 2015, there was no collateral deposited with
counterparties to derivatives (2014: $7,339,042).
46
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
14 PROPERTY, PLANT AND EQUIPMENT
LAND
$’000
BUILDINGS
AND FITOUT
$’000
PLANT AND
EQUIPMENT
$’000
FIXTURES AND
FITTINGS
$’000
MOTOR
VEHICLES
$’000
CAPITAL
WORK IN
PROGRESS
$’000
TOTAL
$’000
CONSOLIDATED
At 30 June 2013
Cost
Accumulated depreciation
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)
Net book value
192,075
675,387
112,498
38,132
2,331
73,559
1,093,982
Movements in the year ended 30 June 2014
Opening net book value
Exchange differences
Net additions/transfers
Depreciation charge
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)
Closing net book value
189,607
661,191
115,350
47,747
2,182
125,870
1,141,947
At 30 June 2014
Cost
Accumulated depreciation
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)
Net book value
189,607
661,191
115,350
47,747
2,182
125,870
1,141,947
Movements in the year ended 30 June 2015
Opening net book value
Exchange differences
Net additions/transfers
Depreciation charge
189,607
1,318
787
–
661,191
8,402
33,620
(27,359)
115,350
1,856
37,348
(40,226)
47,747
528
14,295
(10,832)
2,182
19
806
(492)
125,870 1,141,947
13,851
97,359
(78,909)
1,728
10,503
–
Closing net book value
191,712
675,854
114,328
51,738
2,515
138,101 1,174,248
At 30 June 2015
Cost
Accumulated depreciation
191,712
–
956,334
(280,480)
396,035
(281,707)
124,221
(72,483)
5,250
(2,735)
138,101 1,811,653
(637,405)
–
Net book value
191,712
675,854
114,328
51,738
2,515
138,101 1,174,248
Borrowing costs of $2,092,270 have been capitalised in the current year relating to capital projects (2014: $765,208) using the
Group’s weighted average cost of debt of 6.71% (2014: 6.92%).
A memorandum of encumbrance is registered against the title of land for the Auckland casino in favour of Auckland Council.
Auckland 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.
47
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
GOODWILL
$’000
CASINO
LICENCES
$’000
COMPUTER
SOFTWARE
$’000
TOTAL
$’000
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
137,290
4,946
–
–
374,678
17,842
–
(4,402)
25,680
252
5,724
(5,981)
537,648
23,040
5,724
(10,383)
142,236
388,118
25,675
556,029
142,236
–
429,994
(41,876)
79,054
(53,379)
651,284
(95,255)
142,236
388,118
25,675
556,029
15 INTANGIBLE ASSETS
CONSOLIDATED
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
Movements in the year ended 30 June 2015
Opening net book amount
Exchange differences
Additions
Amortisation charge
Closing net book amount
At 30 June 2015
Cost
Accumulated amortisation
Net book amount
48
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
15 INTANGIBLE ASSETS (continued)
Casino
Licence
SKYCITY
Darwin
Casino
Adelaide
Casino
Contract Term
The casino and associated operations are carried out by SKYCITY Darwin Pty Limited 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 5 year basis
so that, subject to certain criteria being met, the licence period is never less than 15 years. The carrying value of the
casino licence is A$31.7m (FY14: A$31.7m).
The casino and associated operations are carried out by SKYCITY Adelaide Pty Limited under a casino licence (the
Approved Licensing Agreement (ALA)) dated October 1999 (as amended). Unless terminated earlier, the expiry date of
the ALA is 30 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 casino licence is amortised over the life of the ALA.
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 made a A$20 million payment in February
2014 to the South Australian Government and agreed to undertake a casino expansion and hotel development project.
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 asset is amortised over 20 years or 71 years
depending on whether the incremental benefit is associated with the exclusivity period or the full licence period.
The carrying value of the casino licence is A$309.2m (FY14: A$313.3m).
SKYCITY
Auckland
Casino
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 for nil consideration, there is no
associated carrying value.
Pursuant to the terms of the New Zealand International Convention Centre Project and Licensing Agreement between
Her Majesty the Queen in Right of New Zealand and the company dated 5 July 2013, the initial term of the licence will
be extended from the current expiry date of 1 February 2021 to 30 June 2048 on and from the date that the company
executes a building works contract with a contractor to construct the New Zealand International Convention Centre and
there is no condition there under remaining to be satisfied by the company.
SKYCITY
Hamilton
Casino
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 for nil consideration, there
is no associated carrying value.
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 section 138 of the Gambling Act 2003 (NZ). As the licence was initially granted 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 section 138 of the Gambling Act 2003 (NZ). The carrying value of the casino licence is $4.4m
(FY14: $4.4m).
49
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM 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 5
Goodwill
Casino Licence
2014
Goodwill
Casino Licence
OTAGO CASINOS
LIMITED*
$’000
SKYCITY
HAMILTON*
$’000
SKYCITY
DARWIN
$’000
TOTAL
$’000
–
4,391
4,391
–
4,391
4,391
35,786
–
106,450
35,710
142,236
40,101
35,786
142,160
182,337
35,786
–
101,504
34,051
137,290
38,442
35,786
135,555
175,732
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 ten year period. There is a surplus between the calculated value-in-use and the carrying value for each
asset.
* SKYCITY Hamilton and Otago Casino 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
2015
%
39.3
28.3
2014
%
35.5
27.3
2015
%
2.0
3.0
2014
%
2.0
3.0
2015
%
9.5
9.5
2014
%
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 that a reasonably possible change in key assumptions would reduce recoverable amount below carrying
amount.
50
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
16 PAYABLES
Trade payables
Deferred income
Accrued expenses
Employee benefits
2015
$’000
20,125
2,174
59,869
47,917
CONSOLIDATED
2014
$’000
21,965
2,600
53,415
41,520
130,085
119,500
The fair value of payables and accruals approximates the carrying amount as they are of a short term nature.
17 CURRENT LIABILITIES – INTEREST BEARING LIABILITIES
Current
United States Private Placement (USPP)
Total current interest bearing borrowings
Refer note 18 for details concerning the US Private Debt.
18 NON-CURRENT LIABILITIES – INTEREST BEARING LIABILITIES
Unsecured
United States Private Placement (USPP)
Syndicated bank facility
Deferred funding expenses
Total non-current interest bearing liabilities
(a) United States Private Placement (USPP)
As at 30 June 2015, SKYCITY had US$202.0 million and NZ$21.1 million of USPP notes outstanding:
• US$27.0 million maturing 15 March 2017
• US$75.0 million maturing 15 March 2018
• NZ$21.1 million maturing 15 March 2020
• US$100.0 million maturing 15 March 2021
CONSOLIDATED
2015
$’000
2014
$’000
–
–
81,724
81,724
CONSOLIDATED
2015
$’000
2014
$’000
317,228
383,808
(1,944)
699,092
251,300
249,673
(2,038)
498,935
51
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
18 NON-CURRENT LIABILITIES – INTEREST BEARING LIABILITIES (continued)
During the year US$47.0 million and NZ$28.2 million matured. Other than these two repayments, movements in the outstanding
balance relate to foreign exchange rate movements.
The US dollar USPP notes have been hedged to NZ dollars or Australian dollars by way of cross currency interest rate swaps to
eliminate foreign exchange exposure to the US dollar. The offsetting changes in the 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 2015, SKYCITY had in place revolving credit facilities of:
• A$250.0 million maturing 30 June 2019
• NZ$200.0 million maturing 30 June 2020
• NZ$120.0 million maturing 15 March 2021
The syndicated banking facility is comprised of ANZ (New Zealand and Australia), Commonwealth Bank of Australia,
Bank of New Zealand Limited, National Australia Bank and Westpac (New Zealand and Australia).
(c) Fair values
Fair value of USPP debt is estimated at NZ$359 million (2014: NZ$412 million) compared to a carrying value of NZ$317 million
(2014: NZ$333 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.
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.
19 SUBORDINATED DEBT – CAPITAL NOTES
Balance at the end of the year
Deferred expense
Net capital notes at the end of the year
All capital notes were redeemed during the year.
CONSOLIDATED
2015
$’000
–
–
–
2014
$’000
76,451
10
76,441
52
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
20 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
Charged/(credited) to the Income Statement (note 8)
Debited to equity reserves (note 23)
Foreign exchange differences
Closing balance at 30 June
Within 12 months
In excess of 12 months
21 IMPUTATION CREDITS (NEW ZEALAND)
Balances available for use in subsequent reporting periods
Imputation credit account
Franking credit account
CONSOLIDATED
2015
$’000
2014
$’000
254
(18,358)
102,813
734
(1)
(535)
(4,294)
80,613
75,715
6,138
(768)
(472)
80,613
(25,360)
105,973
80,613
211
(11,560)
102,679
(10,726)
(937)
(500)
(3,452)
75,715
87,603
(9,938)
(1,276)
(674)
75,715
(24,772)
100,487
75,715
CONSOLIDATED
2015
$’000
2014
$’000
14,966
3,915
13,523
8,054
As required by relevant tax legislation, the imputation credit account had a credit balance as at 31 March 2015.
53
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
22 SHARE CAPITAL
Opening balance of ordinary shares issued
Share rights issued for employee services
Employee share entitlements issued
Treasury shares issued
Net issue/(purchase) of treasury shares
Shares issued under dividend reinvestment plan
2015
SHARES
2014
SHARES
2015
$’000
2014
$’000
582,088,094 576,958,340
–
746,714
(746,714)
–
5,129,754
–
76,617
(76,617)
–
5,384,647
737,546
1,245
–
–
755
19,254
729,395
1,238
–
–
(13,213)
20,126
587,472,741 582,088,094
758,800
737,546
All ordinary shares rank equally with one vote attached to each fully paid ordinary share.
Included within the number of shares is 6,699,707 treasury shares (2014: 6,776,574) 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 26). Treasury shares may be used to issue shares under the
company’s employee incentive plans or upon the exercise of share rights/options.
23 RESERVES AND RETAINED PROFITS/(LOSSES)
(a) Reserves
Hedging reserve – cash flow hedges
Foreign currency translation reserve
Hedging reserve – cash flow hedges
Balance at the beginning of the year
Revaluation
Transfer to net profit - 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
54
CONSOLIDATED
2015
$’000
2014
$’000
(10,803)
(28,091)
(38,894)
(8,766)
57,467
(60,272)
768
(10,803)
(39,810)
11,719
(28,091)
(8,766)
(39,810)
(48,576)
(5,595)
(40,294)
35,748
1,375
(8,766)
(12,708)
(27,102)
(39,810)
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
23 RESERVES AND RETAINED PROFITS/(LOSSES) (continued)
(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 25.
(ii) Foreign Currency Translation Reserve
Exchange differences arising on translation of foreign controlled entities are taken to the foreign currency translation reserve,
as described in note 2(d). The reserve is recognised in the Income Statement when the net investment is disposed of.
(b) Retained Profits
Movements in retained profits were as follows:
Balance 1 July
Net profit for the year
Dividends
Balance 30 June
24 DIVIDENDS
Prior year final dividend
Current year interim dividend
Total dividends provided for or paid
Prior year final dividend (per share)
Current year interim dividend (per share)
CONSOLIDATED
2015
$’000
84,915
128,744
(116,643)
97,016
2014
$’000
101,799
98,537
(115,421)
84,915
CONSOLIDATED
2015
$’000
58,042
58,601
116,643
10.00¢
10.00¢
2014
$’000
57,461
57,960
115,421
10.00¢
10.00¢
On 11 August 2015, the directors resolved to declare a final dividend of 10 cents per share in respect of the year ended
30 June 2015 (refer to note 32 for further details).
55
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
25 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risks (interest rate, currency and electricity price), liquidity risk, and
credit risk. The Group’s overall risk management programme recognises the nature of these risks and seeks to minimise potential adverse
effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out by a central treasury department under a formal Treasury Policy approved annually by the board of
directors. 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 (ie 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 18) has been fully hedged by
way of cross-currency interest rate swaps (CCIRS), hedging US dollar exposure on both principal and interest. The CCIRS correspond
in amount and maturity to the US dollar borrowings with no residual US dollar exposure.
(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.
PRINCIPAL – INTEREST RATE REPRICING
WEIGHTED
AVERAGE
%
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
2015
Cash and deposits
Bank facility
US Private Placement
IRS/CCIRS*
3.25
4.40
5.31
12,302
(383,808)
(21,127)
84,393
–
–
(39,578)
1,578
–
–
(109,938)
58,450
–
–
–
(11,254)
–
–
–
(40,000)
–
–
(146,585)
(93,167)
12,302
(383,808)
(317,228)
–
(308,240)
(38,000)
(51,488)
(11,254)
(40,000)
(239,752)
(688,734)
Weighted average debt interest rate**
6.06%
56
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
25 FINANCIAL RISK MANAGEMENT (continued)
2014
Cash and deposits
Bank facility
US Private Placement
Capital notes (NZ)
IRS/CCIRS*
PRINCIPAL – INTEREST RATE REPRICING
WEIGHTED
AVERAGE
%
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%
* Interest rate swaps and cross-currency interest rate swaps, notional principal amounts.
** 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 2015
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
–
1,069
794
–
(7,227)
(5,930)
–
(1,069)
(794)
–
6,896
5,650
114
–
–
15,388
–
–
(126)
–
–
(13,922)
–
–
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)
–
–
57
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
25 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$320 million and A$250 million (2014: NZ$285 million and A$200 million) were drawn down by NZ$206 million and A$158 million
as at 30 June 2015 (2014: NZ$137 million, A$30 million and term loan of A$75 million).
CONSOLIDATED – AT 30 JUNE 2015
Bank facility
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
–
–
–
–
–
–
–
39,578
–
109,938
481,341
21,127
120,000
146,585
601,341
317,228
39,578
109,938
502,468
266,585
918,569
Payables
Total drawn debt
Future contracted interest on drawn debt
Future contracted interest on CCIRS/IRS
79,317
–
11,948
3,167
–
–
8,600
2,933
–
39,578
16,536
5,560
–
109,938
13,302
4,213
–
404,935
18,449
7,291
–
146,585
5,947
1,665
79,317
701,036
74,782
24,829
58
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
25 FINANCIAL RISK MANAGEMENT (continued)
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
On 20 March 2015, SKYCITY restructured its banking facilities. The restructure included an extension of the maturity dates
(refer note 18).
During the year, the capital notes (15 May 2015) and US$47.0 million and NZ$21.1 million of USPP notes (15 March 2015) matured
and were repaid.
(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 2015
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
–
–
–
–
–
–
32
70,998
71,030
327
33,861
34,188
–
–
–
–
–
–
TOTAL
BALANCE
$’000
32
70,998
71,030
327
33,861
34,188
59
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
25 FINANCIAL RISK MANAGEMENT (continued)
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
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 rate swaps is calculated as the present value of the estimated
future cash flows based on observable yield curves.
The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with
the resulting value discounted back to present value.
LOANS AND
RECEIVABLES
$’000
ASSETS / (LIABILITIES)
AT FAIR VALUE THROUGH THE
INCOME STATEMENT
$’000
DERIVATIVES USED
FOR HEDGING
$’000
LIABILITIES
AT AMORTISED COST
$’000
53,232
10,226
3,294
–
–
–
–
66,752
–
–
–
32
(327)
–
–
(295)
–
–
–
70,998
(33,861)
–
–
37,137
–
–
–
–
–
(699,092)
(79,994)
(779,086)
(e) Financial instruments by category
CONSOLIDATED – AT 30 JUNE 2015
Cash and bank balances
Trade receivables
Sundry receivables
Derivative financial instruments – assets
Derivative financial instruments – liabilities
Interest bearing liabilities
Payables
Total
60
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
25 FINANCIAL RISK MANAGEMENT (continued)
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
(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
54,052
6,216
9,713
–
–
–
–
–
69,981
–
–
–
769
(415)
–
–
–
354
–
–
–
15,889
(39,171)
–
–
–
(23,282)
–
–
–
–
–
(498,935)
(76,441)
(75,380)
(650,756)
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 (debt at hedged exchange rates
less cash at bank) 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
2015
2.1 x
7.8 x
2014
2.3 x
6.4 x
These types of ratios are consistent with the financial covenants in the Group’s various funding facilities. Actual gearing as at
30 June 2015 was within covenant limits on funding facilities.
The Group does not have any externally-imposed capital requirements.
61
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
26 SHARE BASED PAYMENTS
Chief Executive Officer and Executive Long Term Incentive Plan 2009
Under this plan, executives purchase SKYCITY shares funded by an interest free loan from the Group. The shares purchased by the
executives are held by a trustee company with executives entitled to exercise the voting rights attached to the shares and receive
dividends, the proceeds of which are used to repay the interest free loan.
At the end of the restricted period (3 to 4 years), the Group will pay a bonus to each executive to the extent their performance targets
have been met which is sufficient to repay the initial interest free loan associated with the shares which vest. The shares upon which
performance targets have been met will then fully vest to the executives. The loan owing on shares upon which performance targets have
not been met (the forfeited shares) will be novated from the executives to the trustee company and will be fully repaid by the transfer of
the forfeited shares. Performance targets relate to total shareholder return.
At 30 June 2015, the interest free loan on the CEO Long Term Incentive Plan is $4,709,538 (2014: $8,319,048) and on the Executive
Long Term Incentive Plan total $11,051,650 (2014: $10,183,719).
Movements in the number of share rights outstanding are as follows:
GRANT DATE
EXPIRY DATE
CONSOLIDATED 2015
31/08/10
02/03/11
31/08/11
29/08/12
28/08/13
27/08/14
Total
31/08/14
02/03/15
31/08/15
29/08/16
28/08/17
27/08/18
CONSOLIDATED 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
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
WITHIN
TESTING
WINDOW
NUMBER
319,903
1,144,291
670,200
764,800
2,566,758
–
–
–
–
–
–
880,000
(76,866)
–
–
–
–
–
(243,037)
(1,144,291)
(125,000)
(97,500)
–
–
545,200
667,300
(168,750) 2,398,008
880,000
–
–
–
545,200
–
–
–
5,465,952
880,000
(76,866) (1,778,578) 4,490,508
545,200
408,263
1,082,195
1,394,291
705,200
999,800
–
–
–
–
–
–
2,851,758
–
(746,714)
–
–
–
–
(408,263)
(15,578)
–
319,903
(250,000) 1,144,291
670,200
(35,000)
(235,000)
764,800
(285,000) 2,566,758
–
319,903
1,144,291
–
–
–
4,589,749
2,851,758
(746,714)
(1,228,841) 5,465,952
1,464,194
The weighted average remaining contractual life of options and rights outstanding at the end of the period was 1.97 years
(2014: 2.08 years).
Fair Value of Share Rights Granted
The assessed fair value at grant date of the rights granted on 27 August 2014 is $1.00 (28 August 2013 is $1.14), this has been
calculated using the single index model by Ernst & Young Transaction Advisory Services Limited.
62
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
26 SHARE BASED PAYMENTS (continued)
The valuation inputs for the rights granted on 27 August 2014 included:
•
•
•
•
•
rights are granted for no consideration
exercise price: nil (2014: nil)
grant date: 27 August 2014 (2014: 28 August 2013)
expiry date: 27 August 2018 (2014: 28 August 2017)
share price at valuation date $3.75 (2014: $3.93)
The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the term of the right.
Expenses arising from Share-Based Payment Transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were
as below.
Rights issued under Share Rights Plans
27 RELATED PARTY TRANSACTIONS
CONSOLIDATED
2015
$’000
1,245
1,245
2014
$’000
1,238
1,238
There are no bad or doubtful debts associated with any related party of the Group (2014: nil).
(a) Key Management and Personnel Compensation
Key management compensation is set out below. The key management personnel are all the directors of the company, the Chief
Executive Officer and the key direct reports to the Chief Executive Officer. Following a review of key management it was determined
that this should only include directors, the CEO and key executives with a group-wide role. In the prior year key management included
all of the CEOs direct reports.
2015
2014
RELATED PARTY TRANSACTIONS (continued)
(b) Other Transactions with Key Management Personnel or Entities Related to them
SHORT-TERM
BENEFITS
$’000
SHARE-BASED
PAYMENTS
$’000
8,928
10,685
792
1,291
TOTAL
$’000
9,720
11,976
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 arm’s length commercial basis.
(c) Subsidiaries
Interests in subsidiaries are set out in note 28.
63
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
28 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.
PRINCIPAL
PLACE OF BUSINESS
CLASS OF
SHARES
2015
%
EQUITY HOLDING
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
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
100
100
100
100
100
100
100
100
100
100
100
2014
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
NAME OF ENTITY
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
SKYCITY Investments Christchurch Limited
SKYCITY Investments Queenstown Limited
SKYCITY Management Limited
SKYCITY Metro Limited
SKYCITY Wellington Limited
SKYCITY Adelaide Pty Limited
SKYCITY Australia Finance Pty Limited
SKYCITY Australia Limited Partnership
SKYCITY Australia Pty Limited
SKYCITY Darwin Pty Limited
SKYCITY Treasury Australia Pty Limited
SKYCITY Investment Holdings Limited
29 CONTINGENCIES
There are no significant contingencies at year end (2014: nil).
64
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015
30 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
2015
$’000
2014
$’000
10,477
17,084
The Group leases various offices and other premises under non-cancellable operating leases. These leases have varying terms,
escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Commitments not recognised in the financial statements
CONSOLIDATED
2015
$’000
7,472
18,023
309,902
335,397
2014
$’000
5,561
15,813
293,627
315,001
The above operating lease summary includes a large number of leases, the most significant of which are:
•
•
SKYCITY Auckland - Hobson and Federal Streets sub soil lease. This lease is for a period of 999 years from 31 January 1996
with rent reviews every five years.
SKYCITY Adelaide - Casino building lease. The initial lease term is until 3 March 2025 with 3 further rights of renewal for
20 years each and annual rent reviews.
65
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
31 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Profit for the year
Depreciation and amortisation
Finance costs net
Net (gain) on sale of associate
Current period employee share expense
Gain on sale of fixed assets
Change in operating assets and liabilities
Decrease in receivables and prepayments
Increase in inventories
Increase in payables
Increase/(decrease) in deferred tax liability
Decrease in tax receivable
Increase in provisions
Capital items included in working capital movements
Net cash inflow from operating activities
2015
$’000
128,744
89,292
43,927
–
1,245
(1,348)
2,156
(491)
10,585
4,898
8,335
3,739
(407)
CONSOLIDATED
2014
$’000
98,537
80,769
48,049
(934)
1,238
(995)
1,081
(455)
14,102
(11,888)
510
–
759
290,675
230,773
32 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
Dividend
On 11 August 2015, the directors resolved to provide for a final dividend to be paid in respect of the year ended 30 June 2015. The
25% imputed, unfranked dividend of 10 cents per share will be paid on 2 October 2015 to all shareholders on the company’s register
at the close of business on 18 September 2015.
66
SKYCITY ENTERTAINMENT GROUP LIMITEDNOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT | YEAR ENDED 30 JUNE 2015 RECONCILIATION OF NORMALISED RESULTS TO REPORTED RESULTS
2015
2014
REVENUE
$M
EBITDA
$M
EBIT
$M
NPAT
$M
REVENUE
$M
EBITDA
$M
EBIT
$M
NPAT
$M
Normalised
1,007.7
304.9
216.4
134.1
927.3
287.6
208.0
123.2
International Business at Theoretical
Provision for International Business Debtors
International Business Adjustments
Adelaide redevelopment costs
NZICC interest and other costs
Strategic projects
Darwin pre-opening costs
Restructuring costs
Auckland project costs
Profit from sale of Christchurch
Total Other Adjustments
1.3
–
1.3
–
–
–
–
–
–
–
3.5
–
3.5
(1.7)
(0.6)
–
(0.1)
(1.6)
(0.3)
–
(4.3)
3.5
–
3.5
(1.7)
(0.6)
–
(0.1)
(1.6)
(1.1)
–
(5.1)
2.3
–
2.3
(1.2)
(4.6)
–
(0.1)
(1.1)
(0.7)
–
(7.7)
(24.8)
–
(24.8)
–
–
–
–
–
–
–
–
(21.7)
(0.2)
(21.9)
(4.3)
(0.3)
(1.4)
–
(2.3)
(0.9)
–
(9.2)
(21.7)
(0.2)
(21.9)
(4.3)
(0.3)
(1.4)
–
(2.3)
(2.1)
–
(10.4)
(15.4)
(0.2)
(15.6)
(3.0)
(2.8)
(1.0)
–
(1.7)
(1.5)
0.9
(9.1)
Reported
1,009.1
304.1
214.8
128.7
902.5
256.5
175.7
98.5
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 redevelopment costs – Structural redundancies and launch costs for new facilities (Sean’s Kitchen and Madame Hanoi)
• NZICC – Interest on purchase of New Zealand International Convention Centre (NZICC) land bank (calculated using the Group’s
average cost of debt of 6.7% on an average balance of $85m) and other costs specific to this project
•
Strategic project costs – none in FY15, with FY14 including the acquisition of SKYCITY Wharf Casino, the investigation of
investment opportunities in Brisbane, the Gold Coast and the Philippines, and other miscellaneous items
• Darwin pre-opening costs – ACES Sports Bar
•
Restructuring costs – Costs associated with changing the staffing structures under an approved restructuring plan
• Auckland project costs – Federal Street launch and Federal Street fire costs
International Business actual win rate at 1.36% for FY15 (FY14: 0.97%)
Normalisation adjustments have been calculated in a consistent manner in FY15 and FY14.
67
SKYCITY ENTERTAINMENT GROUP LIMITEDSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
AND OTHER DISCLOSURES
FOR THE YEAR ENDED 30 JUNE 2015
68
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 CORPORATE GOVERNANCE STATEMENT
69
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CORPORATE GOVERNANCE STATEMENT
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 set out in the company’s Board Charter (available
in the Investor Centre section of the company’s website at
www.skycityentertainmentgroup.com). As a New Zealand
company listed on the Australian and New Zealand stock
exchanges, these cornerstone principles, detailed 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 (Third Edition) of the ASX Corporate
Governance Council, and the New Zealand Financial Markets
Authority’s Corporate Governance Principles and Guidelines.
For the purposes of ASX Listing Rule 4.10.3:
•
•
this corporate governance statement is current as at
25 September 2015 and has been approved by the board
of SKYCITY; and
SKYCITY has followed the recommendations set by the
ASX Corporate Governance Council, and the corporate
governance principles set out in the NZX’s Corporate
Governance Best Practice Code, during the financial year
ended 30 June 2015 except where otherwise outlined in
this corporate governance statement.
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 Charter details the board’s role and responsibilities.
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.
Specific responsibilities of the board include:
•
•
•
•
•
•
•
•
oversight of the company, including its control and
accountability procedures and systems;
appointment, performance, and removal of the Chief Executive
Officer;
confirmation of the appointment and removal of the senior
executive group (being the direct reports to the Chief
Executive Officer);
setting the remuneration of the Chief Executive Officer and
approval of the remuneration of the senior executive group;
approval of the corporate strategy and objectives and
oversight of the adequacy of the company’s resources
required to achieve the strategic objectives;
approval of, and monitoring of actual results against, the annual
business plan and budget (including the capital expenditure
plan);
review and ratification of the company’s systems of risk
management and internal compliance and control, codes of
conduct and legal compliance; and
approval and monitoring of the progress of capital
expenditures, capital management initiatives, acquisitions and
divestments.
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 board
maintains a formal set of delegated authorities that details the
extent to which employees can commit the company. These
delegated authorities are approved by the board and are subject to
annual review by the board.
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.
Each director and senior executive has a written agreement with
the company setting out their terms of appointment and
responsibilities.
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
70
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 CORPORATE GOVERNANCE STATEMENT
•
assist in the selection of candidates to stand for election by
shareholders at annual meetings.
Board Composition and Skills Matrix
As at 30 June 2015, 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 previously announced to the market, Peter Cullinane will be
retiring from the board at the company’s upcoming 2015 Annual
Meeting.
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. The areas of expertise and experience
determined by the board as being the key competencies required
to meet these objectives include:
Appointment
The board has established the Governance and Nominations
Committee to:
•
•
identify and recommend to the board suitable persons for
nomination as members of the board and its committees
(taking into account such factors as experience, qualifications,
judgement, and the ability to work with other directors);
annually review the overall composition and structure of the
board and its committee memberships and, if appropriate, the
removal of a director from the board and/or its committees;
• monitor the succession and rotation of board and committee
members;
• monitor the outside directorships and other business interests
of directors with a view to ensuring independence/no conflicts
of interest, and director capability and time availability to
effectively undertake the requirements of their SKYCITY
board and committee positions;
• monitor related parties, conflicts of interest, and independence
issues;
•
•
•
•
•
•
•
•
•
•
•
•
•
•
governance and strategy;
infrastructure experience;
gaming industry experience and understanding;
understanding of Asia and Asian consumers;
local market knowledge of Auckland;
local market knowledge of Adelaide;
local market knowledge of Darwin;
government relations;
public relations and communications;
investment banking;
property and real estate acumen;
hospitality industry experience and understanding;
legal;
finance and accounting;
• mathematical fluency;
•
•
human resources;
occupational health and safety; and
• marketing.
As at the date of this annual report, the board comprises
individuals with expertise and experience in the specific areas
listed above other than legal. Details of individual expertise and
experience of the directors are set out on pages 22 and 23 of
this annual report.
•
•
•
ensure that potential candidates understand the role of the
board and the time commitment involved when acting as a
member of the board;
oversee the evaluation of the board; and
review the board’s succession planning.
External consultants are engaged to access a wide base of
potential candidates and to review the suitability of candidates
for appointment.
The procedures for the appointment and removal of directors are
prescribed in the company’s constitution, which, amongst other
things, requires all potential directors to have satisfied the
extensive probity requirements of each jurisdiction in which the
company holds gaming licences.
Subject to satisfaction of the probity requirements, the board
may appoint directors to fill casual vacancies that occur or to add
persons to the board up to the maximum number (currently 10)
prescribed by the constitution. If the board appoints a new director
during the year, that person will stand for election by shareholders
at the next annual meeting. Shareholders are provided with
relevant information on any candidate standing for election in the
company’s notice of meeting.
Directors are appointed under the company’s Terms of
Appointment and Reference for Directors and Board Charter
(both available in the Investor Centre section of the company’s
website at www.skycityentertainmentgroup.com) for a term
of three years and subject to re-election by shareholders in
accordance with the rotation requirements of NZX and ASX
and as prescribed in the company’s constitution.
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SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CORPORATE GOVERNANCE STATEMENT
Director Independence
The Board Charter and the company’s constitution require 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. The Board
Charter requires the board chairperson and (where appointed)
deputy chairperson to be independent directors and prohibits the
company’s Chief Executive Officer from filling either of these roles.
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’s Corporate Governance Best
Practice Code and has taken into account the independence
guidelines as recommended in the ASX Corporate Governance
Council’s Corporate Governance Principles and Recommendations
(ASX Independence Guidelines).
At its June 2015 meeting, the board reviewed the status of each
director in accordance with the independence specification of the
NZX’s Corporate Governance Best Practice Code and taking into
account the ASX Independence Guidelines and determined that
all current non-executive directors were independent at the
balance date. The managing director, Nigel Morrison, was not
independent at the balance date by virtue of the fact that he was
also the Chief Executive Officer of the company.
Access to Information and Advice
New directors participate in an individual induction programme,
tailored to meet their particular information requirements.
Directors receive regular reports and comprehensive information
on the company’s operations before each board and committee
meeting and have unrestricted access to any other information
they require. Senior management is also available at and outside
each meeting to address queries.
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 - the Audit
and Financial Risk Committee, Governance and Nominations
Committee, Remuneration and Human Resources Committee
and Corporate Social Responsibility Committee.
The members of each of the committees are non-executive
directors and the non-executive directors of the board appoint
the chairperson of each committee.
The current members and chairperson of each committee, and
their respective qualifications and experience, are set out on pages
22 and 23 of this annual report and in the Investor Centre section
of the company’s website at www.skycityentertainmentgroup.com.
Each committee operates under a formal charter document
as agreed by the board. Each charter sets out the role and
responsibilities of the relevant committee and is available
in the Investor Centre section of the company’s website at
www.skycityentertainmentgroup.com. Each committee charter
and the performance of each committee are subject to formal
review by the board on an annual basis.
Meeting Attendance
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
The following table shows attendances at board and committee
meetings by directors during the financial year ended
30 June 2015. 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(1)
Brent Harman
Peter Cullinane
Sue Suckling
Richard Didsbury
Richard Tsiang
Nigel Morrison
18 December 2008
12 October 2010
20 September 2002
18 December 2008
26 March 2008
9 May 2011
20 July 2012
17 December 2014
18 December 2008
8
8
8
2
7
8
8
8
5
7
1
1
1
-
1
1
-
1
1
1
9
9
9
2
8
9
8
9
6
8
4
4
4
2
-
-
-
-
2
-
4
4
-
-
3
-
4
-
-
-
1
1
1
-
1
1
1
1
1(2) -
-
3
3
-
-
-
3
-
3
-
(1) Rod McGeoch retired as a director effective from 16 October 2014.
(2) Richard Tsiang attended the Governance and Nominations Committee meeting in his capacity as a consultant prior to his appointment as a director on 17 December 2014.
72
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
3.
INTEGRITY, ETHICAL BEHAVIOUR AND DIVERSITY
SKYCITY actively promotes ethical and responsible behaviour
and decision-making by:
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.
•
•
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 (available in the Investor Centre section
of the company’s website at www.skycityentertainmentgroup.com),
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 (available
in the Investor Centre section of the company’s website
at www.skycityentertainmentgroup.com) for directors and
employees that sets out guidelines in respect of trading in,
or giving recommendations concerning, the company’s
securities, including derivatives of such listed securities.
Prior consent must be obtained from the Company Secretary
(or any other authorised person) before directors and certain
employees who may have access to material information
undertake any trading in the company’s securities, grant security
over SKYCITY securities, enter into any margin loan or similar
instrument in respect of such securities or enter into any
hedging arrangements which reduce the risk elements essential
to effective employee incentive schemes.
Details of any securities trading by directors or executives who are
subject to the company’s Securities Trading Policy are notified to
the board. In addition, directors and officers of the company must
comply with the disclosure obligations under subpart 6 of the
New Zealand Financial Markets Conduct Act 2013 and the NZX
and ASX Listing Rules and formally disclose their SKYCITY
shareholdings and other securities holdings to the NZX and ASX
(as applicable) within prescribed timeframes.
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
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 company has a Diversity and Inclusion Policy (available
in the Investor Centre section of the company’s website at
www.skycityentertainmentgroup.com) that provides a framework
for SKYCITY’s current and future diversity and inclusion initiatives.
The company is committed to providing opportunities and
initiatives that assist all to reach their potential on merit,
unhindered by individual differences, and regularly benchmarks
and reports on its diversity position, policy and objectives.
SKYCITY has several objectives to advance diversity and inclusion
in the workplace. These include:
•
•
•
continuing to build a workforce that reflects the diversity of
the markets in which the company operates;
continuing to strive to ensure strong female candidates are
identified in the recruitment process for all board and senior
executive roles;
implementing an annual audit of gender pay parity as a core
function of the company’s annual remuneration review cycle;
and
•
inclusiveness training for all management.
Each year, SKYCITY’s board sets measurable objectives to
promote diversity, including gender diversity and inclusion. At the
end of each financial year, the objectives are reviewed along with
the company’s progress in achieving them.
SKYCITY performed well against the measurable objectives set by
the board for the 2014/2015 financial year (as reported in the
company’s 2014 annual report):
OBJECTIVE
Continue to strive to ensure strong female candidates are identified in
the recruitment process for all board and senior executive roles
PROGRESS MADE
40% of senior management roles recruited for in the past year had a
successful female candidate and 55% had at least one female included
on the short list of applicants.
The Request For Proposal (RFP) for the board recruitment process
explicitly specified that SKYCITY required female candidates to be
identified wherever possible.
Several significant female appointments were made, including the
General Manager SKYCITY Hamilton, New Zealand International
Convention Centre Project Director, Marketing Manager Adelaide
Casino and Human Resources Manager SKYCITY Darwin.
Michelle Baillie, General Manager SKYCITY Hamilton, was accepted
73
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CORPORATE GOVERNANCE STATEMENT
into the 2015 BreakThrough Leaders Programme, facilitated by
New Zealand Global Women. She is the first SKYCITY employee to
be nominated for this programme.
As at 30 June 2015, the gender composition of the company’s
directors, key management personnel, senior executives, officers
and total workforce was as follows:
OBJECTIVE
Implement an annual audit of gender pay parity as a core function of
SKYCITY’s annual remuneration review cycle
PROGRESS MADE
Following significant changes made to the remuneration process to
ensure gender fairness during the financial year ended 30 June 2014
(which was recognised as award-winning in the 2015 YWCA Pay Equity
Awards), SKYCITY experienced a dramatic improvement in pay equity
during the financial year ended 30 June 2015.
Female staff received (on average) a 12% higher salary increase than
their male equivalents in the October 2014 salary reviews. These
changes occurred following extensive unconscious bias training and
improved reporting and remuneration guidance to managers.
OBJECTIVE
FEMALE
MALE
TOTAL
NUMBER
%
NUMBER
%
Directors
Key
management
personnel
Senior
executives
Officers
Total
Workforce
1
1
2
1
2,940
12.5%
20%
17%
9%
47%
7
4
87.5%
80%
10
10
83%
91%
8
5
12
11
3,312
53% 6,252
Comparatively, the gender composition of the company’s directors,
key management personnel, senior executives, officers and total
workforce as at 30 June 2014 was as follows:
Illustrate SKYCITY’s commitment to the Rainbow Community by
achieving the Rainbow Tick accreditation
FEMALE
MALE
TOTAL
NUMBER
%
NUMBER
%
PROGRESS MADE
SKYCITY achieved Rainbow Tick Accreditation following an audit
process that assessed the company’s policies, culture and
support/training to ensure the company offers a safe and inclusive
workplace for staff and customers from the Rainbow Community.
OBJECTIVE
Roll out inclusiveness training to all management
PROGRESS MADE
SKYCITY rolled out diversity and inclusion training to managers to raise
awareness of unconscious bias in the recruitment and selection
processes and provide tools to minimise any negative effects. More than
120 of our leaders have now completed this training.
The measurable objectives for the 2015/2016 financial year are to:
•
•
continue to strive to ensure strong female candidates are
identified in the recruitment process for all board and senior
executive roles;
conduct a detailed review of staff engagement by diversity
group (age, gender, ethnicity and Rainbow) and identify
initiatives to further improve staff inclusion; and
• monitor the participation of under-represented groups in our
leadership training and talent programmes.
Directors
Key
management
personnel
Senior
executives
Officers
Total
Workforce
1
1
2
1
2,780
12.5%
20%
15%
8%
47%
In the above tables:
7
4
87.5%
80%
11
12
85%
92%
8
5
13
13
3,132
53% 5,912
•
•
•
•
‘directors’ includes the Chief Executive Officer, who is also
the Managing Director;
‘key management personnel’ are those five group executives
(including the Chief Executive Officer) referred to on page
77 of this annual report;
‘senior executives’ includes the Chief Executive Officer’s
direct reports and site General Managers; and
‘officers’ includes the Chief Executive Officer and his direct
reports only.
74
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 CORPORATE GOVERNANCE STATEMENT
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 non-audit services. 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 2014/2015
financial year are set out in note 6 to the financial statements.
Fees for audit and tax compliance work in the 2014/2015 financial
year represent 74% 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 the 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.
SKYCITY believes high standards of reporting and disclosure are
essential for proper accountability between SKYCITY and its
investors, employees and stakeholders.
The company is committed to promoting investor confidence by
providing timely and balanced disclosure of all material matters
relating to SKYCITY and its subsidiaries (SKYCITY Group).
The company maintains a Market Disclosure Policy (available
in the Investor Centre section of the company’s website at
www.skycityentertainmentgroup.com) for directors and employees
that sets out guidelines in respect of the company’s continuous
disclosure obligations. The Policy is designed to ensure that
SKYCITY:
•
satisfies the requirements of the New Zealand Financial
Markets Conduct Act 2013, the Australian Corporations Act
2001 and the NZX and ASX Listing Rules;
• meets its disclosure obligations in a way that allows all
interested parties equal opportunity to access information;
• meets stakeholders expectations for equal, timely, balanced
and meaningful disclosure; and
•
provides guidance on the processes to ensure compliance.
The company is also 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. The Company
Secretary is also accountable directly to the board, through the
chairperson of the board, on all matters to do with the proper
functioning of the board.
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 (including its
corporate governance framework, media releases, current and
past annual reports, dividend histories and notices of meeting)
75
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CORPORATE GOVERNANCE STATEMENT
is available to all shareholders in the Investor Centre section of
the company’s website at www.skycityentertainmentgroup.com;
•
posting all stock exchange announcements in the Investor
Centre section of the company’s website promptly after they
have been disclosed to the market;
• webcasting or making available on the Investor Centre section
of the company’s website audio recordings of important
events such as annual meetings and Chief Executive Officer
presentations;
•
•
•
giving shareholders the option to receive communications
from, and send communications to, the company and its
security registry, Computershare, electronically;
engaging in a programme of regular interactions with
institutional investors, shareholder associations and proxy
advisers;
promoting two-way interaction with shareholders, by
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. Each year, in the company’s notice of meeting,
shareholders are invited to submit questions to the company
prior to the annual meeting to enable the company to
aggregate the main themes of the questions asked and
respond to them at the annual meeting. Representatives of the
company’s external auditors are also invited to attend the
company’s annual meeting to answer any shareholder
questions concerning their audit and external audit report; and
•
ensuring that continuous disclosure obligations are understood
and complied with throughout the SKYCITY Group.
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 at least annually, with
the most recent report being provided in August 2015.
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 at least annually that the
statement in respect of the integrity of the company’s financial
statements referred to above is founded on a sound system of risk
management and internal compliance and control which implements
76
the policies of the board, and that the company’s risk management
and internal compliance and control systems are operating
efficiently and effectively in all material respects. The most recent
confirmations were provided by the Chief Executive Officer and
the Chief Financial Officer in August 2015.
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.
SKYCITY’s ability to create or preserve value for its shareholders
requires the successful execution of its business strategy. Risks
influencing its ability to do this, including SKYCITY’s material
exposure to economic, environmental and social sustainability risks,
if any, and how it manages or intends to manage those risks, are set
out below:
• Highly regulated industry
SKYCITY operates in industries (in particular, the casino
industry) which are highly regulated. The regulatory framework
is subject to changes from time to time, which may impact the
environment in which SKYCITY operates and the costs of
operating its business. Potential examples of such changes
include unfavourable changes to gaming legislation and
regulations, licence conditions and gaming taxes and levies.
The risk of regulatory change is mitigated by maintaining
engagement with the governments of each jurisdiction in which
SKYCITY operates and with industry stakeholders through
frequent submissions and regular informal engagements.
Targeted proactive and reactive compliance initiatives are
undertaken as and when required based on the likelihood of
the risk occurring and the impact it would have on SKYCITY’s
business.
Renewal or extension of Auckland casino licence
SKYCITY’s Auckland property contributes a significant portion
of SKYCITY’s EBITDA. This concentration of earnings means
that the performance of SKYCITY is heavily dependent upon
the Auckland property. A significant disruption to SKYCITY’s
Auckland operations (which may arise through the expiry of
the Auckland casino licence) could have a significant negative
impact on SKYCITY. SKYCITY’s Auckland casino licence is
currently due to expire on 1 February 2021.
SKYCITY has sought to mitigate this risk by entering into an
agreement with the New Zealand Government in relation to
the New Zealand International Convention Centre (the
NZICC). This agreement (and associated NZICC legislation)
provides various regulatory concessions for SKYCITY’s
Auckland property, including an extension of the Auckland
casino licence to 30 June 2048. These concessions are
subject to a number of conditions, the key one of which is
SKYCITY entering into a binding construction contract for
the construction of the NZICC. SKYCITY expects to sign a
construction contract by October 2015 and then to
commence construction by December 2015.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
8. PERFORMANCE EVALUATION
The board and committee charters require an evaluation of the
board and 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 2014 was conducted
by the chairman of the board (Chris Moller) and completed in
February 2015. 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 reviews the outcomes of those reporting
directly to that position in accordance with the company’s
performance review procedures, with the last review conducted in
August 2015. In the case of the Chief Executive Officer, the review
involved a formal response/feedback process with a one-on-one
meeting involving the board chairman. In the case of each senior
executive, the review involved a formal response/feedback process
with a one-on-one meeting involving the Chief Executive Officer.
9. REMUNERATE FAIRLY AND RESPONSIBLY
This section details the approach to remuneration frameworks,
outcomes and performance for the company’s non-executive
directors and its group executives for the financial year ended
30 June 2015 as listed below:
NAME
POSITION
TERM
Non-Executive Directors
Chris Moller
Bruce Carter
Peter Cullinane
Richard Didsbury
Brent Harman
Sue Suckling
Richard Tsiang
Chairman
Deputy Chairman
Director
Director
Director
Director
Director
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Part Year
Former Non-Executive Director
Rod McGeoch
Director
Part Year
Group Executives
Nigel Morrison
Managing Director and
Chief Executive Officer
Full Year
Rob Hamilton
Chief Financial Officer
Part Year
Peter Treacy
Grainne Troute
John Mortensen
General Counsel and
Company Secretary
General Manager
Corporate Services
Full Year
Full Year
Chief Operating Officer,
New Zealand
Full Year
The key changes to the board and to the senior executive team
during the financial year ended 30 June 2015 included:
Rod McGeoch
Retired as a director on 16 October 2014
Richard Tsiang
Appointed as a director on 17 December 2014
Rob Hamilton
Appointed as Chief Financial Officer on
13 October 2014
Remuneration Governance
The Remuneration and Human Resources Committee is the
main governing body for setting remuneration policy across the
SKYCITY Group and develops the remuneration framework and
policies for board approval.
The responsibilities of the Remuneration and Human Resources
Committee are outlined in the Remuneration and Human Resources
Committee Charter (available in the Investor Centre section of the
company’s website at www.skycityentertainmentgroup.com), which
is reviewed annually by the board.
The Remuneration and Human Resources Committee oversees the
management of the human resources activities of the company, the
senior management structure, senior executive performance,
remuneration and incentivisation, and succession planning. It also
seeks to assist the board to ensure that the company’s
remuneration policies and practices reward fairly and responsibly
with a clear link to the company’s strategic objectives and
corporate and individual performance. The Remuneration and
Human Resources Committee is also responsible for periodically
reviewing non-executive director fees.
The board-approved Remuneration and Human Resources Policy
Statement (available in the Investor Centre section of the
company’s website at www.skycityentertainmentgroup.com)
recognises that to achieve its business objectives SKYCITY needs
high quality, committed people. 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;
be performance-oriented so that remuneration practices
recognise and reward high levels of performance and to avoid
an entitlement culture;
provide a significant at-risk component of total remuneration
which drives performance to achieve company goals and
strategy;
• manage remuneration within levels of cost efficiency and
affordability; and
•
align remuneration for senior executives with the interests of
shareholders.
77
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CORPORATE GOVERNANCE STATEMENT
A range of market data and specific benchmark reports are used to
ensure market relativity of senior executive positions, including
research and reports from independent remuneration consultants.
Each year, the Remuneration and Human Resources Committee
reviews changes in remuneration laws and practices and market
trends to ensure the company’s practices are appropriately aligned.
Changes to Remuneration Policy and Practices
During the financial year ended 30 June 2015, there were no
material changes to the remuneration policy.
Non-Executive Director Remuneration
Shareholders at the annual meeting determine the total
remuneration available to non-executive directors. At the 2014
Annual Meeting, shareholders approved, effective from
1 July 2014, a total remuneration amount for non-executive
directors of $1,365,000 per annum (plus GST, if any).
The following table outlines the non-executive directors’ fees
(exclusive of GST, if any) for the board and its committees as at
30 June 2015:
Board
POSITION
Chairperson
Deputy Chairperson
FEES
(PER ANNUM)
$275,000
$157,500
Non-Executive Director
$126,000
Audit and Financial Risk
Committee
Remuneration and
Human Resources
Committee
Corporate Social
Responsibility
Committee
Chairperson
Member
Chairperson
Member
Chairperson
Member
$35,000
$15,000
$35,000
$15,000
$25,000
$15,000
All non-executive directors are members of the Governance and
Nominations Committee and receive no additional fees for this
Committee.
The board chairman does not receive separate fees for the board
committees that he sits on.
For directors who were in office on or before 1 May 2004,
SKYCITY’s constitution permitted the company to make a
retirement payment. Retirement allowances were discontinued at
30 June 2004 with retirement allowances accrued to that date
frozen as to amount. As the only director eligible for the
retirement allowance, Rod McGeoch was paid a one-off payment
of $22,913.24 when he retired at the 2014 Annual Meeting.
Details of the total remuneration paid to, and other benefits
received by, non-executive directors for services in their capacity
as directors of the company during the financial year ended
30 June 2015 are set out on page 84 of this annual report.
Remuneration Framework
Remuneration components are offered in the context of a total
remuneration package, measured on a “total cost to the company”
basis. The remuneration arrangements of the company’s
Chief Executive Officer and group executives are made up of
both fixed and variable remuneration, with three elements - fixed
remuneration, short term incentive (STI) at-risk remuneration and
long term incentive (LTI) at-risk remuneration.
The STI at-risk components are based on performance against key
financial and non-financial measures and all STI bonuses are at the
ultimate discretion of the board.
The board determines an appropriate level of fixed remuneration
for the Chief Executive Officer and group executives taking
into account recommendations from the Remuneration and
Human Resources Committee.
Fixed Remuneration
The company endeavours to set fixed remuneration at levels that
are relative to similar positions in the market in which individual
executives are positioned. For “casino-specific” positions, account
is taken of salaries within the sector.
To assist the Remuneration and Human Resources Committee in
its salary deliberations, PricewaterhouseCoopers is commissioned
on a regular basis to survey remuneration against external
comparator markets as relevant and appropriate (eg industry and
geography).
Fixed remuneration is reviewed annually - in the case of the
Chief Executive Officer, at an agreed anniversary date on 1 July
and, in the case of other group executives, in August each year.
Short Term Incentive
The Chief Executive Officer and each group executive receive
70% of their STI based on the company’s financial performance.
In the case of the Chief Executive Officer and group executives
(except John Mortensen), eligibility for this element is based on
achievement of the company’s budgeted NPAT (normalised net
profit after tax) for the financial year ended 30 June 2015.
For John Mortensen, eligibility for this element is based on
achievement of Auckland’s budgeted EBITDA (earnings before
interest, taxes, depreciation and amortization) for the financial
year ended 30 June 2015.
The remaining 30% of each STI is based on a small number of
personal goals that are agreed on an individual basis at the
commencement of each financial year. In the case of the Chief
Executive Officer, these are aligned to the strategic priorities of
the company. The non-financial objectives for each of the group
executives are aligned to those set for the Chief Executive
Officer but may include specific personal objectives. For each of
the Chief Executive Officer and the group executives there is an
STI eligibility “gateway” related to meeting or exceeding prior
year financial performance.
78
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 CORPORATE GOVERNANCE STATEMENT
The Chief Executive Officer has an STI target of 105% of his
fixed remuneration. Group executives have an STI target of 40%
of their fixed remuneration and have a maximum STI potential of
54% of their fixed remuneration.
The Chief Executive Officer and group executives receive their
STI as cash following completion of the external audit of the
company’s year-end results.
Long Term Incentives
The company operates two LTI plans – one for the Chief
Executive Officer (which is approved by shareholders) and the
other for the company’s most senior executives. Details of the
2013 SKYCITY Chief Executive Officer LTI Plan are included in
the section “Chief Executive Officer Remuneration” below and
details of the SKYCITY Senior Executive LTI Plan are included
on page 80 of this annual report.
Chief Executive Officer Remuneration
Nigel Morrison has an employment agreement (a copy of which is
available in the Investor Centre section of the company’s website
at www.skycityentertainmentgroup.com) as Managing Director and
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.
Remuneration Mix
The Chief Executive Officer’s remuneration package is heavily
weighted towards at-risk variable remuneration with the mix for the
financial year ended 30 June 2015 being approximately 35% fixed
remuneration, 33% STI and 32% LTI.
Remuneration 2015
Fixed Salary: For the financial year ended 30 June 2015,
Mr Morrison received a base salary of $1,905,500.
STI: The board awarded Mr Morrison an STI bonus of $1,763,683
which was paid in August 2015 and will, therefore, appear in the
company’s financial accounts for the 2016 financial year.
$1,400,543 of this bonus was in consideration of the company’s
NPAT performance. The balance of Mr Morrison’s STI was
assessed by reference to his performance against the strategic
non-financial objectives agreed with him at the commencement of
the 2015 financial year.
Having assessed his performance against each of his non-financial
objectives, the board decided to grant Mr Morrison 60.5% of his
non-financial STI.
LTI: The 2013 SKYCITY Chief Executive Officer Long Term
Incentive Plan governs Mr Morrison’s current LTI. Under the Plan:
• Mr Morrison is provided with financial assistance by way of an
interest-free loan by a subsidiary of the company to acquire
shares in the company.
• A trustee holds legal title to the relevant shares on behalf of
Mr Morrison for a restrictive period of at least three years
•
•
until certain performance hurdles are met. The performance
hurdles involve comparison of the total shareholder return
(TSR) achieved by SKYCITY against the shareholder returns
achieved by a group of comparable Australasian companies
(comparator group), and by the companies whose securities
are in the NZSX50 index (index group).
For the shares to vest in Mr Morrison, the company must
achieve a TSR equal to or greater than the average of the
comparator and index groups’ TSRs. The number of shares
that will vest depend on where the SKYCITY TSR is relative
to the average median 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 is 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 under the Plan by Mr Morrison with the
assistance of an interest-free loan were on 8 November 2013
(with an effective acquisition date of 28 August 2013) 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, 87 and 89 of this annual report.
The 2009 SKYCITY Chief Executive Officer LTI Plan governed
Mr Morrison’s previous LTI and ended after the third re-test in
March 2015 of the LTI shares issued to him in March 2011.
None of the March 2011 LTI shares vested to Mr Morrison.
Other
Mr Morrison also receives the benefit of a health insurance
plan that SKYCITY offers to all of its employees and directors
(either at no cost or at a discounted rate). During the financial year
ended 30 June 2015, SKYCITY paid premiums totalling $1,483 to
SKYCITY’s health insurance provider in connection with
Mr Morrison.
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
79
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM CORPORATE GOVERNANCE STATEMENT
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.
Senior Executive STI
For the financial year ended 30 June 2015, a total of $2,081,883
was paid under the Senior Executive STI Plan to 10 senior
executives (including the group executives outlined above) – an
amount equivalent to 43% of combined base salary for this group.
Senior Executive LTI
Under the SKYCITY Senior Executive LTI Plan introduced in 2009,
which is similar to the 2013 SKYCITY Chief Executive Officer LTI
Plan, selected senior executives are provided with financial
assistance by way of an interest-free loan by a subsidiary of the
company to acquire shares in the company. A trustee holds legal
title to the relevant shares on behalf of those senior executives for
a restrictive period of at least three years until certain performance
hurdles are met. The performance hurdles involve comparison of
the total shareholder return (TSR) achieved by SKYCITY against
the shareholder returns achieved by a group of comparable
Australasian companies (comparator group), and by the companies
whose securities are in the NZSX50 index (index group).
For LTI shares issued before and including 2013, to vest in a
participant under the SKYCITY Senior 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 median 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.
For LTI shares issued in 2014 and thereafter, 50% of the shares
are allocated to a peer comparator group tranche and 50% of the
shares are allocated to an index comparator group tranche. The
number of shares that will vest depend on where the SKYCITY
TSR is relative to the median TSR of each of the peer comparator
group and index comparator group separately and the TSRs
representing the 75th percentiles of the TSRs achieved by the
each of the peer comparator group and the index group separately.
Each tranche will be tested separately. If SKYCITY’s TSR is at the
median TSR of a group, 50% of a tranche will vest. If SKYCITY’s
TSR is at the 75th percentile of a group, 100% of a tranche will vest.
Performance is 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 SKYCITY Senior Executive
LTI Plan and outstanding as at 14 August 2015 are detailed on
page 89 of this annual report.
During the financial year ended 30 June 2015, the following
vesting calculations were completed:
• August 2010 LTI: The third and final test was completed with
a further 7.75% of shares vesting to executives. The remaining
23.25% of unvested shares were forfeited in accordance with
the terms of the SKYCITY Senior Executive LTI Plan.
• March 2011 LTI: The second and third (and final) tests were
completed. No shares vested to executives and 100% were
forfeited in accordance with the terms of the SKYCITY
Senior Executive LTI Plan.
• August 2011 LTI: The first and second tests were completed.
To date, no shares have vested to executives. The third (and
final) test will be completed during September 2015 and any
shares that do not vest at that time will be forfeited in
accordance with the terms of the SKYCITY Senior Executive
LTI Plan.
Salaried Employee STI and Individual Bonus Plan
To drive outstanding company and individual performance,
SKYCITY operates an STI plan for selected senior salaried
employees and those with operational accountability for a
department or business unit (Salaried STI Plan). 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 financial year ended 30 June 2015,
321 salaried staff participated in the Salaried STI Plan. Based on
achievement of individual and financial targets, 277 staff received
an average STI payment of 15.2% 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 Plan.
Under the Individual Bonus 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.
80
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 CORPORATE GOVERNANCE STATEMENT
In total, 480 SKYCITY salaried personnel were paid incentives
totalling $6,654,676 under the Salaried STI Plan and
Individual Bonus Plan.
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 (available in
the Investor Centre section of the company’s website at
www.skycityentertainmentgroup.com) 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.
81
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM SHAREHOLDER INFORMATION
TWENTY LARGEST SHAREHOLDERS AS AT 14 AUGUST 2015
1. HSBC Nominees (New Zealand) Limited
2. National Nominees Limited
3. HSBC Nominees (New Zealand) Limited A/C State Street
JP Morgan Nominees Australia Limited
4.
5.
JP Morgan Chase Bank NA NZ Branch
6. Citibank Nominees (New Zealand) Limited
7. National Nominees New Zealand Limited
8. HSBC Custody Nominees (Australia) Limited
9. RBC Investor Services Australia Nominees Pty Limited
10. Accident Compensation Corporation
11. BNP Paribas Noms Pty Limited
12. RBC Investor Services Australia Nominees Pty Limited
13. Citicorp Nominees Pty Limited
14. Private Nominees Limited
15. BNP Paribas Nominees (NZ) Limited
16. UBS Nominees Pty Limited
17. Public Trust
18. Citicorp Nominees Pty Limited
19. ANZ Wholesale Australasian Share Fund
20. Masfen Securities Limited
NUMBER OF
SHARES
%
OF SHARES
50,780,311
46,659,225
39,900,600
39,421,215
36,075,155
32,197,579
28,360,130
27,812,334
18,406,503
15,620,527
13,955,161
13,580,220
13,565,460
8,431,137
7,217,969
7,195,079
5,891,392
5,380,994
4,721,883
4,456,260
8.64%
7.94%
6.79%
6.71%
6.14%
5.48%
4.83%
4.73%
3.13%
2.66%
2.38%
2.31%
2.31%
1.44%
1.23%
1.23%
1.00%
0.92%
0.80%
0.76%
Total
419,629,134
71.43%
Total shares on issue as at 14 August 2015 were 587,472,741 of which 6,699,707 were held in aggregate by Public Trust on
behalf of eligible and future participants pursuant to the 2013 SKYCITY Chief Executive Officer Long Term Incentive Plan and
SKYCITY Senior Executive Long Term Incentive Plan. No shares were held by the company directly as treasury stock.
82
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 SHAREHOLDER INFORMATION
DISTRIBUTION OF ORDINARY SHARES AND REGISTERED SHAREHOLDINGS AS AT 14 AUGUST 2015
1– 1,000
1,001– 5,000
5,001– 10,000
10,001– 100,000
> 100,000
Total
NUMBER OF
SHAREHOLDERS
NUMBER
OF SHARES
3,739
7,937
2,913
2,560
1,450,566
21,799,945
20,609,194
59,322,029
133 484,291,007
17,282 587,472,741
As at 14 August 2015, there were 1,109 shareholders (with a total of 58,680 shares) holding less than a marketable parcel of
shares under the ASX Listing Rules, based on the closing share price of A$3.69. The ASX Listing Rules define a marketable parcel
of shares as a parcel of shares of not less than A$500.
SUBSTANTIAL SECURITY HOLDERS
The following persons had given notice as at 30 June 2015, in accordance with subpart 5 of Part 5 of the New Zealand Financial
Markets Conduct Act 2013, that they were substantial security holders in the company and held a relevant interest in the number
of ordinary shares shown below:
BlackRock Group (BlackRock Inc. and certain subsidiaries)
Perpetual Limited and subsidiaries
Lazard Asset Management Pacific Co
DATE OF
SUBSTANTIAL
SECURITY
NOTICE
RELEVANT
INTEREST IN
NUMBER OF
SHARES
% OF SHARES
HELD AT
DATE OF
NOTICE
3 October 2014
15 April 2015
5 June 2015
40,792,063
41,924,156
42,229,375
7.00%
7.14%
7.188%
The total number of listed voting securities of SKYCITY Entertainment Group Limited as at 30 June 2015 was 587,472,741.
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 financial year
ended 30 June 2015 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
Richard Tsiang
$275,000.00
$192,500.00
$39,919.35
$161,000.00
$151,000.00
$143,540.32
$141,000.00
$135,693.54(3)
$22,913.24(1)
$ 2,580.14(2)
$ 1,290.07(2)
The figures shown are gross amounts and exclude GST where applicable.
(1) Rod McGeoch retired as a director effective from 16 October 2014. In
addition to remuneration paid for services in his capacity as a director, he
was paid $22,913.24 in October 2014 as a retirement payment following his
retirement from the board as detailed further on page 78 of this annual report.
(2) 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).
(3) Richard Tsiang received total remuneration of $135,693.54 during the
financial year ended 30 June 2015, of which $59,749.99 was paid to him in
respect of consultancy services provided to the Group for the period from
15 July–16 December 2014 (inclusive) prior to his appointment as a director
on 17 December 2014.
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 $20,400 (plus GST) to Richard Didsbury
during the financial year ended 30 June 2015 in connection
with consultancy services provided by him in relation to the
New Zealand International Convention Centre, which were
provided as additional services outside of his capacity as a
director of the company.
Nigel Morrison is Managing Director and Chief Executive Officer
of the company. The remuneration paid to, and other benefits
received by, Mr Morrison in his capacity as Chief Executive
Officer during the financial year ended 30 June 2015 are
detailed on page 79 of this annual report.
84
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 2015, 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 financial year ended
30 June 2015. Remuneration shown below also includes
settlement payments and payments in lieu of notice with respect
to certain employees upon their departure from the company.
REMUNERATION
$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
$320,000–$329,999
$330,000–$339,999
$340,000–$349,999
$350,000–$359,999
$360,000–$369,999
$400,000–$409,999
$430,000–$439,999
$440,000–$449,999
$480,000–$489,999
$530,000-$539,999
$550,000-$559,999
$610,000-$619,999
$630,000-$639,999
$640,000-$649,999
$690,000-$699,999
$700,000-$709,999
$730,000-$739,999
$770,000-$779,999
$800,000-$809,999
$880,000-$889,999
$910,000-$919,999
Total
EMPLOYEES
58
37
20
18
10
18
13
7
6
3
5
4
1
2
1
3
2
3
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
234
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015
DIRECTORS’ DISCLOSURES
INTERESTS REGISTER
Disclosure of Directors’ Interests
Section 140(1) of the New Zealand Companies Act 1993 requires a director of a company to disclose certain interests. Under
subsection (2) a director can make disclosure by giving a general notice in writing to the company of a position held by a director in
another named company or entity. The following are particulars included in the company’s Interests Register as at 30 June 2015
(notices given by directors during the financial year ended 30 June 2015 are marked with an asterisk):
Chris Moller (Chairman)
Cricket World Cup 2015 Ltd
Meridian Energy Limited
New Zealand Transport Agency
Westpac New Zealand Limited
Bruce Carter (Deputy Chairman)
ASC Pty Limited
Badge Management Pty Limited
Bank of Queensland Limited and
certain subsidiaries
BBRC Funds Management Pty Ltd
Cobbadah Pty Limited
Eudunda Farmers Limited
Ferrier Hodgson
Fortis Ago Pty Ltd
Genesee & Wyoming Australia Pty Limited
Stichting Administratiekantoor Manadel (Holland)
Brent Harman
Harman Consulting Limited
Harman Investments Limited
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
The Kiwi Trust
Sue Suckling
Observer
Acemark Holdings Limited
Chair
Chair
Director
Chair
Director
Director
Director
Director
Director
Barker Fruit Processors and certain subsidiaries
Callaghan Innovation Research Limited
ECL Group Limited
Jacobsen Holdings Limited
New Zealand Qualifications Authority
NZ Health Partnerships Limited
Restaurant Brands New Zealand Limited
Takeovers Panel
Richard Didsbury
Auckland International Airport Limited
Consultant
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 Property Group Limited
Whisper Cove Heights Limited
Richard Tsiang
The Hong Kong Jockey Club
Director
Director
Director
Director and
Shareholder
Director and
Shareholder
Director
Director
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Trustee*
Managing
Director
Chair
Chair
Chair
Chair
Chair
Interim Chair*
Director
Member
Director
Director
Trustee
Trustee
Director
Chair
Director
Director
Director
Consultant and
Advisory Board
Member*
The following details included in the Interests Register as at 30 June 2014, or entered during the financial year ended 30 June 2015, have been
removed during the financial year ended 30 June 2015:
• Bruce Carter is no longer Chair of Territory Insurance Office or a director of RSC Nominees Pty Limited.
• Sue Suckling is no longer a Chair of Health Benefits Limited Transition Interim Governance Group or a director of New Zealand Health
Innovation Hub, Oxford Clinic Hospital Limited or Oxford Health 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 2015:
Chris Moller (Chairman)
Bruce Carter (Deputy Chairman)
Brent Harman
Sue Suckling
Richard Didsbury
Nigel Morrison
DATE OF
ACQUISITION/
DISPOSAL
DURING PERIOD
3 October 2014
20 August 2014
3 October 2014
3 October 2014
3 October 2014
27 March 2015
27 March 2015
3 October 2014
6 October 2014
6 October 2014
10 September 2014
3 October 2014
24 October 2014
24 October 2014
24 October 2014
19 May 2015
CONSIDERATION
$3.5758 per share(1)
A$3.40 per share
$3.5758 per share(1)
$3.60 per share
$3.5758 per share(1)
$4.09 per share
$4.09 per share
$3.5758 per share(1)
Nil(6)
Nil(6)
$3.72 per share
$3.5758 per share(1)
$2.885 per share(8)
$2.885 per share(8)
Nil(9)
Nil(9)
SHARES
ACQUIRED/
(DISPOSED)
1,611(2)
10,000(3)
1,467(3)
5,000(4)
280(5)
7,800(4)
(7,800)(5)
799
(31,513)
31,513(7)
10,000
390
32,236
(32,236)
(96,707)
(1,094,291)
(1) Shares issued under the SKYCITY Dividend Reinvestment Plan.
(2) Shares held by FNZ Custodians Limited.
(3) Shares held by Tarquay Pty Limited on trust for Tarquay Superannuation Fund.
(4) Shares held by Forbar Nominees Limited.
(5) Shares held by Investment Custodial Services Limited.
(6) Shares transferred to the trustees of The Sue Suckling Family Trust as part of a personal reorganisation.
(7) Shares held by the trustees of The Sue Suckling Family Trust.
(8) Share rights converted to shares under the 2009 SKYCITY Chief Executive Officer Long Term Incentive Plan.
(9) Lapse of share rights under the 2009 SKYCITY Chief Executive Officer Long Term Incentive Plan.
86
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015
DIRECTORS’ DISCLOSURES
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARES
Directors disclosed the following relevant interests in SKYCITY shares as at 30 June 2015:
Chris Moller (Chairman)
Bruce Carter (Deputy Chairman)
Brent Harman
Peter Cullinane
Sue Suckling
Richard Didsbury
Richard Tsiang
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 Forbar Nominees Limited.
(4) Shares held by Investment Custodial Services Limited.
(5) Shares held by the trustees of The Sue Suckling Family Trust.
(6) Shares held by Perpetual Limited.
(7) Shares acquired under the 2013 SKYCITY Chief Executive Officer Long Term Incentive Plan and held by Public Trust.
SHARES
BENEFICIALLY HELD
63,526(1)
53,944(2)
42,800(3)
2,480(4)
29,250
31,513(5)
15,390
30,000
1,144,325
82,233(6)
1,279,258(7)
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SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
COMPANY DISCLOSURES
STOCK EXCHANGE LISTINGS
• Directors: David Christian, Nigel Morrison, Peter Treacy
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 page 89 of this
annual report.
SKYCITY ENTERTAINMENT GROUP LIMITED
The following persons held office as directors of SKYCITY
Entertainment Group Limited as at the end of the 2014/2015
financial year, being 30 June 2015:
Chris Moller (Chairman)
Brent Harman
Sue Suckling
Richard Tsiang
Bruce Carter (Deputy Chairman)
Peter Cullinane
Richard Didsbury
Nigel Morrison
SUBSIDIARY COMPANIES
Subsidiary Company Directorships
The following persons held office as directors of subsidiaries
of SKYCITY Entertainment Group Limited as at the end of the
2014/2015 financial year, being 30 June 2015:
• Directors: Nigel Morrison and Peter Treacy:
New Zealand International Convention Centre Limited
Otago Casinos Limited
Planet Hollywood (Civic Centre) Limited(1)
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(2)
SKYCITY Investments Queenstown Limited
SKYCITY Management Limited
SKYCITY Metro Limited
SKYCITY Wellington Limited
Sky Tower Limited
and Bruce Carter:
SKYCITY Adelaide Pty Limited
SKYCITY Australia Finance Pty Limited
SKYCITY Australia Pty Limited
• Directors: Nigel Morrison, Peter Treacy and Bruce Carter:
SKYCITY Treasury Australia Pty Limited
SKYCITY Darwin Pty Limited
Non-wholly Owned Company Directorships
At 30 June 2015, 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
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 21 August 2015, NZX granted SKYCITY a waiver from
NZX Listing Rule 5.2.3 (which requires securities to be held
by at least 500 members of the public holding at least 25%
of the number of securities of the class issued, with each
such member holding at least a minimum holding, before
being considered by NZX for quotation on the New Zealand
stock exchange) in relation to the proposed offer by the
company of new unsubordinated, unsecured, redeemable,
fixed rate bonds (Bonds) to be quoted on the NZX Debt
Market for a period of 12 months from the quotation date
for the Bonds. The waiver permits SKYCITY to have fewer
than 500 Bond holders who are members of the public
holding at least 25% of the Bonds, with the effect that the
Bonds may not be widely held and there may be reduced
liquidity in those Bonds.
(1) Planet Hollywood (Civic Centre) Limited was wound up and removed from the
New Zealand Register of Companies on 28 July 2015.
(2) SKYCITY Investments Christchurch Limited was wound up and removed from the
New Zealand Register of Companies on 14 July 2015.
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.
88
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 OTHER INFORMATION
LONG TERM INCENTIVE SHARES
TRANSFER OF SHARES
As at 14 August 2015, shares on issue were as detailed below:
•
•
1,279,258 shares issued under the 2013 SKYCITY
Chief Executive Officer Long Term Incentive Plan (approved
by shareholders at the 2013 Annual Meeting) and held by
Public Trust on behalf of the Chief Executive Officer. The
shares have been purchased by Mr Morrison under the Plan
with the assistance of an interest-free loan and are held on
behalf of Mr Morrison by Public Trust for a restrictive period.
The shares vest in Mr Morrison when performance hurdles
set by the board of directors are met; and
2,811,250 shares issued under the SKYCITY Senior
Executive Long Term Incentive Plan (initially approved by
directors in September 2009) and held by Public Trust on
behalf of 23 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 when performance hurdles set by the
board of directors are met.
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.
Clause 12.11 of the constitution provides that if a transfer of
shares results in the transferee, and the persons associated with
that transferee:
•
•
holding more than 5% of the shares in SKYCITY; or
increasing their combined holding further beyond 5% if:
> they already hold more than 5% of the shares in SKYCITY;
and
> the transferee has not been approved by the relevant
regulatory authority as an associated casino person of any
casino licence holder,
then the votes attaching to all shares held by the transferee and
the persons associated with that transferee are suspended unless
and until either:
•
•
•
•
each regulatory authority advises that approval is not needed;
or
any regulatory authority which determines that its approval
is required approves the transferee, together with the
persons associated with that transferee, as an associated
casino person of any applicable casino licence holder; or
the board of the company is satisfied that registration of
the proposed transfer will not prejudice any casino licence;
or
the transferee and the persons associated with that
transferee dispose of such number of SKYCITY shares as
will result in their combined holding falling below 5% or,
if the regulatory authorities approve in respect of the
transferee and the persons associated with that transferee
a higher percentage, the lowest such percentage approved
by the regulatory authorities.
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
Accordingly, the constitution contains the following provisions
restricting the acquisition of shares in the company to achieve
this.
Donations of $52,260 were made by the company during
the 12-month period ended 30 June 2015 ($17,482 during
the 12 months ended 30 June 2014).
89
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM OTHER INFORMATION
REVIEW OF OPERATIONS AND ACTIVITIES
OTHER DISCLOSURES
A detailed review of the operations and activities of the company
for the financial year ended 30 June 2015 is set out in the
Chairman and Chief Executive Officer’s Review on pages 4 to 11
of this annual report.
OTHER LEGISLATION/REQUIREMENTS
General limitations on the acquisition of securities imposed
by the jurisdiction in which SKYCITY is incorporated
(ie New Zealand law) are outlined in the following paragraphs.
Other than the provisions noted on page 89 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.
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.
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 SKYCITY
Chief Executive Officer Long Term Incentive Plan and SKYCITY
Senior Executive Long Term Incentive Plan as detailed 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 14 August 2015, 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 2001 (Australia).
There are no material differences between NZX Appendix 1
and ASX Appendix 4E issued by SKYCITY Entertainment Group
Limited on 12 August 2015 in respect of the financial year ended
30 June 2015 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 2015, a final dividend of
10 cents per share will be paid on 2 October 2015 to all
shareholders on the company’s register at the close of business
on 18 September 2015. 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 was 5.00pm (New Zealand time) on 21 September
2015. Full details of the company’s Dividend Reinvestment Plan
are available in the Investor Centre section of the company’s
website at www.skycityentertainment group.com.
90
ANNUAL REPORT | YEAR ENDED 30 JUNE 2015 REGISTERED OFFICE
AUDITOR
PricewaterhouseCoopers
188 Quay Street
Private Bag 92162
Auckland
SOLICITORS
Russell McVeagh
Vero Centre
48 Shortland Street
PO Box 8
Auckland
Bell Gully
Vero Centre
48 Shortland Street
PO Box 4199
Auckland
Webb Henderson
110 Customs Street West
PO Box 105–426
Auckland
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
DIRECTORY
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
Email: enquiry@computershare.co.nz
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
Email: enquiry@computershare.co.nz
91
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM skycityentertainmentgroup.com