ANNUAL
REPORT
YEAR ENDED 30 JUNE 2018
RECORD FINANCIAL PERFORMANCE NORMALISED NET PROFIT AFTER TAX (NPAT) UP 10.4%NORMALISED EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (EBITDA) UP 5.5% TO $338.2 MILLIONNEW CHAIRMAN AND SENIOR MANAGEMENT TEAM ONBOARDCOMMITTED TO A MINIMUM WAGE IN NZ OF $20 BY 2020BECAME A SIGNATORY TO THE CLIMATE LEADERS COALITION WITH A COMMITMENT TO BE CARBON NEUTRAL BY 2050POSITIVE MOMENTUM ON THE NEW ZEALAND INTERNATIONAL CONVENTION CENTRE AND HORIZON HOTEL PROJECTCOMMENCED THE MAIN CONSTRUCTION WORKS FOR OUR ADELAIDE CASINO EXPANSION PROJECTANNUAL REPORT | YEAR ENDED 30 JUNE 2018 2 INTERNATIONAL BUSINESS TURNOVER UP 39.2% TO $11.9 BILLION AND NORMALISED EBITDA UP 71.2% TO A RECORD $32.6 MILLIONIMPROVED OPERATIONAL PERFORMANCE ACROSS ALL OUR PROPERTIESCOMPLETED A REFRESH OF OUR GROUP STRATEGIC PLANSUCCESSFULLY PROGRESSED KEY STRATEGIC INITIATIVESTOTAL FY18 DIVIDEND OF 20 CENTS PER SHARE $4 MILLION AWARDED TO NEW ZEALAND COMMUNITIES VIA OUR SKYCITY COMMUNITY TRUSTSLAUNCHED AUSTRALASIA’S FIRST DIRECT-TO-TELEVISION ESPORTS STUDIO IN THE SKY TOWER ANNOUNCED THE OPENING OF THE ALL BLACKS EXPERIENCE AT SKYCITY AUCKLAND FROM 2020 SIGNIFICANT ONGOING INVESTMENT IN THE COMPANY’S ICT AND DIGITAL CAPABILITY 3SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM 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.
GENERAL
Our FY18 Highlights
About SKYCITY
Our Business
Our Numbers
Our Risk Profile and Management
Chairman’s Review
Our Board
Our Senior Leadership Team
Management’s Review
CORPORATE SOCIAL RESPONSIBILITY
Our Sustainability
Our Corporate Social Responsibility Pillars
Our People
Our Customers
Our Communities
Our Environment
Our Suppliers
Independent Limited Assurance Statement
2
6
8
10
11
14
16
20
24
31
34
34
42
44
47
53
56
CORPORATE GOVERNANCE STATEMENT
AND OTHER DISCLOSURES
Corporate Governance Statement
Director and Employee Remuneration
Shareholder and Bondholder Information
Directors’ Disclosures
Company Disclosures
FINANCIAL STATEMENTS
Independent Auditor’s 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
GRI CONTENT INDEX
DIRECTORY
59
68
80
82
84
88
92
93
94
95
96
97
125
126
130
This annual report is dated 18 September 2018 and is signed on behalf of the Board of directors of SKYCITY Entertainment Group Limited by:
Rob Campbell
Chairman
ANNUAL MEETING
Bruce Carter
Deputy Chairman
The 2018 annual meeting of SKYCITY Entertainment Group Limited will be held on Friday 19 October 2018 in the SKYCITY Theatre, Level 3,
SKYCITY Auckland, Corner of Wellesley and Hobson Streets, Auckland, commencing at 10.00am (New Zealand time).
5SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
SKYCITY Entertainment Group Limited (SKYCITY or the company and, together with its subsidiaries, the Group) is committed to continually
improving its statutory reporting documents to make them more accessible to a wider range of people and evolving its approach to increased
environmental and social governance measures in its reporting. Therefore, in addition to containing a review of SKYCITY’s financial
performance for the financial year ended 30 June 2018, this annual report also contains, for the first time, a review of SKYCITY’s economic,
social and environmental performance for the financial year ended 30 June 2018. A separate corporate social responsibility report for 2018
will not be prepared by SKYCITY as it has done in previous years. Where appropriate, information is also provided in relation to activities that
have occurred after 30 June 2018, but prior to publication of this annual report.
The non-financial information in this annual report has been informed by the principles and disclosures of the Global Reporting Initiative’s (GRI)
Sustainability Reporting Standards. Ernst & Young has undertaken limited assurance (in accordance with the International Standard on Assurance
Engagements (New Zealand)) over disclosures associated with selected performance data included in the Corporate Social Responsibility section
included in this annual report. A GRI reference index based on the GRI Sustainability Reporting Standards is included on pages 126 to 129 of this
annual report.
SKYCITY Entertainment Group Limited is New Zealand’s largest tourism, leisure and entertainment company and is listed in both New Zealand
and Australia.
As one of three major publicly listed casino operators in Australasia, we operate integrated entertainment complexes in New Zealand (in Auckland,
Hamilton and Queenstown) and Australia (in Adelaide and Darwin). In addition to our casino gaming facilities at each of our complexes, we also
offer premium restaurants, bars and conference facilities which appeal to both domestic and international visitors alike. Additionally, we also
offer award-winning hotel accommodation in Auckland and Darwin.
We employ nearly 6,000 employees across our operations in New Zealand and Australia, with around 3,500 of those employees based at our
flagship property in Auckland across 200+ job types. Upon completion of the New Zealand International Convention Centre and Horizon Hotel
projects in Auckland (due for completion late 2019) and our A$330 million expansion project in Adelaide (due for completion in 2020), our
workforce will significantly increase in size.
SKYCITY Darwin
SKYCITY Auckland
SKYCITY Hamilton
SKYCITY Queenstown
and SKYCITY Wharf
Adelaide Casino
6
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018
PROPERTY
GENERAL MANAGER
OPENED/ACQUIRED
CASINO VENUE LICENCE/
LICENSING AGREEMENT
RUNS UNTIL
ENTERTAINMENT
ACTIVITIES
SKYCITY
AUCKLAND
Michael Ahearne
Chief Operating
Officer (with direct
responsibility for
SKYCITY Auckland)
Opened in 1996
2048*
SKYCITY
HAMILTON
Michelle Baillie
General Manager
SKYCITY Hamilton
Opened in 2002
2027*
Increased ownership
from 70% to 100% in
2005
SKYCITY
QUEENSTOWN
AND SKYCITY
WHARF
Jonathan Browne
General Manager
SKYCITY
Queenstown/
SKYCITY Wharf
Opened Queenstown
in 2000
2025* (Queenstown)
2024* (Wharf)
Increased ownership
of Queenstown from
60% to 100% in 2012
Acquired Wharf
in 2013
ADELAIDE CASINO Luke Walker
Acquired in 2000
2085
SKYCITY DARWIN
General Manager
Adelaide Casino
David Christian
General Manager
SKYCITY Darwin
Acquired in 2004
2036
• Gaming
• Hotels
• Food and beverage
• Entertainment
• Conventions
• Out-catering
• Car parking
• Sky Tower
• Theatre
• Gaming
• Food and beverage
• Entertainment
• Conventions
• Car parking
• Tenpin bowling
• Gaming
• Food and beverage
• Entertainment
• Conventions
• Gaming
• Food and beverage
• Entertainment
• Gaming
• Hotels
• Food and beverage
• Entertainment
• Conventions
• Car parking
FY18 REVENUE (INCLUDING
GAMING GST AND
NORMALISED INTERNATIONAL
BUSINESS)
$696 million
$61 million
$27 million
A$174 million
A$118 million
* Each New Zealand casino venue licence can be renewed for a further period of 15 years pursuant to sections 134–138 of the New Zealand Gambling Act 2003.
SKYCITY is committed to continually improving and evolving our approach to increased environmental and social
governance measures in our reporting. We are therefore immensely proud to have been recognised for our
environmental, social and governance practices and reporting.
In July 2018, following its June 2018 index review, FTSE Russell (the trading name of FTSE International Limited and
Frank Russell Company) confirmed that SKYCITY had been independently assessed according to the FTSE4Good
criteria, and had satisfied the requirements to become a constituent of the FTSE4Good Index Series.
Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies
demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market
participants to create and assess responsible investment funds and other products.
7
ABOUT SKYCITYSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM ANNUAL VISITATION AND NORMALISED REVENUE (INCLUDING GAMING GST) IN FY18
GAMING
RESTAURANTS & BARS
HOTELS
$868
MILLION*
2.8 MILLION
VISITS FROM LOYALTY
CARD MEMBERS**
4,095
ELECTRONIC GAMING MACHINES^
349
TABLES^
$113
RESTAURANT AND BAR COVERS
MILLION
6.2 MILLION
13
14
18
SIGNATURE RESTAURANTS^
OTHER RESTAURANTS^
BARS^
CONFERENCES
SKY TOWER
$18
MILLION
560,000
SKY TOWER VISITS
$27
MILLION
170,000
CONFERENCE DELEGATES
7,500
SQUARE METRES OF
CONFERENCE ROOMS^
8
$58
MILLION
240,000
787
PARKING
$7
MILLION
2.2 MILLION
CARS PARKED
3,600
PARKING BAYS^
HOTEL ROOMS OCCUPIEDHOTEL ROOMS^ANNUAL REPORT | YEAR ENDED 30 JUNE 2018 OPERATING EARNINGS BY PROPERTY
DISTRIBUTIONS TO OUR STAKEHOLDERS IN FY18
INTERNATIONAL
BUSINESS
9%
AUCKLAND
70%
ADELAIDE
6%
DARWIN
7%
GOVERNMENTS
$170 MILLION
IN TAXES
QUEENSTOWN
1%
EMPLOYEES
$323 MILLION
IN SALARIES AND WAGES
HAMILTON
7%
COMMUNITIES
$20 MILLION
IN COMMUNITY CONTRIBUTIONS,
LEVIES AND SPONSORSHIPS
REVENUE BY BUSINESS ACTIVITY
SUPPLIERS
$271 MILLION
IN PAYMENTS TO SUPPLIERS
$261 MILLION
OF CAPITAL INVESTED
FOOD AND
BEVERAGE
13%
HOTELS
5%
LENDERS
$35 MILLION
IN INTEREST PAID
INTERNATIONAL
BUSINESS
15%
SHAREHOLDERS
$135 MILLION
OF DIVIDENDS DECLARED IN
RELATION TO THE FY18 PERIOD
OTHER
3%
LOCAL
GAMING
64%
*Total gaming revenues, including carded and non-carded play.
** Calculated by reference to customers who used their SKYCITY Premier Rewards cards to game, where one visit records a customer's patronage on a day irrespective of how many
times they used their card on that day.
^As at 1 September 2018.
9
OUR BUSINESSSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM 1,200
1,000
800
1,200
600
1,200
1,000
400
1,000
800
1,200
n
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800
600
1,000
400
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30.0
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25.0
0
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20.0
30.0
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15.0
30.0
25.0
10.0
25.0
20.0
30.0
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0.0
15.0
10.0
20.0
10.0
5.0
15.0
5.0
0.0
10.0
0.0
5.0
0.0
GROUP REVENUE (INCLUDING GAMING GST)
1,008 1,009
1,084 1,101
1,029 1,022
1,101 1,097
ENTERPRISE VALUE
927
903
0
600
400
800
FY14
FY15
FY16
FY17
FY18
400
200
600
GROUP EBITDA
FY14
GROUP EBITDA
FY14
GROUP EBITDA
GROUP EBITDA
FY14
GROUP EBITDA
350
0
200
300
0
400
250
400
350
200
350
300
400
FY15
FY15
FY15
FY16
NORMALISED
REPORTED
FY16
FY16
330
334
305
304
FY17
FY17
FY17
FY18
FY18
FY18
320
307
338
339
150
100
300
250
350
250
200
300
288
257
50
200
150
250
0
150
100
200
FY14
FY15
FY16
FY17
FY18
100
50
150
EARNINGS PER SHARE AND DIVIDEND PER SHARE
FY14
FY15
FY16
EARNINGS PER SHARE AND DIVIDEND PER SHARE
FY16
FY14
FY15
EARNINGS PER SHARE AND DIVIDEND PER SHARE
FY16
FY14
FY15
NORMALISED
REPORTED
FY17
FY17
FY17
EARNINGS PER SHARE AND DIVIDEND PER SHARE
EARNINGS PER SHARE AND DIVIDEND PER SHARE
FY18
FY18
FY18
25.4
22.9
20.0
20.0
25.5
21.0
23.4
20.0
20.0
21.3
FY14
4,000
4,000
3,500
4,000
4,000
3,500
3,000
3,500
3,500
3,000
2,500
3,000
348
447
643
349
672
3,009
2,723
2,749
3,000
2,467
2,500
2,000
2,317
2,500
n
o
i
l
l
i
m
$
Z
N
2,500
2,000
2,000
n
o
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1,500
n
$
o
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m
$
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n
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i
2,000
1,500
m
$
Z
N
1,000
1,500
1,500
1,000
500
1,000
1,000
500
FY15
FY16
FY17
FY18
500
FY14
FY15
FY16
FY17
FY18
500
EQUITY VALUE(1)
NET DEBT(2)
FY14
FY14
FY14
FY15
FY15
FY15
FY16
FY16
FY16
FY17
FY17
FY17
NORMALISED EPS
DECLARED EPS
FY18
FY18
FY18
FY14
(1) Based on the share price and number of
shares on issue as at 30 June in each
financial year.
FY17
FY15
FY16
FY14
FY15
FY16
FY17
(2) Gross hedged debt less cash at bank as
FY18
FY18
at 30 June in each financial year.
FY17
FY14
FY15
FY16
FY18
10
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018
The SKYCITY Board is ultimately responsible for the governance of the Group’s risk management, which includes formulating the Group’s
risk appetite and setting and monitoring risk tolerance.
The company maintains a risk management framework for the identification, assessment, monitoring and management of risk to the company’s
business. As part of this framework, SKYCITY maintains an independent, centrally-managed Group Risk function which evaluates and reports
on risks and controls across the Group. The Group Risk team collates, assesses and monitors the risks the Group faces by way of a Top Risk
Profile, which is updated regularly. The Top Risk Profile is a current view of the most significant emerging, or potential risks facing the Group,
as well as a summary of how those risks are being mitigated or prepared for, and is a critical input to strategic planning, insurance renewal,
investment and resource prioritisation, and assurance planning. Management reports to the Audit and Risk Committee and SKYCITY Board
on the effectiveness of the company’s management of its material business risks at least annually.
SKYCITY operates in a dynamic and challenging environment with risks and opportunities both locally and internationally. SKYCITY’s ability to
create and 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 outlined 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 and/or smoking legislation and regulations, licence conditions and gaming taxes and levies.
The risk of regulatory change is mitigated by maintaining frequent engagement with the governments and regulators in each jurisdiction in which
SKYCITY operates and with industry stakeholders. Targeted 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.
SUSPENSION, CANCELLATION OR EXPIRY 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 suspension, cancellation or expiry of the Auckland casino licence, would have a significant negative impact on SKYCITY. The suspension,
cancellation or expiry of any of SKYCITY’s other casino licences would also have a negative impact on SKYCITY.
SKYCITY has mitigated this risk by securing an extension of the Auckland casino licence to 30 June 2048 and an extension of the Darwin casino
licence to 30 June 2036. The Adelaide casino licence currently runs until 30 June 2085. Extensions to the Hamilton and Queenstown casino
licences are intended to be sought in accordance with the renewal provisions of the Gambling Act 2003 (New Zealand) in due course. In addition,
SKYCITY mitigates the risk by maintaining a robust compliance culture and framework to ensure compliance with licence conditions and gaming
legislation and regulations, and maintaining engagement with the governments and regulators, in each jurisdiction in which SKYCITY operates.
ECONOMIC AND BUSINESS VOLATILITY
The general economic conditions in the markets that SKYCITY operates in, in addition to volatility in certain parts of the business, can significantly
influence the financial performance of the company.
To mitigate these risks, SKYCITY continually monitors its external environment, including the geo-political and global economic landscape, and has
a robust liquidity management framework. SKYCITY also continually reviews the optimal mix for its business activities to ensure it has a balanced
portfolio reflecting its risk appetite.
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
11
CUSTOMER AND INNOVATION RISK
SKYCITY recognises that it is important to consider evolving customer demographics and preferences in both our gaming and non-gaming
operations, including new offerings, technologies and innovation.
To ensure SKYCITY remains relevant to our customers, key strategic projects are currently being progressed, with a focus on emerging industry
trends and opportunities for leveraging new technology and demographic changes, as more fully outlined in Management’s Review on pages
24 to 29 of this annual report.
TECHNOLOGY RISK
Technology represents a critical platform to SKYCITY’s business - not only for facilitating/enabling our operations, but also mitigating cyber-threats
and ensuring compliance with regulatory and licence requirements.
To mitigate technology risk, SKYCITY is investing in a significant programme over the medium-term to improve technology systems, infrastructure,
capability and data management, and to improve cyber-resilience. In addition, there is also significant focus on technology project governance,
risk management and assurance.
DEVELOPMENT AND PROJECT RISK
With two significant growth projects underway, the New Zealand International Convention Centre and Horizon Hotel development in Auckland
and the Adelaide Casino expansion, as well as master planning across the Group, SKYCITY recognises that robust project management is critical to
successful delivery of these projects. Accordingly, SKYCITY has established strong governance and oversight frameworks for both current and
future major growth projects.
HEALTH AND SAFETY RISK
SKYCITY has Health and Safety Risk Registers in place that identify risks into two key categories - high consequence/low frequency (being critical
risks) and low consequence/high frequency risks.
To mitigate our critical risks (which include working at heights, confined spaces, electrical, moving plant, fire and explosion), we have in place
extensive safe systems of work to effectively control the potential for an incident. Our ongoing safety assurance activities seek to test these
controls and, where appropriate, strengthen our critical risk controls ensuring we keep our people and visitors safe.
Due to the hospitality and retail focus of our business, a high percentage of our health and safety risk falls into the low consequence/high
frequency category, which includes risks such as slips/trips and cuts from manual tasks. We have in place harm prevention programmes aimed at
reducing minor injuries and promoting wellness amongst our employees and contractors.
Our New Zealand properties are tertiary accredited under the Accident Compensation Corporation (ACC) Accredited Employers Programme and
our Adelaide site is a registered self-insured employer. We undertake assurance activities to maintain certifications and continually improve our
health and safety performance.
A staff member working at height in Auckland
12
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018OUR RISK PROFILE AND MANAGEMENT Artist's impressions of the Adelaide Casino expansion
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
13
OUR RISK PROFILE AND MANAGEMENT The SKYCITY Board and management team work effectively together
and will continue to improve the size, scope and quality of the business.
So far as the Board is concerned, the directors’ focus is on ensuring that:
•
the full range of positive and negative risks is considered properly
in major decisions;
•
the capital of the business is invested efficiently and effectively;
• all compliance requirements are consistently met;
• social expectations of our business are embraced and achieved;
and
• management, staff and the Board are aligned around the business
objectives.
These are all matters for ongoing review and improvement. Currently,
we are making good progress.
In our core gaming business, there is intense competition for the
engagement of customers with many options available to them. We aim
to offer the unique experience of casino gaming in each of our venues
with responsible hosting integral to the experience. This experience
requires ongoing renewal and refreshment of the gaming facilities and
ancillary services suited to each venue. As an entertainment business
we must provide high quality and engaging experiences to a wide range
of people.
In each of the locations we operate, we are significant employers. It is
central to our performance that we have engaged, skilled and rewarded
staff. Our people come from many different cultures and it is a
consistent aim of the Board and management that we recognise and
value the contributions from all. There is a range of activities to deliver
on this aim, such as the SKYCITY Quest for the Best awards,
an employee recognition programme which recognises employees who
live SKYCITY’s values and consistently achieve outstanding customer
service levels, and the various employee leadership development
programmes, including ‘Tahuna te Ahi’ – a new tailored programme
Rob Campbell
14
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018
At our flagship Auckland property, there is great potential to add value
through development of the precinct and the addition of a wider
range of entertainment options complementing the existing offers.
Our approach to this is to work with quality partners, sharing expertise
and capital to best effect.
The most important role of the Board is the allocation of capital. We are
placing emphasis on ensuring that capital is not locked into or stranded
within low value enhancing assets or activities. There are attractive
options around our core business and our consistent aim is to deliver
better allocation to grow the value of our business. There will be
ongoing activity reflecting this view with care but pace.
ROB CAMPBELL
Chairman
providing accelerated leadership development specifically for our
M�ori employees. The Board takes an active interest in these activities.
The economic and social context in which we operate demands a high
level of corporate responsibility. Through the work of the various
SKYCITY Board committees and at full Board meetings, we examine
the trends and challenges, establish new pathways and practices, and
monitor performance. We are rigorous in our self-examination, open to
improvement and welcome constructive external proposals.
We have major development activity underway in Auckland and
Adelaide. Governance of these projects (again through both specialist
Board committee and full Board meetings) is rigorous in terms of
planning, contracting and monitoring. We anticipate that substantive
scale development activity on current and future projects will be an
ongoing feature of the business and are structuring Board and
management accordingly.
The New Zealand International Convention Centre is a project of
national significance, as reflected in the partnership with the
New Zealand Government. The completion of the project and effective
management of the centre will be an important presentation of
New Zealand to the world. We are intent on this being a facility of
which the country can be proud. While there have been delays in
the construction phase, the full attention of the business and our
contracting partners is devoted to that end, while planning,
booking and preparation for the first events are well advanced.
As advised to the market previously, we plan to increase our hotel
business both in existing and new locations. This is a core part of the
entertainment, gaming and conference business. The SKYCITY Board
and management are directing attention to the best capital structure for
this part of the business and we are identifying appropriate partners in
terms of capital, branding and operation. Looking forward, we anticipate
an increased level of activity in this area.
15
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCHAIRMAN'S REVIEW From left to right:
MURRAY JORDAN
Director
SUE SUCKLING
Director
BRENT HARMAN
Director
RICHARD DIDSBURY
Director
ROB CAMPBELL
Chairman
JENNIFER OWEN
Director
BRUCE CARTER
Deputy Chairman
16
17
ROB CAMPBELL – Chairman
BRENT HARMAN – Director
Member of the Audit and Risk Committee
Member of the Remuneration and Human Resources Committee
Member of the Corporate Social Responsibility Committee
Chair of the Governance and Nominations Committee
Appointed a director of SKYCITY in June 2017
Rob Campbell was appointed Chairman of the SKYCITY Board
effective from 1 January 2018 following Chris Moller’s retirement
from the Board.
Rob is currently the Chair of Summerset Group Holdings Limited,
Tourism Holdings Limited and WEL Networks Limited and a director
of Precinct Properties New Zealand Limited. Rob has over 30 years’
experience in capital markets and is a director of or advisor to a range
of investment fund and private equity groups in New Zealand, Australia,
Hong Kong and the United States of America.
Rob holds a Bachelor of Arts with First Class Honours in Economic
History and Political Science and a Masters of Philosophy in Economics.
BRUCE CARTER – Deputy Chairman
Chair of the Audit and 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 Limited (Australian Submarine
Corporation) and Aventus Capital Limited and a director of Bank of
Queensland Limited and Genesee and Wyoming Inc (US) as well as a
number of private companies and government bodies. He is a Fellow
of Chartered Accountants Australia and New Zealand.
Member of the Remuneration and Human Resources Committee
Member of the Governance and Nominations Committee
Appointed a director of SKYCITY in December 2008
Brent Harman’s governance experience of more than 25 years includes
executive directorships of two London-based FTSE-listed companies,
executive and non-executive directorships of two ASX-listed companies
and directorships of a number of listed and unlisted New Zealand
companies. His previous governance roles include being Chair of
Mediaworks NZ Limited and a director of Metlifecare Limited.
Brent’s previous career in management in New Zealand included
developing and launching the Newstalk radio format as General
Manager of Newstalk ZB and after that as Chief Executive Officer
of TVNZ. He is a Chartered Member of the New Zealand Institute
of Directors.
As previously announced to the market in September 2018, Brent will
retire from the Board at SKYCITY’s upcoming annual meeting of
shareholders on 19 October 2018.
SUE SUCKLING – Director
Chair of the Corporate Social Responsibility Committee
Member of the Governance and Nominations Committee
Appointed a director of SKYCITY in May 2011
Sue Suckling is an independent director and consultant with over
25 years in commercial corporate governance. She is recognised for
her leadership in the technology innovation space and her deep
governance experience.
Sue is currently the Chair of the New Zealand Qualifications Authority,
Insurance & Financial Services Ombudsman Scheme Commission,
Jacobsen Holdings Limited, Blinc Innovation Limited, ECL Group
Limited and Jade Software Corporation Limited. Previous governance
roles include chairing NIWA, AgriQuality Limited, and as a director of
Restaurant Brands Limited, Westpac Investments Limited and the
New Zealand Dairy Board. She holds an OBE for her contribution to
New Zealand business. Sue is a Chartered Fellow of the New Zealand
Institute of Directors and a Companion of the Royal Society of
New Zealand.
18
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018
RICHARD DIDSBURY – Director
MURRAY JORDAN – Director
Member of the Corporate Social Responsibility Committee
Member of the Governance and Nominations Committee
Appointed a director of SKYCITY in July 2012
Chair of the Remuneration and Human Resources Committee
Member of the Governance and Nominations Committee
Appointed a director of SKYCITY in December 2016
Murray Jordan is currently a director of Chorus Limited and Metcash
Limited, an ASX listed wholesale distributor specialising in food, grocery
and hardware based in Australia, a director of Stevenson Group
Limited, a family owned New Zealand business specialising in building
products and quarrying, and a trustee of the Starship Foundation.
Prior to embarking on a governance career in 2015, he held various
senior management roles at Foodstuffs Limited from 2004 to 2015,
including Managing Director of Foodstuffs North Island and
Managing Director and General Manager Retail, Sales and Performance
of Foodstuffs Auckland Limited. In 2013, he led the merger of the
Auckland and Wellington businesses of Foodstuffs to create what is
now known as Foodstuffs North Island and established and oversaw
the integration programme.
His early career was in the property sector, including as General
Manager of Telecom NZ’s property business and General Manager
of AMP Capital Investors NZ Limited’s property portfolio. Murray has
a Masters degree in Property Administration from the University
of Auckland.
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, Kiwi Property Group
Limited, which is now the largest property vehicle listed on the NZX.
He is Chairman of NX2 (the private sector consortium involved in the
Puhoi to Warkworth motorway project, a Private Public Partnership).
He is well known for his work as a past president of the Property
Council of New Zealand and was previously Chairman of Committee
for Auckland Limited. His previous governance roles include being a
director of Infrastructure Auckland and Tourism Auckland.
JENNIFER OWEN – Director
Member of the Audit and Risk Committee
Member of the Governance and Nominations Committee
Appointed a director of SKYCITY in December 2016
Jennifer Owen is a Principal of Owen Gaming Research, an
independent research firm specialising in the gaming and wagering
markets. She has more than 30 years’ experience in the areas of
accountancy, audit, finance, treasury and equities research.
Jennifer has specific specialist knowledge of the New Zealand and
Australian gaming and entertainment sectors through her roles as
Director of Equities Research at Citigroup Global Markets, with a
specialist focus on the Australasian gaming sector, and as Equities
Research Analyst at Macquarie Group focussing on the tourism/leisure
sector. She has been engaged in research, analysis, and more recently,
consulting in the sector since 1996, and has a wide network within the
gaming industry and a strong understanding of industry and investor
issues. Her previous governance roles include serving on the Board of
Racing NSW and the Investment Committee of the Salvation Army.
Jennifer holds a Bachelor of Business from the Queensland Institute
of Technology and a Masters in Business Administration from the
University of Queensland, is a graduate of the Australian Institute of
Company Directors’ Diploma course and is a member of Chartered
Accountants Australia and New Zealand.
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
19
OUR BOARD From left to right:
SIMON JAMIESON
General Manager NZICC
GRAEME STEPHENS
Chief Executive Officer
LIZA MCNALLY
Chief Marketing Officer
JO WONG (seated)
General Counsel
and Company Secretary
ROB HAMILTON
Chief Financial Officer
MICHAEL AHEARNE (seated)
Chief Operating Officer
GLEN MCLATCHIE
Chief Information Officer
CLAIRE WALKER
General Manager
Human Resources
20
21
GRAEME STEPHENS
Chief Executive Officer
MICHAEL AHEARNE
Chief Operating Officer
Graeme joined SKYCITY as Chief Executive Officer in May 2017,
bringing with him significant expertise in the gaming, hospitality, and
leisure industries.
Michael joined SKYCITY in December 2017 as Chief Operating Officer
and is responsible for overseeing the operations and driving value
across SKYCITY's six properties in New Zealand and Australia.
Prior to joining SKYCITY, Graeme was Chief Executive Officer of
Sun International, a casino, resorts and entertainment company listed
on the Johannesburg Stock Exchange. Under his leadership, the
company rebalanced its portfolio, diversified into growth areas in
both South Africa and Latin America, redeveloped its flagship resort
in Sun City and built a new casino resort near Pretoria.
An accountant by profession and with more than 10 years’ experience
in banking and corporate finance, Graeme was appointed Senior
Vice President of New Business Development at Kerzner International
in 2003 and was responsible for a number of global hospitality projects
before joining Sun International in 2011.
ROB HAMILTON
Chief Financial Officer
Rob joined SKYCITY as Chief Financial Officer in October 2014 and
is responsible for the financial management of SKYCITY, including
reporting, treasury, risk management and corporate development.
He also oversees SKYCITY’s International Business and ICT function
and helps to drive the strategic direction of the SKYCITY Group.
Rob is a respected member of the finance community with more than
20 years’ experience at First NZ Capital, where he led the investment
banking team.
Rob holds Bachelor degrees in Commerce and Science and is on the
Board of Trustees for Auckland Grammar School.
Prior to joining SKYCITY, Michael held a number of senior operational
and product leadership roles at Paddy Power Betfair, one of the world’s
leaders in sports betting and gaming. Prior to this, Michael enjoyed a
13-year career in the Australasian gaming and entertainment sector –
ten years of which were spent at The Star Casino, Sydney, where he
held a variety of senior management positions and, following that,
three years as Chief Operating Officer for Aristocrat in the Australia
and New Zealand regions.
Michael is a qualified accountant and holds a Master of Business
Administration from the University of Technology, Sydney.
CLAIRE WALKER
General Manager Human Resources
Claire was appointed General Manager Human Resources in
August 2016 and is responsible for leading the development and
implementation of best practice human resource strategy across
SKYCITY. She also has executive responsibility for corporate social
responsibility at SKYCITY.
Prior to her appointment as General Manager Human Resources, Claire
was Chief People Officer at Sanford Limited where she established the
human resources function and led the sustainability and integrated
reporting activities for the organisation. Prior to this, Claire led the
human resources and employee relations function for the SKYCITY
Auckland business. Claire has also held senior human resource roles
with Carter Holt Harvey and Downer after several years working in the
education sector.
22
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018
JO WONG
General Counsel and Company Secretary
LIZA MCNALLY
Chief Marketing Officer
Jo joined SKYCITY as Senior Legal Counsel in January 2009 and
was subsequently appointed as Deputy General Counsel before
being appointed as General Counsel and Company Secretary in
September 2016. As General Counsel and Company Secretary, Jo is
responsible for SKYCITY’s legal, company secretarial, regulatory affairs
and anti-money laundering functions.
Jo has nearly 20 years’ experience in both private practice and in-house
legal roles. Before joining SKYCITY in 2009, she held General Counsel
and Group Corporate Counsel roles in the New Zealand financial
services industry and was a Senior Solicitor at Russell McVeagh, one of
the leading law firms in New Zealand.
Jo was a participant in the 2017 Global Women Breakthrough Leaders
Programme, is a member of New Zealand Asian Leaders and holds a
Bachelor of Laws and a Bachelor of Arts (Criminology and Japanese)
from Victoria University of Wellington.
SIMON JAMIESON
General Manager NZICC
Since joining SKYCITY in September 2007, Simon has held a number of
roles, including General Manager SKYCITY Adelaide, General Manager
Hotels SKYCITY Auckland and Acting General Manager SKYCITY
Auckland. As General Manager NZICC, Simon oversees the
development of SKYCITY’s New Zealand International Convention
Centre and Horizon Hotel project in Auckland. He is also responsible
for health and safety at SKYCITY.
With more than 30 years’ experience in large-scale hospitality
businesses, Simon brings a wealth of commercial experience and
tourism know-how to the SKYCITY business.
Liza joined SKYCITY in January 2018 as Chief Marketing Officer,
bringing with her over 20 years of marketing expertise.
Hailing from Australia, Liza's experience includes senior positions in
both Sydney and Auckland with a number of senior marketing and sales
positions within media, entertainment and telecommunications
organisations. These include News Corp Australia, Telecom/Spark
New Zealand and New Zealand Media & Entertainment (NZME) as well
as a period of time running her own consulting firm.
With her broad marketing background, Liza brings holistic thinking to
our marketing efforts with particular focus on our brand, digital,
customer and loyalty.
GLEN MCLATCHIE
Chief Information Officer
Glen joined SKYCITY in 2016 as Chief Information Officer and is
responsible for lifting the digital capability of the organisation to be
able to respond to future innovation initiatives and growth strategies.
Prior to joining SKYCITY, Glen was General Manager ICT with Meridian
Energy where he transformed and modernised their aging technology
footprint and digital capability. He has 25 years of technology
experience from across several industries globally, having worked in and
out of the UK, France, USA, Australia, Malaysia, India, China and the
Middle East.
Glen holds a Master of Information Systems from Swinburne University
of Technology, Australia, and a Bachelor of Business Studies from
Massey University, New Zealand.
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
23
OUR SENIOR LEADERSHIP TEAM The year under review is my first full year as Chief Executive and it has therefore
been a period where, in addition to the “normal” focus on operating results, my focus
has been on a few areas that needed to be addressed early on in my tenure.
These included:
• completing my learning curve on the underlying business and portfolio;
• meeting with the majority of our shareholders and understanding their rationale
for investment into SKYCITY and expectations of the medium-term strategy for
the company;
•
•
identifying, promoting and employing the members of my Senior Leadership Team;
formulating the strategic parameters, framework and objectives for the next
3–5 years;
• working with the SKYCITY Board to prioritise strategic objectives and
commencing with implementation; and
• commencement of a process to align senior management and the wider
employee base with the strategic direction of the company.
I am pleased with where we have finished the year in relation to the above
objectives and, as regards the operating results, these were slightly ahead of
expectation with full credit going to Michael Ahearne and his team.
I am confident that with our new Chairman, Rob Campbell, and the new SKYCITY
Senior Leadership Team now onboard and settled in, we can continue to deliver
on our key strategic initiatives and major projects over the coming year.
Our refreshed Group strategy has a clear focus on the creation of both sustainable
shareholder returns and enhanced social and sustainability initiatives critical to the
long term viability and success of the company.
Thank you to the SKYCITY Board for their ongoing support of the Senior
Leadership Team and thank you to my executive and all our SKYCITY staff members
who work so tirelessly to deliver a safe, but fun, entertainment and hospitality
experience for our customers. All of us at SKYCITY have chosen a career in the
hospitality industry because we are passionate about the business. It’s an industry
that demands long hours and we are busiest at times of the day, week or year when
others are relaxing. But we love it because it’s a fun place to be. Our customers give
us the thing that is most precious to all of us, their leisure time. They trust us with
that precious time and we understand that our current performance and future
relevance depends on us consistently creating exceptional experiences for them.
Graeme Stephens
24
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018
GRAEME STEPHENS
Chief Executive Officer
This review provides a summary of SKYCITY’s strategic positioning and
performance for the 2018 financial year and our priorities for the
year ahead.
RESULTS
SKYCITY’s FY18 full-year result delivered a record year for the
company both in terms of earnings and net profit, with a strong rebound
in International Business, solid performance in New Zealand and a
return to earnings growth in Adelaide and Darwin on a like-for-like basis.
The key features of the result were:
• normalised net profit after tax (NPAT) up 10.4% to $169.9 million
and normalised earnings before interest, tax, depreciation and
amortisation (EBITDA) up 5.5% to $338.2 million;
•
•
•
reported NPAT up 277.9% due to A$95 million impairment of
SKYCITY Darwin’s goodwill the previous year;
improved operational performance across all properties, led by
International Business with turnover up 39.2% to $11.9 billion and
normalised EBITDA up 71.2% to a record $32.6 million; and
fully-imputed final dividend of 10 cents per share bringing total
FY18 dividends to 20 cents per share in line with existing
dividend policy.
Despite the disruption in the CBD from the City Rail Link development
and the New Zealand International Convention Centre/Horizon Hotel
project, SKYCITY Auckland achieved record EBITDA of $260.7 million,
up 3.7%. Gaming revenue was up 2.6%, while non-gaming revenue rose
4.6% on the back of another strong performance from the SKYCITY
Hotel and SKYCITY Grand Hotel, with occupancy rates of approximately
90%. A good performance across food and beverage was bolstered by
the opening of our premium Chinese restaurant, Huami, in July 2017 and
our South-East Asian outlet, Spice Alley, in January 2018.
SKYCITY Hamilton achieved record earnings in FY18, up 4.3% to
$26.9 million, including good growth in non-gaming revenue from our
bowling facility, Bowl & Social, and effective cost management.
Our combined Queenstown properties grew earnings by 56.5% to
$2.1 million, driven by higher visitation and efficiencies from reduced
operating hours at Wharf Casino.
Adelaide Casino achieved EBITDA growth of 12.5% to $A22.5 million,
assisted by improved gaming machine market share in the latter part of
the year, an increase in premium gaming activity, and effective cost
management. This was despite considerable disruption caused by
building works around the property, including SKYCITY’s $A330 million
expansion project which commenced in June this year.
SKYCITY Darwin’s performance stabilised over the year, with visitation
up in response to broadening on-site entertainment. EBITDA fell 5.3%
to A$25.1 million as a consequence of our Keno customers being
exceptionally lucky. Adjusting for the higher-than-average number of
Keno 10-spot jackpot wins at the property (three in FY18 compared to
none in the prior year) would see Darwin earnings up 6.7% on the
previous year.
SKYCITY’s international VIP business has recovered strongly from a
challenging FY17, achieving turnover of $11.9 billion, up 39.2%, and
record normalised EBITDA of $32.6 million, up 71.2%, with a win rate
very close to the long term theoretical. This result reflects both the
recovery of the sector across Asia-Pacific and the performance of our
restructured International Business team, led by our new President of
International Business, Stewart Neish. This is the standout feature of
our results and with this performance our International Business
became our second largest contributor to earnings (after Auckland).
PROGRESS ON OUR KEY STRATEGIC INITIATIVES
This year, in conjunction with the SKYCITY Senior Leadership Team,
the SKYCITY Board approved a refreshed Group strategy. Key
considerations when setting the medium-term strategy were:
•
the profitability of our business is roughly 80% from New Zealand
and 20% from Australia. Shareholders are comfortable with the
relatively low country risk and regulatory environments that these
jurisdictions offer and we are likely to remain focussed on this
region for the foreseeable future;
• our business is predominantly gaming-led, with roughly 80%
currently coming from the casino component. The long term,
exclusive nature of our casino licences provides a solid underpin to
the risk profile of the business. We have strategically evaluated our
existing casino licences to ensure we are maximising the potential
within them and have identified further opportunity for growth in
the premium market as well as our Queenstown licences;
•
there are unlikely to be many (if any) new land-based casino licence
opportunities in our jurisdictions of operation, so growth (other
than organic growth) will have to come from other lines of business.
The balance of our business essentially derives from hotels and
restaurants. Our restaurants are relatively low margin and exist
primarily to service our gaming, hotel and conventions customers
and to ensure that our destinations remain relevant in their
25
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMMANAGEMENT'S REVIEW OUR REFRESHED GROUP STRATEGY
To be the leader in gaming, entertainment and hospitality in our communities
Improve our operating performance
Optimise our existing portfolio
Grow and diversify our business
Offer a great and safe place to work
Always put customers first
Be responsible leaders in
our communities
communities. Our hotels are higher margin businesses and there is
an opportunity to scale up our portfolio and expertise – initially on
our precincts, but also on a stand-alone basis;
• we are cognisant of a strategic need to remain abreast of
developments in the online and digital space and, where
appropriate, to ensure that we take up opportunities that will
ensure we continue to offer a relevant form of entertainment;
• a review of our existing precincts to ensure that we are maximising
opportunities has highlighted areas of potential investment into
premium gaming spaces, hotels (as highlighted above) and
entertainment to ensure our destinations remain relevant to
customer demand. Where necessary, we are prepared to acquire
property to ensure we are future proofed;
• we have two major projects currently underway that have
committed us to circa $1 billion of debt over the next few years.
While we are very comfortable with our ability to service and repay
this level of gearing, it does not leave us with any significant debt
capacity for other expansionary projects or initiatives in the short
term. Any funding requirements for new initiatives will be raised
through sale of non-core assets and/or partnering using a “capital
lighter” approach; and
•
the relatively high dividend yield that SKYCITY offers is valued by
shareholders and should be preserved and recognised when
looking at any future funding requirements.
Improve our Operating Performance
During the financial year, we successfully implemented a number of
initiatives to improve our operating performance, including new events
and more effective marketing driving visitation growth at all properties
(with a greater focus on data analytics), investment in new gaming
product across the Group, a focus on growing our International
Business and premium gaming markets, significant ongoing investment
in the company’s ICT and digital capability and a strong operating cost
focus driving margin growth at all properties.
In International Business, we have seen more visits from our major
customers and an increased use of third party junket operators, which
led to a record six-month turnover in the second half of the financial
year. We also managed to increase our margins due to operating
efficiencies and low bad debts.
We continue to make good progress on investment in ICT systems and
platforms. Part of the investment to date has been replacing end-of-life
systems, but we are getting to a point where we can start to focus on
initiatives to improve customer experiences – such as loyalty/CRM
systems. Our ICT costs were higher and contributed to higher
corporate costs during FY18.
Optimise our Existing Portfolio
We have progressed a number of key initiatives to optimise our existing
portfolio, including acquiring a number of properties around our
Auckland precinct as part of a broader master planning programme,
26
CHARACTER & CULTURE GOALSBUSINESS GOALSVISIONANNUAL REPORT | YEAR ENDED 30 JUNE 2018MANAGEMENT'S REVIEW developing plans to enhance our International Business and premium
gaming offerings in Auckland, continuing to evaluate master planning
opportunities in Hamilton and exploring options to create an improved
VIP/premium facility in Queenstown.
SKYCITY’s master plan for the Federal Street precinct is starting to
take shape, with most of the property acquisitions needed now
completed, including a majority interest in the AA Centre on the
corner of Victoria and Albert Streets, which is likely to become the
Group’s new headquarters. This will allow the existing head office site,
Federal House, to become part of the broader precinct development.
With the consolidation of our ownership of the Federal Street precinct,
we are looking to develop new, non-gaming, family-oriented
entertainment offerings that will ensure we remain a relevant precinct
in the context of all the other development in Auckland. Ultimately,
we would like to see Federal Street closed to through traffic so that
we can achieve our goal of a precinct for people, not vehicles.
Within SKYCITY’s existing portfolio, the two key projects currently
underway – the New Zealand International Convention Centre/Horizon
Hotel project and the Adelaide Casino expansion project - are
transformational in nature.
The New Zealand International Convention Centre (NZICC) and
Horizon Hotel project is continuing to benefit from positive momentum
over recent months and SKYCITY is actively working with Fletcher
Construction to assist it to achieve its target completion date of
December 2019. There continues to be good progress made on-site,
with the roof of the NZICC currently being installed and the first of the
glass panels, designed by Sara Hughes, due to be lifted into place in the
coming month. Pleasingly, we have secured several major conventions
for the NZICC for 2020 and we continue to pursue a strong pipeline
of leads.
In Adelaide, we have appointed Hansen Yuncken as the main
construction contractor for the expansion project. Work is well
underway and the project is currently on-track for completion in the
third quarter of calendar 2020. The expansion will deliver a new casino
floor as well as a luxury hotel, wellness centre, signature bars and
restaurants, and conference facilities. The project will help secure the
future of our Adelaide business and deliver jobs and tourists into
South Australia.
Our Hamilton casino continues to achieve growth and we are exploring
further development opportunities to leverage the positive economic
and tourism outlook in the Waikato region. We own undeveloped
freehold land adjacent to our casino and would benefit from having a
hotel on premise. Our decision to proceed with development plans is,
to some extent, linked to our potential to raise capital from non-core
assets and our potential hotel strategy.
The Queenstown Wharf Casino is not meeting the full potential of its
licence and we are actively assessing options to provide an enhanced
customer experience. We have a particular focus on the potential to
increase our International Business, given the popularity of the
Queenstown region and the general resurgence of
International Business.
In our quest for a “capital-lighter” approach to enhance returns on our
balance sheet, we have concluded the sale of our Federal Street car
park in Auckland for $40 million and are commencing a marketing
process for the potential monetisation of the main site car parks in
Auckland. We have sought expressions of interest from potential buyers
of our Darwin property and this process is nearing conclusion, with a
final decision to be taken within the next few months.
Grow and Diversify our Business
Potential Hotel Strategy
In Auckland, we currently have two operational hotels and one near
completion, with potential for a fourth as part of our master plan for the
precinct. In Adelaide, we have one hotel under construction and see
potential for a second hotel near our precinct. We also see potential to
develop hotels in Hamilton and Queenstown.
We believe we can deliver an attractive portfolio to a passive investor
looking for exposure to this asset class and we are actively engaging
with potential partners who will provide funding to assist further growth
in this sector, on a “capital-lighter” basis.
Online Gaming
SKYCITY is developing an online gaming strategy as a logical extension
of our land-based casino operations. Online delivery of goods and
services is increasingly the norm across many industries and ours is no
exception.
It is currently permissible for offshore-based online casinos to offer
gaming to New Zealand customers and we are currently losing business
to these offshore-based operators. In response, we are advancing a
partnership-based strategy that would enable us to start operating in
this space from offshore.
It seems reasonable to anticipate that at some point in the future online
gaming will be regulated within New Zealand and we also need to be
ready to participate in that opportunity should it arise. We are
extremely respectful of the good relationship that we have built with
the New Zealand regulatory bodies and are mindful of that relationship
in any initiative we might pursue in the online space.
Other Forms of Entertainment
As an entertainment and hospitality provider, we are challenged to
ensure we continue to offer relevant forms of entertainment and
hospitality to customers increasingly spoilt for choice and with
increasingly divergent interests. We have therefore taken steps over
the last financial year to broaden our entertainment offering beyond
traditional gaming and entertainment to attract new customers and
ensure long term relevance.
We acquired an interest in Let’s Play Live Media (LPL), New Zealand’s
leading broadcaster and operator of esports, and in conjunction with
them launched Australasia’s first direct-to-television esports studio in
the Sky Tower.
In addition, the All Blacks Experience - a joint venture between the
New Zealand Rugby and Ng�i Tahu Tourism – will open in the existing
27
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMMANAGEMENT'S REVIEW SKYCITY Auckland Convention Centre site from 2020 and provide
visitors with a state-of-the-art, interactive experience that will showcase
the All Blacks. Through the use of innovation and technology, it will
provide a full sensory, interactive, and immersive experience for all
New Zealanders and visitors to celebrate New Zealand’s rugby heritage,
achievements and culture - bringing together the stories of our rugby
legends, the drama and excitement of Test match rugby, and the
mastery and legacy of the All Blacks.
We are also discussing other interactive entertainment possibilities for
the remaining areas of the existing SKYCITY Auckland Convention
Centre site and hope to announce details of the new offerings in the
near future.
Character and Culture Goals
Our vision sets out the “what” is SKYCITY aiming to be, and the
business goals above detail some of the initiatives that will determine
“how” we get there. We also put a lot of emphasis and focus on “who”
is SKYCITY – our character and culture.
In particular, we need to continually focus on our social licence to
operate – as in the casino industry we have to try harder than most to
justify our place in society. Furthermore, because we have exclusive
casino licences (ie. no other casino nearby), we automatically have a
community that is ours to look after if we expect to be in business on a
sustainable basis – our customers, employees and suppliers are “locals”
often with long term relationships.
Our corporate social responsibility initiatives are also best focussed on
doing good for our community and it is obviously critical to ensure that
we don’t create harm to our community. Our objective is to ensure that
our strategic decisions strengthen the communities we operate in and
provide environments and opportunities for our customers, suppliers
and staff to enjoy, to be entertained and to be safe.
We are also committed to providing safe environments for our
customers, suppliers and staff to enjoy and be entertained in. With a
renewed focus, we have this year adopted a new Group Health and
Safety Strategy for 2019-2021 which centres around the mission
“Prevent Harm and Build Wellness” and four goals:
•
Industry leading safety culture – we will create a positive safety
culture for our workers and guests with a strong emphasis on
genuine and visible leadership and active engagement of
our workers;
• Effective risk management – we will focus on our critical risks
ensuring we have sufficient risk mitigation strategies in place to
prevent fatal or serious harm;
• Sustainable systems and processes – we will create a
contemporary and resilient approach to the management and
improvement of health and safety; and
• Health and wellbeing – we will adopt a risk-based approach to
health and wellbeing including programmes to reduce physical and
psychosocial risks to our workers.
The new strategy also addresses the New Zealand Government’s key
goals of its draft NZ Health and Safety at Work Strategy 2018-2028.
28
LPL esports studio in the Sky Tower
Artist's impression of the All Blacks Experience
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018MANAGEMENT'S REVIEW At SKYCITY, we are proud of our culture of compliance – a fundamentally positive culture with people focussed on doing the right thing and with a
genuine care for our customers. However, such a culture cannot be taken for granted, and requires ongoing conscious attention to be maintained
and to keep complacency at bay. We are cognisant of the recent Australian Royal Commission into Misconduct in the Banking, Superannuation and
Financial Services Industry, the Bazely Report in New Zealand and the Victorian Commission for Gambling and Liquor Regulation’s review of
Crown Melbourne and are committed to taking the lessons learned from those reviews to uplift the risk culture at SKYCITY.
In that context, this year we sought an external review of SKYCITY’s corporate social responsibility framework to ascertain how we could further
improve our corporate social responsibility activities. After a lengthy consultative process involving interviews with key internal and external
stakeholders, we adopted an enhanced set of corporate social responsibility goals, priorities and targets in August 2018, which are directly aligned
to our most material issues, what really matters, and will allow us to measure our progress in a transparent way going forward. An outline of
SKYCITY’s revised corporate social responsibility framework, the activities undertaken to support our corporate social responsibility strategy, and
achievement against the goals, priorities and metrics for the financial year ended 30 June 2018 are set out on pages 31 to 55 of this annual report.
VALUE CREATION MATRIX
In summary, the table below depicts how we see ourselves creating shareholder value through the convergence of the various initiatives to
increase and diversify earnings, in a capital efficient manner, and with a focus on long term sustainability:
Increase casino, entertainment
and hospitality revenue
Develop new, complementary business
Achieve operating leverage and
efficiencies across the Group
Allocate capital to higher
returning assets and businesses
Maintain efficient capital structure
and distribution policy
Introduce investment partners to
drive growth and enhance returns
Protect and enhance
‘social licence to operate’
Evolve with changing customer
preferences and technology
Be a responsible corporate citizen
Earnings growth and diversification
$
A
B
C
Efficient capital allocation
Long term sustainability
%
Attractive and
sustainable
shareholder returns
OUTLOOK FOR FY19
Consistent with FY18, SKYCITY is expected to achieve modest growth in group normalised EBITDA in FY19, with key drivers expected to be
further growth in International Business and Auckland, offset by higher corporate costs. There is much debate (nationally and internationally)
around the macro-economic environments within which we operate and the prevailing mood seems to be that business confidence is falling and
economic tailwinds are slowing. We believe that regardless of any potential economic slow-down, there is still enough that we can do to improve
our own performance that we can reasonably anticipate growth in our business.
Trading in early FY19 is in-line with expectations following a positive finish to FY18 and we plan to continue our existing dividend policy with a
minimum annual dividend of 20 cents per share.
With the Senior Leadership Team now settled in and our strategic focus approved by the Board, we see the phase ahead as one where we should
make good progress in implementing our strategy. In addition to the key strategic initiatives identified above, there are a large number of other
smaller initiatives that are clustered under the various business and character and culture goals.
29
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMMANAGEMENT'S REVIEW SKYCITY is committed to maintaining the highest levels of corporate social responsibility objectives and practices, with priority given to
minimising the impacts associated with problem gambling as an area of primary focus.
The SKYCITY Board is supported by a dedicated Board committee on matters relating to corporate social responsibility. The role,
responsibilities, composition, structure and membership of the Corporate Social Responsibility Committee are set out in the Corporate Social
Responsibility Charter (available in the Governance section of the company’s website at www.skycityentertainmentgroup.com), which is
reviewed and approved by the Board on an annual basis. The guiding principles that underpin SKYCITY’s corporate social responsibility
activities are also set out in the Charter. Sue Suckling is the current Chair of the Corporate Social Responsibility Committee.
The objectives of the Corporate Social Responsibility Committee are to assist the Board to contribute to SKYCITY’s vision and strategic plan
by ensuring that the company’s corporate social responsibility strategy is best practice and supports the highest level of corporate social
responsibility objectives, with priority given to minimising the impacts associated with problem gambling as an area of primary focus.
The responsibilities of the Committee include reviewing and recommending to the Board the corporate social responsibility strategy, principles,
policies and practices of the company to ensure alignment with the company’s strategic objectives and performance and reviewing and
reporting to the Board on the company’s impacts associated with SKYCITY’s five corporate social responsibility pillars.
The Board and the Corporate Social Responsibility Committee maintain operational supervision of SKYCITY’s corporate social responsibility
activities through clearly defined policy and effective management. Claire Walker, SKYCITY’s General Manager Human Resources,
has executive responsibility for SKYCITY’s corporate social responsibility activities with key operational personnel within the business having
day-to-day responsibility for the activities.
WHAT MATTERS
At SKYCITY, we recognise that corporate social responsibility is critical
to all levels of our business and operations. Part of being a responsible
business is understanding the impacts arising from our operations.
The aim of this understanding is to enable positive impacts to be
fostered and negative impacts to be at the very least mitigated and
ideally abated. This is particularly true when there is potential for harm
to either people or the environment.
In December 2016, after undertaking research with both internal and
external stakeholders on which sustainability issues were most relevant
to our business, SKYCITY adopted its first set of corporate social
responsibility goals, priority actions and targets, centred around
five corporate social responsibility pillars – Responsible Gaming,
The Environment, Community Development and Investment,
Fair Operating Practices and Labour Practices and Human Rights -
and developed its first materiality matrix, which highlighted a set of
priority impact areas and issues for our business. Since adopting that
framework, we have worked hard to embed those five corporate social
responsibility pillars into all levels of our organisation and in the way we
operate. The material issues have become the focus for managing our
risks and have heavily influenced our corporate social responsibility
strategy and priorities, which underpin our reporting on our
non-financial performance.
However, the corporate social responsibility landscape has evolved
quickly since that time and, in mid-2018, we engaged Ernst & Young
to review SKYCITY’s corporate social responsibility framework to help
us identify how we could further improve our framework.
As part of this review, Ernst & Young conducted interviews with key
internal and external stakeholders to canvas their views of SKYCITY’s
corporate social responsibility framework, including shareholders, trade
unions, community partners and grant recipients, SKYCITY’s Chief
Executive Officer and Board members and staff within the Human
Resources, Security, Host Responsibility and Procurement teams.
The insights from those interviews enabled us to refine our materiality
matrix and corporate social responsibility goals, priorities and targets in
August 2018, which are directly aligned to our most material issues and
what really matters, and will allow us to continue to measure our
progress in a transparent way.
The process of refreshing our corporate social responsibility framework
has helped to strengthen relationships with our stakeholders and
prioritise and communicate our activities strategically. The review has also
ensured that we incorporate global trends and local market conditions in
our approach to, and assessment of, risks and opportunities.
In undertaking our analysis, we have plotted the issues identified as
most material on a matrix and allocated those issues to the revised
corporate social responsibility pillars as set out in the following diagram.
Unsurprisingly, again, the most material issue to all stakeholders, internal
and external, is responsible gaming. This is front and centre for the
SKYCITY Board and management as well.
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
31
OUR CORPORATE SOCIAL RESPONSIBILITY MISSION
As a cornerstone enterprise in our communities, SKYCITY contributes positively to these communities and enables them to thrive.
Our People
Inspire our People - A great place to work where our people are empowered to grow and achieve
OUR CUSTOMERS
Host Responsibly - Ensuring safe and enjoyable experiences for our customers, staff and our communities
OUR COMMUNITIES
Develop and Contribute to our Communities - Serving a social purpose by investing in the local economies
and communities in which we operate
OUR ENVIRONMENT
Conserve the Environment - Reducing our environmental footprint
OUR SUPPLIERS
Source Ethically and Responsibly - Sourcing responsibly and locally
MATERIALITY MATRIX
high
l
s
r
e
d
o
h
e
k
a
t
S
o
t
e
c
n
a
t
r
o
p
m
I
low
9
1
11
12
Impact on Business
inspire our
people
host
responsibility
5 Host responsibility
6 Customer experience
and engagement
1 Career development
and progression
2 Health, safety
and wellbeing
3 Employee engagement
4 Diversity, inclusion
and belonging
32
develop and
contribute to
our communities
7 Community
partnerships and
outcomes
8 Economic contribution
9 Transport and housing
7
8
5
6
10
2
4
13
3
high
conserve the
environment
Source ethically
and responsibly
10 Climate change
and emissions
13 Ethical and sustainable
procurement
11 Water usage
12 Waste
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY
In recent years, SKYCITY has participated in the Dow Jones Sustainability Index assessment to benchmark our position on economic,
environmental and social factors relative to others from within our industry. The index is a globally recognised independent third party rating for
corporate social responsibility, which is assessed by RobecoSam each year. Despite making progress in several areas within the index, we have
decided not to participate in 2018. We believe it is more meaningful and useful to instead focus our resources and efforts on our internal
corporate social responsibility priorities and reporting on our progress against these.
SUSTAINABLE DEVELOPMENT GOALS
In 2015, the countries of the United Nations adopted
the 2030 Agenda for Sustainable Development and its
seventeen Sustainable Development Goals - a set of
goals to end poverty, protect the planet, and ensure
prosperity for all as part of a new sustainable
development agenda. Each goal has specific targets to
be achieved. SKYCITY recognises that, for the goals to
be achieved, everyone needs to do their part and
business and industry play an important role. We are
committed to playing our part in helping to achieve
the goals.
OUR PILLARS
The following pages outline SKYCITY’s goals, priorities and metrics for
each of the five corporate social responsibility pillars, outline the activities
undertaken to support our corporate social responsibility strategy, and
provide a summary of our achievement against the goals, priorities and
metrics for the financial year ended 30 June 2018 (as set out in SKYCITY’s
2017 annual report).
The areas identified as priority issues are those considered highly material
for SKYCITY’s business and for our stakeholders. Our priorities and
metrics set out what we intend to do both in our business and our
communities. They are intended to challenge the business and staff and
provide a dedicated framework for measuring progress over the coming
years. We are committed to measuring performance on each goal, through
specific key performance indicators, which will ensure the business strives
to keep pace with internal and external expectations.
We look forward to reporting against the revised corporate social
responsibility framework - identifying where we are as a business and how
we can further improve strategically and practically. We are committed to
continual refinement and improvement.
Whilst we are immensely proud of our progress to date, we recognise that
some areas require more focus and attention to achieve our objectives.
We welcome all feedback and questions in relation to our corporate social
responsibility framework - please contact SKYCITY at csr@skycity.co.nz in
this regard.
33
Our priorities and metrics set out what we intend to do both in our business and our communitiesSKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY Our People
Inspire our People - A great place to work where our people are empowered to grow and achieve
PRIORITY ISSUES
• Employee engagement, learning and development and careers
• Diversity, inclusion and belonging
• Health, safety and wellbeing
METRICS/DISCLOSURES
• Diversity and gender statistics including gender equality of pay, management and governance
representation
•
Internal promotions, career paths and employment opportunities for youth
• Total recordable incident frequency rate, hazard reporting and safety improvement plans
• Health and safety engagement activities such as leadership safety walks and Health and Safety
Committee engagement
As a major employer with nearly 6,000 staff and growing, we know that taking care of our people is the key to creating a great place to work.
We aim to create an environment where people are at the centre and ensure that our employees can work safely, are motivated to work hard,
progress in their careers, and have the tools and knowledge they need to look after both themselves and our customers.
In March 2018, SKYCITY announced its intention to pay its New Zealand-based staff at least $20 an hour by 2020, an initiative that will
significantly increase the take-home pay of around 1,750 people in Auckland, Hamilton and Queenstown - nearly half (46%) of all SKYCITY staff in
New Zealand. This initiative will be phased in over the next three years and will see the hourly rate of SKYCITY’s lowest-paid employees increase
by 21% over the period - an average of 7% every year between now and 2020, compared to the statutory minimum wage of $16.50 as of
1 April 2018. SKYCITY is the first major listed New Zealand company to commit to a $20 an hour minimum wage, which the New Zealand
Government has signalled it plans to adopt by 2021.
Prem Joseph, Driver Services Manager at SKYCITY Auckland
34
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY With a large and diverse workforce, SKYCITY is recognised for taking a lead in staff development and care. We have an advanced set of priorities
and programmes in place across our sites to achieve our goal of being a great place to work where our people are empowered to grow and to
achieve. We are committed to providing our employees with sustainable career paths at SKYCITY and we want our staff to grow their careers
with us.
SNAPSHOT OF DIVERSITY AT SKYCITY
In April 2018, we asked our employees across the SKYCITY Group to participate in a survey to help us build a better workplace where we
celebrate diversity and promote inclusion. Around 50% of our employees participated and the valuable information collated will help us to
continue to build relevant programmes, tailored to the needs of all our employees. The following graphic illustrates the diverse make up of our
workforce as at April 2018:
EMPLOYEES
AGE
WE HAVE
5,690
EMPLOYEES
(full-time, part-time and casual)
Generation Z 18.2%
Generation Y
Millennials
41.7%
Generation X 28.3%
Baby Boomers 11.7%
Veterans
0.1%
36 YEARS
AVERAGE AGE OF
OUR WORKFORCE
82 YEARS
AGE OF OUR
OLDEST EMPLOYEE
60%
OF OUR WORKFORCE
ARE 36 YEARS OLD
AND UNDER
GENDER SPLIT
WOMEN IN LEADERSHIP
LGBTTI+ COMMUNITY
VS
48.3%
WOMEN
51.6%
MEN
0.1%
GENDER DIVERSE
36%
OF LEADERSHIP ROLES
HELD BY WOMEN
6%
IDENTIFY AS BEING
A MEMBER OF THE
LGBTTI+
COMMUNITY
ETHNICITIES
DISABILITIES
OUR TOP 10 ETHNICITIES EMPLOYEES IDENTIFY WITH:
Chinese
Australian
Indian
New Zealander
M�ori
Filipino
Other Asian
Other European
Samoan
English
20%
16%
13%
13%
9%
7%
6%
6%
2%
2%
OUR TOP 3
NON-ENGLISH
LANGUAGES:
Chinese (Cantonese)
Filipino (Tagalog)
Hindi
EMPLOYEES
SPEAK/WRITE IN
54
DIFFERENT
LANGUAGES
1.3%
IDENTIFY AS HAVING
A DISABILITY
35
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY At SKYCITY, we have a strong representation of minority groups who are often underrepresented in the wider workforce. Encouraging diversity of
thought in our workforce allows us to strategically reflect our diverse customer base and draw people with different backgrounds to our business.
We believe this diversity of thought offers an opportunity to enhance SKYCITY’s competitive advantage and provide long term sustainable
business success. We value and respect the contributions, ideas and experiences of people from all backgrounds and are committed to an inclusive
workplace that enhances and promotes workplace diversity across the business. We are committed to providing opportunities and initiatives that
assist all to reach their potential on merit, unhindered by other individual differences, and regularly benchmark and report on our diversity position,
policy and objectives.
This year, SKYCITY participated in the Deloitte Inclusion Survey and pleasingly we achieved a score of 4.9 (compared to 4.5 for the overall survey
population), which is indicative of an organisation that has a strong foundation for inclusion and is on a journey to becoming a highly inclusive workplace.
SKYCITY has a Diversity and Inclusion Policy (available in the Governance section of the company’s website at www.skycityentertainmentgroup.
com) that provides a framework for the company’s current and future diversity and inclusion initiatives. Each year, the SKYCITY Board sets
measurable objectives to promote diversity and inclusion. The measurable objectives set by the Board for the financial year ending 30 June 2019
are to:
• continue to ensure strong female candidates are identified in the recruitment process for all Board and senior executive roles;
• maintain a gender balance across the population of employees who make up the top four levels of the organisation hierarchy;
• continue to review gender pay equality and deliver an organisation-wide programme that removes any risk of bias or inequality;
•
leverage diverse talent pools to develop a more ethnically diverse leadership population;
• maintain Rainbow Tick certification for all our New Zealand sites and partner with Pride in Diversity Australia to reiterate our commitment to
our lesbian, gay, bi-sexual, intersex, takatapui and trans-sexual staff;
• build the capability of all leaders in understanding and leveraging diversity of thought through ensuring appropriate learning and
development solutions are delivered; and
• continue to provide support and education to employees and managers to promote mental health awareness.
SKYCITY’s performance against the measurable objectives set by the Board to promote diversity and inclusion for the year ended 30 June 2018
(as reported in the company’s 2017 annual report) is outlined on pages 63 and 64 of this annual report.
FY18 PERFORMANCE
A summary of our achievement against the goals, priorities and metrics for this pillar for the financial year ended 30 June 2018 (as set out in
SKYCITY’s 2017 annual report) is outlined in the table below:
PRIORITY
RESULTS
Increased investment in staff development
Achieved – several new staff development initiatives were deployed which supported staff
from underrepresented groups to thrive and develop their potential at SKYCITY, including:
•
‘Winning Women’, an internal professional development series in New Zealand
• Tahuna te Ahi, an internal M�ori leadership programme in New Zealand
•
three Pasifika employees participated in the external Niu Pasifika leadership programme
in New Zealand
In addition:
•
in New Zealand, one senior woman participated in the Global Women Breakthrough
Leaders Programme and five women participated in the Global Women Activate
Leaders Programme
• we continued to run our internal leadership development programmes across the
SKYCITY Group for selected employees
Growth in internal promotion rates
Achieved – internal promotions across the Group have increased year on year from 33%
of hires to 37% of hires
Rainbow Tick certification maintained
Achieved – Rainbow Tick maintained for each of our Auckland, Hamilton and
Queenstown sites
36
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY PRIORITY
RESULTS
Develop an approach to supporting
underrepresented minorities in employment
and career development
Achieved - the framework and supporting structure for a Diversity and Inclusion Council was
developed as a pilot in New Zealand and several employee resource groups have been
established, including SKYCITY Pride, Tahuna te Ahi, Women in Technology and
Winning Women
Continued focus on gender pay equality
and unconscious bias
Growth in near miss reporting, employee
participation in wellness initiatives and safety
committees
Achieved
• Continued to monitor and report on remuneration outcomes by gender to ensure pay
equality across the SKYCITY Group
• Our annual salary review saw an average increase for female salaried employees of 2.22%
and an average increase for male salaried employees of 2.19% across the SKYCITY Group
• An analysis of remuneration across the managerial hierarchy and vertically through a
function within the organisation identified no indications of gender bias operating across
like positions across the SKYCITY Group
• While there is no evidence of a gender driven pay gap across like positions, we remain
focussed on increasing the representation of women in senior roles across the business
through a gender balanced talent pipeline
• The SKYCITY Board and members of the Senior Leadership Team participated in
unconscious bias training
• The Senior Leadership Team and other New Zealand-based senior managers participated
in Rainbow Tick training
• SKYCITY participated in the Deloitte Inclusion Survey conducted in partnership with
Global Women
Achieved
• 23% increase in near miss reporting across the Group
• 6% increase in total incident reporting across the Group
• 37 health and safety representatives from across the Group participated in a specialised
•
training course to improve health and safety engagement and participation
Increased focus on health and safety, leading to the adoption of a new Group Health and
Safety Strategy for 2019-2021
• Workshops delivered to coincide with Mental Health Awareness Week across our
New Zealand sites
• Development of a Healthy Minds programme in Adelaide
HIGHLIGHTS
Health and Safety
Our employees and contractors are the heart and soul of our
operations, and ensuring their health and wellbeing is central to our
performance as a business and as an employer of choice.
risk management, contemporary and sustainable systems and processes
and improving health and wellbeing. Our key health and safety success
factors have been identified as zero fatalities or serious injuries,
reducing low consequence and high frequency injuries, keeping our
guests safe whilst visiting our properties and enhancing the health and
wellbeing of our workforce.
During the past financial year, we have reinforced our commitment to
preventing harm and building wellness through assurance activities and
improvement initiatives. Of particular focus has been the considerable
effort applied to improving the management of our critical risks and
contractor management. We redefined our health and safety
improvement journey with the development of a SKYCITY Group
Health and Safety Strategy for 2019–2021. The strategy outlines our
health and safety goals as being industry leading safety culture, effective
All of our New Zealand properties are Accident Compensation
Corporation (ACC) Partnership Programme certified at a tertiary level
and our Adelaide site is a registered self-insured employer.
Each property within the SKYCITY Group must demonstrate
compliance with our Group Health and Safety policy and standards
for safety. We conduct internal audits annually and external audits as
required for registration and certification. Findings from these audits
are monitored and tracked for continuous improvement.
37
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY Employee Wellbeing
SKYCITY’s wellness programme continues to be strongly supported by
our staff. The programme aims to encourage healthier behaviours and
personal responsibility for health outcomes by providing support,
information and skills training. The programme goals include improving
staff health habits, increasing physical activity, reducing absenteeism
and improving productivity.
Acknowledging that the hospitality industry is overrepresented in mental
health statistics, this year we launched the “SKYCITY Korero”
in partnership with comedian Mike King and the Key to Life Charitable
Trust and coinciding with Mental Health Week in New Zealand.
115 New Zealand-based employees attended a series of workshops
designed to encourage and normalise conversation about mental health.
The feedback received was extremely positive with some employees
commenting that the korero allowed people to talk more openly about
problems and safely ask questions about mental health that they may
previously have been too afraid to ask.
The Adelaide site has developed a Healthy Minds programme which
launched in 2018. Healthy Minds augments SKYCITY’s existing processes
(such as offering an Employee Assistance Programme) to incorporate
prevention and wellbeing enhancement as a core focus. By becoming an
accredited Healthy Minds workplace, Adelaide Casino will enable a baseline
level of mental health and wellbeing education accessible to all employees,
encouraging openness and communication about staff wellbeing.
All staff will be offered training in the concept of wellbeing (which
incorporates mental health) to establish the link between wellbeing and
work performance. It is hoped that wellbeing conversations will become a
part of management practices ensuring both early intervention when
problems arise and a focus on individuals’ self-management of their
personal wellbeing.
Staff Support Programmes
SKYCITY has a range of services designed to assist employees who may
need a helping hand. At our Auckland and Hamilton sites, the Connect
Centre offers confidential help and advice for SKYCITY employees – for
work issues and situations outside of work. They offer advice about
practical and effective ways to handle difficult or sensitive issues. Where
needed, they can also assist employees in working with agencies outside
of SKYCITY who may be able to help. The Group-wide Employee
Assistance Programme (EAP) is a supportive and confidential programme
designed to assist SKYCITY employees who may have problems that
affect them at work - advice and support is available 24 hours a day,
seven days a week, from trained professional counsellors who can help
staff with their problems. SKYCITY also provides emergency financial
assistance for employees suffering financial hardship. This help can
include budgeting advice, and last resort financial help through a 'SMILE'
loan to New Zealand-based staff who qualify for support.
Healthcare
SKYCITY understands that healthcare can be expensive and sometimes
difficult to access for members of the workforce. We therefore offer
permanent, full-time employees in our New Zealand sites health
insurance via our healthcare provider Southern Cross Healthcare.
SKYCITY fully subsidises the RegularCare plan, which provides shared
cover for surgical treatment, recovery, support, imaging and diagnostic
tests and day-to-day treatment. Employees are also able to add their
family members to the insurance plan at an additional cost.
As part of our wellness programme, all SKYCITY employees across the
Group are also invited to get their flu vaccinations at work for free.
This service is offered annually to employees on-site at the beginning of
the flu season to ensure all staff have easy access to the vaccinations.
Bringing our ‘Whole Selves’ to Work
We are immensely proud to have maintained a Rainbow Tick for our
Auckland, Hamilton and Queenstown properties in 2018 and have
committed to continually improving and working with the feedback we
receive from Rainbow Tick to find ways we can further support our
SKYCITY rainbow community. Being a Rainbow Tick employer means
SKYCITY has been acknowledged as being a safe, supportive and
SKYCITY staff celebrate the Auckland Pride Parade
38
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY welcoming workplace where employees can bring their whole selves to
work without fear of discrimination or disadvantage – no matter what
their gender identity or sexual orientation.
Our Adelaide and Darwin sites participated in the Australian Pride in
Diversity programme, which reiterates our commitment to our lesbian,
gay, bi-sexual, trans-sexual and intersex Australian-based staff.
SKYCITY Queenstown has been a supporter of the Winter Pride event
in Queenstown for many years and signed up to the Pride Pledge in June
2018. The Pride Pledge was started in Queenstown to raise the visibility
of safe spaces within the Queenstown community after the Winter Pride
festival organisers realised that, although the town had an inclusive heart,
it was very difficult for the rainbow community to see any visible signs
that they were welcome and included.
Employees from our Hamilton and Auckland sites participated for the
first time in the Auckland Pride Parade in February 2018 – alongside
a colourful float featuring a mirror tiled Sky Tower surrounded by
a cityscape.
Women’s Refuge Endorsement of SKYCITY’s White Ribbon
Policy
In March 2018, SKYCITY received Workplace Refuge Endorsement from
the Women’s Refuge, which recognises the company’s achievements in
the family violence space. To achieve endorsement, an organisation must
show that family violence is prevented, victims and perpetrators of family
violence are helped, communication and networking are increased, family
violence initiatives are prioritised, and leadership in driving change is
demonstrated.
SKYCITY’s White Ribbon family violence policy, developed in
conjunction with Women’s Refuge, was introduced in March 2017 in our
New Zealand sites. Since then, SKYCITY has completed more than
385 hours of White Ribbon training for more than 250 managers across
its business on how to recognise the signs of family violence, respond
accordingly and refer to the appropriate organisations. SKYCITY
Auckland has also established a Family Violence Committee that will,
alongside the long established Connect Centre (an employee support
service), be a point of contact for staff.
New Partnerships
In March 2018, on the eve of International Women’s Day, SKYCITY
announced its new partnership with Global Women. As an important
step in our ongoing commitment to diversity and inclusion, the
partnership sees SKYCITY become a principal partner of Global
Women, an organisation that aims to change the face of business to be as
diverse as New Zealand itself. The partnership allows us to continue to
actively support our pipeline of talented women into senior leadership
roles with professional development programmes, such as the Global
Women Breakthrough Leaders programme.
SKYCITY has also renewed its commitment, for a further three years, as a
Major Sponsor of Tupu Toa, a New Zealand corporate pathways
internship programme for M�ori and Pasifika which is producing a
powerful, national network of M�ori and Pasifika business leaders through
internships with New Zealand’s best-known companies.
Tahuna te Ahi – Ignite the Fire
One of the ways we deliver on our commitment to an inclusive workplace
that enhances and promotes diversity is with targeted programmes which
support employees from underrepresented groups to thrive. As a large
New Zealand employer, we feel a particular responsibility to ensure we
provide our M�ori employees (9% of our employees identify as M�ori)
with every opportunity to progress.
Recognising the special standing of M�ori as tangata whenua and the
indigenous people of Aotearoa, this year, for the first time, we offered
a tailored programme for our New Zealand-based employees providing
accelerated leadership development specifically for M�ori employees in
addition to implementing initiatives which elevate the standing of M�ori at
SKYCITY more broadly. The programme is designed to ensure the voice
of M�ori is heard and that the M�ori world view, values, and leadership
behaviours contribute to our competitive advantage. A core element of
the programme saw the participants working in small groups on business
related roopu projects such as the inclusion of M�ori values in our
corporate value statements, a cultural advisory group to support the
strengthening of M�ori culture within the business and a series of
authentic M�ori experiences for our customers.
Providing Career Paths for Talented Young People
In February 2018, SKYCITY welcomed 15 promising young chefs into its
2018 intake of the SKYCITY Auckland Chef Apprenticeship Programme.
Over the three-year programme, the apprentices will work within more
than 20 different kitchen environments at SKYCITY Auckland, including
award-winning restaurants and with celebrity chefs Sean Connolly, Nic
Watt, Al Brown and Peter Gordon, and gain an internationally recognised
City and Guilds Food Preparation and Culinary Arts qualification. Upon
completion, graduates are equipped with a wide skill set, having mastered
a range of cuisines, and experienced a variety of kitchen environments – a
breadth of experience not offered in many other places.
The apprentice chef programme is a part of SKYCITY’s focus on youth
employment, giving talented young people opportunities to gain
qualifications and develop careers in the hospitality industry.
39
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY Continuing to Contribute
For our employees approaching retirement age in New Zealand, we offer a Work Choices planned retirement programme — a voluntary and
individualised support programme for employees contemplating retirement. Family members are invited to be part of the planning process —
the outcomes of which may include phased reduction in hours and/or workload, flexible working arrangements, or redeployment as the employee
transitions into retirement. Employees are also provided with some ongoing support services for a period following retirement as well as the continuity
of employee discounts at SKYCITY.
While the programme has seen three of our more senior employees transition into retirement during the last financial year, Trevor Philbert at age 82
remains proudly SKYCITY’s eldest employee. Trevor enjoys being part of the SKYCITY Auckland Security team, manning the staff entry and passing
on the benefit of his 22 years’ service with SKYCITY, contributing to the business and to his colleagues.
Dine Academy
A new partnership for SKYCITY in 2018 has been with the Dine Academy, a social enterprise that supports the training and transition to employment
of secondary school students passionate about entering a career in the hospitality industry. It offers senior high school students, community groups,
vulnerable youth and long term unemployed jobseekers a pre-employment training programme that starts as a boot camp run over one week.
The intensive week-long boot camp includes a day of hands-on practical training and assessment with the Front of House team at the SKYCITY
Auckland Convention Centre and culminates with trainees preparing to ‘go live’ onto a shift. SKYCITY was delighted with the calibre of the students
this year and offered 18 of them employment in the SKYCITY Auckland Convention Centre.
CHALLENGES
SKYCITY has developed a variety of programmes and partnerships to support career development and progression across our sites. Our challenge is
to ensure that these programmes and partnerships remain effective and relevant. To this end, SKYCITY regularly discontinues programmes that have
not achieved interest or sustained impact, and develops and trials new offerings. In some cases, we have programmes we believe are effective, but
participation has dropped for various reasons. We continue to review our programmes and partnerships and seek advice from staff on how to remove
barriers to participation (such as release time) and introduce better incentives.
OUR STAFF NUMBERS
The following is a summary of staff and workforce data for SKYCITY Entertainment Group as at 1 July 2018:
Worked Full-Time Equivalent
(FTE)* by site (%)
Total Headcount
for Group (%)
Employment Contract Type
for Group (%)
SITE
NO. OF FTE EMPLOYEES
%
SITE
NO. OF EMPLOYEES
%
CONTRACT TYPE
NO. OF EMPLOYEES
%
Adelaide
Auckland
Darwin
Hamilton
Queenstown
Total
618
2,354
282
248
74
17%
66%
8%
7%
2%
Adelaide
Auckland
Darwin
Hamilton
Queenstown
1,083
3,518
671
328
90
19%
61%
12%
6%
2%
3,576 100%
Total
5,690 100%
* The FTE calculation is based on contracted hours worked by staff, not actual hours.
40
Permanent
Temporary
Total
5,201
489
91%
9%
5,690 100%
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY Employment Contract Type by Gender (%)
CONTRACT TYPE
Permanent
Temporary
Employment Contract Type by Site (%)
CONTRACT TYPE
Permanent
Temporary
Employment Type by Gender (%)
CONTRACT TYPE
Full-Time
Part-Time
Casual
FEMALE
GENDER DIVERSE
91%
9%
100%
0%
MALE
91%
9%
GROUP TOTAL
91%
9%
ADELAIDE
AUCKLAND
DARWIN
HAMILTON
QUEENSTOWN
70%
30%
98%
2%
88%
12%
FEMALE
GENDER DIVERSE
49%
25%
26%
40%
20%
40%
100%
0%
MALE
61%
17%
22%
100%
0%
GROUP TOTAL
55%
21%
24%
Employees in Collective Agreements by Site (%)
CONTRACT TYPE
ADELAIDE
AUCKLAND
DARWIN
HAMILTON
QUEENSTOWN
GROUP TOTAL*
Yes
No
78%
22%
26%
74%
83%
17%
8%
92%
0%
100%
41%
59%
*Group total %’s are weighted proportionately based on site Worked FTE.
Employee Absenteeism as a Percentage of Scheduled Days (%)
CONTRACT TYPE
Absenteeism
ADELAIDE
3.77%
AUCKLAND
4.01%
DARWIN
2.65%
HAMILTON
QUEENSTOWN
GROUP TOTAL*
3.38%
1.96%
3.63%
*Group total %s are weighted proportionately based on site worked FTE.
Safe and enjoyable casino experiences
41
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY OUR CUSTOMERS
Host Responsibly - Ensuring safe and enjoyable experiences for our customers, staff and
our communities
PRIORITY ISSUES
• Leading and best practice host responsibility
• Customer experience and engagement
• Community knowledge
METRICS/DISCLOSURES
• Customer offerings, service and engagement
• Host Responsibility Programme performance and problem gambling indicators, such as preventative
customer service encounters and engagement practices
• Employee training completion rates
• Public policy and compliance, including transparent reporting of regulator audit findings
• Benchmarking of SKYCITY’s Host Responsibility Programme against industry
•
Increase in community knowledge and understanding of SKYCITY’s harm minimisation practices
in order to advance SKYCITY’s harm minimisation approach.
This collaborative approach ensures that knowledge about problem
gambling is shared between SKYCITY and the relevant stakeholders,
who will work together to minimise harm.
In late 2016, the New Zealand Department of Internal Affairs
conducted a ‘mystery shopping’ exercise across all casinos and
120 pubs and clubs (Class 4 venues) around New Zealand. SKYCITY’s
four casinos in Auckland, Hamilton and Queenstown came out top in
the exercise. The Department reported that “the results from SKYCITY
casinos show what can be done when more dedicated resource is
directed at minimising harmful gambling within a culture that puts a
clear focus on a high standard of harm minimisation practice” and that
“the overall results also show that SKYCITY casinos have cultivated a
culture of care within their casinos”. We are immensely proud of the
culture of care we have developed within our casinos and continue to
focus on ways to ensure that this culture of care is maintained, including
through regular internal ‘mystery shopping’ exercises.
At our core, SKYCITY is a provider of casino entertainment.
The promotion of responsible gaming and safe consumption of alcohol
are topics at the heart of our business. When done responsibly,
gambling can be a harmless entertainment activity, however it can also
have harmful effects on some individuals, their families and their
communities. Our challenge is therefore to ensure that our business
provides entertaining and profitable, yet safe and responsible,
experiences and environments for our customers and staff.
We take our responsibilities to minimise risk and harm from problem
gambling very seriously - SKYCITY has a robust Host Responsibility
Programme in place at each of its sites to prevent and minimise harm
from problem gaming, all SKYCITY staff receive training in problem
gaming indicators, and we employ a dedicated team of host
responsibility specialists at each of our sites. In addition, at our largest
and busiest Auckland site, a team of Customer Service Ambassadors
are trained to interact with customers and report any concerns to our
Security and Host Responsibility specialist teams so preventative action
can be taken. An outline of our commitment to host responsibility
and detailed individual site-related information can be found at
www.skycityentertainmentgroup.com/our-commitment/
responsible-gambling.
Given that the most material issue to all stakeholders, internal and
external, is responsible gaming, we aim to foster good relationships with
problem gambling stakeholders. As part of this approach, we provide
tours of our facilities and literature to treatment providers to assist them
in understanding our Host Responsibility Programmes. The objective is
to improve information sharing and collaboration between stakeholders
42
We are immensely proud of the culture of care we have developed ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY FY18 PERFORMANCE
A summary of our achievement against the goals, priorities and metrics for this pillar for the financial year ended 30 June 2018 (as set out in
SKYCITY’s 2017 annual report) is outlined in the table below:
PRIORITY
RESULTS
100% rating in “Promoting Responsible
Gaming” on the Dow Jones Sustainability
Index (DJSI)
100% regulatory compliance in
host responsibility and positive
trend/improvement in regulator audits
Achieve independent evaluation of host
responsibility programmes and training
resources at all sites
Maintain or improve on our 2017 financial
year baseline for staff rating as a
‘responsible host’ in the employee
engagement survey
Achieved – maintained a rating of 100% in “Promoting Responsible Gaming” for the second
year in the DJSI assessment (results released in September 2017)
Achieved – no issues identified by regulators
In progress – in November 2016, an independent review was carried out by KPMG of the
Auckland Host Responsibility Programme. Additional reviews were planned for the following
12 months, beginning with Adelaide Casino, using the model followed by KPMG but conducted
by our own Group Risk and Assurance team as part of our Business Self-Assurance programme
as that team has significant understanding of the issues and risks related to preventing gambling
harm. The Group Risk team commenced audits of the Darwin and Adelaide sites in June 2018,
which are in the process of being finalised as at the date of this annual report
In progress – SKYCITY has moved to bi-annual employee engagement surveys and has
therefore not had the opportunity to ask staff for their views in 2018
HIGHLIGHTS
SKYCITY improved year on year with a score of 67 points (up four
points) in the Dow Jones Sustainability Index assessment in 2017 — just
four points below the Australian index score of 71 points required for
listing on the index. This result shows continuous improvement being
made across many key areas, particularly host responsibility where
SKYCITY was ranked 5th out of a total of 21 casino and gaming
companies who participated. Pleasingly, we maintained our 100% rating
in “Promoting Responsible Gaming”.
During the 2018 financial year, a new Group-wide SKYCITY Host
Responsibility Governance Group was convened where members of
our Operations, Risk, Legal and Host Responsibility teams meet
quarterly to discuss host responsibility related incidents and initiatives
and to ensure progress against our objective to maintain a leading host
responsibility programme is achieved.
SKYCITY Darwin has been involved, together with clubs and pubs
throughout the Northern Territory, in Amity Community Services’ multi
venue self-exclusion pilot programme as a way of contributing to a
collaborative, multi-property approach to minimising harm.
CHALLENGES
Maintaining Best Practice
A key focus for SKYCITY is to maintain the high standard of host
responsibility best practice recognised by the New Zealand
Department of Internal Affairs through its ‘mystery shopping’ exercise in
late 2016. We continue to focus on ways to maintain the high standard,
including through our regular internal ‘mystery shopping’ exercises.
In a dynamic casino environment, maintaining effectiveness, relevancy
and consistency in harm minimisation best practice is an ongoing
challenge. In response to that challenge, SKYCITY continues to explore
available technology solutions (such as trialling facial recognition
technology), seek expert advice, consult stakeholder groups and source
a range of research material. We anticipate that an effective technology
solution will become available in the future.
Managing Exclusions
Another challenge that we deal with frequently is our ability to
effectively manage and prevent breaches of customer exclusion orders.
SKYCITY customers can choose to exclude themselves from all
SKYCITY premises in New Zealand, for a period of up to two years.
In some cases, SKYCITY itself makes the decision to exclude a
customer as a means to prevent risk of harm occurring, or as a means to
stop further harm through a customer’s gaming at a SKYCITY casino.
Such exclusions result in an exclusion order. Unfortunately, some
customers attempt to re-enter the casino and breach their exclusion
orders. With the size of our customer base and premises, it can be a
challenge to identify these persons immediately. At times excluded
customers do enter the casino with the intention of gaming. We do all
we can to prevent this from happening, and all casino supervisors and
43
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY floor security staff are provided with up-to-date information on customers that have been excluded. SKYCITY keeps photographs of all excluded
patrons, and we share our database across our sites so that these excluded individuals cannot enter our other premises. We rely on our casino
staff, security and surveillance teams using photographs to recognise these excluded people. Unfortunately, this system is open to error, which
can result in some individuals re-entering the casino. Effective technology solutions will, once available to SKYCITY, assist to recognise
excluded people.
Consistency of Responsible Gaming Culture and Practice
The alignment of excellent host responsibility and harm minimisation practice and culture across the SKYCITY Group is challenging due to
differences from site to site, such as size, scale and staffing structure. There are also market and customer differences that impact our approach
to staff training and programme design, in addition to unique cultural distinctions to consider. Furthermore, our sites across New Zealand,
South Australia and the Northern Territory each have different regulatory environments in which to operate.
These differences mean that while the Host Responsibility Programmes have similarities, they are often carried out quite differently. However,
problem gaming as an addiction and the possibility of harm from this type of behaviour manifests itself the same regardless of jurisdiction or
location. That is why SKYCITY endeavours to lead in this area and employ best practice prevention methods across the business. A key strategic
focus across the SKYCITY Group for minimising gambling harm is prevention. Robust prevention initiatives can be developed and implemented
across the Group with few or no regulatory or local procedural constraints. By adopting a prevention approach, we can increase our ability to
identify and respond early to new or emerging concerns that may lead to problem gambling related issues for our customers.
We are also committed to carrying out regular reviews of each of our Host Responsibility Programmes to ensure alignment of our practices across
our sites.
OUR COMMUNITIES
Develop and Contribute to our Communities - Serving a social purpose by investing in the local
economies and communities in which we operate
PRIORITY ISSUES
• Economic contribution
• Partnerships
• Community outcomes strategy and progress
•
Investing in our communities through the SKYCITY Community Trusts in New Zealand and through
meaningful charity partnerships
• Developing deeper connections with iwi and predominant ethnicities in the communities in which we
operate
METRICS/DISCLOSURES
• Measure and evaluate SKYCITY’s economic contribution to the communities in which we operate,
including local procurement spend
• Narrative and case studies on partnerships including indigenous/iwi partnerships
• Reporting of community outcomes through narrative and case studies accompanied by
quantitative results
Our aim is to create value in our business and in the communities in which we operate. We understand that to do this we need to engage
meaningfully with our communities, listen to their critical needs and expectations, and respond through developing meaningful community
partnerships and by taking action to address key issues in our operations. Engaging our stakeholders helps us to understand community attitudes
toward SKYCITY, the communities’ expectations of us, and how stakeholders believe SKYCITY should create value.
SKYCITY engages with stakeholders in a variety of ways, both formal and informal, in each of the communities in which it operates. These actions
range from legally required engagement with regulators and problem gaming service providers for example, to less formal feedback mechanisms
such as social media, customer surveys and public perception monitoring.
4 4
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY FY18 PERFORMANCE
A summary of our achievement against the goals, priorities and metrics for this pillar for the financial year ended 30 June 2018 (as set out in
SKYCITY’s 2017 annual report) is outlined in the table below:
PRIORITY
RESULTS
Improve community perception of SKYCITY
as a valuable cornerstone enterprise –
measured through regular perception insights,
research and community engagement
feedback
Partially achieved – a 2018 UMR survey in New Zealand showed an improvement in the
public’s perception of SKYCITY’s contribution to the economy and employing a lot of
people, but scores related to being a good employer and being trusted to do what is right
decreased against the prior year’s survey
Improve level of staff awareness of, and pride
in, SKYCITY being a responsible part of the
community
Achieved – the employee-led Corporate Social Responsibility Committee in Auckland has
made excellent progress in driving employee involvement and awareness through their
regular meetings and through pillar showcase events
HIGHLIGHTS
A New Strategy - Building Communities by Developing People
In 2017 and 2018, we spent time engaging with our communities to look
more closely at our community development and investment activities
and see how we could deliver more impact in partnership with the
community. As part of this process, SKYCITY held a series of focus
groups with employees from across the SKYCITY Group and
community representatives, including the youth development, family
support and financial capability sectors – the purpose of which was to
determine what social issues the community sector considered to be
most credible and aligned to SKYCITY, given our unique set of
resources and assets. What was heard overwhelmingly from this
process was that SKYCITY had the ability to be a game changer in the
community investment space, that SKYCITY could lead the way with
innovative and transformative community development goals and that,
with strategic collaboration, SKYCITY had the platform as a large
organisation to create sustained social impact.
Through this engagement and analysis process it became evident that
SKYCITY, as somewhat of a microcosm of the wider community, should
be focussing on young people and their access to liberating
opportunities for personal development, lifelong learning and
employment. In this context, a thematic approach of “Building
Communities by Developing People” has become the foundation for
what SKYCITY stands for and the overarching theme for SKYCITY’s
community investment and development across all of our sites. With the
benefit of the feedback gained through engaging with our stakeholders,
SKYCITY has developed a new community development and
investment strategy that has a spirit of partnership at its heart. What
SKYCITY brings to the table is employment opportunity for unskilled,
unemployed and at-risk youth within each of the communities within
which we operate. We can provide employment, training and a career
path. This is a powerful contribution and we will partner with other
philanthropic trusts, community groups, corporate and government
agencies to provide the wrap-around support these young people need
to get into sustainable employment.
Over the coming year, we will finalise the operational strategy across
the SKYCITY Group to deliver this new strategy, which will result in
a significant realignment of our existing community activities. We will
also work in partnership with our communities and stakeholders to
co-design a job and life skills programme that has the power to
transform the lives of disadvantaged young people. We will achieve
greater social impact and business value by better focussing our
community investment, charity partnership, cause marketing and
sponsorship resources toward this core theme, allowing for local
diversity in developing genuine community partnership.
Through collaboration with the SKYCITY Auckland Community Trust,
there is opportunity to achieve even greater social impact in the areas
of youth development and wellbeing through the Trust’s prioritisation of
youth development and its identification of the following key areas for
funding - youth development, including mentoring and transition
support; youth wellbeing, including mental health; work readiness
and work-related skills and training; and initiatives that support
educational achievement.
Underpinning SKYCITY’s community development and investment
strategy is an opportunity for SKYCITY staff to take their knowledge
and skills out into their communities through a volunteer programme
and involvement in the delivery of youth development programmes.
SKYCITY Community Trusts
Over the past financial year, our four SKYCITY Community Trusts
awarded a total of $4 million to communities in the Auckland, Waikato
and Queenstown Lakes regions.
Established to provide funds for community and charitable purposes,
the SKYCITY Community Trusts are one of the vehicles we use to ‘put
something back’ into the local community. The independent trusts aim
to help local and regional organisations carry out community assistance
and development work, focussing on supporting families to thrive and
communities to prosper. Since establishing the SKYCITY Auckland
Community Trust in 1996, we have awarded over $55 million to more
than 4,700 community groups and organisations, large and small,
through our four SKYCITY Community Trusts.
45
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY BACS Good Business Egg Awards
In April 2018, SKYCITY was awarded the Community Empowerment
Award at the BACS Good Business Egg Awards 2018. BACS (Business
and Community Shares) is a trusted partner in facilitating the sharing
of skills, knowledge, resources and wisdom between community
organisations and businesses to tackle issues in New Zealand society to
better enable communities to thrive. BACS host an annual awards event
to showcase good corporate social responsibility by New Zealand
businesses that invest in people sustainability.
The awards are judged by a panel of community leaders (which, this
year, included the Women’s Refuge, White Ribbon and YWCA) and
businesses are not able to nominate themselves. The judges noted
that SKYCITY is a well-developed company that has quietly advanced
into leadership in New Zealand social responsibility through its
strategic planning.
Variety – The Children’s Charity
In May 2018, SKYCITY’s 18-year partnership with Variety –
The Children’s Charity was recognised by the award of a Variety
International Presidential Award presented to SKYCITY at the Variety
World Conference held in Adelaide. The award is presented to
companies that show outstanding commitment to Variety and those
who have, over many years, assisted Variety’s mission of improving the
lives of disadvantaged kids.
We are proud of the partnership we have with Variety and the support
we have provided to continue the important work they do in our
communities, raising more than $3.6 million through fundraising, grants
and in-kind sponsorship over the past 18 years.
every year since. SKYCITY is proud to have Leukaemia & Blood Cancer
New Zealand as a charity partner and to have worked together to raise
more than $9.75 million through three annual events - the Firefighter
Sky Tower Stair Challenge, Step Up Sky Tower Stair Challenge and
SKYCITY Dining for a Difference.
Volunteering and Donations
SKYCITY Queenstown staff volunteered on a regular basis throughout
the year to support the Wakatipu Reforestation Trust planting days.
During the financial year, SKYCITY Auckland employees volunteered
their time to help prepare meals using rescued food, much of which
comes from SKYCITY’s partnership with Kiwi Harvest (a food rescue
programme), for Everybody Eats, an ambitious social enterprise offering
both those hungry and in need and those looking for a unique dining
experience a nutritious three-course dinner on a "pay as you feel" basis
in Auckland City's Karangahape Road. SKYCITY Auckland Executive
Chef Fiona Ruane is the driving force behind SKYCITY’s involvement in
Everybody Eats and says “tables are shared with people from all walks
of life enjoying a unique experience. Those who are underprivileged sit
with a broad range of people and are not judged on their appearance
or their circumstances and everyone gets to experience a wonderful
three-course meal”.
In line with our commitment to reducing waste, SKYCITY Hamilton
donated surplus furniture from their office refurbishment project to
local charities. The drama department at a local school along with
theatres across New Zealand benefited from the donation of surplus
uniforms following a change in uniform for our Hamilton employees –
with no uniforms having ended up in landfill.
Free Admission to the Sky Tower
CHALLENGES
In August 2017, we celebrated the Sky Tower’s 20th birthday with a
programme of celebratory activities throughout the month, including a
day where Aucklanders enjoyed free entry to the Sky Tower to thank
them for having so enthusiastically supported the Sky Tower since it
opened in 1997. Over 7,600 visitors took up the opportunity to visit the
Sky Tower for free on that day. New Zealand residents can also enjoy
free entry to the Sky Tower on their birthday with photo ID and proof
of residential address.
In May 2018, the Sky Tower was voted the number one activity in
Auckland on TripAdvisor, the world's largest travel website.
Leukaemia & Blood Cancer New Zealand
Nearly 1,000 firefighters from communities across New Zealand joined
forces to raise more than $1.5 million for Leukaemia & Blood Cancer
New Zealand (the national charity dedicated to supporting patients and
their families living with blood cancers and related blood conditions) for
the 14th Firefighter Sky Tower Stair Challenge in May 2018, with each
participant climbing the 1,103 steps of the Sky Tower wearing
25 kilograms of gear. The annual event for SKYCITY’s charity partner
reached its $1 million fundraising target three days ahead of the event.
SKYCITY Auckland first hosted the Firefighter Sky Tower Stair
Challenge in 2004 and the event has gone from strength to strength
46
SKYCITY is a major cornerstone of the community. We understand that
our scope for influence and change is huge, and SKYCITY invests in and
works to develop our communities in a variety of ways.
Whilst it is easy for organisations to talk about inputs and outputs, such
as how much money or ‘in-kind’ contributions are given to charity, the
number of charities receiving support, or how many hours staff spend
on volunteering for community projects, it is a more challenging exercise
to determine the outcomes and impact of those activities. We want to
ensure that there is genuine and measurable social impact from our
SKYCITY Community Trusts and other charitable giving. In this regard,
our refreshed community development approach of “Building
Communities by Developing People” has become the foundation for
what SKYCITY stands for and the overarching theme for our “Develop
and Contribute to Our Communities” pillar. We are enormously proud
of this new direction for SKYCITY’s community development and
investment strategy and look forward to sharing our progress with our
stakeholders over the coming year.
We continue to look at our community investments and partnerships in
a more holistic and strategic way, to ensure that they are aligned to our
unique business assets and are ultimately delivering both social and
business value.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY OUR ENVIRONMENT
Conserve the Environment - Reducing our environmental footprint
PRIORITY ISSUES
• Climate change and emissions
• Reducing waste
METRICS/DISCLOSURES
• Emissions and emission intensity including energy efficiency and reduction
• Measuring and reporting our carbon footprint
• Reduction of waste and diversion from landfill
SKYCITY is dedicated to growing in a sustainable manner with a commitment to environmental sustainability as a foundation for successful
economic, social and cultural development. Working within the limits of the natural environment will allow current and future generations to benefit
from its resources to ensure continual economic and social prosperity, which we believe results in business continuity and positive impacts on staff
and stakeholder wellbeing.
Although SKYCITY is not a major emitter of greenhouse gases, we recognise the role that we need to play in reducing our impacts and have
committed to the setting of internationally accredited science-based targets to reduce our emissions, which will be set by the end of FY19 through
Science Based Targets, a joint initiative of CDP, the United Nations Global Compact (UNGC), the World Resources Institute (WRI) and the World
Wildlife Fund (WWF).
We take climate change seriously and have already taken significant steps to reduce our environmental impact, with a focus on the two key areas of
reducing energy consumption and reducing waste. SKYCITY has already made steps towards climate action, including a 14% and 17% reduction in
carbon from gas and electricity respectively per dollar revenue during the period from FY15 to FY18.
In July 2018, a group of 60 New Zealand business leaders, including SKYCITY’s Chief Executive Officer Graeme Stephens, joined forces to tackle
the issue of climate change by forming the Climate Leaders Coalition. Together, the members of the Climate Leaders Coalition represent a variety
of businesses from different industries, which contribute to nearly half of New Zealand’s emissions. The group’s goal is to help New Zealand
transition to a low emissions economy and, in doing so, create a
positive future for New Zealanders, business and the economy.
Members of the Climate Leaders Coalition have signed a joint
Climate Change Statement, which commits their companies to
action and is the group’s first step in their drive for positive change.
By signing the statement, each of the business leaders have
committed to:
•
measuring their greenhouse gas emissions and publicly
reporting on them;
•
•
•
•
setting a public emissions reduction target consistent with
keeping within 2 degrees of warming;
working with their suppliers to reduce their greenhouse gas
emissions;
supporting the Paris Agreement and New Zealand’s
commitment to it; and
supporting the introduction of a climate commission and
carbon budgets enshrined in law.
The Climate Leaders Coalition recognises the role that business
can play in bringing about change and demonstrates the significant
leadership direction being taken by businesses on the issue of
climate change.
47
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY As part of our commitment to climate action, SKYCITY is also working towards achieving certification by the Certified Emissions Measurement and
Reduction Scheme (CEMARS) run by Enviro-Mark Solutions, a government-owned environmental certifications body in New Zealand. As part of
this process, SKYCITY is measuring, managing and formalising a reduction plan for our carbon emissions with the objective of keeping global
temperatures within 2 degrees of warming. This plan will be independently audited and verified under the CEMARS programme. As recommended
by the Task Force on Climate-related Financial Disclosures, we are also preparing disclosures on climate risks pending direction from the
publication of the Carbon Bill by the New Zealand Government in April 2019.
FY18 PERFORMANCE
A summary of our achievement against the goals, priorities and metrics for this pillar for the financial year ending 30 June 2018 (as set out in
SKYCITY’s 2017 annual report) is outlined in the table below, noting that:
•
in 2018, we adopted the CEMARS programme to calculate our carbon footprint for the 2018 financial year and recalculate our carbon
footprint for the previous 2015–2017 financial years, with the following resulting changes in methodology and restatement of results:
o for our Queenstown sites, we used supplier measured data rather than estimated data for gas usage;
o for our Darwin site, different conversion factors for gas were used and gas data usage may change once supplier measured data for FY15–17
is received (which will replace estimated data); and
• our environmental data is measured per million dollars of revenue, excluding revenue from International Business.
PRIORITY
General
RESULTS
Measure and establish baseline data for the
2015–2018 financial years for emissions,
energy, waste and water
Improve employee perception of SKYCITY
as being responsible with respect to the
environment
•
Achieved – baseline data for emissions, energy, waste and water for FY15 - FY18 is set out
on page 50 of this annual report
Achieved
Improved staff awareness across the Auckland site around SKYCITY’s environmental
initiatives via our internal staff newsletter and intranet, including our waste management
initiatives (to coincide with Recycling Week in New Zealand), alternative transport options
and SKYCITY’s involvement in the Moo2Shampoo Recycling Project
• Opened a bike cage in the SKYCITY Auckland car park for staff (who cycle to work) to
securely store their bicycles – as part of the launch, cycling safety gear, backpack covers
and bells were given away to staff
• SKYCITY Auckland staff were offered an Auckland Transport HOP card to enable them
to enjoy free public transport for two weeks within Auckland
•
Increased focus on carbon emissions and climate change action across all New Zealand
sites as a consequence of SKYCITY signing up to the Climate Leaders Coalition in
New Zealand
Carbon
Measure carbon footprint (scope 1 and 2)
by the end of FY18
Achieved
Measure carbon footprint (scope 3) by the
end of FY20
10% reduction in scope 1 and 2 emissions
by the end of FY18
Achieved – our carbon footprint will be audited by CEMARS in FY19
Achieved – 16% reduction in gas and electricity from FY15 baseline
30% reduction in total emissions by the end
of FY25
In progress
48
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY PRIORITY
Energy
RESULTS
3% energy reduction per year per dollar
revenue (from FY15 baseline)
Achieved – Electricity: 3% reduction each year from FY17 to FY18, FY16 to FY17 and
FY15 to FY16
Partially achieved – Gas: 1% reduction from FY17 to FY18, 5% reduction from FY16 to FY17
and 9% reduction from FY15 to FY16
Waste
40% reduction of waste to landfill by end of
FY25 (from FY15 baseline)
In progress
7% reduction per year in waste to landfill
per year per dollar revenue
Partially achieved – 13% reduction from FY17 to FY18, 6% reduction from FY16 to FY17
and 1% reduction from FY15 to FY16
Zero waste by end of FY30
In progress
Water
3% water use reduction per year per dollar
revenue
Partially achieved – 10% reduction from FY17 to FY18, 2% reduction from FY16 to FY17
and 9% increase from FY15 to FY16
HIGHLIGHTS
Moo2Shampoo Recycling Project – A New Zealand First
SKYCITY and Fonterra have partnered on a product stewardship
scheme that sees Anchor ‘light proof’ milk bottles which are used at
SKYCITY Auckland’s Sky Café recycled locally to produce the Puriri
amenities range for the SKYCITY Grand Hotel and SKYCITY Hotel in
Auckland. Product stewardship is a concept where whoever designs,
produces, sells or uses a product takes responsibility for minimising the
product’s environmental impact throughout all stages of the product’s
life cycle.
The empty Anchor milk bottles used at Sky Café are collected by
Anchor and delivered to Auckland-based plastics recyclers, Astron
Sustainability. There, the bottles are ground down to plastic beads which
are delivered to HealthPak to manufacture the Puriri bottles for
SKYCITY’s hotel amenities range. Once discarded by hotel guests, the
empty Puriri bottles are collected and recycled back into the cycle,
creating a continuous recycling loop – and life – for the Anchor
milk bottles.
The first batch of recycled Puriri bottles was presented to our customers
in November 2017. In its infancy, this is the first product stewardship
initiative of its kind between two New Zealand companies and will see
35,000 milk bottles recycled locally per annum. This innovative
partnership shows the possibility and power of businesses working
together to create shared solutions that reduce environmental impact.
Both SKYCITY and Fonterra are working towards Moo2Shampoo
achieving registration as a product stewardship scheme and
endorsement from the Ministry for Environment.
49
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY SKYCITY Auckland's Executive Chef, Fiona Ruane, and her team take pride in SKYCITY's waste management initiatives
Food Redirection and Recovery
Playing Cards
SKYCITY’s Auckland and Hamilton sites have implemented a robust
food waste redirection and recovery programme. We have partnered
with both Kiwi Harvest and Kaivolution to donate food in accordance
with the Food Act 2014. This has resulted in the donation of 700kg of
food to charities through Kiwi Harvest since the programme began in
June 2016 and 2,250kg of food donated through Kaivolution since
March 2015.
Food that cannot be donated is collected from all SKYCITY Auckland
kitchens and commercially composted offsite to be used on
New Zealand soils to aid the horticulture industry. During the 2018
financial year, through the efforts of our kitchen teams, SKYCITY sent
500 tonnes of food waste to be commercially composted. This has led
to the implementation of compostable coffee cups and lids in all of our
Auckland outlets in addition to the phasing out of plastic straws to those
of compostable material where straws are required.
SKYCITY has presented and given tours to businesses interested in
their own food waste journey.
Our playing cards, previously going to landfill, can now be recycled
through our waste service partners. This initiative will be rolled out
across all our sites during the coming year and will equate to 170 tonnes
of playing cards being recycled per annum.
TOTAL CARBON FOOTPRINT (UNAUDITED)
Including Scope 1, Scope 2 and Scope 3 (per million dollar revenue)
40
39
38
37
36
35
34
33
32
31
30
29
28
e
u
n
e
v
e
R
r
a
l
l
o
D
n
o
i
l
l
i
M
r
e
p
e
2
O
C
t
l
a
t
o
T
50
FY15
FY16
FY17
FY18
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY
FY18 CARBON FOOTPRINT INVENTORY (UNAUDITED)
LPG
1%
ELECTRICITY
67%
NATURAL GAS
15%
WASTE
7%
AIR TRAVEL
9%
OTHER
1%
The following tables summarise our key environmental performance data for FY15 to FY18. In 2017, we undertook external assurance for the first
time of our FY17 environmental performance data (covering electricity and waste to landfill). In 2018, our FY18 performance data for Scope 1
GHG emissions from gas, Scope 2 GHG emissions from electricity and waste to landfill volume were audited. To help ensure our data systems and
targets are robust, in the coming year we are also preparing to have our baseline FY15 to FY17 data independently audited.
ENERGY
Electricity (kWh per million dollar revenue)
ELECTRICITY KWH
PER DOLLAR REVENUE
FY15
FY16
FY17
FY18
SKYCITY
AUCKLAND
83,159.82
78,158.29
74,119.97
73,795.90
SKYCITY
HAMILTON
SKYCITY
QUEENSTOWN
110,939.85
107,768.05
95,339.35
85,453.30
42,855.98
31,899.73
33,906.67
25,944.78
ADELAIDE
CASINO
74,215.03
77,157.74
79,603.09
73,266.51
SKYCITY
DARWIN
121,223.52
125,359.27
SKYCITY
GROUP
88,315.12
85,664.30
131,359.68
83,510.27
125,755.39
80,596.77
% change FY15 to FY18
11% decrease
23% decrease
39% decrease
1% decrease
4% increase
9% decrease
Gas (kWh per million dollar revenue)
GAS KWH
PER DOLLAR REVENUE
SKYCITY
AUCKLAND
SKYCITY
HAMILTON
SKYCITY
QUEENSTOWN
ADELAIDE
CASINO
SKYCITY
DARWIN*
SKYCITY
GROUP
FY15
FY16
FY17
FY18
40,547.40
37,619.40
46,964.90
22,175.26
7,702.63
31,963.84
35,204.18
37,983.55
47,579.36
21,322.23
8,211.80
29,198.18
32,190.98
30,690.76
58,599.21
22,465.88
8,786.38
27,629.49
32,381.34
27,539.59
57,854.38
20,757.29
9,630.46
27,416.80
% change FY15 to FY18
20% decrease
27% decrease
23% increase
6% decrease
25% increase
14% decrease
*Gas data usage for FY15–17 is based on estimated data and not supplier measured data.
51
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY EMISSIONS
Scope 1 Emissions from Gas
TCO2E (GWP) PER MILLION
DOLLAR REVENUE
SKYCITY
AUCKLAND
SKYCITY
HAMILTON
SKYCITY
QUEENSTOWN
ADELAIDE
CASINO
SKYCITY
DARWIN*
SKYCITY
GROUP
FY15
FY16
FY17
FY18
7.87
6.84
6.25
6.29
7.31
7.38
5.96
5.35
9.12
9.24
11.38
11.24
4.11
3.96
4.17
4.03
1.73
1.84
1.97
2.16
6.21
5.67
5.37
5.36
% change FY15 to FY18
20% decrease
27% decrease
23% increase
2% decrease
25% increase
14% decrease
*Gas data usage for FY15–17 is based on estimated data and not supplier measured data.
Scope 2 Emissions from Electricity
TCO2E (GWP) PER MILLION
DOLLAR REVENUE
SKYCITY
AUCKLAND
SKYCITY
HAMILTON
SKYCITY
QUEENSTOWN
ADELAIDE
CASINO
FY15
FY16
FY17
FY18
11.53
10.13
8.85
8.82
15.40
13.94
11.39
10.21
5.88
4.14
4.05
3.10
39.33
40.89
40.58
35.90
SKYCITY
DARWIN
81.22
83.99
86.07
80.48
SKYCITY
GROUP
27.60
26.28
24.73
22.93
% change FY15 to FY18
24% decrease
34% decrease
47% decrease
9% decrease
1% decrease
17% decrease
WATER
KL PER MILLION DOLLAR REVENUE
SKYCITY
AUCKLAND
SKYCITY
HAMILTON
SKYCITY
QUEENSTOWN
FY15
FY16
FY17
FY18
513.39
519.24
531.29
505.81
502.68 Data not available
450.89 Data not available
374.93 Data not available
354.27 Data not available
ADELAIDE
CASINO
311.84
337.86
354.00
314.78
SKYCITY
DARWIN
1382.27
1777.73
1690.06
1379.52
SKYCITY
GROUP
608.90
661.35
646.01
578.47
% change FY15 to FY18
1% decrease
30% decrease Data not available
1% increase
0%
5% decrease
WASTE TO LANDFILL
TONNES PER MILLION DOLLAR
REVENUE
SKYCITY
AUCKLAND
SKYCITY
HAMILTON*
SKYCITY
QUEENSTOWN
ADELAIDE
CASINO
SKYCITY
DARWIN
FY15
FY16
FY17
FY18
3.88
3.76
3.50
2.87
1.89 Data not available Data not available
2.83 Data not available Data not available
2.54 Data not available
Data excluded
2.50 Data not available
Data excluded
4.30
4.22
4.17
4.32
SKYCITY
GROUP
3.82
3.77
3.53
3.08
% change FY15 to FY18
26% decrease
32% increase Data not available
Data excluded
1% increase
19% decrease
*Increased waste from December 2015 to September 2016 and from December 2016 to February 2017 due to on-site refurbishments.
Scope Definitions
Through the CEMARS programme, SKYCITY must report all Scope 1, Scope 2 and Scope 3 emissions (unless deemed de minimis), where:
• Scope 1 emissions are direct emissions from sources owned or controlled by SKYCITY - for example, gas
(LPG and natural), fuel combustion from company vehicles, rental cars and leased fleet, and refrigerant and air conditioning systems;
• Scope 2 emissions are indirect emissions from electricity purchased by SKYCITY; and
• Scope 3 emissions are indirect emissions from sources not owned or controlled by SKYCITY but resulting from SKYCITY’s activities -
for example, travel (including short and long-haul air travel), waste sent to landfill and freight/couriers (for items exceeding 2kg).
52
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018
CORPORATE SOCIAL RESPONSIBILITY
OUR SUPPLIERS
Source Ethically and Responsibly - Sourcing responsibly and locally
PRIORITY ISSUES
• Ethical and sustainable sourcing practices
• Supply chain transparency and traceability
• Local suppliers
METRICS/DISCLOSURES
• Responsible procurement strategy and performance
• Procurement activity supports the objectives of the Conserve the Environment pillar
• Reporting of adherence, audit results and outcomes
• Local vs international procurement spend
• Case studies on local suppliers and tangible community benefits
• Disclosure of risk relating to human rights and forced labour issues in supply chain
This pillar concerns the way SKYCITY leverages its relationships with other organisations to promote positive outcomes in areas of impact such
as anti-corruption, responsible political advocacy, fair competition and promoting social and environmental responsibility in our supply chain.
Positive outcomes can be achieved by providing leadership and promoting the adoption of social responsibility more broadly through the
organisation’s sphere of influence.
SKYCITY has approximately 4,030 key on-going suppliers across the Group, with a significant number of these being in the food and beverage
sector. As a major purchaser of goods and services (we spent over $271 million with a vast array of suppliers of goods and services in the financial
year ended 30 June 2018), SKYCITY has a significant opportunity to use its purchasing power to drive sustainability. Our approach is to focus on
the areas in which we can have the biggest impact in terms of minimising our carbon footprint and with respect to key vendors at high ongoing
expenditure levels. These areas include food, beverage, property and marketing portfolios in particular.
We adopted an Ethical Sourcing Code in 2016 to improve our indirect impact on society and the environment by carefully selecting and working
with our suppliers to ensure sustainable procurement. The Code outlines our alignment with the ten principles of the United Nations Global
Compact. It is not a compliance measure in itself, but asks that vendors provide voluntary acknowledgement of our commitment to the principles
of the Code. Through distribution of the Code, we hope to encourage our suppliers to improve their practices and to assist them in doing so,
hence improving the quality of life of the people we touch indirectly and contributing to the protection of the environment. In the past financial
year, we have continued to advance our leadership in supply chain sustainability by rolling out the Ethical Sourcing Code to current and new
suppliers across our sites via the onboarding process for new vendors.
FY18 PERFORMANCE
A summary of our achievement against the goals, priorities and metrics for this pillar for the financial year ended 30 June 2018 (as set out in
SKYCITY’s 2017 annual report and refined in SKYCITY’s 2017 Corporate Sustainability Report) is outlined in the table below:
PRIORITY
RESULTS
Increased Dow Jones Sustainability Index
(DJSI) rating for “Supply Chain Management”
year on year
By the end of FY18, all new vendors and
existing vendors across the Group have
received a copy of, and acknowledge their
voluntary commitment to support the
principles of, SKYCITY’s Ethical Sourcing
Code
Achieved – rating increased to 58% in “Supply Chain Management” (up from 51%) in the DJSI
assessment (results released in September 2017)
Partially achieved - all new vendors are made aware of the Code at the time of onboarding
and SKYCITY has regularly communicated with all suppliers to reinforce the Code. As part
of a technology upgrade to our purchasing system in late 2018, all suppliers will be asked to
acknowledge their commitment to support the principles of the Code
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM
53
CORPORATE SOCIAL RESPONSIBILITY PRIORITY
RESULTS
By the end of FY18, the vendor sustainability
assessment and auditing process will be
agreed across all SKYCITY sites
By the end of FY18, vendors covering 70% of
New Zealand spend in key categories (food
and beverage, property and marketing) will
have undertaken the chosen sustainability
assessment and audit process
By the end of FY19, vendors covering 70% of
Group spend in key categories (food and
beverage, property and marketing) will have
undertaken the chosen sustainability
assessment and audit process
Achieved – the EcoVadis assessment and auditing process (as outlined below) was selected
Partially achieved – of the 129 suppliers initially invited to undertake the EcoVadis
assessment/audit, 45 New Zealand-based suppliers (representing over $22 million or
approximately 60% of our annual food and beverage procurement spend in New Zealand)
have completed the process. Over the coming year, incorporating learnings from the initial
pilot, the assessment/audit will be extended to cover additional New Zealand suppliers and
our Australian suppliers
In progress - the EcoVadis assessment/audit will be extended to cover additional
New Zealand suppliers and our Australian suppliers
HIGHLIGHTS
Group Procurement Policy
At SKYCITY, we actively seek out ways to incorporate sustainability
criteria into our supply chain. During the last financial year, we launched
a Group-wide procurement policy to incorporate the key governing
principles of shareholder value, superlative experiences, community
benefit and corporate sustainability. Our intention is to source and
procure locally made and supplied products from Australasian owned
and operated businesses as a preference wherever possible. The new
policy drives greater rigour in the onboarding of new suppliers and
has an emphasis on supplier consolidation and ethical sourcing with
SKYCITY choosing the best mix of suppliers to meet its
business requirements.
Sustainable Supply Chain
In September 2017, we commenced a sustainable supply chain
assessment pilot initiative with 129 of our key suppliers in New Zealand.
As part of this, we engaged an external provider, EcoVadis, to audit and
rate our suppliers against an industry-tailored set of environmental,
social and governance criteria and our suppliers were invited to fill out
an online questionnaire and provide evidence to support their actions
and policies across each criterion. A supplier who completes the
assessment receives a rating scorecard that shows areas where they are
achieving good practice and areas where they may need to improve.
We can therefore identify critical risks and begin a dialogue with our
suppliers with a view to improving sustainability performance over time.
As noted earlier, 45 suppliers have completed the assessment/audit
and we will continue to roll out the process to suppliers across the
SKYCITY Group.
Tuna Supplier Review
During the financial year, SKYCITY completed an investigation of tuna
suppliers for its New Zealand operations and established that all
suppliers were operating in accordance with laws within their local
jurisdictions, under strict licences and quotas, with most product being
line caught aside from a small percentage (6% of our total tuna supply)
which is farmed.
SKYCITY sources tuna from New Zealand, Fiji and Mexico and has a
stringent approach to selecting suppliers, many of whom are long term,
trusted partners to our business who have been subject to the careful
due diligence of our procurement team, with ethical sourcing being an
important consideration.
Corporate Social Responsibility Committee Showcase
Throughout the year, at our Auckland site, the employee-led Corporate
Social Responsibility Committee held a series of events highlighting the
objectives sitting behind each pillar of SKYCITY’s corporate social
responsibility framework and outlining ways in which employees could
get involved and support initiatives.
Our procurement, purchasing and supply chain areas have a strong
focus on corporate social responsibility as they are the first point of
contact with the suppliers that provide the products and services
purchased on behalf of SKYCITY.
During the week-long event in Auckland, the SKYCITY Procurement
team was encouraged by the level of interest from employees in
understanding where we procure from and that the SKYCITY Ethical
Sourcing Code is a fundamental part of the procurement and supply
chain at SKYCITY.
54
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE SOCIAL RESPONSIBILITY
CHALLENGES
Our current procurement system does not categorise country of origin
by each product line. As part of a major information technology
upgrade project, we will be able to categorise items in more detail,
including country of origin, from late 2018. In the interim, the SKYCITY
Procurement team has identified ways to manually capture this
information, allowing us to modify procurement practices where
required to support our new Group Procurement Policy.
We continue to focus on obtaining a clearer picture of our suppliers’
supply chains to ensure they align with our Ethical Sourcing Code and
new suppliers are asked about their supply practices prior to becoming
an approved supplier of the company. However, the scope and
geographic spread of our supply chain, and also the wide variety of
suppliers we engage with, creates challenges for embedding the Ethical
Sourcing Code and ensuring our suppliers are doing more than
acknowledging their commitments. Our suppliers are very diverse,
ranging from small localised family businesses to global multinationals.
In some cases, our suppliers are very small operators and they have few
resources to provide detailed information about their policies and
sustainability and governance approaches. In other cases, we have had
long-standing agreements with suppliers, but have never engaged them
before on sustainability issues. As we manage these issues more closely,
we will have the opportunity to deepen our engagement with our
suppliers on the Ethical Sourcing Code. A key way that we will do that into
the future is to undertake supplier sustainability assessments and audits.
Whilst we have made good progress in our supply chain practices to date,
we recognise that more focus and attention is required to achieve our
objectives. We are committed to increasing the clarity around our goals,
priorities and metrics for this pillar.
A living wall at SKYCITY Auckland
55
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE SOCIAL RESPONSIBILITY 56
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018INDEPENDENT LIMITED ASSURANCE STATEMENT Robert Alvarez and Maluatai Ale from the SKYCITY Auckland Property Services Team
57
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COM FOR THE YEAR ENDED 30 JUNE 2018
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.
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.
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 Governance 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 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.
SKYCITY is listed as a ‘Foreign Exempt Listing’ on the ASX. The ASX
Foreign Exempt Listing category is based on a principle of substituted
compliance recognising that, for secondary listings, the primary
regulatory role and oversight rest with the home exchange and the
supervisory regulator in that jurisdiction. As a company with ASX
Foreign Exempt Listing status, SKYCITY is not required to comply
with ASX Listing Rule 4.10, which requires entities to include certain
prescribed information in their annual reports, or the Corporate
Governance Principles and Recommendations (Third Edition) of the
ASX Corporate Governance Council. Notwithstanding, SKYCITY has
included all the information required under ASX Listing Rule 4.10 in this
annual report and followed a majority of the recommendations set by
the ASX Corporate Governance Council, in addition to all the
corporate governance principles set out in the NZX’s Corporate
Governance Code, during the financial year ended 30 June 2018.
In addition, as mentioned above, the cornerstone principles set out in
SKYCITY’s Board Charter (available in the Governance section of the
company’s website at www.skycityentertainmentgroup.com) continue
to reflect the principles in the Corporate Governance Principles and
Recommendations (Third Edition) of the ASX Corporate
Governance Council.
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
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.
• ensure a balance of authority so that no single individual has
2. STRUCTURE THE BOARD TO ADD VALUE
unfettered powers.
The Board Charter details the Board’s role and responsibilities.
The Board establishes the company’s objectives, the major strategies
Board effectiveness requires the efficient discharge of the duties
imposed on the directors by law and the addition of value to
the company.
59
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE GOVERNANCE STATEMENT To achieve this, the SKYCITY Board is structured to:
• government relations;
• have a sound understanding of, and competence to deal with,
• public relations and communications;
the current and emerging issues of the business;
• effectively review and challenge the performance of management
and exercise independent judgement; and
• assist in the selection of candidates to stand for election by
shareholders at annual meetings.
Board Composition and Skills Matrix
As at 30 June 2018, the Board comprised seven non-executive
directors. Biographical details of individual directors are set out on
pages 18 and 19 of this annual report.
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 were
most recently agreed by the Board in May 2018 and include:
• 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;
•
investment banking;
• property and real estate acumen;
• hospitality industry experience and understanding;
•
legal;
• finance and accounting;
• mathematical fluency;
• human resources;
• occupational health and safety;
• marketing;
• digital capability and exposure;
• corporate social responsibility; and
• millennial understanding.
In June 2018, Board members completed a self-assessment survey to
identify the Board’s overall competency in relation to the above areas of
expertise and experience. The results of the survey are set out in the
table below – where 1 indicates low competency and 5 indicates high
competency. Details of individual expertise and experience of the
directors are set out on pages 18 and 19 of this annual report.
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);
DIRECTOR COMPETENCIES
Health & Safety
Human Resources
Mathematical Fluency
Accounting
Law
Property
Investment Banking
PR & Comms
Govt Relations
Darwin
Adelaide
Hamilton
Auckland
Marketing
CSR
Millennials
Hospitality/Tourism
Asian Consumers
Digital
Gaming
3.57
3.71
3.86
4.00
3.57
3.86
3.71
3.71
3.14
2.71
2.86
2.86
3.57
3.43
3.71
3.71
3.14
2.86
3.00
3.29
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Average Rating
60
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE GOVERNANCE STATEMENT • 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
independence of directors, the Board has adopted the definition of
independence set out in the NZX Main Board Listing Rules and has
taken into account the independence guidelines as recommended in
the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations (Third Edition) (ASX Independence
Guidelines).
At its June 2018 meeting, the Board reviewed the status of each
director in accordance with the definition of independence set out in
the NZX Main Board Listing Rules and taking into account the ASX
Independence Guidelines and determined that all current
non-executive directors were independent at the balance date.
issues;
• 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 Governance 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.
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.
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 training and regular visits to the
company’s key operations. The Board also undertakes periodic
educational trips to observe and receive briefings from other
companies in the gaming and entertainment industries.
Directors are entitled to obtain independent professional advice (at the
expense of the company) on any matter relating to their responsibilities
as a director or with respect to any aspect of the company’s affairs,
provided they have previously notified the Board chairperson of their
intention to do so.
Indemnities and Insurance
The company provides a deed of indemnity in favour of each director
and member of senior management and provides professional
indemnity insurance cover for directors and executives acting in good
faith in the conduct of the company’s affairs.
Board Committees
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
The Board has four formally appointed standing committees – the Audit
and Risk Committee, Governance and Nominations Committee,
Remuneration and Human Resources Committee and Corporate Social
Responsibility Committee.
The members of each of these 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 of these committees,
and their respective qualifications and experience, are set out on pages
18 and 19 of this annual report and in the People section of the
company’s website at www.skycityentertainmentgroup.com.
61
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE GOVERNANCE STATEMENT Each of these committees 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 Governance 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
The following table shows attendances at Board and committee meetings by directors during the financial year ended 30 June 2018, during which
seven Board meetings were scheduled:
APPOINTMENT
TO OFFICE
BOARD
SCHEDULED
BOARD
UNSCHEDULED
BOARD
TOTAL
AUDIT AND
RISK(1)
REMUNERATION
AND HUMAN
RESOURCES
GOVERNANCE
AND
NOMINATIONS
CORPORATE
SOCIAL
RESPONSIBILITY
NUMBER OF MEETINGS HELD
Rob Campbell
Bruce Carter
Brent Harman
Sue Suckling
Richard Didsbury
Jennifer Owen
Murray Jordan
Chris Moller(2)
25 June 2017
12 October 2010
18 December 2008
9 May 2011
20 July 2012
5 December 2016
5 December 2016
18 December 2008
7
7
7
7
7
7
7
7
3
3
3
3
3
2
3
3
2
2
10
10
10
10
9
10
10
9
5
5
5
4
–
2
–
5
–
3
8
8
1
8
3
1
1
8
4
1
1
1
1
1
1
1
1
1
3
3
–
–
3
3
–
–
1
(1) The Audit and Financial Risk Committee was renamed the Audit and Risk Committee on 8 February 2018.
(2) Chris Moller retired as a director effective 31 December 2017.
3. INTEGRITY, ETHICAL BEHAVIOUR AND DIVERSITY
Code of Business Practice
For SKYCITY, it is important to be a good corporate citizen, whilst
operating a sustainable and successful business model. SKYCITY expects
its Board, management and employees to act in accordance with the
company’s values, policies and legal obligations and actively promotes
ethical and responsible behaviour and decision-making by:
• clarifying and promoting observance of its guiding values; and
• 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.
Training and information on the company’s values, policies and legal
obligations are provided to all employees on induction and continually
throughout their time at SKYCITY.
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 Governance 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.
Compliance with the Code of Business Practice is monitored through
education and notification by individuals who become aware of any
breach. In addition, all senior managers are required annually to provide a
confirmation to the company that to the best of their knowledge all
business matters undertaken within their areas of responsibility have
been conducted in accordance with the Code of Business Practice.
Corporate Social Responsibility
Trading in Securities
To help the company define its responsibilities and the effectiveness of its
activities, SKYCITY maintains operational supervision of its Corporate
Social Responsibility (CSR) activities through management as well as
governance-level oversight through the Board’s Corporate Social
Responsibility Committee. This Committee directs all the company’s
commitment to care activities and is responsible for developing and
maintaining SKYCITY’s CSR policies.
The Corporate Social Responsibility Committee focusses on the five
pillars of the company’s CSR strategy, which are described in further
detail on pages 31 to 55 of this annual report together with details
of SKYCITY’s CSR activities.
The company maintains a Securities Trading Policy (available on
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.
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 Main Board Listing
Rules and formally disclose their SKYCITY shareholdings and other
securities holdings to the NZX and, consequently, ASX within
prescribed timeframes.
62
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE GOVERNANCE STATEMENT
Conflicts of Interest
SKYCITY expects its directors and employees to avoid conflicts of interest in their decisions and to avoid any direct or indirect interest, investment,
association, or relationship which is likely to, or appears to, interfere with the exercise of their independent judgement.
Where conflicts of interest may arise (or where potential conflicts of interest may arise), directors must formally advise the company or, in the case
of an employee, their manager about any matter relating to that conflict (or potential conflict) of interest.
Gaming Prohibition
Directors and employees are not permitted to participate in any gaming or wagering activity at SKYCITY operated properties.
Diversity and Inclusion
Each year, SKYCITY’s Board sets measurable objectives to promote diversity and inclusion. At the end of each financial year, these 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 year ended 30 June 2018 (as reported in the company’s 2017 annual report) as follows:
OBJECTIVE
PROGRESS MADE
Continue to strive to ensure strong female
candidates are identified in the recruitment
process for all Board and senior executive
roles
Recruitment briefs for the Board recruitment process during the past financial year explicitly
specified that SKYCITY required female candidates to be identified wherever possible.
Recruitment briefs for senior leadership recruitment process explicitly specified that SKYCITY
require female candidates to be identified wherever possible.
In the past financial year, two female senior executive appointments have been made to the
positions of Chief Marketing Officer and General Counsel and Company Secretary, each
reporting to the Chief Executive Officer.
Continue to review gender pay equality and
deliver an organisation-wide programme that
removes any risk of bias or inequality
SKYCITY continues to monitor and report on remuneration outcomes by gender to ensure pay
equality. The annual salary review resulted in an average increase for female salaried employees
of 2.22% and an average increase for male salaried employees of 2.19%.
Maintain Rainbow Tick certification for our
New Zealand sites and membership of Pride
in Diversity in Australia to reiterate our
commitment to our lesbian, gay, bi-sexual,
transgender, takatapui and intersex
employees
Monitor the participation of under-
represented groups in our leadership training
and talent programmes
SKYCITY also conducted analysis of remuneration across the managerial hierarchy and
vertically through a function within the organisation. The analysis identified that there are no
indications of gender bias operating across like positions.
While our analysis has identified no evidence of a gender driven pay gap across like positions,
we remain focussed on increasing the representation of women in senior roles across the
business through a gender balanced talent pipeline.
Rainbow Tick certification was achieved for each of our Auckland, Hamilton and Queenstown sites.
Our Adelaide and Darwin sites have maintained Pride in Diversity membership and collaborated
to develop a training programme on LGBTI inclusion to be delivered to the Senior Leadership
Team during the 2019 financial year.
During the past financial year, 193 staff attended one or more of the internal leadership
development modules - 45% of whom were female and 55% of whom were male.
In addition, 48% of participants in the internal talent management programme were female.
SKYCITY continues to achieve strong Asian, M�ori and Pasifika representation in its internal
leadership development modules with 50% of participants in the emerging leaders programme
identifying as Asian and 17% identifying as either M�ori or Pasifika.
Of the participants in SKYCITY’s middle management leadership development programme,
37% identified as Asian and 13% identified as either M�ori or Pasifika.
63
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE GOVERNANCE STATEMENT OBJECTIVE
PROGRESS MADE
Deliver talent and development programmes
that assist under-represented groups to
maximise their potential
Several programmes were delivered during the past financial year which supported staff from
underrepresented groups to thrive and develop their potential at SKYCITY:
•
the ‘Winning Women’ professional development series was launched in March 2018;
• one senior woman participated in the Global Women Breakthrough Leadership
Programme and five women participated in the Activate Leadership programme;
•
in partnership with Indigenous Growth Limited, SKYCITY launched Tahuna te Ahi,
its M�ori leadership programme;
•
three Pasifika employees commenced in the Niu Pasifika leadership programme; and
• SKYCITY continued its sponsorship of the New Zealand Asian Leaders Forum.
SKYCITY also continued to offer its Work Choices planned retirement programme which
provided support to three employees who transitioned into retirement in 2018.
The framework and supporting structure for a Diversity and Inclusion Council was developed
during the past financial year.
Several employee resource groups have been established, including SKYCITY Pride, Tahuna te
Ahi, Women in Technology and Winning Women.
The SKYCITY Board and members of the Senior Leadership Team participated in unconscious
bias training during the past financial year. The Senior Leadership Team and other senior
managers also participated in Rainbow Tick training.
SKYCITY participated in the Deloitte Inclusion Survey which was conducted in partnership with
Global Women.
Workshops were delivered to coincide with Mental Health Awareness Week, which have
assisted in encouraging conversation about issues associated with mental health.
Establish a diversity council structure and
encourage the formation of a range of diverse
communities who may identify areas of
opportunity or need and develop appropriate
solutions to support such communities
Undertake a programme of cultural
intelligence assessment and training for senior
executives and senior managers and provide
unconscious bias training for directors and
senior executives
Deliver a programme which educates
employees and management in supporting
mental health awareness
Gender Breakdown
The gender composition of the company’s directors, officers, senior executives and total workforce as at 30 June 2018 and 30 June 2017 was
as follows:
FEMALE
MALE
TOTAL
FEMALE
MALE
TOTAL
NUMBER
%
NUMBER
NUMBER
%
NUMBER
2
3
4
29%
43%
40%
48%
5
4
6
2,950
2017
Directors
Officers
Senior Executives
7
7
10
%
71%
57%
60%
52%
5,691
Total Workforce
2,730
2
2
3
25%
33%
30%
48%
6
4
7
2,956
%
75%
67%
70%
52%
8
6
10
5,686
2018
Directors
Officers
Senior Executives
Total Workforce
2,737
In the above tables:
•
•
‘officers’ are the Chief Executive Officer and those directly reporting to the Chief Executive Officer, other than the Executive Assistant;
‘senior executives’ are those directly reporting to the Chief Executive Officer, other than the Executive Assistant, and those who are a site
General Manager; and
•
the ‘total workforce’ number does not specify those who identify as gender diverse.
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ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE 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 Risk Committee has responsibility for oversight of the
quality, reliability, and accuracy of the company’s internal and external
financial statements, the quality of the company’s external result
presentations, its internal control environment and risk management
programmes, and for its relationships with its internal and
external auditors.
The Audit and Risk Committee and the Board undertake sufficient
inquiry of the company’s management and the company’s internal and
external auditors in order to enable them to be satisfied as to the
validity and accuracy of the company’s financial reporting. The Chief
Executive Officer and the Chief Financial Officer are required to
confirm in writing 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 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
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 financial year ended
30 June 2018 are set out in note 5 to the financial statements. Fees for
audit and tax compliance work for the financial year ended
30 June 2018 represent 59% 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 Governance
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, Australian Corporations Act 2001, NZX Main
Board Listing Rules 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.
Jo Wong, 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) is
available to all shareholders in the Investor Centre section of the
company’s website at www.skycityentertainmentgroup.com;
• posting stock exchange announcements in the Investor Centre
section of the company’s website promptly after they have been
disclosed to the market;
65
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE GOVERNANCE STATEMENT • giving shareholders the option to receive communications from,
8. PERFORMANCE EVALUATION
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 risk management framework for the
identification, assessment, monitoring and management of risk to the
company’s business.
SKYCITY maintains an independent, centrally-managed Group Risk
function which evaluates and reports on risks and controls across the
Group. Management is required to report to the Audit and Risk
Committee and Board on the effectiveness of the company’s
management of its material business risks at least annually.
The Audit and Risk Committee approves the assurance plan, with
results and performance of the organisation’s risk and controls regularly
reviewed by both the Committee and the external auditors. The Chief
Executive Officer and the Chief Financial Officer are required to
confirm in writing to the Audit and Risk Committee 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 control which aligns to the policies of the
Board, and that the company’s risk management and internal control
systems are operating efficiently and effectively in all material respects.
The most recent confirmations were provided by the Chief Executive
Officer and Chief Financial Officer in August 2018.
The company maintains business continuity, material damage and
liability insurance cover to ensure that the earnings of the business are
well protected from adverse circumstances.
SKYCITY’s ability to create and 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 outlined on pages
11 to 13 of this annual report.
Evaluation of the Board and its Committees
The Board and committee charters require an evaluation of the Board
and its committees’ 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.
A self-evaluation questionnaire was completed by each of the directors
and select management in December 2017 for the purpose of
evaluating the Board’s performance. The findings of the review were
discussed at the Board’s February 2018 meeting.
Evaluation of Senior Management
The Board undertakes the performance review of the Chief Executive
Officer and reviews the performance outcomes of those reporting
directly to that position in accordance with the company’s performance
review procedures. In the case of the Chief Executive Officer, the
review generally involves a formal response/feedback process at both
the half year and full year. In the case of each senior executive, the
review involves a formal response/feedback process between the
Chief Executive Officer and each senior executive.
9. REMUNERATE FAIRLY AND RESPONSIBLY
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 Governance 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 incentive plans, 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 annually reviewing non-executive director fees.
The Board-approved Remuneration and Human Resources Policy
Statement (available in the Governance 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
66
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018CORPORATE GOVERNANCE STATEMENT 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 managers with the interests of
shareholders.
A range of market data and specific benchmarking 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.
During the financial year ended 30 June 2018, there were two material
changes to SKYCITY’s remuneration policies:
•
the Policy on Non-Executive Director Remuneration was amended
to allow the company to seek shareholder approval for increases
to the total non-executive director fee pool on an annual basis.
In previous years, the company has sought shareholder approval
for increases to the non-executive director fee pool on an ad-hoc
basis. However, going forward, the company intends to seek
shareholder approval for increases to the fee pool on an annual
basis to more closely align non-executive director remuneration
with market movements, with the intention of benchmarking
SKYCITY’s non-executive director remuneration against a
comprehensive comparator group every three years to ensure
market competitiveness to attract and retain qualified, highly
capable directors; and
• a transitional short term incentive plan was implemented in respect
of the financial year ended 30 June 2018 for employees holding
group executive and senior management positions in substitution
of previous short term incentive cash arrangements to better align
those employees’ interests with the short term performance goals
of the company and the interests of shareholders, as well as
provide them with the opportunity to share in the success of the
company. Further details of the transitional short term incentive
plan are outlined on pages 70, 71 and 75 of this annual report.
SKYCITY’s remuneration strategy and policies are based on a “pay for
performance” philosophy. The Board has reviewed the structure of
SKYCITY’s incentive schemes for the financial year ending
30 June 2019 to ensure they are competitive and effective to enable
the company to attract and retain the leadership and talent required to
drive business strategy and financial performance in the interests of
shareholders. Any subsequent change to the company’s remuneration
strategy and/or policies will continue to reflect SKYCITY’s “pay for
performance” philosophy and drive shareholder value.
67
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCORPORATE GOVERNANCE STATEMENT REMUNERATION OF SKYCITY NON-EXECUTIVE DIRECTORS AND GROUP EXECUTIVES
This section details the company’s approach to remuneration frameworks,
outcomes and performance for the following non-executive directors and
group executives for the financial year ended 30 June 2018:
Group Executives
Michael Ahearne
Appointed as Chief Operating Officer effective
from 11 December 2017
NAME
POSITION
TERM
Non-Executive Directors
Rob Campbell
Chairman
Director
Bruce Carter
Deputy Chairman
Richard Didsbury
Brent Harman
Sue Suckling
Jennifer Owen
Murray Jordan
Director
Director
Director
Director
Director
Part Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Former Non-Executive Director
Chris Moller
Chairman
Part Year
Group Executives
Graeme Stephens
Chief Executive Officer
Full Year
Michael Ahearne
Chief Operating Officer
Part Year
Rob Hamilton
Claire Walker
Chief Financial Officer
Full Year
General Manager
Human Resources
Full Year
Liza McNally
Chief Marketing Officer
Part Year
Simon Jamieson
General Manager NZICC Full Year
Glen McLatchie
Chief Information Officer
Full Year
Jo Wong
General Counsel and
Company Secretary
Full Year
Former Group Executives
John Mortensen
Sonya Crosby
Peter Treacy
Group Chief Operating
Officer
Part Year
Chief Innovation Officer
Part Year
Group General Manager
Corporate Services and
Chief Risk Officer
Part Year
The following key changes to the Board and group executive team
occurred during the financial year ended 30 June 2018:
Non-Executives Directors
Chris Moller
Rob Campbell
Retired as Board Chairman and a
director effective from 1 January 2018
Appointed as Chairman effective from
1 January 2018
68
John Mortensen
Resigned as Group Chief Operating Officer
effective from 1 January 2018
Sonya Crosby
Resigned as Chief Innovation Officer effective
from 6 January 2018
Simon Jamieson
Jo Wong
Liza McNally
Peter Treacy
Appointed as a direct report to the Chief
Executive Officer and assumed responsibility for
the company’s health and safety function effective
from 17 January 2018
Appointed as a direct report to the Chief
Executive Officer and assumed responsibility for
the company’s regulatory affairs and anti-money
laundering functions effective from 19 January
2018
Appointed as Chief Marketing Officer effective
from 22 January 2018
Resigned as Group General Manager Corporate
Affairs and Chief Risk Officer effective from
20 April 2018
Non-Executive Directors
Shareholders at the annual meeting determine the total remuneration
available to the company’s 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 2018:
POSITION
FEES (PER
FINANCIAL YEAR)
Board
Audit and Risk Committee
Remuneration and Human
Resources Committee
Corporate Social
Responsibility Committee
Chairperson
Deputy Chairperson
Non-Executive
Director
Chairperson
Member
Chairperson
Member
Chairperson
Member
$275,000
$157,500
$126,000
$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.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018DIRECTOR AND EMPLOYEE REMUNERATION The company’s Policy on Non-Executive Director Remuneration
(available in the Governance section of the company’s website at
www.skycityentertainmentgroup.com) sets out a framework for
SKYCITY to attract and retain qualified, highly capable directors from a
pan-Australasian talent pool for the purpose of driving value and
maintaining the highest standards of corporate governance on behalf of
shareholders. The Policy is reviewed annually to take account of
changing market, industry and economic circumstances as well as
developing organisational requirements. The guiding principles that
underpin the Policy are that:
• non-executive director remuneration will be regularly
benchmarked against external comparator markets to ensure it is
broadly in line with that payable in other large publicly-listed
companies in Australasia; and
•
the incremental accountability and commitment that accompanies
specific roles will be recognised in the company’s non-executive
director remuneration structure.
The Remuneration and Human Resources Committee is responsible for
making recommendations to the Board annually on non-executive
director remuneration changes. The Board seeks shareholder approval
for any proposed increase to the total remuneration pool under the
Policy on Non-Executive Director Remuneration.
In accordance with practice, at its May 2018 meeting, the Board
reviewed SKYCITY’s current total non-executive director remuneration
pool and Board and committee fees against a comparator group and
REMUNERATION OF DIRECTORS
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 2018 are as listed below:
BOARD AND
COMMITTEE FEES
OTHER
Chris Moller(1)
Rob Campbell(2)
Bruce Carter
Brent Harman(3)
Sue Suckling
Richard Didsbury
Jennifer Owen
Murray Jordan (4)
$137,500.00
$208,000.00
$192,500.00
$151,000.00
$151,000.00
$141,000.00
$141,000.00
$151,000.00
$4,120.86(5)
$2,060.60(5)
The figures shown are gross amounts and exclude GST where applicable.
(1) Chris Moller retired as a director effective 31 December 2017.
(2) Rob Campbell was appointed as Chairman of the Board effective 1 January 2018.
(3) Brent Harman retired as Chairman of the Remuneration and Human Resources
Committee effective 31 December 2017.
(4) Murray Jordan was appointed Chairman of the Remuneration and Human Resources
Committee effective 1 January 2018.
(5) 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).
available data on board fee movements in both New Zealand and
Australia. Given comparable director fees have increased over the
last four years since the last shareholder approved increase to the
company’s total non-executive director remuneration pool in 2014,
the Board resolved to seek shareholder approval at the company’s
upcoming 2018 annual meeting of shareholders on 19 October 2018
for a 5% increase to the total remuneration pool for the financial year
ending 30 June 2019 to allow for targeted fee increases to the
Chairman, Deputy Chairman, non-executive director and Chair of the
Corporate Social Responsibility Committee roles, as well as the
appointment of an additional non-executive director – full details of
which are set out in the company’s 2018 Notice of Meeting.
As part of the Board’s review process, Ernst & Young was engaged
to benchmark the market positioning of SKYCITY’s Board and
committee fees and provide recommendations on changes to fees.
An executive summary of Ernst & Young’s findings is available in
the Governance section of the company’s website at
www.skycityentertainmentgroup.com.
In addition to directors’ fees, non-executive directors may also receive
remuneration for additional services provided to the company outside
of their capacities as directors of the company at the discretion of the
Board and subject to the maximum remuneration amount which has
been approved by the shareholders of the company.
In addition to remuneration paid for services in their capacity as
directors of the company, SKYCITY:
• meets the expenses incurred by directors in relation to company
matters, which are incidental to the performance of their duties,
including travel;
• paid a total of $13,200.00 (plus GST) to Richard Didsbury during
the financial year ended 30 June 2018 in connection with
consultancy services provided by him in relation to the New
Zealand International Convention Centre development and
Adelaide Casino redevelopment projects, which were provided
as additional services outside of his capacity as a director of the
company; and
• paid a total of $13,200.00 (plus GST) to Murray Jordan during
the financial year ended 30 June 2018 in connection with
consultancy services provided by him in relation to the New
Zealand International Convention Centre development and
Adelaide Casino redevelopment projects, which were provided
as additional services outside of his capacity as a director of the
company.
69
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMDIRECTOR AND EMPLOYEE REMUNERATION
Group Executives
Remuneration components are offered in the context of a total
remuneration package, measured on a “total cost to the company”
basis. The remuneration arrangements for each group executive
comprise both fixed and variable remuneration where the fixed
portion comprises a base salary, a KiwiSaver/superannuation
contribution and a limited number of other benefits and the variable
portion comprises both short term incentive at-risk remuneration
(STI) and long term incentive at-risk remuneration (LTI). The Board
determines appropriate levels of fixed remuneration taking into
account recommendations from the Remuneration and Human
Resources Committee. The STI component is based on performance
against both key financial and non-financial measures and all STI
bonuses are at the ultimate discretion of the Board.
In previous years, the company has disclosed remuneration actually
paid to group executives during a particular financial year rather than
remuneration attributable or payable in relation to that financial year.
The disclosures on the following pages of this annual report reflect the
total rewards earned by, although not necessarily paid to, group
executives for the financial year ended 30 June 2018 as the Board
believes this approach more appropriately describes executive pay
and performance. Accordingly, the following disclosures include the
STI and LTI components earned by group executives in respect of the
financial year ended 30 June 2018 notwithstanding that the Board
approved STI awards were granted in September 2018.
Fixed Remuneration
The company endeavours to set fixed remuneration at levels that are
relative to similar positions in the broader Australasian market and,
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 (e.g. industry and geography).
Fixed remuneration is reviewed annually for each group executive
and, when appropriate, the Remuneration and Human Resources
Committee approves remuneration increases for group executives.
Short Term Incentive Remuneration
In response to the forecast trading conditions which were anticipated
in the company’s operating budget for the financial year ended
30 June 2018, a transitional STI plan, referred to as the Restricted
Share Rights Plan, was implemented for that financial year for
employees holding group executive and senior management positions
in substitution of previous STI cash arrangements to better align those
employees’ interests with the short term performance goals of the
company and the interests of shareholders, as well as provide them
with the opportunity to share in the success of the company.
The Restricted Share Rights Plan provides for the offer of restricted
share rights to selected employees of the Company, the number of
which is calculated based on an employee’s achievement against
70
agreed financial and non-financial measures for the financial year
ended 30 June 2018. Each restricted share right granted under the
Restricted Share Rights Plan is a right to receive one ordinary share in
the company, which only vests if the relevant employee remains
employed by the company (or a company within the SKYCITY Group)
on 1 July 2020, being two years after completion of the company’s
2018 financial year.
The following table shows how the STI component was calculated for
the group executives for the financial year ended 30 June 2018 under
the Restricted Share Rights Plan:
Calculation of STI for Group Executives
70% of each group executive’s STI was based on the company’s
financial performance where eligibility for this component was
determined by achievement of the company’s budgeted NPAT
(normalised net profit after tax) for the financial year ended 30 June
2018 (ie. a gateway hurdle).
The remaining 30% was based on achievement of a small number of
non-financial goals that were agreed with each group executive at the
commencement of the 2018 financial year. In the case of the Chief
Executive Officer, these were aligned to the strategic priorities of the
company as determined by the Board to be critical indicators of
performance and drivers of shareholder value. The non-financial
goals for each other group executive were aligned to those set for
the Chief Executive Officer, but included specific personal
objectives.
Financial Component
Non-Financial Component
Base Salary
Base Salary
X
At-risk %
X
Financial
Component %
X
X
At-risk %
X
Non-Financial
Component %
X
X
Business Unit Multiplier
=
=
Financial Outcome
+
Performance Multiplier
=
=
Non-Financial Outcome
=
Combining both financial
and non-financial
components results in
the STI outcome for
a participant
STI Outcome
In response to the forecast trading conditions which were anticipated
in the company’s operating budget for the financial year ended 30
June 2018, the multiplier for both the financial and non-financial
components of the STI was also reduced by up to 50% for each
group executive. The STI outcome was then multiplied by 150% to
compensate each participant for the two-year deferral in vesting of
their restricted share rights.
The number of restricted shares rights granted to a group executive
under the Restricted Share Rights Plan was then determined by
dividing the relevant STI outcome by the volume-weighted average
sale price of SKYCITY shares on the NZX Main Board designated as
price-setting trades by NZX Limited over the ten-business day
period immediately preceding 1 July 2018.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018DIRECTOR AND EMPLOYEE REMUNERATION
On 11 September 2018, a total of 1,898,564 restricted share rights were issued under the Restricted Share Rights Plan to 104 participants,
including the Chief Executive Officer and other group executives.
The transitional STI plan was a catalyst for a broader review of the company’s variable remuneration structure for group executives and senior
managers and led to the introduction of new performance incentive arrangements for the financial year ending 30 June 2019 as more fully
described later in this section.
Long Term Incentive Remuneration
The company operated two LTI plans during the financial year ended 30 June 2018 for the company’s most senior executives, including the
group executives. Details of the SKYCITY Senior Executive LTI Plan and SKYCITY Executive Cash Award Plan are included on pages 74 and 75
of this annual report.
Chief Executive Officer's Remuneration
The total remuneration earned by Mr Stephens for duties relating to the Chief Executive Officer position for the year ended 30 June 2018 was
as follows:
FIXED ANNUAL REMUNERATION
PAY FOR PERFORMANCE
BASE SALARY
KIWISAVER
OTHER
BENEFITS
SUB TOTAL
STI
OUTCOME
LTI
GRANT
SUB TOTAL
NON-RECURRING
PAYMENTS
TOTAL
REMUNERATION
$1,450,000
$43,500
$5,302
$1,498,802 $1,015,000(1) $1,250,000(2)
$2,265,000
0
$3,763,802
(1) Calculated on the basis of 251,238 restricted share rights granted to Mr Stephens under the Restricted Share Rights Plan in September 2018.
(2) Calculated on the basis of 320,883 SKYCITY shares allocated to Mr Stephens under the SKYCITY Senior Executive LTI Plan in August 2017.
The graph below shows the mix of remuneration that was earned by Mr Stephens for his performance over the financial year ended 30 June 2018:
FY18 Actual
Target
Maximum
34%
39%
34%
39%
34%
39%
27%
27%
27%
Base Salary
STI Outcome*
LTI Awarded
* capped at 70% of base salary
Fixed Annual Remuneration
Mr Stephens’ fixed annual remuneration consisted of a base salary (delivered in cash), KiwiSaver contributions and health care benefits. His base
salary throughout the financial year ended 30 June 2018 was $1,450,000.
In determining Mr Stephens’ base salary, the Board refers to external market data, including comparable positions in other listed New Zealand
companies and companies within the casino industry.
Pay Gap
Mr Stephens’ base salary remuneration ratio to the median annualised employee base salary is 29:1.
71
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMDIRECTOR AND EMPLOYEE REMUNERATION STI Outcome
The following table shows how the STI component was calculated for Mr Stephens for the financial year ended 30 June 2018 under the
Restricted Share Rights Plan:
Calculation of STI for Chief Executive Officer
Mr Stephens’ at-risk STI component for the 2018 financial year was set at 70% of his base salary, contingent on his achievement of specific
financial and non-financial goals. Eligibility for his STI component was based on improvement on the previous financial year’s normalised Group
NPAT (net profit after tax) performance. 70% of Mr Stephens’ STI was measured against the company’s achievement of normalised Group NPAT
and the remaining 30% was based on a small number of agreed key non-financial goals.
The company’s FY18 financial performance exceeded the budgeted normalised Group NPAT target and, accordingly, the multiplier that was
applied to Mr Stephens’ financial component was 120% as per the terms of the Restricted Share Rights Plan. The Board assessed Mr Stephens
as having achieved 100% performance against his non-financial goals (which related to certain strategic initiatives, the company’s business plan,
people, stakeholder relations, health and safety and risk management), however the multiplier applied to Mr Stephens’ non-financial/personal
component was reduced to 50% as per the terms of the Restricted Share Rights Plan.
Consequently, the STI outcome for Mr Stephens for the year ended 30 June 2018 was $1,015,000 (capped at 70% of his base salary), which
resulted in 251,238 restricted shares rights being granted to Mr Stephens in September 2018 under the Restricted Share Rights Plan.
Financial Component
Base Salary
$1,450,000
X
At-risk %
70%
Non-Financial Component
Base Salary
$1,450,000
X
At-risk %
70%
Conversion to Restricted Share Rights
STI Outcome
$1,004,850
X
150%*
X
X
=
Financial
Component %
70%
Non-Financial
Component %
30%
X
X
Financial
Multiplier
120%
Performance
Multiplier
50%
=
=
Financial
Outcome
$852,600
Non-Financial
Outcome
$152,250
STI Outcome
$1,004,850
Final
STI Outcome
$1,507,275
Capped
STI Outcome
$1,015,000
251,238
Restricted
Share Rights
*To compensate for the two-year deferral in vesting of restricted share rights under the Restricted Share Rights Plan.
LTI Outcome
Mr Stephens received an allocation of 320,883 shares in the company equal to $1,250,000 under the SKYCITY Senior Executive LTI Plan in
August 2017. Details of the SKYCITY Senior Executive LTI Plan are included on page 74 of this annual report.
Employment Agreement
Mr Stephens’ employment agreement (a copy of which is available on the company’s website at www.skycityentertainmentgroup.com) is dated
4 November 2016 and reflects standard conditions that are appropriate for a senior executive of a listed Australasian company. Mr Stephens’
employment agreement may be terminated by:
• either Mr Stephens or the company by giving six months' notice in writing;
•
•
the company without notice in the case of serious misconduct, serious breach (including substantial non-performance) or other cause
justifying summary dismissal; or
the company immediately if the SKYCITY Board forms the view that substantial incompatibility and/or irreconcilable differences have
developed with Mr Stephens or the Board otherwise wishes to terminate his employment when he is not at fault (including a redundancy
situation or medical incapacity).
All entitlements payable to Mr Stephens on termination of his employment are outlined in his employment agreement (a copy of which is available
on the company’s website at www.skycityentertainmentgroup.com).
72
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018DIRECTOR AND EMPLOYEE REMUNERATION Other Group Executives’ Remuneration
The following information relates to the remuneration earned by the group executives (both current and former) for the financial year ended
30 June 2018, but excluding the Chief Executive Officer whose remuneration is detailed separately on pages 71 and 72.
The total remuneration earned by the group executives for the financial year ended 30 June 2018 was as follows:
FIXED ANNUAL REMUNERATION
PAY FOR PERFORMANCE
BASE SALARY
KIWISAVER
OTHER
BENEFITS
SUB TOTAL
STI
OUTCOME
LTI
GRANT
SUB TOTAL
NON-RECURRING
PAYMENTS
TOTAL
REMUNERATION
$4,385,097
$183,348(1)
$35,664
$4,604,109 $2,002,012(2) $1,246,560(3)
$3,248,572 $1,471,096(4)
$9,323,778
(1) Includes KiwiSaver payments paid on applicable non-recurring payments.
(2) Includes cash and the value of 457,800 restricted share rights granted to group executives under the Restricted Share Rights Plan in September 2018.
(3) Calculated on the basis of 320,000 SKYCITY shares allocated to group executives under the SKYCITY Senior Executive LTI Plan in August 2017.
(4) Non-recurring payments include payments for retention (for the purpose of ensuring continuity during the period following the resignation of the former Chief Executive Officer and prior to the
appointment of Mr Stephens), redundancy and sign on (for the purpose of buying out existing entitlements with a former employer).
Fixed Annual Remuneration
Fixed annual remuneration for each group executive consisted of a base salary (delivered in cash), KiwiSaver contributions and health care benefits.
In determining base salaries for the group executives, the Board refers to external market data, including comparable positions in other listed New
Zealand companies and companies within the casino industry.
STI Outcome
Each group executive’s at-risk STI component for the 2018 financial year was set at 40% of their base salary, contingent on individual achievement
of specific financial and non-financial goals. Eligibility for their STI component was based on improvement on the previous financial year's normalised
Group NPAT performance. 70% of each group executive’s STI was measured against the company’s achievement of normalised Group NPAT and
the remaining 30% was based on a small number of agreed key non-financial goals.
The company’s FY18 financial performance exceeded the budgeted normalised Group NPAT target and, accordingly, the multiplier that was
applied to each group executive’s financial component was 120% as per the terms of the Restricted Share Rights Plan. Based on the Board’s
assessment of the group executives’ performance against their non-financial goals (relating to certain strategic initiatives, the company’s business
plan, people, stakeholder relations, health and safety and risk management), the group executives combined received 75% of their non-financial
component.
The combined STI outcome for the group executives for the year ended 30 June 2018 was $2,002,012, which includes a cash payment to a former
group executive and the value of the 457,800 restricted shares rights granted to group executives in September 2018 under the Restricted Share
Rights Plan.
LTI Outcome
The combined LTI outcome for the group executives for the year ended 30 June 2018 was $1,246,560, which represents the 320,000 SKYCITY
shares allocated to the group executives under the SKYCITY Senior Executive LTI Plan in August 2017. Details of the SKYCITY Senior Executive LTI
Plan are included on page 74 of this annual report.
73
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMDIRECTOR AND EMPLOYEE REMUNERATION REMUNERATION OF SKYCITY EMPLOYEES
All salaried roles within SKYCITY are 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 several sources to determine remuneration ranges by job
band or level to ensure competitiveness at both base salary and total
remuneration levels.
Individual remuneration is set within the appropriate range considering
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.
SKYCITY Senior Executive LTI Plan
Under the SKYCITY Senior Executive LTI Plan introduced in 2009,
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 NZX 50 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’ median 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 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.
74
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. In the event a takeover
offer for the acquisition of SKYCITY’s ordinary shares is formally made,
or an amalgamation or scheme of arrangement involving SKYCITY’s
ordinary shares is formally proposed, which will result in a change in
control of SKYCITY if it is successful:
•
•
the SKYCITY Board will determine a date (TO Calculation Date)
prior to the final date on which holders of SKYCITY’s ordinary
shares may participate in the takeover offer, amalgamation or
scheme of arrangement (as applicable); and
the TSR achieved by SKYCITY, and the members of the
comparator group and the index group will be calculated, and the
change in the TSR index will be determined, for the period from
the date the shares were issued to the TO Calculation Date,
provided that the SKYCITY Board may determine that the performance
calculation referred to above will not occur if it considers participants
will have the opportunity to participate in the takeover offer,
amalgamation or scheme of arrangement on terms that are fair and
reasonable as between participants and holders of other classes of
SKYCITY securities or there are no reasonable grounds to believe
that the takeover offer, amalgamation or scheme of arrangement will
be successful.
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.
During the financial year ended 30 June 2018, the following vesting
calculations were completed:
• August 2013 LTI: The third (and final) test was completed, with no
further shares vesting to executives. To date, 25% of shares have
vested to executives in respect of the 2013 allocation. All unvested
shares were accordingly forfeited in accordance with the terms of
the SKYCITY Senior Executive LTI Plan; and
• August 2014 LTI: The first and second tests were completed.
To date, no shares have vested to executives in respect of the
2014 allocation. The third (and final) test will be completed during
September 2018 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.
As at 1 September 2018, a total of 2,245,883 shares were issued
under the SKYCITY Senior Executive LTI Plan and held by Public Trust
on behalf of 22 participants. The shares vest in a participant only when
performance hurdles set by the Board of directors are met.
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018DIRECTOR AND EMPLOYEE REMUNERATION From time to time as directed by SKYCITY, the Public Trust acquires
shares in the company on-market for the purposes of the company’s
long term incentive employee plans, including the SKYCITY Senior
Executive LTI Plan. As at 1 September 2018, the Public Trust held a
total of 5,515,841 shares - 2,679,918 of which were allocated and held
on behalf of eligible participants and 2,835,923 of which were
unallocated and held on behalf of future participants.
SKYCITY Executive Cash Award Plan
In February 2016, the company established the SKYCITY Executive
Cash Award Plan in Australia. The objectives of the Plan are to promote
the retention of the company’s most senior executives in Australia
and drive longer term performance and alignment of incentives of
participants with the interests of the company’s shareholders.
Grants made under the Plan support these objectives by conferring on
selected senior executives the right to receive a cash amount (based on
the market value of shares in SKYCITY) on the achievement of
performance hurdles, which mirror the performance hurdles for
the SKYCITY Senior Executive LTI Plan.
As at 1 September 2018, there were three participants in the SKYCITY
Executive Cash Award Plan.
Other Plans for Salaried Employees
To drive outstanding company and individual performance, during the
year under review, SKYCITY operated 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,
70% of their STI target was linked to the achievement of minimum
financial targets with the remaining percentage dependent on the
achievement of individual, role-specific non-financial targets.
Payments under the Salaried STI Plan had a performance gateway
based on company and business unit financial targets and increased
according to the degree by which the company performed relative to
these financial targets.
As outlined on page 70, the most senior eligible salaried employees
received their STI in restricted share rights under the Restricted Share
Rights Plan in September 2018. The remaining eligible salaried
employees received their STI in cash in August 2018 following
completion of the external audit of the company’s year-end results.
For the financial year ended 30 June 2018, 452 salaried staff (excluding
the Chief Executive Officer and other group executives) participated in
the Salaried STI Plan. Based on achievement of individual and financial
targets, 398 staff received an average STI outcome of 14% of their
fixed salary.
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.
In total, in respect of the financial year ended 30 June 2018, 582
SKYCITY salaried personnel (excluding the Chief Executive Officer and
other group executives) were paid or granted incentives totalling
approximately $9.9 million under the Individual Bonus Plan and Salaried
STI Plan.
New Performance Incentive Arrangements for FY19
As part of a review of the company’s variable remuneration structure,
the Board approved new incentive arrangements during the past
financial year for the Chief Executive Officer, other group executives
and senior managers for the financial year beginning 1 July 2018.
The new incentive arrangements recognise and reward short and longer
term performance by providing participants an opportunity to be
further aligned with shareholders’ interests by earning, subject to the
company achieving its financial performance gateway, an incentive
award which is delivered in cash and deferred equity awards (in the
form of restricted share rights in the company).
(i) Performance Incentive Plan
The Performance Incentive Plan (PIP) provides selected employees the
opportunity to earn a cash payment under a STI scheme and acquire
restricted share rights under a deferred STI scheme. Each restricted
share right granted under the PIP is a right to receive one ordinary
share in the company, which only vests if the relevant employee satisfies
the specified vesting criteria.
For the 2019 financial year, 437 employees were invited in September
2018 to participate in the PIP for the opportunity to earn a cash
payment under the STI scheme – 111 of whom also have the
opportunity to acquire restricted share rights under the deferred STI
scheme (an additional 81 employees relative to participation in the
SKYCITY Senior Executive LTI Plan).
STI Scheme Component of PIP
In respect of the financial year beginning 1 July 2018, 70% of each
participant’s STI target award will be determined based on the
company’s financial performance and the remaining 30% will be
determined based on a small number of personal goals which are
aligned to the strategic priorities of the company.
STI awards will be delivered in cash at the end of the financial year
following the completion of the external audit of the company’s year
end results, where the maximum award under the STI is 150% of the
target award.
Deferred STI Scheme Component of PIP
The deferred STI scheme under the PIP offers participants, subject to
the relevant STI performance conditions being met, the opportunity to
acquire restricted share rights of an amount equivalent to between 10%
and 50% of their base salary. Restricted share rights (if any) issued to a
participant on a STI cash payment date (Declaration Date) will only vest
if that participant remains an employee up and until:
•
•
the first anniversary of the Declaration Date in respect of 50% of
the restricted share rights; and
the second anniversary of the Declaration Date in respect of the
remaining 50% of the restricted share rights.
75
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMDIRECTOR AND EMPLOYEE REMUNERATIONDIRECTOR AND EMPLOYEE REMUNERATION However, if a participant’s deferred STI entitlement in any financial year
is to restricted share rights having a value of $10,000 or less (calculated
using the volume-weighted average sale price of SKYCITY shares used
to determine the number of restricted share rights to be issued to the
participant), the restricted share rights will not be split out equally into
two separate tranches, but will instead comprise one tranche and
(subject to the vesting criteria being satisfied) vest to the participant
on the first anniversary of the Declaration Date.
Upon vesting, a participant will be allocated one ordinary share in
the company for each restricted share right that vests as soon as
practicable after the relevant anniversary of the Declaration Date.
Subject to complying with the Company’s Securities Trading Policy
and Code of Business Practice, participants are free to sell, transfer or
otherwise deal with shares issued to them under the PIP (subject to
minimum shareholding requirements for the Chief Executive Officer
and other group executives).
The intention of the deferred STI component under the PIP is to act
both as a retention and an engagement tool. The maximum award under
the deferred STI scheme is 150% of the target award.
Any unvested restricted share rights will be forfeited if a participant
ceases to be employed by SKYCITY (or a company in the SKYCITY
Group) before the relevant Declaration Date, although the Board has
discretion to determine otherwise such as where a participant ceases to
be an employee due to injury, permanent disability, ill health or
redundancy or dies. In the case of a group executive however, if he/she
ceases employment for any reason (other than as a result of the
termination of their employment by SKYCITY for cause, including for
serious misconduct) prior to vesting of any restricted share rights, and
they have been employed by SKYCITY for at least three years as at the
date of cessation of his/her employment, then he/she will continue to
be eligible to have shares transferred to him/her on the first and second
anniversaries (as applicable) of the Declaration Date as if their
employment had not ceased, unless the Board determines otherwise.
As a rule, a group executive will not be eligible to the extent they are
terminated for cause, breach the terms of their employment agreement
or for underperformance.
In the event that a genuine error is made by, or on behalf of, the Board
or the company in determining any entitlement under the PIP, including
where the company’s financial statements are subsequently required to
be restated, the Board may seek to recover from a participant the value
of any benefits erroneously awarded to a participant under the PIP.
Restricted share rights issued under the PIP may not be transferred,
assigned or disposed of and participants may not create any interest in
favour of any third party over the restricted share rights (except with
Board approval).
(ii) Long Term Incentive Plan
The new 2018 SKYCITY Executive Long Term Incentive Plan is
substantially similar to the earlier SKYCITY Senior Executive LTI Plan
(in relation to LTI shares issued in 2014 and thereafter) except for the
following material enhancements to align remuneration with the creation
of shareholder value over the long term:
• 50% of the shares are allocated to an absolute total shareholder
return (TSR) tranche;
•
the remaining 50% of the shares are allocated equally to each of an
NZX comparator group tranche, an ASX comparator group tranche
and a competitor comparator group tranche; and
• performance is assessed three years after the issue of the shares,
with no retesting dates in the event the performance hurdles are
not satisfied as at that date.
In order to determine whether any shares will vest in a participant
following the three-year restrictive period for those shares, each
tranche is measured against the performance hurdle for that tranche on
the performance testing date for those shares, where the performance
hurdle for each of the tranches is:
•
•
•
•
for the absolute TSR tranche, a comparison of SKYCITY’s TSR over
the restrictive period against the cost of equity for the SKYCITY
Group over the restrictive period as determined by the Board;
for the NZX comparator group tranche, a comparison of
SKYCITY’s TSR over the restrictive period against the TSR of each
of the constituent entities of the NZX 50 index (as at the grant
date, other than SKYCITY) over the same period;
for the ASX comparator group tranche, a comparison of SKYCITY’s
TSR over the restrictive period against the TSR of each of the
constituent entities of the ASX 200 index (as at the grant date,
other than SKYCITY) over the same period; and
for the competitor comparator group tranche, a comparison of
SKYCITY’s TSR over the restrictive period against the TSR of each
of Crown Resorts Limited and The Star Entertainment Group
Limited over the same period.
The Chief Executive Officer and other group executives were invited to
participate in the 2018 SKYCITY Executive Long Term Incentive Plan
(2018 LTI Plan) for the 2019 financial year. Consequently, 246,726
SKYCITY shares were acquired by the Chief Executive Officer in
August 2018 under the 2018 LTI Plan by way of an interest-free loan by
a subsidiary of the company, equivalent to 70% of his base salary for the
2019 financial year. A total of 187,309 SKYCITY shares were similarly
acquired by the other group executives in August 2018.
As at 1 September 2018, a total of 434,035 shares were issued under
the 2018 LTI Plan and held by Public Trust on behalf of 8 participants.
The shares vest in a participant only when performance hurdles set by
the Board of directors are met.
76
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018DIRECTOR AND EMPLOYEE REMUNERATION The maximum award under the 2018 LTI Plan is 100% of the
relevant grant allocation.
The transfer of shares to participants at the end of the three-year
restrictive period is dependent on satisfaction of the performance
conditions and continued employment with SKYCITY. If a
participant resigns or is dismissed for misconduct or poor
performance before the end of the restrictive period, any unvested
shares will be forfeited, unless SKYCITY terminates the
employment of a group executive without cause, a group executive
ceases employment as a result of a material change to the terms
and conditions of his/her employment which results in a diminution
of that group executive’s role, status and responsibility in the
period of 12 months immediately preceding a performance testing
date or a group executive dies or ceases to be an employee due to
medical incapacity or permanent disability.
However, to support long term decision-making, execution of
strategy and to encourage strong succession planning by the Chief
Executive Officer, the Chief Executive Officer will continue to be
eligible to have shares transferred to him if he ceases employment
with SKYCITY for any reason (other than as a result of the
termination of employment by SKYCITY for cause, including for
serious misconduct) during the restrictive period and the
performance conditions are satisfied – in this situation, the
performance conditions will be tested on the performance testing
date as if his employment had not ceased.
As in the case of the PIP, in the event that a genuine error is made
by, or on behalf of, the Board or the company in determining a
participant’s entitlement under the 2018 LTI Plan, including where
the company’s or a third party’s financial statements are
subsequently required to be restated, the Board may seek to
recover from a participant the value of any shares erroneously
determined to have vested to that participant.
Until the restrictive period for the relevant shares has ended and
the relevant loan on those shares is repaid, a participant may not
sell those shares or use them as security for another loan.
The PIP and 2018 LTI Plan design was reviewed by Ernst & Young,
who confirmed the new plans aligned with SKYCITY’s business and
remuneration strategic goals.
To further align the group executives’ interests with those of
shareholders, each group executive is encouraged, over a period of
five years, to build up and retain shares in the company (acquired
under the PIP and/or 2018 LTI Share Plan) equivalent to at least
one year of their base salary.
The Chief Executive Officer’s employment agreement has been
amended to reflect his participation in the PIP and 2018 LTI Plan
and is available on the company’s website at www.
skycityentertainmentgroup.com.
FIXED REMUNERATION
AT-RISK REMUNERATION
GROUP EXECUTIVE REMUNERATION STRUCTURE
Fixed Annual Remuneration
Base salary, medical insurance and KiwiSaver
STI and Deferred STI under PIP
Reward for strong personal and business
financial performance during the performance
period
VALUE DETERMINED BY
2018 LTI Plan
Reward for longer term company performance
Individual skills, performance, experience and
contribution to the Group's performance
Consideration is also given to both internal
and external relativities to ensure that the level
of fixed remuneration is both competitive yet
appropriate for the organisation
Achievement of both financial (70%) and
non-financial (30%) performance based on:
(i) Group targets set by the Board and/or
business unit targets set by the Chief
Executive Officer; and
(ii) individual targets set by the Chief
Executive Officer
Cash, provision of medical insurance and
KiwiSaver contributions
DELIVERED AS
STI - cash
Deferred STI - restricted share rights, which
(subject to continued employment) vest in two
tranches - 12 and 24 months after STI cash
payment date
AS CONSIDERATION FOR
Tranche 1: Absolute TSR measure comparing
SKYCITY’s performance relative to cost of
equity
Tranche 2: Relative TSR measure comparing
SKYCITY’s performance against three equally
weighted tranches - NZX 50 index, ASX 200
index and Crown/Star
Shares, which (subject to continued
employment) vest 36 months after acquisition
To provide competitive remuneration in
recognition of the day-to-day accountabilities
of the position
To recognise and reward individual
performance and support the delivery of
annual targets of strategic objectives
The deferral into equity supports ongoing
performance and aligns the interests of
executives and shareholders
To reward performance over a multi-year
timeframe and align executive interests with
shareholders, ensuring executives act/behave
and control/manage in a way that adds
shareholder value in the longer term
77
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMDIRECTOR AND EMPLOYEE REMUNERATION EMPLOYEES ELIGIBLE TO PARTICIPATE IN THE PIP AND 2018 LTI PLAN
STI Scheme under PIP
Chief Executive Officer, other group executives, senior managers and managers
Deferred STI Scheme under PIP
Chief Executive Officer, other group executives and senior managers
LTI Plan
Chief Executive Officer and other group executives
DELIVERY TIMEFRAME OF THE PIP AND 2018 LTI PLAN
PERFORMANCE YEAR
BASE SALARY
STI CASH1
DEFERRED STI (EQUITY)
LTI (EQUITY)
FY2019
FY2020
FY2021
FY2022
FY2023
FY2024
FY2025
FY19 Base
FY20 Base
FY21 Base
FY22 Base
FY23 Base
FY24 Base
FY25 Base
FY19 STI Cash
FY20 STI Cash
FY19 Tranche 1
FY21 STI Cash
FY20 Tranche 1
FY19 Tranche 2
FY22 STI Cash
FY21 Tranche 1
FY20 Tranche 2
FY19 LTI Vest
FY23 STI Cash
FY22 Tranche 1
FY21 Tranche 2
FY20 LTI Vest
FY24 STI Cash
FY23 Tranche 1
FY22 Tranche 2
FY21 LTI Vest
FY25 STI Cash
FY24 Tranche 1
FY23 Tranche 2
FY22 LTI Vest
(1) STI cash payments are paid shortly after the end of the relevant financial year following completion of the external audit of the company’s year-end results.
REMUNERATION MIX FOR GROUP EXECUTIVES UNDER THE PIP AND 2018 LTI PLAN
The graph below shows the changes to the remuneration mix for the group executives at target. Under the new incentive arrangements, group
executives will be remunerated with a greater equity component than that which was delivered via the previous remuneration structure.
The new incentive arrangements introduce a change to the maximum outcomes achievable. Under the previous STI arrangements:
•
•
the 150% maximum multiplier for the financial component is reached at 105% of budgeted performance – however, under the PIP, the
multiplier for the financial component (70% of the overall calculation) will remain at 150%, but the maximum will now only be reached at
or greater than 110% of budgeted performance; and
the non-financial component (30% of the overall calculation) had a maximum multiplier of 125% - however, under the PIP, the non-financial
component will have a maximum multiplier of 150% for exceptional levels of personal performance.
REMUNERATION MIX AT TARGET
Chief Executive Officer - Former Scheme at Target
Chief Executive Officer - New Scheme at Target
Other Group Executives - Former Scheme at Target
Other Group Executives - New Scheme at Target
39%
39%
55%
57%
27%
34%
15%
19%
22%
17%
27%
23%
14% 12%
0%
25%
50%
75%
100%
REMUNERATION MIX AT TARGET - CASH VS EQUITY
Chief Executive Officer - Former Scheme
Chief Executive Officer - New Scheme
Other Group Executives - Former Scheme
Other Group Executives - New Scheme
66%
54%
77%
75%
34%
46%
23%
25%
0%
25%
50%
75%
100%
Base Salary
(Cash)
STI (Cash)
DSTI (Equity)
LTI (Equity)
Cash
Equity
78
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018DIRECTOR AND EMPLOYEE REMUNERATION EMPLOYEE REMUNERATION
The numbers of employees or former employees of the company and its subsidiaries, not being directors of the company, who received
remuneration and other 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 2018, are listed below. Remuneration includes salary, short term cash bonuses and,
where applicable, health insurance premiums, sign on payments and the value of share rights and shares expensed (including PAYE and
PAYG on vested share rights but excluding accrued PAYE and PAYG on unvested share rights) during the financial year ended 30 June
2018. 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
NUMBER OF EMPLOYEES
$100,000–$109,999
$110,000–$119,999
$120,000–$129,999
$130,000–$139,999
$140,000–$149,999
$150,000–$159,999
$160,000–$169,999
$170,000–$179,999
$180,000–$189,999
$190,000–$199,999
$200,000–$209,999
$210,000–$219,999
$220,000–$229,999
$230,000–$239,999
$240,000–$249,999
$250,000–$259,999
$260,000–$269,999
$280,000–$289,999
$300,000–$309,000
$320,000–$329,999
$330,000–$339,999
$340,000–$349,999
$350,000–$359,999
$370,000–$379,999
$380,000–$389,999
$420,000–$429,999
$460,000–$469,999
$480,000–$489,999
$490,000–$499,999
$500,000–$509,999
$510,000–$519,999
$550,000–$559,999
$580,000–$589,999
$620,000–$629,999
$810,000–$819,999
$850,000–$859,999
$890,000–$899,999
$1,050,000–$1,059,999
$1,550,000–$1,559,999
$2,220,000–$2,229,999
Total
76
48
33
34
17
16
10
13
9
11
5
4
7
3
3
4
1
2
2
2
1
1
1
1
3
1
1
1
1
2
1
3
1
2
1
1
1
1
1
1
326
79
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMDIRECTOR AND EMPLOYEE REMUNERATION TWENTY LARGEST REGISTERED SHAREHOLDERS AS AT 1 SEPTEMBER 2018
NUMBER OF SHARES
% OF SHARES
JP Morgan Nominees Australia Limited
JPMorgan Chase Bank NA NZ Branch - Segregated Clients Acct - NZCSD
1. HSBC Custody Nominees (Australia) Limited
2. HSBC Nominees (New Zealand) Limited - NZCSD
3. HSBC Nominees (New Zealand) Limited A/C State Street - NZCSD
4.
5. Citibank Nominees (New Zealand) Limited - NZCSD
6. Citicorp Nominees Pty Limited
7. Accident Compensation Corporation - NZCSD
8.
9. BNP Paribas Noms Pty Limited
10. JPMorgan Nominees Australia Limited
11. BNP Paribas Nominees (NZ) Limited - NZCSD
12. ANZ Custodial Services New Zealand Limited - NZCSD
13. National Nominees Limited
14. Citicorp Nominees Pty Limited
15. ANZ Wholesale Australasian Share Fund - NZCSD
16. UBS Nominees Pty Limited
17. New Zealand Depository Nominee Limited
18. HSBC Nominees A/C NZ Superannuation Fund Nominees Limited - NZCSD
19. BNP Paribas Nominees (NZ) Limited - NZCSD
20. BNP Paribas Nominees Pty Limited
Total
126,399,532
72,534,655
57,781,409
57,207,677
39,946,581
23,475,006
22,322,158
20,774,867
17,238,972
15,291,185
12,648,774
12,116,288
9,904,168
9,314,839
7,287,952
5,866,251
5,657,127
5,375,676
5,222,610
5,191,192
531,556,919
18.58%
10.66%
8.49%
8.41%
5.87%
3.45%
3.28%
3.05%
2.53%
2.25%
1.86%
1.78%
1.46%
1.37%
1.07%
0.86%
0.83%
0.79%
0.77%
0.76%
78.12%
Total ordinary shares on issue as at 1 September 2018 were 680,342,108 of which 5,515,841 were held in aggregate by Public Trust on behalf
of eligible and future participants pursuant to the SKYCITY Senior Executive Long Term Incentive Plan and 2018 SKYCITY Executive Long
Term Incentive Plan.
The ordinary shares are quoted on both the NZX Main Board and ASX under the ticker code ‘SKC’.
No shares were held by the company directly as treasury stock.
DISTRIBUTION OF ORDINARY SHARES AND REGISTERED SHAREHOLDINGS AS AT 1 SEPTEMBER 2018
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
>100,000
Total
NUMBER OF SHAREHOLDERS
NUMBER OF SHARES
3,841
6,564
2,511
2,298
132
15,346
1,432,447
17,959,585
17,652,047
53,655,844
589,642,185
680,342,108
As at 1 September 2018, there were 1,158 shareholders (with a total of 58,887 shares) holding less than a marketable parcel of shares under
the ASX Listing Rules, based on the closing share price of A$3.72. The ASX Listing Rules define a marketable parcel of shares as a parcel of
shares of not less than A$500.
80
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018SHAREHOLDER AND BONDHOLDER INFORMATION
SUBSTANTIAL SECURITY HOLDERS
The following persons had given notice as at 30 June 2018, 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. The total number of listed voting securities of SKYCITY Entertainment Group Limited as at 30 June 2018 was 680,342,108.
Substantial security holder notices received since 30 June 2018 can be viewed at www.nzx.com/companies/SKC/announcements.
Perpetual Limited
Commonwealth Bank of Australia
Lazard Asset Management Pacific Co
Investors Mutual Limited
BlackRock, Inc
Sumitomo Mitsui Trust Holdings, Inc
DATE OF
SUBSTANTIAL
SECURITY
NOTICE
RELEVANT
INTEREST IN
NUMBER OF
SHARES
% OF SHARES
HELD AT
DATE OF
NOTICE
30 June 2017
1 September 2017
12 September 2017
5 December 2017
20 March 2018
11 May 2018
46,999,542
47,028,632
50,152,982
48,485,763
41,695,222
34,738,762
7.20%
7.047%
7.515%
7.43%
6.129%
5.15%
BONDS
On 28 September 2015, the company issued 125 million unsubordinated, unsecured, redeemable, fixed rate, seven year bonds at an issue
price of $1 per bond. The bonds pay a fixed rate of interest of 4.65% per annum until the maturity date and are quoted on the NZX Debt
Market under the ticker code ‘SKC040’.
TWENTY LARGEST REGISTERED BONDHOLDERS AS AT 1 SEPTEMBER 2018
NUMBER OF BONDS
% OF BONDS
Investment Custodial Services Limited
1.
2. FNZ Custodians Limited
3. Forsyth Barr Custodians Limited
4. Custodial Services Limited
5. ANZ Custodial Services New Zealand Limited - NZCSD
6. Custodial Services Limited
7. Custodial Services Limited
8. Custodial Services Limited
9. Tea Custodians Limited Client Property Trust Account - NZCSD
10. Lynette Therese Erceg, Darryl Edward Gregory & Catherine Agnes Quinn
11. Tappenden Holdings Limited
12. Citibank Nominees (New Zealand) Limited - NZCSD
13. Custodial Services Limited
14. Custodial Services Limited
15. BNP Paribas Nominees (NZ) Limited - NZCSD
16. Forsyth Barr Custodians Limited
17. JBWere (NZ) Nominees Limited
18. Investment Custodial Services Limited
19. BNP Paribas Nominees (NZ) Limited - NZCSD
20. BGS Trustee Limited
Total
13,778,000
13,640,000
11,682,000
10,486,000
8,111,000
5,486,000
5,475,000
2,809,000
2,100,000
2,000,000
2,000,000
1,800,000
1,792,000
1,775,000
1,275,000
1,118,000
963,000
800,000
755,000
750,000
88,595,000
11.02%
10.91%
9.35%
8.39%
6.49%
4.39%
4.38%
2.25%
1.68%
1.60%
1.60%
1.44%
1.43%
1.42%
1.02%
0.89%
0.77%
0.64%
0.60%
0.60%
70.87%
DISTRIBUTION OF BONDS AND REGISTERED HOLDINGS AS AT 1 SEPTEMBER 2018
1,001–5,000
5,001–10,000
10,001–100,000
>100,000
Total
NUMBER OF BONDHOLDERS
NUMBER OF BONDS
79
203
685
67
395,000
1,961,000
24,033,000
98,611,000
1,034
125,000,000
81
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMSHAREHOLDER AND BONDHOLDER INFORMATION
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 2018 (notices given by directors during the financial year
ended 30 June 2018 are marked with an asterisk):
Rob Campbell
King Tide Asset Management Limited
Precinct Properties New Zealand Limited
RC Custodian Limited
Summerset Group Holdings Limited
Tourism Holdings Limited
Tutanekai Investments Limited
WEL Networks Limited
Bruce Carter
ASC Pty Limited
Aventus Capital Limited
Badge Management Pty Limited
Bank of Queensland Limited
Cobbadah Pty Limited
Eudunda Farmers Limited
Ferrier Hodgson
Genesee & Wyoming Australia Pty Limited
Genesee and Wyoming Inc (US)
Brent Harman
Harman Investments Limited
Director and
Shareholder
Director and
Shareholder
Director
Chair and
Shareholder
Chair and
Shareholder
Director and
Shareholder
Chair
Chair
Chair
Director
Director
Director
Director
Consultant
Director
Director*
Sue Suckling
ECL Group Limited
Insurance & Financial Services
Ombudsman Scheme Commission
Jacobsen Holdings Limited
Jade Software Corporation Limited
Lincoln Hub Establishment Board
New Zealand Qualifications Authority
Sue Suckling Holdings Limited
Richard Didsbury
Brick Bay Wines Limited
Brick Bay Development Trust
Brick Bay Investments Trust
Brick Bay Trustee Limited
Kiwi Property Group Limited
NX2 GP Limited
NX2 Hold GP Limited
Whisper Cove Heights Limited
Jennifer Owen
Aspire Child Care (Mascot) Pty Ltd
Owen Gaming Research
Director and
Shareholder
Murray Jordan
Chorus Limited
Metcash Limited
Real Clarity Limited
Starship Foundation
Stevenson Group Limited
Chair
Chair*
Chair
Chair
Chair
Chair
Managing
Director
Director
Trustee
Trustee
Director
Director
Chair
Chair
Director
Director
Principal
Director
Director
Director and
Shareholder
Trustee
Director
The following details included in the Interests Register as at 30 June 2017, or entered during the financial year ended 30 June 2018, have been
removed during the financial year ended 30 June 2018:
• Rob Campbell is no longer a director of Committee for Auckland Limited;
• Bruce Carter is no longer a director of certain subsidiaries of Bank of Queensland Limited;
• Sue Suckling is no longer the chair of Callaghan Innovation Research Limited; and
• Richard Didsbury is no longer a director of Auckland International Airport Limited.
82
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018DIRECTORS' DISCLOSURES
DIRECTORS’ AND SENIOR MANAGERS’ 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 2018:
Rob Campbell
Sue Suckling
Richard Didsbury
Jennifer Owen
Murray Jordan
Chris Moller(6)
DATE OF
ACQUISITION/
DISPOSAL
DURING PERIOD
10 August 2017
15 September 2017
16 March 2018
15 September 2017
16 March 2018
15 September 2017
16 March 2018
15 September 2017
8 September 2017
15 September 2017
16 March 2018
15 September 2017
CONSIDERATION
$3.95 per share
$3.6782 per share(2)
$3.7726 per share(2)
$3.6782 per share(2)
$3.7726 per share(2)
$3.6782 per share(2)
$3.7726 per share(2)
A$3.4200 per share
$3.7829 per share
$3.6782 per share(2)
$3.7726 per share(2)
$3.6782 per share(2)
SHARES
ACQUIRED/
(DISPOSED)
25,000(1)
1,265(1)
1,265(1)
940(3)
940(3)
907
907
20,000(4)
8,000(5)
325(5)
522(5)
1,896
(1) Shares held by FNZ Custodians Limited on behalf of Tutanekai Investments Limited.
(2) Shares issued under the SKYCITY Dividend Reinvestment Plan.
(3) Shares held by the trustees of The Sue Suckling Family Trust.
(4) Shares held by the trustees of the Owen & Paull Retirement Fund.
(5) Shares held by the trustees of Endeavour Trust.
(6) Chris Moller retired as a director effective 31 December 2017.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARES
Directors disclosed the following relevant interests in SKYCITY shares as at 30 June 2018:
Rob Campbell
Bruce Carter
Brent Harman
Sue Suckling
Richard Didsbury
Jennifer Owen
Murray Jordan
(1) Shares held by FNZ Custodians Limited on behalf of Tutanekai Investments 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 the trustees of The Sue Suckling Family Trust.
(5) Shares held by the trustees of the Owen & Paull Retirement Fund.
(6) Shares held by the trustees of Endeavour Trust.
SHARES
BENEFICIALLY HELD
52,530(1)
64,618(2)
49,808(3)
39,051(4)
37,660
35,000(5)
21,700(6)
83
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMDIRECTORS' DISCLOSURES
STOCK EXCHANGE LISTINGS
Overseas Subsidiaries
SKYCITY Entertainment Group Limited is a listed issuer with ordinary
shares quoted on both the NZX Main Board and ASX (in each case,
under the ticker code ‘SKC’) and bonds quoted on the NZX Debt
Market (under the ticker code ‘SKC040’).
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 85 of this annual report.
Directors
Graeme Stephens, Jo Wong
Companies
Horizon Tourism Limited
SKYCITY Investment Holdings Limited
Directors
Companies
Graeme Stephens, Jo Wong, Bruce Carter,
David Christian
SKYCITY Adelaide Pty Limited
SKYCITY Australia Finance Pty Limited
SKYCITY Australia Pty Limited
SKYCITY Darwin Pty Limited
SKYCITY Treasury Australia Pty Limited
SKYCITY is listed as a ‘Foreign Exempt Listing’ on the ASX.
SKYCITY ENTERTAINMENT GROUP LIMITED
The following persons held office as directors of SKYCITY
Entertainment Group Limited as at 30 June 2018:
Rob Campbell (Chairman) Bruce Carter (Deputy Chairman)
Brent Harman
Richard Didsbury
Murray Jordan
Sue Suckling
Jennifer Owen
SUBSIDIARY COMPANIES
Subsidiary Company Directorships
Rob Hamilton and Peter Treacy ceased to be directors of Horizon
Tourism Limited and SKYCITY Investment Holdings Limited on
31 August 2017.
Non-wholly Owned Company Directorships
As at 30 June 2018, SKYCITY also had an interest in, and was
represented by a SKYCITY representative on the boards of, the
New Zealand companies listed below:
Representative Stacey Dutton
Companies
Lets Play Live Media Limited
TNZ Esports Limited
The following persons held office as directors of subsidiaries of
SKYCITY Entertainment Group Limited as at 30 June 2018:
Sonya Crosby ceased to be a director of Lets Play Live Media Limited
and TNZ Esports Limited on 26 January 2018.
New Zealand Subsidiaries
Directors
Graeme Stephens, Jo Wong
Companies
New Zealand International Convention Centre
Limited
Otago Casinos Limited
Queenstown Casinos Limited
SKYCITY Action Management Limited
SKYCITY Auckland Holdings Limited
SKYCITY Auckland Limited
SKYCITY Casino Management Limited
SKYCITY Hamilton Limited
SKYCITY International Holdings Limited
SKYCITY Investments Australia Limited
SKYCITY Investments Queenstown Limited
SKYCITY Management Limited
SKYCITY Wellington Limited
Sky Tower 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 or 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
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.
84
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018COMPANY DISCLOSURES
VOTING RIGHTS ATTACHED TO SECURITIES
Each share gives the holder a right to attend and vote at a meeting of
shareholders. Holders have the right to cast one vote per share on a
poll of any resolution put to the shareholders.
There are no voting rights attached to SKYCITY’s debt securities.
However, bond holders are welcome to attend the annual meeting
of shareholders.
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);
• Casino Act 1997 (South Australia);
• Gaming Control Act (Northern Territory); and
•
legislation providing for the establishment, operation and
regulation of casinos in any other jurisdiction in which SKYCITY or
any of its subsidiaries may hold a casino licence.
SKYCITY needs to ensure when it participates in gaming activities that:
•
•
it has the power under its constitution to take such action as may
be necessary to ensure that its suitability to do so in a particular
jurisdiction is not affected by the identity or actions (including
share dealings) of a shareholder; and
there are appropriate protections to ensure that persons do not
gain positions of significant influence or control over SKYCITY or
its business activities without obtaining any necessary statutory or
regulatory approvals in those jurisdictions.
Accordingly, the constitution contains the following provisions
restricting the acquisition of shares in the company to achieve this.
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.
During the financial year ended 30 June 2018, the Board considered all
such transfers and was satisfied in each case that the registration of the
relevant transfer would not prejudice any casino licence.
DONATIONS
Donations of $57,563.50 were made by the company during the
financial year ended 30 June 2018 ($27,171 during the financial year
ended 30 June 2017).
REVIEW OF OPERATIONS AND ACTIVITIES
A detailed review of the operations and activities of the company for
the financial year ended 30 June 2018 is set out in the Chairman’s
Review on pages 14 and 15 of this annual report and Management’s
Review on pages 24 to 29 of this annual report.
OTHER LEGISLATION AND 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 included in the company's constitution, 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.
85
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMCOMPANY DISCLOSURES CREDIT RATING
As at the date of this annual report, SKYCITY Entertainment Group
Limited has a Standard & Poor’s BBB– rating with a stable outlook.
FINAL DIVIDEND
In respect of the financial year ended 30 June 2018, a final dividend of
10 cents per share was paid on 14 September 2018 to all shareholders
on the company’s register at the close of business on 31 August 2018.
The company’s Dividend Reinvestment Plan (established in February
2011) was applied to this final dividend with no discount. Full details of
the company’s Dividend Reinvestment Plan are available in the Investor
Centre section of the company’s website at
www.skycityentertainmentgroup.com.
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.
ESCROW AND BUY-BACK ARRANGEMENTS
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 company's long term incentive
employee plans as detailed in the Director and Employee Remuneration
section in this annual report. 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 the date of this annual report, the company does not have in
place an on-market share buy-back programme.
86
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018COMPANY DISCLOSURES FOR THE YEAR ENDED 30 JUNE 2018
These financial statements were signed on 7 August 2018
on behalf of the Board of directors of SKYCITY Entertainment Group Limited by:
Rob Campbell
Chairman
Bruce Carter
Deputy Chairman and Chairman of the
Audit and Risk Committee
INDEPENDENT AUDITOR’S REPORT
To the shareholders of SKYCITY Entertainment Group Limited
The financial statements comprise:
•
•
•
•
•
•
the balance sheet as at 30 June 2018;
the income statement for the year then ended;
the statement of comprehensive income for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended; and
the notes to the financial statements, which include a summary of significant accounting policies.
OUR OPINION
In our opinion, the financial statements of SKYCITY Entertainment Group Limited (the Company), including its subsidiaries (the Group), present
fairly, in all material respects, the financial position of the Group as at 30 June 2018, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and International Financial Reporting
Standards (IFRS).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs NZ) and International Standards on Auditing
(ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners
(PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’ Code
of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of tax compliance, tax advisory, accounting assistance and executive benchmarking
assistance. The provision of these other services has not impaired our independence as auditor of the Group.
OUR AUDIT APPROACH
Overview
An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement.
Overall Group materiality: $11.6 million, which represents 5% of profit before tax.
Our audit approach
Overview
Materiality
We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of
the Group is most commonly measured by users, and is a generally accepted benchmark.
Audit Scope
We have determined that there are two key audit matters:
• Consideration of the carrying value of goodwill and casino licence intangible assets
• Accounting for liquidated damages.
Materiality
The scope of our audit was influenced by our application of materiality.
Key Audit
matters
An audit is designed to obtain reasonable assurance whether the financial
statements are free from material misstatement.
Overall group materiality: $9.7 million, which represents 5% of profit before
tax, excluding the impact of the impairment charge of $99.5 million made in
relation to Darwin goodwill.
We chose profit before tax as the benchmark because, in our view, it is the
benchmark against which the performance of the Group is most commonly
measured by users, and is a generally accepted benchmark. The impact of the
impairment charge was excluded from our materiality assessment as ao ne-off,
non-cash expense which does not impact the underlying performance of the
Group and therefore would not be considered by users in measuring the
performance of the Group.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the
financial statements as a whole as set out above. These, together with qualitative considerations, helped us to determine the scope of our audit,
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
88
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018INDEPENDENT AUDITOR'S REPORT Audit scope
We designed our audit by assessing the risks of material misstatement in the financial statements and our application of materiality. As in all of our
audits, we also addressed the risk of management override of internal controls including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole,
taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.
The structure of the Group means the majority of the audit work for the Group is performed by the New Zealand Group audit team. We also utilise
audit teams in Australia for specified procedures, as directed by the New Zealand Group audit team where local knowledge of the trading
environment or the legal and regulatory environment is required.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the
current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Consideration of the carrying value of goodwill and
casino licence intangible assets
The Group has goodwill and casino licence intangible assets
totalling $799.4 million.
We performed our own assessment of the DCF models used in the impairment
assessment.
As noted in note 16 to the financial statements an
assessment of the value in use of the goodwill and indefinite
life casino licence intangible assets was made using
discounted cash flow forecasts (DCF) for each cash
generating unit (CGU).
In preparing the DCFs management have made a number of
judgements that can influence the value. The most significant
of these judgements are disclosed within note 16 to the
financial statements.
In addition, as disclosed within note 16 of the financial
statements an impairment assessment was also performed in
relation to the Adelaide CGU which includes a definite life
casino licence intangible asset using a DCF model.
The assessments performed resulted in a conclusion that
there was no impairment associated with any goodwill and
casino licence intangible assets.
In relation to the forecast cash flows we performed the following procedures:
• compared the forecast cash flows used to the Board approved business
plan;
• understood the processes undertaken, controls over and basis for preparing
the forecasts;
• considered key assumptions, in particular the estimated future growth rates,
by comparing expectations of underlying inflation;
• engaged our valuation expert to assist in our assessment of the discount
rates and the terminal growth rates used in the model;
• compared historical performance against budget, investigated material
differences and considered the impact on future cash flow forecasts; and
• performed a sensitivity analysis on the forecast cash flows to determine
whether a reasonably possible change in assumptions could lead to a
conclusion the intangible asset is impaired.
In relation to the Adelaide forecast we also understood and assessed the
commercial prospects of achieving future plans by agreeing these to detailed
supporting analyses prepared by management and comparing these against
historic information for the Adelaide casino and industry.
We also considered the appropriateness of disclosures in relation to the valuation
of intangible assets and associated impairment testing performed.
As a result of our procedures, we did not propose any adjustments.
89
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMINDEPENDENT AUDITOR'S REPORT
Key audit matter
How our audit addressed the key audit matter
We reviewed the contract for the construction of the NZICC, noting a number
of separate delivery milestones and the right to liquidated damages if certain
milestones are not met.
We reviewed management's paper summarising the current status of the
liquidated damages, supporting invoices and progress claims. We challenged
management’s rationale behind the judgment applied in terms of meeting the
probable threshold and not the virtually certain threshold. In particular, we
considered the contract terms for the build and the fact that SKYCITY’s right to
retain these liquidated damages is disputed by FCC.
We reviewed the disclosure in the financial statements to ensure that this is
compliant with the requirements of the New Zealand accounting standards.
As a result of these procedures, we have concluded that the accounting
treatment is appropriate and appropriate disclosures have been made in
Note 27 (b).
Accounting for liquidated damages
The Group has withheld liquidated damages from progress
claims owing to Fletcher Construction Company Limited
(FCC) under the contract to build the New Zealand
International Convention Centre (NZICC). As disclosed in
note 27 (b) to the financial statements, as at 30 June 2018,
the Group has withheld amounts totalling $26.9 million.
The amount withheld is recognised as a liability in the
balance sheet.
The Group has withheld these amounts as it considers that it
has the right to these funds under the liquidated damages
provisions in the construction contract with FCC.
The accounting treatment of liquidated damages requires
judgement. The critical judgment made by the Directors is
whether the recovery of the liquidated damages is probable
or virtually certain.
At 30 June 2018, the Directors have concluded that the
recovery is probable but not virtually certain as FCC have
notified SKYCITY that they dispute SKYCITY’s right to these
liquidated damages. Therefore the liquidated damages have
been disclosed as a contingent asset in note 27 (b) of the
financial statements and have not been recognised as
income in the income statement.
INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR’S REPORT
The Directors are responsible for the annual report. Our opinion on the financial statements does not cover the other information included in the
annual report and we do not, and will not express any form of assurance conclusion on the other information. At the time of our audit, there was no
other information available to us.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the financial statements in accordance with
NZ IFRS and IFRS, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but to do so.
90
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018INDEPENDENT AUDITOR'S REPORT AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs NZ and ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/auditreport-1/
This description forms part of our auditor’s report.
WHO WE REPORT TO
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might state those matters
which we are required to state to them in an auditor’s 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.
The engagement partner on the audit resulting in this independent auditor’s report is Leopino Foliaki.
For and on behalf of:
Chartered Accountants
7 August 2018
Auckland
91
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMINDEPENDENT AUDITOR'S REPORT
FOR THE YEAR ENDED 30 JUNE 2018
Gaming win plus non-gaming revenue
Less gaming GST
Revenue
Other income
Share of losses from associates
Employee benefits expense
Other expenses
Directors fees
Gaming taxes
Direct consumables
Marketing and communications
Community contributions, levies and sponsorships
Fair value adjustment to investment property
Earnings Before Interest, Taxes, Depreciation and Amortisation Expenses (EBITDA)
Depreciation and amortisation expense
Impairment of goodwill
Earnings Before Interest and Tax (EBIT)
Net finance costs
Profit Before Income Tax
Income tax expense
Profit for the Year Attributable to Shareholders of the Company
Earnings per share for Profit Attributable
to the Shareholders of the Company
Attributable to continuing operations:
Basic earnings per share
Diluted earnings per share
The above income statement should be read in conjunction with the accompanying notes.
CONSOLIDATED
NOTES
2018
$’0 0 0
2017
$’0 0 0
3
3
3
4
5
11
5
16
8
12
6
6
1,094,566
(99,987)
1,021,259
(93,959)
994,579
2,608
(347)
(322,563)
(172,806)
(1,273)
(41,950)
(70,787)
(27,839)
(20,095)
(799)
338,728
(94,377)
–
244,351
(12,458)
231,893
(62,374)
169,519
927,300
767
–
(306,513)
(152,486)
(1,161)
(41,860)
(69,155)
(29,453)
(20,429)
–
307,010
(95,049)
(99,486)
112,475
(16,712)
95,763
(50,901)
44,862
CENTS
CENTS
25.3
25.3
6.8
6.7
92
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2018
Profit for the Year
Other Comprehensive Income
Items that may be Reclassified Subsequently to Profit or Loss
Exchange differences on translation of overseas subsidiaries
Cash Flow Hedge Reserve
Cash flow hedges – revaluations
Cash flow hedges – transfer to finance costs
Cash flow hedges – income tax
Cost of Hedging Reserve
Cost of hedging reserve – costs incurred
Cost of hedging reserve – income tax
Other Comprehensive (Loss) for the Year, Net of Tax
Total Comprehensive Income for the Year Attributable to Shareholders of the Company
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
CONSOLIDATED
2018
$’0 0 0
2017
$’0 0 0
169,519
44,862
8,436
2,154
(18,241)
8,376
2,855
(2,757)
772
(559)
168,960
(11,092)
10,952
89
–
–
2,103
46,965
93
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMSTATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED
NOTES
2018
$’0 0 0
2017
$’0 0 0
18
17
22
19
15
16
11
22
20
9
22
10
22
13
16
21
75,955
23,379
–
7,570
4,799
22,175
133,878
1,498,610
831,833
35,300
2,290
42,597
2,410,630
2,544,508
192,679
–
7,376
534
200,589
508,453
3,288
28,770
84,547
560,835
1,185,893
1,386,482
1,158,026
1,152,260
(63,929)
69,695
1,158,026
56,727
17,363
8,097
7,037
2,068
–
91,292
1,324,577
819,025
–
–
43,417
2,187,019
2,278,311
136,570
102,375
13,741
2,554
255,240
289,404
2,943
24,307
80,021
555,459
952,134
1,207,374
1,070,937
1,100,792
(63,370)
33,515
1,070,937
AS AT 30 JUNE 2018
ASSETS
Current Assets
Cash and bank balances
Receivables and prepayments
Derivative financial instruments
Inventories
Current tax receivables
Non-current assets classified as held for sale
Total current assets
Non-current Assets
Property, plant and equipment
Intangible assets
Investment properties
Investments accounted for using the equity method
Derivative financial instruments
Total non-current assets
Total Assets
LIABILITIES
Current Liabilities
Payables
Interest bearing liabilities
Current tax liabilities
Derivative financial instruments
Total current liabilities
Non-current Liabilities
Interest bearing liabilities
Provisions
Derivative financial instruments
Deferred tax liabilities
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.
94
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018BALANCE SHEET
FOR THE YEAR ENDED 30 JUNE 2018
NOTES
CONSOLIDATED
SHARE
CAPITAL
$’0 0 0
HEDGING
RESERVE
$’0 0 0
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$’0 0 0
COST OF
HEDGING
RESERVE
$’0 0 0
RETAINED
EARNINGS
$’0 0 0
TOTAL
EQUITY
$’0 0 0
Balance as at 1 July 2016
1,055,737
(14,430)
(51,043)
Total comprehensive income/(expense)
Dividends provided for or paid
Shares issued under
dividend reinvestment plan
Share rights issued for employee service
Net purchase of treasury shares
7
21
21
21
–
–
44,511
736
(192)
(51)
–
–
–
–
2,154
–
–
–
–
Balance as at 30 June 2017
1,100,792
(14,481)
(48,889)
Balance as at 1 July 2017
1,100,792
(14,481)
(48,889)
–
–
–
–
–
–
–
–
122,778
1,113,042
44,862
(134,125)
46,965
(134,125)
–
–
–
44,511
736
(192)
33,515
1,070,937
33,515
1,070,937
Total comprehensive income/(expense)
Dividends provided for or paid
Shares issued under
dividend reinvestment plan
Share rights issued for employee service
Net purchase of treasury shares
7
21
21
21
–
–
48,257
2,983
228
(7,010)
–
8,436
–
(1,985)
–
169,519
(133,339)
168,960
(133,339)
–
–
–
–
–
–
–
–
–
–
–
–
48,257
2,983
228
Balance as at 30 June 2018
1,152,260
(21,491)
(40,453)
(1,985)
69,695
1,158,026
The above statement of changes in equity should be read in conjunction with the accompanying notes.
95
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMSTATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Gaming taxes and levies paid
Income taxes paid
Net Cash Inflow from Operating Activities
Cash Flows from Investing Activities
Purchase of/proceeds from property, plant and equipment
Payments for investment property
Payments for associates
Payments for intangible assets
Net Cash Outflow from Investing Activities
Cash Flows from Financing Activities
Cash flows associated with derivatives
New borrowings
Repayment of borrowings
Net purchase of treasury shares
Dividends paid to company shareholders
Interest paid
Net Cash Outflow 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.
CONSOLIDATED
NOTES
2018
$’0 0 0
2017
$’0 0 0
988,412
(577,390)
411,022
(59,189)
(62,744)
289,089
(206,466)
(36,099)
(2,637)
(8,589)
(253,791)
9,736
206,956
(112,459)
228
(85,082)
(35,449)
938,820
(567,951)
370,869
(60,933)
(30,412)
279,524
(154,617)
–
–
(3,970)
(158,587)
(5,028)
10,000
(38,972)
(192)
(89,614)
(30,713)
(16,070)
(154,519)
19,228
56,727
75,955
(33,582)
90,309
56,727
29
22
10
10
21
7
18
96
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018STATEMENT OF CASH FLOWS
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SKYCITY Entertainment Group Limited (SKYCITY or the company and its subsidiaries or the Group) operates in the gaming, entertainment,
hotel, 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 7 August 2018.
In preparing these financial statements SKYCITY has adopted 'streamlined' reporting. Streamlined reporting aims to present the financial
statements in a more logical manner and eliminate unnecessary information. This approach is supported by the New Zealand Financial
Markets Authority.
(a) Basis of Preparation
The financial statements of the Group have been prepared in accordance with Generally Accepted Accounting Practice ('GAAP'). They comply
with New Zealand Equivalents to International Financial Reporting Standards (‘NZ IFRS’) and other applicable Financial Reporting Standards,
as applicable for-profit entities. The financial statements also comply with International Financial Reporting Standards (‘IFRS’).
The Group has a negative working capital balance. The Group has significant available undrawn committed banking facilities totalling $625 million
as at 30 June 2018 (refer to note 10) and has the ability to fully pay all debts as they fall due.
The Group is designated as a for-profit entity for financial reporting purposes.
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Group as at 30 June 2018 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.
Measurement Basis
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities
and investment properties (including derivative instruments) at fair value through profit or loss.
Critical Accounting Estimates and Judgements
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires the company to exercise its
judgement in the process of applying the Group’s accounting policies. Judgement is used in the determination of recoverable amount (or value
in use) of goodwill and indefinite useful life casino licences.
The Group tests annually whether goodwill and indefinite useful life licences have suffered any impairment, in accordance with the accounting
policy stated in note 16. The recoverable amounts of cash-generating units have been determined based on value in use calculations.
These calculations require the use of estimates.
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.
Judgement has been used in determining the appropriate accounting for liquidated damages, as outlined in note 27.
(b) Principles of Consolidation
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.
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.
97
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS (c) 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 other
comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.
Translation differences on financial assets and liabilities carried at fair value through profit and loss are recognised in profit or loss as part of the fair
value gain or loss. Translation differences on non-monetary financial assets such as equity classified at fair value through other comprehensive
income are included in other comprehensive income.
(iii) Foreign Operations
The results and financial position of foreign entities (none of which has the currency of a hyperinflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation currency as outlined 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 in other comprehensive income.
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.
At 30 June 2018, there was a $19.8 million debit balance in the Foreign Currency Translation Reserve associated with SKYCITY Darwin.
(d) Goods and Services Tax (GST)
The Income Statement, Statement of Cash Flows 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.
(e) 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.
(f) 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.
(g) 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 2018 or later periods, but which the Group has not early adopted. The significant items are:
• NZ IFRS 15, Revenue from Contracts with Customers
(Effective date: periods beginning on or after 1 January 2018). 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 2018 and earlier application is permitted. The Group intends to adopt NZ IFRS 15 from 1 July 2018.
The Group has assessed the impact of NZ IFRS 15. Work focussed on segregating the different revenue streams that exist within the business.
The majority of revenue relates to non-complex transactions where there is no material impact on the adoption of NZ IFRS 15. Had the Group
adopted this standard effective 1 July 2017, liabilities for loyalty points would have increased by approximately $1m. The Group intends to use
the full retrospective approach to applying the new standard.
98
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS As part of the assessment of the impact of adopting IFRS 15 and considering current and developing industry practice, the Group is also
assessing how certain arrangements with International Business customers should be treated, with the impact being revenue and expenses
which are currently disclosed separately being netted against each other.
The Group intends to use the full retrospective approach to applying the new standard.
• NZ IFRS 16: Leases
(Effective date: periods beginning on or after 1 January 2019). NZ IFRS 16, ‘Leases’, replaces the current guidance in NZ IAS 17.
Under NZ IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration. Under NZ IAS 17, a lessee was required to make a distinction between a finance lease (on balance sheet) and an
operating lease (off balance sheet). NZ IFRS 16 now requires a lessee to recognise a lease liability reflecting future lease payments and a
‘right-of-use asset’ for virtually all lease contracts. Included is an optional exemption for certain short-term leases and leases of low-value assets.
This standard will affect the accounting for the Group's operating leases. As at the reporting date, the Group has non-cancellable operating
leases commitments of $347.2 million (refer note 28).
Management is completing an initial analysis of the impact on the Group's consolidated balance sheet and income statement of NZ IFRS 16.
This requires significant judgement on the incremental borrowing rate used to discount lease assets and liabilities. Given the long term nature of
the Group's lease commitments the discount rate has a significant impact on the quantum of change. Indicatively management expects the
recognition of a right of use asset and a lease liability of between $30 million and $45 million depending on the final discount rate used.
This excludes the impact of the future lease commitments that are not yet effective identified in note 28. The impact on the income statement
will be to:
• reduce operating expenses;
• increase depreciation; and
• increase finance costs.
The overall impact on Net Profit After Taxation is not expected to be significant.
The above impacts have no cash effect to the Group and the changes are for financial reporting purposes only.
The Group currently intends to adopt the simplified transition approach under NZ IFRS 16 in the year ending 30 June 2020 and will not restate
comparative amounts for the year prior to first adoption.
2 SEGMENT INFORMATION
Accounting Policy
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.
99
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS 997,187
(347)
(658,112)
(94,377)
244,351
(12,458)
231,893
928,067
(621,057)
(99,486)
(95,049)
112,475
(16,712)
95,763
(a) Primary Reporting Format — Business Segments
SKYCITY
AUCKLAND
$’0 0 0
REST OF
NEW ZEALAND
$’0 0 0
ADELAIDE
CASINO
$’0 0 0
SKYCITY
DARWIN
$’0 0 0
INTER-
NATIONAL
BUSINESS
$’000
CORPORATE/
GROUP
$’0 0 0
TOTAL
$’0 0 0
2018
Revenue from external customers and other income
Shares of net profits/(losses) of associates
Expenses
Depreciation and amortisation
531,028
–
(270,319)
(50,385)
65,348
(347)
(36,315)
(5,401)
149,396
–
(124,971)
(18,287)
112,398
–
(85,020)
(13,515)
139,017
–
(105,834)
–
–
–
(35,653)
(6,789)
210,324
23,285
6,138
13,863
33,183
(42,442)
Segment profit/EBIT
Net finance costs
Profit before income tax
Segment assets
Net additions to non-current assets
(other than financial assets and deferred tax)
2017
Segment profit/EBIT
Net finance costs
Profit before income tax
Segment assets
1,167,809
97,075
515,746
231,801
96,894
6,582
43,925
10,664
–
–
532,077
2,544,508
158,038
316,103
Revenue from external customers and other income
Expenses
Impairment of goodwill
Depreciation and amortisation
514,642
(263,349)
–
(50,817)
63,056
(37,884)
–
(5,690)
144,832
(123,691)
–
(17,809)
110,712
(82,646)
(99,486)
(13,809)
94,825
(89,164)
–
–
–
(24,323)
–
(6,924)
200,476
19,482
3,332
(85,229)
5,661
(31,247)
1,119,935
56,632
475,169
229,461
Net additions to non-current assets
(other than financial assets and deferred tax)
48,130
5,028
23,042
7,890
(b) Secondary Reporting Format — Geographical Segments
–
–
397,114
2,278,311
105,127
189,217
New Zealand
Australia
(c) Description of Segments
SEGMENT REVENUES
NON- CURRENT ASSETS
EXCLUDING FINANCIAL
INSTRUMENTS
2018
$’0 0 0
2017
$’0 0 0
2018
$’0 0 0
2017
$’000
661,770
332,809
656,928 1,658,548
709,485
270,372
1,480,510
663,092
994,579
927,300 2,368,033
2,143,602
Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer that are used to assess
performance and allocate resources.
The Group is organised into the following main operating segments:
SKYCITY Auckland
SKYCITY Auckland includes casino operations, hotels and convention, food and beverage, car parking, Sky Tower, investment properties and
a number of other related activities, and excludes International Business customers.
100
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS
Rest of New Zealand
Rest of New Zealand includes the Group's operations at SKYCITY Hamilton, SKYCITY Queenstown, SKYCITY Wharf and Associates, and
excludes International Business customers.
Adelaide Casino
Adelaide Casino includes casino operations and food and beverage, and excludes International Business customers.
SKYCITY Darwin
SKYCITY Darwin includes casino operations, food and beverage and hotel, and excludes International Business customers.
International Business
The International Business segment is made up of international customers sourced mainly from Asia. The revenue is generated at SKYCITY’s
Auckland, Darwin, Adelaide, Queenstown and Hamilton locations. The results of the segment includes commission and complimentary play.
Corporate/Group
Head office and group-wide functions including legal and regulatory, group finance, human resources, information technology, innovation, the
Chief Executive Officer's office and directors. The Group's interest in the New Zealand International Convention Centre is also included here.
3 REVENUE
Accounting Policy
Revenues include gaming, hotel and conventions, food and beverage, Sky Tower, car parking and other revenues. Gaming 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 hotel rooms, food, beverage and other promotional allowances provided on a complimentary basis to customers.
Gaming win plus non-gaming revenue
Less gaming GST
Total revenue
Gaming
Non-gaming
Total revenue
2018
$’0 0 0
2017
$’0 0 0
1,094,566
(99,987)
994,579
763,141
231,438
994,579
1,021,259
(93,959)
927,300
704,854
222,446
927,300
Gaming win represents the gross cash inflows associated with gaming activities and includes GST. “Gaming win plus non-gaming revenue” does not
represent revenue as defined by NZ IFRS. The Group has decided to disclose this amount as it gives 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.
101
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS
4 OTHER INCOME
Net gain on disposal of property, plant and equipment
Dividend income
Rental income from investment properties
5 EXPENSES
Other Expenses Includes:
Utilities, insurance and rates
Other property expenses
Other items (including International Business commissions)
Minimum lease payments relating to operating leases
Provision for bad and doubtful debts
Depreciation and Amortisation
Depreciation
Casino licence amortisation (Adelaide)
Computer software amortisation
Auditor's Fees
2018
$’0 0 0
1,071
6
1,531
2,608
2017
$’0 0 0
762
5
–
767
2018
$’0 0 0
2017
$’0 0 0
25,506
14,302
126,440
4,870
1,688
172,806
82,127
5,786
6,464
94,377
23,584
15,039
101,616
4,587
7,660
152,486
82,766
5,533
6,750
95,049
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.
The Group employs PricewaterhouseCoopers on assignments additional to their statutory audit duties where PricewaterhouseCoopers’ expertise
and experience with the Group are important and auditor independence is not impaired. These assignments are principally tax advice and tax
compliance. For other work, the company's External Audit Independence Policy requires that advisers other than PricewaterhouseCoopers should
be engaged wherever practical. Other assurance services are defined by the Group where PricewaterhouseCoopers provide assistance with the
Group's internal compliance or risk activities.
Tax advisory services relates to ad hoc queries covering a range of tax related matters.
102
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS
(a) Assurance Services
Audit Services
Group Audit
Total remuneration for audit services
Other Assurance Services
Accounting assistance
IT risk review
Tax compliance services
Total remuneration for other assurance services
Total remuneration for assurance services
(b) Other Services
Taxation advisory services
Executive benchmarking assistance
Total remuneration for other services
Total fees expense
6 EARNINGS PER SHARE
Accounting Policy
2018
$’0 0 0
690
690
27
–
100
127
817
406
121
527
1,344
2017
$’0 0 0
837
837
27
48
100
175
1,012
322
72
394
1,406
(i) Basic Earnings per Share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted Earnings per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect
of interest and other financing costs associated with dilutive potential ordinary shares, and the weighted average number of shares assumed to have
been issued for no consideration in relation to dilutive potential ordinary shares.
Basic Earnings per Share
Profit attributable to the ordinary equity holders of the company
used in calculating basic earnings per share
Diluted Earnings per Share
Profit attributable to the ordinary equity holders of the company
used in calculating diluted earnings per share
2018
$’0 0 0
2017
$’0 0 0
169,519
44,862
170,186
44,500
103
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS
Weighted average number of ordinary shares in issue
669,112,499
656,691,523
Adjustments for Calculation of Diluted Earnings per Share:
Share rights
2,605,883
2,623,124
Weighted average number of ordinary shares for diluted earnings per share
671,718,382
659,314,647
2018
NUMBER
2017
NUMBER
7 DIVIDENDS
Accounting Policy
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.
Prior year final dividend
Current year interim dividend
Total dividends provided for or paid
Cents per share
Prior year final dividend (per share)
Current year interim dividend (per share)
2018
$’0 0 0
66,210
67,129
133,339
10.0
10.0
2017
$’0 0 0
68,457
65,668
134,125
10.5
10.0
On 7 August 2018, the directors resolved to declare a final dividend of 10.0 cents per share in respect of the year ended 30 June 2018 (refer to
note 30 for further details).
8 NET FINANCE COSTS
Finance costs
Exchange (gains)/losses
Interest income
Capitalised interest (refer Property, Plant and Equipment note 15)
Total finance costs
2018
$’0 0 0
35,915
(136)
(422)
(22,899)
12,458
2017
$’0 0 0
32,303
(534)
(1,187)
(13,870)
16,712
104
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS
9 CURRENT LIABILITIES — INTEREST BEARING LIABILITIES
Accounting Policy
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.
United States private placement notes
Refer note 10(a) for details concerning the US private placement notes.
2018
$’0 0 0
2017
$’0 0 0
–
102,375
10 NON-CURRENT LIABILITIES — INTEREST BEARING LIABILITIES
Accounting Policy
Interest bearing liabilities are recognised initially at fair value, net of transaction costs incurred. Apart from US dollar denominated USPP debt
issued in March 2018, interest bearing liabilities are subsequently carried at amortised cost and any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest
method. The interest margin on the US dollar denominated USPP debt issued in March 2018 is accounted under IFRS9 as a fair value hedge.
Therefore the carrying value of this debt is carried at fair value for the interest rate risk.
Unsecured
United States private placement notes
Syndicated bank facility
New Zealand bonds
Deferred funding expenses
Total non-current interest bearing liabilities
2018
$’0 0 0
2017
$’0 0 0
386,658
–
125,000
(3,205)
508,453
157,627
10,000
125,000
(3,223)
289,404
(a) United States Private Placement (USPP) Notes
As at 30 June 2018, SKYCITY had US$200.0 million, A$65.4 million and NZ$21.1 million of USPP notes outstanding:
• NZ$21.1 million maturing 15 March 2020
• US$100.0 million maturing 15 March 2021
• US$100.0 million maturing 15 March 2025
• A$65.4 million maturing 15 March 2028
Movements in the outstanding balance in the current year relate to repayment of US$75.0 million and issuance of US$100.0 million and
A$65.4 million of USPP notes in March 2018, foreign exchange rate movements of $24.5 million and fair value adjustments of -$2.4 million in
relation to fair value hedges.
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 22.
Fair value of USPP debt is estimated at NZ$398.0 million compared to a carrying value of NZ$386.7 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.
105
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS
(b) Syndicated Bank Facility
The syndicated banking facility is provided by ANZ (New Zealand and Australia), Commonwealth Bank of Australia, Bank of New Zealand,
National Australia Bank and Westpac (New Zealand and Australia).
As at 30 June 2018, SKYCITY had in place revolving credit facilities of:
• NZ$200.0 million maturing 30 June 2020
• NZ$120.0 million maturing 15 March 2021
• A$280.0 million maturing 31 March 2022.
(c) New Zealand Bond
$125 million of unsubordinated, unsecured, redeemable fixed rate bonds were issued on 28 September 2015 with a maturity of seven years.
The bonds are quoted on the NZDX. As at 30 June 2018, the closing price was $1.03385 per $1 bond. The bonds are carried at amortised cost.
The total fair value is $129.2 million and is a level 1 valuation as they are listed securities.
(d) Negative Pledge Deeds
A negative pledge deed has been executed in relation to each of the funding facilities - bank, USPP and New Zealand bonds. In each deed are
requirements for minimum guarantee group participation as well as financial covenants. All requirements of the negative pledge deeds have been
met as at 30 June 2018.
(e) Weighted Average Interest Rate as at 30 June
2018
%
$’000
2017
%
$’0 0 0
Interest bearing liabilities*
6.21%
511,658
6.70%
395,002
*The weighted average debt interest rate includes the impact of interest rate hedging.
(f) Net Debt Reconciliation
2018
$’0 0 0
2017
$’0 0 0
27,198
48,757
–
(511,658)
(435,703)
75,955
(490,531)
(21,127)
(435,703)
11,526
45,201
(102,375)
(292,627)
(338,275)
56,727
(363,875)
(31,127)
(338,275)
Net debt
Cash at bank
Cash in house
Borrowings - repayable within one year (including overdraft)
Borrowings - repayable after one year
Net debt
Cash at bank and in house
Gross debt - fixed interest rates
Gross debt - variable interest rates
Net debt
106
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS
11 NON-CURRENT ASSETS — INVESTMENT PROPERTIES
Accounting Policy
Investment property, principally comprising freehold office buildings, is held for long-term rental yields and is not occupied by the Group.
Investment property is carried at fair value, which is based on active market prices, adjusted, if necessary, for any difference in the nature, location
or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods such as recent prices in less
active markets or discounted cash flow projections. These valuations are reviewed annually by a member of the New Zealand Property Institute.
Changes in fair values are recorded in the income statement.
At fair value
Balance at the beginning of the year
Acquisitions
Net (loss) from fair value adjustment
Closing balance at 30 June
(a) Amounts Recognised in Profit and Loss for Investment Property
Rental income
Direct operating expenses from property that generated rental income
Net (loss) from fair value adjustment
2018
$’0 0 0
2017
$’0 0 0
–
36,099
(799)
35,300
2018
$’0 0 0
1,531
(467)
(799)
265
–
–
–
–
2017
$’0 0 0
–
–
–
–
(b) Valuation Basis
Investment properties purchased during the year were valued on 30 June 2018 by Bower Valuations Limited and Extensory Advisory Limited,
Registered Valuers, Members of the New Zealand Institute of Valuers and the Property Institute of New Zealand, at a total value of $29.2 million.
The valuers have recent experience in the location and category of the investment being valued. The basis of the valuation of investment properties
is fair value being the amounts for which the properties could be exchanged between willing parties in an arm’s length transaction, based on
current prices in an active market for similar properties in the same location and condition and subject to similar leases. The $6.1 million purchase
price of Investment Properties purchased on 29 June 2018 has been deemed to be fair value.
12 INCOME TAX EXPENSE
Accounting Policy
The income tax expense for the year is the tax payable on the current year’s taxable income, based on the income tax rate for each jurisdiction.
This is then adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the financial statements, and changes in unused tax losses.
Deferred 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.
107
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS
(a) Income Tax Expense
Current tax
Deferred tax
Income tax expense
(b) Numerical Reconciliation of Income Tax Expense to Prima Facie Tax Payable
Profit from continuing operations before income tax expense
Prima facie income tax @ 28%
Tax effects of:
Expenses not deductible for tax purposes
Foreign exchange rate differences
Share of partnership expenditure
Differences in overseas tax rates
Asset held for sale
Impairment of goodwill
Other
Income tax expense
The weighted average applicable tax rate was 26.9% (2017: 53.2%).
13 DEFERRED TAX LIABILITIES
The balance comprises temporary differences attributable to:
Provisions and accruals
Depreciation
Foreign exchange variances
Tax losses (Australian operations)
Cash flow hedges
Other
Net deferred tax liabilities
Movements:
Balance at the beginning of the year
Charged to the income statement (note 12)
Debited to equity reserves
Foreign exchange differences
Closing balance at 30 June
14 IMPUTATION AND FRANKING CREDITS
Balances available for use in subsequent reporting periods
Imputation credit account (New Zealand)
Franking credit account (Australia)
As required by relevant tax legislation, the imputation credit account had a credit balance as at 31 March 2018.
108
2018
$’0 0 0
54,175
8,199
62,374
231,893
64,930
2,118
(88)
(6,399)
828
999
–
(14)
62,374
2017
$’0 0 0
49,467
1,434
50,901
95,763
26,814
2,687
(433)
(6,213)
(2,023)
–
30,083
(14)
50,901
2018
$’0 0 0
2017
$’0 0 0
(14,537)
108,611
141
–
(9,217)
(451)
84,547
80,021
8,199
(3,627)
(46)
84,547
2018
$’0 0 0
47,254
3,476
(14,378)
106,282
521
(6,476)
(5,542)
(386)
80,021
78,688
1,434
(89)
(12)
80,021
2017
$’0 0 0
52,034
3,870
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS
15 PROPERTY, PLANT AND EQUIPMENT
Accounting Policy
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.
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 fitout
5–75 years
Plant, equipment and motor vehicles 2–75 years
3–20 years
Fixtures and fittings
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.
At 1 July 2016
Cost
Accumulated depreciation
Net book amount
Year Ended 30 June 2017
Opening net book amount
Exchange differences
Net additions/transfers
Depreciation charge (note 5)
Closing net book amount
At 30 June 2017
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2018
Opening net book amount
Exchange differences
Net additions/transfers
Assets classified as held for sale and other disposals
Depreciation charge (note 5)
Closing net book amount
At 30 June 2018
Cost
Accumulated depreciation
Net book amount
LAND
$’0 0 0
BUILDINGS
AND FITOUT
$’0 0 0
PLANT,
EQUIPMENT
AND MOTOR
VEHICLES
$’0 0 0
FIXTURES AND
FITTINGS
$’0 0 0
CAPITAL
WORK IN
PROGRESS
$’0 0 0
TOTAL
$’0 0 0
189,771
–
962,623
(293,948)
384,212
(249,401)
121,093
(69,775)
178,487
–
1,836,186
(613,124)
189,771
668,675
134,811
51,318
178,487
1,223,062
189,771
89
16
–
668,675
589
13,541
(27,014)
134,811
146
35,411
(43,752)
51,318
42
8,171
(12,000)
178,487
158
126,118
–
1,223,062
1,024
183,257
(82,766)
189,876
655,791
126,616
47,531
304,763
1,324,577
189,876
–
976,690
(320,899)
412,569
(285,953)
128,629
(81,098)
304,763
–
2,012,527
(687,950)
189,876
655,791
126,616
47,531
304,763
1,324,577
189,876
948
-
(9,850)
–
655,791
6,074
15,982
(12,292)
(28,675)
126,616
1,509
37,444
(31)
(41,458)
47,531
424
8,725
(2)
(11,994)
304,763
2,183
205,046
–
–
1,324,577
11,138
267,197
(22,175)
(82,127)
180,974
636,880
124,080
44,684
511,992
1,498,610
180,974
–
985,155
(348,275)
443,233
(319,153)
137,689
(93,005)
511,992
–
2,259,043
(760,433)
180,974
636,880
124,080
44,684
511,992
1,498,610
109
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS
(a) Capitalised Borrowing Costs
Borrowing costs of $22,898,838 have been capitalised in the current year relating to capital projects (2017: $13,869,753) using the Group's
weighted average cost of debt of 6.27% (2017: 6.98%).
(b) Capital Commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities was $490.5 million (2017: $390.9 million). The majority of
the 2018 capital commitment relates to the construction of the New Zealand International Convention Centre, the Horizon Hotel, the Adelaide
expansion and the purchase of the strata title interests in the AA Centre in Auckland.
(c) Encumbrances
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 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.
There are four encumbrances relating to the NZICC site land. One encumbrance protects the rights of the Crown under the NZICC Project and
Licensing Agreement, two relate to firewalls between buildings that have now been demolished and the final encumbrance protects the underground
vehicle entrance to the car park on the main Auckland casino site. The NZICC site land is also subject to a covenant in favour of the Crown which
restricts the subdivision and use of the site to that permitted under the NZICC Project and Licensing Agreement.
16 INTANGIBLE ASSETS
Accounting Policy
(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 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.
Goodwill is allocated to cash generating units for the purpose of impairment testing.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment.
The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell.
Any impairment is recognised immediately as an expense and is not subsequently reversed.
(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.
Judgement is exercised in determining whether a casino licence has a finite or indefinite useful life. Consideration is given to the terms and
conditions of the relevant licence and in particular the renewal terms.
(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.
110
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS (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) on a straight line basis.
At 1 July 2016
Cost
Accumulated amortisation
Net book amount
Movements in the Year Ended 30 June 2017
Exchange differences
Additions
Impairment charge
Amortisation charge
Closing net book amount
At 30 June 2017
Cost
Accumulated amortisation
Net book amount
Movements in the Year Ended 30 June 2018
Exchange differences
Additions
Amortisation charge
Closing net book amount
At 30 June 2018
Cost
Accumulated amortisation
Net book amount
GOODWILL
$’000
CASINO
LICENCES
$’000
COMPUTER
SOFTWARE
$’000
TOTAL
$’000
134,938
–
805,818
(44,477)
86,670
(59,692)
1,027,426
(104,169)
134,938
761,341
26,978
923,257
334
–
(99,486)
–
1,226
–
–
(5,533)
17
5,960
–
(6,750)
1,577
5,960
(99,486)
(12,283)
35,786
757,034
26,205
819,025
35,786
–
35,786
807,152
(50,118)
92,829
(66,624)
935,767
(116,742)
757,034
26,205
819,025
–
–
–
12,411
–
(5,786)
133
12,514
(6,464)
12,544
12,514
(12,250)
35,786
763,659
32,388
831,833
35,786
–
35,786
821,364
(57,705)
102,842
(70,454)
959,992
(128,159)
763,659
32,388
831,833
111
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS
Casino Licence
Contract Term
SKYCITY Auckland
Casino (indefinite
useful life)
SKYCITY Auckland Limited holds a Casino Premises Licence for the Auckland premises.
The initial licence was granted in 1996 for nil consideration, and hence there was no associated initial 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 (NZICC Agreement), the initial
term of the licence was extended to 30 June 2048.
The licence can be renewed for further periods of 15 years pursuant to section 138 of the Gambling Act 2003 (NZ).
In addition to the licence extension, the Casino Premises Licence was amended to (a) permit the implementation of
account based cashless gaming and ticket in ticket out (TITO) gaming systems; (b) permit an increase in the number of
gaming machines, gaming tables and automated table games; and (c) implement various other operational improvements.
Under the NZICC Agreement, the Company has agreed to construct the NZICC for a total cost of at least $430 million.
The reforms (a to c above) are exclusive to the Group and were recorded at fair value based on the estimated
incremental benefit over the life of the reforms. The fair value was determined using a discounted cashflow model falling
within level 3 of the fair value hierarchy over the life of the reforms.
The asset will not be amortised but will be reviewed for impairment annually.
The carrying amount of the casino licence is $405 million (FY17: $405 million).
Adelaide Casino
(finite useful life)
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.
The casino licence and associated regulatory reforms 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$293.5 million (FY17: A$298.8 million).
SKYCITY Darwin
Casino (indefinite
useful life)
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 2018 and now expires on 30 June 2036. The Casino Operator's Agreement is subject to extension for a
further five years once its period to maturity reaches 15 years. These licence extensions apply on a continuing five year
basis so that, subject to certain criteria being met, the licence period is never less than 15 years. The carrying value of
the casino licence is A$31.7 million (FY17: A$31.7 million).
SKYCITY Hamilton
Casino (indefinite
useful life)
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
(indefinite useful life)
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)
(indefinite useful life)
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 which arose on
SKYCITY's acquisition of Otago Casinos Limited is $4.4 million (FY17: $4.4 million).
The asset is not amortised but will be reviewed for impairment annually.
112
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS The deferred licence value relating to Auckland ($405.0 million) and Adelaide (NZ$155.8 million, 2017: NZ$150.5 million) included within
non-current liabilities will be transferred and offset against property, plant and equipment when the New Zealand International Convention Centre
and Adelaide redevelopment, respectively, have been completed.
(a) Impairment Tests for Intangibles with Indefinite Lives
201 8
Goodwill
Casino Licence
Total
2017
Goodwill
Casino Licence
Total
SKYCITY
AUCKLAND
$’000
OTAGO CASINOS
LIMITED*
$’000
SKYCITY
HAMILTON*
$’000
SKYCITY
DARWIN
$’000
TOTAL
$’000
–
405,000
405,000
–
405,000
405,000
–
4,391
4,391
–
4,391
4,391
35,786
–
–
34,566
35,786
443,957
35,786
34,566
479,743
35,786
–
35,786
–
33,374
35,786
442,765
33,374
478,551
The recoverable amount of a cash generating unit is determined based on value in use calculations. These calculations use cash flow projections
approved by directors which include cash flows in relation to International Business where those cash flows relate to the relevant Cash Generating
Unit. There is a surplus between the calculated value in use and the carrying value for each asset.
*SKYCITY Hamilton and Otago Casinos Limited are included within the "Rest of New Zealand" segment in note 2.
The movement in goodwill is as follows:
Balance at 1 July
Impairment charge
Exchange differences
Balance at 30 June
2018
$’0 0 0
2017
$’0 0 0
35,786
–
–
35,786
134,938
(99,486)
334
35,786
(b) Key Assumptions used for Value in Use Calculations of Cash Generating Units
SKYCITY Auckland
SKYCITY Hamilton
SKYCITY Darwin
EBITDA MARGIN
GROWTH RATE
DISCOUNT RATE
2018
%
40.9
44.5
21.9
2017
%
40.9
43.5
23.3
2018
%
2.0
2.0
2.5
2017
%
2.0
2.0
–
2018
%
9.0
9.0
9.0
2017
%
9.5
9.5
9.5
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.
113
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS
(c) Impairment Charge
In the prior year, an impairment of the goodwill associated with SKYCITY Darwin of A$94.6m was recognised. The write-off of Darwin's goodwill
was primarily attributable to increased competitive pressures in the gaming machine business. This stems from the unforeseen policy decision in
December 2014 by the previous Northern Territory Government to remove the cap on gaming machines in the Territory. This significant increase
in competing gaming machines in the catchment area of the casino had an adverse impact on revenue and earnings at SKYCITY Darwin.
17 RECEIVABLES AND PREPAYMENTS
Accounting Policy
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for doubtful debts.
Trade receivables (net)
Sundry receivables
Total receivables and prepayments
Due to the short-term nature of these receivables, their carrying value is assumed to be equal to their fair value.
18 CASH AND BANK BALANCES
Cash at bank
Cash in house
Total cash and bank balances
2018
$’0 0 0
14,611
8,768
23,379
2018
$’0 0 0
27,198
48,757
75,955
2017
$’0 0 0
11,882
5,481
17,363
2017
$’0 0 0
11,526
45,201
56,727
19 CURRENT ASSETS — NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
Accounting Policy
Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and
a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the
liabilities of a disposal group classified as held for sale continue to be recognised.
Land
Buildings
Plant and equipment
Total
114
2018
$’0 0 0
9,850
12,292
33
22,175
2017
$’0 0 0
–
–
–
–
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS
20 PAYABLES
Accounting Policy
Payables are stated at fair value or estimated liability where accrued.
Trade payables
Liquidated damages (refer note 27(b))
Deferred income
Accrued expenses
Employee benefits
Total payables
21 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
2018
$’0 0 0
32,118
26,931
1,738
89,145
42,747
2017
$’0 0 0
16,945
–
1,061
81,331
37,233
192,679
136,570
2018
SHARES
2017
SHARES
2018
$’000
2017
$’000
667,376,523 656,986,761
–
204,689
(204,689)
–
10,389,762
–
–
–
–
12,965,585
1,100,792
2,983
–
–
228
48,257
1,055,737
736
–
–
(192)
44,511
680,342,108 667,376,523
1,152,260
1,100,792
All ordinary shares rank equally with one vote attached to each fully-paid ordinary share.
Included within the number of shares is 5,515,841 treasury shares (2017: 5,515,841) held by the company. The movement in treasury shares during
the prior 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 24). Treasury shares may be used to issue shares under the company's employee incentive plans or
upon the exercise of share rights/options.
22 DERIVATIVE FINANCIAL INSTRUMENTS
Accounting Policy
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at 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:
(1) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or
(2)
hedges of exposures to variability in cash flows associated with recognised assets or liabilities or highly probable forecast transactions
(cash flow hedges).
115
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS
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.
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 recognised 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).
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.
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.
NOTIONAL VALUE
FAIR VALUE
2018
$’000
2017
$’000
2018
$’000
2017
$’000
Current Assets
Cross currency interest rate swaps – cash flow hedges
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
–
–
–
102,375
81,078
183,453
–
–
–
50,000
110,106
100,517
106,308
71
42,526
Total non-current derivative financial instrument assets
160,106
206,825
42,597
Current Liabilities
Forward foreign currency contracts
Interest rate swaps – cash flow hedges
Total current derivative financial instrument liabilities
Non-current Liabilities
Interest rate swaps – cash flow hedges
Cross-currency interest rate swaps – cash flow hedges
61,607
80,000
71,959
98,100
141,607
170,059
86
448
534
399,682
148,346
456,450
–
24,742
4,028
Total non-current derivative financial instrument liabilities
548,028
456,450
28,770
Total net derivative financial instruments
13,293
A component of the interest margin in US$100.0 million of these CCIRS is treated as a fair value hedge.
6,384
1,713
8,097
2,275
41,142
43,417
362
2,192
2,554
24,307
–
24,307
24,653
116
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS
23 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risks (including currency and interest rate risk), 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 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 currency 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 investment in, and intercompany loans to, its Australian operations. Exposure to the US dollar arises from funding
denominated in that currency.
The Group utilises natural hedges wherever possible 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 private placement notes detailed in note 10) 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 risk arises 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.
(iii) Summarised Sensitivity Analysis
SKYCITY manages its interest rate and foreign exchange rate exposure to minimise the impact of fluctuations in the market. The residual exposure
is not considered material or significant.
(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 from
International Business activity.
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 & 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 Business activity is managed in accordance with accepted industry practice. Settlement risk associated with International Business
customers is minimised through credit checking and a formal review and approval process.
There are no significant concentrations of credit risk in the Group.
117
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS (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
Debt maturities are detailed in note 10.
(d) Fair Value Estimation
The financial instruments 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); and
•
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
Other than the New Zealand bonds, which are listed on the NZDX and therefore level 1, all SKYCITY financial instruments, which includes
cross-currency interest rate swaps, interest rate swaps and forward foreign currency contracts, are valued using level two in the above fair value
measurement hierarchy.
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; and
• 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.
Further details on derivatives are provided in note 22.
(e) Capital Risk Management
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 measured as a ratio 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
2018
1.3 x
9.5 x
2017
1.1 x
10.3 x
These types of ratios are consistent with the financial covenants in the Group’s various funding facilities. Actual gearing ratio and interest cover as at
30 June 2018 were within covenant limits on funding facilities.
118
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS
24 SHARE-BASED PAYMENTS
Accounting Policy
SKYCITY operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of
the share rights 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 granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). 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.
Current Plans
2009 Executive Long Term Incentive Plan
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 (three to four 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 relative to other comparable companies.
At 30 June 2018, the interest free loans on the Executive Long Term Incentive Plan total $8,352,332 (2017: $8,712,764).
2017 Chief Executive Officer commencement shares
Effective 4 November 2016, the newly appointed Chief Executive Officer was granted 325,000 ordinary shares to be issued on 3 November 2018.
There are no performance targets associated with these shares, and there is no right to dividends in the intervening period.
2018 Chief Operating Officer commencement shares
Effective 18 November 2017, the newly appointed Chief Operating Officer was granted 35,000 ordinary shares to be issued on 1 November 2019.
There are no performance targets associated with these shares, and there is no right to dividends in the intervening period.
2018 SKYCITY Restricted Share Rights Plan
The 2018 Short Term Incentive Plan was changed for selected senior staff. For approximately 116 staff the 2018 short term incentive has been
replaced with restricted share rights. These rights will be issued to staff after the finalisation of the Group's results. Each right converts to one share
provided the staff member continues to be employed by the Group on 30 June 2020.
119
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS Outstanding Rights and Shares
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
GRANT DATE
EXPIRY DATE
BALANCE
AT START OF
THE YEAR
NUMBER
GRANTED
DURING
THE YEAR
NUMBER
EXERCISED
DURING
THE YEAR
NUMBER
EXPIRED
DURING
THE YEAR
NUMBER
BALANCE
AT END OF
THE YEAR
NUMBER
2018
28/08/13
27/08/14
26/08/15
24/08/16
04/11/16
23/08/17
18/11/17
Total
2017
29/08/12
28/08/13
27/08/14
26/08/15
24/08/16
04/11/16
Total
28/08/17
27/08/18
28/08/19
24/08/20
03/11/18
23/08/21
18/11/19
29/08/16
28/08/17
27/08/18
28/08/19
24/08/20
03/11/18
493,124
665,000
515,000
625,000
325,000
–
–
–
–
–
– 1,015,883
35,000
–
–
–
–
–
–
–
–
(493,124)
(110,000)
(135,000)
(210,000)
–
(105,000)
–
–
555,000
380,000
415,000
325,000
910,883
35,000
2,623,124 1,050,883
– (1,053,124) 2,620,883
400,100
818,750
780,000
620,000
–
–
–
–
–
–
685,000
325,000
–
(204,689)
–
–
–
–
(400,100)
(120,937)
(115,000)
(105,000)
(60,000)
–
–
493,124
665,000
515,000
625,000
325,000
2,618,850
1,010,000
(204,689)
(801,037) 2,623,124
The weighted average remaining contractual life of rights outstanding at the end of the period was 1.69 years (2017: 1.67 years).
Fair Value of Share Rights Granted
The assessed fair value at grant date of the rights granted on 23 August 2017 was $1.28 (24 August 2016 was $1.56). This was calculated using the
single index model by Ernst & Young Transaction Advisory Services Limited.
The valuation inputs for the rights granted on 23 August 2017 included:
(a)
rights are granted for no consideration
(b) exercise price: nil (2017: nil)
(c) share price at grant date: $3.90 (2017: $4.94)
The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the term of the right.
Fair Value of Chief Executive Officer commencement shares granted
The assessed fair value at grant date of the commencement shares granted on 4 November 2016 was $2.68. This was calculated using the
European call option model by Ernst & Young Transaction Advisory Services Limited.
The valuation inputs for the Commencement Shares granted on 4 November 2016 included:
(a) granted for no consideration
(b) exercise price nil
(c) share price at grant date: $3.62
The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the term of the
commencement shares.
Fair Value of Chief Operating Officer commencement shares granted
The assessed fair value at grant date of the commencement shares granted on 18 November 2017 was $2.68. This was calculated using the
European call option model by Ernst & Young Transaction Advisory Services Limited.
120
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS
The valuation inputs for the Commencement Shares granted on 18 November 2017 included:
(a) granted for no consideration
(b) exercise price: nil
(c) share price at grant date: $3.57
The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the term of the
commencement shares.
Fair Value of SKYCITY Restricted Share Rights
The assessed fair value of each right was determined by Ernst & Young Transaction Advisory Services Limited at $3.02. The exact number of rights
to be issued will not be determined until after the finalisation of the Group's results.
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 follows:
Rights issued under Share Rights Plans
25 RELATED PARTY TRANSACTIONS
(a) Key Management Personnel Compensation
2018
$’0 0 0
2,983
2017
$’0 0 0
736
Key management compensation is set out below. The key management personnel are all the directors of the company, the Chief Executive Officer
and the Senior Leadership Team.
2018
2017
SHORT-TERM
BENEFITS
$’000
SHARE-BASED
PAYMENTS
$’000
9,061
5,668
1,730
398
TOTAL
$’000
10,791
6,066
(b) Other Transactions with Key Management Personnel or Entities Related to Them
Certain directors and management 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, and a register of directors' interests is maintained.
Any transactions undertaken with these entities have been entered into in the normal course of business.
Certain directors and management hold shares in SKYCITY and receive dividends in the normal course of business.
(c) Subsidiaries
Interests in subsidiaries are set out in note 26.
121
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS
26 SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following significant subsidiaries in accordance with the
accounting policy described in note 1(b):
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 Queenstown Limited
SKYCITY Management Limited
SKYCITY Wellington Limited
SKYCITY Adelaide Pty Limited
SKYCITY Australia Finance Pty Limited
SKYCITY Australian Limited Partnership
SKYCITY Australia Pty Limited
SKYCITY Darwin Pty Limited
SKYCITY Treasury Australia Pty Limited
Horizon Tourism Limited
SKYCITY Investment Holdings Limited
PRINCIPAL
PLACE OF BUSINESS
CLASS OF
SHARES
2018
2017
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
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Hong Kong
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%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
All wholly-owned subsidiary companies and significant partly-owned subsidiaries have balance dates of 30 June.
27 CONTINGENCIES
(a) Contingent liabilities
The Group has no contingent liabilities at 30 June 2018.
(b) Contingent assets
Included within the Fletcher Construction Company Limited (FCC) construction contracts for the NZICC and Horizon Hotel is the right to
liquidated damages if certain milestones are not met. To date SKYCITY has withheld $26.9 million from payments to FCC for liquidated damages.
The amounts withheld have been recognised as part of current liabilities (refer note 20) as ultimate recovery is not able to be considered virtually
certain due to the fact that SKYCITY’s right to retain these liquidated damages is disputed by FCC.
Additional future costs expected to be incurred by SKYCITY due to delays in the NZICC and Horizon Hotel project are expected to be covered
by liquidated damages.
There are no other significant contingencies at year end (2017: nil).
122
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS
28 COMMITMENTS
Operating Lease Commitments
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.
Within one year
Later than one year but not later than five years
Later than five years
Commitments not recognised in the financial statements
2018
$’000
4,947
13,150
329,068
347,165
2017
$’000
4,266
11,754
329,565
345,585
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.
• Adelaide Casino building lease: The initial lease term is until 3 March 2025 with three further rights of renewal for 20 years each and annual
rent reviews.
In addition to the operating lease summary above the Group has commitments to the following leases which are not yet effective:
• Adelaide: 750 car park spaces
• Auckland: NZICC air bridge across Hobson Street.
29 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
Profit for the year
Depreciation and amortisation
Net finance costs
Current period employee share expense
Gain on sale of fixed assets
Fair value adjustment to investment property
Impairment of goodwill
Share of profits/(losses) of associates
Change in operating assets and liabilities
Change in receivables and prepayments
Change in inventories
Change in payables
Change in deferred tax liability
Change in tax receivable – current
Change in provisions
Change in tax payable – current
Capital items included in working capital movements
Net cash inflow from operating activities
2018
$’000
169,519
94,377
12,458
2,983
(1,071)
799
–
347
(6,016)
(533)
56,109
4,526
(2,731)
345
(6,365)
(35,658)
2017
$’000
44,862
95,049
16,712
736
(762)
–
99,486
–
19,175
668
(1,348)
1,333
4,847
(1,182)
13,741
(13,793)
289,089
279,524
123
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMNOTES TO THE FINANCIAL STATEMENTS
30 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
(a) Dividend
On 7 August 2018, the directors resolved to provide for a final dividend to be paid in respect of the year ended 30 June 2018. The fully imputed,
unfranked dividend of 10.0 cents per share will be paid on 14 September 2018 to all shareholders on the company's register at the close of
business on 31 August 2018.
(b) Auckland AA Centre
On 19 July 2018, the company settled the purchase of the strata title interests in the AA Centre in Auckland for a total consideration of
$47 million.
124
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018NOTES TO THE FINANCIAL STATEMENTS FY18
FY17
REVENUE
$M
EBITDA
$M
EBIT
$M
NPAT
$M
REVENUE
$M
EBITDA
$M
EBIT
$M
Normalised
1,100.8
338.2
243.8
169.9
1,028.9
(4.0)
–
0.5
–
0.5
–
(0.4)
–
(6.9)
–
320.4
(13.4)
–
225.4
(13.4)
(99.5)
International Business at Theoretical
Asset write-offs
Reported
1,096.8
338.7
244.4
169.5
1,022.0
307.0
112.5
NPAT
$M
153.8
(9.4)
(99.5)
44.9
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.
Total revenues are gaming win plus non-gaming revenues.
Normalisation adjustments have been calculated in a consistent manner in FY18 and FY17.
FY18 adjustments
• None
FY17 adjustments
•
Impairment of Darwin goodwill, A$94.6m (NZ$99.5 million)
The actual win rate on International Business was 1.32% for FY18 (FY17: 1.27%).
125
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMRECONCILIATION OF NORMALISED RESULTS TO REPORTED RESULTS GENERAL STANDARD DISCLOSURES
SECTION
Organisational
profile
ASPECT / GRI
DISCLOSURE
DESCRIPTION
PUBLICATION
PAGE(S)
LIMITATIONS
EXTERNAL
ASSURANCE
102-1
Name of organisation
102-2
Activities, brands, products
and services
102-3
Location of headquarters
102-4
Location of operations
102-5
Ownership and legal form
Annual Report 2018:
About SKYCITY
Annual Report 2018:
About SKYCITY
Annual Report 2018:
Our Business
Annual Report 2018:
Directory
Annual Report 2018:
About SKYCITY
Annual Report 2018:
Notes to the Financial
Statements
Annual Report 2018:
Shareholder and
Bondholder Information
6
7
8
130
6-7
97
80-81
102-6
Markets served
Annual Report 2018:
About SKYCITY
6-7
102-7
Scale of organisation
i. Total number of
employees
ii. Total number of
operations
iii. Net sales
iv. Total capitalisation
Annual Report 2018:
Our People
Annual Report 2018:
About SKYCITY
Annual Report 2018:
Our Business
Annual Report 2018:
Income Statement
Annual Report 2018:
Balance Sheet
v. Quantity of products
and services provided
Annual Report 2018:
Our Business
Additional information
Annual Report 2018
40
7
8
92
94
8
Yes
Yes
Yes
102-8
Information on employees and
other workers
Annual Report 2018:
Our People
40-41
Note 1
Yes
126
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018
SECTION
Organisational
profile
ASPECT / GRI
DISCLOSURE
DESCRIPTION
PUBLICATION
PAGE(S)
LIMITATIONS
EXTERNAL
ASSURANCE
102-9
Supply chain
Annual Report 2018:
Our Suppliers
53-55
102-10
102-11
Significant changes to the
organisation and its supply
chain
No changes
Precautionary principle or
approach
SKYCITY Ethical
Sourcing Code
102-12
External initiatives
Strategy
102-14
Statement from senior
decision-maker
Annual Report 2018:
Our Sustainability
Annual Report 2018:
Our People
Annual Report 2018:
Our Environment
Annual Report 2018:
Chairman's Review
33
38-39
47
14-15
Ethics and
Integrity
102-16
Values, principles, standards
and norms of behaviour
SKYCITY Code of
Business Practice
Governance
102-18
Governance structure Annual Report 2018:
59-67
Stakeholder
engagement
102-40
List of stakeholder groups
102-41
102-42
102-43
102-44
102-45
102-46
Reporting
practice
Corporate Governance
Statement
Annual Report 2018:
Our Sustainability
Annual Report 2018:
Our People
Annual Report 2018:
Our Sustainability
Collective bargaining
agreements
Identifying and selecting
stakeholders
Approach to stakeholder
engagement
Annual Report 2018:
Our Sustainability
Key topics and concerns
raised
Annual Report 2018:
Our Sustainability
Entities included in the
consolidated financial
statements
Annual Report 2018:
Subsidiaries
Defining report content and
topic boundaries
Annual Report 2018:
Our Sustainability
102-47
List of material topics
102-48
Restatements of information
102-49
Changes in reporting
102-50
Reporting period
102-51
Date of most recent report
Annual Report 2018:
Our Sustainability
Annual Report 2018:
Our Environment
Annual Report 2018:
About SKYCITY
Annual Report 2018:
About SKYCITY
Annual Report 2018:
About SKYCITY
31
41
31
31
31-32
122
31-33
32
48
6
6
6
Yes
127
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMGRI CONTENT INDEX
ASPECT / GRI
DISCLOSURE
DESCRIPTION
PUBLICATION
PAGE(S)
LIMITATIONS
EXTERNAL
ASSURANCE
102-52
Reporting cycle
Annual Report 2018:
About SKYCITY
102-53
102-54
Contact point for questions
regarding the report
Annual Report 2018:
Our Sustainability
Claims of reporting in
accordance with the GRI
standards
Annual Report 2018:
About SKYCITY
6
33
6
SECTION
Reporting
practice
Limitations:
Note 1 – The reporting on GRI 102-8 on employees and other workers does not include ‘activities performed by workers who are not employees’
and ‘significant variations in numbers reported’.
SPECIFIC STANDARD DISCLOSURES
DESCRIPTION
PUBLICATION
PAGE(S)
LIMITATIONS
EXTERNAL
ASSURANCE
Annual Report 2018:
Our Environment
Annual Report 2018:
Our Environment
Annual Report 2018:
Our Environment
Annual Report 2018:
Our Environment
Annual Report 2018:
Our Suppliers
Annual Report 2018:
Health and Safety
Annual Report 2018:
Health and Safety
Annual Report 2018:
Our People
Annual Report 2018:
Our People
Annual Report 2018:
Our People
47-49
51
47-48
52
53-55
13
37-38
13
37
34-40
38-40
34-40
SECTION
Conserve the
Environment
ASPECT / GRI
DISCLOSURE
GRI 103
Energy management
approach
GRI 302-3
Energy intensity
GRI 103
Emissions management
approach
GRI 305-4
GHG emissions intensity
Source Ethically
and Responsibly
GRI 103
Ethical and sustainable
procurement management
approach
Inspire Our
People
GRI 103
Health and safety
management approach
GRI 403-2
Types and rates of injury
GRI 103
Employee engagement
management approach
GRI 404-2
Employee programmes
GRI 103
Diversity, inclusion and
belonging management
approach
128
ANNUAL REPORT | YEAR ENDED 30 JUNE 2018GRI CONTENT INDEX SECTION
Inspire Our
People
ASPECT / GRI
DISCLOSURE
GRI 405-1
Host Responsibly GRI 103
GRI 416-1
GRI 416-2
GRI 103
GRI 419-1
DESCRIPTION
PUBLICATION
PAGE(S)
LIMITATIONS
EXTERNAL
ASSURANCE
Governance and employee
diversity
Annual Report 2018:
Our People
35
Customer health and safety
management approach
Annual Report 2018:
Our Customers
Assessment of health and
safety of products and
services
Annual Report 2018:
Our Customers
Non-compliance incidents
related to health and safety of
products and services
Annual Report 2018:
Our Customers
Socio-economic compliance
management approach
Annual Report 2018:
Our Customers
42-44
42-44
42-44
42-44
Non-compliance with
socio-economic laws and
regulations
Annual Report 2018:
Our Customers
42-44
Note 1
Limitations:
Note 1 – The reporting of GRI 419-1 on Non-compliance with Socio-Economic Laws and Regulations does not include economic laws
and regulations.
129
SKYCITY ENTERTAINMENT GROUP LIMITED | SKYCITYENTERTAINMENTGROUP.COMGRI CONTENT INDEX REGISTERED OFFICE
AUDITOR
SKYCITY Entertainment Group Limited
Level 6
Federal House
86 Federal Street
PO Box 6443
Wellesley Street
Auckland
New Zealand
Telephone:
+64 9 363 6000
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
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
SUPERVISOR FOR BONDS
The New Zealand Guardian Trust
Company Limited
Dimension House
99–105 Customhouse Quay
PO Box 3845
Wellington
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
130
DIRECTORYANNUAL REPORT | YEAR ENDED 30 JUNE 2018 skycityentertainmentgroup.com