T H E S T A R
E N T E R T A I N M E N T
G R O U P
ANNUAL REPORT 2017
CONTENTS
O U R V I S I O N
O U R F O O T P R I N T
O U R H I G H L I G H T S
M E S S A G E S
Chairman’s Message
CEO’s Message
B O A R D A N D E X E C U T I V E
Board of Directors
Executive Team
G R O U P P E R F O R M A N C E
K E Y P R O J E C T S
S U S TA I N A B I L I T Y
Sustainability Strategy
Delivering World Class Properties
Leading Company
Guest Wellbeing
Talented Teams
D I R E C T O R S ’ , R E M U N E R A T I O N
A N D F I N A N C I A L R E P O R T
Directors’ Report
Remuneration Report
Financial Report
A D D I T I O N A L I N F O R M A T I O N
Shareholder Information
Corporate Governance Statement Details
Annual General Meeting Details
Company Directory
Key Dates for FY2017/18
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2017 has seen The Star Entertainment Group continue
to mature as a business, with steady operating results
reflecting a year of consolidation as focus sharpens on
executing our strategic agenda.
The pipeline of development and capital
improvements of our properties, with
partners Chow Tai Fook Enterprises Limited
and Far East Consortium International
Limited, has grown this year, and is
progressing strongly to meet increasing
tourism demand, as well as our evolving
local markets. Our international VIP
business has adjusted effectively to changing
circumstances in North Asia, accelerating its
existing diversification strategy.
The Group’s master brand roll-out took
important steps, with the launch of a new
‘The Star Club’ branded loyalty program
in November 2016, and the rebranding of
Jupiters Hotel & Casino to The Star Gold
Coast in March 2017. Both initiatives have
been well received by our members and
guests, and are expected to work hard for
the Group in 2018, as the loyalty platform
begins to scale up, and The Star Gold Coast
fully leverages its status as a major partner
of the 2018 Commonwealth Games.
The Sydney and Brisbane Festivals, the
Queensland Maroons, and NSW Blues State
of Origin rugby league teams, along with
racing in Sydney were amongst other key
partnerships that further reinforced our
properties’ integral relationships with their
cities and communities during the 2017
financial year. Eighteen months of emphasis
on service excellence has also begun to
pay dividends, with The Darling Hotel at
The Star Sydney being recognised with a
prestigious Forbes Five Star rating – the first
and only one in Sydney.
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The newly refurbished hotel at The Star Gold Coast displaying ‘The Star’ logo. The property rebranded in March 2017.
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 OUR VISION
OUR FOOTPRINT
TO BE AUSTRALIA’S
LEADING INTEGRATED
RESORT COMPANY BY FULLY
HARNESSING OUR UNIQUE
OPPORTUNITIES IN EACH
PROPERTY, TO PROVIDE THE
MOST THRILLING GUEST
EXPERIENCES IN WAYS THAT
TRULY REFLECT THE UNIQUE
CHARACTER OF OUR CITIES.
TREASURY
BRISBANE
1,500+
Team members
THE STAR
GOLD COAST
THE STAR
SYDNEY
2,000+
Team members
4,500+
Team members
4MILLION
Guests in FY2017
3.4MILLION
Guests in FY2017
10.4MILLION
Guests in FY2017
11
Restaurants
and bars
127
Hotel rooms
14
Restaurants
and bars
596
Hotel rooms
35
Restaurants
and bars
606
Hotel rooms
BRAND
PILLARS
PRIORITIES
VALUES
SERVICE
COMMITMENTS
Thrilling experiences
Shareholder Value
Ownership
Accessible luxury
World Class Properties
True Teamwork
Local spirit
Leadership in Loyalty
Welcoming
Excellence in
Guest Service
Talented Teams
City Pride
Live it
Be Human
Bring it
Be Your Best Self
Own it
Be a Star Player
Deliver it
Be the Perfect Host
PROPERTY INVESTMENTS
$3BN
Redevelopment
of Queen’s Wharf Brisbane
UP TO$850M
Potential investment in
The Star Gold Coast
UP TO$1BN
Potential investment at
The Star Sydney*
*Subject to all approvals. Investments include contributions from joint venture partners.
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 OUR
HIGHLIGHTS
62%
OF PRE-TAX PROFITS
PAID TO ALL LEVELS
OF GOVERNMENT
$13m+
$895m
CONTRIBUTION
TO CHARITIES,
COMMUNITY GROUPS
AND PARTNERSHIPS
ESTIMATED SPEND
ON 4,000+ SUPPLIERS
AUSTRALIA WIDE
$2,432m $264m 32.0¢
ACTUAL GROSS
REVENUE
($M)
STATUTORY
NPAT
($M)
BASIC EARNINGS
PER SHARE
(CENTS)
#1
‘GLOBAL LEADER’
CASINO AND GAMING
INDUSTRY
Dow Jones Sustainability Index (DJSI)
assessment 2016
16.0¢
DIVIDEND
PER SHARE
(CENTS)
AWARDS
MEMBER
Dow Jones Sustainability Index 2016
AWARDED
RobecoSAM Sustainability Award
Industry Mover 2016
(Dow Jones Sustainability Index assessment)
AWARDED
RobecoSAM Sustainability Award
Gold Class 2016
(Dow Jones Sustainability Index assessment)
CONSTITUENT
The Star Entertainment Group
remains a constituent of the
FTSE4Good Index
2,432
2,358
2,258
264
32.0
194
169
23.6
20.5
13.0
11.0
16.0
FINALIST
Australian HR Awards
(Employer of Choice, Diversity & Inclusion,
Reward & Recognition Program)
SILVER EMPLOYER
‘Pride in Diversity’
Australian Workplace Equality Index
for LGBTI Inclusion
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FORBES 5 STAR RATING
The Darling Hotel at The Star Sydney
is Sydney’s only luxury hotel to receive
the prestigious Forbes Five-Star rating
WINNER TAA AWARDS FOR EXCELLENCE
Best Environmental Initiatives
(Metropolitan Hotel) The Star Sydney
Tourism Accommodation Australia NSW
BACKGROUND IMAGE IS A CONCEPT IMAGE ONLY. SUBJECT TO APPROVALS.
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 CHAIRMAN’S
MESSAGE
Consistent with my messages in last
year’s Annual Report and Annual General
Meeting address, I am pleased to report
to shareholders that FY2017 saw The Star
Entertainment Group continue to mature
as a business, with steady operating results
reflecting a year of consolidation as our
concentration sharpens on executing our
strategic agenda. Core to this was further
advancement in the company’s strategy
of investing in key domestic assets and
diversifying our international business.
In delivering against strategic priorities,
we have made significant progress in our
pursuit of the opportunities that exist
today and long-term for Australia in the
tourism sector. In a landscape where
international visitation, most notably from
Asia, continues to rise substantially, we are
expanding and enhancing our properties
in the attractive destinations of Sydney,
the Gold Coast and Brisbane.
With continued stable leadership across
the Board and executive management
team, this concentration again delivered
sustained operating momentum and
financial performance, earnings growth
and returns to shareholders, despite
some disruption from capital works
projects across the Sydney and Gold Coast
properties as new and enhanced assets
were completed and opened.
Statutory net profit after tax (NPAT) for
the Group was $264.4 million, up 36%
on the prior year, supported by domestic
revenue growth in the second half of the
year along with ongoing effective cost
management, and assisted by a favourable
win rate in the International VIP Rebate
business. In normalised terms, applying
the normalised win rate of 1.35%, the
full year NPAT result was $214.5 million,
down 11.1% on FY2016 impacted by
lower turnover in the International VIP
Rebate business with disruption in the
North Asia market.
Statutory earnings before interest, tax,
depreciation and amortisation (EBITDA)
increased 19.9% on last financial year to
$586.2 million and normalised EBITDA
was down 7.4% to $515.1 million.
With these results, the Board declared a
final dividend of 8.5 cents per share (fully
franked), taking total dividends for the
year to 16 cents per share (fully franked), up
23.1% on FY2016 and representing growth
in dividends returned to shareholders over
each of the last five years.
As highlighted, these results were achieved
as transformational projects were carried
out and delivered across the properties.
This included completion of refurbished
hotel rooms across Astral Towers at
The Star Sydney and refurbishment
of all 596 hotel rooms at the newly
branded, The Star Gold Coast. These
reinvigorated hotel assets along with new
food and beverage and entertainment
offerings reflect our ongoing commitment
to delivering world-class tourism and
entertainment destinations with wide-
ranging offerings, coupled with excellence
in guest service. The validation of this
effort through The Darling at The Star
Sydney receiving the first Forbes Travel
Guide Five-Star rating in New South Wales
was particularly pleasing.
The 2017 financial year also saw the
continued close collaboration with our
Hong Kong based partners, Chow Tai Fook
complex, will be open ahead of the Gold
Coast 2018 Commonwealth Games, of
which The Star is very proud to be an
Official Partner.
On behalf of the Board, I congratulate
Matt Bekier and the management team
on their continued drive to make The Star
Entertainment Group Australia’s leading
integrated resort company and return
value to shareholders by delivering upon
strategic priorities while maintaining
momentum and efficiency in the existing
business operations.
I look forward to welcoming shareholders
and providing another update at the 2017
Annual General Meeting at The Star, Sydney.
Thank you for your ongoing support for
The Star Entertainment Group.
John O’Neill AO
CHAIRMAN
and Far East Consortium, on additional
investment opportunities to expand
and improve the value proposition
of our properties on the Gold Coast
and in Sydney. On the Gold Coast, we
received approval from the Queensland
Government to construct a new
700 room hotel and apartment tower
costing approximately $400 million,
which is the first stage in the master
plan for the property announced in
May 2016. In addition, our consortium
purchased the iconic beachfront resort,
the Sheraton Grand Mirage Resort
Gold Coast, complementing our South-
East Queensland integrated resorts and
enhancing their appeal to a broad range
of domestic and international visitors.
In January 2017, a significant
milestone was reached on the
Queen’s Wharf Brisbane integrated
resort development project with the
Destination Brisbane Consortium taking
possession of the 13 hectare CBD site and
commencing demolition works, which
are well underway and on schedule.
We expect to progress to foundations
work commencing in early 2018.
The ongoing growth in our existing
business, long-term tourism forecasts and
our drive to deliver world-class integrated
resorts with authentic local spirit provide
confidence in the scale and nature of
projects underway.
In FY2018 we are looking forward to the
completion and unveiling of the new
suites hotel tower at The Star Gold Coast,
including roof top dining and premium
gaming areas. This new luxury asset,
along with the reinvigorated existing
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 CEO’S
MESSAGE
The 2017 financial year witnessed the
ongoing transformation of The Star
Entertainment Group. We seek to become
Australia’s leading integrated resort
operator and seize opportunities emerging
within the domestic market and the
expanding international tourism sector.
This year, we executed important steps in
this strategy and delivered record statutory
earnings and shareholder dividends.
The Star Gold Coast – formerly Jupiters
– became the latest physical expression
of the Group’s ongoing evolution
when rebranded in March to represent
new standards of product excellence.
The property will be further improved
when a luxury suite hotel opens before the
Gold Coast 2018 Commonwealth Games.
Another milestone was the Group’s
acquisition of the Sheraton Grand Mirage
Resort on the Gold Coast in a joint venture
with Hong Kong based partners Chow Tai
Fook and Far East Consortium.
This valued relationship continues to
expand beyond the initial agreement
for the Queen’s Wharf Brisbane project.
It now extends to capital works in Sydney
– the planned The Ritz-Carlton Hotel
and apartment tower project – and a
planned hotel and apartment tower on
the Gold Coast.
Other critical elements to the business
strategy include the development of best
in class Loyalty capabilities, developing
talented teams and creating a culture of
guest service excellence. These capabilities
will ensure that The Star Entertainment
Group, as a leading company, is operating
world-class properties and maximising
value to shareholders.
OPERATING PERFORMANCE
The 2017 financial year showed good
progress in the performance of our
core business, despite a softer trading
environment and disruption in Sydney
and the Gold Coast.
The first half year involved major
development works and the relaunch of
the Loyalty program. We have seen positive
momentum post the Loyalty relaunch,
with member perception improving and
pleasing growth in private gaming room
revenues. In the second half of the year,
we delivered solid domestic revenue growth
in Sydney and the Gold Coast as disruption
decreased and guests responded positively
to completed investments.
For the full year, actual gross revenue
across the Group grew 3.2% to $2,432m,
with The Star Sydney growing by 1.8% to
$1,686m and the Queensland properties
increasing 6.5% to $746m. Normalised
gross revenue declined 3.9% to $2,337m.
Domestic gaming revenues grew 2% to
$1,545m across the Group in the 2017
financial year, largely due to a pleasing
performance in table games. Non-gaming
cash revenue of $248m was up 0.6% for
the year. This result would have been
further enhanced but for the impact of
disruption in the first half year prior to
the completion of key capital works.
The International VIP Rebate business
witnessed actual revenue growth of 7.3%,
supported by a high win rate of 1.59%
compared to the theoretical rate of 1.35%.
International VIP Rebate business turnover
was down 19.9%, with the lower volumes
impacted by the high win rate and the
well-documented disruption to the
North Asian market.
However, the diversification of our
International VIP Rebate business delivered
pleasing results. Our strategy of providing
a compelling high-end tourism proposition
for VIP and Premium Mass customers from
an expanding range of source markets
showed good traction. In support of this
strategy, we expanded our sales teams to
cover a broader international footprint.
We welcomed VIP or Premium Mass guests
from 13 countries and continue to assess
entry into additional markets.
It was also pleasing that our collections
remained strong. This reflected
a continuing focus on credit risk
management and effective credit processes.
Operating expenses for the 2017 financial
year showed a particularly good result.
Expenses were up 1% on last year to $971
million, despite record capital expenditure,
the relaunch of Loyalty, the expansion of
our VIP sales teams and the rebranding
of the Gold Coast property. This reflects the
company’s continued cost discipline and
focus to drive efficiency improvements.
AWARDS
The Star Entertainment Group and
its properties continued to receive
acknowledgement and recognition for
the quality of our offerings and our
commitment to service excellence.
The Darling at The Star Sydney had the
distinction of becoming the first luxury
hotel in NSW to be awarded the Forbes
Five-Star Rating. The accolade from the
Forbes Travel Guide is among the most
sought-after in the tourism and hospitality
sector. It was one of 34 awards bestowed on
The Star Sydney during the 2017 financial
year, including a Hall of Fame entry for
The Star Event Centre after winning the
“Best Specialty Event Venue” for the third
successive year at the National Meetings
and Events Awards. There were 14 awards
for our Queensland properties.
The Star Entertainment Group was also
awarded Silver Employer status by the
Australian Workplace Equality Index for
its LGBTI inclusion, and was a finalist
in the Australian HR awards in the
Employer of Choice, Diversity & Inclusion
and Reward & Recognition categories.
In terms of sustainability, we were
delighted that The Star Entertainment
Group was acknowledged as the global
leader in the Casinos and Gaming sector of
the Dow Jones Sustainability Index (DJSI)
assessment in 2016. The top ranking was
achieved for a second successive year when
the annual DJSI assessment was released
in September 2017. The Queen’s Wharf
Brisbane integrated resort development
also achieved a 6-Star Green Star
Communities Rating v1. This represents
world leadership in master planning.
TEAM AND COMMUNITY
Thousands of jobs will be created as
the transformation of our integrated
resorts continues over the next five years.
The growth of inbound tourism will also
require the industry more generally to
expand its collective workforce to cope
with demand. We are preparing for this
eventuality in a variety of ways, from
embedding our values and culture to
drive ongoing improvements in guest
service excellence, to partnering with
institutions in a practical and value-
add manner. During the 2017 financial
year, we partnered with TAFE NSW to
establish a Sydney School of Hospitality
Excellence. This follows the launch in the
previous year of the Queensland Hotel
& Hospitality School – a partnership with
TAFE Queensland.
In aligning with our business promise to
deliver experiences with authentic local
spirit, The Star Entertainment Group
encourages and supports the communities
in which we operate, providing widespread
assistance to organisations and key events.
In the 2017 financial year, the value of
contributions to community groups,
charitable organisations and partnerships
by The Star Entertainment Group’s
properties exceeded $13 million.
The Star Sydney committed total
funding of $1.5m to Barnardos Australia,
Taronga Conservation Society Australia
and Chris O’Brien Lifehouse. The property
also partnered with a range of community
groups and organisations including
the Gay and Lesbian Mardi Gras, the
NSW Rugby League, the Sydney Swans
and the Australian Turf Club, while also
joining OzHarvest, Australia’s leading food
rescue organisation.
In Queensland, ongoing support
was provided to Ronald McDonald
House South East Queensland, while a
partnership with Choice, Passion, Life
(formerly Cerebral Palsy League) entered
its 15th year. Assistance to Surf Lifesaving
Queensland has been continuous
since 1994 and in the 2017 financial
year included the donation of a new
inflatable rescue boat. Events and sports
partnerships included the Gold Coast 2018
Commonwealth Games, the Pan Pacific
Masters Games, Blues on Broadwater and
the Queensland Rugby League.
CAPITAL EXPENDITURE AND PRIORITIES
The Star Entertainment Group incurred
capital expenditure of $420 million, up
$114 million on the previous financial
year. This growth is due to development
works at The Star Sydney and The Star
Gold Coast. At both properties, there were
significant refurbishments of existing
hotel rooms and, on the Gold Coast, a new
luxury all-suite hotel neared completion.
Capital expenditure in the 2018 financial
year is expected to be at similar levels.
The Star Entertainment Group has five
priorities for the 2018 financial year.
They represent the next stage of executing
the transformation plan:
○ Improve earnings across the Group
through continued focus on domestic
gaming and operating efficiencies
○ Deliver on the next stage of the capital
works program, including completion of
demolition at Queen’s Wharf Brisbane
and the commencement of excavation
○ Progress planning approvals for
joint venture developments with
Chow Tai Fook and Far East Consortium
in Sydney and the Gold Coast
○ Continue diversification of the Group’s
VIP and Premium Mass revenue base
○ Continue the drive to differentiate the
value proposition at each property.
To deliver on these priorities, The Star
Entertainment Group continues to attract
new talent and make key appointments
across the business.
I would like to extend my gratitude to the
Board and management for their support
and commitment during the 2017 financial
year and, importantly, to the team members
who have contributed so wonderfully to our
ongoing growth and development.
I also want to thank the millions of
guests who visited us and experienced the
significant changes we have made, and
continue to make, to enhance each one
of our properties.
Matt Bekier
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 BOARD OF
DIRECTORS
JOHN O’NEILL AO
CHAIRMAN AND
NON-EXECUTIVE
DIRECTOR
MATT BEKIER
MANAGING DIRECTOR
AND CHIEF EXECUTIVE
OFFICER
KATIE LAHEY AM
NON-EXECUTIVE
DIRECTOR
RICHARD SHEPPARD
NON-EXECUTIVE
DIRECTOR
Diploma of Law; Foundation Fellow of the Australian Institute of Company Directors
John O’Neill was formerly Managing Director and Chief Executive Officer of Australian
Rugby Union Limited, Chief Executive Officer of Football Federation Australia,
Managing Director and Chief Executive Officer of the State Bank of New South Wales,
and Chairman of the Australian Wool Exchange Limited.
Mr O’Neill was also formerly a Director of Tabcorp Holdings Limited and Rugby World
Cup Limited.
Mr O’Neill was also the inaugural Chairman of Events New South Wales, which flowed
from the independent reviews he conducted into events strategy, convention and
exhibition space, and tourism on behalf of the New South Wales Government.
Mr O’Neill is currently a member of the Advisory Council of China Matters and a
Director of Sport Australia Hall of Fame (SAHOF).
Master of Economics and Commerce; PhD in Finance
Matt Bekier was previously Chief Financial Officer and Executive Director of the Company.
He was also Chief Financial Officer of Tabcorp Holdings Limited from late 2005 until the
demerger of the Company and its controlled entities in June 2011.
Prior to his role at Tabcorp, Mr Bekier held various roles with McKinsey and Company over
14 years. During that time, he focused on building a substantial practice in both post-merger
management and financial services, working across four continents.
Mr Bekier is currently a member of the Board of the Australasian Gaming Council and an
Honorary Adjunct Professor at Macquarie University.
Bachelor of Arts (First Class Honours), Master of Business Administration
Katie Lahey has extensive experience in the retail, tourism and entertainment sectors
and previously held chief executive roles in the public and private sectors.
Ms Lahey is currently the Chair of Tourism & Transport Forum and the Executive
Chairman Australasia for Korn Ferry International. She is also a member of the
Australian Brandenburg Orchestra Board.
Ms Lahey was previously the Chair of Carnival Australia and a member of the boards of
David Jones Limited, Australia Council Major Performing Arts, Hills Motorway Limited,
Australia Post and Garvan Research Foundation.
Bachelor of Economics (First Class Honours), Fellow of the Australian Institute of Company Directors
Richard Sheppard has had an extensive executive career in the banking and finance
sector including an executive career with Macquarie Group Limited spanning more
than 30 years.
Mr Sheppard was previously the Managing Director and Chief Executive Officer of
Macquarie Bank Limited and chaired the boards of a number of Macquarie’s listed
entities. He has also served as Chairman of the Commonwealth Government’s
Financial Sector Advisory Council.
Mr Sheppard is currently the Chairman and a Non-Executive Director of Dexus Property
Group and a Non-Executive Director of Snowy Hydro Limited. He is also a Director of the
Bradman Foundation.
GERARD BRADLEY
NON-EXECUTIVE
DIRECTOR
SALLY PITKIN
NON-EXECUTIVE
DIRECTOR
GREG HAYES
NON-EXECUTIVE
DIRECTOR
Bachelor of Commerce; Diploma of Advanced Accounting; Fellow of the Institute of Chartered
Accountants; Fellow of CPA Australia; Fellow of the Australian Institute of Company Directors;
Fellow of the Institute of Managers and Leaders
Gerard Bradley is the Chairman of Queensland Treasury Corporation and related companies,
having served for 14 years as Under Treasurer and Under Secretary of the Queensland Treasury
Department. He has extensive experience in public sector finance in both the Queensland and
South Australian Treasury Departments.
Mr Bradley has previously served as Chairman of the Board of Trustees at QSuper.
His previous non-executive board memberships also include Funds SA, Queensland
Investment Corporation, Suncorp (Insurance & Finance), Queensland Water Infrastructure
Pty Ltd, and South Bank Corporation.
Mr Bradley is currently a Non-Executive Director of Pinnacle Investment Management
Group Limited and a Director of the Winston Churchill Memorial Trust.
Doctor of Philosophy (Governance); Master of Laws; Bachelor of Laws; Fellow of the
Australian Institute of Company Directors
Sally Pitkin is a Queensland based company director and lawyer with extensive corporate
experience and over 20 years’ experience as a non-executive director and board member
across a wide range of industries in the private and public sectors.
Dr Pitkin currently holds various board roles, including as a Non-Executive Director of
Super Retail Group Limited, IPH Limited and Link Administration Holdings Limited.
Dr Pitkin is the President of the Queensland Division, and a member of the National Board
of the Australian Institute of Company Directors.
Dr Pitkin was previously a Non-Executive Director of Aristocrat Leisure Limited.
Master of Applied Finance; Graduate Diploma in Accounting; Bachelor of Arts;
Advanced Management Programme (Harvard Business School, Massachusetts);
Member of Institute of Chartered Accountants
Greg Hayes is an experienced executive and director having worked across a range of
industries including energy, infrastructure and logistics. Mr Hayes brings to the Board
skills and experience in the areas of strategy, finance, mergers and acquisitions, and strategic
risk management, in particular in listed companies with global operations. He is currently
a Director of Incitec Pivot Limited, Precision Group, Aurrum Holdings Pty Ltd and Home
Investment Consortium Company Pty Ltd.
Mr Hayes was previously Chief Financial Officer and Executive Director of Brambles
Limited, Chief Executive Officer & Group Managing Director of Tenix Pty Ltd, Chief
Financial Officer and later interim CEO of the Australian Gaslight Company (AGL),
Chief Financial Officer Australia and New Zealand of Westfield Holdings, and
Executive General Manager, Finance of Southcorp Limited.
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 EXECUTIVE
TEAM
The Star Entertainment Group’s experienced
executive team leads the company to deliver
world-class integrated resort assets, develop
its people and create shareholder value.
Back row from left to right:
JOHN DE ANGELIS
CHIEF INFORMATION OFFICER
PAULA MARTIN
GROUP GENERAL COUNSEL &
COMPANY SECRETARY
GREG HAWKINS
MANAGING DIRECTOR
THE STAR SYDNEY
MATT BEKIER
MANAGING DIRECTOR &
CHIEF EXECUTIVE OFFICER
GEOFF HOGG
MANAGING DIRECTOR QUEENSLAND
JOHN CHONG
PRESIDENT INTERNATIONAL
MARKETING
PAUL MCWILLIAMS
CHIEF RISK OFFICER.
Seated from left to right:
GEOFF PARMENTER
GROUP EXECUTIVE MARKETING &
CORPORATE AFFAIRS
CHAD BARTON
CHIEF FINANCIAL OFFICER
KIM LEE
CHIEF HUMAN RESOURCES OFFICER
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 GROUP
PERFORMANCE
The Star Entertainment Group delivered record
earnings in the 2017 financial year, enabling a 23%
increase in dividends for the year.
THE STAR SYDNEY
The Star Sydney’s success in the 2017
financial year continued the momentum
from 2016. Guests have responded to a
repositioned and upgraded offering, with
increased domestic and international
revenues helping deliver earnings growth.
The Star Sydney is one of the city’s most
sought after entertainment and tourism
destinations, welcoming over 10 million
guests per year.
In the 2017 financial year, The Star Sydney
was the recipient of 34 awards. The Darling
was the first ever Sydney-based hotel to
receive a Five-Star rating by the prestigious
Forbes Travel Guide. The Forbes Travel
Guide’s anonymous inspectors travel the
world to assess hotels, restaurants and spas
against up to 800 strict objective standards
in both service and facility. The Darling Spa
was also awarded a Forbes Four-Star Rating.
The Star Sydney was also proud to be
nominated for 13 awards in NSW at the
2017 Tourism Accommodation Australia
(TAA) Awards for Excellence with Momofuku
Seiōbo winning Restaurant of the Year and
Sokyo Lounge winning Bar of the Year in the
Metropolitan Hotels category. The property
also won the ‘Best Environmental Initiatives’
category at the TAA NSW Awards for
Excellence 2017 after achieving finalist status
in the previous two years.
The consistently awarded The Star Event
Centre was inducted into the Hall of Fame
after winning ‘Best Specialty Event Venue’
for the third consecutive year at the
National Meetings and Events Awards 2017.
The Star Sydney’s operating performance
for the 2017 financial year overall was
pleasing. Domestic revenues were impacted
by disruption from capital works in the
first half of FY2017, with solid growth in
the second half as new and refurbished
assets became available. Our International
VIP Rebate business faced disruption
in North Asian markets from 2QFY2017,
resulting in lower business volumes,
although revenues were helped by a higher
than expected win rate. Statutory gross
revenues increased 1.8% to $1.7 billion
(or down 8.5% on a normalised basis to
$1.6 billion). EBITDA increased 32.6% to
$401 million (excluding significant items)
for the year (or down 16.0% on a normalised
basis to $321 million).
Domestic table games business revenue
grew 5.7% for the year. Revenue from
the slots business increased 1.8% for the
year, with The Star Sydney increasing its
market share in the third quarter of the
2017 financial year as disruption eased and
gaming and non-gaming investments were
completed. Revenue from non-gaming
businesses declined 4.5% on the prior year,
impacted by disruption from capital works.
Turnover in the International VIP Rebate
business was $33.5 billion (a 29% decline
from the prior year), impacted by the high
win rate of 1.59% in the 2017 financial
year (up from 1.20% in the prior year) and
disruption to the North Asian market.
Effective cost management continued at
The Star Sydney, with operating expenses
down 0.8% to $614 million for the 2017
financial year, absorbing increases in
domestic gaming volumes, investments
in marketing, the relaunch of the loyalty
program in November 2016 and
wage indexation.
Strategic priorities at The Star Sydney
for the 2018 financial year remain focused
on investing in our core businesses to
attract repeat visitation from locals and
tourists. This includes continued progress
on investments to further enhance the
offering at The Star Sydney, as well as
submitting the Development Application for
the proposed $500 million tower (including
The Ritz-Carlton hotel and residential
apartments) in partnership with our
Hong Kong based partners, Chow Tai Fook
Enterprises Limited and Far East
Consortium International Limited.
THE STAR ENTERTAINMENT GROUP
THREE YEAR STATUTORY FINANCIAL RESULTS SUMMARY
REPORTED RESULTS
FY2015
FY2016
FY2017
$m
$m % change
$m % change
STATUTORY REVENUE
2,140.3
2,268.1
EBITDA
EBIT
NPAT
SIGNIFICANT ITEMS
(AFTER TAX)
450.8
287.1
169.3
2.7
↑6.0
↑8.4
↑13.2
↑14.9
2,344.0
586.2
421.7
264.4
↑3.3
↑19.9
↑29.8
↑36.0
488.8
325.0
194.4
0
↓100.0
8.9
↑100.0
The Darling Hotel at The Star Sydney. The Darling Hotel is proud to be Sydney’s only luxury hotel to receive a Forbes Five-Star rating.
NPAT BEFORE SIGNIFICANT
ITEMS
172.0
194.4
BASIC EARNINGS PER SHARE
20.5 cents
23.6 cents
FULL YEAR DIVIDEND
(FULLY FRANKED)
11.0 cents
13.0 cents
↑13.0
↑14.9
↑18.2
273.3
32.0 cents
↑40.6
↑36.0
16.0 cents
↑23.1%
* For further information please refer to the financial report contained in the Annual Report for the relevant financial year.
14
15
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 QUEENSLAND
The Group’s Queensland properties
delivered another year of earnings
growth in the 2017 financial year, whilst
progressing investments in both Brisbane
and the Gold Coast. These investments
demonstrate our commitment to
Queensland and tourism, whilst securing
the Group’s long term strategic position in
South East Queensland.
Together with our partners in the
Destination Brisbane Consortium, Chow
Tai Fook Enterprises Limited and Far East
Consortium International Limited, the
Group took possession of 12 hectares in the
Brisbane CBD in January 2017 to progress
development of the Queen’s Wharf Brisbane
integrated resort. Demolition works are on
schedule, with foundations work expected
to commence in early 2018.
Jupiters Hotel & Casino has been
successfully rebranded as The Star Gold
Coast, with the completion of significant
capital works repositioning and upgrading
the resort. The new luxury suite hotel at
The Star Gold Coast with its signature
accommodation, gaming and dining
offerings is scheduled to open before the
Gold Coast 2018 Commonwealth Games.
The Queensland Government has approved
construction of a new approximately
$400 million hotel and apartment tower
that the Group will deliver in partnership
with Chow Tai Fook Enterprises Limited
and Far East Consortium International
Limited subject to the completion of a
successful apartment pre-sales program,
with opening planned in 2021. Further,
the Group completed the acquisition
of the Sheraton Grand Mirage Resort,
Gold Coast with its partners during the
year, complementing our South East
Queensland integrated resorts and
enhancing their appeal to a broad range
of domestic and international tourists.
Our Queensland properties collectively
received 14 awards in the 2017 financial
year, with hotel and restaurant offerings
recognised for their quality. Highlights
included three awards at the prestigious
Queensland Hotels Association Awards
for Excellence. The Star Entertainment
Group was recognised for its Outstanding
Achievement in Training, and The Star
Gold Coast’s Garden Kitchen & Bar
was awarded Best Restaurant in the
Accommodation Hotels category.
Statutory gross revenue for the Queensland
properties increased to $746 million, up
6.5% compared to the 2016 financial year
(or up 7.9% on a normalised basis) due
to increased International VIP Rebate
business revenue. EBITDA of $199 million
(excluding significant items) increased
6.6% (up 11.5% on a normalised basis)
compared to the prior year.
Revenue from domestic gaming was
impacted by capital works disruption at
The Star Gold Coast in the first half, and
competitor investments and disruption
to access from the construction of the
Queen’s Wharf Brisbane development.
Table games revenue declined 1.4% and
slots revenues declined 2.8% in the 2017
financial year relative to the prior year.
Non-gaming business revenues increased
7.1% for the year, reflecting positive
customer response to new and refurbished
offerings at The Star Gold Coast.
Operating expenses of $357 million was up
4.3% on the prior year, driven by increased
activity, investments in loyalty, marketing,
the rebranding to The Star Gold Coast, and
wage indexation.
Strategic priorities for our Queensland
properties for the 2018 financial year
include completion of the luxury suite
hotel at The Star Gold Coast prior to
the Gold Coast 2018 Commonwealth
Games, the completion of demolition,
the commencement of excavation and
finalising the Plan of Development at
Queen’s Wharf Brisbane.
48
AWARDS
RECEIVED
ACROSS OUR
PROPERTIES
5.7%
INCREASE IN
DOMESTIC
TABLE GAMES
REVENUE
(SYDNEY)
11.5%
INCREASE IN
NORMALISED
EBITDA (QLD)
17
Treasury Brisbane.
16
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017
KEY PROJECTS
QUEEN’S WHARF BRISBANE
© Destination Brisbane Consortium. All rights reserved. Artist's impression. Subject to planning approvals.
18
The Star Entertainment Group – together with Destination
Brisbane Consortium partners Chow Tai Fook Enterprises
Limited and Far East Consortium International Limited –
is delivering an iconic development in Brisbane that will
revitalise the city’s heritage buildings, deliver striking
landmark architecture and will become a globally
recognised destination.
On 1 January 2017, Destination Brisbane
Consortium took possession of the
Queen’s Wharf Brisbane development
site to begin demolition and enabling
works on its $3 billion world-class project.
During the 2017 financial year:
○ Two CBD roads closed from January
2017 to enable the development’s safe
construction: a section of William Street,
from Elizabeth to Margaret streets,
during the build; and Queens Wharf
Road permanently
○ Destination Brisbane Consortium
appointed a demolition and early works
contractor, which has erected safety
hoarding stretching almost 1km around
the site that uses creative messaging to
showcase Brisbane as a changing and
growing city
○ As part of Destination Brisbane
Consortium’s heritage management
approach, heritage footing
investigations were conducted, extensive
monitoring procedures and equipment
were installed, and two of the nine
heritage buildings in the precinct were
braced by steel to ensure stability and
security ahead of demolition
○ Demolition works commenced
to remove three former government
non-heritage buildings in the precinct.
The site is expected to be level and ready
for underground car park excavation works
by early 2018.
Main construction works are expected
to begin in 2019, once excavation of the
foundations, basements and underground
car park is complete.
The Star Entertainment Group will
continue to operate Treasury Brisbane
until the new integrated resort opens and
the transition to a new casino occurs.
The Star Entertainment Group’s two
existing heritage buildings will be
subsequently repurposed by The Star
Entertainment Group into a hotel operated
by The Ritz-Carlton and a premium retail
precinct. The Star Entertainment Group
will retain these buildings under a
long-dated lease and will be a 50% equity
owner of the integrated resort component,
which includes the hotels and all public
realm areas.
The Queen’s Wharf Brisbane integrated
resort development includes a range of
tourism, infrastructure and residential
developments, including:
○ 50 new bars and restaurants
○ Five new hotels, including the world
renowned The Ritz-Carlton and the
6-star Rosewood, which will provide
more than 1,000 premium hotel rooms
○ New retail space
○ Restored and repurposed
heritage buildings
○ The equivalent of 12 football fields
in size of public space
○ A public Sky Deck located more than
100 metres above William Street
○ World-class gaming facilities (to replace
Brisbane’s existing Treasury casino)
which will comprise less than 5% of
the development footprint
○ 2,000 apartments
○ A new pedestrian bridge to South Bank.
The Queen’s Wharf Brisbane integrated
resort development is the largest private
sector project in Queensland, stretching
from George Street to the Brisbane River,
and from Queen Street to Alice Street.
The development will employ more than
2,000 workers during peak construction in
2020/21, and create more than 8,000 jobs
in Queensland when fully operational.
PROJECT TIMELINE*
2017
2017
Commence
demolition and
enabling works
at Queen’s Wharf
Brisbane
2019/20
Installation of
above-ground
infrastructure
2022
Expected opening
of the core
integrated resort
development
2018
Commence
excavation works
to remove around
600,000m3
of spoil
2021
Internal fit-out of
buildings in the
development
2024
Anticipated
opening of the
repurposed
Treasury
Building
2024
*Timeline is indicative only.
References to years are to calendar years.
19
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 KEY PROJECTS
THE STAR GOLD COAST
The property has relaunched as The Star Gold Coast
after more than 30 years as Jupiters Hotel & Casino.
This transition embodies an ongoing transformation.
The luxury suite hotel under construction at The Star Gold Coast.
The Star Entertainment Group, as part
of its commitment to the Gold Coast,
has also commenced work on the first
phase of its future master plan concept,
receiving approval from the City of Gold
Coast Council and the Queensland
Government for an additional hotel and
apartment tower on Broadbeach Island.
Subject to successful apartment pre-sales,
the complex could take the property’s
transformation to a combined investment
of up to $850 million.
The new hotel and apartment tower
is a project of the joint venture vehicle
– Destination Gold Coast Consortium
– including The Star Entertainment
Group and its partners Chow Tai Fook
Enterprises Limited and Far East
Consortium International Limited.
The development is the first phase of
a broader master plan concept that
includes the potential for up to five hotel
and/or residential towers, a world class
recreational deck with water features,
tropical gardens, pools and spa facilities,
and new entertainment offerings.
Development works at The Star Gold Coast
are well advanced, with the following
works already delivered:
○ A full refurbishment of all 596 hotel rooms
○ A refreshed and redesigned hotel lobby
○ Six new and exciting food and beverage
offerings, including the one-hatted Kiyomi,
Cucina Vivo, Garden Kitchen & Bar,
M&G Café and Bar, Mei Wei Dumplings
and a new-look Atrium Bar
○ A luxurious poolside experience
○ An exterior refresh of the existing hotel
and a rejuvenated events lawn
○ One of Australia’s largest permanent
outdoor projection systems.
With these projects fully delivered, the
next phase of the redevelopment and
expansion is advancing with the following
works program:
○ Construction of the new luxury
17 storey suite hotel, which is scheduled
to open before the Gold Coast 2018
Commonwealth Games
○ Continued expansion of the food and
beverage offering, with further new
restaurants and bars
○ Re-energised main gaming floor
experience, connecting the existing
building through to the luxury suite hotel
○ A refreshed property arrival experience
○ Canal front parkland upgrade
in partnership with City of Gold
Coast Council.
20
PROJECT TIMELINE*
2017
2017
Application
to construct a
new hotel and
apartment tower
with joint venture
partners approved
2018
Complete the
luxury suite hotel
(before the
Gold Coast 2018
Commonwealth
Games)
2021
Complete
the new joint
venture hotel
and apartment
tower (subject
to pre-sales
and associated
facilities)
2018
Pre-sales for
the apartments in
the proposed joint
venture hotel and
apartment tower
2018
Commence
preparatory works
for the new joint
venture hotel
and apartment
tower (subject
to successful
pre-sales)
2021
*Timeline is indicative only.
References to years are to financial years.
Concept image only. Subject to approvals.
21
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 KEY PROJECTS
THE STAR SYDNEY
The Star Sydney, one of Sydney’s most awarded
entertainment and tourism destinations, has up
to $1 billion in capital works projects completed,
in progress or in planning.
The Star Entertainment Group is
working with its joint venture partners,
Chow Tai Fook Enterprises Limited
and Far East Consortium International
Limited, to progress an additional
$500 million of proposed development
works at The Star Sydney. The proposed
development is progressing through the
planning stages and includes:
○ A new hotel and residential tower
proposed to be operated by the world
renowned The Ritz-Carlton. Following
a design excellence competition
overseen by a panel of industry experts
and after analysis and consideration of
community and stakeholder feedback,
internationally acclaimed architects
FJMT were selected to design the
proposed hotel and residential tower.
○ Additional food and beverage, retail,
function and event space, as well as
other resort facilities and attractions.
Concept image only. Subject to all approvals.
An initial $500 million investment in
The Star Sydney covers a range of works,
including the expansion of restaurants
and bars, upgrades to the Sovereign Room,
gaming and retail offerings, the renovation
of hotel rooms and facilities, and improved
customer flow and property access.
The 2017 financial year saw the
commencement and delivery of a range
of projects as part of this investment,
including:
○ The completion of the Astral Tower
hotel rooms upgrade and the
Astral Residences refurbishment
of 130 apartments
○ The completion of gaming works
including the new Vantage Room
(entry level domestic private gaming
experience), Stadium (the new multi-
terminal gaming experience) and the
new poker experience on the main
gaming floor area
○ The completion and launch of Latitude,
the new main gaming floor bar experience
○ The commencement of the new Hotel Club
Lounge located in the Astral Tower, due for
completion in the 2018 financial year
○ The commencement of the Astral
lobby and Porte Cochere upgrade and
refresh, due for completion in the 2018
calendar year.
FJMT’s proposed design for a new hotel and residential tower at The Star Sydney. Concept image only. Subject to all approvals.
22
PROJECT TIMELINE*
2017
Astral Tower room
refurbishment
completed
Community
engagement
commences
for proposed
joint venture tower
(The Ritz-Carlton)
Astral Lobby and
Port Cochere
works to
commence
Development
Approval to be
submitted for
joint venture
tower
2021
Expected
completion of
Sovereign Room
expansion
2018
Astral Residences
upgrades to be
completed
Enabling works
for Sovereign
Room expansion
to commence
2019
New food and
beverage assets to
be completed
2021
*Timeline is indicative only.
References to years are to financial years.
23
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 SUSTAINABILITY
At The Star Entertainment Group, we
embrace a holistic approach to sustainability,
and its importance to the workplace
and the community. ‘Our Bright Future’
is the core strategy developed, which
combines environmental, social and
governance objectives under four pillars.
The strategy is underpinned by an
annual materiality assessment.
WORLD CLASS
PROPERTIES
The Star develops and operates
world class liveable, environmentally
sustainable and resilient integrated
resorts and precincts
#1
‘GLOBAL LEADER’
CASINO AND
GAMING INDUSTRY
The Star Entertainment Group was ranked
global leader of the Casino and Gaming
Industry in the Dow Jones Sustainability
Index (DJSI) assessment 2016
6 STAR
GREEN STAR
COMMUNITIES
RATING V1
Awarded for the Queen’s Wharf Brisbane
integrated resort development
$780K
ONGOING COST
SAVINGS ACHIEVED
PER ANNUM
Cost savings from energy, water
and maintenance efficiency projects
implemented in FY2017
LEADING
COMPANY
GUEST
WELLBEING
TALENTED
TEAMS
The Star is an ethical corporate
citizen leading the way in
responsible gaming and
maintaining strong relationships
with our stakeholders
The Star is committed to giving
our guests a safe, secure and
comfortable experience
The Star attracts, develops
and retains a talented,
diverse and engaged team
$13+
MILLION
CONTRIBUTION
Value of contribution to community
groups, charitable organisations and
partnerships by The Star Entertainment
Group’s properties
18
MILLION
VISITORS
The approximate number of guests
who visited The Star Sydney, The Star
Gold Coast and Treasury Brisbane
in FY2017
20%
TARGET OF ASIAN
REPRESENTATION IN
LEADERSHIP ROLES
To better reflect the diversity of our
team members and guests
$350K
DONATED LOCALLY
IN SYDNEY
The Star Sydney is proud to support
its neighbours in the City of Sydney
and launched a Community Grants
Program in August 2016
400+
SECURITY AND
SURVEILLANCE TEAM
Security and surveillance team members
across The Star Entertainment Group’s
properties keep guests safe
70+
APPRENTICE
CHEFS
First, second and third year apprentice
chefs studied at The Star Culinary
Institute in FY2017
$18.9m
CONTRIBUTED
TO RESPONSIBLE
GAMBLING FUND
(NSW)
The Responsible Gambling Fund (NSW)
supports projects and services that aim to
reduce and prevent the harms associated
with problem gambling
15,000 #1
COMMUNITY
NEWSLETTERS
DELIVERED
The Star Sydney communicates with
local residents in Pyrmont providing
development and operational updates
OUTSTANDING
ACHIEVEMENT
IN TRAINING
Awarded to our Queensland properties at
the Queensland Hotel Association (QHA)
Awards for Excellence
24
24
25
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 SUSTAINABILITY
SUSTAINABILITY STRATEGY
REDUCING RESOURCE USE
The Star Entertainment Group continues
to target sustainable reductions in resource
use through capital and operational
energy and water improvement projects.
To support this commitment, The Star
Entertainment Group set long term carbon
and water targets in May 2017 to achieve
a 30% reduction in carbon and water
intensity by FY2023 against a baseline of
FY2013 on a square meter basis. For the
2017 financial year and in this Report,
resource intensity has been reported on
a per visitor basis in addition to absolute
consumption. From FY2018, intensity
reporting will move from visitation to
square meters. As the company’s portfolio
is expected to grow substantially with new
assets being developed and new loads
coming on-line, resource use is expected
to increase in absolute terms. However,
consumption per square meter should
decrease as energy and water retrofit
projects occur and new, more efficient floor
space opens over time.
To ensure the Group continues to prioritise
energy efficiency in an expanding portfolio
with energy prices expected to continue to
rise, an energy and water project pipeline
was established in FY2015 to ensure
projects are implemented each year that
deliver cost and environmental benefits.
To date, the Group has implemented
over twenty six projects delivering
environmental savings, with financial
savings of over $1.4 million achieved in
the last two financial years.
The Group has also set more stringent
controls for developments and new projects
through the revised Sustainable Design
and Operational Standards, specifying
mandatory and voluntary requirements to
ensure new build and refurbishment projects
maximise energy and water savings and
best practice sustainability opportunities.
The following resource saving projects
were delivered in FY2017:
○ The Star Sydney refurbished the
Astral Tower and Residences, delivering
1,200 MWh in electricity savings and
over 2,000 GJ in gas savings and over
26,000 kL of water savings per annum.
○ Treasury Brisbane introduced a chiller
control strategy at 159 William Street,
Brisbane (with expected savings of
240 MWh) and installed power factor
correction to the Treasury buildings.
To reduce energy from lighting, an
upgrade to LEDs on the main gaming
floor reduced the lighting load from
60 kW to 19 kW.
○ The Star Gold Coast has progressed
through a $40 million infrastructure
project to allow for expansion plans
to the island with more efficient plant
and equipment. The benefits of these
upgrades are expected to be realised
from FY2018 as the projects complete.
The refurbishment of the existing hotel’s
596 rooms was completed in 2017 and
included a number of sustainable design
features, delivering estimated energy
savings of 1,334 MWh and water savings
of 22,000 kL per annum.
ENERGY AND CARBON EMISSIONS
The Group’s total emissions in carbon
dioxide equivalents (CO2-e) from gas and
electricity for the 2017 financial year were
101,170 tonnes. This footprint equates
to a decrease of 3.5% from 2016 and a
decrease of 6.8% from base year FY2013.
The Group’s total energy consumption
from gas and electricity for the 2017
financial year was 598,576 gigajoules (GJ)
which was a 2.3% decrease from the 2016
financial year and a 1.5% reduction from
base year FY2013. On an intensity basis,
the Group’s carbon emissions decreased
from 5.8 kg CO2-e/visitor in 2016 to 5.7 kg
CO2-e/visitor in 2017 and achieved a 15%
reduction from 6.7 kg CO2-e/visitor from
base year FY2013. Energy consumption
per visitor decreased from 33.8 MJ/visitor
in FY2016 to 33.7 MJ/visitor in FY2017,
and achieved a 9% MJ/visitor reduction
from 37.2 MJ/visitor from base year FY2013.
WATER CONSUMPTION
The Group’s total potable water
consumption was 817,121 kL in the 2017
financial year, a 3.4% decrease from FY2016
however an overall increase of 18.7% from
base year FY2013. On an intensity basis, the
Group’s water consumption has decreased
from 46.6 litres per visitor in FY2016 to
46.1 litres per visitor in FY2017 however
intensity has increased from 42.2 litres per
visitor in base year FY2013.
All properties except The Star Gold
Coast experienced decreases in water
consumption in the FY2017 when compared
to FY2016, saving over 28,740 kL in total.
The Star Gold Coast’s water consumption
increased by 3,000 kL which was expected
due to the reverse osmosis plant being
stopped in September 2016 to allow for
relocation and upsizing in capacity as part
of the infrastructure improvement project.
The new plant will double in size and will
be installed in 2018.
TARGETING RECYCLING
IMPROVEMENTS
The Group takes a comprehensive
approach to improving landfill diversion
with the Waste Strategy targeting recycling
improvements across all areas of the
business from offices, to bars, restaurants,
hotel rooms and entertainment offerings.
The Group has been tracking recycling
performance against the base year
FY2013 to ensure that improvements are
measurable, continue to divert increased
waste volumes from landfill and promote
behavior change across the organisation.
Across the Group, total recycling rates
have increased from 10% diversion
in FY2013 to 36% diversion across all
operations in FY2017. The Star Sydney
reached the highest diversion rate to date
achieving a rate of 49% within the year.
On an intensity basis, recycling per visitor
in tonnes has increased as the Group’s
recycling performance increased. During
the financial year a number of initiatives
have been introduced to ensure continuous
improvement including:
○ the introduction of commingle bins as
part of the Astral Tower and Residences
refurbishment
○ the rollout of new dual recycling bins
for guest use at The Star Gold Coast
and Treasury Brisbane
○ the establishment of dedicated Waste
Strategy Groups focusing on training,
auditing, process improvement and
behavioural change programs
○ undertaking multiple site audits at
The Star Sydney with specialised
training running in peak periods to
maximise recycling in bars
○ expanding the Soap Aid recycling
scheme to The Darling Hotel, collecting
over 1,450 kgs of used soaps since the
program began
○ the commencement of a program to
recycle Nepresso capsules from
The Star Gold Coast hotel rooms. To date
over 3,500 capsules have been recycled
○ the celebration of National Recycling
Week with information stands, team
member giveaways, and training surveys
on recycling.
CLIMATE RISK ASSESSMENT
The Star Entertainment Group recognises
that its properties may be susceptible to
future changes in climate. Accordingly,
we are committed to improving the
resilience of our business operations,
our assets, and the precincts in which
our properties are located.
The Star Entertainment Group completed
climate risk assessments for each of our
properties during FY2017. The project
assessed the predicted climate variables
for each location including the expected
changes in rainfall, temperature and
extreme weather events, and assessed
these predicted physical impacts on the
buildings. By analysing the predicted
climate exposure and property sensitivity,
the climate risk was identified for each of
our properties. To manage these risks into
the future and to design and build with
a changing climate in mind, prioritised
mitigation and adaptation actions have
been developed and are included in
the Group’s Sustainable Design and
Operational Standards.
CARBON EMISSIONS
ENERGY CONSUMPTION
WATER CONSUMPTION
RECYCLING RATES
6.7
,
5
9
5
8
0
1
37.2
33.2
32.5
33.8
33.7
46.6
46.1
0.15
0.16
0.14
42.2
42.0
0.09
6.0
,
3
5
9
4
0
1
5.7
9
9
0
5
0
1
,
5.8
,
9
2
8
4
0
1
5.7
0
7
1
1
0
1
,
,
6
7
4
7
0
6
,
5
4
4
4
8
5
3
5
5
9,
9
5
8
7
8
2
1
6
,
,
6
7
5
8
9
5
0
4
4
8
8
6
,
38.9
8
9
8
3
8
6
,
9
2
2
6
7
7
,
,
1
6
8
5
4
8
0.03
0
1
1
2
1
7
1
8
,
FY13
FY14
FY15
FY16
FY17
FY13
FY14
FY15
FY16
FY17
FY13
FY14
FY15
FY16
FY17
FY13
0
2
FY14
1
3
FY15
3
3
FY16
6
3
FY17
CARBON EMISSIONS
(TONNES CO2-E)
EMISSIONS INTENSITY
(KG CO2-E/VISITOR)
ENERGY CONSUMPTION
(GJ)
ENERGY INTENSITY
(MJ/VISITOR)
WATER CONSUMPTION
(KL)
WATER
(L/VISITOR)
RECYCLING RATE (%)
RECYCLING RATE INTENSITY
(KG/VISITOR)
* 2.13% of FY2017 utility accounts were unbilled at the time of reporting. The missing usage has been estimated as 1.0% (1.1 GWh) for electricity, 0.7% (1.3 Tj) for gas and 3.5% (28.9 ML) for water.
* The FY2013 baseline for waste has been recalculated. ‘Recycling intensity’ kg/visitor has been used in FY2017, not ‘waste to landfill intensity kg/visitor’ as used in the FY2016 report, which
better reflects recycling performance.
* Visitation numbers have been restated for The Star Sydney in FY2016 impacting the FY2016 intensity per visitor metric.
26
27
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 SUSTAINABILITY
DELIVERING WORLD CLASS PROPERTIES
GREEN BUILDING RATINGS
In the 2017 financial year, The Star
Entertainment Group continued to
achieve and commit to green building
ratings with both Green Star and the
National Australian Built Environment
Rating System (NABERS).
Destination Brisbane Consortium
(on behalf of The Star Entertainment
Group and its joint venture partners) was
awarded a 6 Star Green Star Communities
Rating v1 for the Queen’s Wharf Brisbane
development which represents world
leadership in master planning.
As development progresses, the
Queen’s Wharf Brisbane integrated resort
development will move towards achieving
6 Star Green Star Design & As Built rating
commitments for all new buildings, and
aims to achieve Australian best practice
sustainability outcomes on the repurposing
of existing heritage buildings.
The Star Entertainment Group also registered
the proposed The Ritz-Carlton hotel and
residential tower at The Star Sydney for a
5 Star Green Star Design & As Built rating,
and The Star Entertainment Group’s
corporate office in New South Wales was
certified with a NABERS Energy Tenancy
Rating, achieving 5 Stars.
QUEEN’S WHARF
BRISBANE
Integrated resort
development
Communities
v1
RATING
STATUS
6 Star Green Star Communities
Rating v1 achieved
Committed to achieving a 6 Star
Green Star Design & As Built rating
for non-residential new buildings
Committed to achieving industry
best practice design for existing
heritage buildings
Committed to achieving Green
Star Performance ratings for each
non-residential building
5 Star NABERS Energy Tenancy
Rating achieved
Committed to achieving a 5 Star
Green Star Design & As Built rating
SYDNEY CORPORATE
OFFICE
60 Union Street,
Pyrmont NSW
THE STAR SYDNEY
Proposed The Ritz-Carlton
hotel and residential tower
A newly refurbished room at The Astral Residences.
PLANNING AND DESIGNING
IN SUSTAINABILITY –
THE ASTRAL TOWER
AND RESIDENCES
The Star Entertainment Group
focuses on achieving energy and water
efficiency outcomes in all refurbishment
and development projects without
comprising guest experience.
In the recent $130 million
refurbishment of the Astral Tower and
Residences at The Star Sydney, modern
luxury was achieved in each of the
375 rooms refurbished. This upgrade
also contributed towards achievement
of our sustainability goals.
Our Sustainable Design and Operational
Standards were applied in the planning
and design phase, focusing on energy
efficient lighting selection, smart controls,
water efficient fixtures, fittings and toilets
with high WELS ratings, and in-room
recycling for guests.
Through improved specifications in
design, the refurbishment project is
estimated to deliver over 1,200 MWh
in electricity savings, over 2,000 GJ in
gas savings and over 26,000 kL of water
savings per annum. These energy savings
equate to a total annual carbon saving
of approximately 900 tonnes, which is
approximately 2.4 tonnes of CO2 for
each room refurbished.
The sustainable design features used
in the refurbishment of the Astral Tower
and Residences are estimated to deliver
annual cost savings of over $370,000 in
energy, water and maintenance expenses.
THE DESIGN ELEMENTS FOR THE ASTRAL TOWER AND RESIDENCES INCLUDED:
35W HALOGEN
DOWNLIGHTS BEING
REPLACED WITH
7.5W LED LIGHTS
TOILETS ARE
DUAL FLUSH
4 STAR WELS RATED
REPLACEMENT OF
OLD FAN COIL
UNITS WITH MORE
EFFICIENT MODELS
BATHROOM TAPS
AND SHOWER
HEADS ARE NOW
5 STAR WELS RATED
UPGRADING ROOM
CONTROLS AND IN-
ROOM TECHNOLOGY
WITH C4 SUITE
CONTROL SYSTEM THAT
ENABLES THE ROOM TO
GO INTO A SLEEP MODE
TO CONSERVE ENERGY
© Destination Brisbane Consortium. All rights reserved. Artist's impression. Subject to planning approvals.
28
Illustration only. Not to scale.
29
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 SUSTAINABILITY
DELIVERING WORLD CLASS PROPERTIES
SUSTAINABILITY
LEADING COMPANY
SUSTAINABLE PROCUREMENT
The Star Entertainment Group is committed to continuous
improvement in supply chain management and takes a long-
term view to managing and maintaining relationships with
suppliers and contractors.
During the year, our Sustainable Procurement Principles
were refreshed to require our suppliers to consider ethical,
environmental and social sustainability impacts on the
communities in which we operate, as well as overall resource
use. We have taken steps to conduct a gap analysis of our
supply chain to understand high impact areas that will form
the basis of our Responsible Supply Chain Strategy.
FY2017 SUSTAINABLE PROCUREMENT INITIATIVES
Across the business, we have been working with our suppliers on
innovative and sustainable product and process solutions which
include the following improvements:
○ Installed wine taps in high volume bar areas and
self-serve water fountains to reduce glass bottles and
plastic packaging
○ Moving to polycarbonate and melamine reusable products
in bars and restaurants, to avoid using disposable plastic
for eat in options
○ Using iPads for stocktake and food safety recording,
reducing paper wastage
○ Expanded the towel and sheet reuse choices for guests in
the Astral Tower and Residences, reducing energy, water
and detergent use from laundering
○ Implemented printing practices to reduce paper usage
and subsequent CO2 emissions, by standardising
printing configurations
○ Over 250,000 litres of our used cooking oil was recycled into
biodiesel and stockfeed manufacture (our oil management
program delivered cost savings of over $70,000 during
the year)
○ Fresh cooking oil is now delivered in tanks, which has
avoided the use of more than 22,500 20 litre bins that would
have otherwise gone to landfill
○ Increasing spending on biodegradable and carbon neutral
food service packaging and cups by 50% between FY2016
and FY2017
○ All disposable napkin ranges are now made with
Forest Stewardship Council (FSC) certified pulp and are
carbon neutral.
The Star Entertainment Group has a proud record of
responsible corporate citizenship and embraces a culture
of social responsibility, ethical behavior and community
support, to promote sustainable business practices.
REUSING WASTE OYSTER SHELLS
TO IMPROVE HARBOURSIDE ECOLOGY
WITH OCEANWATCH AUSTRALIA
The Star Sydney was delighted to collaborate with OceanWatch
Australia to donate used oyster shells from the Harvest
Buffet at The Star Sydney to OceanWatch Australia’s Living
Shoreline’s Program. The program aims to re-establish
Australian intertidal reefs supporting habitat growth in
dedicated rehabilitation areas across Sydney Harbour.
Over a number of restaurant sittings, The Star Sydney’s
Harvest Buffet and stewarding teams worked with OceanWatch
Australia to collect over 500 kgs of used oyster shells. Once
collected, the Ocean Watch Australia team processes, cleans
and bags the shells for placement in Sydney Harbour
to create artificial reefs which prevent erosion and create
a habitat for marine life.
OceanWatch Australia works with the community to ensure
Australia’s marine environment is healthy, productive, valued
and used in a responsible way.
Image: The Star Entertainment Group team members
with OceanWatch Australia Program Manager
Simon Rowe during a visit to Oceanwatch Living
Shoreline’s Program at Lane Cove National Park.
Image above: The Star Sydney is honoured to partner with City West Housing, a non-for-profit organisation supporting low to moderate income earners with housing, to offer a free cricket
pilot program for teenagers.
TRUSTED COMMUNITY
PARTNERS
Supporting local and state based
charities as well as community groups
and events is an important factor in
The Star Entertainment Group’s
commitment to foster local spirit and be
active and valued participants in each of
the cities in which it operates. In the 2017
financial year, The Star Entertainment
Group is proud to have made contributions
in excess of $13 million to a range of
community groups and events, and
charitable and sporting organisations.
Support is provided in a variety of forms,
reflecting the diversity of groups with which
The Star Entertainment Group engages.
This includes active participation by team
members, direct assistance via grants, and
sponsorship arrangements. Each property
is proud to also provide in-kind use of our
world-class venues, including the provision
of event management and food and
beverage supplies.
The Star Entertainment Group has built on
its long-term involvement with charities
in Queensland including Choice, Passion,
Life (formerly the Cerebral Palsy League)
and Surf Life Saving Queensland.
Relationships with the premier partners
announced by The Star Sydney in
2016 – Taronga Conservation Society
Australia, Barnardos Australia and
Chris O’Brien Lifehouse also continued
in the 2017 financial year. To ensure
the sustainability of our partnerships,
contributions are characterised by strong
synergies and a natural association with
our properties in Sydney, Brisbane and
the Gold Coast.
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31
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 SUSTAINABILITY
LEADING COMPANY
THE STAR SYDNEY
In the 2017 financial year, The Star
Sydney committed collective financial
funding of $1.5 million to Barnardos
Australia, Taronga Conservation Society
Australia and Chris O’Brien Lifehouse.
To further support these relationships,
team members participated in a wide
range of volunteering activities, including
a complete family home renovation project
with Barnardos Australia, supporting
bush regeneration for vital wildlife
conservation programs for Taronga Zoo,
and volunteering their time to art project
‘Arterie’ at Chris O’Brien Lifehouse.
The Star Sydney is proud to support
its neighbours in the city of Sydney
and launched a Community Grants
Program in August 2016. Friends of
Pyrmont Community Centre, the Harris
Community Scholarship Fund and the
Pyrmont History Group were the first to
receive a community grant from The Star
Sydney. The Star is also proud to partner
with City West Housing, a non-for-profit
organisation supporting low to moderate
income earners with housing, to offer a
free cricket pilot program for teenagers
living in the Ultimo and Pyrmont areas.
The Star Sydney was also involved in
a range of local event and sporting
partnerships, including:
○ Being the Official Partner of the NSW
Rugby League and the official home of
the NSW Blues, including developing
the NSW Blatchys Blues SMARTWiG
campaign for fans
○ Being a Premier Partner of the Sydney
Swans and hosting key Sydney Swans
events, including the Sydney Swans
Guernsey Presentation and Hall of Fame
Induction Dinner
○ Being a Foundation Partner and the
Official Entertainment Partner of
the Australian Turf Club, including
participation in The Star Doncaster Mile,
The Star Epsom and The Star Chinese
Festival of Racing
○ Joining OzHarvest, Australia’s leading
food rescue organisation, to serve
thousands of people a free hot meal
in Martin Place, as part of the ‘Think.
Eat. Save’ campaign.
TREASURY BRISBANE
Treasury Brisbane is a proud supporter to
several community-focused organisations
across the sporting, charity and cultural
sectors. During the 2017 financial year,
Treasury Brisbane continued its association
with Queensland Rugby League as Official
Partner, and in conjunction with The
Star Gold Coast, was the official home
of the XXXX Queensland Maroons. City
pride and local spirit are key elements
of our community strategy, and in
September 2016, Treasury Brisbane was
proud to support one of Australia’s major
international arts and cultural events
as one of the Principal Partners of the
Brisbane Festival. Treasury Brisbane and
the Brisbane Festival collaborated to deliver
an interactive pop-up dance experience –
‘You should be Dancing’.
In conjunction with The Star Gold Coast,
Treasury Brisbane again supported Ronald
McDonald House South East Queensland
(RMHSEQ). Treasury Brisbane was a major
sponsor of the Brisbane International
tennis tournament and raised $83,500 for
RMHSEQ through the ‘Aces for Hearts’
initiative (for every ace served, $100 was
donated to the charity). Treasury team
members also committed their time to
create a ‘Make a Meal’ event for sick children
and their families that included a buffet
smorgasbord and a visit from Santa.
Treasury Brisbane was also proud
to be involved in other events and
partnerships, including:
○ Celebrating 15 years of consecutive
support for Choice, Passion, Life
(formerly the Cerebral Palsy League) and
being Presenting Partner for the Live Large
Festival in South Bank
○ Being a Presenting Partner of the
Asia Pacific Screen Awards (APSA),
Asia Pacific’s highest accolade
in film
○ Participating in the National Trust
of Queensland’s Brisbane Open
House event by opening Treasury
to the public and conducting tours
○ Being a Partner of the Brisbane
Racing Club with naming rights for
Treasury Brisbane Ladies Oaks Day.
More than $20,000 was also donated
to other community organisations
through direct contributions and
our ‘Open Your Hearts’ program
that invites team members to
nominate worthy recipients for
charitable donations.
Entertainment on Sky Terrace during The Star Chinese Festival of Racing as
part of The Star Sydney’s partnership with the Australian Turf Club (ATC).
The Star Sydney's Managing Director Greg Hawkins
with Momofuku Seiōbo Head Chef Paul Carmichael
during Oz Harvest's 'CEO Cook Off’. Collectively
the event raised $1.7 million, which results in
3.4 million meals to people in need.
Treasury Brisbane was proud to support one of Australia’s major international
arts and cultural events as one of the Principal Partners of the Brisbane Festival.
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33
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 SUSTAINABILITY
LEADING COMPANY
The new inflatable rescue boat donated by
The Star Gold Coast to Surf Life Saving Queensland.
THE STAR GOLD COAST
The Star Gold Coast maintains long-term
relationships with key charity partners in
Queensland, and actively encourages team
members to contribute to the community
in which they live, work and play.
The Star Gold Coast continued its support of
Surf Life Saving Queensland (a partnership
which began in 1994) by donating a new
inflatable rescue boat to assist in keeping
local beachgoers safe.
TO ENSURE THE
SUSTAINABILITY OF
OUR PARTNERSHIPS,
CONTRIBUTIONS ARE
CHARACTERISED BY
STRONG SYNERGIES
AND A NATURAL
ASSOCIATION WITH
OUR PROPERTIES.
34
The Gold Coast property hosted a
Daffodil Day morning tea with charity
partner Cancer Council Queensland,
unveiling an edible display to celebrate
30 years of the iconic fundraiser which helps
make a difference for cancer patients and
their families.
The Star Gold Coast also supported the
Currumbin Wildlife Hospital Foundation
and was a platinum sponsor of the
Foundation’s ‘Sanctuary Under the Stars’
fundraising event. The Star Gold Coast
provided much-needed winter warmth to
sick or injured animals as well by donating
hundreds of blankets to the Currumbin
Wildlife Hospital.
Team members nominated and supported
local organisations and charities through
our ‘Open Your Hearts’ program and other
in-kind donations collectively totalling
close to $60,000.
The Star Gold Coast is also involved in
various event and sporting partnerships
on the Gold Coast, including:
○ First Official Partner of the Gold Coast
2018 Commonwealth Games. In April
2017, The Star Gold Coast proudly
hosted a breakfast to celebrate one
year until the Commonwealth Games.
Guests included Gold Coast 2018
Commonwealth Games ambassadors
and athletes Sally Pearson OAM, Steve
Moneghetti AM, and Gold Coast 2018
Commonwealth Games Corporation
Chairman Peter Beattie AC
○ Official Partner of Blues on Broadbeach,
an iconic Australian blues festival that
nurtures Australian talent and provides
a stage for international acts
○ Naming rights sponsor of the Pan Pacific
Masters Games, which attracted more
than 14,000 athletes from 20 countries
○ Official Partner of the Queensland
Rugby League (QRL) and Home of
the XXXX Queensland Maroons, in
conjunction with Treasury Brisbane.
Treasury Brisbane chefs with mum Jenny Milne and her son Robbie.
WE’RE PROUD TO
SUPPORT RONALD
MCDONALD HOUSE
SOUTH EAST
QUEENSLAND WITH
THE OPENING OF
THEIR NEW SOUTH
BRISBANE HOUSE.
GEOFF HOGG,
MANAGING DIRECTOR
QUEENSLAND
THE STAR ENTERTAINMENT GROUP
COMMUNITY PARTNERSHIP:
RONALD MCDONALD HOUSE SOUTH
EAST QUEENSLAND
On 5 November 2016, Treasury Brisbane
and The Star Gold Coast team members
were proud to be on hand to support
Ronald McDonald House South East
Queensland (RMHSEQ) with the official
opening of their new South Brisbane facility.
RMHSEQ provides accommodation for
the families of seriously ill children who
live more than 50km from the treatment
hospital in Brisbane.
In 2014, Treasury Brisbane and The Star
Gold Coast pledged $3 million over three
years to assist in the construction of a
new house in Brisbane. Both properties
have undertaken a number of initiatives
to raise money for the house.
The new house is one of the largest
Ronald McDonald Houses in the world,
includes 70 accommodation rooms, play
areas, outdoor space, laundry facilities
and a rooftop function area. We are
thrilled to have also delivered and
sponsored the heart of house area that
consists of a communal kitchen, dining
and lounge area.
The fundraising activities benefited
Ronald McDonald House’s two Family
Rooms at the Gold Coast University
Hospital as well.
The Star Entertainment Group also
provided support to the fit-out works of
the new house by putting RMHSEQ in
touch with some of our furniture and
kitchen suppliers to reap significant
savings of approximately $140,000.
In addition to their financial contribution,
Treasury Brisbane and The Star
Gold Coast have found other ways to
help the charity through the provision
of in-kind services. Treasury Brisbane
hosted Ronald McDonald House
‘Captain of Industry’ fundraising lunches
including their inaugural Business
Leaders Group luncheon.
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 SUSTAINABILITY
LEADING COMPANY
AN INTEGRAL
PART OF THE
DAILY OPERATIONS
IS THE PROVISION
OF A SAFE AND
SUPPORTIVE
ENVIRONMENT
FOR OUR TEAM
MEMBERS AND
OUR GUESTS.
RESPONSIBLE GAMBLING
The Star Entertainment Group provides
a variety of engaging entertainment
experiences at its properties. An integral
part of the daily operations is the provision
of a safe and supportive environment for
our team members and our guests.
While many of The Star Entertainment
Group’s guests enjoy gambling as part of
their leisure and entertainment experience
and do so within their financial means,
some guests experience problems in
controlling their gambling habits.
The Star Entertainment Group has in place
a responsible gambling program which is
designed to identify at an early stage guests
who may be exhibiting signs of having
problems in controlling their gambling
habits, and subsequently support those
guests while they seek counselling or
other appropriate treatment.
The objective of the responsible gambling
program is to minimise the potential
harm that may be caused by gambling
(such as financial hardship, emotional
distress and relationship breakdown), and
to provide guests with the means to make
informed decisions about managing their
gambling behaviours.
Key operational aspects of The Star
Entertainment Group’s responsible
gambling program are:
Team members at The Australasian Croupier Championships held at The Star Gold Coast.
○ Providing sensitive and confidential
support to guests seeking to exclude
themselves from attending one or more
of The Star Entertainment Group’s
casinos (The Star Entertainment Group
has agreements with selected Gambling
Help Services in Queensland and
New South Wales to allow individuals
to self-exclude from a casino without
having to attend the casino in person)
○ Assisting self-excluded guests to also
self-exclude from other gambling venues
○ Providing clocks throughout the casinos
so that guests are aware of time spent on
gambling activities.
○ Encouraging guests to take regular
breaks in play
○ Preventing intoxicated guests from
participating in gambling activities
○ Prohibiting the cashing of cheques to
fund gambling activities (other than
by prior arrangement)
$100+m
CONTRIBUTED TO
THE QLD GAMBLING
COMMUNITY BENEFIT
FUND* SINCE 1987
* previously the Jupiters Casino Community
Benefit fund
Board oversight of The Star Entertainment
Group’s responsible gambling program
is provided by the People, Culture and
Social Responsibility Committee. The
operational aspects of the responsible
gambling program are implemented and
applied by The Star Entertainment Group’s
three Patron Liaison Managers who report
directly to The Star Entertainment Group’s
Chief Risk Officer.
There are also Responsible Gambling
Liaison Officers who are available at each
property to provide on-the-floor support to
guests and their relatives.
The following initiatives also support
The Star Entertainment Group’s approach
to responsible gambling:
○ All new team members are introduced
to responsible gambling practices as
part of their orientation and complete
a bi-annual responsible gambling
refresher training session
○ Our Security and Surveillance staff are
trained to prevent minors and those
persons who have chosen to self-exclude
themselves from gaining access to
gaming areas
○ Each property operates under a
‘Responsible Gambling Code of
Practice’ which sets the standards
and requirements to be followed for
the responsible delivery of gambling
products and services
○ The Star Entertainment Group’s Patron
Liaison Managers are members of the
National Association for Gambling
Studies Inc., which is a non-profit
organisation that aims to promote
discussion and research into all areas
of gambling activity
In Queensland, one of The Star
Entertainment Group’s Patron Liaison
Managers attends Responsible Gambling
Network meetings on the Gold Coast,
○ Providing guests with readily
○ Prohibiting betting on credit terms
○ Conducting responsible advertising and
marketing campaigns in compliance
with applicable regulations and industry
codes of practice
accessible information about problem
gambling, including symptoms and
treatment options
○ Working with external support agencies
to provide assistance and information
for guests experiencing problems in
controlling their gambling habits
36
SINCE 2013, THE STAR
ENTERTAINMENT GROUP HAS
CONDUCTED RESPONSIBLE GAMBLING
AWARENESS WEEKS, IN ADDITION
TO THOSE ALREADY ORGANISED BY
COMMUNITY SUPPORT GROUPS.
in Brisbane and on the Sunshine Coast.
The meetings are conducted by the
Gambling Help service in Queensland and
are attended by industry participants and
the Queensland Office of Liquor and Gaming
Regulation. The Responsible Gambling
Network provides a forum to exchange
information and views about approaches
to responsible gambling and finding
solutions, to improve the management of
problem gambling.
A percentage of gaming taxes paid by
The Star Entertainment Group is directed
to the Gambling Community Benefit Fund
in Queensland (previously the Jupiters
Casino Benefit fund). Since 1987 more
than $100 million has been contributed to
the Gambling Community Benefit Fund
for grants to community groups across
Southern Queensland.
In the 2017 financial year, The Star
Entertainment Group contributed $18.9
million to the Responsible Gambling Fund
(NSW). Funds are allocated, through the
New South Wales government, to support
various projects and services that aim to
reduce and prevent the potential harms
associated with problem gambling.
In New South Wales, The Star
Entertainment Group engages BetCare, a
dedicated independent counselling service,
to provide assistance for distressed guests,
including 24/7 crisis intervention. BetCare
also assists with gambling assessments for
guests seeking revocation of self-exclusion
agreements and provides specialised
responsible gambling training to our
Responsible Gambling Liaison Officers.
Since 2013, The Star Entertainment Group
has conducted responsible gambling
awareness weeks, in addition to those
already organised by community
support groups.
RESPONSIBLE SERVICE
OF ALCOHOL
Responsible Service of Alcohol (RSA)
aims to reduce the adverse health, social
and economic consequences of alcohol
consumption for individuals, their family,
friends and the community.
The Star Entertainment Group’s properties
operate in a highly regulated industry
and the RSA obligations placed on its
properties in Sydney, the Gold Coast and
Brisbane are found in relevant state-based
legislation, regulations and liquor licences.
The Star Entertainment Group’s commitment
to RSA is monitored by a RSA Committee
comprising of senior operational team
members who meet bi-monthly to review
matters such as changes to legislation,
incidents, trend reports and upcoming events.
At each property, all team members
who are directly involved in the service
or supply of alcohol, including those
supervising or managing these processes
must have a current RSA training course
certificate. Team members who are not
directly involved in the service or supply
of liquor are required to complete the in-
house RSA training upon commencement
of employment.
For our guests, RSA awareness is promoted
through brochures which are available at
the casino entrances at each property.
In addition to strict refusal of entry
policies, each property has in place
processes for:
○ Monitoring that guests on the premises
are not unduly affected by excess
consumption of alcohol
○ Empowering food and beverage
managers to identify high-risk periods
and manage consumption by limiting
the amount of drinks that can be
purchased at any one time
○ Mandatory reporting of all serious RSA
related incidents (to be documented
within the approved incident reporting
databases and records)
The Star Entertainment Group’s properties
have also taken the following measures to
support responsible service of alcohol:
○ The use of toughened or tempered
glass for many of the beverages served
in the public areas of the Gold Coast
and Brisbane casino properties
(excluding restaurants)
○ The use of toughened or tempered glass
in the Main Gaming Floor venues and
the use of plastic drinking vessels
at Sky Terrace, the Sports Bar and
Marquee Nightclub during restricted
periods at The Star Sydney.
37
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 SUSTAINABILITY
GUEST WELLBEING
SUSTAINABILITY
TALENTED TEAMS
Promoting guest wellbeing by providing a safe and enjoyable
environment across our properties is of paramount importance
to The Star Entertainment Group.
The Star Entertainment Group is proud of its talented and
diverse workforce and is committed to equipping its team
members with the knowledge, tools and passion to deliver
thrilling and authentic guest experiences.
The Star Entertainment Group properties welcome around 18 million guests per annum.
SECURITY AND SURVEILLANCE
The Star Entertainment Group’s properties
maintain leading security and surveillance
operations. All properties are supported by
24 hours-a-day seven-days-a-week security
and surveillance operations.
Across our three properties our security
and surveillance team comprises more
than 400 people. Each property has in
place standard operating procedures to
deal with and respond to any suspected
undesirable conduct. An incidents register
is maintained at each property and the
internal compliance team reviews all
requirements, and conducts regular
audits to support compliance with
relevant legislation and policies.
The Star Entertainment Group’s
properties are pre-eminent international
tourist destinations that deliver a
range of offerings including food and
beverage, accommodation, theatre, live
entertainment and gaming to around
18 million guests per year.
The Star Entertainment Group is
committed to providing all guests with a
safe, secure and comfortable experience
at each of our properties. Our properties
are subject to a high level of oversight
from various external regulators. The Star
Entertainment Group works with police,
casino regulators and the local community
in each city so our properties remain safe
for all our local and international guests.
The Star Entertainment Group takes
a zero-tolerance approach to illegal,
undesirable and anti-social behaviour in
conjunction with its Responsible Gambling
and Responsible Service of Alcohol
(RSA) practices.
NEIGHBOURHOOD
ENGAGEMENT
A ‘Neighbourhood Advisory Panel’ has
been set up at The Star Sydney to provide
a formal and ongoing engagement
opportunity between The Star Sydney
and its neighbours. The panel provides an
opportunity to learn more about
The Star Sydney’s operations and to
suggest solutions or address concerns to
neighbourhood issues.
A community newsletter is also delivered
to 5,000 local residents and businesses in
the Pyrmont area, providing updates on
The Star Sydney’s plans.
Online development updates for residents
and stakeholders are provided at our
Queensland properties.
The Star Entertainment Group has initiated
a pilot program at The Star Sydney to
engage our guests on our sustainability
products and services (to be conducted
through outreach programs in our hotels).
Matt Bekier, Managing Director and CEO The Star Entertainment Group, and Queensland
Attorney-General, Minister for Justice and Minister for Training and Skills, Hon. Yvette D’Ath MP
with graduates from the International Hospitality Service Program, the flagship program
of the Queensland Hotel & Hospitality School.
LEARNING AND DEVELOPMENT
Building our internal capability through
the provision of learning and development
opportunities for our people is integral
to The Star Entertainment Group’s vision
to become Australia’s leading integrated
resort company. Developing a pipeline of
future tourism and hospitality workers
by continuously upskilling our people in
all areas and levels of the business is a
core priority.
In addition to internal training programs,
Learning & Development teams across our
properties partner with external training
organisations such as TAFE, hospitality
schools and universities, allowing us to
provide our team members with a range
of learning activities that are nationally
recognised and accredited.
KEY LEARNING AND
DEVELOPMENT PROGRAMS
○ The Star Culinary Institute (delivered
with TAFE NSW and TAFE QLD)
continued to create training and
mentoring opportunities for young chefs
through the Apprentice Chef program.
○ The program provides unique, supportive
onsite learning experiences including
regular master classes in consultation
with industry experts. In the 2017
financial year, over 70 apprentice chefs
were enrolled in the program, undertaking
rotations across our properties.
○ The Queensland Hotel & Hospitality
School (a partnership with TAFE
Queensland) celebrated its first year
of operation in December 2016.
The development of the school’s three
courses – the International Hospitality
Service Program, culinary arts
apprenticeships, and front-of-house
apprenticeships – is overseen by an
industry panel comprised of many of the
state’s leading global brands. The school’s
flagship International Hospitality Service
Program is designed to develop food and
beverage service skills for work in luxury
5 and 6-star properties and students
receive an accredited Certificate III in
Hospitality upon graduation. The school
is helping to build a pipeline of future
workers ahead of the Queen’s Wharf
Brisbane development that will require
8,000 operational roles.
○ Aboriginal and Torres Strait Islander
work experience program (delivered
by The Star Gold Coast in partnership
with TAFE QLD and DMAC Personnel) is
designed to build capability and create
job opportunities in the hospitality
industry for indigenous people. This
program has been completed by
14 students who have successfully
broadened their employability by
attending classroom sessions and two
weeks of practical work experience
placements. On completion of the
program, students are awarded a
Certificate II in Hospitality.
○ The Macquarie Graduate School of
Management (MGSM) ‘Women in MBA’
(Masters of Business Administration
program launched in 2015 with The Star
Entertainment Group as a founding
partner) encourages diversity by
financially supporting future female
business leaders to complete an MBA.
38
39
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 SUSTAINABILITY
TALENTED TEAMS
DIVERSITY TARGETS
OUR SAFETY GOALS
50%
FEMALE REPRESENTATION
IN LEADERSHIP
LEVELS 1-4 BY 2020
20%
ASIAN REPRESENTATION
IN LEADERSHIP
LEVELS 1-3 BY 2020
5%
YEAR-ON-YEAR
INCREASE IN AUSTRALIAN
WORKPLACE EQUALITY
INDEX SCORE
EMPLOYEE ENGAGEMENT
OF MATURE AGE TEAM
MEMBERS
We promote the following events
internally to raise awareness amongst
our team members:
○ International Day Against Homophobia,
Transphobia and Biphobia (IDAHOT)
○ Wear it Purple Day (to support
LGBTI youth)
We have also produced and distributed
our own guide to supporting gender-
transitioning team members.
AGE
Mature Age Workers Expos are held at each
of our properties to provide wellbeing and
career development information. We also
offer a seminar program that supports
mature age team members in planning
for the later stages of their careers.
Education, awareness and training form a
key part of The Star Entertainment Group’s
Diversity and Inclusion Strategy. Our
senior leaders take part in Unconscious
Bias training, on-site training programs
in cultural awareness are offered to all
employees, and LGBTI-specific training
for managers and employees continues
to be provided by our partner in LGBTI
inclusion, ‘Pride in Diversity’.
ZERO FATALITIES
AND SERIOUS
INJURIES
REDUCING LOW
CONSEQUENCE
INJURIES
A HEALTHY
AND ENGAGED
WORKFORCE
KEEPING OUR GUESTS
SAFE WHILST VISITING
OUR PROPERTIES
WORK, HEALTH, SAFETY
A new Work Health and Safety (WHS)
Policy was developed by management
and approved by the Board this financial
year. The new WHS Policy reinforces that
health and safety in the workplace is a
shared responsibility between The Star
Entertainment Group, its leaders, workers,
contractors and visitors to our sites.
To support the WHS Policy, the Board also
approved a new strategy which outlines the
following six key strategic focus areas:
○ Safety Culture
○ Safety Management Systems
○ Critical Risks
○ Risk Management and Human Factors
○ Safety Assurance and Investigation
○ Health and Wellbeing
SAFETY CULTURE
Our focus on safety culture has
commenced with the implementation of
safety programs to demonstrate active
and visible safety leadership. Our leaders,
Executive Committee and Board of
Directors participate in safety leadership
walks and activities to measure the success
of our safety programs.
SAFETY MANAGEMENT SYSTEMS
Our safety management systems continue
to evolve. During the 2017 financial year,
The Star Entertainment Group introduced
an online Workplace Safety Management
system which provides a more effective
process for induction, contractor
management and visitor management at
our properties.
Robust work, health and safety practices are an important part of keeping our kitchens safe.
CRITICAL RISKS
In working towards achieving our goal of
zero fatalities and serious injuries, we have
reviewed our top WHS risks and validated
that we have adequate critical risk controls
in place.
RISK MANAGEMENT AND HUMAN
FACTORS
We are implementing risk management
programs that address hazard areas
such as plant and equipment, hazardous
chemicals, and manual tasks. During this
financial year, we commenced ergonomic
studies using wireless sensors on workers
to create a manual task risk profile. This
has helped The Star Entertainment Group
introduce higher level controls in the
design of tables and workplaces to reduce
risks associated with manual tasks.
SAFETY ASSURANCE AND
INVESTIGATION
Our safety assurance activities have been
focused around high risk construction
works. We have implemented a safety
audit program on all high-risk principal
contractors so that our construction
partners understand that our safety
goals extend to all works in which they
have management or control over, on our
properties and work sites.
HEALTH AND WELLBEING
We continue to provide health and
wellbeing programs to our team members
to promote a healthy and engaged
workforce.
The Star Entertainment Group uses a
number of leading and outcome based
safety indicators, including:
○ Total Recordable Incident Frequency
Rate (TRIFR)
○ % of incidents reported within 24 hours
○ % of investigations commenced within
24 hours
○ % of WHS training undertaken
Our TRIFR reduced by a further 5% from the
2016 financial year, achieving the assigned
annual target set by the Board.
TOTAL RECORDABLE INJURY
FREQUENCY RATE (TRIFR)
FY13 - 33.5
FY14 - 31.4
FY15 - 31.4
FY16 - 24.4
FY17 - 22.9
41
Around 200 Leaders and team members participated in the 'Walk and
Talk for Women's Leadership' across The Star Entertainment Group properties.
DIVERSITY AND INCLUSION
The Star Entertainment Group is
committed to promoting and fostering
diversity and inclusion in the workplace
and recognises the important
contribution each team member’s unique
perspectives and background brings to
our organisation. Our policies, practices
and behaviours all contribute to creating
a safe, welcoming and inclusive workplace
and support equitable and collaborative
relationships and talented teams. This
is underpinned by our Diversity and
Inclusion Policy and is supported by our
Diversity and Inclusion Strategy.
The Star Entertainment Group’s
internal Diversity and Inclusion Steering
Committee continues to oversee the
diversity and inclusion initiatives at
The Star Entertainment Group, with input
from four Diversity Working Groups that
address four key diversity areas: gender,
multicultural, lesbian, gay, bisexual,
transgender and intersex (LGBTI) and age.
We have measurable targets for each of
these four areas (see graphic above) and
our progress towards achieving these
targets are reported back to the Board of
Directors on an annual basis.
Team members at each property have
participated in the following initiatives
and local and global events to support
diversity and inclusion.
40
GENDER
The Star Entertainment Group launched
Women in Gaming Australasia (WGA)
with Aristocrat Leisure Limited. WGA is
an organisation dedicated to supporting
the development and success of women
who work in the gaming industry.
In celebration of International Women’s Day,
The Star Entertainment Group held ‘Walk
and Talk for Women’s Leadership’ events
across each of our properties. These events
provided a platform for female employees to
connect with leaders in the business.
MULTICULTURAL
Lunar New Year, Mid-Autumn Festival
and Harmony Day are celebrated across our
properties. In addition, focus groups were
conducted to increase our understanding
around the career experiences of our
multicultural team members. This helped
us develop a roadmap of initiatives to
ensure we have a strong talent pipeline of
multicultural team members.
LGBTI
The Star Sydney has been a proud partner
of the Sydney Gay and Lesbian Mardi Gras
for two years. Our sponsorship includes
team members taking part in the Mardi
Gras parade and supporting Queer Screen
(a not-for-profit arts organisation that
showcases LGBTI screen content at the
Mardi Gras Film Festival and the Queer
Screen Film Festival).
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 SUSTAINABILITY
TALENTED TEAMS
REWARD AND RECOGNITION
To build a guest-centric and service focused culture, The Star Entertainment Group recognises the importance of celebrating and
sharing the stories of our team members and leaders, who set the benchmark for guest service excellence and deliver a consistently
high standard of performance.
‘Star awards’ is one way The Star Entertainment Group recognises and rewards top performers. Annual awards are given to team members
who are delivering thrilling guest experiences by demonstrating qualifying behaviours called ‘Star Qualities’, and to leaders who are living our
‘Values’ of City Pride, Ownership, Welcoming and True Teamwork.
CITY PRIDE
STAR AWARD WINNERS
JUSTIN BURNHAM
FRONT OFFICE HOTEL SUPERVISOR, THE STAR GOLD COAST
Justin is an outstanding leader in The Star Gold Coast hotel team, who consistently delivers
exceptional guest excellence in his role of managing the busy hotel front office. Justin is known
for his friendly, approachable attitude when dealing with guests’ queries. He listens to and
empathises with guests, creating positive guest experiences that enhance and protect
The Star Gold Coast’s brand. Justin is a “natural” in his space and the passion he brings to his
role is an ongoing inspiration to his team.
ASHLEIGH PAGE
RECRUITMENT ADVISOR, TREASURY BRISBANE
Ashleigh comes to work every day with a smile, commitment and a can-do attitude. Her
approach to recruitment is based on her forward-thinking and collaborative approach, looking
at the needs of the business and candidates now and in the future. Ashleigh has taken it upon
herself to update processes to improve recruitment outcomes, especially during busy periods.
Ashleigh’s positive and enthusiastic persona, together with her impressive work ethic makes
her a great colleague.
RACHAEL COX
EXECUTIVE ASSISTANT TO CHIEF OPERATING OFFICER, THE STAR SYDNEY
Rachael is a hardworking, organised executive assistant who takes time out
of her busy workload to act as Network Co-ordinator and Chair to Spectrum, The Star
Entertainment Group’s LGBTI diversity group. Rachael has assisted with organising a variety of
events for Spectrum in her free time, including leading the participation of 100+ team members
in the 2016 and 2017 Sydney Gay & Lesbian Mardi Gras Parades. Rachael is a passionate member
of Spectrum and she also drives the team to support the initiatives of our other diversity working
groups, Women@The Star, Young@Heart, and Unity@TheStar, to create a truly inclusive culture at
The Star Sydney.
SCOTT GILLELAND
GROUP OPERATIONS MANAGER INFORMATION TECHNOLOGY,
THE STAR ENTERTAINMENT GROUP
Scott is a passionate and innovative IT professional who works tirelessly to understand
the diverse businesses that his team services daily. Scott routinely walks the floor of
different business areas, engaging with colleagues to learn about their work and to gain an
understanding of issues that may impact the level of service his team can deliver. Like a true
leader, Scott identified three areas of improvement in the way IT programs are delivered and
took ownership to achieve a superior outcome. Scott is known as a mentor, always supporting
and encouraging junior team members.
42
OWNERSHIP
WELCOMING
TRUE TEAMWORK
43
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 DIRECTORS’, REMUNERATION
AND FINANCIAL REPORT
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 7
Directors' Report
for the year ended 30 June 2017
T H E S T A R E N T E R T A I N M E N T G R O U P L I M I T E D
A . C . N 1 4 9 6 2 9 0 2 3
A S X C O D E : S G R
A N D I T S C O N T R O L L E D E N T I T I E S
CONTENTS
D I R E C T O R S ’ R E P O R T
A U D I T O R ’ S I N D E P E N D E N C E D E C L A R A T I O N
R E M U N E R A T I O N R E P O R T
F I N A N C I A L R E P O R T
Consolidated income statement
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the financial statements
A. Key income statement disclosures
B. Key balance sheet disclosures
C. Commitments, contingencies and subsequent events
D. Group structure
E. Risk management
F. Other disclosures
G. Accounting policies and corporate information
D I R E C T O R S ’ D E C L A R A T I O N
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
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The Directors of The Star Entertainment Group Limited (the Company) submit their report for the consolidated entity
comprising the Company and its controlled entities (collectively referred to as the Group) in respect of the financial
year ended 30 June 2017.
1. Directors
The names and titles of the Company's Directors in office during the financial year ended 30 June 2017 and until the
date of this report are set out below. Directors were in office for this entire period.
Directors
John O'Neill AO
Matt Bekier
Gerard Bradley
Greg Hayes
Katie Lahey AM
Sally Pitkin
Richard Sheppard
Chairman and Non-Executive Director
Managing Director and Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
2. Operating and Financial Review
The Operating and Financial Review for the year ended 30 June 2017 has been designed to provide shareholders with
a clear and concise overview of the Groupʼs operations, financial position, business strategies and prospects. The
review also discusses the impact of key transactions, events that have taken place during the reporting period and
material business risks faced by the Group, to allow shareholders to make an informed assessment of the results and
future prospects of the Company. The review complements the Financial Report and has been prepared in accordance
with the guidance set out in ASICʼs Regulatory Guide 247.
2.1. Principal activities
The principal activities of the Group are the management of integrated resorts with gaming, entertainment and
hospitality services.
The Star Entertainment Group Limited owns and operates The Star Sydney (Sydney), The Star Gold Coast (Gold
Coast) and Treasury Brisbane (Brisbane). The Group also manages the Gold Coast Convention and Exhibition
Centre on behalf of the Queensland Government and invests in a number of strategic joint ventures.
2.2. Business strategies
The key strategic priorities for the Group as initially outlined in the Company's 2014 Annual Report are to:
• Create “world class casino resorts with local spirit”;
• Manage planned capital expenditure programs in Queensland and Sydney to deliver value and returns for
shareholders;
Increase the volume of high-value visitation from local, domestic and international markets;
•
• Grow the domestic and International VIP Rebate business;
•
• Maximise value from technology, including further enhancing gaming and loyalty experiences and delivering
Improve customer experience, including providing customers with tailored product and service offerings; and
integrated and new IT platforms.
The Group has continued to make good progress on all these key strategic priorities during the year, with:
• Financial performance improved across all properties;
• Balance sheet strength maintained;
• Rebranding of Jupiters to The Star Gold Coast;
• Relaunch of The Star Club loyalty program and improved customer service;
•
Leadership in place supplemented by strengthened functional capability;
• Completion of a number of capital projects, including full refurbishment of Sydney and Gold Coast hotels,
expansion of main gaming floor (MGF) in Sydney and additional food and beverage offerings in Gold Coast;
• Continuing the focus on international diversification, across global VIP and Premium Mass markets; and
•
Invested in new joint venture with Chow Tai Fook Enterprises Limited (CTF) and Far East Consortium International
Limited (FEC) that acquired the Sheraton Grand Mirage, Gold Coast.
44
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45
ANNUAL REPORT 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017THE STAR ENTERTAINMENT GROUP
Directors' Report
for the year ended 30 June 2017
In FY2018, the focus will be on the following key strategic priorities:
•
• Deliver on the next stage of the capital development programs, in particular the completion of the new 6 star hotel
Improve earnings across the Group through continued focus on domestic gaming and operating efficiency;
in Gold Coast;
• Progress planning approvals for joint venture developments with CTF and FEC in Sydney and Gold Coast;
• Continue diversification of the Groupʼs international revenue base into global VIP and Premium Mass markets; and
• Continue the drive to differentiate the value proposition at each of our properties, through brand, loyalty, customer
service, and food and beverage offerings.
The Directors have excluded from this report any further information on the likely developments in the operations of the
Group and the expected results of those operations in future financial years, as the Directors have reasonable grounds
to believe that to include such information will be likely to result in unreasonable prejudice to the Group.
2.3. Group performance
Gross revenue of $2,432.2 million was up 3.2% on the prior comparable period (pcp), partly due to an above average
win rate in the International VIP Rebate business and offset by disruption from capital works and a softer macro-
economic environment. Normalised1 revenues decreased 3.9% for the period to $2,337.3 million, down from $2,431.0
million in the pcp, impacted by lower International VIP Rebate business volumes.
Operating costs remain well managed, up 1.0%, reflecting increased domestic gaming volumes, ongoing investment in
marketing, loyalty program relaunch and wage indexation. Significant operating expense items ($12.8 million) relate to
costs relating to the unutilised aircraft. There were no significant items within the prior period.
Earnings before interest, tax, depreciation and amortisation (EBITDA) of $586.2 million was up 19.9% on the pcp.
Normalised EBITDA (excluding significant items) of $515.1 million was down 7.4% on the pcp. Normalised EBITDA
margin of 22.0% is down from 22.9% in the pcp as a result of higher average gaming taxes in Sydney.
Depreciation and amortisation expense of $164.5 million was flat on the pcp. Finance costs of $41.7 million were down
9.0% on the pcp.
Net profit after tax (NPAT) was $264.4 million, up 36.0% on the pcp. Normalised NPAT, excluding significant items,
was $214.5 million, down 11.1% on the pcp.
Basic Earnings per Share (EPS) was 32.0 cents, up 36.0% on the pcp. Diluted EPS was 31.9 cents, 23.6 cents in the
pcp. A final dividend of 8.5 cents fully franked was declared, totalling 16.0 cents per share for the year, up 23.1% on
the pcp and reflecting a payout ratio of 50.0% of statutory NPAT for the year ended 30 June 2017.
2.4. Group financial position
The Groupʼs net assets increased by 4.1% compared with the previous year.
Receivables remain well managed, with receivables past due not impaired less than one year comprising over 95% of
the total. Net receivables past due not impaired greater than 30 days of $33.3 million, flat on the pcp, reflecting new
debts being offset by collections during the period.
Net debt2 was $787.5 million (30 June 2016: $473.8 million) with $200.5 million in undrawn facilities and an average
drawn debt maturity of 2.3 years. Gearing levels remain conservative at 1.3 times FY2017 net debt to actual EBITDA,
positioning the Group well to continue executing on its growth projects. Operating cash flow before interest and tax
was $567.9 million (30 June 2016: $477.4 million). EBITDA to cash conversion ratio of 97% (30 June 2016: 98%).
Trade and other payables of $324.5 million were up 23.9% from June 2016 as a result of higher gaming related
payables, representing players' funds deposited and chips in circulation at 30 June 2017.
1 Normalised results reflect the underlying performance of the business as they remove the inherent volatility of the International VIP
Rebate business. Normalised results are adjusted using an average win rate of 1.35% of actual turnover.
2 Net debt is shown as interest bearing liabilities, less cash and cash equivalents, less net position of derivative financial instruments.
Derivative financial instruments reflect the position of currency swaps and interest rate hedges entered into for the USPP debt.
Directors' Report
for the year ended 30 June 2017
2.5. Segment operations
The Group comprises the following three operating segments:
• Sydney;
• Gold Coast; and
• Brisbane.
Refer to note A1 for more details of the financial performance of the Companyʼs operating segments. The activities and
drivers of the results for these operations are discussed below.
Sydney
Gross revenue was $1,685.8 million, up 1.8% on the pcp and EBITDA was $401.1 million, up 32.6% on the pcp.
Normalised EBITDA was $320.6 million, down 16.0% on the pcp.
Normalised gross revenue in Sydney was $1,595.5 million, down 8.5% on the pcp. Revenue decreased due to lower
International VIP Rebate business volumes, partially offset by solid domestic revenue growth in the second half of the
year. Domestic gross gaming revenue was up 4.4% on the pcp, with growth across both tables and slots, up 5.7% and
1.8% respectively. Electronic gaming machine market share of 9.1% for Q1-Q3 FY2017 consistent with the pcp. Non-
gaming cash revenue was down 4.5% on the pcp due to disruption from capital works in the first half of the year.
Taxes, levies, rebates and commissions of $670.6 million were down 8.8% on the pcp as a result of lower International
VIP Rebate business volumes, partially offset by higher average non-rebate gaming taxes. Sydneyʼs average non-
rebate tax rate was 32.6%, up from 31.9% in the pcp (top marginal tax rate of 50.0% in both years). Operating
expenditure of $614.1 million was down 0.8% on the pcp as continued cost control offset the investments in loyalty,
marketing, wage indexation and higher domestic gaming volumes. Normalised EBITDA margin of 20.1% was down
from 21.9% on the pcp.
The Sydney property is one of the main partners to the Sydney Festival, a Leadership Partner of City of Sydney's
Chinese New Year Festival and a sponsor of the Sydney Swans and New South Wales Rugby League (NSW Blues).
The Sydney property also contributed to various charities during the period, including Barnardos Australia and Taronga
Conservation Society Australia.
Queensland (Gold Coast and Brisbane)
Gross revenue was $746.4 million, up 6.5% on the pcp and EBITDA was $198.6 million, up 6.6% on the pcp.
Normalised EBITDA was $194.5 million, up 11.5% on the pcp.
Normalised gross revenue in Queensland was $741.8 million, up 7.9% on the pcp. Queensland experienced an
increase in revenue performance due to increased International VIP Rebate business revenue. The domestic gaming
business was down 2.2% on the pcp, with decline in both tables and slots, down 1.4% and 2.8% respectively. Non-
gaming revenue was up 7.1% on the pcp. Taxes, levies, rebates and commissions were up 10.6% on the pcp, driven
by increased International VIP Rebate business gaming in the period. Operating expenses of $356.7 million across the
Queensland properties were up 4.3% on the pcp. Normalised EBITDA margin of 26.2% was up from 25.4% on the pcp.
The Gold Coast property is the First Official Partner of the Gold Coast 2018 Commonwealth Games.
The Brisbane property was a sponsor of the Brisbane Festival and Queensland Rugby League (Queensland Maroons)
during the year.
The Queensland properties also contribute to various charities and not-for-profit organisations including Ronald
McDonald House and Surf Life Saving Queensland.
International VIP Rebate business
The results of the International VIP Rebate business are included in the segment performance overviews above. The
International VIP Rebate business turnover was $39.7 billion, down 19.9% on the pcp. The actual win rate of 1.59%
was above both the win rate for the pcp of 1.20% and the normalised rate of 1.35%. Normalised International VIP
Rebate business revenue was $544.7 million, down 18.6% on the pcp, compared to statutory revenue of $639.6 million
(up 7.3% on the pcp).
46
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017 Directors' Report
for the year ended 30 June 2017
Directors' Report
for the year ended 30 June 2017
2.6. Significant changes in the state of affairs and future developments
2.7. Risk management
Other than those stated within this report, there were no significant changes in the state of affairs of the Group during
the financial year. The section below discusses the impact of key transactions and events that have taken place during
the reporting period.
Sydney
Sydney's casino licence continues until 2093 and includes exclusivity arrangements with the New South Wales
Government until November 2019.
The Group has previously disclosed a proposed investment of up to $1 billion (subject to various approvals) which
includes a new tower to be developed with joint venture partners CTF and FEC. The capacity of the property is
proposed to be expanded to approximately 1,000 hotel rooms and residences (including The Ritz Carlton hotel and
luxury residences), with signature gaming experiences including new and refurbished premium gaming rooms and
gaming salons, and over 50 food and beverage offerings. The Groupʼs share of capital expenditure is expected to be
approximately $667 million (prior to the sale of any apartments).
Capital expenditure in the year was approximately $180 million, including the completion of the Vantage Room,
Latitude Bar, carpark upgrade, Astral Tower upgrade and MGF refurbishment. The redevelopment of the Astral
Residences, Astral Lobby and Porte Cochere and Sovereign Room expansion continues.
Gold Coast
The Group holds a perpetual casino licence to operate The Star Gold Coast. The Group owns Broadbeach Island on
which the casino is located. The Group has previously disclosed a major redevelopment of the property of up to $845
million capital spend (subject to various approvals), including a $400 million new 6 star hotel with joint venture partners
CTF and FEC. The capacity of the property is proposed to be expanded to approximately 1,400 hotel rooms and
residences with signature gaming facilities, over 20 restaurants and bars, and substantial resort facilities and
attractions. The Groupʼs share of capital expenditure is expected to be approximately $578 million (prior to the sale of
any apartments).
Progress on the redevelopment project includes the completion of the hotel rooms upgrade, Atrium Bar refurbishment,
new restaurants and MGF refurbishment. Capital expenditure in the year was approximately $210 million, including
construction costs for the new 6 star hotel, refurbishment of the Atrium Bar and upgrades to hotel rooms.
The Group continues to manage the Gold Coast Convention and Exhibition Centre adjacent to the casino.
Brisbane
In November 2015, contractual close was reached between the Queensland Government and Destination Brisbane
Consortium (DBC) on the Queenʼs Wharf Brisbane development. DBCʼs integrated resort ownership structure requires
capital to be contributed 50% by the Group and 25% each by CTF and FEC. The Group will act as the operator under
a long dated casino management agreement.
The Group holds a perpetual casino licence in Queensland that is attached to the lease of the current Treasury site
that expires in 2070. Upon opening of the integrated resort, the Groupʼs casino licence will be surrendered and DBC
will be granted a casino licence for 99 years including an exclusivity period of 25 years.
CTF and FEC will each contribute 50% of the capital to undertake the residential and related components of the
broader Queenʼs Wharf Brisbane development. The Group is not a party to the residential development joint venture.
Initial work on the integrated resort is on schedule and on budget, with demolition works underway and foundation
work expected to commence in early 2018.
The Group takes a structured approach to identifying, evaluating and managing those risks which have the potential to
affect achievement of strategic objectives. The commentary relating to Principle 7 in the Groupʼs Corporate
Governance Statement describes the Groupʼs risk management framework which is based on ISO31000, the
international standard on risk management. The Corporate Governance Statement can be viewed on the Groupʼs
website.
Details of the Groupʼs major risks and associated mitigation strategies are set out below. The mitigation strategies are
designed to reduce the likelihood of the risk occurring and/or to minimise the adverse consequences of the risk should
it happen. However, some risks are affected by factors external to, and beyond the control of, the Group.
Risk and description
Mitigation strategy
Competitive Position
The potential effect of increased competition
in
the Groupʼs key markets of Sydney,
Brisbane and the Gold Coast
Realising value from capital projects
The ability to generate adequate returns from
the
in capital
projects.
financial capital
invested
Human capital management
The ability to attract, recruit and retain the
right people
leadership and
operational roles.
key
for
Effective management of key stakeholders
The ability to engage with key stakeholders to
satisfy
interests without
the Groupʼs operations or
compromising
achievement of
strategic
objectives.
their competing
the Groupʼs
Geo-political and regulatory changes
The potential effect of political or regulatory
changes in Australia affecting the operation of
casinos, or the potential effect of changes in
the administration of laws in foreign countries
affecting the ability of foreign nationals to
travel to and/or bring funds to Australia.
the
to protect
Data and systems security and reliability
The ability
integrity of
confidential business or customer data which
is collected, used, stored, and disposed of in
the course of business operations, and the
ability to maintain the security and operating
reliability of key business systems.
The Groupʼs vision is to be Australiaʼs leading integrated resort
company. The Group is making substantial investments in developing
new or improved venue facilities in all key markets, diversifying
revenue sources and in improving the customer service capabilities
of employees.
The Group has implemented a comprehensive project management
framework and employed a number of appropriately skilled and
experienced project managers to reduce the risk of delays in
completion and/or overruns in costs of capital projects. The Group
has also developed plans to market and promote its portfolio of
attractive resort facilities to achieve the level of customer patronage
required to deliver the expected returns on investment.
The Group has in place a variety of avenues to attract, recruit and
develop high performing and high potential employees, including an
in-house talent acquisition team. The Group runs a number of training
and development programs to provide employees with career
development opportunities, and annually conducts an employee
engagement survey to monitor for emerging issues which might affect
the ability to retain talented employees. The Groupʼs diversity and
inclusion programs are widely recognised as being among the best in
the industry.
The Group has developed strong communication lines with a variety
of stakeholder groups, including State governments in New South
Wales and Queensland, regulators in both States, investors, media
and unions. The Group has also developed strategic partnerships
local community groups and charitable
with a number of
organisations.
The Group continuously monitors for potential legislative changes or
changes in relevant government policy in the States and countries in
which it conducts business operations. The Group also makes
representations to governments and industry groups to promote
effective, appropriate and consistent regulatory and policy outcomes.
The Group has a dedicated IT security function which continuously
tests and monitors our technology systems to detect and block
viruses and other threats to the security of our data. Employees are
regularly trained on the importance of maintaining effective cyber
security and data privacy processes.
48
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5
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017 Directors' Report
for the year ended 30 June 2017
Risk and description
Mitigation strategy
Major business disruption events
The ability to anticipate, prevent, respond to
and recover from events which have the
potential to prevent the continued operation of
one of our resort facilities, or which inhibit the
ability of guests being able to visit one of our
resort facilities for a sustained period of time.
People health and safety
The ability to operate the Groupʼs resort
facilities without affecting the safety, security
and wellbeing of our guests and employees.
Financial management
The ability to maintain financial performance
and a strong balance sheet which enables the
Group to fund future growth opportunities on
commercially acceptable terms.
Corporate governance
The ability to maintain a strong and effective
governance structure which supports a culture
of
and
compliance.
accountability,
transparency,
framework enables early
The Groupʼs business continuity
identification of material risks to the continued operation of a resort
facility. The framework is supported by a suite of emergency
response, crisis management, and disaster recovery plans that are
regularly tested and updated.
The Group takes a risk based approach to managing workplace
health and safety. Critical safety risks have been identified with
mitigation plans in place. Dedicated workplace health and safety and
injury management specialists are employed at each resort facility.
To assist in maintaining the safety and security of our guests and
employees, each resort facility employs a substantial number of
security and surveillance personnel to provide support in monitoring
existential threats and managing potential incidents on a real time
basis.
The Group annually establishes a financial budget and 5 year plan
which underpin the setting of performance targets incorporated in
management incentive plans. Financial performance is continuously
monitored for any variations from annual financial budgets and
market expectations. The Groupʼs core business produces strong
cashflow, allowing the Group to maintain low to moderate levels of
debt while allowing shareholders to be paid dividends.
The Group has a well-defined governance framework which identifies
the roles and responsibilities of the Board, the Board Committees
and senior management. The Group also has a complementary set of
key policies, compliance with which is monitored on an ongoing
basis. The Group operates an integrated “3 lines of defence” model
to identify and manage key risks and to provide assurance that
critical controls are effective in managing those risks.
2.8. Environmental regulation and performance
The Group is committed to sustainability leadership in the entertainment sector and reducing resource consumption
across its operations. In 2016 the Group set out a five-year Sustainability Strategy, 'Our Bright Future', focused on
building business capacity and delivering continuous improvement in the management of environmental, social and
governance issues (ESG). The Sustainability Strategy is aligned to the business strategy and groups ESG objectives
and targets into four key pillars:
• we strive to be Australia's leading integrated resort company;
• we actively support guest wellbeing;
• we attract, develop and retain talented teams; and
• we develop and operate world class properties.
The Sustainability Strategy is underpinned by a structured materiality assessment process that was first conducted in
2016 over a three month period to identify potential material issues and ESG risks relevant to the business and
industry.
To support the delivery of the Sustainability Strategy and to ensure the Group manages the resource consumption
from an expanding portfolio, an energy and water project pipeline has been established to ensure projects are
implemented each year that deliver cost and environmental benefits. The Group has now implemented over twenty
four projects, delivering environmental and financial savings of over $1.4 million in the last two financial years. To
ensure energy and water efficiency is achieved in refurbishment and development projects, the Groupʼs Sustainable
Design Guidelines have been applied to achieve greener building outcomes by specifying energy efficient technologies
and best practice water and waste management.
During the year, the Group attained the global leadership position of the Casino and Gaming Industry in the Dow
Jones Sustainability Index. The Group also attained its first National Australian Built Environment Rating System
(NABERS) rating for its office located at 60 Union St, Pyrmont, New South Wales, achieving a result of 5 out of a
possible 6 Stars for energy efficiency.
6
50
Directors' Report
for the year ended 30 June 2017
The Company is registered under the National Greenhouse Energy Reporting System (NGERS) and reports all energy
consumption and greenhouse gas emissions to the Federal Government every year. The Companyʼs Environmental
Management Policy, Sustainability Strategy, Materiality Assessment and Sustainable Design Guidelines can be found
on the Companyʼs website. Sustainability performance and progress against the Sustainability Strategy is reported to
the People, Culture and Social Responsibility Committee regularly.
3. Earnings per share (EPS)
Basic EPS for the financial year was 32.0 cents (2016: 23.6 cents), 36.0% up on the pcp as a result of the improved
operational performance across the Group. Diluted EPS was 31.9 cents (2016: 23.6 cents). EPS is disclosed in note
F3 of the Financial Report.
4. Dividends
4.1. Dividend payout
An interim dividend of 7.5 cents per share (fully franked) was paid on 22 March 2017.
A final dividend per share of 8.5 cents (fully franked) was declared, totalling 16.0 cents per share for the year, up
23.1% on the pcp and reflecting a payout ratio of 50.0% of statutory NPAT for the year ended 30 June 2017.
4.2. Dividend Reinvestment Plan (DRP)
The Companyʼs DRP is in operation for the final dividend. The last date for receipt of election notices to enable
participation for the final dividend is 30 August 2017. The price at which shares are allocated under the DRP is the
daily volume weighted average market price of the Company's shares sold in the ordinary course of trading on the ASX
over a period of 10 trading days beginning on (and including) the fourth trading day after the Record Date (29 August
2017). Shares allocated under the DRP will rank equally with the Company's existing fully paid ordinary shares.
5. Significant events after the end of the financial year
On 23 August 2017, the Group completed a tender and reissue offer in relation to 73% of the Groupʼs US Private
Placement (USPP) borrowings. This was undertaken to extend the Group's tenor on average drawn debt maturity by 3
years to 5.2 years, reduce finance costs on a like for like basis and lower refinancing requirements for the Group. The
Group estimates that its average blended cost of debt on all USPP notes following the new issue will be approximately
5% (down from over 9% on previous notes). The transaction is expected to result in a one-off loss in the range of $30-
$34 million (after tax) relating to the crystallisation of an existing obligation for the related out of the money interest rate
swaps and other costs. This one-off loss will be recognised as a significant item in the FY2018 Financial Report.
Further detail can be found in the ASX Announcement - The Star announces placement of long-term notes (dated 23
August 2017).
Other than those events that have already been disclosed in this report or elsewhere in the Financial Report, there
have been no other significant events occurring after 30 June 2017 and up to the date of this report that have
materially affected or may materially affect the Groupʼs operations, the results of those operations or the Groupʼs state
of affairs.
7
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017 Directors' Report
for the year ended 30 June 2017
Directors' Report
for the year ended 30 June 2017
6. Directors' qualifications, experience and special responsibilities
The details of the Company's Directors in office during the financial year and until the date of this report (except as
otherwise stated) are set out below.
Current Directors
Gerard Bradley
Current Directors
John O'Neill AO
Chairman (from 8 June 2012); Non-Executive Director (from 28 March 2011)
Diploma of Law; Foundation Fellow of the Australian Institute of Company Directors
Experience:
John OʼNeill was formerly Managing Director and Chief Executive Officer of Australian
Rugby Union Limited, Chief Executive Officer of Football Federation Australia, Managing
Director and Chief Executive Officer of the State Bank of New South Wales, and Chairman
of the Australian Wool Exchange Limited.
Mr OʼNeill was also formerly a Director of Tabcorp Holdings Limited and Rugby World Cup
Limited.
Mr OʼNeill was also the inaugural Chairman of Events New South Wales, which flowed from
the independent reviews he conducted into events strategy, convention and exhibition
space, and tourism on behalf of the New South Wales Government.
Mr O'Neill is currently a member of the Advisory Council of China Matters.
Special Responsibilities:
Mr OʼNeill is Chairman of the Board and an ex-officio member of all Board committees.
Directorships of other Australian listed companies held during the last 3 years:
Nil
Matt Bekier
Managing Director and Chief Executive Officer (from 11 April 2014)
Executive Director (from 2 March 2011)
Master of Economics and Commerce; PhD in Finance
Greg Hayes
Experience:
Matt Bekier is a member of the Board of the Australasian Gaming Council.
Mr Bekier was previously Chief Financial Officer and Executive Director of the Company
and also previously Chief Financial Officer of Tabcorp Holdings Limited from late 2005 and
until the demerger of the Company and its controlled entities in June 2011.
Prior to his role at Tabcorp, Mr Bekier previously held various roles with McKinsey &
Company.
Special Responsibilities:
Nil
Directorships of other Australian listed companies held during the last 3 years:
Nil
Non-Executive Director (from 30 May 2013)
Bachelor of Commerce; Diploma of Advanced Accounting; Fellow of the Institute of
Chartered Accountants; Fellow of CPA Australia; Fellow of the Australian Institute of
Company Directors; Fellow of the Australian Institute of Managers and Leaders
Experience:
Gerard Bradley is the Chairman of Queensland Treasury Corporation and related
companies, having served for 14 years as Under Treasurer and Under Secretary of the
Queensland Treasury Department. He has extensive experience in public sector finance in
both the Queensland and South Australian Treasury Departments.
Mr Bradley has previously served as Chairman of the Board of Trustees at QSuper. His
previous non-executive board memberships also
include Funds SA, Queensland
Investment Corporation, Suncorp (Insurance & Finance), Queensland Water Infrastructure
Pty Ltd, and South Bank Corporation.
Mr Bradley is currently a Director of the Winston Churchill Memorial Trust.
Special Responsibilities:
• Chair of the Risk and Compliance Committee
• Member of the Audit Committee
• Member of the Investment and Capital Expenditure Review Committee
• Member of the Remuneration Committee
Directorships of other Australian listed companies held during the last 3 years:
Pinnacle Investment Management Group Limited (1 September 2016 to present)
Non-Executive Director (from 24 April 2015)
Master of Applied Finance; Graduate Diploma in Accounting; Bachelor of Arts; Advanced
Management Programme (Harvard Business School, Massachusetts); Member of Institute
of Chartered Accountants
Experience:
Greg Hayes is an experienced executive and director having worked across a range of
industries including energy, infrastructure and logistics. Mr Hayes brings to the Board skills
and experience in the areas of strategy, finance, mergers and acquisitions, and strategic
risk management, in particular in listed companies with global operations. He is currently a
Director of Precision Group, Aurrum Holdings Pty Ltd and Home Investment Consortium
Company Pty Ltd.
Mr Hayes was previously Chief Financial Officer and Executive Director of Brambles
Limited, Chief Executive Officer & Group Managing Director of Tenix Pty Ltd, Chief
Financial Officer and later interim CEO of the Australian Gaslight Company (AGL), Chief
Financial Officer Australia and New Zealand of Westfield Holdings, and Executive General
Manager, Finance of Southcorp Limited.
Special Responsibilities:
• Chair of the Audit Committee
• Member of the Investment and Capital Expenditure Review Committee
• Member of the Risk and Compliance Committee
Directorships of other Australian listed companies held during the last 3 years:
• Incitec Pivot Limited (1 October 2014 to present)
52
8
9
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017 Directors' Report
for the year ended 30 June 2017
Directors' Report
for the year ended 30 June 2017
Current Directors
Katie Lahey AM
Sally Pitkin
Non-Executive Director (from 1 March 2013)
Bachelor of Arts (First Class Honours); Master of Business Administration
Experience:
Katie Lahey has extensive experience in the retail, tourism and entertainment sectors and
previously held chief executive roles in the public and private sectors.
Ms Lahey is currently the Chair of Tourism & Transport Forum and Executive Chairman
Australasia for Korn Ferry International. She is also a member of the Australian
Brandenburg Orchestra Board.
Ms Lahey was previously the Chair of Carnival Australia and a member of the boards of
David Jones Limited, Australia Council Major Performing Arts, Hills Motorway Limited,
Australia Post and Garvan Research Foundation.
Special Responsibilities:
• Chair of the People, Culture and Social Responsibility Committee
• Member of the Remuneration Committee
• Member of the Risk and Compliance Committee
Directorships of other Australian listed companies held during the last 3 years:
Nil
Non-Executive Director (from 19 December 2014)
Doctor of Philosophy (Governance); Master of Laws; Bachelor of Laws; Fellow of the
Australian Institute of Company Directors
Experience:
Sally Pitkin is a Queensland based company director and lawyer with extensive corporate
experience and over 20 yearsʼ experience as a non-executive director and board member
across a wide range of industries in the private and public sectors.
Dr Pitkin is the President of the Queensland Division, and a member of the National Board
of the Australian Institute of Company Directors.
Dr Pitkin was previously a Non-Executive Director of Aristocrat Leisure Limited.
Special Responsibilities:
• Chair of the Remuneration Committee
• Member of the Audit Committee
• Member of the People, Culture and Social Responsibility Committee
Directorships of other Australian listed companies held during the last 3 years:
• Super Retail Group Limited (1 July 2010 to present)
• Billabong International Limited (28 February 2012 to 15 August 2016)
• IPH Limited (23 September 2014 to present)
• Link Administration Holdings Limited (23 September 2015 to present)
Current Directors
Richard Sheppard
Non-Executive Director (from 1 March 2013)
Bachelor of Economics (First Class Honours); Fellow of the Australian Institute of Company
Directors
Experience:
Richard Sheppard has had an extensive executive career in the banking and finance sector
including an executive career with Macquarie Group Limited spanning more than 30 years.
Mr Sheppard was previously the Managing Director and Chief Executive Officer of
Macquarie Bank Limited and chaired the boards of a number of Macquarieʼs listed entities.
He has also served as Chairman of the Commonwealth Governmentʼs Financial Sector
Advisory Council.
Mr Sheppard is currently the Chairman and a Non-Executive Director of Dexus Property
Group and a Non-Executive Director of Snowy Hydro Limited. He is also a Director of The
Bradman Foundation.
Special Responsibilities:
• Chair of the Investment and Capital Expenditure Review Committee
• Member of the Audit Committee
• Member of the Risk and Compliance Committee
Directorships of other Australian listed companies held during the last 3 years:
• Dexus Property Group (1 January 2012 to present)
7. Directors' interests in securities
At the date of this report (except as otherwise stated), the Directors had the following relevant interests in the
securities of the Company:
Name
Current
John O'Neill AO
Matt Bekier
Gerard Bradley
Greg Hayes
Katie Lahey AM
Sally Pitkin
Richard Sheppard
Ordinary Shares
Performance Rights
54,348
649,562
25,000
10,000
27,080
45,900
80,000
Nil
1,350,622
Nil
Nil
Nil
Nil
Nil
8. Company Secretary
Paula Martin holds the position of Group General Counsel and Company Secretary. She holds a Bachelor of Business
(Int. Bus.) and a Bachelor of Laws and a Graduate Diploma in Applied Corporate Governance. She has extensive
commercial legal experience having worked with King & Wood Mallesons (formerly Mallesons Stephen Jaques) prior to
joining the Company. Ms Martin is a member of the Queensland Law Society, Association of Corporate Counsel
(Australia) and the Governance Institute of Australia.
54
10
11
55
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017 Directors' Report
for the year ended 30 June 2017
Directors' Report
for the year ended 30 June 2017
Description of services
Other assurance related services in relation to the Company and any other entity in the
consolidated group
Other non-audit services including taxation services
Total of all non-audit and other services
$000
-
272.0
272.0
Amounts paid or payable by the Company for audit and non-audit services are disclosed in note F11 of the Financial
Report.
13. Rounding of amounts
The Star Entertainment Group Limited is a company of the kind specified in the Australian Securities and Investments
Commissionʼs ASIC Corporations (Rounding in Financial/Directorsʼ Reports) Instrument 2016/191. In accordance with
that Instrument, amounts in the Financial Report and the Directorsʼ Report have been rounded to the nearest hundred
thousand dollars unless specifically stated to be otherwise.
14. Auditor's independence declaration
Attached is a copy of the auditor's independence declaration provided under section 307C of the Corporations Act
2001 (Cth) in relation to the audit of the Financial Report for the year ended 30 June 2017. The auditor's independence
declaration forms part of this Directorsʼ Report.
This report has been signed in accordance with a resolution of Directors.
John O'Neill AO
Chairman
Sydney
23 August 2017
9. Board and Committee meeting attendance
During the financial year ended 30 June 2017, the Company held 13 meetings of the Board of Directors (including 4
unscheduled meetings which were attended by a majority of Directors). The numbers of Board and Committee
meetings attended by each of the Directors during the year are set out in the table below.
Board of
Directors
Audit
Committee
Risk and
Compliance
Committee
Remuner-
ation
Committee
People,
Culture &
Social
Responsibi-
lity
Committee
Investment &
Capital
Expenditure
Review
Committee
Directors
A B A B A B A B A B A B
John O'Neill AO
Matt Bekier (i)
Gerard Bradley
Greg Hayes
Katie Lahey AM
Sally Pitkin
Richard Sheppard
13
13
13
12
12
13
13
13
13
13
13
13
13
13
5
-
5
5
-
5
5
5
-
5
5
-
5
5
4
-
4
3
4
-
4
4
-
4
4
4
-
4
4
-
4
-
4
4
-
4
-
4
-
4
4
-
4
-
-
-
4
4
-
4
-
-
-
4
4
-
5
-
5
4
-
-
5
5
-
5
5
-
-
5
A - Number of meetings attended as a Director or Committee member
B - Maximum number of meetings available for attendance as a Committee member
(i)
The Managing Director and Chief Executive Officer is not a member of any Board Committee but may attend Board
Committee meetings upon invitation, however this attendance is not recorded here
Details of the functions and memberships of the Committees of the Board and the terms of reference for each Board
Committee are available from the Corporate Governance section of the Companyʼs website.
10.
Indemnification and insurance of Directors and Officers
The Directors and Officers of the Company are indemnified against liabilities pursuant to agreements with the
Company. The Company has entered into insurance contracts with third party insurance providers, in accordance with
normal commercial practices. Under the terms of the insurance contracts, the nature of the liabilities insured against
and the amount of premiums paid are confidential.
11.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of
the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst & Young during or since the end of the financial year.
12. Non-audit services
Ernst & Young, the external auditor to the Company and the Group, provided non-audit services to the Company
during the financial year ended 30 June 2017. The Directors are satisfied that the provision of non-audit services
during this period was compatible with the general standard of independence for auditors imposed by the Corporations
Act 2001 (Cth). The nature and scope of each type of non-audit service provided did not compromise auditor
independence. These statements are made in accordance with advice provided by the Audit Committee.
The Audit Committee reviews the activities of the independent external auditor and reviews the auditorʼs performance
on an annual basis.
Limited authority is delegated to the Company's Group Chief Financial Officer for the pre-approval of audit and non-
audit services proposed by the external auditor, limited to $50,000 per engagement and capped at 40% of the relevant
year's audit fee. Delegated authority is only exercised in relation to services that are not in conflict with the role of
statutory auditors, where management does not consider the services to impair the independence of the external
auditor and the external auditor has confirmed that the services would not impair their independence. Any other non-
audit related work to be undertaken by the external auditor must be approved by the Chair of the Audit Committee.
Further details relating to the Audit Committee and the engagement of auditors are available in the Corporate
Governance Statement.
Ernst & Young, acting as the Companyʼs external auditor, received or is due to receive the following amounts in
relation to the provision of non-audit services to the Company:
56
12
13
57
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017 AUDITOR’S INDEPENDENCE DECLARATION
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditors Independence Declaration to the Directors of The Star
Entertainment Group
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
REMUNERATION REPORT
(AUDITED)
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 7
T H E S T A R E N T E R T A I N M E N T G R O U P L I M I T E D
A . C . N 1 4 9 6 2 9 0 2 3
A S X C O D E : S G R
A N D I T S C O N T R O L L E D E N T I T I E S
As lead auditor for the audit of The Star Entertainment Group for the financial year ended 30 June 2017, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
Auditors Independence Declaration to the Directors of The Star
the audit; and
Entertainment Group
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of The Star Entertainment Group and the entities it controlled during the financial
As lead auditor for the audit of The Star Entertainment Group for the financial year ended 30 June 2017, I
year.
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
Ernst & Young
This declaration is in respect of The Star Entertainment Group and the entities it controlled during the financial
year.
John Robinson
Partner
23 August 2017
Ernst & Young
John Robinson
Partner
23 August 2017
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
58
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
14
14
59
ANNUAL REPORT 2017THE STAR ENTERTAINMENT GROUP
Remune
For the year
eration R
r ended 30 Ju
Report (u
une 2017
d)
unaudited
Remuneration Report (audited)
For the year ended 30 June 2017
Introductio
on from the
Remunerati
on Committ
tee Chair
Dear Shareh
older,
On behalf of
report is prep
the Board, I a
pared on a con
am pleased to
nsistent basis
present the R
to the previou
Remuneration
us year for eas
Report for the
se of referenc
e year ended 3
ce.
30 June 2017
2016 Annua
l General Me
eting (AGM)
(FY17). This
Summary for FY17
Remuneration
Reviews
The FY16 Re
of the resolut
emuneration R
tion.
Report receive
ed positive sha
areholder supp
port at the 201
16 AGM, with
98.16% of vo
tes in favour
At the 2016 A
share rights u
70% of total a
AGM, shareho
under the Lon
annual reward
olders approve
ng Term Perfor
d, with more th
ed a grant to th
rmance Plan (
han 55% deliv
he Managing
(LTPP). His to
vered through
Director and C
otal at risk rem
deferred equi
ty.
Chief Executiv
muneration now
ve Officer of p
w accounts for
erformance
r more than
Shareholders
million per an
s also approve
nnum to provid
ed an increase
de future flexib
e to the Non-E
bility to increa
Executive Dire
se the size of
ectors’ (NED) f
f the Board.
fee pool cap fr
rom $2 million
n to $2.5
FY17 Perform
rmance and In
ncentive Outc
comes
The Group d
significant ite
the performa
performance
dividends pai
elivered Net P
ems) of $214.5
nce period for
as measured
id to sharehol
Profit after Tax
5 million was 1
r the Short Ter
d against the G
lders in FY17
x (NPAT) of $2
11.1% below t
rm Performan
Guest Satisfac
were 16 cents
264.4 million,
the pcp and be
nce Plan (STP
ction and Safe
s per share, up
36.0% above
elow the targe
PP). The Group
ty targets that
p 23.1% on th
the pcp. Norm
et set by the B
p delivered sa
t were set by t
he pcp.
malised NPAT
oard at the be
atisfactory non
the Board for F
T (excluding
eginning of
n-financial
FY17. Total
As the financ
FY17.
cial performan
ce gateway un
nder the STPP
P was not met
t for FY17, no
incentives ac
ccrued to Exec
cutives in
The FY13 aw
vest. Total Sh
threshold req
ward under the
hareholder Re
quired for vest
e Long Term P
eturn (TSR) of
ting.
Performance P
f 54.5% was b
Plan (LTPP) w
below the 50th
was tested for
percentile of t
vesting during
the competitor
g the period an
r peer group a
nd did not
and below the
Future even
ts
The FY14 LT
Earnings per
TPP is due to b
r Share (EPS)
be tested for v
and 50% Rel
vesting in Octo
ative Total Sh
ober 2017. Th
hareholder Ret
his is the first L
turn (rTSR) hu
LTPP award th
urdles.
hat comprises
50%
The Board is
strategic prio
s presently und
orities.
dertaking a rev
view of the LT
TPP performan
nce metrics fo
or alignment w
with the Group’
’s key
Further advic
ce on these m
atters is expe
cted to be pro
ovided at the u
upcoming 201
7 Annual Gen
neral Meeting.
We thank you
u for your sup
port in FY17 a
and welcome y
your feedback
k on our Remu
uneration Rep
port.
Short Term
Performance Plan
(STPP)
Long Term
Performance Plan
(LTPP)
Non-Executive
Director fees
In accordance with the Reward Strategy, the Company annually assesses the remuneration
levels and mix for Executives to identify where adjustments are appropriate based on market
benchmarking against relevant peer groups. The Company considers companies with a
market capitalisation within the range of 70%-160% of The Star Entertainment Group’s
market capitalisation and appropriate gaming and entertainment peers. Following the
remuneration review completed in September 2016, Executives received adjustments to
their remuneration as detailed in Table 7.
Payments under the STPP only accrue if the financial performance gateway for Normalised
Net Profit After Tax (NPAT) for the Group is met. As the financial performance for FY17 was
below the threshold of $245.4 million, set by the Board at the commencement of
performance period, no incentives accrued to Executives in FY17. Figure 3 shows the link
between pay and performance and the alignment of short term incentive outcomes to the
performance of the Group.
Performance rights relating to the FY13 LTPP were tested in September 2016. The TSR
performance of the Group was 54.5%, with a percentile ranking of 46.77. As this was below
the 50th percentile required for vesting, no awards were realised under the LTPP for FY13.
The FY14 LTPP grant is due for testing on 1 October 2017 and comprises an EPS and TSR
performance hurdle. The LTPP performance hurdles are being reviewed by the Board for
alignment to the Group’s key strategic priorities.
The resolution to increase the Non-Executive Directors’ fee pool from $2.0 million to
$2.5 million was approved by shareholders at the 2016 Annual General Meeting. The
increased fee pool provides future flexibility to increase the size of the Board, and to ensure
the Company maintains the ability to attract and retain high calibre Non-Executive Directors
with the appropriate qualifications, skills, experience and diversity to oversee the Company’s
business and strategic direction. Whilst the fee pool was increased by $0.5 million, total
increases to NED fees in FY17 was $0.073 million to align Committee fees with the
appropriate benchmark. The unutilised fee pool is $0.875 million.
This Remuneration Report is comprised of the following sections:
Contents
1. Key Management Personnel .................................................................................................................. 17
CONTENTS
2. Remuneration Governance .................................................................................................................... 17
Yours sincere
rely,
Sally Pitkin
Remuneratio
on Committee
Chair
62
1. Key Management Personnel
3. Remuneration Strategy and Programs ................................................................................................... 18
4. Executive Contracts and Remuneration ................................................................................................. 26
62
2. Remuneration Governance
5. Statutory Executive Remuneration......................................................................................................... 27
63
3. Remuneration Strategy and Programs
6. NED Remuneration ................................................................................................................................ 29
71
4. Executive Contracts and Remuneration
7. Other information .................................................................................................................................... 30
72
5. Statutory Executive Remuneration
7.1. KMP shareholdings ................................................................................................................................ 30
74
6. NED Remuneration
7.2. Loans and other transactions with KMP ................................................................................................. 31
75
7. Other Information
7.3. Variable Remuneration .......................................................................................................................... 32
75
7.1. KMP Shareholdings
7.2. Loans and other transaction with KMP
7.3. Variable Remuneration
76
77
60
15
16
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017 Remuneration Report (audited)
For the year ended 30 June 2017
Gender pay equity
The Group is committed to ensuring all employees are remunerated fairly and equitably. The Group conducts annual
gender pay equity reviews that are presented to the Remuneration Committee. No significant gaps were identified during
FY17.
3. Remuneration Strategy and Programs
The remuneration strategy at The Star Entertainment Group is designed to support a high performance culture, achieve
superior performance and as a result, sustainable value for shareholders. The reward programs are designed to promote
individual accountability and entrepreneurship in employees.
To achieve these objectives, the key reward principles are shaped around:
x
x
x
x
Being market competitive in order to attract and retain high performing individuals (refer section 3.1 – fixed
remuneration),
Paying above market for superior performance behaviours (variable – at risk remuneration) that drive
sustainable value for shareholders (refer section 3.2 – variable (at risk) remuneration),
Delivering a meaningful quantum of awards in equity to create alignment with shareholders’ interest and
manage risk, and
Linking remuneration components and outcomes to the achievement of the Group’s strategic priorities.
Total Annual Reward (TAR) is comprised of a fixed and a variable component. The variable component includes both a
short term and long term incentive opportunity. The Group balances the level of fixed versus variable remuneration
based on the industry’s market for talent, the views of shareholders and the need for effective reward mechanisms to
connect short and long-term performance against the Group’s strategic priorities. Fixed remuneration and total target
remuneration (fixed remuneration plus variable remuneration) is targeted at the median of the relevant market, with an
opportunity to earn above median pay, up to the 75th percentile, where higher levels of performance are realised.
Remuneration Report (audited)
For the year ended 30 June 2017
The Directors of The Star Entertainment Group Limited (The Star Entertainment Group or the Company) have
approved this Remuneration Report for the consolidated entity comprising the Company and its controlled entities
(collectively referred to as the Group) in respect of the financial year ended 30 June 2017.
This Remuneration Report outlines the remuneration arrangements for Key Management Personnel (KMP) who are
defined as those persons having authority and responsibility for planning, directing and controlling the major activities of
the Group, directly or indirectly, including any director (whether executive or otherwise) of The Star Entertainment Group
Limited. This report has been prepared in accordance with the requirements of the Corporations Act 2001(Cth) (the
Corporations Act) and its regulations. The information has been audited as required by section 308(3C) of the
Corporations Act where indicated.
For purposes of this report, the term ‘Executives’ means the executive director (Managing Director and Chief Executive
Officer) and senior executives (the Chief Financial Officer and the Managing Directors of The Star Sydney and
Queensland properties), but excludes Non-Executive Directors (NEDs).
1. Key Management Personnel
The names and titles of the Company’s KMP for the year ended 30 June 2017 are set out below. KMP were in office for
the entire duration of the financial year, unless otherwise stated. There have been no changes to KMP since the end of
the financial year.
Non-Executive Directors
Position
John O’Neill AO
Gerard Bradley
Greg Hayes
Katie Lahey AM
Sally Pitkin
Richard Sheppard
Executives
Matt Bekier
Chad Barton
Greg Hawkins
Geoff Hogg
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Managing Director and Chief Executive Officer
Chief Financial Officer
Managing Director, The Star Sydney
Managing Director, Queensland
2. Remuneration Governance
The Remuneration Committee (the Committee) considers matters relating to the remuneration of KMP as well as the
remuneration policies of the Group generally. This includes reviewing and recommending to the Board, the remuneration
of Executives and of the Chairman and NEDs. The main responsibilities of the Committee are outlined in the
Remuneration Committee Terms of Reference, available on the corporate governance page of the Company’s
website: https://www.starentertainmentgroup.com.au/corporate-governance/
Under the Remuneration Committee Terms of Reference, the majority of Committee members must be independent non-
executive directors and the Chair of the Committee must be an independent non-executive director. All members of the
Remuneration Committee (including the Chair of the Committee) are independent non-executive directors. Details of
members of the Committee and their background are included in the Directors’ Report on pages 8 to 11.
Use of remuneration advisors
The Committee seeks external advice from time to time to ensure it is fully informed when making remuneration
decisions. Remuneration advisors are engaged by, and report directly to, the Committee. PricewaterhouseCoopers
(PwC) are the Group’s appointed independent external remuneration consultants. No remuneration recommendations as
defined by the Corporations Act were provided by PwC during FY17.
Remuneration Report approval at 2016 Annual General Meeting (AGM)
The FY16 Remuneration Report received positive shareholder support at the 2016 AGM, with 98.16% of votes in favour
of the resolution.
62
17
18
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017
Remuneration Report (audited)
For the year ended 30 June 2017
Figure 1 illustrates the components of Executives’ Total Annual Reward (TAR) opportunity and how these are linked to
strategic objectives of the Group.
Figure 1: Components of Executive TAR Opportunity
Component/
Percentage of
TAR
Fixed
remuneration
CEO – 27%
Other Execs –
48%
Delivery
Performance
alignment
Strategic
objective
Performance
period
Cash (i) and
superannuation
Market median
Attraction
and retention
(Talented
Teams)
July 2016 to
June 2017
Short-term
incentive (STI) cash
CEO – 18%
Other Execs – 19%
Cash and
superannuation
STI Restricted
Shares
CEO – 9 %
Other Execs –
10%
Restricted shares (ii)
Group or property
performance and
individual
performance (iii)
Short-term
financial and non -
financial
performance (iii)
July 2016 to June
2017
Long-term incentive
(LTI)
CEO – 46%
Other Execs – 23%
Performance rights
Relative Total
Shareholder
Return and
Earnings per Share
Sustainable
Shareholder value
creation (4-year
period)
September 2016 to
September 2020
TAR opportunity 100%
(i)
Employees may voluntarily elect to salary sacrifice for additional superannuation contributions and motor vehicle novated leases (from fixed
remuneration component only).
(ii) A mandatory one-third of the Executives’ short-term incentive award is deferred into restricted shares which are subject to a holding lock for a period
of twelve months from the date of the award.
(iii) Table 2 provides details on the strategic priorities and the metrics used to assess performance against the strategic priorities
Remune
For the year
eration R
r ended 30 Ju
Report (a
une 2017
audited)
3.1 Fixed r
remuneratio
n
The fixed rem
The amount
muneration rec
of fixed remun
ceived by Exe
neration an Ex
ecutives may in
xecutive receiv
nclude base s
ves is based o
salary, superan
on the followin
nnuation and
ng:
non-monetary
y benefits.
x Sco
ope and respo
nsibilities of th
he role,
x Refe
base
cap
erence to the
ed on similar
italisation) and
level of remun
market capita
d industry pee
neration paid t
lisation (range
ers, and
to Executives
e 70% to 160%
of comparable
% of The Star
e ASX-listed o
Entertainmen
organisations,
t Group’s mar
determined
rket
x
Leve
el of internatio
onal and dome
estic gaming k
knowledge, sk
kills and exper
rience of the in
ndividual.
Fixed remune
Fixed remune
factors.
eration is revie
eration may d
ewed annually
eviate from th
y, and the poli
e market med
cy is to target
dian depending
fixed remune
g on the indiv
eration at the m
idual capabilit
median of the
ties and other
market.
business
3.2 Variabl
e (at risk) re
n
emuneration
The Star Ente
Board approv
are the Short
programs are
ertainment Gr
ved business
t Term Perform
e set out in se
roup has two v
plan to ultimat
mance Plan (S
ction 3.3 and
variable rewar
tely deliver su
STPP) and the
3.5 respective
rd programs d
uperior returns
e Long Term P
ely.
esigned to dri
s and long-term
Performance P
ve performan
m value creati
Plan (LTPP). F
ce and execut
on for shareho
Further details
tion of the
olders. They
s of these two
Figure 2 illus
(the Chief Fin
trates the rem
nancial Officer
muneration mix
r and the Man
x for the Mana
aging Directo
aging Director
rs of The Star
and Chief Exe
r Sydney and t
ecutive Office
the Queenslan
r and senior e
nd properties)
executives
) respectively.
Figure 2: Re
emuneration m
mix for FY17
Deferred
Equity
55%
Cash
45%
LTI
46%
STI D
Deferred
STI C
Cash
d
Fixed
9%
18%
27%
Cash vs.
C
erred Equity
Def
73%
At Risk
27%
Fixed
Fixed vs.
F
At Risk
Manag
ging Director an
Total Target
d Chief Executiv
ve Officer
rd
Annual Rewar
52%
At Risk
48%
Fixed
Fixed vs.
At Risk
Deferred
Equity
33%
LTI
STI Deferred
23%
10%
19%
STI Cash
Cash
67%
Fixed
48%
Mana
Ma
aging Director Th
anaging Directo
Chief Financi
otal Target Ann
To
Cash vs.
Deferred Equ
ity
ey
he Star - Sydne
r Queensland
al Officer
nual Reward
64
19
20
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017 Remuneration Report (audited)
For the year ended 30 June 2017
3.3 Short Term Performance Plan Design
The STPP is designed to reward Executives for execution of the Group’s strategy during the performance period.
Payments only accrue under the plan if the Group achieves its financial performance gateway, thereby aligning to
shareholder interests and achieving a direct link between pay and performance (refer Figure 3). Payments are further
moderated based on satisfactory performance against key non financial performance indicators. Individual payments are
performance based and assessed using a weighted balanced scorecard approach (refer Figure 4).
As the Group did not achieve the financial performance gateway for FY17, no incentives accrued to Executives under the
STPP in FY17.
The number of employees invited to participate in the STPP was approximately 692 (increased from 451 for FY16).
Table 1 sets out the key features of the STPP, all of which are consistent with the prior year.
Table 1: Key design features of the STPP
Purpose
To reward Executives for execution of the Group’s strategy during the performance period.
Gateway
The minimum level of financial performance required before any incentives accrue under the STPP is referred to as the
gateway. The gateway hurdle is 95% of the budgeted Normalised1 NPAT of the Group as approved by the Board. This
gateway applies to all Executives and other participants in the plan. The Board may use its discretion to make
payments to reward for significant non-financial performance.
Pool size
The pool size is determined by the Board through an assessment of Group performance, including:
1. Financial performance (Normalised NPAT)
0% of target pool vests at below 95% of budgeted NPAT
50% of target pool vests at 95% of budgeted NPAT
100% of target pool vests at 100% of budgeted NPAT
150% of target pool vests at 110% of budgeted NPAT
2. Non-financial performance measures and strategic priorities (Guest Service and Safety).
Opportunities are based on the Executive’s incentive target in their employment contract (refer Table 7)
The payment range available is 0%-150% of the Executive’s incentive target.
Incentive
opportunity
levels
Payment
calculation
Individual performance is determined by using a weighted scorecard of measures (Figure 4) to arrive at a performance
rating. Performance ratings link to payment ranges as follows:
5 = Outstanding (125 – 150% of target)
4 = Exceeds (100 – 125% of target)
3 = Meets (75 – 100% of target)
2 = Meets some (0 – 75% of target)
1 = Did not meet (0% of target)
An Executive’s individual STI award is based on the following calculation:
Fixed
Remuneration
x
Individual
Target STI %
x
Group
Performance
Multiplier %
(0-150%)
x
Individual
Performance
Multiplier %
(0-150%)
Individual STI
award
(capped at
150% x
target)
Payments are capped at 150% of the Executive’s STPP target. Where performance and/or behaviours have been
deemed unsatisfactory, no incentives are awarded.
Delivery of
payments
(including
deferrals)
Clawback
Two-thirds of payments are delivered in cash in September.
One-third of all payments are held in restricted shares for a period of twelve months from the date of the award. These
shares are forfeited in the event that the Executive voluntarily terminates from the Group. Executives are entitled to
receive dividends and have voting rights during the restriction period, however they are unable to vote on remuneration
resolutions at the AGM.
Incentives may be clawed back where there has been a material misrepresentation of the financial outcomes on which
the payment had been assessed and/or the Executive’s actions have been found to be fraudulent, dishonest or in
breach of the Group’s Code of Conduct (e.g. misconduct). This provision may extend up to the prior three financial
years of STPP payments.
1 Normalised results reflect the underlying performance of the business as they remove the inherent volatility of the International VIP Rebate
business and exclude significant items that are considered by their nature and size unusual or not in the ordinary course of business. This methodology has
been consistently applied since FY12.
Remune
For the year
eration R
r ended 30 Ju
Report (a
une 2017
audited)
3.4 Reward
d Outcomes
under STPP
P
In determinin
financial and
ng whether any
non-financial
y incentives a
performance
re being paid
against target
and the size o
ts.
of the incentiv
e pool, the Bo
oard considers
s both
x
Financia
al performanc
ce
The financial
performance
measure driv
ving the size of
f the STPP po
ool is Normalis
sed NPAT of t
he Group.
Figure 3 show
percentage o
ws the Compa
of STIs awarde
any’s reported
ed relative to t
d Normalised N
the ‘on target’
NPAT relative
amount.
to target over
r the last six fi
nancial years
and the
As the financ
accrued to Ex
cial performan
xecutives.
ce gateway of
f $245.4 millio
on (i.e. 95% of
f Target NPAT
T) was not met
t for FY17, no
incentives
Figure 3: No
ormalised NP
AT relative to
o target and p
percentage S
TI paid
Normalised NPAT relative to target and STI%
300.0
250.0
)
m
$
(
T
A
P
N
200.0
150.0
100.0
50.0
-
%
I
T
S
125%
115%
105%
95%
85%
75%
65%
FY12
FY13
FY14
FY15
FY16
FY17
Normalised NPAT ($m)
Target NPAT ($m)
STI %
No awards were ma
ade in FY12, FY13 a
and FY17, as targets
were not achieved
x
STPP po
ool moderatin
ng measures
s
The two non-
Safety (TRIF
-financial mea
R)^.
asures conside
ered when det
termining the s
size of the ST
TPP pool are G
Guest Satisfac
ction and
Guest Satisfa
critical focus
action is an ind
area of the G
dicator of the
roup, particula
value delivere
arly during the
ed from the qu
e current capit
uality of our cu
al expansion a
ustomer exper
and redevelop
ience and Saf
pment phase.
fety is a
For FY17, the
set by the Bo
e Group came
oard at the com
e within 95% o
mmencement
of the Guest S
of the perform
Satisfaction tar
mance period.
rget and achie
eved better tha
an the Safety T
TRIFR limit
x
Executiv
ve scorecard
ds (individual
performance
e)
Although no
against their
incentives acc
respective we
crued to Execu
eighted balanc
utives in respe
ced scorecard
ect FY17, indiv
objectives. D
vidual perform
etails of these
mance for Exe
e objectives ar
cutives was a
re shown in Fi
ssessed
gure 4.
Figure 4: We
eighted balan
nced scoreca
ard
Ma
anaging Director
and Chief
utive Officer
and Chief Execu
er
f Financial Office
Manag
Mana
ing Director, The
aging Director, Q
e Star Sydney
Queensland
Differentiated value p
proposition
x Guest Excellence c
x Customer loyalty
culture
People
x Safety TRIFR^
x Diversity and Enga
x Talent developmen
gement^
nt and
retention
Governance, risk and
d
ment
stakeholder managem
x Compliance
x Sustainability
x Key stakeholder ma
anagement
r
Othe
strateg
gic
es
prioriti
40%
Shareholder
value creation
60%
Deliver Sharehold
and Work Class P
er value
roperties
x Earnings and m
arket
share growth tar
rgets
x Diversification o
f
venue
international rev
x Operational effic
ciencies
x Delivery of capit
tal
plans on
redevelopment p
time, on budget
x Balance sheet
management / c
ratios
capital
Differenti
ated value proposition
x Guest
x Custom
Excellence culture
mer loyalty
People
Guest
20%
x Safety
x Diversi
x Talent
retentio
TRIFR^
ity and Engagement^
development and
on
People
20%
Sh
valu
hareholder
ue creation
40%
Governan
stakehold
nce, risk and
der management
x Compl
x Sustain
iance
nability
Governanc
20%
e
Deliver
and Wo
Shareholder value
ork Class Properties
x Net r
x EBIT
x EGM
grow
x Oper
and
x Deliv
main
redev
time,
revenue growth
TDA growth
M market share
wth
rational efficiencies
margin optimisation
very of capital
ntenance and
velopment plans on
, on budget
^External p
providers are enga
aged to report on
TRIFR, Guest Sa
tisfaction and Emp
ployee Engageme
ent scores as app
licable.
66
21
22
67
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017
Remuneration Report (audited)
For the year ended 30 June 2017
Table 2 provides a summary of performance against the strategic priorities of the Group for FY17.
Table 2: FY17 Performance outcomes against strategic priorities and key performance indicators
Strategic
Priorities
Shareholder
Value and
World Class
Properties
Key performance indicator
Performance outcomes/ commentary
FINANCIAL PERFORMANCE
x Deliver budgeted Normalised NPAT and EBITDA
(improving earnings and operating efficiencies)
x Grow revenues and market share in domestic and
International Rebate Business (IRB), including
diversification of revenue
x Grow EGM Market Share
x Manage operational benchmarks, cash and receivables
x The Group’s normalised EBITDA and NPAT performance
were below budget, impacted by disruptions from capital
works at the Sydney and Gold Coast properties and softer
macro-environment and events in China
x EGM Market share flat in Sydney and down ~1% in Qld
x IRB actual win rate above normalised levels, receivables
well controlled, increased dividend to shareholders
x Benefits of around $48m in FY17 from “Fit for Growth”
program that is focused at driving year on year sustainable
improvements/operational efficiencies
Overall
Rating
Below
target
CAPITAL REDEVELOPMENT PLANS
x Deliver capital works within scope, timing and budget
x Progress master planning for Sydney and the Gold Coast
in line with business strategy
x Progress Queen’s Wharf Brisbane (QWB) development in
line with approved time frames
x Manage balance sheet and key ratios in line with target
x Master planning and redevelopment works progressing in
line with expectations with Capital expenditure of more than
$420m completed in FY17. Key projects delivered in FY17
include:
On target
o (Sydney) – upgrade to 303 room Astral Tower hotel,
entry level domestic private gaming room (Vantage),
multi-terminal gaming machine theatre
o (Gold Coast) – main gaming floor refresh, upgrade to
596 room hotel, reception and Atrium area, launched
two new restaurants
x QWB development on track, demolition works commenced
x Gearing and other key ratios were within target range
Differentiated
value
proposition
GUEST SERVICE CULTURE
x Elevate the customer service culture through:
o Implementation of world class Guest Service System
(refers to a comprehensive system geared towards
creating sustainable service culture)
o Measuring the internal level of customer service
through an independently managed Internal Customer
Survey (ICS)
x Guest service scores within 95% of target except on the
Gold Coast where this was >10% below target
x Over 85% of staff completed the ‘Star Quality’ service
foundations training that is also embedded in induction
programs across the Group
x Over 17,500 guest surveys completed
x Satisfactory ICS results from FY17 survey
LEADERSHIP IN LOYALTY
x To achieve a leadership position in Loyalty and thereby
achieve growth in market share and earnings
x Execution on Loyalty targets include:
o relaunch of program on an upgraded platform to offer
improved program features and enhanced analytics
capability
o focus on existing customer engagement levels to
increase rated play and offer attainable mid-tier
benefits and exemplary customer service, improving
new member quality and acquisition metrics
x Deliver the Group’s new branding for The Star Gold Coast
x Loyalty program relaunched per plan in November 2016
x Relaunched loyalty program showing positive initial signs
x Member perception improving month on month since
relaunch in November 2016
x Electronic gaming rated play in FY2017 continued to grow
faster than unrated play across key metrics – turnover,
actual and theoretical win across both Slots and MTGMs
x New member acquisition showing initial signs of improving
quality – increased visitation within first 4 weeks of signing
up and higher average gaming spend per trip in 2H2017 on
pcp
x The Star Gold Coast rebranding completed as per plan
Slightly
below
target
On track
People
EMPLOYEE ENGAGEMENT
x Focus on ensuring continuous improvements in employee
engagement and diversity through identification and
delivery of appropriate targeted action plans and initiatives
x Support a culture of continuous learning through
implementation of contemporary Learning Management
System (LMS) and effective leadership behaviours and
competencies
x Employee engagement action plans following FY16
Employee Opinion Survey (EOS) satisfactorily on track
across all properties.
x ICS completed with overall score within threshold
x LMS implemented in Dec 2016 with more than 67,000
online compliance training modules completed
x Multiple Diversity and Inclusion and HR awards and finalist
nominations, including for Employer of Choice
On track
SAFETY
x Deliver a safe environment for guests and team members
x Revised WHS strategy approved and implemented in FY17
x TRIFR scores improved on pcp and on decreasing for all
On track
across the Group
x Measure Work, Health & Safety (WHS) progress, including
Total Reportable Injury Frequency Rate (TRIFR), Long
Term Injury Frequency Rate (LTIFR)
x Operationalise strategy and measures of progress,
including implementation of robust WHS information
technology platform and increased reporting
properties except Gold Coast
x LTIFR below expectations - remedial plans under review in
conjunction with overall safety improvement plans
x Phase 1 of Work Safety Management System implemented
RISK, COMPLIANCE & SUSTAINABILITY
x Foster a sound control and compliance environment
x No material compliance or risk breaches
x Casino licence review in Sydney completed with no
underpinned by a strong governance framework, including:
material findings
o Effective implementation and monitoring of
compliance with company policies and procedures
o Active monitoring of regulatory and other legislative
compliance requirements
x Deliver on the Sustainability Strategy and achieve resource
consumption reduction
x Maintain and develop key stakeholder relationships
including with regulatory and law enforcement agencies,
community organisations, shareholders, trade unions and
other key business partners.
x The Group obtained the global leadership position of the
Casino and Gaming Industry in the Dow Jones
Sustainability Index and remains a member of the
FTSE4Good Index
x ESG Strategy on track
x Progress made with QWB development and relations with
broader stakeholder groups during development phase
x Development approvals and submissions for expansion
projects (including with joint venture partners) on track
x Over $10m contributed to partnerships, community groups
and charities
Above
target
23
Governance,
risk and
stakeholder
management
68
Remuneration Report (audited)
For the year ended 30 June 2017
3.5 Long Term Performance Plan
The LTPP is principally designed to reward Executives for their contributions towards achieving the Group’s strategic
priorities orientated around the achievement of sustainable shareholder value creation. Equity awards are granted
annually and may vest after four years (subject to performance). Performance is measured at the test date against two
criteria rTSR and EPS. The Board is presently reviewing the LTPP performance criteria in the context of its strategic
priorities to ensure these are appropriate and effective in driving the execution of the strategy. Consultation with key
stakeholders is an important part of this review.
For FY17, there were 17 participants in the plan (9 participants for FY16). Each of the Executives participates in the plan.
Table 3 sets out the key features of the LTPP, all of which are consistent with the prior year.
Table 3: Key design features of the LTPP
Purpose
To reward Executives for execution of the Group’s strategy and delivering long term sustainable shareholder value
creation.
Type of equity
award
Determination of
the number of
rights
Vesting
conditions
(hurdles) and
schedule
Performance Rights - when the performance rights vest, ordinary shares in The Star Entertainment Group are
automatically registered in the participant’s name and the participant will have voting and dividend rights corresponding
to the rights of all other holders of ordinary shares. These ordinary shares are free of restrictions but are still subject to
The Star Entertainment Group’s Securities Trading Policy.
The number of performance rights allocated to an Executive is based on the following calculation:
Target LTI ($)
y
Moderated face
value of a
performance right
Number of performance rights
allocated
Moderated face value reflects the face value of the share at the allocation date less the value of any dividends foregone
by the award holder during the vesting period, i.e. Share price x Dividend Discount Factor. Details of annual grant
values for Executives is set out in Table 7.
rTSR (50% of the award)
EPS (50% of the award)
rTSR has been included to focus the Executives on
the return received by shareholders (capital returns,
dividends and share price movement) over the four
year period relative to a peer group of companies.
EPS has been included to drive line of sight between
shareholder value creation and management’s financial
performance, against the Group’s business plan. It measures
growth in accounting-based earnings per ordinary share.
TSR peer group: S&P ASX 100
FY17 EPS target: EPS Growth to FY20
Exclusions: property trusts, infrastructure groups, and
mining companies, represented by the S&P Global
Industry Classification Standards of Oil & Gas, Metals
& Mining, Transportation Infrastructure and Real
Estate.
The EPS threshold and stretch target is set by the Board at the
beginning of the performance period by reference to a Board
approved long term plan.
The Star Entertainment Group will disclose the actual EPS
target on a retrospective basis to ensure that the Group’s
competitive position is not undermined.
The Star
Entertainment
Group’s relative
TSR ranking
Below 50th
percentile
At 50th percentile
Above 50th and
below 75th
percentile
At or above 75th
percentile
Percentage of
performance rights that
will vest
0%
50%
Pro-rata between 50% (at
50th percentile) and
100% (at 75th percentile)
100%
EPS performance
outcome
Below threshold
At threshold
Between threshold
and stretch
Percentage of performance
rights that will vest
0%
50%
Pro-rata between threshold and
target
At stretch
100%
Test Date and
Vesting date
Cessation of
employment,
Change of
Control and
Clawback
Performance rights are tested on the fourth anniversary of the grant and are not subject to retesting.
All unvested performance rights lapse immediately upon cessation of employment with The Star Entertainment Group.
However, the Board has discretion in special circumstances to determine the number of performance rights retained
and the terms applicable. Special circumstances include events such as retirement, redundancy, death and permanent
disability. If a Change of Control Event occurs, or the Board determines in its absolute discretion that a Change of
Control Event may occur, the Board will determine in its absolute discretion appropriate treatment regarding any
Awards.
Unvested rights may be clawed back where there has been a material misrepresentation of the financial outcomes on
which the award had been assessed and/or the Executive’s actions have been found to be fraudulent, dishonest or in
breach of the Group’s Code of Conduct (e.g. misconduct).
24
69
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017
Remuneration Report (audited)
For the year ended 30 June 2017
3.6 Vesting under the LTPP
Since the Group’s inception in 2011, there have been six grants made under the LTPP, with two grants tested and no
vesting outcomes (refer Table 4).
Table 4: Details of performance rights issued to date
Detail
Grant date
Test date
FY12 Grant
FY13 Grant
FY14 Grant
FY15 Grant
FY16 Grant
FY17 Grant
20 Sep 2011
19 Sep 2012
1 Oct 2013
26 Sep 2014
21 Sep 2015
5 Oct 2016
20 Sep 2014
19 Sep 2016
1 Oct 2017
26 Sep 2018
21 Sep 2019
5 Oct 2020
Vesting hurdle(s)
TSR
TSR
TSR & EPS
TSR & EPS
TSR & EPS
TSR & EPS
Test result
0% vested
0% vested
N/A
N/A
N/A
N/A
During FY17, the FY13 grant was tested and did not vest as performance hurdles were not met.
The next test date will be in October 2017, for performance rights granted in FY14.
The FY13 Grant was the first grant with a four year performance period, resulting in a gap year in 2015. Prior to this, the
vesting period was three years.
Performance rights relating to the FY13 grant were tested in September 2016. The TSR performance of the Group was
54.5% (excluding the value of franking credits), with a percentile ranking of 46.77. As this was below the 50th percentile
required for vesting, no awards were realised under the LTPP for FY13.
The FY14 Grant, due to be tested on 1 October 2017, is the first award with an EPS performance hurdle that comprises
50% of the award outcome. The Group introduced the EPS measure in FY14 to better align the reward outcomes under
the LTPP with the execution of the Group’s strategic priorities. The outcomes will be reported in the FY18 Remuneration
Report.
Table 5 outlines the performance of the Group and shareholder returns over the last six financial years.
Table 5: Statutory key performance indicators
Performance metric
Statutory NPAT
Basic EPS (statutory)
Full year dividend (fully franked, cents
per share)
Share price at year end
Increase/(decrease) in share price
FY12
$42.2m
5.9c
4.0c
$4.28
N/A
FY13
$83.5m
10.1c
6.0c
$3.06
(29%)
FY14
FY15
FY16
FY17
$106.3m
$169.3m
$194.4m
$264.4m
12.9c
8.0c
$3.14
+3%
20.5c
11.0c
$4.36
+39%
23.6c
13.0c
$5.40
+24%
32.0c
16.0c
$5.05
(6%)
Table 6 summarises the unvested performance rights held by Executives as at 30 June 2017.
Table 6: Performance rights by grant held by Executives at 30 June 2017
Executive
Matt Bekier
Chad Barton
Greg Hawkins
Geoff Hogg
FY14 Grant
FY15 Grant
FY16 Grant
FY17 Grant
Total performance rights
held
196,850
352,112
-
-
62,992
91,549
169,014
70,422
253,456
62,903
110,599
50,691
477,649
548,204
67,108
117,958
54,064
787,334
1,350,622
221,560
397,571
238,169
2,207,922
Total performance rights
259,842
683,097
The FY13 Grant was tested in September 2016 and as performance hurdles were not met and there is no retesting of hurdles, these rights lapsed.
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72
73
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017
Remuneration Report (audited)
For the year ended 30 June 2017
6. NED Remuneration
Remuneration Policy
x
x
x
NEDs receive a Board fee and a Committee fee for their participation as Chair or member of each Committee.
NEDs do not receive any performance or incentive payments and are not eligible to participate in any of
The Star Entertainment Group’s reward programs. This policy aligns with the principle that NEDs act
independently and impartially.
Board fees are not paid to the Managing Director and Chief Executive Officer. Executives do not receive fees
for directorships of any subsidiaries.
NED Fees
The aggregate fees payable to NEDs for their services as directors are limited to the maximum annual amount approved
by shareholders, currently set at $2,500,000 including superannuation contributions.
There were small increases to Committee fees in FY17 to align with the increasing demands on Committee members
and to maintain market competitiveness. Board and Committee fees effective from 1 July 2016 are shown in Table 10.
Table 10: Annual NED Fees (inclusive of superannuation)
Board
Audit
Risk &
Compliance
Remuneration
People, Culture &
Social
Responsibility
Investment & Capital
Expenditure Review
Chair
$475,000
$35,000
$35,000
$35,000
$30,000
$30,000
Member
$160,000
$17,500
$17,500
$17,500
$15,000
$15,000
The Star Entertainment Group remunerates NEDs for the full month of fees irrespective of their commencement date. Observer fees are paid
where the NED appointment is subject to regulatory approvals being obtained. Observer fees are equivalent to applicable Board and Committee fees.
A summary of the total remuneration received by each NED is set out in Table 11.
Table 11: NED Remuneration
NED
Financial year
Board and Committee Fees
$
Superannuation (i)
$
John O'Neill AO
Gerard Bradley
Greg Hayes
Katie Lahey AM
Sally Pitkin
Richard Sheppard
TOTAL FY17
TOTAL FY16
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
439,168
439,476
225,384
208,609
207,965
203,139
205,580
191,781
207,983
194,064
205,562
196,419
1,491,642
1,433,488
35,832
35,524
19,616
19,308
19,535
18,944
19,420
18,219
19,517
18,436
19,438
18,581
133,358
129,012
(i) Comprises superannuation contributions per Superannuation Guarantee legislation and salary sacrificed superannuation.
Total
$
475,000
475,000
245,000
227,917
227,500
222,083
225,000
210,000
227,500
212,500
225,000
215,000
1,625,000
1,562,500
Remuneration Report (audited)
For the year ended 30 June 2017
7. Other information
7.1. KMP shareholdings
To align the interests of the Board and Executives with the interests of shareholders generally, the Company introduced
in FY16, a minimum shareholding policy for KMP. There is a separate Minimum Shareholding Policy that applies to other
executives who report directly to the Managing Director and Chief Executive Officer.
Minimum Shareholding Policy for Executives
Executives are encouraged to progressively acquire shares over a five year period from the date of their appointment (for
new Executives), or within five years from the date of commencement of the policy (for existing Executives).
The Managing Director and Chief Executive Officer is to hold a minimum number of shares which is of equal value to
150% of one year’s base salary at the time of his unconditional appointment.
Other Executives are to hold a minimum number of shares which is of equal value to 100% of one year’s base salary at
the time of their unconditional appointment.
Direct and indirect holdings in shares or performance rights will each count towards the minimum shareholding target.
Minimum Shareholding Policy for NEDs
NEDs are encouraged to progressively acquire shares over a three year period from the date of commencement of their
unconditional appointment (for within three years from the date of commencement of the policy (for existing directors).
NEDs are to hold shares of equal value to their respective annual base fees applicable at the time of their unconditional
appointment.
Direct and indirect holdings will both count towards the minimum shareholding target.
Tables 12 and 13 show the number of shares and performance rights held by NEDs and Executives respectively at the
beginning and end of the financial year.
Table 12: Shares held by NEDs at 30 June 2017
NED
Balance at start of the
year
Number acquired
Number divested
Balance at the end of
the year
John O’Neill AO
Gerard Bradley
Greg Hayes
Katie Lahey AM
Sally Pitkin
Richard Sheppard
51,172
25,000
10,000
27,080
26,900
50,000
Total ordinary shares
190,152
3,176
-
-
-
19,000
30,000
52,176
-
-
-
-
-
-
-
54,348
25,000
10,000
27,080
45,900
80,000
242,328
74
29
30
75
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017 Remuneration Report (audited)
For the year ended 30 June 2017
Table 13: Shares and Performance Rights held by Executives at 30 June 2017
Executive
Holding
Balance at start of the
year
Acquired or granted
as compensationi
Disposed of, lapsed or
transferred during the
year ii
Balance at the end of
the year
Matt Bekier
Performance Rights
1,029,690
Ordinary Shares
361,140
548,204
148,633
(227,272)
-
Restricted Shares
146,733
141,689
(148,633)
Chad Barton
Performance Rights
154,452
Ordinary Shares
-
Restricted Shares
Greg Hawkins
Performance Rights
Ordinary Shares
32,366
279,613
-
Restricted Shares
47,536
Geoff Hogg
Performance Rights
247,741
Ordinary Shares
Restricted Shares iii
62,081
30,897
67,108
33,273
30,775
117,958
48,868
56,212
54,064
31,938
20,993
-
-
(32,785)
-
-
(48,151)
(63,636)
-
(30,575)
1,350,622
509,773
139,789
221,560
33,273
30,356
397,571
48,868
55,597
238,169
94,019
21,315
Note: The closing balances of restricted shares are subject to a deferral period of one year that ends on 15 September 2017.
(i) Includes shares acquired under the Dividend Reinvestment Plan and transfers from restricted shares where the holding lock has been lifted
(ii) Restricted shares that are no longer subject to a holding lock are converted into ordinary shares
(iii) Includes 217 ordinary shares acquired through salary sacrifice under the General Employee Share Plan that are subject to a holding lock for three years
from the acquisition date
7.2.
Loans and other transactions with KMP
There have been no loans or other transactions with KMP during the year.
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31
77
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2017
FINANCIAL REPORT
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 7
Consolidated income statement
For the year ended 30 June 2017
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2017
T H E S T A R E N T E R T A I N M E N T G R O U P L I M I T E D
A . C . N 1 4 9 6 2 9 0 2 3
A S X C O D E : S G R
A N D I T S C O N T R O L L E D E N T I T I E S
Revenue
Other income
Government taxes and levies
Commissions and fees
Employment costs
Depreciation and amortisation
Cost of sales
Property costs
Advertising and promotions
Other expenses
Share of net loss of associate and joint venture entities accounted for
using the equity method
Earnings before interest and tax (EBIT)
Net finance costs
Profit before income tax (PBT)
Income tax expense
Net profit after tax (NPAT)
Other comprehensive (loss)/income
Items that may be reclassified subsequently to profit or loss
Change in fair value of cash flow hedges taken to equity, net of tax
Total comprehensive income for the period
Earnings per share:
Basic earnings per share
Diluted earnings per share
Fully franked dividend per share
Note
A2
2017
$m
2016
$m
2,344.0
2,268.1
A3
A3
A3
A4
A3
D5
A5
F2
F1
F3
F3
A6
1.1
(526.2)
(247.3)
(609.1)
(164.5)
(85.7)
(77.9)
(91.5)
(120.5)
(0.7)
421.7
(41.7)
380.0
(115.6)
264.4
0.8
(504.6)
(313.7)
(600.5)
(163.8)
(81.8)
(77.8)
(85.7)
(116.0)
-
325.0
(45.8)
279.2
(84.8)
194.4
(13.4)
251.0
9.6
204.0
32.0 cents
23.6 cents
31.9 cents
16.0 cents
23.6 cents
13.0 cents
The above consolidated income statement should be read in conjunction with accompanying notes.
33
79
ANNUAL REPORT 2017
Consolidated balance sheet
For the year ended 30 June 2017
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 30 JUNE 2017
Consolidated statement of cash flows
For the year ended 30 June 2017
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Other assets
Total current assets
Property, plant and equipment
Intangible assets
Derivative financial instruments
Investment in associate and joint venture entities
Other assets
Total non current assets
TOTAL ASSETS
LIABILITIES
Trade and other payables
Interest bearing liabilities
Income tax payable
Provisions
Derivative financial instruments
Other liabilities
Total current liabilities
Interest bearing liabilities
Deferred tax liabilities
Provisions
Derivative financial instruments
Total non current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Retained earnings
Reserves
TOTAL EQUITY
Note
B1
B2
B3
F4
B4
B5
B3
D5
F4
F5
B7
F2
F6
B3
F7
B7
F2
F6
B3
F8
F8
2017
$m
113.7
192.7
11.9
48.4
60.9
427.6
2,360.5
1,851.8
151.1
212.4
11.9
4,587.7
5,015.3
324.5
130.0
28.8
66.5
18.4
21.1
589.3
915.0
188.2
9.9
37.3
1,150.4
1,739.7
3,275.6
2,580.5
702.3
(7.2)
3,275.6
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
80
2016
$m
159.0
130.3
9.0
14.5
38.5
351.3
2,120.9
1,836.7
242.0
29.3
15.2
4,244.1
4,595.4
261.9
-
20.8
58.3
17.8
20.9
379.7
813.5
181.9
14.6
58.0
1,068.0
1,447.7
3,147.7
2,580.5
561.8
5.4
3,147.7
34
Cash flows from operating activities
Net cash receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Payment of government levies, gaming taxes and GST
Interest received
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant, equipment and intangibles
Payments for investment in associate and joint venture entities
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from interest bearing liabilities
Repayment of interest bearing liabilities
Dividends paid
Finance costs
Net cash inflow/(outflow) from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Note
2017
$m
2016
$m
2,348.3
(1,259.4)
(521.0)
1.0
(95.6)
2,287.6
(1,307.7)
(502.5)
1.3
(100.8)
473.3
377.9
(407.6)
(183.9)
(591.5)
434.5
(185.0)
(123.9)
(52.7)
72.9
(292.5)
(29.3)
(321.8)
160.0
(110.0)
(94.9)
(48.8)
(93.7)
(45.3)
(37.6)
159.0
113.7
196.6
159.0
F2
F9
B7
B7
A6
B1
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
35
81
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 Consolidated statement of changes in equity
For the year ended 30 June 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
2017
Balance at 1 July 2016
Profit for the year
Other comprehensive income
Total comprehensive income
Dividends paid
Employee share based payments
Balance at 30 June 2017
2016
Balance at 1 July 2015
Profit for the year
Other comprehensive income
Total comprehensive income
Dividends paid
Employee share based payments
Balance at 30 June 2016
Note
F1
A6
F10
F1
A6
F10
Ordinary
shares
$m
Retained
earnings
$m
Hedging
reserve
$m
Share based
payment
reserve
$m
2,580.5
-
-
-
-
-
2,580.5
2,580.5
-
-
-
-
-
2,580.5
561.8
264.4
-
264.4
(123.9)
-
702.3
462.3
194.4
-
194.4
(94.9)
-
561.8
(0.4)
-
(13.4)
(13.4)
-
-
(13.8)
(10.0)
-
9.6
9.6
-
-
(0.4)
5.8
-
-
-
-
0.8
6.6
2.6
-
-
-
-
3.2
5.8
Total
$m
3,147.7
264.4
(13.4)
251.0
(123.9)
0.8
3,275.6
3,035.4
194.4
9.6
204.0
(94.9)
3.2
3,147.7
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
NOTES TO THE
FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 7
Refer to the Operating Financial Review (OFR) within the Directors’ Report for details of key transactions during the year.
CONTENTS
A K E Y I N C O M E S TA T E M E N T D I S C L O S U R E S
A1. Segment information
A2. Revenue
A3. Expenses
A4. Depreciation and amortisation
A5. Net finance costs
A6. Dividends
A7. Significant items
B K E Y B A L A N C E S H E E T D I S C L O S U R E S
A S S E T S
B1. Cash and cash equivalents
B2. Trade and other receivables
B3. Derivative financial instruments
B4. Property, plant and equipment
B5. Intangible assets
B6. Impairment testing and goodwill
L I A B I L I T I E S
B7. Interest bearing liabilities
C C O M M I T M E N T S , C O N T I N G E N C I E S A N D S U B S E Q U E N T E V E N T S
C1. Commitments
C2. Contingent liabilities
C3. Subsequent events
D G R O U P S T R U C T U R E
D1. Related party disclosures
D2. Parent entity disclosures
D3. Deed of cross guarantee
D4. Key Management Personnel disclosures
D5. Investment in associates and joint venture entities
E R I S K M A N A G E M E N T
E1. Financial risk management objectives and policies
E2. Additional financial instruments disclosures
F O T H E R D I S C L O S U R E S
F1. Other comprehensive income
F2. Income tax
F3. Earnings per share
F4. Other assets
F5. Trade and other payables
F6. Provisions
F7. Other liabilities (current)
F8. Share capital and reserves
F9. Reconciliation of net profit after tax to net cash inflow from operations
F10. Employee share plans
F11. Auditor’s remuneration
82
G A C C O U N T I N G P O L I C I E S A N D C O R P O R A T E I N F O R M A T I O N
36
8 4
84
85
85
86
86
87
87
8 8
88
88
90
91
92
93
9 5
95
9 7
97
97
97
9 8
98
100
101
102
103
1 0 6
106
109
1 1 2
112
112
115
115
115
116
117
117
118
119
120
1 2 1
83
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
A Key income statement disclosures
A Key income statement disclosures
A1 Segment information
A1 Segment information
The Group's operating segments have been determined based on the internal management reporting structure and the
The Group's operating segments have been determined based on the internal management reporting structure and the
nature of products and services provided by the Group. They reflect the business level at which financial information is
nature of products and services provided by the Group. They reflect the business level at which financial information is
provided to the executive decision makers, being the Managing Director and Chief Executive Officer and the Group
provided to the executive decision makers, being the Managing Director and Chief Executive Officer and the Group
Chief Financial Officer, for decision making regarding resource allocation and performance assessment.
Chief Financial Officer, for decision making regarding resource allocation and performance assessment.
The Group has three reportable segments:
The Group has three reportable segments:
Sydney
Sydney
Comprises The Star Sydney's casino operations, including hotels, apartment complex, restaurants
Comprises The Star Sydney's casino operations, including hotels, apartment complex, restaurants
and bars.
and bars.
Comprises The Star Gold Coast's casino operations, including hotel, theatre, restaurants and bars.
Comprises The Star Gold Coast's casino operations, including hotel, theatre, restaurants and bars.
Comprises Treasury's casino operations, including hotel, restaurants and bars.
Comprises Treasury's casino operations, including hotel, restaurants and bars.
Gold Coast
Gold Coast
Brisbane
Brisbane
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
A2 Revenue
A2 Revenue
Gaming
Gaming
Non-gaming and other
Non-gaming and other
Total gross revenue
Total gross revenue
Player rebates and promotional allowances
Player rebates and promotional allowances
2017
2017
Gross revenues - VIP a
Gross revenues - VIP a
Gross revenues - domestic a
Gross revenues - domestic a
Segment revenue (refer to note A2)
Segment revenue (refer to note A2)
Segment earnings before interest, tax and
Segment earnings before interest, tax and
significant items
significant items
Depreciation and amortisation
Depreciation and amortisation
Capital expenditure
Capital expenditure
2016
2016
Gross revenues - VIP a
Gross revenues - VIP a
Gross revenues - domestic a
Gross revenues - domestic a
Segment revenue (refer to note A2)
Segment revenue (refer to note A2)
Segment earnings before
Segment earnings before
significant items
significant items
Depreciation and amortisation
Depreciation and amortisation
Capital expenditure
Capital expenditure
interest,
interest,
tax and
tax and
Sydney
Sydney
$m
$m
547.9
547.9
1,137.9
1,137.9
1,685.8
1,685.8
Gold Coast
Gold Coast
$m
$m
66.3
66.3
331.3
331.3
397.6
397.6
Brisbane
Brisbane
$m
$m
25.4
25.4
323.4
323.4
348.8
348.8
300.9
300.9
100.2
100.2
180.0
180.0
Sydney
Sydney
$m
$m
555.1
555.1
1,101.7
1,101.7
1,656.8
1,656.8
200.7
200.7
101.7
101.7
150.2
150.2
58.1
58.1
36.3
36.3
209.1
209.1
Gold Coast
Gold Coast
$m
$m
39.9
39.9
321.1
321.1
361.0
361.0
49.1
49.1
35.2
35.2
132.4
132.4
76.2
76.2
28.0
28.0
30.5
30.5
Brisbane
Brisbane
$m
$m
1.3
1.3
338.6
338.6
339.9
339.9
75.2
75.2
26.9
26.9
23.6
23.6
a
a
Gross revenue is presented as the gross gaming win before player rebates and promotional allowances.
Gross revenue is presented as the gross gaming win before player rebates and promotional allowances.
Reconciliation of reportable segment profit to profit before income tax
Reconciliation of reportable segment profit to profit before income tax
Segment earnings before interest, tax and significant items
Segment earnings before interest, tax and significant items
Significant items (refer to note A7)
Significant items (refer to note A7)
Unallocated items:
Unallocated items:
- net finance costs (refer to note A5)
- net finance costs (refer to note A5)
- share of net loss of associate and joint venture entities accounted for using
- share of net loss of associate and joint venture entities accounted for using
the equity method
the equity method
Profit before income tax (PBT)
Profit before income tax (PBT)
2017
2017
$m
$m
435.2
435.2
(12.8)
(12.8)
(41.7)
(41.7)
(0.7)
(0.7)
380.0
380.0
Total
Total
$m
$m
639.6
639.6
1,792.6
1,792.6
2,432.2
2,432.2
435.2
435.2
164.5
164.5
419.6
419.6
Total
Total
$m
$m
596.3
596.3
1,761.4
1,761.4
2,357.7
2,357.7
325.0
325.0
163.8
163.8
306.2
306.2
2016
2016
$m
$m
325.0
325.0
-
-
(45.8)
(45.8)
-
-
279.2
279.2
38
38
Revenue is up $75.9m or 3.3% on the prior comparable period (pcp) driven by growth in domestic gaming and
Revenue is up $75.9m or 3.3% on the prior comparable period (pcp) driven by growth in domestic gaming and
the high win rate in the International VIP Rebate business.
the high win rate in the International VIP Rebate business.
Revenue
Revenue
Revenue is measured at the fair value of the consideration received or receivable from the sale of goods and services
Revenue is measured at the fair value of the consideration received or receivable from the sale of goods and services
in the ordinary course of the Group's activities. Revenue is recognised to the extent that it is probable that the
in the ordinary course of the Group's activities. Revenue is recognised to the extent that it is probable that the
economic benefits associated with a transaction will flow to the Group and the amount of revenue and associated
economic benefits associated with a transaction will flow to the Group and the amount of revenue and associated
costs incurred can be reliably measured. Revenue comprises net gaming win less player rebates and promotional
costs incurred can be reliably measured. Revenue comprises net gaming win less player rebates and promotional
allowances, as well as other non-gaming revenue from the hotels, restaurants and bars.
allowances, as well as other non-gaming revenue from the hotels, restaurants and bars.
Customer loyalty programs
Customer loyalty programs
The Group operates customer loyalty programs enabling customers to accumulate award credits for gaming and on-
The Group operates customer loyalty programs enabling customers to accumulate award credits for gaming and on-
property spend. A portion of the spend, equal to the fair value of the award credits earned and reduced for expected
property spend. A portion of the spend, equal to the fair value of the award credits earned and reduced for expected
breakage, is treated as deferred revenue (refer to note F7). Revenue from the award credits is recognised in the
breakage, is treated as deferred revenue (refer to note F7). Revenue from the award credits is recognised in the
income statement when the award is redeemed or expires.
income statement when the award is redeemed or expires.
A3 Expenses
A3 Expenses
Profit before income tax is stated after charging the following expenses and significant items:
Profit before income tax is stated after charging the following expenses and significant items:
Other income
Other income
Net foreign exchange gain
Net foreign exchange gain
Government taxes and levies (including gaming GST):
Government taxes and levies (including gaming GST):
New South Wales
New South Wales
Queensland
Queensland
1.1
1.1
0.8
0.8
Government taxes and levies is up $21.6m or 4.3% on the pcp in line with higher gaming revenues, as well as a
Government taxes and levies is up $21.6m or 4.3% on the pcp in line with higher gaming revenues, as well as a
higher average gaming tax rate in Sydney.
higher average gaming tax rate in Sydney.
Employment costs:
Employment costs:
Salaries, wages, bonuses and other benefits
Salaries, wages, bonuses and other benefits
Defined contribution plan expense (superannuation guarantee charges)
Defined contribution plan expense (superannuation guarantee charges)
Share based payment expense (refer to note F10)
Share based payment expense (refer to note F10)
Cost of inventories recognised as an expense during the year
Cost of inventories recognised as an expense during the year
Movement in provision for impairment of trade receivables (refer to note B2)
Movement in provision for impairment of trade receivables (refer to note B2)
Operating lease charges
Operating lease charges
Significant items (refer to note A7)
Significant items (refer to note A7)
2017
2017
$m
$m
2,184.2
2,184.2
248.0
248.0
2,432.2
2,432.2
(88.2)
(88.2)
2,344.0
2,344.0
2016
2016
$m
$m
2,111.1
2,111.1
246.6
246.6
2,357.7
2,357.7
(89.6)
(89.6)
2,268.1
2,268.1
369.4
369.4
156.8
156.8
526.2
526.2
559.8
559.8
45.5
45.5
3.8
3.8
609.1
609.1
85.7
85.7
18.7
18.7
13.0
13.0
12.8
12.8
350.0
350.0
154.6
154.6
504.6
504.6
551.9
551.9
43.0
43.0
5.6
5.6
600.5
600.5
81.8
81.8
23.1
23.1
12.3
12.3
-
-
39
39
85
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
84
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
A4 Depreciation and amortisation
A4 Depreciation and amortisation
Property, plant and equipment (refer to note B4)
Property, plant and equipment (refer to note B4)
Intangible assets (refer to note B5)
Intangible assets (refer to note B5)
Other
Other
2017
2017
$m
$m
137.1
137.1
26.2
26.2
1.2
1.2
164.5
164.5
2016
2016
$m
$m
135.6
135.6
27.1
27.1
1.1
1.1
163.8
163.8
Depreciation is calculated using a straight line method. The useful lives over which the assets are depreciated are as
Depreciation is calculated using a straight line method. The useful lives over which the assets are depreciated are as
follows (for further details of the useful lives of intangible assets refer to note B5):
follows (for further details of the useful lives of intangible assets refer to note B5):
Freehold and leasehold buildings
Freehold and leasehold buildings
Leasehold improvements
Leasehold improvements
Plant and equipment
Plant and equipment
Software
Software
Licences
Licences
Operating equipment (which includes uniforms, casino chips, kitchen utensils, crockery, cutlery and linen) is
Operating equipment (which includes uniforms, casino chips, kitchen utensils, crockery, cutlery and linen) is
recognised as a depreciation expense based on usage. The period of usage depends on the nature of the operating
recognised as a depreciation expense based on usage. The period of usage depends on the nature of the operating
equipment and varies between 1 to 3 years.
equipment and varies between 1 to 3 years.
The residual values and useful lives are reviewed annually, and adjusted if appropriate, at each financial reporting
The residual values and useful lives are reviewed annually, and adjusted if appropriate, at each financial reporting
date.
date.
10 - 95 years
10 - 95 years
4 - 75 years
4 - 75 years
5 - 20 years
5 - 20 years
3 - 10 years
3 - 10 years
Until expiry
Until expiry
A5 Net finance costs
A5 Net finance costs
Interest paid on borrowings
Interest paid on borrowings
Capitalised to property, plant and equipmenta
Capitalised to property, plant and equipmenta
Borrowing costs
Borrowing costs
Finance costs
Finance costs
Interest income
Interest income
Net finance costs recognised in the income statement
Net finance costs recognised in the income statement
49.4
49.4
(10.0)
(10.0)
3.3
3.3
42.7
42.7
(1.0)
(1.0)
41.7
41.7
44.6
44.6
(1.7)
(1.7)
4.2
4.2
47.1
47.1
(1.3)
(1.3)
45.8
45.8
a
a
Borrowing costs of $10.0 million were capitalised during the year and are included in 'Additions' in note B4. The capitalisation
Borrowing costs of $10.0 million were capitalised during the year and are included in 'Additions' in note B4. The capitalisation
rate was equal to the Group's weighted average cost of borrowings applicable to the Group's outstanding borrowings during the
rate was equal to the Group's weighted average cost of borrowings applicable to the Group's outstanding borrowings during the
year.
year.
Net finance costs of $41.7 million were down 9.0% on the pcp as a result of higher capitalised interest partially
Net finance costs of $41.7 million were down 9.0% on the pcp as a result of higher capitalised interest partially
offset by an increase in average debt year on year.
offset by an increase in average debt year on year.
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
A6 Dividends
A6 Dividends
2017
2017
Cents per
Cents per
share
share
2016
2016
Cents per
Cents per
share
share
Dividends per share
Dividends per share
Interim dividend
Interim dividend
Final dividend
Final dividend
Total dividend
Total dividend
A final dividend per share of 8.5 cents fully franked was declared, totalling 16.0 cents per share for the year, up
A final dividend per share of 8.5 cents fully franked was declared, totalling 16.0 cents per share for the year, up
23.1% on the pcp and reflecting the improved performance and financial position of the Group.
23.1% on the pcp and reflecting the improved performance and financial position of the Group.
2017
2017
$m
$m
5.5
5.5
7.5a
7.5a
13.0
13.0
7.5b
7.5b
8.5c
8.5c
16.0
16.0
2016
2016
$m
$m
Dividends declared and paid during the year on ordinary shares
Dividends declared and paid during the year on ordinary shares
Final dividend paid during the year in respect of the year ended 30 June 2016 a
Final dividend paid during the year in respect of the year ended 30 June 2016 a
Interim dividend paid during the year in respect of the half year ended 31
Interim dividend paid during the year in respect of the half year ended 31
December 2016 b
December 2016 b
a A final dividend of 7.5 cents per share fully franked for the year ended 30 June 2016 (30 June 2015: 6 cents) was declared on 25
a A final dividend of 7.5 cents per share fully franked for the year ended 30 June 2016 (30 June 2015: 6 cents) was declared on 25
August 2016 and paid on 30 September 2016 (2015: declared on 11 August 2015 and paid on 16 September 2015).
August 2016 and paid on 30 September 2016 (2015: declared on 11 August 2015 and paid on 16 September 2015).
b An interim dividend of 7.5 cents per share fully franked for the half year ended 31 December 2016 (31 December 2015: 5.5 cents)
b An interim dividend of 7.5 cents per share fully franked for the half year ended 31 December 2016 (31 December 2015: 5.5 cents)
was declared on 15 February 2017 and paid on 22 March 2017 (2016: declared on 15 February 2016 and paid on 22 March
was declared on 15 February 2017 and paid on 22 March 2017 (2016: declared on 15 February 2016 and paid on 22 March
2016).
2016).
Dividends declared after balance date
Dividends declared after balance date
Final dividend declared for the year ended 30 June 2017 c
Final dividend declared for the year ended 30 June 2017 c
70.2
70.2
c Since the end of the financial year, the Directors have declared a final dividend of 8.5 cents per ordinary share (2016: 7.5 cents),
c Since the end of the financial year, the Directors have declared a final dividend of 8.5 cents per ordinary share (2016: 7.5 cents),
fully franked. The aggregate amount is expected to be paid on 26 September 2017 out of retained earnings at 30 June 2017, but
fully franked. The aggregate amount is expected to be paid on 26 September 2017 out of retained earnings at 30 June 2017, but
not recognised as a liability at the end of the year.
not recognised as a liability at the end of the year.
Franking credit balance
Franking credit balance
Amount of franking credits available to shareholders
Amount of franking credits available to shareholders
61.9
61.9
62.0
62.0
123.9
123.9
49.5
49.5
45.4
45.4
94.9
94.9
2017
2017
$m
$m
2016
2016
$m
$m
61.9
61.9
121.7
121.7
79.2
79.2
A7 Significant items
A7 Significant items
12.8
12.8
12.8
12.8
Costs relating to the unutilised aircraft, including unavoidable lease payments, maintenance and other costs.
Costs relating to the unutilised aircraft, including unavoidable lease payments, maintenance and other costs.
Earnings before interest and tax (EBIT) is stated after charging the following significant items:
Earnings before interest and tax (EBIT) is stated after charging the following significant items:
Costs associated with the International VIP Rebate business a
Costs associated with the International VIP Rebate business a
Net significant items
Net significant items
a
a
Significant items are determined by management based on their nature and size. They are items of income or expense
Significant items are determined by management based on their nature and size. They are items of income or expense
which are, either individually or in aggregate, material to the Group or to the relevant business segment and:
which are, either individually or in aggregate, material to the Group or to the relevant business segment and:
− not in the ordinary course of business (for example, the cost of significant reorganisations or restructuring); or
− not in the ordinary course of business (for example, the cost of significant reorganisations or restructuring); or
− part of the ordinary activities of the business but unusual due to their size and nature (for example, impairment of
− part of the ordinary activities of the business but unusual due to their size and nature (for example, impairment of
-
-
-
-
assets).
assets).
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
86
40
40
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
41
41
87
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Other receivables
Other receivables
Other receivables are not past due or considered impaired. It is expected that these balances will be received as they
Other receivables are not past due or considered impaired. It is expected that these balances will be received as they
fall due.
fall due.
The chart below compares the ageing of trade receivables and amounts considered impaired as at 30 June 2017 and
The chart below compares the ageing of trade receivables and amounts considered impaired as at 30 June 2017 and
30 June 2016 respectively.
30 June 2016 respectively.
Trade receivables ageing profile
m
$
200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
–
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Total trade
receivables
Not yet due
(0-30 days)
30 days - 1 Year
(past due)
1-3 Years
(past due)
3+ Years
(past due)
Considered impaired
Not impaired
Provision for impairment of trade receivables
Provision for impairment of trade receivables
The Group recognises a provision for impairment of trade receivables when there is objective evidence that an
The Group recognises a provision for impairment of trade receivables when there is objective evidence that an
individual trade debt is impaired. Factors considered when determining if an impairment exists include the age of the
individual trade debt is impaired. Factors considered when determining if an impairment exists include the age of the
debt, management's experienced judgement, and other specific facts related to the debt.
debt, management's experienced judgement, and other specific facts related to the debt.
B Key balance sheet disclosures
B Key balance sheet disclosures
Assets
Assets
B1 Cash and cash equivalents
B1 Cash and cash equivalents
Cash on hand and in banks
Cash on hand and in banks
Short term deposits, maturing within 30 days
Short term deposits, maturing within 30 days
B2 Trade and other receivables
B2 Trade and other receivables
Trade receivables a
Trade receivables a
Less provision for impairment
Less provision for impairment
Net trade receivables
Net trade receivables
Other receivables
Other receivables
Includes patron cheques not deposited of $123.2 million (2016: $69.6 million).
Includes patron cheques not deposited of $123.2 million (2016: $69.6 million).
a
a
Past due not impaired receivables of $33.3 million are consistent with the pcp.
Past due not impaired receivables of $33.3 million are consistent with the pcp.
(i) Provision for impairment reconciliation
(i) Provision for impairment reconciliation
Balance at beginning of year
Balance at beginning of year
Provision for impairment recognised during the year b
Provision for impairment recognised during the year b
Less amounts written off as uncollectible
Less amounts written off as uncollectible
Balance at end of year
Balance at end of year
b These amounts are included in other expenses in the income statement (refer to note A3).
b These amounts are included in other expenses in the income statement (refer to note A3).
Trade receivables are non-interest bearing and are generally on 30 day terms.
Trade receivables are non-interest bearing and are generally on 30 day terms.
2017
2017
$m
$m
107.7
107.7
6.0
6.0
113.7
113.7
176.6
176.6
(14.0)
(14.0)
162.6
162.6
30.1
30.1
192.7
192.7
(12.8)
(12.8)
(18.7)
(18.7)
17.5
17.5
(14.0)
(14.0)
2016
2016
$m
$m
103.4
103.4
55.6
55.6
159.0
159.0
123.2
123.2
(12.8)
(12.8)
110.4
110.4
19.9
19.9
130.3
130.3
(9.4)
(9.4)
(23.1)
(23.1)
19.7
19.7
(12.8)
(12.8)
(ii) Ageing of trade and other receivables
(ii) Ageing of trade and other receivables
Trade receivables
Trade receivables
2017
2017
Not yet due
Not yet due
Past due not impaired
Past due not impaired
Considered impaired
Considered impaired
2016
2016
Not yet due
Not yet due
Past due not impaired
Past due not impaired
Considered impaired
Considered impaired
0 - 30 days
0 - 30 days
$m
$m
30 days - 1
30 days - 1
year
year
$m
$m
1 - 3 years
1 - 3 years
$m
$m
3 years +
3 years +
$m
$m
Total
Total
$m
$m
129.3
129.3
-
-
-
-
129.3
129.3
77.2
77.2
-
-
-
-
77.2
77.2
-
-
27.1
27.1
2.8
2.8
29.9
29.9
-
-
31.5
31.5
11.5
11.5
43.0
43.0
-
-
6.2
6.2
11.2
11.2
17.4
17.4
-
-
1.7
1.7
1.3
1.3
3.0
3.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
129.3
129.3
33.3
33.3
14.0
14.0
176.6
176.6
77.2
77.2
33.2
33.2
12.8
12.8
123.2
123.2
42
42
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
88
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
43
43
89
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
B3 Derivative financial instruments
B3 Derivative financial instruments
Current assets
Current assets
Cross currency swaps
Cross currency swaps
Forward currency contracts
Forward currency contracts
Non current assets
Non current assets
Cross currency swaps
Cross currency swaps
Forward currency contracts
Forward currency contracts
Interest rate swaps
Interest rate swaps
Current liabilities
Current liabilities
Interest rate swaps
Interest rate swaps
Non current liabilities
Non current liabilities
Interest rate swaps
Interest rate swaps
Net financial assets
Net financial assets
2017
2017
$m
$m
47.0
47.0
1.4
1.4
48.4
48.4
150.0
150.0
0.2
0.2
0.9
0.9
151.1
151.1
18.4
18.4
18.4
18.4
37.3
37.3
37.3
37.3
143.8
143.8
2016
2016
$m
$m
12.6
12.6
1.9
1.9
14.5
14.5
239.8
239.8
2.2
2.2
-
-
242.0
242.0
17.8
17.8
17.8
17.8
58.0
58.0
58.0
58.0
180.7
180.7
Net derivative assets down $36.9 million due to a decrease in the value of the cross currency swap used to
Net derivative assets down $36.9 million due to a decrease in the value of the cross currency swap used to
hedge the USPP loan as a result of an appreciation in the AUD vs USD exchange rate.
hedge the USPP loan as a result of an appreciation in the AUD vs USD exchange rate.
Valuation of derivatives and other financial instruments
Valuation of derivatives and other financial instruments
The valuation of derivatives and financial instruments is based on market conditions at the balance sheet date. The
The valuation of derivatives and financial instruments is based on market conditions at the balance sheet date. The
value of the instrument fluctuates on a daily basis and the actual amounts realised may differ materially from their
value of the instrument fluctuates on a daily basis and the actual amounts realised may differ materially from their
value at the balance sheet date.
value at the balance sheet date.
Refer to note E2 for additional financial instruments disclosure.
Refer to note E2 for additional financial instruments disclosure.
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
B4 Property, plant and equipment
B4 Property, plant and equipment
Freehold
Freehold
land
land
$m
$m
Note
Note
Freehold
Freehold
and
and
leasehold
leasehold
buildings
buildings
$m
$m
Leasehold
Leasehold
improvements
improvements
$m
$m
Plant and
Plant and
equipment
equipment
$m
$m
2017
2017
Cost
Cost
Opening balance at beginning of the year
Opening balance at beginning of the year
Additions
Additions
Disposals
Disposals
Reclassification / transfer a
Reclassification / transfer a
Closing balance at end of the year b
Closing balance at end of the year b
Accumulated depreciation
Accumulated depreciation
Opening balance at beginning of the year
Opening balance at beginning of the year
Depreciation expense
Depreciation expense
Disposals
Disposals
Closing balance at end of the year
Closing balance at end of the year
Carrying Amount
Carrying Amount
Opening balance at beginning of the year
Opening balance at beginning of the year
Closing balance at end of the year
Closing balance at end of the year
2016
2016
Cost
Cost
Opening balance at beginning of the year
Opening balance at beginning of the year
Additions
Additions
Disposals
Disposals
Reclassification / transfer
Reclassification / transfer
Closing balance at end of the year
Closing balance at end of the year
Accumulated depreciation
Accumulated depreciation
Opening balance at beginning of the year
Opening balance at beginning of the year
Depreciation expense
Depreciation expense
Disposals
Disposals
Closing balance at end of the year
Closing balance at end of the year
A4
A4
A4
A4
Carrying Amount
Carrying Amount
Opening balance at beginning of the year
Opening balance at beginning of the year
Closing balance at end of the year
Closing balance at end of the year
a
a
81.5
81.5
-
-
-
-
-
-
81.5
81.5
-
-
-
-
-
-
-
-
81.5
81.5
81.5
81.5
81.5
81.5
-
-
-
-
-
-
81.5
81.5
-
-
-
-
-
-
-
-
1,794.7
1,794.7
267.8
267.8
(9.3)
(9.3)
(5.3)
(5.3)
2,047.9
2,047.9
306.7
306.7
43.6
43.6
(8.7)
(8.7)
341.6
341.6
1,488.0
1,488.0
1,706.3
1,706.3
1,622.6
1,622.6
189.6
189.6
(6.3)
(6.3)
(11.2)
(11.2)
1,794.7
1,794.7
264.5
264.5
48.5
48.5
(6.3)
(6.3)
306.7
306.7
81.5
81.5
81.5
81.5
1,358.1
1,358.1
1,488.0
1,488.0
279.7
279.7
6.8
6.8
(0.3)
(0.3)
(0.1)
(0.1)
286.1
286.1
88.6
88.6
10.4
10.4
(0.3)
(0.3)
98.7
98.7
191.1
191.1
187.4
187.4
275.1
275.1
5.9
5.9
-
-
(1.3)
(1.3)
279.7
279.7
79.2
79.2
9.4
9.4
-
-
88.6
88.6
195.9
195.9
191.1
191.1
922.8
922.8
102.5
102.5
(30.5)
(30.5)
6.9
6.9
1,001.7
1,001.7
562.5
562.5
83.1
83.1
(29.2)
(29.2)
616.4
616.4
360.3
360.3
385.3
385.3
845.2
845.2
85.5
85.5
(21.8)
(21.8)
13.9
13.9
922.8
922.8
506.5
506.5
77.7
77.7
(21.7)
(21.7)
562.5
562.5
338.7
338.7
360.3
360.3
2017
2017
$m
$m
Includes reclassifications of $1.5 million (2016: $1.4 million) from intangibles to plant and equipment (refer to note B5).
Includes reclassifications of $1.5 million (2016: $1.4 million) from intangibles to plant and equipment (refer to note B5).
b Includes capital works in progress of:
b Includes capital works in progress of:
Buildings - at cost
Buildings - at cost
Leasehold improvements - at cost
Leasehold improvements - at cost
Plant and equipment - at cost
Plant and equipment - at cost
33.0
33.0
3.8
3.8
47.8
47.8
Total
Total
$m
$m
3,078.7
3,078.7
377.1
377.1
(40.1)
(40.1)
1.5
1.5
3,417.2
3,417.2
957.8
957.8
137.1
137.1
(38.2)
(38.2)
1,056.7
1,056.7
2,120.9
2,120.9
2,360.5
2,360.5
2,824.4
2,824.4
281.0
281.0
(28.1)
(28.1)
1.4
1.4
3,078.7
3,078.7
850.2
850.2
135.6
135.6
(28.0)
(28.0)
957.8
957.8
1,974.2
1,974.2
2,120.9
2,120.9
2016
2016
$m
$m
117.3
117.3
1.5
1.5
40.7
40.7
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
90
44
44
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
45
45
91
Total capital works in progress
159.5
Total capital works in progress
159.5
Additions of $377.1 million, up 34.2% on the pcp consisting predominantly of redevelopment works in the Gold
Additions of $377.1 million, up 34.2% on the pcp consisting predominantly of redevelopment works in the Gold
Coast and Sydney properties. For details on capital activities refer to section 2.6 of the Directors' Report.
Coast and Sydney properties. For details on capital activities refer to section 2.6 of the Directors' Report.
84.6
84.6
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Property, plant and equipment is comprised of the following assets:
Property, plant and equipment is comprised of the following assets:
− Freehold land - Gold Coast property;
− Freehold land - Gold Coast property;
− Freehold and leasehold buildings - Brisbane, Gold Coast and Sydney properties;
− Freehold and leasehold buildings - Brisbane, Gold Coast and Sydney properties;
− Leasehold improvements - Brisbane property; and
− Leasehold improvements - Brisbane property; and
− Plant and equipment - operational and other equipment.
− Plant and equipment - operational and other equipment.
Asset useful lives and residual values
Asset useful lives and residual values
For the accounting policy on depreciation and useful lives of property, plant and equipment refer to note A4.
For the accounting policy on depreciation and useful lives of property, plant and equipment refer to note A4.
Capital works in progress
Capital works in progress
Major ongoing projects include the refurbishment at the Sydney property and the expansion and refurbishment of the
Major ongoing projects include the refurbishment at the Sydney property and the expansion and refurbishment of the
Gold Coast property. Minor refurbishment is also being undertaken at the Brisbane property.
Gold Coast property. Minor refurbishment is also being undertaken at the Brisbane property.
Impairment
Impairment
Refer to note B6 for details of the accounting policy and key assumptions included in the impairment calculation.
Refer to note B6 for details of the accounting policy and key assumptions included in the impairment calculation.
B5 Intangible assets
B5 Intangible assets
Sydney and
Sydney and
Brisbane
Brisbane
casino
casino
licences
licences
$m
$m
Sydney
Sydney
casino
casino
concessions
concessions
$m
$m
Goodwill
Goodwill
$m
$m
Note
Note
Software a
Software a
$m
$m
Other
Other
$m
$m
1,442.2
1,442.2
-
-
-
-
-
-
1,442.2
1,442.2
-
-
-
-
-
-
-
-
1,442.2
1,442.2
1,442.2
1,442.2
1,442.2
1,442.2
-
-
-
-
-
-
1,442.2
1,442.2
-
-
-
-
-
-
-
-
A4
A4
A4
A4
294.7
294.7
-
-
-
-
-
-
294.7
294.7
62.9
62.9
3.2
3.2
-
-
66.1
66.1
231.8
231.8
228.6
228.6
294.7
294.7
-
-
-
-
-
-
294.7
294.7
59.7
59.7
3.2
3.2
-
-
62.9
62.9
100.0
100.0
-
-
-
-
-
-
100.0
100.0
20.2
20.2
2.9
2.9
-
-
23.1
23.1
79.8
79.8
76.9
76.9
100.0
100.0
-
-
-
-
-
-
100.0
100.0
17.4
17.4
2.8
2.8
-
-
20.2
20.2
162.4
162.4
42.5
42.5
(7.7)
(7.7)
(1.5)
(1.5)
195.7
195.7
99.5
99.5
17.1
17.1
(8.0)
(8.0)
108.6
108.6
62.9
62.9
87.1
87.1
139.4
139.4
25.2
25.2
(0.8)
(0.8)
(1.4)
(1.4)
162.4
162.4
82.2
82.2
18.1
18.1
(0.8)
(0.8)
99.5
99.5
27.2
27.2
-
-
-
-
-
-
27.2
27.2
7.2
7.2
3.0
3.0
-
-
10.2
10.2
20.0
20.0
17.0
17.0
27.2
27.2
-
-
-
-
-
-
27.2
27.2
4.2
4.2
3.0
3.0
-
-
7.2
7.2
2017
2017
Cost
Cost
Opening balance at beginning of the year
Opening balance at beginning of the year
Additions a
Additions a
Disposals
Disposals
Reclassification / transfer b
Reclassification / transfer b
Closing balance at end of the year
Closing balance at end of the year
Accumulated amortisation
Accumulated amortisation
Opening balance at beginning of the year
Opening balance at beginning of the year
Amortisation expense
Amortisation expense
Disposals
Disposals
Closing balance at end of the year
Closing balance at end of the year
Carrying Amount
Carrying Amount
Opening balance at beginning of the year
Opening balance at beginning of the year
Closing balance at end of the year
Closing balance at end of the year
2016
2016
Cost
Cost
Opening balance at beginning of the year
Opening balance at beginning of the year
Additions
Additions
Disposals
Disposals
Reclassification / transfer
Reclassification / transfer
Closing balance at end of the year
Closing balance at end of the year
Accumulated amortisation
Accumulated amortisation
Opening balance at beginning of the year
Opening balance at beginning of the year
Amortisation expense
Amortisation expense
Disposals
Disposals
Closing balance at end of the year
Closing balance at end of the year
Carrying Amount
Carrying Amount
Opening balance at beginning of the year
Opening balance at beginning of the year
Closing balance at end of the year
Closing balance at end of the year
a
a
b
b
235.0
235.0
231.8
231.8
Includes capital works in progress of $24.5 million (2016: $18.1 million).
Includes capital works in progress of $24.5 million (2016: $18.1 million).
Includes reclassifications of $1.5 million (2016: $1.4 million) to property, plant and equipment (refer to note B4).
Includes reclassifications of $1.5 million (2016: $1.4 million) to property, plant and equipment (refer to note B4).
1,442.2
1,442.2
1,442.2
1,442.2
82.6
82.6
79.8
79.8
57.2
57.2
62.9
62.9
23.0
23.0
20.0
20.0
Total
Total
$m
$m
2,026.5
2,026.5
42.5
42.5
(7.7)
(7.7)
(1.5)
(1.5)
2,059.8
2,059.8
189.8
189.8
26.2
26.2
(8.0)
(8.0)
208.0
208.0
1,836.7
1,836.7
1,851.8
1,851.8
2,003.5
2,003.5
25.2
25.2
(0.8)
(0.8)
(1.4)
(1.4)
2,026.5
2,026.5
163.5
163.5
27.1
27.1
(0.8)
(0.8)
189.8
189.8
1,840.0
1,840.0
1,836.7
1,836.7
46
46
Intangible asset additions relate predominantly to software as the Group progresses its strategic priority to
Intangible asset additions relate predominantly to software as the Group progresses its strategic priority to
maximise value from technology, including further enhancing gaming and loyalty experience and delivering
maximise value from technology, including further enhancing gaming and loyalty experience and delivering
integrated and new IT platforms.
integrated and new IT platforms.
Asset useful lives and residual values
Asset useful lives and residual values
Intangible assets are amortised using the straight line method as follows:
Intangible assets are amortised using the straight line method as follows:
− The Sydney casino licence is amortised from its date of issue until expiry in 2093.
− The Sydney casino licence is amortised from its date of issue until expiry in 2093.
− The Brisbane casino licence is amortised over the remaining life of the lease to which the licence is linked, which
− The Brisbane casino licence is amortised over the remaining life of the lease to which the licence is linked, which
expires in 2070. The Group will continue to amortise the casino licence over its current term up until it is
expires in 2070. The Group will continue to amortise the casino licence over its current term up until it is
surrendered, following the opening of the integrated resort at Queen's Wharf Brisbane (QWB) which is expected in
surrendered, following the opening of the integrated resort at Queen's Wharf Brisbane (QWB) which is expected in
2022.
2022.
− The Sydney casino concessions granted by the New South Wales government include effective casino exclusivity
− The Sydney casino concessions granted by the New South Wales government include effective casino exclusivity
and product concessions in New South Wales which are amortised over the period of expected benefits, which is
and product concessions in New South Wales which are amortised over the period of expected benefits, which is
until 2019 and 2093 respectively.
until 2019 and 2093 respectively.
− Software is amortised over useful lives of 3 to 10 years.
− Software is amortised over useful lives of 3 to 10 years.
− Other assets include the contribution to the construction costs of the state government owned Gold Coast
− Other assets include the contribution to the construction costs of the state government owned Gold Coast
Convention and Exhibition Centre. The Group's Gold Coast casino is deriving future benefits from the contribution,
Convention and Exhibition Centre. The Group's Gold Coast casino is deriving future benefits from the contribution,
which is being amortised over a period of 50 years.
which is being amortised over a period of 50 years.
Goodwill and impairment testing
Goodwill and impairment testing
Goodwill is assessed for impairment on an annual basis and is carried at cost less accumulated impairment losses.
Goodwill is assessed for impairment on an annual basis and is carried at cost less accumulated impairment losses.
Refer to note B6 for the accounting policy on asset impairment and details of key assumptions included in the
Refer to note B6 for the accounting policy on asset impairment and details of key assumptions included in the
impairment testing calculation.
impairment testing calculation.
B6 Impairment testing and goodwill
B6 Impairment testing and goodwill
Sydney
Sydney
$m
$m
1,013.5
1,013.5
1,013.5
1,013.5
Brisbane
Brisbane
$m
$m
263.2
263.2
263.2
263.2
Gold Coast
Gold Coast
$m
$m
165.5
165.5
165.5
165.5
Total carrying
Total carrying
amount
amount
$m
$m
1,442.2
1,442.2
1,442.2
1,442.2
Goodwill acquired through business combinations has been allocated to the applicable cash generating unit for
Goodwill acquired through business combinations has been allocated to the applicable cash generating unit for
impairment testing. Each cash generating unit represents a business operation of the Group.
impairment testing. Each cash generating unit represents a business operation of the Group.
Carrying amount of goodwill allocated to each cash generating unit
Carrying amount of goodwill allocated to each cash generating unit
Cash generating unit
Cash generating unit
(Reportable segment)
(Reportable segment)
2017
2017
2016
2016
The recoverable amount of each of the three cash generating units at year end (Sydney, Gold Coast and Brisbane) is
The recoverable amount of each of the three cash generating units at year end (Sydney, Gold Coast and Brisbane) is
determined based on 'fair value less costs of disposal', which is calculated using the discounted cash flow approach.
determined based on 'fair value less costs of disposal', which is calculated using the discounted cash flow approach.
This approach utilises cash flow forecasts that represent a market participant's view of the future cash flows that would
This approach utilises cash flow forecasts that represent a market participant's view of the future cash flows that would
arise from operating and developing the Group's assets. These cash flows are principally based upon Board approved
arise from operating and developing the Group's assets. These cash flows are principally based upon Board approved
business plans for a five-year period, together with longer term projections and approved capital investment plans,
business plans for a five-year period, together with longer term projections and approved capital investment plans,
extrapolated using an implied terminal growth rate of 2.5% (2016: 2.5%). These cash flows are then discounted using
extrapolated using an implied terminal growth rate of 2.5% (2016: 2.5%). These cash flows are then discounted using
a relevant long term post-tax discount rate specific to each cash generating unit, ranging between 8.9% to 9.7% (2016:
a relevant long term post-tax discount rate specific to each cash generating unit, ranging between 8.9% to 9.7% (2016:
9.0% to 9.5%). The pre-tax discount rates range between 12.7% to 13.8% (2016: 12.9% to 13.6%).
9.0% to 9.5%). The pre-tax discount rates range between 12.7% to 13.8% (2016: 12.9% to 13.6%).
No impairment was recognised in any of the cash generating units at 30 June 2017 (2016: nil). The
No impairment was recognised in any of the cash generating units at 30 June 2017 (2016: nil). The
performance of the Group was driven by growth in the domestic gaming business (+1.7%) and a high win rate
performance of the Group was driven by growth in the domestic gaming business (+1.7%) and a high win rate
in the International VIP Rebate Business (IRB) with revenue up 7.3%.
in the International VIP Rebate Business (IRB) with revenue up 7.3%.
Key assumptions
Key assumptions
The fair value measurement is valued using level 3 valuation techniques (refer to note E2(vi) for details of the levels).
The fair value measurement is valued using level 3 valuation techniques (refer to note E2(vi) for details of the levels).
The key assumptions on which management based its cash flow projections when determining 'fair value less costs of
The key assumptions on which management based its cash flow projections when determining 'fair value less costs of
disposal' are as follows:
disposal' are as follows:
i. Cash flow forecasts
i. Cash flow forecasts
The cash flow forecasts are based upon Board approved business plans for a five-year period, together with longer
The cash flow forecasts are based upon Board approved business plans for a five-year period, together with longer
term projections and approved capital investment plans for each cash generating unit.
term projections and approved capital investment plans for each cash generating unit.
ii. Terminal value
ii. Terminal value
The terminal growth rate used is in line with the forecast long term underlying growth rate in the Consumer Price Index
The terminal growth rate used is in line with the forecast long term underlying growth rate in the Consumer Price Index
(CPI).
(CPI).
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
92
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
47
47
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THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
iii. Discount rates
iii. Discount rates
Discount rates applied are based on the post tax weighted average cost of capital applicable to the relevant cash
Discount rates applied are based on the post tax weighted average cost of capital applicable to the relevant cash
generating unit.
generating unit.
iv. Regulatory changes
iv. Regulatory changes
Queensland
Queensland
Upon opening of the integrated resort in 2022, the existing Brisbane casino will cease to operate and the Group will act
Upon opening of the integrated resort in 2022, the existing Brisbane casino will cease to operate and the Group will act
as the operator of the QWB casino.
as the operator of the QWB casino.
The Group currently holds a perpetual casino licence in Queensland that is attached to the lease of the current
The Group currently holds a perpetual casino licence in Queensland that is attached to the lease of the current
Brisbane site that expires in 2070. Upon opening of the integrated resort, the Group's casino licence will be
Brisbane site that expires in 2070. Upon opening of the integrated resort, the Group's casino licence will be
surrendered and Destination Brisbane Consortium (DBC) will be granted a casino licence for 99 years including an
surrendered and Destination Brisbane Consortium (DBC) will be granted a casino licence for 99 years including an
exclusivity period of 25 years.
exclusivity period of 25 years.
The Group will surrender the Brisbane casino licence in exchange for the right to operate the new QWB casino.
The Group will surrender the Brisbane casino licence in exchange for the right to operate the new QWB casino.
New South Wales
New South Wales
On 8 July 2014, Liquor and Gaming NSW issued a restricted gaming licence to Crown Resorts Limited (Crown) to
On 8 July 2014, Liquor and Gaming NSW issued a restricted gaming licence to Crown Resorts Limited (Crown) to
operate a restricted gaming facility at Barangaroo South, Crown Sydney Hotel Resort (Crown Sydney) from
operate a restricted gaming facility at Barangaroo South, Crown Sydney Hotel Resort (Crown Sydney) from
November 2019 onwards. On 28 June 2016, Crown announced that conditional planning approval had been received
November 2019 onwards. On 28 June 2016, Crown announced that conditional planning approval had been received
from the NSW Planning Assessment Commission, and that Crown is expecting to complete construction and open
from the NSW Planning Assessment Commission, and that Crown is expecting to complete construction and open
Crown Sydney in 2021. The expected impact of Crown Sydney has been taken into consideration in determining the
Crown Sydney in 2021. The expected impact of Crown Sydney has been taken into consideration in determining the
recoverable amount of Sydney's cash generating unit at 30 June 2017. As further details of the final scope and timing
recoverable amount of Sydney's cash generating unit at 30 June 2017. As further details of the final scope and timing
of the proposed gaming facility become known, management will continue to consider the impact that this may have on
of the proposed gaming facility become known, management will continue to consider the impact that this may have on
the cash generating unit's carrying value.
the cash generating unit's carrying value.
v. Sensitivities
v. Sensitivities
The key estimates and assumptions used to determine the 'fair value less costs of disposal' of a cash generating unit
The key estimates and assumptions used to determine the 'fair value less costs of disposal' of a cash generating unit
are based on management's current expectations after considering past experience, future investment plans and
are based on management's current expectations after considering past experience, future investment plans and
external information. They are considered to be reasonably achievable, however, significant changes in any of these
external information. They are considered to be reasonably achievable, however, significant changes in any of these
key estimates, assumptions or regulatory environments may result in a cash generating unit's carrying value exceeding
key estimates, assumptions or regulatory environments may result in a cash generating unit's carrying value exceeding
its recoverable value, requiring an impairment charge to be recognised.
its recoverable value, requiring an impairment charge to be recognised.
For the Gold Coast, management considers that a 3.6 percentage point decline (2016: 4.0 percentage point decline) in
For the Gold Coast, management considers that a 3.6 percentage point decline (2016: 4.0 percentage point decline) in
the compound average growth rate is a reasonable possible change that could give rise to an impairment.
the compound average growth rate is a reasonable possible change that could give rise to an impairment.
For the Sydney property, the impact of Crown Sydney on the projected earnings and cash generating unit's carrying
For the Sydney property, the impact of Crown Sydney on the projected earnings and cash generating unit's carrying
value has been assessed, taking into consideration the expected increase in competition as well as the expected
value has been assessed, taking into consideration the expected increase in competition as well as the expected
increase in market size. A reasonably possible change in any of the assumptions used does not result in an
increase in market size. A reasonably possible change in any of the assumptions used does not result in an
impairment charge at 30 June 2017, however management will continue to monitor the assumptions with regards to
impairment charge at 30 June 2017, however management will continue to monitor the assumptions with regards to
the expected impact of Crown Sydney on Sydney's carrying value.
the expected impact of Crown Sydney on Sydney's carrying value.
Impairment of assets
Impairment of assets
Goodwill and indefinite life intangible assets are tested for impairment at least annually. Property, plant and equipment,
Goodwill and indefinite life intangible assets are tested for impairment at least annually. Property, plant and equipment,
other intangible assets and other financial assets are considered for impairment if there is a reason to believe that
other intangible assets and other financial assets are considered for impairment if there is a reason to believe that
impairment may be necessary. Factors taken into consideration in reaching such a decision include the economic
impairment may be necessary. Factors taken into consideration in reaching such a decision include the economic
viability of the asset itself and where it is a component of a larger economic entity, the viability of the unit itself.
viability of the asset itself and where it is a component of a larger economic entity, the viability of the unit itself.
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Liabilities
Liabilities
B7 Interest bearing liabilities
B7 Interest bearing liabilities
Current
Current
Private placement - US dollar (ii)
Private placement - US dollar (ii)
Non current
Non current
Bank loans - unsecured (net of unamortised borrowing costs) (i)
Bank loans - unsecured (net of unamortised borrowing costs) (i)
Private placement - US dollar (ii)
Private placement - US dollar (ii)
2017
2017
$m
$m
130.0
130.0
130.0
130.0
446.9
446.9
468.1
468.1
915.0
915.0
2016
2016
$m
$m
-
-
-
-
196.2
196.2
617.3
617.3
813.5
813.5
The Group has undrawn bank facilities of $200.5 million at year end and an average drawn debt maturity of 2.3
The Group has undrawn bank facilities of $200.5 million at year end and an average drawn debt maturity of 2.3
years.
years.
Net debt was $787.5 million, up 66.2% on the pcp with gearing levels increased to 1.3x at 30 June 2017
Net debt was $787.5 million, up 66.2% on the pcp with gearing levels increased to 1.3x at 30 June 2017
compared to 1.0x at 30 June 2016.
compared to 1.0x at 30 June 2016.
Refer also to note C3 Subsequent events.
Refer also to note C3 Subsequent events.
Refer to note F8 (iii) for Capital management disclosures and the calculation of the gearing ratio.
Refer to note F8 (iii) for Capital management disclosures and the calculation of the gearing ratio.
(i) Bank loans - unsecured (net of unamortised borrowing costs)
(i) Bank loans - unsecured (net of unamortised borrowing costs)
Syndicated revolving facility
Syndicated revolving facility
The Group has drawn down $250.0 million of the syndicated revolving facility (SFA) and $49.5 million of the syndicated
The Group has drawn down $250.0 million of the syndicated revolving facility (SFA) and $49.5 million of the syndicated
revolving facility (SFB).
revolving facility (SFB).
2017
2017
Type
Type
Syndicated revolving facility - tranche A
Syndicated revolving facility - tranche A
Syndicated revolving facility - tranche B
Syndicated revolving facility - tranche B
2016
2016
Type
Type
Syndicated revolving facility - tranche A
Syndicated revolving facility - tranche A
Syndicated revolving facility - tranche B
Syndicated revolving facility - tranche B
Facility amount
Facility amount
$m
$m
250.0
250.0
250.0
250.0
500.0
500.0
Facility amount
Facility amount
$m
$m
250.0
250.0
250.0
250.0
500.0
500.0
Unutilised at 30 June
Unutilised at 30 June
$m
$m
-
-
200.5
200.5
200.5
200.5
Unutilised at 30 June
Unutilised at 30 June
$m
$m
200.0
200.0
250.0
250.0
450.0
450.0
Maturity date
Maturity date
July 2018
July 2018
July 2019
July 2019
Maturity date
Maturity date
July 2018
July 2018
July 2019
July 2019
Interest is variable, linked to BBSY (Bank Bill Swap Bid Rate), plus a margin tiered against the reported gearing ratio at
Interest is variable, linked to BBSY (Bank Bill Swap Bid Rate), plus a margin tiered against the reported gearing ratio at
the end of certain test dates.
the end of certain test dates.
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
94
48
48
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
49
49
95
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Working capital facility
Working capital facility
On 31 May 2017, the Group rolled over its working capital facility. This working capital facility has been executed on
On 31 May 2017, the Group rolled over its working capital facility. This working capital facility has been executed on
the same terms and conditions as the existing syndicated revolving facility agreement.
the same terms and conditions as the existing syndicated revolving facility agreement.
C Commitments, contingencies and subsequent events
C Commitments, contingencies and subsequent events
C1 Commitments
C1 Commitments
(i) Operating lease commitments a
(i) Operating lease commitments a
Facility amount
Facility amount
$m
$m
150.0
150.0
150.0
150.0
Unutilised at 30 June
Unutilised at 30 June
$m
$m
-
-
-
-
2017/2016
2017/2016
Maturity date
Type
Maturity date
Type
January 2019
Working capital facility
January 2019
Working capital facility
January 2018
Working capital facility
January 2018
Working capital facility
Interest is variable, linked to BBSY, plus a margin tiered against the reported gearing ratio at the end of certain test
Interest is variable, linked to BBSY, plus a margin tiered against the reported gearing ratio at the end of certain test
dates.
dates.
(ii) US Private Placement (USPP)
(ii) US Private Placement (USPP)
The Group's USPP borrowings have not changed during the year, and are summarised below.
The Group's USPP borrowings have not changed during the year, and are summarised below.
2017/2016
2017/2016
Type
Type
Series A
Series A
Series B
Series B
Maturity date
Maturity date
June 2018
June 2018
June 2021
June 2021
$m USD
$m USD
100.0
100.0
360.0
360.0
460.0
460.0
$m (AUD)*
$m (AUD)*
94.0
94.0
336.0
336.0
430.0
430.0
* The $430.0 million USPP borrowings are stated in the table above at the AUD amount repayable under cross currency swaps at
maturity. Interest is variable, linked to BBSW (Bank Bill Swap Rate), and a defined gearing ratio at the end of certain test dates. The
* The $430.0 million USPP borrowings are stated in the table above at the AUD amount repayable under cross currency swaps at
$460.0 million USD translates to $598.1m AUD at 30 June 2017 of which $130.0 million is disclosed as a current interest bearing
maturity. Interest is variable, linked to BBSW (Bank Bill Swap Rate), and a defined gearing ratio at the end of certain test dates. The
liability.
$460.0 million USD translates to $598.1m AUD at 30 June 2017 of which $130.0 million is disclosed as a current interest bearing
liability.
All of the above borrowings are subject to financial undertakings as to gearing and interest cover.
All of the above borrowings are subject to financial undertakings as to gearing and interest cover.
Fair value disclosures
Fair value disclosures
Details of the fair value of the Group's interest bearing liabilities are set out in note E2.
Details of the fair value of the Group's interest bearing liabilities are set out in note E2.
Financial Risk Management
Financial Risk Management
As a result of USPP borrowings, the Group is exposed to the foreign currency risk through the movements in
As a result of USPP borrowings, the Group is exposed to the foreign currency risk through the movements in
USD/AUD exchange rate. The Group has entered into cross currency swaps in order to hedge this exposure. As at 30
USD/AUD exchange rate. The Group has entered into cross currency swaps in order to hedge this exposure. As at 30
June 2017, 100% of the USPP borrowings balance of US$460.0 million is hedged.
June 2017, 100% of the USPP borrowings balance of US$460.0 million is hedged.
The Group is also exposed to the interest rate risk as a result of bank loans and USPP borrowings. To hedge against
The Group is also exposed to the interest rate risk as a result of bank loans and USPP borrowings. To hedge against
this risk, the Group has entered into interest rate swaps. As at 30 June 2017, out of the total interest bearing liabilities,
this risk, the Group has entered into interest rate swaps. As at 30 June 2017, out of the total interest bearing liabilities,
60.3% (2016: 68.3%) has been hedged against the interest rate risk. Further details about the Group's exposure to
60.3% (2016: 68.3%) has been hedged against the interest rate risk. Further details about the Group's exposure to
interest rate and foreign currency movements are provided in notes E1 and E2.
interest rate and foreign currency movements are provided in notes E1 and E2.
Not later than one year
Not later than one year
Later than one year but not later than five years
Later than one year but not later than five years
Later than five years
Later than five years
(ii) Other commitments b
(ii) Other commitments b
Not later than one year
Not later than one year
Later than one year but not later than five years
Later than one year but not later than five years
Later than five years
Later than five years
a The Group leases property (including Sydney and Brisbane property leases) under operating leases expiring between 1 to 76
a The Group leases property (including Sydney and Brisbane property leases) under operating leases expiring between 1 to 76
years. Leases generally provide the Group with a right of renewal at which time all terms are renegotiated. Lease payments
years. Leases generally provide the Group with a right of renewal at which time all terms are renegotiated. Lease payments
comprise a base amount plus an incremental contingent rental. Contingent rentals are based on either movements in the CPI or
comprise a base amount plus an incremental contingent rental. Contingent rentals are based on either movements in the CPI or
are subject to market rate review. Operating lease commitments also include commitments in relation to the leasing of aircraft.
are subject to market rate review. Operating lease commitments also include commitments in relation to the leasing of aircraft.
2017
2017
$m
$m
14.3
14.3
11.4
11.4
79.1
79.1
104.8
104.8
2016
2016
$m
$m
13.6
13.6
19.9
19.9
80.6
80.6
114.1
114.1
197.5
197.5
4.2
4.2
-
-
201.7
201.7
238.2
238.2
40.7
40.7
-
-
278.9
278.9
refurbishment and redevelopment in Sydney.
refurbishment and redevelopment in Sydney.
b Other commitments as at 30 June 2017 mainly include capital construction and related costs in connection with the Gold Coast
b Other commitments as at 30 June 2017 mainly include capital construction and related costs in connection with the Gold Coast
The Group will invest approximately $1 billion into Destination Brisbane Consortium to fund the construction of the
The Group will invest approximately $1 billion into Destination Brisbane Consortium to fund the construction of the
Integrated Resort (expected to open in 2022).
Integrated Resort (expected to open in 2022).
Commitments include operating lease commitments for the Sydney and Brisbane properties, as well as capital
Commitments include operating lease commitments for the Sydney and Brisbane properties, as well as capital
commitments in relation to the redevelopment of the Gold Coast and Sydney, both of which are well underway.
commitments in relation to the redevelopment of the Gold Coast and Sydney, both of which are well underway.
Refer to note D5 for commitments in respect of investment in associate and joint venture entities.
Refer to note D5 for commitments in respect of investment in associate and joint venture entities.
C2 Contingent liabilities
C2 Contingent liabilities
C3 Subsequent events
C3 Subsequent events
Legal challenges
Legal challenges
There are outstanding legal actions between the Company and its controlled entities and third parties as at 30 June
There are outstanding legal actions between the Company and its controlled entities and third parties as at 30 June
2017. The Group has notified its insurance carrier of all relevant litigation and believes that any damages (other than
2017. The Group has notified its insurance carrier of all relevant litigation and believes that any damages (other than
exemplary damages) that may be awarded against the Group, in addition to its costs incurred in connection with the
exemplary damages) that may be awarded against the Group, in addition to its costs incurred in connection with the
action, will be covered by its insurance policies where such policies are in place. Where there are no policies in place,
action, will be covered by its insurance policies where such policies are in place. Where there are no policies in place,
provisions are made for known obligations where the existence of a liability is probable and can be reasonably
provisions are made for known obligations where the existence of a liability is probable and can be reasonably
quantified. As the outcomes of these actions remain uncertain, contingent liabilities exist for possible amounts
quantified. As the outcomes of these actions remain uncertain, contingent liabilities exist for possible amounts
eventually payable that are in excess of the amounts covered for by the insurance policies in place or of the amounts
eventually payable that are in excess of the amounts covered for by the insurance policies in place or of the amounts
provided for.
provided for.
Financial guarantees
Financial guarantees
Refer to note E1 for details of financial guarantees provided by the Group at the reporting date.
Refer to note E1 for details of financial guarantees provided by the Group at the reporting date.
On 23 August 2017, the Group completed a tender and reissue offer in relation to 73% of the Groupʼs US Private
On 23 August 2017, the Group completed a tender and reissue offer in relation to 73% of the Groupʼs US Private
Placement (USPP) borrowings. This was undertaken to extend the Group's tenor on average drawn debt maturity by 3
Placement (USPP) borrowings. This was undertaken to extend the Group's tenor on average drawn debt maturity by 3
years to 5.2 years, reduce finance costs on a like for like basis and lower refinancing requirements for the Group. The
years to 5.2 years, reduce finance costs on a like for like basis and lower refinancing requirements for the Group. The
Group estimates that its average blended cost of debt on all USPP notes following the new issue will be approximately
Group estimates that its average blended cost of debt on all USPP notes following the new issue will be approximately
5% (down from over 9% on previous notes). The transaction is expected to result in a one-off loss in the range of $30-
5% (down from over 9% on previous notes). The transaction is expected to result in a one-off loss in the range of $30-
$34 million (after tax) relating to the crystallisation of an existing obligation for the related out of the money interest rate
$34 million (after tax) relating to the crystallisation of an existing obligation for the related out of the money interest rate
swaps and other costs. This one-off loss will be recognised as a significant item in the FY2018 Financial Report.
swaps and other costs. This one-off loss will be recognised as a significant item in the FY2018 Financial Report.
Further detail can be found in the ASX Announcement - The Star announces placement of long-term notes (dated 23
Further detail can be found in the ASX Announcement - The Star announces placement of long-term notes (dated 23
August 2017).
August 2017).
Other than those events disclosed in the Directors' Report or elsewhere in these financial statements, there have been
Other than those events disclosed in the Directors' Report or elsewhere in these financial statements, there have been
no other significant events occurring after the balance sheet date and up to the date of this report, which may
no other significant events occurring after the balance sheet date and up to the date of this report, which may
materially affect either the Group's operations or results of those operations or the Group's state of affairs.
materially affect either the Group's operations or results of those operations or the Group's state of affairs.
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
96
50
50
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
51
51
97
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
a These companies entered into a deed of cross guarantee with The Star Entertainment Sydney Holdings Limited on 31 May 2011,
a These companies entered into a deed of cross guarantee with The Star Entertainment Sydney Holdings Limited on 31 May 2011,
and as such are members of the closed group as defined in Australian Securities and Investments Commission Instrument
and as such are members of the closed group as defined in Australian Securities and Investments Commission Instrument
2016/785 (refer to note D3)
2016/785 (refer to note D3)
b These companies have provided a charge over their assets and undertakings as explained in note E1
b These companies have provided a charge over their assets and undertakings as explained in note E1
c Deregistered on 24 August 2016
c Deregistered on 24 August 2016
d
Incorporated on 18 October 2016
d
Incorporated on 18 October 2016
e The following entity changed its company name on 18 October 2016:
e The following entity changed its company name on 18 October 2016:
f
f
- The Star Entertainment (Macau) Limited was previously known as Jupiters Resorts (Macau) Limited
- The Star Entertainment (Macau) Limited was previously known as Jupiters Resorts (Macau) Limited
The following entity changed its company name on 3 November 2016:
The following entity changed its company name on 3 November 2016:
- EEI Services (Hong Kong) Holdings Limited was previously known as Echo Entertainment International (Hong Kong) Limited
- EEI Services (Hong Kong) Holdings Limited was previously known as Echo Entertainment International (Hong Kong) Limited
g The following entities changed their company name on 2 February 2017:
g The following entities changed their company name on 2 February 2017:
- The Star Entertainment International Pty Ltd was previously known as Destination Brisbane Pty Ltd
- The Star Entertainment International Pty Ltd was previously known as Destination Brisbane Pty Ltd
- The Star Entertainment Sydney Apartments Pty Ltd was previously known as Sydney Harbour Apartments Pty Limited
- The Star Entertainment Sydney Apartments Pty Ltd was previously known as Sydney Harbour Apartments Pty Limited
- The Star Entertainment Sydney Properties Pty Ltd was previously known as Sydney Harbour Casino Properties Pty Limited
- The Star Entertainment Sydney Properties Pty Ltd was previously known as Sydney Harbour Casino Properties Pty Limited
h The following entities changed their company name on 3 February 2017:
h The following entities changed their company name on 3 February 2017:
- The Star Entertainment QLD Limited was previously known as Jupiters Limited
- The Star Entertainment QLD Limited was previously known as Jupiters Limited
- The Star Entertainment QLD Custodian Pty Ltd was previously known as Jupiters Custodian Pty Ltd
- The Star Entertainment QLD Custodian Pty Ltd was previously known as Jupiters Custodian Pty Ltd
The following entity changed its name on 24 May 2017:
The following entity changed its name on 24 May 2017:
- The Star Entertainment Gold Coast Trust was previously known as Jupiters Trust
- The Star Entertainment Gold Coast Trust was previously known as Jupiters Trust
Incorporated on 15 June 2017
Incorporated on 15 June 2017
i
i
j
j
(iii) Transactions with controlled entities
(iii) Transactions with controlled entities
The Star Entertainment Group Limited
The Star Entertainment Group Limited
During the period, the Company entered into the following transactions with controlled entities:
During the period, the Company entered into the following transactions with controlled entities:
− loans of $128.4 million were advanced by controlled entities (2016: the Company advanced loans of $32.9 million);
− loans of $128.4 million were advanced by controlled entities (2016: the Company advanced loans of $32.9 million);
and
and
− income tax and GST paid on behalf of controlled entities was $230.6 million (2016: $225.2 million).
− income tax and GST paid on behalf of controlled entities was $230.6 million (2016: $225.2 million).
The amount receivable by the Company from controlled entities at year end is $279.7 million (2016: $151.3 million). All
The amount receivable by the Company from controlled entities at year end is $279.7 million (2016: $151.3 million). All
the transactions were undertaken on normal commercial terms and conditions.
the transactions were undertaken on normal commercial terms and conditions.
(iv) Transactions with other related parties
(iv) Transactions with other related parties
Other transactions
Other transactions
During the period, in addition to equity contributions (refer to note D5), the Group entered into the following
During the period, in addition to equity contributions (refer to note D5), the Group entered into the following
transactions with related parties:
transactions with related parties:
- Amount recharged to Destination Brisbane Consortium Integrated Resort Holdings Pty Ltd was $0.2 million (2016:
- Amount recharged to Destination Brisbane Consortium Integrated Resort Holdings Pty Ltd was $0.2 million (2016:
$0.9 million); and
$0.9 million); and
- Amount paid to Destination Brisbane Consortium Integrated Resort Holdings Pty Ltd was $1.5 million (2016: nil)
- Amount paid to Destination Brisbane Consortium Integrated Resort Holdings Pty Ltd was $1.5 million (2016: nil)
relating to capital works.
relating to capital works.
D Group structure
D Group structure
D1 Related party disclosure
D1 Related party disclosure
(i) Parent entity
(i) Parent entity
(ii)
(ii)
The ultimate parent entity within the Group is The Star Entertainment Group Limited.
The ultimate parent entity within the Group is The Star Entertainment Group Limited.
Investments in controlled entities
Investments in controlled entities
The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities in
The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities in
accordance with the accounting policy described in note G. The financial years of all controlled entities are the same
accordance with the accounting policy described in note G. The financial years of all controlled entities are the same
as that of the Company (unless stated otherwise below).
as that of the Company (unless stated otherwise below).
Equity interest
Equity interest
at 30 June
at 30 June
2016
2016
%
%
Equity interest
Equity interest
at 30 June
at 30 June
2017
2017
%
%
Country of
Country of
incorporation
incorporation
Equity type
Equity type
Note
Note
Name of controlled entity
Name of controlled entity
Parent entity
Parent entity
The Star Entertainment Group Limited
The Star Entertainment Group Limited
Controlled entities
Controlled entities
The Star Entertainment Sydney Holdings Limited
The Star Entertainment Sydney Holdings Limited
The Star Pty Limited
The Star Pty Limited
The Star Entertainment Pty Ltd
The Star Entertainment Pty Ltd
The Star Entertainment Sydney Properties Pty Ltd
The Star Entertainment Sydney Properties Pty Ltd
The Star Entertainment Sydney Apartments Pty Ltd
The Star Entertainment Sydney Apartments Pty Ltd
Star City Investments Pty Limited
Star City Investments Pty Limited
Star City Share Plan Company Pty Ltd
Star City Share Plan Company Pty Ltd
The Star Entertainment QLD Limited
The Star Entertainment QLD Limited
The Star Entertainment QLD Custodian Pty Ltd
The Star Entertainment QLD Custodian Pty Ltd
The Star Entertainment Gold Coast Trust
The Star Entertainment Gold Coast Trust
The Star Entertainment International No.1 Pty Ltd
The Star Entertainment International No.1 Pty Ltd
The Star Entertainment International No.2 Pty Ltd
The Star Entertainment International No.2 Pty Ltd
The Star Entertainment (Macau) Limited
The Star Entertainment (Macau) Limited
The Star Entertainment International No.3 Pty Ltd
The Star Entertainment International No.3 Pty Ltd
EEI Services (Hong Kong) Holdings Limited
EEI Services (Hong Kong) Holdings Limited
Echo Entertainment (Shanghai) Trading Co. Ltd
Echo Entertainment (Shanghai) Trading Co. Ltd
EEI Services (Hong Kong) Limited
EEI Services (Hong Kong) Limited
EEI C&C Services Pte Ltd
EEI C&C Services Pte Ltd
The Star Entertainment RTO Pty Ltd
The Star Entertainment RTO Pty Ltd
The Star Entertainment Finance Limited
The Star Entertainment Finance Limited
The Star Entertainment International Pty Ltd
The Star Entertainment International Pty Ltd
The Star Entertainment Technology Services Pty Ltd
The Star Entertainment Technology Services Pty Ltd
The Star Entertainment Training Company Pty Ltd
The Star Entertainment Training Company Pty Ltd
PPIT Pty Ltd
PPIT Pty Ltd
The Star Entertainment International No.4 Pty Ltd
The Star Entertainment International No.4 Pty Ltd
The Star Entertainment Online Holdings Pty Ltd
The Star Entertainment Online Holdings Pty Ltd
The Star Entertainment Online Pty Ltd
The Star Entertainment Online Pty Ltd
The Star Entertainment Brisbane Holdings Pty Ltd
The Star Entertainment Brisbane Holdings Pty Ltd
The Star Entertainment Brisbane Operations Pty Ltd
The Star Entertainment Brisbane Operations Pty Ltd
The Star Entertainment DBC Holdings Pty Ltd
The Star Entertainment DBC Holdings Pty Ltd
The Star Brisbane Car Park Holdings Pty Ltd
The Star Brisbane Car Park Holdings Pty Ltd
d
The Star Entertainment Gold Coast Holdings Pty Ltd
d
The Star Entertainment Gold Coast Holdings Pty Ltd
d
The Star Entertainment GC Investments Pty Ltd
d
The Star Entertainment GC Investments Pty Ltd
The Star Entertainment GC Investments No.1 Pty Ltd d
The Star Entertainment GC Investments No.1 Pty Ltd d
j
The Star Entertainment International No.5 Pty Ltd
j
The Star Entertainment International No.5 Pty Ltd
f
f
c
c
Australia
Australia
e
e
h
h
h
h
i
i
a b
Australia
a b
Australia
a b
Australia
a b
Australia
a
Australia
a
Australia
a b g Australia
a b g Australia
a g
Australia
a g
Australia
a
Australia
a
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Macau
Macau
Australia
Australia
Hong Kong
Hong Kong
China
China
Hong Kong
Hong Kong
Singapore
Singapore
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
g
g
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
units
units
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
ordinary shares
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
0.0
0.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
52
52
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
98
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
53
53
99
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
D2 Parent entity disclosures
D2 Parent entity disclosures
The Star Entertainment Group Limited, the parent entity of the Group, was incorporated on 2 March 2011.
The Star Entertainment Group Limited, the parent entity of the Group, was incorporated on 2 March 2011.
2017
2017
$m
$m
Result of the parent entity
Result of the parent entity
Profit for the year
Profit for the year
Total comprehensive income for the year a
Total comprehensive income for the year a
244.8
244.8
244.8
244.8
2016
2016
$m
$m
142.3
142.3
142.3
142.3
a
a
Since the end of the financial year, the Company has declared a final dividend of 8.5 cents per ordinary share (2016: 7.5 cents),
Since the end of the financial year, the Company has declared a final dividend of 8.5 cents per ordinary share (2016: 7.5 cents),
which is expected to be paid on 26 September 2017 out of retained earnings at 30 June 2017 to its shareholders (refer to note
which is expected to be paid on 26 September 2017 out of retained earnings at 30 June 2017 to its shareholders (refer to note
A6).
A6).
Financial position of the parent entity
Financial position of the parent entity
Current assets
Current assets
Non current assets
Non current assets
Total assets
Total assets
Current liabilities
Current liabilities
Non current liabilities
Non current liabilities
Total liabilities
Total liabilities
Net assets
Net assets
Total equity of the parent entity
Total equity of the parent entity
Issued capital
Issued capital
Retained earnings
Retained earnings
Shared based payments benefits reserve
Shared based payments benefits reserve
Total equity
Total equity
1,310.0
1,310.0
2,589.5
2,589.5
3,899.5
3,899.5
43.5
43.5
1,031.5
1,031.5
1,075.0
1,075.0
1,181.3
1,181.3
2,589.4
2,589.4
3,770.7
3,770.7
36.9
36.9
1,031.2
1,031.2
1,068.1
1,068.1
2,824.5
2,824.5
2,702.6
2,702.6
2,580.5
2,580.5
237.2
237.2
6.8
6.8
2,824.5
2,824.5
2,580.5
2,580.5
116.3
116.3
5.8
5.8
2,702.6
2,702.6
Contingent liabilities
Contingent liabilities
There were no contingent liabilities for the parent entity at 30 June 2017 (2016: nil).
There were no contingent liabilities for the parent entity at 30 June 2017 (2016: nil).
Capital expenditure
Capital expenditure
The parent entity does not have any capital expenditure commitments for the acquisition of property, plant and
The parent entity does not have any capital expenditure commitments for the acquisition of property, plant and
equipment contracted but not provided for at 30 June 2017 (2016: nil).
equipment contracted but not provided for at 30 June 2017 (2016: nil).
Guarantees
Guarantees
The Star Entertainment Group Limited has guaranteed the liabilities of The Star Entertainment Finance Limited and
The Star Entertainment Group Limited has guaranteed the liabilities of The Star Entertainment Finance Limited and
The Star Entertainment International No.3 Pty Ltd. As at 30 June 2017, the carrying amount included in current
The Star Entertainment International No.3 Pty Ltd. As at 30 June 2017, the carrying amount included in current
liabilities at 30 June 2017 was nil (2016: nil), and the maximum amount of these guarantees was $117.7 million (2016:
liabilities at 30 June 2017 was nil (2016: nil), and the maximum amount of these guarantees was $117.7 million (2016:
$117.3 million) (refer to note E1). The Company has also undertaken to support its controlled entities when necessary
$117.3 million) (refer to note E1). The Company has also undertaken to support its controlled entities when necessary
to enable them to pay their debts as and when they fall due.
to enable them to pay their debts as and when they fall due.
Accounting policy for investments in controlled entities
Accounting policy for investments in controlled entities
All investments are initially recognised at cost, being the fair value of the consideration given. Subsequently
All investments are initially recognised at cost, being the fair value of the consideration given. Subsequently
investments are carried at cost less any impairment losses.
investments are carried at cost less any impairment losses.
D3 Deed of cross guarantee
D3 Deed of cross guarantee
The Star Entertainment Sydney Holdings Limited, The Star Pty Limited, The Star Entertainment Pty Ltd, The Star
The Star Entertainment Sydney Holdings Limited, The Star Pty Limited, The Star Entertainment Pty Ltd, The Star
Entertainment Sydney Properties Pty Ltd, The Star Entertainment Sydney Apartments Pty Ltd and Star City
Entertainment Sydney Properties Pty Ltd, The Star Entertainment Sydney Apartments Pty Ltd and Star City
Investments Pty Limited are parties to a deed of cross guarantee under which each company guarantees the debts of
Investments Pty Limited are parties to a deed of cross guarantee under which each company guarantees the debts of
the others. By entering into the deed, the wholly-owned entities have been relieved from the requirements to prepare a
the others. By entering into the deed, the wholly-owned entities have been relieved from the requirements to prepare a
Financial Report and Directors' Report under Instrument 2016/785 issued by the Australian Securities and Investments
Financial Report and Directors' Report under Instrument 2016/785 issued by the Australian Securities and Investments
Commission.
Commission.
(i) Consolidated income statement and summary of movements in consolidated earnings
(i) Consolidated income statement and summary of movements in consolidated earnings
The above companies represent a 'closed group' for the purposes of the Class Order, and as there are no other parties
The above companies represent a 'closed group' for the purposes of the Class Order, and as there are no other parties
to the deed of cross guarantee that are controlled by The Star Entertainment Sydney Holdings Limited, they also
to the deed of cross guarantee that are controlled by The Star Entertainment Sydney Holdings Limited, they also
represent the 'extended closed group'.
represent the 'extended closed group'.
Set out below is a consolidated income statement and a summary of movements in consolidated retained earnings for
Set out below is a consolidated income statement and a summary of movements in consolidated retained earnings for
the year ended 30 June 2017 of the closed group.
the year ended 30 June 2017 of the closed group.
Consolidated income statement
Consolidated income statement
Revenue
Revenue
Other income
Other income
Government taxes and levies
Government taxes and levies
Commissions and fees
Commissions and fees
Employment costs
Employment costs
Depreciation, amortisation and impairment
Depreciation, amortisation and impairment
Cost of sales
Cost of sales
Property costs
Property costs
Advertising and promotions
Advertising and promotions
Other expenses
Other expenses
Earnings before interest and tax (EBIT)
Earnings before interest and tax (EBIT)
Net finance costs
Net finance costs
Profit before income tax (PBT)
Profit before income tax (PBT)
Income tax expense
Income tax expense
Net profit after tax (NPAT)
Net profit after tax (NPAT)
Total comprehensive income for the period
Total comprehensive income for the period
Summary of movements in consolidated retained earnings
Summary of movements in consolidated retained earnings
Accumulated profit/(loss) at the beginning of the financial year
Accumulated profit/(loss) at the beginning of the financial year
Profit for the year
Profit for the year
Dividends paid
Dividends paid
Accumulated profit at the end of the financial year
Accumulated profit at the end of the financial year
2017
2017
$m
$m
1,620.4
1,620.4
2016
2016
$m
$m
1,575.7
1,575.7
(0.1)
(0.1)
(369.4)
(369.4)
(222.4)
(222.4)
(338.3)
(338.3)
(88.1)
(88.1)
(48.7)
(48.7)
(50.3)
(50.3)
(53.7)
(53.7)
(229.1)
(229.1)
220.3
220.3
-
-
220.3
220.3
(67.9)
(67.9)
152.4
152.4
152.4
152.4
141.6
141.6
152.4
152.4
(164.0)
(164.0)
130.0
130.0
0.5
0.5
(349.9)
(349.9)
(294.3)
(294.3)
(335.2)
(335.2)
(93.9)
(93.9)
(45.1)
(45.1)
(51.0)
(51.0)
(52.4)
(52.4)
(113.1)
(113.1)
241.3
241.3
-
-
241.3
241.3
(68.8)
(68.8)
172.5
172.5
172.5
172.5
45.1
45.1
172.5
172.5
(76.0)
(76.0)
141.6
141.6
(ii) Consolidated balance sheet
(ii) Consolidated balance sheet
Set out below is a consolidated balance sheet as at 30 June 2017 of the closed group consisting of The Star
Set out below is a consolidated balance sheet as at 30 June 2017 of the closed group consisting of The Star
Entertainment Sydney Holdings Limited, The Star Pty Limited, The Star Entertainment Pty Ltd, The Star Entertainment
Entertainment Sydney Holdings Limited, The Star Pty Limited, The Star Entertainment Pty Ltd, The Star Entertainment
Sydney Properties Pty Limited, The Star Entertainment Sydney Apartments Pty Limited, and Star City Investments Pty
Sydney Properties Pty Limited, The Star Entertainment Sydney Apartments Pty Limited, and Star City Investments Pty
Limited.
Limited.
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
100
54
54
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
55
55
101
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Consolidated balance sheet
Consolidated balance sheet
ASSETS
ASSETS
Cash assets
Cash assets
Trade and other receivables
Trade and other receivables
Inventories
Inventories
Other
Other
Total current assets
Total current assets
Property, plant and equipment
Property, plant and equipment
Intangible assets
Intangible assets
Other assets
Other assets
Total non current assets
Total non current assets
TOTAL ASSETS
TOTAL ASSETS
LIABILITIES
LIABILITIES
Trade and other payables
Trade and other payables
Provisions
Provisions
Other liabilities
Other liabilities
Total current liabilities
Total current liabilities
Deferred tax liabilities
Deferred tax liabilities
Provisions
Provisions
Total non current liabilities
Total non current liabilities
TOTAL LIABILITIES
TOTAL LIABILITIES
NET ASSETS
NET ASSETS
EQUITY
EQUITY
Issued Capital
Issued Capital
Retained Earnings
Retained Earnings
TOTAL EQUITY
TOTAL EQUITY
D4 Key Management Personnel disclosures
D4 Key Management Personnel disclosures
Compensation of Key Management Personnel
Compensation of Key Management Personnel
Short term
Short term
Long term
Long term
Share based payments
Share based payments
2017
2017
$m
$m
2016
2016
$m
$m
28.7
28.7
145.0
145.0
8.0
8.0
21.9
21.9
203.6
203.6
1,315.0
1,315.0
287.7
287.7
11.8
11.8
1,614.5
1,614.5
1,818.1
1,818.1
437.7
437.7
38.3
38.3
12.2
12.2
488.2
488.2
54.5
54.5
5.5
5.5
60.0
60.0
548.2
548.2
1,269.9
1,269.9
1,139.9
1,139.9
130.0
130.0
1,269.9
1,269.9
2017
2017
$000
$000
5,757
5,757
344
344
2,304
2,304
49.7
49.7
115.3
115.3
5.8
5.8
18.7
18.7
189.5
189.5
1,240.4
1,240.4
292.0
292.0
12.7
12.7
1,545.1
1,545.1
1,734.6
1,734.6
348.3
348.3
35.6
35.6
11.9
11.9
395.8
395.8
51.7
51.7
5.6
5.6
57.3
57.3
453.1
453.1
1,281.5
1,281.5
1,139.9
1,139.9
141.6
141.6
1,281.5
1,281.5
2016
2016
$000
$000
8,564
8,564
347
347
2,419
2,419
Total compensation
Total compensation
The above reflects the compensation for individuals who are Key Management Personnel of the Group. The note
The above reflects the compensation for individuals who are Key Management Personnel of the Group. The note
should be read in conjunction with the Remuneration Report.
should be read in conjunction with the Remuneration Report.
11,330
11,330
8,405
8,405
D5 Investment in associate and joint venture entities
D5 Investment in associate and joint venture entities
Set out below are the investments of the Group as at 30 June 2017 which, in the opinion of the Directors, are material
Set out below are the investments of the Group as at 30 June 2017 which, in the opinion of the Directors, are material
to the Group. The entities listed below have share capital consisting solely of ordinary shares, which are held by the
to the Group. The entities listed below have share capital consisting solely of ordinary shares, which are held by the
Group. The country of incorporation is also their principal place of business, and the proportion of ownership interest is
Group. The country of incorporation is also their principal place of business, and the proportion of ownership interest is
the same as the proportion of voting rights held.
the same as the proportion of voting rights held.
2017
2017
Name of entity
Name of entity
Destination Brisbane Consortium Integrated Resort
Destination Brisbane Consortium Integrated Resort
Holdings Pty Ltd (i)
Holdings Pty Ltd (i)
Festival Car Park Pty Ltd (ii)
Festival Car Park Pty Ltd (ii)
Destination Gold Coast Investments Pty Ltd (iii)
Destination Gold Coast Investments Pty Ltd (iii)
Total equity accounted investments
Total equity accounted investments
Country of
Country of
incorporation
incorporation
% of
% of
ownership
ownership
Nature of
Nature of
ownership
ownership
Measurement
Measurement
method
method
Australia
Australia
Australia
Australia
Australia
Australia
50
50
50
50
50
50
Associate
Associate
Joint venture
Joint venture
Joint venture
Joint venture
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Carrying
Carrying
amount
amount
$m
$m
152.6
152.6
13.5
13.5
46.3
46.3
212.4
212.4
(i) Destination Brisbane Consortium Integrated Resort Holdings Pty Ltd
(i) Destination Brisbane Consortium Integrated Resort Holdings Pty Ltd
The Group has partnered with Hong Kong-based organisations Chow Tai Fook Enterprises Limited (CTF) and Far East
The Group has partnered with Hong Kong-based organisations Chow Tai Fook Enterprises Limited (CTF) and Far East
Consortium International Limited (FEC) to form Destination Brisbane Consortium (DBC) for the Queenʼs Wharf
Consortium International Limited (FEC) to form Destination Brisbane Consortium (DBC) for the Queenʼs Wharf
Brisbane Project. The parties have formed two vehicles (the Integrated Resort Joint Venture and the Residential Joint
Brisbane Project. The parties have formed two vehicles (the Integrated Resort Joint Venture and the Residential Joint
Venture), which together are responsible for completing the Queenʼs Wharf Brisbane project.
Venture), which together are responsible for completing the Queenʼs Wharf Brisbane project.
Consistent with the ownership structure, the Group will contribute 50% of the capital to the development of the
Consistent with the ownership structure, the Group will contribute 50% of the capital to the development of the
Integrated Resort and act as the casino operator under a long dated casino management agreement. CTF and FEC
Integrated Resort and act as the casino operator under a long dated casino management agreement. CTF and FEC
will each contribute 25% of the capital to the development of the integrated resort. CTF and FEC will each contribute
will each contribute 25% of the capital to the development of the integrated resort. CTF and FEC will each contribute
50% of the capital to undertake the residential and related component of the broader Queenʼs Wharf Brisbane
50% of the capital to undertake the residential and related component of the broader Queenʼs Wharf Brisbane
development. The Group is not a party to the residential joint venture.
development. The Group is not a party to the residential joint venture.
30 June 2017
30 June 2017
Commitments and contingent liabilities
Commitments and contingent liabilities
DBC will invest approximately $2 billion to fund the construction of the integrated resort, which is expected to open in
DBC will invest approximately $2 billion to fund the construction of the integrated resort, which is expected to open in
2022 (subject to various approvals).
2022 (subject to various approvals).
Summarised financial information
Summarised financial information
The financial statements of the associate is prepared for the same reporting period as the Group and follow the same
The financial statements of the associate is prepared for the same reporting period as the Group and follow the same
accounting policies of the Group.
accounting policies of the Group.
Balance sheet
Balance sheet
Total current assets
Total current assets
Total non current assets
Total non current assets
Total current liabilities
Total current liabilities
Total non current liabilities
Total non current liabilities
Net assets
Net assets
Reconciliation to investment carrying amount:
Reconciliation to investment carrying amount:
Carrying amount at the beginning of the year
Carrying amount at the beginning of the year
Share of equity contributions for the Group
Share of equity contributions for the Group
Share of loss for the period
Share of loss for the period
Capitalised costs
Capitalised costs
Carrying amount at the end of the year
Carrying amount at the end of the year
2017
2017
$m
$m
2016
2016
$m
$m
53.2
53.2
327.2
327.2
(14.8)
(14.8)
(75.0)
(75.0)
290.6
290.6
16.2
16.2
136.7
136.7
(1.1)
(1.1)
0.8
0.8
152.6
152.6
5.4
5.4
21.4
21.4
(7.3)
(7.3)
-
-
19.5
19.5
-
-
10.0
10.0
(0.1)
(0.1)
6.3
6.3
16.2
16.2
57
57
103
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
102
56
56
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Income statement
Income statement
Loss before tax
Loss before tax
Income tax benefit
Income tax benefit
Loss for the year (continuing operations)
Loss for the year (continuing operations)
Total comprehensive loss for the year (continuing operations)
Total comprehensive loss for the year (continuing operations)
Group's share of loss for the year
Group's share of loss for the year
Dividends received from the associate entity
Dividends received from the associate entity
2017
2017
$m
$m
(2.1)
(2.1)
-
-
(2.1)
(2.1)
(2.1)
(2.1)
(1.1)
(1.1)
-
-
2016
2016
$m
$m
(0.3)
(0.3)
0.1
0.1
(0.2)
(0.2)
(0.2)
(0.2)
(0.1)
(0.1)
-
-
(ii) Festival Car Park Pty Ltd
(ii) Festival Car Park Pty Ltd
The Group has a 50% interest in Festival Car Park Pty Ltd, a joint venture that operates the Festival Car Park on
The Group has a 50% interest in Festival Car Park Pty Ltd, a joint venture that operates the Festival Car Park on
Charlotte Street in Brisbane. This is a joint venture with CTF and FEC.
Charlotte Street in Brisbane. This is a joint venture with CTF and FEC.
Commitments and contingent liabilities
Commitments and contingent liabilities
The joint venture had capital commitments of $0.1 million (2016: $0.3 million) as at 30 June 2017. There were no other
The joint venture had capital commitments of $0.1 million (2016: $0.3 million) as at 30 June 2017. There were no other
contingent liabilities.
contingent liabilities.
Summarised financial information
Summarised financial information
The financial statements of the joint venture are prepared on financial information that is unaudited and prepared for
The financial statements of the joint venture are prepared on financial information that is unaudited and prepared for
reporting purposes. The joint venture has a financial year end date of 31 March.
reporting purposes. The joint venture has a financial year end date of 31 March.
2017
2017
$m
$m
2016
2016
$m
$m
Balance sheet
Balance sheet
Cash and cash equivalents
Cash and cash equivalents
Total current assets excluding cash and cash equivalents
Total current assets excluding cash and cash equivalents
Total non current assets
Total non current assets
Total current liabilities
Total current liabilities
Total non current liabilities - financial liabilities
Total non current liabilities - financial liabilities
Net assets
Net assets
Reconciliation to investment carrying amount:
Reconciliation to investment carrying amount:
Carrying amount at the beginning of the year
Carrying amount at the beginning of the year
Share of profit for the period
Share of profit for the period
Share of equity contributions for the Group
Share of equity contributions for the Group
Carrying amount at the end of the year
Carrying amount at the end of the year
Income statement
Income statement
Revenue
Revenue
Interest expense
Interest expense
Other expenses
Other expenses
Profit before tax
Profit before tax
Income tax expense
Income tax expense
Profit for the year (continuing operations)
Profit for the year (continuing operations)
Total comprehensive income for the year (continuing operations)
Total comprehensive income for the year (continuing operations)
Group's share of profit for the year
Group's share of profit for the year
1.7
1.7
0.1
0.1
48.3
48.3
(0.6)
(0.6)
(22.5)
(22.5)
27.0
27.0
13.1
13.1
0.4
0.4
-
-
13.5
13.5
3.1
3.1
(0.7)
(0.7)
(1.4)
(1.4)
1.0
1.0
(0.3)
(0.3)
0.7
0.7
0.7
0.7
0.4
0.4
0.4
0.4
0.9
0.9
47.6
47.6
(0.2)
(0.2)
(22.5)
(22.5)
26.2
26.2
-
-
0.1
0.1
13.0
13.0
13.1
13.1
0.7
0.7
(0.2)
(0.2)
(0.2)
(0.2)
0.3
0.3
(0.1)
(0.1)
0.2
0.2
0.2
0.2
0.1
0.1
58
58
(iii) Destination Gold Coast Investments Pty Ltd
(iii) Destination Gold Coast Investments Pty Ltd
On 20 October 2016, a 50% interest was acquired in Destination Gold Coast Investments Pty Ltd (DGCI). DGCI is a
On 20 October 2016, a 50% interest was acquired in Destination Gold Coast Investments Pty Ltd (DGCI). DGCI is a
joint venture with CTF and FEC involved in the operation of the Sheraton Grand Mirage Resort, Gold Coast. The
joint venture with CTF and FEC involved in the operation of the Sheraton Grand Mirage Resort, Gold Coast. The
Group's interest is accounted for using the equity method.
Group's interest is accounted for using the equity method.
The Securityholdersʼ Deed for Destination Gold Coast Investments Pty Ltd requires unanimous consent for each Board
The Securityholdersʼ Deed for Destination Gold Coast Investments Pty Ltd requires unanimous consent for each Board
resolution. Due to the unanimous requirement for decisions, each party has joint control of the entity. The entity is
resolution. Due to the unanimous requirement for decisions, each party has joint control of the entity. The entity is
designed to exist on its own and the Deed does not grant the rights to assets and liabilities directly to the Group. The
designed to exist on its own and the Deed does not grant the rights to assets and liabilities directly to the Group. The
investment has therefore been classified as a joint venture.
investment has therefore been classified as a joint venture.
DGCI has provisionally accounted for a business combination in which DGCI is in the process of ascertaining the fair
DGCI has provisionally accounted for a business combination in which DGCI is in the process of ascertaining the fair
values of the identifiable assets, liabilities and contingent liabilities acquired. In doing so, the Group has relied on the
values of the identifiable assets, liabilities and contingent liabilities acquired. In doing so, the Group has relied on the
best estimate of the identifiable assets, liabilities and contingent liabilities of DGCI, until the quantification and
best estimate of the identifiable assets, liabilities and contingent liabilities of DGCI, until the quantification and
treatment of items under review is complete.
treatment of items under review is complete.
Commitments and contingent liabilities
Commitments and contingent liabilities
The joint venture had capital commitments of $0.2 million (2016: nil) as at 30 June 2017. There were no other
The joint venture had capital commitments of $0.2 million (2016: nil) as at 30 June 2017. There were no other
contingent liabilities.
contingent liabilities.
Summarised financial information
Summarised financial information
The financial statements of the joint venture is prepared for the same reporting period as the Group and follow the
The financial statements of the joint venture is prepared for the same reporting period as the Group and follow the
same accounting policies of the Group.
same accounting policies of the Group.
Balance sheet
Balance sheet
Cash and cash equivalents
Cash and cash equivalents
Total current assets excluding cash and cash equivalents
Total current assets excluding cash and cash equivalents
Total non current assets
Total non current assets
Total current liabilities
Total current liabilities
Total non current liabilities - financial liabilities
Total non current liabilities - financial liabilities
Other non current liabilities
Other non current liabilities
Net assets
Net assets
Reconciliation to investment carrying amount:
Reconciliation to investment carrying amount:
Share of profit for the period
Share of profit for the period
Share of equity contributions for the Group
Share of equity contributions for the Group
Carrying amount
Carrying amount
Income statement
Income statement
Revenue
Revenue
Interest expense
Interest expense
Depreciation expense
Depreciation expense
Operating expenses
Operating expenses
Profit before tax
Profit before tax
Income tax expense
Income tax expense
Profit for the year (continuing operations)
Profit for the year (continuing operations)
Total comprehensive income for the year (continuing operations)
Total comprehensive income for the year (continuing operations)
Group's share of profit for the year
Group's share of profit for the year
2017
2017
$m
$m
2016
2016
$m
$m
6.7
6.7
0.9
0.9
167.1
167.1
(11.9)
(11.9)
(72.2)
(72.2)
(14.3)
(14.3)
76.3
76.3
-
-
46.3
46.3
46.3
46.3
16.2
16.2
(0.9)
(0.9)
(1.2)
(1.2)
(13.9)
(13.9)
0.3
0.3
(0.3)
(0.3)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
59
59
105
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
104
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
E Risk Management
E Risk Management
E1 Financial risk management objectives and policies
E1 Financial risk management objectives and policies
The Group's principal financial instruments, other than derivatives, comprise cash, short term deposits, bank bills,
The Group's principal financial instruments, other than derivatives, comprise cash, short term deposits, bank bills,
Australian denominated bank loans, and foreign currency denominated notes.
Australian denominated bank loans, and foreign currency denominated notes.
The main purpose of these financial instruments is to raise debt capital for the Group's operations. The Group has
The main purpose of these financial instruments is to raise debt capital for the Group's operations. The Group has
various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its
various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its
operations. Derivative transactions are also entered into by the Group, being interest rate swaps, cross currency
operations. Derivative transactions are also entered into by the Group, being interest rate swaps, cross currency
swaps and forward currency contracts, the purpose being to manage interest rate and currency risks arising from the
swaps and forward currency contracts, the purpose being to manage interest rate and currency risks arising from the
Group's operations and sources of finance.
Group's operations and sources of finance.
The Group's risk management policy is carried out by the Corporate Treasury function under the Group Treasury
The Group's risk management policy is carried out by the Corporate Treasury function under the Group Treasury
Policy approved by the Board. Corporate Treasury reports regularly to the Board on the Group's risk management
Policy approved by the Board. Corporate Treasury reports regularly to the Board on the Group's risk management
activities and policies. It is, and has been throughout the period under review, the Group's policy that no trading in
activities and policies. It is, and has been throughout the period under review, the Group's policy that no trading in
financial instruments shall be undertaken.
financial instruments shall be undertaken.
The main risks arising from the Group's financial instruments are interest rate risk, foreign currency risk, credit risk and
The main risks arising from the Group's financial instruments are interest rate risk, foreign currency risk, credit risk and
liquidity risk.
liquidity risk.
Details of significant accounting policies and methods adopted, including criteria for recognition, the basis of
Details of significant accounting policies and methods adopted, including criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument, are disclosed in note G.
financial liability and equity instrument, are disclosed in note G.
Interest rate risk
Interest rate risk
The Group has a policy of controlling exposure to interest rate fluctuations by the use of fixed and variable rate debt
The Group has a policy of controlling exposure to interest rate fluctuations by the use of fixed and variable rate debt
and by the use of interest rate swaps or caps. The Group has entered into interest rate swap agreements to hedge
and by the use of interest rate swaps or caps. The Group has entered into interest rate swap agreements to hedge
underlying debt obligations and allow floating rate borrowings to be swapped to fixed rate borrowings. Under these
underlying debt obligations and allow floating rate borrowings to be swapped to fixed rate borrowings. Under these
arrangements, the Group will pay fixed interest rates and receive the bank bill swap rate calculated on the notional
arrangements, the Group will pay fixed interest rates and receive the bank bill swap rate calculated on the notional
principal amount of the contracts.
principal amount of the contracts.
At 30 June 2017 after taking into account the effect of interest rate swaps, approximately 60.3% (2016: 68.3%) of the
At 30 June 2017 after taking into account the effect of interest rate swaps, approximately 60.3% (2016: 68.3%) of the
Group's borrowings are at a fixed rate of interest.
Group's borrowings are at a fixed rate of interest.
Foreign currency risk
Foreign currency risk
As a result of issuing private notes denominated in US Dollars (USD), the Group's balance sheet can be affected by
As a result of issuing private notes denominated in US Dollars (USD), the Group's balance sheet can be affected by
movements in the USD/AUD exchange rate. In order to manage this exposure, the Group has entered into cross
movements in the USD/AUD exchange rate. In order to manage this exposure, the Group has entered into cross
currency swaps to fix the exchange rate on the notes until maturity. The Group agrees to exchange a fixed USD
currency swaps to fix the exchange rate on the notes until maturity. The Group agrees to exchange a fixed USD
amount for an agreed Australian Dollar (AUD) amount with swap counterparties, and re-exchange this again at
amount for an agreed Australian Dollar (AUD) amount with swap counterparties, and re-exchange this again at
maturity. These swaps are designated to hedge the principal and interest obligations under the private notes.
maturity. These swaps are designated to hedge the principal and interest obligations under the private notes.
The Group has operating leases for two aircrafts invoiced in USD. The Group has entered into foreign exchange
The Group has operating leases for two aircrafts invoiced in USD. The Group has entered into foreign exchange
forward contracts to hedge against the USD currency risk, by exchanging the future USD lease payments to AUD
forward contracts to hedge against the USD currency risk, by exchanging the future USD lease payments to AUD
amounts.
amounts.
Credit risk
Credit risk
Credit risk on financial assets which have been recognised on the balance sheet, is the carrying amount less any
Credit risk on financial assets which have been recognised on the balance sheet, is the carrying amount less any
allowance for non recovery. The Group minimises credit risk via adherence to a strict credit risk management policy.
allowance for non recovery. The Group minimises credit risk via adherence to a strict credit risk management policy.
Collateral is not held as security.
Collateral is not held as security.
Credit risk in trade receivables is managed in the following ways:
Credit risk in trade receivables is managed in the following ways:
− The provision of cheque cashing facilities for casino gaming patrons is subject to detailed policies and procedures
− The provision of cheque cashing facilities for casino gaming patrons is subject to detailed policies and procedures
designed to minimise any potential loss, including the use of a central credit agency which collates information from
designed to minimise any potential loss, including the use of a central credit agency which collates information from
the major casinos around the world; and
the major casinos around the world; and
− The provision of non gaming credit is covered by a risk assessment process for customers using the Credit
− The provision of non gaming credit is covered by a risk assessment process for customers using the Credit
Reference Association of Australia, bank opinions and trade references.
Reference Association of Australia, bank opinions and trade references.
Receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is
Receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is
carefully managed and controlled.
carefully managed and controlled.
With respect to credit risk arising from other financial assets of the Group, which comprise cash and cash equivalents
With respect to credit risk arising from other financial assets of the Group, which comprise cash and cash equivalents
(including short term deposits and bank bills), the maximum exposure of the Group to credit risk from default of a
(including short term deposits and bank bills), the maximum exposure of the Group to credit risk from default of a
counterparty is equal to the carrying amount of these instruments.
counterparty is equal to the carrying amount of these instruments.
In relation to financial liabilities, credit risk arises from the potential failure of counterparties to meet their obligations
In relation to financial liabilities, credit risk arises from the potential failure of counterparties to meet their obligations
under the contract or arrangement. The Group's maximum credit risk exposure in respect of interest rate swap
under the contract or arrangement. The Group's maximum credit risk exposure in respect of interest rate swap
contracts, cross currency swap contracts and forward currency contracts is detailed in note E2.
contracts, cross currency swap contracts and forward currency contracts is detailed in note E2.
Credit risk includes liabilities under financial guarantees. For financial guarantee contract liabilities, the fair value at
Credit risk includes liabilities under financial guarantees. For financial guarantee contract liabilities, the fair value at
initial recognition is determined using a probability weighted discounted cash flow approach. The fair value of financial
initial recognition is determined using a probability weighted discounted cash flow approach. The fair value of financial
guarantee contract liabilities has been assessed as nil (2016: nil), as the possibility of an outflow occurring is
guarantee contract liabilities has been assessed as nil (2016: nil), as the possibility of an outflow occurring is
considered remote. Details of the financial guarantee contracts in the balance sheet are outlined below.
considered remote. Details of the financial guarantee contracts in the balance sheet are outlined below.
Fixed and floating charges
Fixed and floating charges
The controlled entities denoted (b) in note D1 have provided Liquor and Gaming NSW with a fixed and floating charge
The controlled entities denoted (b) in note D1 have provided Liquor and Gaming NSW with a fixed and floating charge
over all of the assets and undertakings of each company to secure payment of all monies and the performance of all
over all of the assets and undertakings of each company to secure payment of all monies and the performance of all
obligations which they have to Liquor and Gaming NSW.
obligations which they have to Liquor and Gaming NSW.
Guarantees and indemnities
Guarantees and indemnities
The controlled entities denoted (b) in note D1 have entered into a guarantee and indemnity agreement in favour of
The controlled entities denoted (b) in note D1 have entered into a guarantee and indemnity agreement in favour of
Liquor and Gaming NSW whereby all parties to the agreement are jointly and severally liable for the performance of
Liquor and Gaming NSW whereby all parties to the agreement are jointly and severally liable for the performance of
the obligations and liabilities of each company participating in the agreement with respect to agreements entered into
the obligations and liabilities of each company participating in the agreement with respect to agreements entered into
and guarantees given.
and guarantees given.
The Star Entertainment Finance Limited and The Star Entertainment International No. 3 Pty Ltd are called upon to give
The Star Entertainment Finance Limited and The Star Entertainment International No. 3 Pty Ltd are called upon to give
in the ordinary course of business, guarantees and indemnities in respect of the performance of their contractual and
in the ordinary course of business, guarantees and indemnities in respect of the performance of their contractual and
financial obligations. The maximum amount of these guarantees and indemnities is $117.7 million (2016: $117.3
financial obligations. The maximum amount of these guarantees and indemnities is $117.7 million (2016: $117.3
million).
million).
Liquidity risk
Liquidity risk
Liquidity risk arises from the financial liabilities of the Group and the Group's subsequent ability to meet its obligations
Liquidity risk arises from the financial liabilities of the Group and the Group's subsequent ability to meet its obligations
to repay its financial liabilities as and when they fall due.
to repay its financial liabilities as and when they fall due.
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank
loans and notes.
loans and notes.
The Group manages liquidity risk by maintaining a forecast of expected cash flow which is monitored and reviewed on
The Group manages liquidity risk by maintaining a forecast of expected cash flow which is monitored and reviewed on
a regular basis. To help reduce liquidity risk, the Group targets a minimum level of cash and cash equivalents to be
a regular basis. To help reduce liquidity risk, the Group targets a minimum level of cash and cash equivalents to be
maintained, and has revolving facilities in place with sufficient undrawn funds available.
maintained, and has revolving facilities in place with sufficient undrawn funds available.
The Group's policy is that not more than 33% of debt facilities should mature in any financial year within the next four
The Group's policy is that not more than 33% of debt facilities should mature in any financial year within the next four
years. At 30 June 2017, the Group's debt facilities that will mature in less than one year is $130.0 million (2016: nil),
years. At 30 June 2017, the Group's debt facilities that will mature in less than one year is $130.0 million (2016: nil),
representing 12.4% of total debt. The next debt maturity is the Syndicated Facility Agreement facility of $250.0 million
representing 12.4% of total debt. The next debt maturity is the Syndicated Facility Agreement facility of $250.0 million
on 20 July 2018. This represents 23.9% of total debt and is within the Group's policy.
on 20 July 2018. This represents 23.9% of total debt and is within the Group's policy.
Refer to notes B7 and E2 for maturity of financial liabilities.
Refer to notes B7 and E2 for maturity of financial liabilities.
The contractual cash flows including principal and estimated interest receipts or payments of financial assets or
The contractual cash flows including principal and estimated interest receipts or payments of financial assets or
liabilities are as follows:
liabilities are as follows:
(i) Non-derivative financial instruments
(i) Non-derivative financial instruments
2017
2017
1 - 5 years
1 - 5 years
$m
$m
< 1 year
< 1 year
$m
$m
> 5 years
> 5 years
$m
$m
< 1 year
< 1 year
$m
$m
2016
2016
1 - 5 years
1 - 5 years
$m
$m
> 5 years
> 5 years
$m
$m
Financial assets
Financial assets
Cash assets
Cash assets
Short term deposits
Short term deposits
Net trade and other receivables
Net trade and other receivables
Financial liabilities
Financial liabilities
Trade creditors and accrued expenses
Trade creditors and accrued expenses
Bank loans - unsecured
Bank loans - unsecured
Private placement - US dollar
Private placement - US dollar
107.7
107.7
6.0
6.0
192.7
192.7
306.4
306.4
322.4
322.4
12.9
12.9
163.0
163.0
498.3
498.3
-
-
-
-
-
-
-
-
-
-
453.8
453.8
546.9
546.9
1,000.7
1,000.7
Net (outflow)/inflow
Net (outflow)/inflow
(191.9)
(191.9)
(1,000.7)
(1,000.7)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
103.4
103.4
55.7
55.7
130.4
130.4
289.5
289.5
259.9
259.9
6.1
6.1
34.3
34.3
300.3
300.3
-
-
-
-
-
-
-
-
-
-
209.6
209.6
257.5
257.5
467.1
467.1
-
-
-
-
-
-
-
-
-
-
-
-
509.5
509.5
509.5
509.5
(10.8)
(10.8)
(467.1)
(467.1)
(509.5)
(509.5)
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
106
60
60
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
61
61
107
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
(ii) Derivative financial instruments
(ii) Derivative financial instruments
Financial assets
Financial assets
Interest rate swaps - receive AUD floating
Interest rate swaps - receive AUD floating
Cross currency swaps - receive USD fixed
Cross currency swaps - receive USD fixed
Forward currency contract - receive USD
Forward currency contract - receive USD
fixed
fixed
Financial liabilities
Financial liabilities
Interest rate swaps - pay AUD fixed
Interest rate swaps - pay AUD fixed
Cross currency swaps - pay AUD floating
Cross currency swaps - pay AUD floating
Forward currency contract - pay AUD
Forward currency contract - pay AUD
fixed
fixed
Net (outflow)/inflow
Net (outflow)/inflow
2017
2017
1 - 5 years
1 - 5 years
$m
$m
< 1 year
< 1 year
$m
$m
> 5 years
> 5 years
$m
$m
< 1 year
< 1 year
$m
$m
2016
2016
1 - 5 years
1 - 5 years
$m
$m
> 5 years
> 5 years
$m
$m
9.0
9.0
163.0
163.0
9.2
9.2
181.2
181.2
29.1
29.1
163.0
163.0
7.8
7.8
199.9
199.9
(18.7)
(18.7)
24.0
24.0
546.9
546.9
1.2
1.2
572.1
572.1
72.3
72.3
546.9
546.9
0.9
0.9
620.1
620.1
(48.0)
(48.0)
3.2
3.2
-
-
-
-
3.2
3.2
4.7
4.7
-
-
-
-
4.7
4.7
(1.5)
(1.5)
8.7
8.7
34.3
34.3
9.5
9.5
52.5
52.5
26.8
26.8
22.0
22.0
7.7
7.7
56.5
56.5
(4.0)
(4.0)
30.9
30.9
257.5
257.5
10.8
10.8
299.2
299.2
95.6
95.6
172.4
172.4
8.7
8.7
276.7
276.7
22.5
22.5
6.5
6.5
509.5
509.5
-
-
516.0
516.0
20.2
20.2
352.6
352.6
-
-
372.8
372.8
143.2
143.2
For floating rate instruments, the amount disclosed is determined by reference to the interest rate at the last repricing
For floating rate instruments, the amount disclosed is determined by reference to the interest rate at the last repricing
date. For foreign currency receipts and payments, the amount disclosed is determined by reference to the AUD/USD
date. For foreign currency receipts and payments, the amount disclosed is determined by reference to the AUD/USD
rate at balance sheet date.
rate at balance sheet date.
(iii) Financial instruments - sensitivity analysis
(iii) Financial instruments - sensitivity analysis
Interest rates - AUD and USD
Interest rates - AUD and USD
The following sensitivity analysis is based on interest rate risk exposures in existence at year end.
The following sensitivity analysis is based on interest rate risk exposures in existence at year end.
At 30 June, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax
At 30 June, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax
profit and other comprehensive income would have been affected as follows:
profit and other comprehensive income would have been affected as follows:
2017
2017
AUD
AUD
+ 0.5% (50 basis points)
+ 0.5% (50 basis points)
- 0.5% (50 basis points)
- 0.5% (50 basis points)
USD
USD
+ 0.5% (50 basis points)
+ 0.5% (50 basis points)
- 0.25% (25 basis points)
- 0.25% (25 basis points)
2016
2016
AUD
AUD
+ 0.5% (50 basis points)
+ 0.5% (50 basis points)
- 0.5% (50 basis points)
- 0.5% (50 basis points)
USD
USD
+ 0.5% (50 basis points)
+ 0.5% (50 basis points)
- 0.25% (25 basis points)
- 0.25% (25 basis points)
Net profit after tax
Net profit after tax
higher/(lower)
higher/(lower)
$m
$m
Other
Other
comprehensive
comprehensive
income
income
higher/(lower)
higher/(lower)
$m
$m
(1.6)
(1.6)
1.6
1.6
-
-
-
-
(0.5)
(0.5)
0.5
0.5
-
-
-
-
7.3
7.3
(7.5)
(7.5)
(7.0)
(7.0)
(3.5)
(3.5)
6.9
6.9
(7.1)
(7.1)
(10.1)
(10.1)
5.2
5.2
62
62
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
The movements in profit are due to higher/lower interest costs from variable rate debt and investments. The movement
The movements in profit are due to higher/lower interest costs from variable rate debt and investments. The movement
in other comprehensive income is due to an increase/decrease in the fair value of financial instruments designated as
in other comprehensive income is due to an increase/decrease in the fair value of financial instruments designated as
cash flow hedges.
cash flow hedges.
The numbers derived in the sensitivity analysis are indicative only.
The numbers derived in the sensitivity analysis are indicative only.
Significant assumptions used in the interest rate sensitivity analysis include:
Significant assumptions used in the interest rate sensitivity analysis include:
− reasonably possible movements in interest rates were determined based on the Group's current credit rating and
− reasonably possible movements in interest rates were determined based on the Group's current credit rating and
mix of debt, relationships with financial institutions and the level of debt that is expected to be renewed, as well as
mix of debt, relationships with financial institutions and the level of debt that is expected to be renewed, as well as
a review of the last two years' historical movements and economic forecaster's expectations;
a review of the last two years' historical movements and economic forecaster's expectations;
− price sensitivity of derivatives is based on a reasonably possible movement of spot rates at the balance sheet
− price sensitivity of derivatives is based on a reasonably possible movement of spot rates at the balance sheet
− the net exposure at the balance sheet date is representative of what the Group was, and is expecting to be,
− the net exposure at the balance sheet date is representative of what the Group was, and is expecting to be,
dates; and
dates; and
exposed to in the next twelve months.
exposed to in the next twelve months.
Foreign Exchange
Foreign Exchange
The following sensitivity analysis is based on foreign currency risk exposures in existence at the balance sheet date. At
The following sensitivity analysis is based on foreign currency risk exposures in existence at the balance sheet date. At
30 June, had the AUD moved, as illustrated in the table below, with all other variables held constant, post tax profit and
30 June, had the AUD moved, as illustrated in the table below, with all other variables held constant, post tax profit and
other comprehensive income would have been affected as follows:
other comprehensive income would have been affected as follows:
Judgements of reasonably possible movements:
Judgements of reasonably possible movements:
Net profit after tax
Net profit after tax
higher/(lower)
higher/(lower)
2016
2016
$m
$m
-
-
-
-
Net profit after tax
Net profit after tax
higher/(lower)
higher/(lower)
2017
2017
$m
$m
-
-
-
-
Other
Other
comprehensive
comprehensive
income
income
higher/(lower)
higher/(lower)
2017
2017
$m
$m
(53.8)
(53.8)
69.8
69.8
Other
Other
comprehensive
comprehensive
income
income
higher/(lower)
higher/(lower)
2016
2016
$m
$m
(10.9)
AUD/USD + 10 cents
(10.9)
AUD/USD + 10 cents
14.3
AUD/USD - 10 cents
14.3
AUD/USD - 10 cents
There is no movement in net profit after tax as the Group has fully hedged its foreign currency exposure to the USPP.
There is no movement in net profit after tax as the Group has fully hedged its foreign currency exposure to the USPP.
The movement in other comprehensive income is due to an increase/decrease in the fair value of financial instruments
The movement in other comprehensive income is due to an increase/decrease in the fair value of financial instruments
designated as cash flow hedges. Management believes the balance sheet date risk exposures are representative of
designated as cash flow hedges. Management believes the balance sheet date risk exposures are representative of
the risk exposure inherent in the financial instruments. The numbers derived in the sensitivity analysis are indicative
the risk exposure inherent in the financial instruments. The numbers derived in the sensitivity analysis are indicative
only.
only.
Significant assumptions used in the foreign currency exposure sensitivity analysis include:
Significant assumptions used in the foreign currency exposure sensitivity analysis include:
− reasonably possible movements in foreign exchange rates were determined based on a review of the last two
− reasonably possible movements in foreign exchange rates were determined based on a review of the last two
− the reasonably possible movement of 10 cents was calculated by taking the USD spot rate as at balance sheet
− the reasonably possible movement of 10 cents was calculated by taking the USD spot rate as at balance sheet
date, moving this spot rate by 10 cents and then re-converting the USD into AUD with the 'new spot-rate'. This
date, moving this spot rate by 10 cents and then re-converting the USD into AUD with the 'new spot-rate'. This
methodology reflects the translation methodology undertaken by the Group;
methodology reflects the translation methodology undertaken by the Group;
− price sensitivity of derivatives is based on a reasonably possible movement of spot rates at the balance sheet
− price sensitivity of derivatives is based on a reasonably possible movement of spot rates at the balance sheet
− the net exposure at the balance sheet date is representative of what the Group was, and is expecting to be,
− the net exposure at the balance sheet date is representative of what the Group was, and is expecting to be,
years' historical movements and economic forecaster's expectations;
years' historical movements and economic forecaster's expectations;
dates; and
dates; and
exposed to in the next 12 months.
exposed to in the next 12 months.
E2 Additional financial instruments disclosure
E2 Additional financial instruments disclosure
(i)
(i)
Fair values
Fair values
The fair value of the Group's financial assets and financial liabilities approximates their carrying value as at the
The fair value of the Group's financial assets and financial liabilities approximates their carrying value as at the
balance sheet date.
balance sheet date.
Swaps
Swaps
Fair value is calculated using discounted future cash flow techniques, where estimated cash flows and estimated
Fair value is calculated using discounted future cash flow techniques, where estimated cash flows and estimated
discount rates are based on market data at the balance sheet date.
discount rates are based on market data at the balance sheet date.
Forward currency contracts
Forward currency contracts
Fair value is calculated using forward exchange market rates at the balance sheet date.
Fair value is calculated using forward exchange market rates at the balance sheet date.
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
108
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
63
63
109
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
USPP
USPP
Fair value is calculated using discounted future cash flow techniques, where estimated cash flows and estimated
Fair value is calculated using discounted future cash flow techniques, where estimated cash flows and estimated
discount rates are based on market data at the balance sheet date, in combination with restatement to current foreign
discount rates are based on market data at the balance sheet date, in combination with restatement to current foreign
exchange rates.
exchange rates.
Interest rate risk
Interest rate risk
The Group had the following classes of financial assets and financial liabilities exposed to floating interest rate risk:
The Group had the following classes of financial assets and financial liabilities exposed to floating interest rate risk:
(ii)
(ii)
2017
2017
$m
$m
2016
2016
$m
$m
Financial assets
Financial assets
Cash assets
Cash assets
Short term deposits
Short term deposits
Total financial assets
Total financial assets
Financial liabilities
Financial liabilities
Bank loans - unsecured a
Bank loans - unsecured a
USPP cross currency swaps
USPP cross currency swaps
Derivatives b
Derivatives b
Total financial liabilities
Total financial liabilities
29.8
29.8
6.0
6.0
35.8
35.8
449.5
449.5
430.0
430.0
(430.0)
(430.0)
449.5
449.5
30.2
30.2
55.7
55.7
85.9
85.9
200.0
200.0
430.0
430.0
(430.0)
(430.0)
200.0
200.0
a
a
Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. The floating rates
Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. The floating rates
represent the most recently determined rate applicable to the instrument at the balance sheet date.
represent the most recently determined rate applicable to the instrument at the balance sheet date.
b Notional principal amounts.
b Notional principal amounts.
(iii) Financial instruments - interest rate swaps
(iii) Financial instruments - interest rate swaps
Interest rate swaps meet the requirements to qualify for cash flow hedge accounting and are stated at fair value.
Interest rate swaps meet the requirements to qualify for cash flow hedge accounting and are stated at fair value.
These swaps are being used to hedge the exposure to variability in cash flows attributable to movements in the
These swaps are being used to hedge the exposure to variability in cash flows attributable to movements in the
reference interest rate of the designated debt or instrument and are assessed as highly effective in offsetting changes
reference interest rate of the designated debt or instrument and are assessed as highly effective in offsetting changes
in the cash flows attributable to such movements. Hedge effectiveness is measured by comparing the change in the
in the cash flows attributable to such movements. Hedge effectiveness is measured by comparing the change in the
fair value of the hedged item and the hedging instrument respectively each quarter. Any difference represents
fair value of the hedged item and the hedging instrument respectively each quarter. Any difference represents
ineffectiveness and is recorded in the income statement.
ineffectiveness and is recorded in the income statement.
The notional principal amounts and periods of expiry of the interest rate swap contracts are as follows:
The notional principal amounts and periods of expiry of the interest rate swap contracts are as follows:
94.0
Less than one year
94.0
Less than one year
336.0
One to five years
336.0
One to five years
100.0
More than five years
100.0
More than five years
Notional Principal
530.0
Notional Principal
530.0
-
-
94.0
94.0
336.0
336.0
430.0
430.0
2.4% - 7.3% 6.0% - 7.3%
Fixed interest rate range p.a.
2.4% - 7.3% 6.0% - 7.3%
Fixed interest rate range p.a.
2.0%
Variable interest rate range p.a.
2.0%
Variable interest rate range p.a.
Net settlement receipts and payments are recognised as an adjustment to interest expense on an accruals basis over
Net settlement receipts and payments are recognised as an adjustment to interest expense on an accruals basis over
the term of the swaps, such that the overall interest expense on borrowings reflects the average cost of funds achieved
the term of the swaps, such that the overall interest expense on borrowings reflects the average cost of funds achieved
by entering into the swap agreements.
by entering into the swap agreements.
1.7%
1.7%
(iv) Financial instruments - cross currency swaps
(iv) Financial instruments - cross currency swaps
Cross currency swap contracts are classified as cash flow hedges and are stated at fair value.
Cross currency swap contracts are classified as cash flow hedges and are stated at fair value.
These cross currency swaps, in conjunction with interest rate swaps are being used to hedge the exposure to the cash
These cross currency swaps, in conjunction with interest rate swaps are being used to hedge the exposure to the cash
flow variability in the value of the USD debt under the USPP and are assessed as highly effective in offsetting changes
flow variability in the value of the USD debt under the USPP and are assessed as highly effective in offsetting changes
in movements in the forward USD exchange rate. Hedge effectiveness is measured by comparing the change in the
in movements in the forward USD exchange rate. Hedge effectiveness is measured by comparing the change in the
fair value of the hedged item and the hedging instrument respectively each quarter. Any difference represents
fair value of the hedged item and the hedging instrument respectively each quarter. Any difference represents
ineffectiveness and is recorded in the income statement.
ineffectiveness and is recorded in the income statement.
The principal amounts and periods of expiry of the cross currency swap contracts are as follows:
The principal amounts and periods of expiry of the cross currency swap contracts are as follows:
Less than one year
Less than one year
One to five years
One to five years
More than five years
More than five years
Notional principal
Notional principal
2017
2017
2016
2016
AUD $m
AUD $m
94.0
94.0
336.0
336.0
-
-
430.0
430.0
USD $m
USD $m
100.0
100.0
360.0
360.0
-
-
460.0
460.0
AUD $m
AUD $m
-
-
94.0
94.0
336.0
336.0
430.0
430.0
USD $m
USD $m
-
-
100.0
100.0
360.0
360.0
460.0
460.0
Fixed interest rate range p.a.
Fixed interest rate range p.a.
Variable interest rate range p.a.
Variable interest rate range p.a.
5.1% - 5.7%
5.1% - 5.7%
5.1% - 5.7%
5.1% - 5.7%
4.6% - 4.9%
4.6% - 4.9%
4.9% - 5.2%
4.9% - 5.2%
The terms and conditions in relation to interest rate and maturity of the cross currency swaps are similar to the terms
The terms and conditions in relation to interest rate and maturity of the cross currency swaps are similar to the terms
and conditions of the underlying hedged USPP borrowings as set out in note B7.
and conditions of the underlying hedged USPP borrowings as set out in note B7.
(v) Financial instruments - forward currency contracts
(v) Financial instruments - forward currency contracts
Forward currency contracts meet the requirements to qualify for cash flow hedge accounting and are stated at fair
Forward currency contracts meet the requirements to qualify for cash flow hedge accounting and are stated at fair
value.
value.
These contracts are being used to hedge the exposure to variability in the movement USD exchange rate arising from
These contracts are being used to hedge the exposure to variability in the movement USD exchange rate arising from
the Group's operations and are assessed as highly effective hedges as they are matched against known and
the Group's operations and are assessed as highly effective hedges as they are matched against known and
committed payments. Any gain or loss on the hedged risk is taken directly to equity.
committed payments. Any gain or loss on the hedged risk is taken directly to equity.
The notional amounts and periods of expiry of the foreign currency contracts are as follows:
The notional amounts and periods of expiry of the foreign currency contracts are as follows:
2017
2017
$m
$m
2016
2016
$m
$m
Buy USD / sell AUD
Buy USD / sell AUD
Less than one year
Less than one year
One to five years
One to five years
More than five years
More than five years
Notional principal
Notional principal
Average exchange rate (AUD/USD)
Average exchange rate (AUD/USD)
7.8
7.8
0.9
0.9
-
-
8.7
8.7
0.92
0.92
7.7
7.7
8.7
8.7
-
-
16.4
16.4
0.92
0.92
(vi) Financial instruments - fair value hierarchy
(vi) Financial instruments - fair value hierarchy
There are various methods available in estimating the fair value of a financial instrument.
There are various methods available in estimating the fair value of a financial instrument.
The methods comprise:
The methods comprise:
Level 1
Level 1
Level 2
Level 2
the fair value is calculated using quoted prices in active markets.
the fair value is calculated using quoted prices in active markets.
the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for
the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for
the asset or liability, either directly (as prices) or indirectly (derived from prices).
the asset or liability, either directly (as prices) or indirectly (derived from prices).
the fair value is estimated using inputs for the asset or liability that are not based on observable market
the fair value is estimated using inputs for the asset or liability that are not based on observable market
data.
data.
Level 3
Level 3
All of the Group's derivative financial instruments are valued using the Level 2 valuation techniques, being observable
All of the Group's derivative financial instruments are valued using the Level 2 valuation techniques, being observable
inputs. There have been no transfers between levels during the year.
inputs. There have been no transfers between levels during the year.
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
110
64
64
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
65
65
111
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
F Other disclosures
F Other disclosures
F1 Other comprehensive income
F1 Other comprehensive income
Net (loss)/gain on cash flow hedges
Net (loss)/gain on cash flow hedges
Transfer of hedging reserve to the income statement a
Transfer of hedging reserve to the income statement a
Tax on above items recognised in other comprehensive income
Tax on above items recognised in other comprehensive income
2017
2017
$m
$m
(38.3)
(38.3)
19.2
19.2
5.7
5.7
(13.4)
(13.4)
2016
2016
$m
$m
31.9
31.9
(18.2)
(18.2)
(4.1)
(4.1)
9.6
9.6
a The transfer related to the foreign exchange spot retranslation of the foreign debt is offset by the retranslation on the cross
a The transfer related to the foreign exchange spot retranslation of the foreign debt is offset by the retranslation on the cross
currency swaps in the net foreign exchange gain line in the income statement.
currency swaps in the net foreign exchange gain line in the income statement.
F2 Income tax
F2 Income tax
(i)
(i)
Income tax expense
Income tax expense
The major components of income tax expenses are:
The major components of income tax expenses are:
Current tax (expense)
Current tax (expense)
Adjustments in respect of current income tax of previous years
Adjustments in respect of current income tax of previous years
Deferred income tax expense
Deferred income tax expense
Income tax expense reported in the income statement
Income tax expense reported in the income statement
Aggregate of current and deferred tax relating to items charged
Aggregate of current and deferred tax relating to items charged
or credited to equity:
or credited to equity:
Current tax (expense)/benefit reported in equity
Current tax (expense)/benefit reported in equity
Deferred tax benefit/(expense) reported in equity
Deferred tax benefit/(expense) reported in equity
Income tax benefit/(expense) reported in equity
Income tax benefit/(expense) reported in equity
Income tax expense
Income tax expense
A reconciliation between income tax expense and the product of
A reconciliation between income tax expense and the product of
accounting profit before income tax multiplied by the income tax rate
accounting profit before income tax multiplied by the income tax rate
is as follows:
is as follows:
Accounting profit before income tax expense
Accounting profit before income tax expense
At the Group's statutory income tax rate of 30%
At the Group's statutory income tax rate of 30%
- (Recognition)/derecognition of temporary differences
- (Recognition)/derecognition of temporary differences
- Research & Development tax offset
- Research & Development tax offset
- Other items
- Other items
Aggregate income tax expense
Aggregate income tax expense
Effective income tax rate
Effective income tax rate
2017
2017
$m
$m
(106.2)
(106.2)
2.6
2.6
(12.0)
(12.0)
(115.6)
(115.6)
-
-
5.7
5.7
5.7
5.7
380.0
380.0
(114.0)
(114.0)
(1.7)
(1.7)
2.5
2.5
(2.4)
(2.4)
(115.6)
(115.6)
%30.4
%30.4
2016
2016
$m
$m
(80.3)
(80.3)
(1.5)
(1.5)
(3.0)
(3.0)
(84.8)
(84.8)
-
-
(4.1)
(4.1)
(4.1)
(4.1)
279.2
279.2
(83.8)
(83.8)
(0.2)
(0.2)
0.7
0.7
(1.5)
(1.5)
(84.8)
(84.8)
%30.4
%30.4
66
66
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
(ii) Deferred tax balances
(ii) Deferred tax balances
The balance comprises temporary differences attributable to:
The balance comprises temporary differences attributable to:
2017
2017
Employee provisions
Employee provisions
Other provisions and accruals
Other provisions and accruals
Provision for trade impaired debtors
Provision for trade impaired debtors
Unrealised financial liabilities
Unrealised financial liabilities
Other
Other
Deferred tax assets set off
Deferred tax assets set off
Intangible assets
Intangible assets
Property, plant and equipment
Property, plant and equipment
Unrealised financial assets
Unrealised financial assets
Other
Other
Balance
Balance
1 July 2016
1 July 2016
$m
$m
18.2
18.2
14.6
14.6
3.9
3.9
78.8
78.8
6.6
6.6
122.1
122.1
(72.4)
(72.4)
(133.8)
(133.8)
(76.8)
(76.8)
(21.0)
(21.0)
(304.0)
(304.0)
Recognised
Recognised
in the
in the
income
income
statement
statement
$m
$m
0.1
0.1
(3.9)
(3.9)
0.3
0.3
(6.2)
(6.2)
(0.2)
(0.2)
(9.9)
(9.9)
(1.3)
(1.3)
(1.9)
(1.9)
5.8
5.8
(4.7)
(4.7)
(2.1)
(2.1)
Net deferred tax (liabilities)/assets
Net deferred tax (liabilities)/assets
(181.9)
(181.9)
(12.0)
(12.0)
Recognised
Recognised
directly in
directly in
equity
equity
$m
$m
-
-
-
-
-
-
(5.6)
(5.6)
-
-
Balance
Balance
30 June 2017
30 June 2017
$m
$m
18.3
18.3
10.7
10.7
4.2
4.2
67.0
67.0
6.4
6.4
(5.6)
(5.6)
106.6
106.6
-
-
-
-
11.3
11.3
-
-
11.3
11.3
5.7
5.7
(73.7)
(73.7)
(135.7)
(135.7)
(59.7)
(59.7)
(25.7)
(25.7)
(294.8)
(294.8)
(188.2)
(188.2)
2016
2016
Employee provisions
Employee provisions
Other provisions and accruals
Other provisions and accruals
Provision for trade impaired debtors
Provision for trade impaired debtors
Unrealised financial liabilities
Unrealised financial liabilities
Other
Other
Deferred tax assets set off
Deferred tax assets set off
Intangible assets
Intangible assets
Property, plant and equipment
Property, plant and equipment
Unrealised financial assets
Unrealised financial assets
Other
Other
Net deferred tax liabilities
Net deferred tax liabilities
Balance
Balance
1 July 2015
1 July 2015
$m
$m
17.0
17.0
14.7
14.7
2.9
2.9
72.3
72.3
9.6
9.6
Recognised
Recognised
in the
in the
income
income
statement
statement
$m
$m
1.2
1.2
(0.1)
(0.1)
1.0
1.0
5.0
5.0
(3.0)
(3.0)
Recognised
Recognised
directly in
directly in
equity
equity
$m
$m
-
-
-
-
-
-
1.5
1.5
-
-
Balance
Balance
30 June 2016
30 June 2016
$m
$m
18.2
18.2
14.6
14.6
3.9
3.9
78.8
78.8
6.6
6.6
116.5
116.5
(72.7)
(72.7)
(135.1)
(135.1)
(65.8)
(65.8)
(17.7)
(17.7)
(291.3)
(291.3)
(174.8)
(174.8)
4.1
4.1
0.3
0.3
1.3
1.3
(5.4)
(5.4)
(3.3)
(3.3)
(7.1)
(7.1)
(3.0)
(3.0)
1.5
1.5
-
-
-
-
(5.6)
(5.6)
-
-
(5.6)
(5.6)
(4.1)
(4.1)
122.1
122.1
(72.4)
(72.4)
(133.8)
(133.8)
(76.8)
(76.8)
(21.0)
(21.0)
(304.0)
(304.0)
(181.9)
(181.9)
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
112
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
67
67
113
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(iii) Tax consolidation
F3 Earnings per share
Effective June 2011, The Star Entertainment Group Limited (the Head Company) and its 100% owned subsidiaries
2016
formed an income tax consolidation group. Members of the tax consolidation group entered into a tax sharing
arrangement that provides for the allocation of income tax liabilities between the entities should the Head Company
$m
default on its tax payment obligations. At balance date, the possibility of default is remote.
Net profit after tax attributable to ordinary shareholders
Tax effect accounting by members of the tax consolidation group
23.6
Basic earnings per share (cents per share)
Members of the tax consolidation group have entered into a tax funding agreement effective June 2011. Under the
23.6
Diluted earnings per share (cents per share)
terms of the tax funding agreement, the Head Company and each of the members in the tax consolidation group have
agreed to make a tax equivalent payment to or from the Head Company, based on the current tax liability or current tax
asset of the member. Deferred taxes are recorded by members of the tax consolidation group in accordance with the
2016
principles of AASB 112 'Income Taxes'. Calculations under the tax funding agreement are undertaken for statutory
reporting purposes.
Number
2017
Number
2017
$m
194.4
264.4
31.9
32.0
The allocation of taxes under the tax funding agreement is recognised as either an increase or decrease in the
Weighted average number of shares used as the denominator
subsidiaries' intercompany accounts with the Head Company. The Group has chosen to adopt the Group Allocation
Weighted average number of ordinary shares issued
method as outlined in Interpretation 1052 'Tax Consolidation Accounting' as the basis to determine each members'
current and deferred taxes. The Group Allocation method as adopted by the Group will not give rise to any contribution
Adjustment for calculation of diluted earnings per share:
or distribution of the subsidiaries' equity accounts as there will not be any differences between the current tax amount
-
Adjustment for Performance Rights
that is allocated under the tax funding agreement and the amount that is allocated under the Group Allocation method.
Weighted average number of ordinary shares and potential ordinary shares
Income tax payable
as used as the denominator in calculating diluted earnings per share
The balance of income tax payable is the net of current tax and tax instalments/refunds during the year. A current tax
liability arises where current tax exceeds tax instalments paid and a current tax receivable arises where tax instalments
paid exceed current tax.
825,672,730
827,710,326
825,672,730
825,672,730
2,037,596
F4 Other assets
(iv)
The income tax (payable) balance is attributable to:
(Payable)
1 July 2016
(Increase) in
tax payable
Tax
instalment
paid
$m
$m
$m
Over
$m
Current
Prepayments
2017
Other assets
Tax consolidated group - year ended
30 June 2017
Tax consolidated group - year ended
Non current
30 June 2016
Rental paid in advance
Prior years
Other assets
Total Australia
-
(106.2)
(20.8)
-
-
-
(20.8)
(106.2)
-
Overseas subsidiaries
Other assets above are shown net of impairment of nil (2016: nil).
Total
(20.8)
(106.2)
-
2017
$m
Other
56.7
4.2
$m
2016
$m
(Payable)
30 June 2017
34.0
$m
4.5
38.5
(28.8)
-
10.0
-
5.2
(28.8)
15.2
-
(28.8)
77.4
18.2
-
95.6
-
95.6
-
60.9
9.9
2.0
11.9
2.6
-
2.6
-
2.6
-
-
-
-
-
-
F5 Trade and other payables
Trade creditors and accrued expenses
Interest payable
2016
(Payable)/
receivable
1 July 2015
$m
(Increase) in
tax payable
$m
Tax
instalment
paid/(refund)
$m
(Under)/over
$m
322.4
2.1
Other
$m
324.5
259.9
(Payable)
2.0
30 June 2016
$m
261.9
Tax consolidated group - year ended
Trade and other payables of $324.5 million were up 23.9%, predominately relating to higher gaming related
(20.8)
30 June 2016
payables, representing players' funds deposited and chips in circulation at 30 June 2017.
Tax consolidated group - year ended
30 June 2015
Prior years a
(41.8)
(80.2)
(0.3)
(2.7)
(2.2)
44.0
59.4
1.0
2.0
-
-
-
-
-
-
-
-
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
F3 Earnings per share
F3 Earnings per share
Net profit after tax attributable to ordinary shareholders
Net profit after tax attributable to ordinary shareholders
Basic earnings per share (cents per share)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Diluted earnings per share (cents per share)
Weighted average number of shares used as the denominator
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares issued
Weighted average number of ordinary shares issued
Adjustment for calculation of diluted earnings per share:
Adjustment for calculation of diluted earnings per share:
Adjustment for Performance Rights
Adjustment for Performance Rights
Weighted average number of ordinary shares and potential ordinary shares
Weighted average number of ordinary shares and potential ordinary shares
as used as the denominator in calculating diluted earnings per share
as used as the denominator in calculating diluted earnings per share
F4 Other assets
F4 Other assets
Current
Current
Prepayments
Prepayments
Other assets
Other assets
Non current
Non current
Rental paid in advance
Rental paid in advance
Other assets
Other assets
Other assets above are shown net of impairment of nil (2016: nil).
Other assets above are shown net of impairment of nil (2016: nil).
F5 Trade and other payables
F5 Trade and other payables
Trade creditors and accrued expenses
Trade creditors and accrued expenses
Interest payable
Interest payable
2017
2017
$m
$m
264.4
264.4
32.0
32.0
31.9
31.9
2016
2016
$m
$m
194.4
194.4
23.6
23.6
23.6
23.6
2017
2017
Number
Number
2016
2016
Number
Number
825,672,730
825,672,730
825,672,730
825,672,730
2,037,596
2,037,596
-
-
827,710,326
827,710,326
825,672,730
825,672,730
2017
2017
$m
$m
56.7
56.7
4.2
4.2
60.9
60.9
9.9
9.9
2.0
2.0
11.9
11.9
322.4
322.4
2.1
2.1
324.5
324.5
2016
2016
$m
$m
34.0
34.0
4.5
4.5
38.5
38.5
10.0
10.0
5.2
5.2
15.2
15.2
259.9
259.9
2.0
2.0
261.9
261.9
Trade and other payables of $324.5 million were up 23.9%, predominately relating to higher gaming related
Trade and other payables of $324.5 million were up 23.9%, predominately relating to higher gaming related
payables, representing players' funds deposited and chips in circulation at 30 June 2017.
payables, representing players' funds deposited and chips in circulation at 30 June 2017.
Total Australia
Overseas subsidiaries
(39.8)
-
(80.2)
(0.1)
100.7
0.1
(1.2)
(0.3)
-
-
(20.8)
-
Total
a Changes in tax payable relating to amendments to the income tax returns following the application of tax consolidation tax cost
(80.3)
(39.8)
100.8
(1.2)
(0.3)
(20.8)
setting process.
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
114
69
68
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
69
69
115
ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017THE STAR ENTERTAINMENT GROUP Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
F6 Provisions
F6 Provisions
Current
Current
Employee benefits
Employee benefits
Workers' compensation
Workers' compensation
Other
Other
Non-current
Non-current
Employee benefits
Employee benefits
Other
Other
2017
2017
$m
$m
52.8
52.8
7.6
7.6
6.1
6.1
66.5
66.5
8.2
8.2
1.7
1.7
9.9
9.9
2016
2016
$m
$m
49.5
49.5
7.8
7.8
1.0
1.0
58.3
58.3
11.2
11.2
3.4
3.4
14.6
14.6
Reconciliation
Reconciliation
Reconciliations of each class of provision, except for employee benefits and other, at the end of each financial year are
Reconciliations of each class of provision, except for employee benefits and other, at the end of each financial year are
set out below:
set out below:
Workers' compensation reconciliation
Workers' compensation reconciliation
2017
2017
Carrying amount at beginning of the year
Carrying amount at beginning of the year
Provisions made during the year
Provisions made during the year
Provisions utilised during the year
Provisions utilised during the year
Carrying amount at end of the year
Carrying amount at end of the year
Workers'
Workers'
compensation
compensation
(current)
(current)
$m
$m
7.8
7.8
1.3
1.3
(1.5)
(1.5)
7.6
7.6
Other (non-
Other (non-
current)
current)
$m
$m
3.4
3.4
-
-
(1.7)
(1.7)
1.7
1.7
2016
2016
Carrying amount at beginning of the year
Carrying amount at beginning of the year
Provisions made during the year
Provisions made during the year
Provisions utilised during the year
Provisions utilised during the year
Carrying amount at end of the year
Carrying amount at end of the year
Nature and timing of provisions
Nature and timing of provisions
Workers' compensation
Workers' compensation
The Group self insures for workers' compensation in both New South Wales and Queensland. A valuation of the
The Group self insures for workers' compensation in both New South Wales and Queensland. A valuation of the
estimated claims liability for workers' compensation is undertaken annually by an independent actuary. The valuations
estimated claims liability for workers' compensation is undertaken annually by an independent actuary. The valuations
are prepared in accordance with the relevant legislative requirements of each state and 'Professional Standard 300' of
are prepared in accordance with the relevant legislative requirements of each state and 'Professional Standard 300' of
the Institute of Actuaries. The estimate of claims liability includes a margin over case estimates to allow for the future
the Institute of Actuaries. The estimate of claims liability includes a margin over case estimates to allow for the future
development of known claims, the cost of incurred but not reported claims and claims handling expenses, which are
development of known claims, the cost of incurred but not reported claims and claims handling expenses, which are
determined using a range of assumptions. The timing of when these costs will be incurred is uncertain.
determined using a range of assumptions. The timing of when these costs will be incurred is uncertain.
3.8
3.8
-
-
(0.4)
(0.4)
3.4
3.4
9.2
9.2
0.5
0.5
(1.9)
(1.9)
7.8
7.8
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
F7 Other liabilities (current)
F7 Other liabilities (current)
Customer loyalty deferred revenue a
Customer loyalty deferred revenue a
Other deferred revenue
Other deferred revenue
2017
2017
$m
$m
18.2
18.2
2.9
2.9
21.1
21.1
2016
2016
$m
$m
18.5
18.5
2.4
2.4
20.9
20.9
a The Group operates customer loyalty programs enabling customers to accumulate award credits for gaming and on-property
a The Group operates customer loyalty programs enabling customers to accumulate award credits for gaming and on-property
spend. A portion of the spend, equal to the fair value of the award credits earned, is treated as deferred revenue, and recognised
spend. A portion of the spend, equal to the fair value of the award credits earned, is treated as deferred revenue, and recognised
in the income statement when the award is redeemed or expires.
in the income statement when the award is redeemed or expires.
F8 Share capital and reserves
F8 Share capital and reserves
(i) Share capital
(i) Share capital
Ordinary shares - issued and fully paid a
Ordinary shares - issued and fully paid a
2,580.5
2,580.5
2,580.5
2,580.5
a There is only one class of shares (ordinary shares) on issue. These ordinary shares entitle the holder to participate in dividends
a There is only one class of shares (ordinary shares) on issue. These ordinary shares entitle the holder to participate in dividends
and proceeds on winding up of the Company, in proportion to the number and amounts paid on the shares held. On a show of
and proceeds on winding up of the Company, in proportion to the number and amounts paid on the shares held. On a show of
hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each
hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each
share is entitled to one vote. The Company does not have authorised capital nor par value in respect of its issued shares.
share is entitled to one vote. The Company does not have authorised capital nor par value in respect of its issued shares.
Movements in ordinary share capital
Movements in ordinary share capital
Balance at beginning and end of year
Balance at beginning and end of year
(ii) Reserves (net of tax)
(ii) Reserves (net of tax)
Hedging reserve a
Hedging reserve a
Share based payments reserve b
Share based payments reserve b
2017
2017
Number of
Number of
shares
shares
2016
2016
Number of
Number of
shares
shares
825,672,730
825,672,730
825,672,730
825,672,730
2017
2017
$m
$m
(13.8)
(13.8)
6.6
6.6
(7.2)
(7.2)
2016
2016
$m
$m
(0.4)
(0.4)
5.8
5.8
5.4
5.4
Nature and purpose of reserves
Nature and purpose of reserves
a The hedging reserve records fair value changes on the portion of the gain or loss on a hedging instrument in a cash flow hedge
a The hedging reserve records fair value changes on the portion of the gain or loss on a hedging instrument in a cash flow hedge
that is determined to be an effective hedge.
that is determined to be an effective hedge.
b The share based payments reserve is used to recognise the value of equity settled share based payment transactions provided
b The share based payments reserve is used to recognise the value of equity settled share based payment transactions provided
to employees, including Key Management Personnel as part of their remuneration. Refer to note F10 for further details on these
to employees, including Key Management Personnel as part of their remuneration. Refer to note F10 for further details on these
plans.
plans.
(iii) Capital management
(iii) Capital management
The Group's objectives when managing capital are to ensure the Group continues as a going concern while providing
The Group's objectives when managing capital are to ensure the Group continues as a going concern while providing
optimal returns to shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to
optimal returns to shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to
reduce the cost of capital.
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends to be paid to
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends to be paid to
shareholders, return capital to shareholders or issue new shares. Gearing is managed primarily through the ratio of net
shareholders, return capital to shareholders or issue new shares. Gearing is managed primarily through the ratio of net
debt to earnings before interest, tax, depreciation, amortisation, impairment, significant items and share of the net loss
debt to earnings before interest, tax, depreciation, amortisation, impairment, significant items and share of the net loss
of associate and joint venture entities.
of associate and joint venture entities.
Net debt comprises interest bearing liabilities, with US dollar borrowings translated at the 30 June 2017 USD/AUD spot
Net debt comprises interest bearing liabilities, with US dollar borrowings translated at the 30 June 2017 USD/AUD spot
rate of 1.3003 (2016: 1.3421), after adjusting for cash and cash equivalents and derivative financial instruments.
rate of 1.3003 (2016: 1.3421), after adjusting for cash and cash equivalents and derivative financial instruments.
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
116
70
70
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
71
71
117
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
The Groupʼs capital management also aims to ensure that it meets financial covenants attached to the interest bearing
The Groupʼs capital management also aims to ensure that it meets financial covenants attached to the interest bearing
loans and borrowings that define capital structure requirements. There have been no breaches of the financial
loans and borrowings that define capital structure requirements. There have been no breaches of the financial
covenants of any interest bearing loans and borrowings in the current period. Other than these banking covenants, the
covenants of any interest bearing loans and borrowings in the current period. Other than these banking covenants, the
Group is not subject to externally imposed capital requirements.
Group is not subject to externally imposed capital requirements.
Gross Debt
Gross Debt
Net Debt a
Net Debt a
EBITDA
EBITDA
Gearing ratio (times)
Gearing ratio (times)
2017
2017
$m
$m
1,045.0
1,045.0
787.5
787.5
586.2
586.2
1.3
x
1.3
x
a Net debt is stated after adjusting for cash and cash equivalents less the net position of derivative financial instruments.
a Net debt is stated after adjusting for cash and cash equivalents less the net position of derivative financial instruments.
F9 Reconciliation of net profit after tax to net cash inflow from operations
F9 Reconciliation of net profit after tax to net cash inflow from operations
Net profit after tax
Net profit after tax
- Depreciation and amortisation
- Depreciation and amortisation
- Employee share based payments expense
- Employee share based payments expense
- Unrealised foreign exchange gain
- Unrealised foreign exchange gain
- Bad and doubtful debts expense
- Bad and doubtful debts expense
- Finance costs
- Finance costs
- Share of net loss of associate and joint venture entities
- Share of net loss of associate and joint venture entities
Working capital changes
Working capital changes
- (Increase) in trade and other receivables and other assets
- (Increase) in trade and other receivables and other assets
- (Increase) in inventories
- (Increase) in inventories
- Increase in trade and other payables, accruals and provisions
- Increase in trade and other payables, accruals and provisions
- Increase/(decrease) in tax provisions
- Increase/(decrease) in tax provisions
Net cash inflow from operating activities
Net cash inflow from operating activities
Note
Note
A4
A4
F10
F10
A3
A3
A3
A3
A5
A5
D5
D5
2017
2017
$m
$m
264.4
264.4
164.5
164.5
3.8
3.8
(1.1)
(1.1)
18.7
18.7
42.7
42.7
0.7
0.7
(99.4)
(99.4)
(2.9)
(2.9)
62.0
62.0
19.9
19.9
473.3
473.3
2016
2016
$m
$m
813.5
813.5
473.8
473.8
488.8
488.8
1.0
x
1.0
x
2016
2016
$m
$m
194.4
194.4
163.8
163.8
5.6
5.6
(0.8)
(0.8)
23.1
23.1
47.1
47.1
-
-
(48.8)
(48.8)
(1.7)
(1.7)
11.1
11.1
(15.9)
(15.9)
377.9
377.9
Operating cash flow before interest and tax was $567.9 million, up 19.0% on the pcp, with 97% EBITDA to cash
Operating cash flow before interest and tax was $567.9 million, up 19.0% on the pcp, with 97% EBITDA to cash
conversion ratio.
conversion ratio.
F10 Employee share plans
F10 Employee share plans
During the current and prior periods, the Company issued Performance Rights under the Long Term Performance Plan
During the current and prior periods, the Company issued Performance Rights under the Long Term Performance Plan
to eligible employees. The share based payment expense is $3.8 million (2016: $5.6 million) in respect of the equity
to eligible employees. The share based payment expense is $3.8 million (2016: $5.6 million) in respect of the equity
instruments granted is recognised in the income statement.
instruments granted is recognised in the income statement.
The number of Performance Rights granted to employees and forfeited or lapsed during the year are set out below.
The number of Performance Rights granted to employees and forfeited or lapsed during the year are set out below.
2017
2017
Grant Date
Grant Date
19 September 2012
19 September 2012
1 October 2013
1 October 2013
26 September 2014
26 September 2014
21 September 2015
21 September 2015
5 October 2016
5 October 2016
Balance at start
of year
Balance at start
of year
540,583
540,583
461,198
461,198
895,208
895,208
662,328
662,328
-
-
2,559,317
2,559,317
Granted during
the year
Granted during
the year
-
-
-
-
-
-
-
-
1,158,988
1,158,988
1,158,988
1,158,988
Forfeited
during the
Forfeited
year
during the
year
-
-
-
-
-
-
-
-
17,013
17,013
17,013
17,013
Lapsed
during the
Lapsed
year a
during the
year a
540,583
540,583
-
-
-
-
-
-
-
-
540,583
540,583
Vested during
the year
Vested during
the year
-
-
-
-
-
-
-
-
-
-
-
-
Balance at end
of year
Balance at end
of year
-
-
461,198
461,198
895,208
895,208
662,328
662,328
1,141,975
1,141,975
3,160,709
3,160,709
2016
2016
Grant Date
Grant Date
19 September 2012
19 September 2012
1 October 2013
1 October 2013
26 September 2014
26 September 2014
21 September 2015
21 September 2015
Granted during
the year
Granted during
the year
-
-
-
-
-
-
696,893
696,893
696,893
696,893
Balance at start of
year
Balance at start of
year
540,583
540,583
461,198
461,198
895,208
895,208
-
-
1,896,989
1,896,989
Balance at end
of year
Balance at end
of year
540,583
540,583
461,198
461,198
895,208
895,208
662,328
662,328
2,559,317
2,559,317
The grant on 19 September 2012 included market-based hurdles. Grants from 1 October 2013 includes a market
The grant on 19 September 2012 included market-based hurdles. Grants from 1 October 2013 includes a market
based hurdle (relative TSR) and an EPS component. The Performance Rights have been independently valued. For
based hurdle (relative TSR) and an EPS component. The Performance Rights have been independently valued. For
the relative TSR component, valuation was based on assumptions underlying the Black-Scholes methodology to
the relative TSR component, valuation was based on assumptions underlying the Black-Scholes methodology to
produce a Monte-Carlo simulation model. For the EPS component, a discounted cash flow technique was utilised. The
produce a Monte-Carlo simulation model. For the EPS component, a discounted cash flow technique was utilised. The
total value does not contain any specific discount for forfeiture if the employee leaves the Group during the vesting
total value does not contain any specific discount for forfeiture if the employee leaves the Group during the vesting
period. This adjustment, if required, is based on the number of equity instruments expected to vest at the end of each
period. This adjustment, if required, is based on the number of equity instruments expected to vest at the end of each
reporting period.
reporting period.
Lapsed during
the year
Lapsed during
the year
-
-
-
-
-
-
-
-
-
-
Vested during
the year
Vested during
the year
-
-
-
-
-
-
-
-
-
-
Forfeited
during the
Forfeited
year
during the
year
-
-
-
-
-
-
34,565
34,565
34,565
34,565
a Performance rights granted on 19 September 2012 were tested on 19 September 2016 and did not vest. The TSR percentile rank
for the Company was 46.77% and TSR was 54.54%; as a result these Performance Rights lapsed and no shares were issued to
a Performance rights granted on 19 September 2012 were tested on 19 September 2016 and did not vest. The TSR percentile rank
participants.
for the Company was 46.77% and TSR was 54.54%; as a result these Performance Rights lapsed and no shares were issued to
participants.
The key assumptions underlying the Performance Rights valuations are set out below:
The key assumptions underlying the Performance Rights valuations are set out below:
Effective grant date
Effective grant date
19 September 2012
19 September 2012
1 October 2013
1 October 2013
26 September 2014
26 September 2014
21 September 2015
21 September 2015
5 October 2016
5 October 2016
Test and vesting date
Test and vesting date
19 September 2016
19 September 2016
1 October 2017
1 October 2017
26 September 2018
26 September 2018
21 September 2019
21 September 2019
5 October 2020
5 October 2020
Share price
at date of
Share price
grant
at date of
grant
$
$
3.86
3.86
2.68
2.68
3.31
3.31
4.82
4.82
5.89
5.89
Expected
volatility in
Expected
share price
volatility in
share price
%
%
%
%
%
%
%
%
%
%
%
%
25.00
25.00
27.00
27.00
27.00
27.00
28.00
28.00
25.03
25.03
Expected
dividend yield
Expected
dividend yield
%
%
%2.18
%2.18
%1.75
%1.75
%2.90
%2.90
%2.70
%2.70
%2.74
%2.74
Risk free
interest rate
Risk free
interest rate
%
%
%2.70
%2.70
%3.03
%3.03
%2.88
%2.88
%1.98
%1.98
%1.68
%1.68
Average Fair
Value per
Average Fair
Performance
Value per
Right
Performance
Right
$
$
2.20
2.20
2.01
2.01
2.45
2.45
3.53
3.53
4.27
4.27
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
118
72
72
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
73
73
119
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
F11 Auditor's remuneration
F11 Auditor's remuneration
Amounts received or due and receivable by Ernst & Young (Australia) for:
Amounts received or due and receivable by Ernst & Young (Australia) for:
- An audit or review of the Financial Report of the Company and any other
- An audit or review of the Financial Report of the Company and any other
entity in the consolidated group
entity in the consolidated group
- Other services in relation to the Company and any other entity in the
- Other services in relation to the Company and any other entity in the
consolidated group:
consolidated group:
- Assurance related
- Assurance related
- Other non-audit services including taxation services
- Other non-audit services including taxation services
Amounts received or due and receivable by related practices of Ernst &
Amounts received or due and receivable by related practices of Ernst &
Young (Australia) for:
Young (Australia) for:
- Assurance related services
- Assurance related services
2017
2017
$
$
2016
2016
$
$
899,603
899,603
827,499
827,499
-
-
272,439
272,439
-
-
301,661
301,661
1,172,042
1,172,042
1,129,160
1,129,160
-
-
-
-
The auditor of the Company and its controlled entities is Ernst & Young. From time to time, Ernst & Young provides
The auditor of the Company and its controlled entities is Ernst & Young. From time to time, Ernst & Young provides
other services to the Group, which are subject to strict corporate governance procedures encompassing the selection
other services to the Group, which are subject to strict corporate governance procedures encompassing the selection
of service providers and the setting of their remuneration. The Chair of the Audit Committee (or authorised delegate)
of service providers and the setting of their remuneration. The Chair of the Audit Committee (or authorised delegate)
must approve any other services provided by Ernst & Young to the Group.
must approve any other services provided by Ernst & Young to the Group.
74
74
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
G Accounting policies and corporate information
G Accounting policies and corporate information
Investments Commission
Investments Commission
Significant accounting policies are contained within the
Significant accounting policies are contained within the
financial statement notes to which they relate and are not
financial statement notes to which they relate and are not
detailed in this section.
detailed in this section.
Corporate Information
Corporate Information
The Star Entertainment Group Limited (the Company) is
The Star Entertainment Group Limited (the Company) is
a company incorporated and domiciled in Australia. The
a company incorporated and domiciled in Australia. The
Financial Report of the Company for the year ended 30
Financial Report of the Company for the year ended 30
June 2017 comprises the Company and its controlled
June 2017 comprises the Company and its controlled
entities (collectively referred to as the Group). The
entities (collectively referred to as the Group). The
Company's registered office is Level 3, 159 William
Company's registered office is Level 3, 159 William
Street, Brisbane QLD 4000.
Street, Brisbane QLD 4000.
The Company is of the kind specified in Australian
The Company is of the kind specified in Australian
(ASIC)
Securities and
Securities and
(ASIC)
Instrument 2016/191. In accordance with that Instrument,
Instrument 2016/191. In accordance with that Instrument,
amounts in the Financial Report and the Directors'
amounts in the Financial Report and the Directors'
Report have been rounded to the nearest hundred
Report have been rounded to the nearest hundred
to be
thousand dollars, unless specifically stated
to be
thousand dollars, unless specifically stated
otherwise. All amounts are in Australian dollars ($). The
otherwise. All amounts are in Australian dollars ($). The
Company is a for profit organisation.
Company is a for profit organisation.
The Financial Report was authorised for issue by the
The Financial Report was authorised for issue by the
Directors on 23 August 2017.
Directors on 23 August 2017.
Basis of preparation
Basis of preparation
The Financial Report is a general purpose Financial
The Financial Report is a general purpose Financial
Report which has been prepared in accordance with the
Report which has been prepared in accordance with the
Corporations Act 2001, Australian Accounting Standards
Corporations Act 2001, Australian Accounting Standards
and other mandatory Financial Reporting requirements in
and other mandatory Financial Reporting requirements in
Australia.
Australia.
International
financial statements comply with
The
The
International
financial statements comply with
Financial Reporting Standards (IFRS) as issued by the
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
International Accounting Standards Board.
The financial statements have been prepared under the
The financial statements have been prepared under the
historical cost convention except as disclosed in the
historical cost convention except as disclosed in the
accounting policies below and elsewhere in this report.
accounting policies below and elsewhere in this report.
The policies used in preparing the financial statements
The policies used in preparing the financial statements
are consistent with those of the previous year except as
are consistent with those of the previous year except as
indicated under 'Changes in accounting policies and
indicated under 'Changes in accounting policies and
disclosures'.
disclosures'.
Significant accounting judgements, estimates and
Significant accounting judgements, estimates and
assumptions
assumptions
Preparation of the financial statements in conformity with
Preparation of the financial statements in conformity with
Australian Accounting Standards and IFRS requires
Australian Accounting Standards and IFRS requires
judgements, estimates and
management
management
judgements, estimates and
assumptions that affect the reported amounts of assets
assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities
and liabilities and the disclosure of contingent liabilities
at the date of the financial statements and the reported
at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting
amounts of revenues and expenses during the reporting
period.
period.
In the process of applying the Group's accounting
In the process of applying the Group's accounting
following
policies, management has made
policies, management has made
following
judgements, which have the most significant effect on
judgements, which have the most significant effect on
the amounts recognised in the consolidated financial
the amounts recognised in the consolidated financial
statements:
statements:
− Asset useful lives and residual values (refer notes A4
− Asset useful lives and residual values (refer notes A4
− Impairment of assets (refer note B6);
− Impairment of assets (refer note B6);
− Valuation of derivatives and other
− Valuation of derivatives and other
to make
to make
and B5);
and B5);
financial
financial
the
the
instruments (refer note B3);
instruments (refer note B3);
note B2);
note B2);
in outcomes
in outcomes
− Provision for impairment of trade receivables (refer
− Provision for impairment of trade receivables (refer
− Significant items (refer note A7); and
− Significant items (refer note A7); and
− Provisions (refer note F6).
− Provisions (refer note F6).
Uncertainty about these assumptions and estimates
Uncertainty about these assumptions and estimates
that require a material
could result
could result
that require a material
adjustment to the carrying amount of the asset or liability
adjustment to the carrying amount of the asset or liability
in future periods.
in future periods.
Changes in accounting policies and disclosures
Changes in accounting policies and disclosures
The Group has adopted the following new and amended
The Group has adopted the following new and amended
accounting standards, which became applicable from 1
accounting standards, which became applicable from 1
July 2016:
July 2016:
Reference
Reference
AASB 2014-4
AASB 2014-4
Title
Title
Clarification of Acceptable Methods of
Clarification of Acceptable Methods of
Amortisation
and
Depreciation
Depreciation
Amortisation
and
(Amendments to AASB 116 and AASB
(Amendments to AASB 116 and AASB
138)
138)
Amendments to Australian Accounting
Amendments to Australian Accounting
Standards – Annual Improvements to
Standards – Annual Improvements to
Standards
Accounting
Australian
Australian
Standards
Accounting
2012-2014 Cycle
2012-2014 Cycle
Amendments to Australian Accounting
Amendments to Australian Accounting
Initiative
Standards
Standards
Initiative
Amendments to AASB 101
Amendments to AASB 101
Amendments to Australian Accounting
Amendments to Australian Accounting
for
Accounting
-
Standards
Accounting
-
for
Standards
in Joint
Interest
Acquisitions of
Acquisitions of
in Joint
Interest
Operations (AASB 1 & AASB 11)
Operations (AASB 1 & AASB 11)
- Disclosure
- Disclosure
AASB 2015-1
AASB 2015-1
AASB 2015-2
AASB 2015-2
AASB 2014-3
AASB 2014-3
Financial Instruments
Financial Instruments
The adoption of these standards did not have any
The adoption of these standards did not have any
material effect on the financial position or performance of
material effect on the financial position or performance of
the Group, additional disclosures have been made where
the Group, additional disclosures have been made where
required.
required.
Standards and amendments issued but not yet
Standards and amendments issued but not yet
effective
effective
The Group has not applied Australian Accounting
The Group has not applied Australian Accounting
Standards and IFRS that were issued or amended but
Standards and IFRS that were issued or amended but
not yet effective. Those significant pronouncements are
not yet effective. Those significant pronouncements are
disclosed in the table below:
disclosed in the table below:
Application
Reference Title
date
Application
Reference Title
date
AASB 9 *
1 January 2018
AASB 9 *
1 January 2018
AASB 15 * Revenue from Contracts with Customers 1 January 2018
AASB 15 * Revenue from Contracts with Customers 1 January 2018
AASB 16 * Leases
1 January 2019
AASB 16 * Leases
1 January 2019
*AASB 9 will replace AASB 139 and introduces a single,
*AASB 9 will replace AASB 139 and introduces a single,
impairment model and a
loss
forward-looking expected
impairment model and a
loss
forward-looking expected
substantially reformed approach to hedge accounting.
substantially reformed approach to hedge accounting.
AASB 9 is effective for annual periods beginning on or after 1
AASB 9 is effective for annual periods beginning on or after 1
January 2018. The impact of the adoption is not expected to be
January 2018. The impact of the adoption is not expected to be
material. The new Standard will not result in a significant change
material. The new Standard will not result in a significant change
to the classification of financial assets and liabilities. Based on
to the classification of financial assets and liabilities. Based on
the Group's current derivative portfolio, the Group does not
the Group's current derivative portfolio, the Group does not
expect a significant impact on hedge accounting. Under AASB9,
expect a significant impact on hedge accounting. Under AASB9,
hedge effectiveness testing will only be performed on a
hedge effectiveness testing will only be performed on a
prospective basis.
prospective basis.
*AASB 15 replaces AASB 111, AASB 118 and related IFRIC
*AASB 15 replaces AASB 111, AASB 118 and related IFRIC
Interpretations. AASB 15 provides a new five step approach for
Interpretations. AASB 15 provides a new five step approach for
revenue recognition in determining when and how revenue
revenue recognition in determining when and how revenue
should be recognised. The core principle of the new standard is
should be recognised. The core principle of the new standard is
that revenue is recognised in a manner that depicts the transfer
that revenue is recognised in a manner that depicts the transfer
of promised goods or services to customers in an amount that
of promised goods or services to customers in an amount that
75
75
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
120
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
121
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
to recognise
to recognise
reflects the consideration to which the Group expects to be
reflects the consideration to which the Group expects to be
entitled. Under the approach, revenue is recognised once the
entitled. Under the approach, revenue is recognised once the
performance obligations of a contract are satisfied.
performance obligations of a contract are satisfied.
The standard permits entities to apply guidance retrospectively
The standard permits entities to apply guidance retrospectively
the
with comparative balances restated or
the
with comparative balances restated or
cumulative effect of initially applying the standard as an opening
cumulative effect of initially applying the standard as an opening
adjustment to retained earnings on 1 July 2018.
adjustment to retained earnings on 1 July 2018.
AASB 15 includes extensive disclosure requirements intended
AASB 15 includes extensive disclosure requirements intended
to enable users of financial statements to understand judgments
to enable users of financial statements to understand judgments
related to revenue recognition.
related to revenue recognition.
The Group continues to assess the impact of adopting the new
The Group continues to assess the impact of adopting the new
standard on its consolidated financial statements.
standard on its consolidated financial statements.
*Under AASB 16, the distinction between finance and operating
*Under AASB 16, the distinction between finance and operating
leases is eliminated for lessees (with the exception of short-term
leases is eliminated for lessees (with the exception of short-term
and low value leases). Both finance leases and operating leases
and low value leases). Both finance leases and operating leases
will result in the recognition a right-of-use (“ROU”) asset and a
will result in the recognition a right-of-use (“ROU”) asset and a
corresponding lease liability on the balance sheet. The liability is
corresponding lease liability on the balance sheet. The liability is
initially measured at the present value of future lease payments
initially measured at the present value of future lease payments
for the lease term and the ROU asset reflects the lease liability
for the lease term and the ROU asset reflects the lease liability
and initial direct costs, less any lease incentives and amounts
and initial direct costs, less any lease incentives and amounts
required for dismantling.
required for dismantling.
AASB 16 must be implemented retrospectively, however the
AASB 16 must be implemented retrospectively, however the
Group has the option as to whether restate comparatives or
Group has the option as to whether restate comparatives or
have the cumulative impact of application recognised in opening
have the cumulative impact of application recognised in opening
retained earnings on 1 July 2019 ("modified retrospective
retained earnings on 1 July 2019 ("modified retrospective
approach").
approach").
The standard is expected to have a material impact on the
The standard is expected to have a material impact on the
Group's consolidated balance sheet and income statement.
Group's consolidated balance sheet and income statement.
The ROU asset and lease liability is expected to be material for
The ROU asset and lease liability is expected to be material for
the Group's current lease portfolio, including long-term leases
the Group's current lease portfolio, including long-term leases
for the Sydney and Brisbane properties. The transition to AASB
for the Sydney and Brisbane properties. The transition to AASB
16 will result in a change in presentation in the consolidated
16 will result in a change in presentation in the consolidated
income statement. Rental expenses currently disclosed under
income statement. Rental expenses currently disclosed under
interest expense
property costs will be replaced by an
property costs will be replaced by an
interest expense
attributable to the lease liability and a depreciation charge for
attributable to the lease liability and a depreciation charge for
the ROU asset.
the ROU asset.
The Group will continue to assess the impact of the standard
The Group will continue to assess the impact of the standard
with the next steps including a detailed review of all agreements.
with the next steps including a detailed review of all agreements.
Basis of consolidation
Basis of consolidation
Controlled entities
Controlled entities
The Group controls an entity when the Group is exposed,
The Group controls an entity when the Group is exposed,
or has rights, to variable returns from its involvement with
or has rights, to variable returns from its involvement with
the entity and has the ability to affect those returns
the entity and has the ability to affect those returns
through its power over the entity.
through its power over the entity.
Controlled entities are consolidated from the date control
Controlled entities are consolidated from the date control
longer
is
longer
is
consolidated from the date control ceases.
consolidated from the date control ceases.
transactions, balances and unrealised
Intercompany
Intercompany
transactions, balances and unrealised
gains on transactions between Group companies are
gains on transactions between Group companies are
eliminated.
eliminated.
Foreign currency
Foreign currency
The consolidated financial statements are presented in
The consolidated financial statements are presented in
Australian dollars ($) which is the Group's functional and
Australian dollars ($) which is the Group's functional and
presentation currency.
presentation currency.
Transactions and balances
Transactions and balances
Transactions denominated in foreign currencies are
Transactions denominated in foreign currencies are
the
translated at
translated at
the
transaction date.
transaction date.
Monetary items denominated in foreign currencies are
Monetary items denominated in foreign currencies are
translated at the rate of exchange ruling at the end of the
translated at the rate of exchange ruling at the end of the
reporting period. Gains and losses arising from the
reporting period. Gains and losses arising from the
the rate of exchange ruling on
the rate of exchange ruling on
the Group and are no
the Group and are no
transferred
transferred
to
to
the effective
the effective
translation are credited or charged to the income
translation are credited or charged to the income
statement with the exception of differences on foreign
statement with the exception of differences on foreign
currency borrowings that are in an effective hedge
currency borrowings that are in an effective hedge
relationship. These are taken directly to equity until the
relationship. These are taken directly to equity until the
liability is extinguished, at which time they are recognised
liability is extinguished, at which time they are recognised
in the income statement.
in the income statement.
Net finance costs
Net finance costs
Finance income is recognised as the interest accrues,
Finance income is recognised as the interest accrues,
interest method. Finance costs
using
interest method. Finance costs
using
consist of interest and other borrowing costs incurred in
consist of interest and other borrowing costs incurred in
connection with the borrowing of funds. Finance costs
connection with the borrowing of funds. Finance costs
directly associated with qualifying assets are capitalised,
directly associated with qualifying assets are capitalised,
all other finance costs are expensed in the period, in
all other finance costs are expensed in the period, in
which they occur.
which they occur.
Taxation
Taxation
Income tax
Income tax
Income tax comprises current and deferred income tax.
Income tax comprises current and deferred income tax.
Income tax is recognised in the income statement except
Income tax is recognised in the income statement except
to the extent that it relates to items recognised directly in
to the extent that it relates to items recognised directly in
equity, in which case it is recognised in equity.
equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable
Current tax is the expected tax payable on the taxable
income for the period, and any adjustment to tax payable
income for the period, and any adjustment to tax payable
in respect of previous years.
in respect of previous years.
Deferred tax is provided using the balance sheet method,
Deferred tax is provided using the balance sheet method,
providing for temporary differences between the carrying
providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting
amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes.
purposes and the amounts used for taxation purposes.
The following temporary differences are not provided for:
The following temporary differences are not provided for:
− goodwill; and
− goodwill; and
− the initial recognition of an asset or liability in a
− the initial recognition of an asset or liability in a
transaction which is not a business combination and
transaction which is not a business combination and
that affect neither accounting nor taxable profit at the
that affect neither accounting nor taxable profit at the
time of the transaction.
time of the transaction.
The amount of deferred tax provided is based on the
The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the
expected manner of realisation or settlement of the
carrying amount of assets and liabilities.
carrying amount of assets and liabilities.
A deferred tax asset is recognised only to the extent that
A deferred tax asset is recognised only to the extent that
it is probable that future taxable profits will be available
it is probable that future taxable profits will be available
against which the asset can be utilised.
against which the asset can be utilised.
Deferred tax assets and deferred tax liabilities are offset
Deferred tax assets and deferred tax liabilities are offset
only if a legally enforceable right exists to set off current
only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred
tax assets against current tax liabilities and the deferred
tax assets and liabilities relate to the same taxable entity
tax assets and liabilities relate to the same taxable entity
and the same taxation authority.
and the same taxation authority.
Deferred income tax assets and liabilities are measured
Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply to the year
at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based
when the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
substantively enacted at the reporting date.
Goods and Services Tax (GST)
Goods and Services Tax (GST)
Revenues, expenses, assets and
liabilities are
Revenues, expenses, assets and
liabilities are
recognised net of the amount of GST except:
recognised net of the amount of GST except:
− when the GST incurred on a purchase of goods and
− when the GST incurred on a purchase of goods and
taxation
recoverable
services
services
taxation
recoverable
authority, in which case the GST is recognised as
authority, in which case the GST is recognised as
76
76
is not
is not
from
from
the
the
part of the cost of acquisition of the asset or as part
part of the cost of acquisition of the asset or as part
of the expense item as applicable;
of the expense item as applicable;
− casino revenues, due to the GST being offset against
− casino revenues, due to the GST being offset against
− receivables and payables, which are stated with the
− receivables and payables, which are stated with the
government taxes; and
government taxes; and
amount of GST included.
amount of GST included.
The net amount of GST recoverable from, or payable to,
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
the taxation authority is included as part of receivables or
payables in the balance sheet.
payables in the balance sheet.
Cash flows are included in the statement of cash flows
Cash flows are included in the statement of cash flows
on a gross basis and the GST component of cash flows
on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is
arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority is
recoverable from, or payable to, the taxation authority is
classified as operating cash flows.
classified as operating cash flows.
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents are carried in the balance
Cash and cash equivalents are carried in the balance
sheet at face value. Cash and cash equivalents include
sheet at face value. Cash and cash equivalents include
cash balances and call deposits with an original maturity
cash balances and call deposits with an original maturity
of three months or less. Bank overdrafts that are
of three months or less. Bank overdrafts that are
repayable on demand and form an integral part of the
repayable on demand and form an integral part of the
Group's cash management are included as a component
Group's cash management are included as a component
of cash for the purpose of the statement of cash flows.
of cash for the purpose of the statement of cash flows.
Trade and other receivables
Trade and other receivables
Trade receivables are recognised and carried at original
Trade receivables are recognised and carried at original
settlement amount less a provision for impairment,
settlement amount less a provision for impairment,
where applicable. Bad debts are written off when they
where applicable. Bad debts are written off when they
are known to be uncollectible. Subsequent recoveries of
are known to be uncollectible. Subsequent recoveries of
amounts previously written off are credited to the income
amounts previously written off are credited to the income
statement. Other receivables are carried at amortised
statement. Other receivables are carried at amortised
cost less impairment.
cost less impairment.
Inventories
Inventories
food and
include consumable stores,
Inventories
Inventories
food and
include consumable stores,
beverage and are carried at the lower of cost and net
beverage and are carried at the lower of cost and net
realisable value. Inventories are costed on a weighted
realisable value. Inventories are costed on a weighted
average basis. Net realisable value is the estimated
average basis. Net realisable value is the estimated
selling price in the ordinary course of business.
selling price in the ordinary course of business.
Property, plant and equipment
Property, plant and equipment
Refer to notes A4 and B4 for further details of the
Refer to notes A4 and B4 for further details of the
accounting policy, including useful lives of property, plant
accounting policy, including useful lives of property, plant
and equipment.
and equipment.
Freehold land is included at cost and is not depreciated.
Freehold land is included at cost and is not depreciated.
All other items of property, plant and equipment are
All other items of property, plant and equipment are
stated at historical cost net of depreciation, amortisation
stated at historical cost net of depreciation, amortisation
and impairment, and depreciated over periods deemed
and impairment, and depreciated over periods deemed
appropriate to reduce carrying values to estimated
appropriate to reduce carrying values to estimated
residual values over their useful lives. Historical cost
residual values over their useful lives. Historical cost
includes expenditure that is directly attributable to the
includes expenditure that is directly attributable to the
acquisition of these items.
acquisition of these items.
Gains and losses on disposals are determined by
Gains and losses on disposals are determined by
comparing the proceeds with the carrying amount and
comparing the proceeds with the carrying amount and
are recognised in the income statement.
are recognised in the income statement.
When the carrying amount of an asset is greater than its
When the carrying amount of an asset is greater than its
is written down
it
estimated
estimated
is written down
it
immediately to its recoverable amount.
immediately to its recoverable amount.
Costs arising subsequent to the acquisition of an asset
Costs arising subsequent to the acquisition of an asset
recoverable amount,
recoverable amount,
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
122
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
reliably. All other
reliably. All other
with the item will flow to the entity; and
with the item will flow to the entity; and
are included in the asset's carrying amount or recognised
are included in the asset's carrying amount or recognised
as a separate asset, as appropriate, only when it is
as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with
probable that future economic benefits associated with
the item will flow to the Group and the cost of the item
the item will flow to the Group and the cost of the item
repairs and
can be measured
can be measured
repairs and
maintenance costs are charged to the income statement
maintenance costs are charged to the income statement
during the financial year in which they are incurred.
during the financial year in which they are incurred.
Costs relating to development projects are recognised as
Costs relating to development projects are recognised as
an asset when it is:
an asset when it is:
− probable that any future economic benefit associated
− probable that any future economic benefit associated
− it can be measured reliably.
− it can be measured reliably.
If it becomes apparent that the development will not
If it becomes apparent that the development will not
occur, the amount is expensed to the income statement.
occur, the amount is expensed to the income statement.
Intangible assets
Intangible assets
Goodwill
Goodwill
Goodwill represents the excess of the consideration
Goodwill represents the excess of the consideration
transferred over the fair value of the identifiable net
transferred over the fair value of the identifiable net
assets acquired and liabilities assumed. Goodwill is
assets acquired and liabilities assumed. Goodwill is
assessed for impairment on an annual basis and is
assessed for impairment on an annual basis and is
carried at cost less accumulated impairment losses.
carried at cost less accumulated impairment losses.
Impairment losses on goodwill are not reversed.
Impairment losses on goodwill are not reversed.
Goodwill is allocated to cash generating units for the
Goodwill is allocated to cash generating units for the
purpose of impairment testing. The allocation is made to
purpose of impairment testing. The allocation is made to
those cash generating units or groups of cash generating
those cash generating units or groups of cash generating
units that are expected to benefit from the business
units that are expected to benefit from the business
combination in which the goodwill arose.
combination in which the goodwill arose.
Other intangible assets
Other intangible assets
Indefinite life intangible assets are not amortised and are
Indefinite life intangible assets are not amortised and are
impairment. Expenditure on
assessed annually
impairment. Expenditure on
assessed annually
gaming licences acquired, casino concessions acquired,
gaming licences acquired, casino concessions acquired,
computer software and other intangibles are capitalised
computer software and other intangibles are capitalised
line method as
and amortised using
and amortised using
line method as
described in note B5.
described in note B5.
Software
Software
Costs associated with developing or maintaining
Costs associated with developing or maintaining
recognised as
computer software programs are
computer software programs are
recognised as
expenses as incurred. However, costs that are directly
expenses as incurred. However, costs that are directly
associated with identifiable and unique software products
associated with identifiable and unique software products
controlled by the Group and which have probable
controlled by the Group and which have probable
economic benefits exceeding the costs beyond one year
economic benefits exceeding the costs beyond one year
are recognised as intangible assets. Direct costs include
are recognised as intangible assets. Direct costs include
staff costs of the software development team and an
staff costs of the software development team and an
relevant overheads.
appropriate portion of
relevant overheads.
appropriate portion of
is
Expenditure meeting
Expenditure meeting
is
recognised as a capital improvement and added to the
recognised as a capital improvement and added to the
original cost of the asset. These costs are amortised
original cost of the asset. These costs are amortised
over using the straight line method, as described in note
over using the straight line method, as described in note
B5.
B5.
Casino licences and concessions
Casino licences and concessions
Refer to note B5 for details and accounting policy.
Refer to note B5 for details and accounting policy.
the definition of an asset
the definition of an asset
the straight
the straight
the
the
for
for
77
77
123
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Impairment of assets
Impairment of assets
Assets that have an indefinite useful life are not subject
Assets that have an indefinite useful life are not subject
to depreciation or amortisation and are tested annually
to depreciation or amortisation and are tested annually
for impairment. Assets that are subject to depreciation or
for impairment. Assets that are subject to depreciation or
amortisation are reviewed for impairment whenever
amortisation are reviewed for impairment whenever
events or changes in circumstances indicate that the
events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment
carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset's
loss is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount. The
carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value
recoverable amount is the higher of an asset's fair value
less costs of disposal and value in use. For the purpose
less costs of disposal and value in use. For the purpose
of assessing impairment, assets are grouped at the
of assessing impairment, assets are grouped at the
lowest level for which there are separately identifiable
lowest level for which there are separately identifiable
cash flows (cash generating units). Refer to note B6 for
cash flows (cash generating units). Refer to note B6 for
further details of key assumptions included in the
further details of key assumptions included in the
impairment calculation.
impairment calculation.
Provisions
Provisions
A provision is recognised in the balance sheet when the
A provision is recognised in the balance sheet when the
Group has a present legal or constructive obligation as a
Group has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow
result of a past event, and it is probable that an outflow
of economic benefits will be required to settle the
of economic benefits will be required to settle the
obligation and the amount can be reliably estimated. If
obligation and the amount can be reliably estimated. If
the effect is material, provisions are determined by
the effect is material, provisions are determined by
discounting the expected future cash flows at a pre-tax
discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time
rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific
value of money and, where appropriate, the risks specific
to the liability.
to the liability.
Investment in associate and joint venture entities
Investment in associate and joint venture entities
Associates are all entities over which the Group has
Associates are all entities over which the Group has
significant influence but not control or joint control. Joint
significant influence but not control or joint control. Joint
control is the contractually agreed sharing of the joint
control is the contractually agreed sharing of the joint
arrangement, which exists only when decisions about the
arrangement, which exists only when decisions about the
relevant activities require unanimous consent of the
relevant activities require unanimous consent of the
parties sharing control. A joint venture is a type of
parties sharing control. A joint venture is a type of
arrangement whereby the parties that have joint control
arrangement whereby the parties that have joint control
of the arrangement have rights to the net assets of the
of the arrangement have rights to the net assets of the
joint venture. The Group's investments in associate and
joint venture. The Group's investments in associate and
joint venture entities are accounted for using the equity
joint venture entities are accounted for using the equity
method of accounting, after initially being recognised at
method of accounting, after initially being recognised at
cost. Under the equity method of accounting, the
cost. Under the equity method of accounting, the
investments are initially recognised at cost and are
investments are initially recognised at cost and are
subsequently adjusted to recognise the Group's share of
subsequently adjusted to recognise the Group's share of
the post-acquisition profits or losses of the investee in
the post-acquisition profits or losses of the investee in
the Group's share of
the
the
the Group's share of
movements in other comprehensive income of the
movements in other comprehensive income of the
investee in other comprehensive income. Dividends
investee in other comprehensive income. Dividends
received are recognised as a reduction in the carrying
received are recognised as a reduction in the carrying
amount of the investment. The carrying amount of equity-
amount of the investment. The carrying amount of equity-
in
tested
investments
accounted
accounted
tested
investments
in
accordance with the Group's policy.
accordance with the Group's policy.
Interest bearing liabilities
Interest bearing liabilities
Interest bearing liabilities are recognised initially at fair
Interest bearing liabilities are recognised initially at fair
value and include transaction costs. Subsequent to initial
value and include transaction costs. Subsequent to initial
recognition, interest bearing liabilities are recognised at
recognition, interest bearing liabilities are recognised at
amortised cost using the effective interest rate method.
amortised cost using the effective interest rate method.
Any difference between proceeds and the redemption
Any difference between proceeds and the redemption
value is recognised in the income statement over the
value is recognised in the income statement over the
period of the borrowing using the effective interest rate
period of the borrowing using the effective interest rate
method.
method.
income statement, and
income statement, and
impairment
impairment
for
for
is
is
liabilities are classified as current
Interest bearing
Interest bearing
liabilities are classified as current
liabilities unless the Group has an unconditional right to
liabilities unless the Group has an unconditional right to
defer settlement of the liability for at least 12 months
defer settlement of the liability for at least 12 months
after the balance sheet date.
after the balance sheet date.
Leases
Leases
Leases of assets where the Group assumes substantially
Leases of assets where the Group assumes substantially
all the benefits and risks of ownership are classified as
all the benefits and risks of ownership are classified as
finance leases.
finance leases.
Leases of assets under which substantially all the risks
Leases of assets under which substantially all the risks
and benefits of ownership are effectively retained by the
and benefits of ownership are effectively retained by the
lessor are classified as operating leases. Payments
lessor are classified as operating leases. Payments
made under operating leases are charged to the income
made under operating leases are charged to the income
statement on a straight line basis over the period of the
statement on a straight line basis over the period of the
lease.
lease.
Employee benefits
Employee benefits
Post-employment benefits
Post-employment benefits
The Group's commitment to defined contribution plans is
The Group's commitment to defined contribution plans is
limited to making the contributions in accordance with
limited to making the contributions in accordance with
the minimum statutory requirements. There is no legal or
the minimum statutory requirements. There is no legal or
constructive obligation to pay further contributions if the
constructive obligation to pay further contributions if the
fund does not hold sufficient assets to pay all employees
fund does not hold sufficient assets to pay all employees
relating to current and past employee services.
relating to current and past employee services.
Superannuation guarantee charges are recognised as
Superannuation guarantee charges are recognised as
expenses in the income statement as the contributions
expenses in the income statement as the contributions
become payable. A liability is recognised when the
become payable. A liability is recognised when the
Group is required to make future payments as a result of
Group is required to make future payments as a result of
employees' services provided.
employees' services provided.
Long service leave
Long service leave
The Group's net obligation in respect of long term service
The Group's net obligation in respect of long term service
benefits, other than pension plans, is the amount of
benefits, other than pension plans, is the amount of
future benefit that employees have earned in return for
future benefit that employees have earned in return for
their service in the current and prior periods. The
their service in the current and prior periods. The
future
obligation
obligation
future
increases in wage and salary rates including related on-
increases in wage and salary rates including related on-
costs and expected settlement dates, and is discounted
costs and expected settlement dates, and is discounted
using rates attached to bonds with sufficiently long
using rates attached to bonds with sufficiently long
maturities at the balance sheet date, which have maturity
maturities at the balance sheet date, which have maturity
the Group's
the
dates approximating
the Group's
dates approximating
the
obligations.
obligations.
Annual leave
Annual leave
Liabilities for annual leave are calculated at discounted
Liabilities for annual leave are calculated at discounted
amounts based on remuneration rates the Group expects
amounts based on remuneration rates the Group expects
to pay, including related on-costs when the liability is
to pay, including related on-costs when the liability is
expected to be settled. Annual leave is another long term
expected to be settled. Annual leave is another long term
benefit and is measured using the projected credit unit
benefit and is measured using the projected credit unit
method.
method.
Share based payment transactions
Share based payment transactions
The Company operates the Long Term Performance
The Company operates the Long Term Performance
Plan (LTPP), which is available to employees at the most
Plan (LTPP), which is available to employees at the most
senior executive levels. Under the LTPP, employees may
senior executive levels. Under the LTPP, employees may
become entitled to Performance Rights which may
become entitled to Performance Rights which may
potentially convert to ordinary shares in the Company.
potentially convert to ordinary shares in the Company.
The fair value of Performance Rights is measured at
The fair value of Performance Rights is measured at
grant date and is recognised as an employee expense
grant date and is recognised as an employee expense
(with a corresponding increase in the share based
(with a corresponding increase in the share based
payment reserve) over four years from the grant date
payment reserve) over four years from the grant date
irrespective of whether the Performance Rights vest to
irrespective of whether the Performance Rights vest to
78
78
is calculated using
is calculated using
the expected
the expected
terms of
terms of
to
to
in
in
fair value
fair value
recognised
recognised
the holder. A reversal of the expense is only recognised
the holder. A reversal of the expense is only recognised
in the event the instruments lapse due to cessation of
in the event the instruments lapse due to cessation of
employment within the vesting period.
employment within the vesting period.
The fair value of the Performance Rights is determined
The fair value of the Performance Rights is determined
by an external valuer and takes into account the terms
by an external valuer and takes into account the terms
and conditions upon which the Performance Rights were
and conditions upon which the Performance Rights were
granted.
granted.
Under the Company's short term performance plan
Under the Company's short term performance plan
(STPP), eligible employees receive two thirds of their
(STPP), eligible employees receive two thirds of their
annual STPP entitlement in cash and one third in the
annual STPP entitlement in cash and one third in the
form of restricted shares which are subject to a holding
form of restricted shares which are subject to a holding
lock for a period of twelve months. These shares are
lock for a period of twelve months. These shares are
forfeited in the event that the employee voluntarily
forfeited in the event that the employee voluntarily
terminates from the Company during the 12 month
terminates from the Company during the 12 month
holding lock period.
holding lock period.
The cost is recognised in employment costs, together
The cost is recognised in employment costs, together
with a corresponding increase in equity (share based
with a corresponding increase in equity (share based
payment reserve) over the service period. No expense is
payment reserve) over the service period. No expense is
recognised for awards that do not ultimately vest. A
recognised for awards that do not ultimately vest. A
liability is recognised for the fair value of cash settled
liability is recognised for the fair value of cash settled
transactions. The fair value is measured initially and at
transactions. The fair value is measured initially and at
each reporting date up to and including the settlement
each reporting date up to and including the settlement
in
date, with changes
date, with changes
in
employment costs.
employment costs.
Derivative financial instruments
Derivative financial instruments
The Group uses derivative financial instruments to hedge
The Group uses derivative financial instruments to hedge
its exposure to foreign exchange and interest rate risks
its exposure to foreign exchange and interest rate risks
investment
from operational,
arising
investment
arising
from operational,
activities. In accordance with its Treasury Policy, the
activities. In accordance with its Treasury Policy, the
financial
Group does not hold or
Group does not hold or
financial
instruments for trading purposes. However, derivatives
instruments for trading purposes. However, derivatives
that do not qualify for hedge accounting are accounted
that do not qualify for hedge accounting are accounted
for as trading instruments.
for as trading instruments.
Derivative financial instruments are recognised initially at
Derivative financial instruments are recognised initially at
fair value at the date the derivative contract is entered
fair value at the date the derivative contract is entered
into and are subsequently remeasured to fair value at the
into and are subsequently remeasured to fair value at the
end of each reporting period. The resulting gain or loss is
end of each reporting period. The resulting gain or loss is
income statement.
in
recognised
income statement.
recognised
in
However, where derivatives qualify for cash flow hedge
However, where derivatives qualify for cash flow hedge
accounting, the effective portion of the gain or loss is
accounting, the effective portion of the gain or loss is
is
in equity while
deferred
deferred
in equity while
is
recognised in the income statement.
recognised in the income statement.
The fair value of interest rate swap, cross currency swap
The fair value of interest rate swap, cross currency swap
is determined by
and
and
is determined by
reference to market values for similar instruments. Refer
reference to market values for similar instruments. Refer
to note E2 for details of fair value determination.
to note E2 for details of fair value determination.
Derivative assets and liabilities are offset and the net
Derivative assets and liabilities are offset and the net
amount reported in the consolidated balance sheet if,
amount reported in the consolidated balance sheet if,
and only if:
and only if:
− there is a currently enforceable legal right to offset
− there is a currently enforceable legal right to offset
− there is an intention to settle on a net basis, or to
− there is an intention to settle on a net basis, or to
liabilities
liabilities
financing and
financing and
issue derivative
issue derivative
forward currency contracts
forward currency contracts
the recognised amount; and
the recognised amount; and
the assets and settle
the assets and settle
ineffective portion
ineffective portion
immediately
immediately
the
the
the
the
the
the
realise
realise
simultaneously.
simultaneously.
Hedging
Hedging
Cash flow hedge
Cash flow hedge
Where a derivative financial instrument is designated as
Where a derivative financial instrument is designated as
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
124
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
is
is
the
the
losses
losses
forecast
forecast
revoked but
revoked but
transaction affects
transaction affects
the associated gains and
the associated gains and
instrument expires or
instrument expires or
the hedged
the hedged
a hedge of the exposure to variability in cash flows that
a hedge of the exposure to variability in cash flows that
are attributable to a particular risk associated with a
are attributable to a particular risk associated with a
recognised asset or liability, or a highly probable forecast
recognised asset or liability, or a highly probable forecast
transaction, the effective part of any gain or loss on the
transaction, the effective part of any gain or loss on the
derivative financial instrument is recognised directly in
derivative financial instrument is recognised directly in
equity. When the forecast transaction subsequently
equity. When the forecast transaction subsequently
results in the recognition of a non financial asset or
results in the recognition of a non financial asset or
the associated cumulative gain or loss is
liability,
liability,
the associated cumulative gain or loss is
removed from equity and included in the initial cost or
removed from equity and included in the initial cost or
other carrying amount of the non financial asset or
other carrying amount of the non financial asset or
liability.
liability.
If a hedge of a forecast transaction subsequently results
If a hedge of a forecast transaction subsequently results
in the recognition of a financial asset or financial liability,
in the recognition of a financial asset or financial liability,
that were
then
then
that were
recognised directly in equity are reclassified into the
recognised directly in equity are reclassified into the
income statement in the same period or periods during
income statement in the same period or periods during
which the asset acquired or liability assumed affects the
which the asset acquired or liability assumed affects the
income statement (i.e. when interest income or expense
income statement (i.e. when interest income or expense
is recognised). For cash flow hedges, the effective part
is recognised). For cash flow hedges, the effective part
of any gain or loss on the derivative financial instrument
of any gain or loss on the derivative financial instrument
is removed from equity and recognised in the income
is removed from equity and recognised in the income
statement in the same period or periods during which the
statement in the same period or periods during which the
income
hedged
income
hedged
statement. The ineffective part of any gain or loss is
statement. The ineffective part of any gain or loss is
recognised immediately in the income statement.
recognised immediately in the income statement.
is sold,
When a hedging
is sold,
When a hedging
terminated or exercised, or the designation of the hedge
terminated or exercised, or the designation of the hedge
forecast
relationship
relationship
forecast
transaction is still expected to occur, the cumulative gain
transaction is still expected to occur, the cumulative gain
or loss at that point remains in equity and is recognised
or loss at that point remains in equity and is recognised
in accordance with the above when the transaction
in accordance with the above when the transaction
occurs. If the hedged transaction is no longer expected
occurs. If the hedged transaction is no longer expected
to take place, then the cumulative unrealised gain or loss
to take place, then the cumulative unrealised gain or loss
recognised in equity is recognised immediately in the
recognised in equity is recognised immediately in the
income statement.
income statement.
Issued capital
Issued capital
Issued and paid up capital is recognised at the fair value
Issued and paid up capital is recognised at the fair value
of the consideration received. Issued capital comprises
of the consideration received. Issued capital comprises
transaction costs directly
ordinary
ordinary
transaction costs directly
issue of ordinary shares are
to
attributable
attributable
to
issue of ordinary shares are
recognised directly in equity, net of tax, as a reduction of
recognised directly in equity, net of tax, as a reduction of
the share proceeds received.
the share proceeds received.
Operating segment
Operating segment
An operating segment is a component of an entity that
An operating segment is a component of an entity that
engages in business activities from which it may earn
engages in business activities from which it may earn
revenues and incur expenses (including revenues and
revenues and incur expenses (including revenues and
expenses relating to transactions with other components
expenses relating to transactions with other components
of the same entity), whose operating results are regularly
of the same entity), whose operating results are regularly
reviewed by the entity's executive decision makers to
reviewed by the entity's executive decision makers to
allocate resources and assess its performance.
allocate resources and assess its performance.
The Group aggregates two or more operating segments
The Group aggregates two or more operating segments
when they have similar economic characteristics, and the
when they have similar economic characteristics, and the
segments are similar in each of the following respects:
segments are similar in each of the following respects:
− nature of the products and services;
− nature of the products and services;
− type or class of customer for the products and
− type or class of customer for the products and
− methods used to distribute the products or provide
− methods used to distribute the products or provide
shares. Any
shares. Any
the
the
services;
services;
the services; and
the services; and
79
79
125
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Notes to the financial statements
Notes to the financial statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Directors' Declaration
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2017
in
in
liability
liability
the Group's
the Group's
− nature of the regulatory environment.
− nature of the regulatory environment.
Segment results include revenue and expenses directly
Segment results include revenue and expenses directly
attributable to a segment and exclude significant items.
attributable to a segment and exclude significant items.
Capital expenditure represents the total costs incurred
Capital expenditure represents the total costs incurred
during the period to acquire segment assets, including
during the period to acquire segment assets, including
capitalised interest.
capitalised interest.
Dividend distributions
Dividend distributions
Dividend distributions to the Company's shareholders are
Dividend distributions to the Company's shareholders are
financial
recognised as a
financial
recognised as a
statements in the period in which the dividends are
statements in the period in which the dividends are
declared.
declared.
Basic earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the net
Basic earnings per share is calculated by dividing the net
earnings after tax for the period by the weighted average
earnings after tax for the period by the weighted average
number of ordinary shares outstanding during the period.
number of ordinary shares outstanding during the period.
Diluted earnings per share
Diluted earnings per share
Diluted earnings per share is calculated by dividing the
Diluted earnings per share is calculated by dividing the
net earnings attributable to ordinary equity holders
net earnings attributable to ordinary equity holders
adjusted by the after tax effect of:
adjusted by the after tax effect of:
− any dividends or other items related to dilutive
− any dividends or other items related to dilutive
potential ordinary shares deducted in arriving at profit
potential ordinary shares deducted in arriving at profit
or loss attributable to ordinary equity holders;
or loss attributable to ordinary equity holders;
− any interest recognised in the period related to
− any interest recognised in the period related to
− any other changes in income or expense that would
− any other changes in income or expense that would
result from the conversion of the dilutive potential
result from the conversion of the dilutive potential
ordinary shares;
ordinary shares;
dilutive potential ordinary shares; and
dilutive potential ordinary shares; and
by the weighted average number of issued ordinary
by the weighted average number of issued ordinary
shares plus the weighted average number of ordinary
shares plus the weighted average number of ordinary
shares that would be issued on the conversion of all the
shares that would be issued on the conversion of all the
dilutive potential ordinary shares into ordinary shares.
dilutive potential ordinary shares into ordinary shares.
In the opinion of the Directors of The Star Entertainment Group Limited (the Company):
(a)
the financial statements and notes of the Group are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group's consolidated financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
(ii)
complying with the Accounting Standards and the Corporations Regulations 2001;
(b)
the Financial Report also complies with International Financial Reporting Standards as disclosed in note G; and
(c)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and
payable.
This declaration has been made after receiving the declarations required to be made to the directors in accordance with
section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors.
John O'Neill AO
Chairman
Sydney
23 August 2017
The Star Entertainment Group Limited and its controlled entities
The Star Entertainment Group Limited and its controlled entities
126
80
80
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127
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2017
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Audit or's Report t o t he Members of The St ar
Ent er t ainment Group Limit ed
Independent Audit or's Report t o t he Members of The St ar
Ent er t ainment Group Limit ed
Report on t he Audit of t he Financial Report
Opinion
Report on t he Audit of t he Financial Report
We have audited the financial report of The Star Entertainment Group Limited (t he Company) and its subsidiaries
(collectively t he Group), which comprises the consolidated statement of f inancial position as at 30 June 2017, the
Opinion
consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, notes to the financial statements, including a summary of
We have audited the financial report of The Star Entertainment Group Limited (t he Company) and its subsidiaries
significant accounting policies, and the directors' declarat ion.
(collectively t he Group), which comprises the consolidated statement of f inancial position as at 30 June 2017, the
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated
including:
statement of cash flows for the year then ended, notes to the financial statements, including a summary of
significant accounting policies, and the directors' declarat ion.
a)
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
b)
a)
giving a true and fair view of the consolidated f inancial position of the Group as at 30 June 2017 and of it s
consolidated financial performance for the year ended on that date; and
complying wit h Australian Accounting Standards and the Corporations Regulations 2001.
giving a true and fair view of the consolidated f inancial position of the Group as at 30 June 2017 and of it s
consolidated financial performance for the year ended on that date; and
complying wit h Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
b)
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
Basis for Opinion
report . We are independent of the Group in accordance wit h the auditor independence requirement s of the
Corporations Act 2001 and the ethical requirement s of the Accounting Professional and Ethical Standards Board’s
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report in Australia. We have also fulfilled our other et hical responsibilities in accordance with the Code.
report . We are independent of the Group in accordance wit h the auditor independence requirement s of the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Corporations Act 2001 and the ethical requirement s of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
Key Audit Mat t ers
report in Australia. We have also fulfilled our other et hical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit mat t ers are those mat ters that, in our professional judgment , were of most significance in our audit of
t he financial report of the current year. These matters were addressed in the context of our audit of t he financial
Key Audit Mat t ers
report as a whole, and in forming our opinion thereon, but we do not provide a separat e opinion on these mat t ers.
For each mat ter below, our description of how our audit addressed t he matt er is provided in that cont ext.
Key audit mat t ers are those mat ters that, in our professional judgment , were of most significance in our audit of
t he financial report of the current year. These matters were addressed in the context of our audit of t he financial
We have fulfilled the responsibilities described in the Auditor’s Responsibilities f or t he Audit of t he Financial Report
report as a whole, and in forming our opinion thereon, but we do not provide a separat e opinion on these mat t ers.
section of our report , including in relation to these matt ers. Accordingly, our audit included the perf ormance of
For each mat ter below, our description of how our audit addressed t he matt er is provided in that cont ext.
procedures designed to respond to our assessment of the risks of material misstatement of the financial report.
The results of our audit procedures, including the procedures performed to address the mat ters below, provide the
We have fulfilled the responsibilities described in the Auditor’s Responsibilities f or t he Audit of t he Financial Report
basis for our audit opinion on the accompanying financial report .
section of our report , including in relation to these matt ers. Accordingly, our audit included the perf ormance of
procedures designed to respond to our assessment of the risks of material misstatement of the financial report.
The results of our audit procedures, including the procedures performed to address the mat ters below, provide the
basis for our audit opinion on the accompanying financial report .
Goodwill impairment assessment
Goodwill impairment assessment
Why significant t o the audit
How our audit addressed t he key audit mat t er
As at 30 June 2017, the Group’s consolidated balance
Why significant t o the audit
sheet included $1,442m of goodwill.
As at 30 June 2017, the Group’s consolidated balance
As disclosed in Note B6 to the consolidated financial
sheet included $1,442m of goodwill.
stat ements, the Directors’ assessment of goodwill
involves crit ical accounting estimates and assumptions,
As disclosed in Note B6 to the consolidated financial
specifically relating to f uture discount ed cash flows.
stat ements, the Directors’ assessment of goodwill
These estimates and assumptions, summarised in Note
involves crit ical accounting estimates and assumptions,
B6 to the consolidated financial st atements, are
specifically relating to f uture discount ed cash flows.
impacted by the future performance of the Group,
These estimates and assumptions, summarised in Note
market and regulatory environments.
B6 to the consolidated financial st atements, are
We considered t his to be a key audit matter due to the
impacted by the future performance of the Group,
magnitude of the balance and the significant judgments
market and regulatory environments.
and assumpt ions involved in the calculat ion of the Fair
We considered t his to be a key audit matter due to the
Value less Cost of Disposal model.
magnitude of the balance and the significant judgments
and assumpt ions involved in the calculat ion of the Fair
Value less Cost of Disposal model.
Our audit procedures included the following:
How our audit addressed t he key audit mat t er
• Assessed whether the methodology used by the
Our audit procedures included the following:
Directors met the requirements of Australian
Accounting St andards - AASB 136 Impairment of
• Assessed whether the methodology used by the
Assets.
Directors met the requirements of Australian
Accounting St andards - AASB 136 Impairment of
• Tested the mat hemat ical accuracy of the cash
Assets.
flow models.
• Tested the mat hemat ical accuracy of the cash
• Compared the cash flow forecasts with the Board
flow models.
approved f ive-year business plan and long term
capit al invest ment plans.
• Compared the cash flow forecasts with the Board
approved f ive-year business plan and long term
• Together with our valuat ion specialists assessed
capit al invest ment plans.
the assumptions supporting the cash flow
forecasts.
• Together with our valuat ion specialists assessed
the assumptions supporting the cash flow
• Considered the accuracy of the discount rat e and
forecasts.
the terminal growth rate used with involvement
from our valuation specialists.
• Considered the accuracy of the discount rat e and
the terminal growth rate used with involvement
• Tested the sensitivit y analysis performed by t he
from our valuation specialists.
Group focusing on the Cash-Generating Units
where a reasonably possible change in
• Tested the sensitivit y analysis performed by t he
assumpt ions could cause the carrying amount to
Group focusing on the Cash-Generating Units
exceed its recoverable amount.
where a reasonably possible change in
assumpt ions could cause the carrying amount to
• Evaluat ed whether the judgments and estimates
exceed its recoverable amount.
disclosures in the consolidated financial
statements met the requirement s of Australian
• Evaluat ed whether the judgments and estimates
Accounting st andards.
disclosures in the consolidated financial
statements met the requirement s of Australian
Accounting st andards.
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83
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2017
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Recoverabilit y of t rade receivables
Recoverabilit y of t rade receivables
Why signif icant t o t he audit
How our audit addr essed t he key audit mat t er
As disclosed in Not e B2, at 30 June 2017, the Group’s
Why signif icant t o t he audit
consolidated balance sheet included $176.6m of gross
trade receivables and a provision for impairment of
As disclosed in Not e B2, at 30 June 2017, the Group’s
$14.0m.
consolidated balance sheet included $176.6m of gross
trade receivables and a provision for impairment of
The Directors’ assessment of t rade receivable for
$14.0m.
impairment involves judgment, specifically relat ing to
t he individual circumstances of each debtor.
The Directors’ assessment of t rade receivable for
impairment involves judgment, specifically relat ing to
As a consequence, recoverability of trade receivables is
t he individual circumstances of each debtor.
a key audit matt er due to the inherent subjectivit y that is
involved in making judgment s in relation to credit
As a consequence, recoverability of trade receivables is
exposures to det ermine the recoverability of trade
a key audit matt er due to the inherent subjectivit y that is
receivables.
involved in making judgment s in relation to credit
exposures to det ermine the recoverability of trade
receivables.
Our procedures included assessing the overall
How our audit addr essed t he key audit mat t er
reasonableness of the provision f or impairment. In
doing so, we:
Our procedures included assessing the overall
reasonableness of the provision f or impairment. In
• Reviewed the Group’s dat a around historical
doing so, we:
collections to determine the reasonableness of
current provisioning.
• Reviewed the Group’s dat a around historical
collections to determine the reasonableness of
• Tested the aging of the outstanding receivables
current provisioning.
by selecting a sample and agreeing det ails to
support ing document ation.
• Tested the aging of the outstanding receivables
by selecting a sample and agreeing det ails to
• Select ed a sample of the larger t rade receivable
support ing document ation.
balances where a provision for impairment of trade
receivables was recognised and understood the
• Select ed a sample of the larger t rade receivable
rat ionale behind the provisioning by considering
balances where a provision for impairment of trade
the hist orical payment patt erns, whether any post
receivables was recognised and understood the
year-end payments had been received up to t he
rat ionale behind the provisioning by considering
dat e of our audit report and examining the Group’s
the hist orical payment patt erns, whether any post
available information on individual debtors.
year-end payments had been received up to t he
dat e of our audit report and examining the Group’s
• Tested a sample of aged balances where no
available information on individual debtors.
provision was recognised to assess that there were
no indicators of impairment. This included,
• Tested a sample of aged balances where no
amongst others, assessing if payments had been
provision was recognised to assess that there were
received since the year-end, reviewing historical
no indicators of impairment. This included,
payment pat terns and examining the Group’s
amongst others, assessing if payments had been
available information on each debtor.
received since the year-end, reviewing historical
payment pat terns and examining the Group’s
• Reviewed the historical provision position
available information on each debtor.
recorded by the Group against actual outcomes for
debt recovery and/ or write off and assessed the
• Reviewed the historical provision position
accuracy of the Group’s provisioning.
recorded by the Group against actual outcomes for
debt recovery and/ or write off and assessed the
accuracy of the Group’s provisioning.
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84
Inf ormat ion Ot her t han t he Financial Report and Audit or’s Report
The directors are responsible for the ot her information. The other informat ion comprises the information included
Inf ormat ion Ot her t han t he Financial Report and Audit or’s Report
in t he Group’s 2017 Annual Report other than the financial report and our auditor’s report thereon. We obtained
t he Directors’ Report that is to be included in the Annual Report, prior to the date of this auditor’s report , and we
The directors are responsible for the ot her information. The other informat ion comprises the information included
expect to obtain the remaining sections of the Annual Report af ter the date of this auditor’s report .
in t he Group’s 2017 Annual Report other than the financial report and our auditor’s report thereon. We obtained
t he Directors’ Report that is to be included in the Annual Report, prior to the date of this auditor’s report , and we
Our opinion on the financial report does not cover the other informat ion and we do not and will not express any
expect to obtain the remaining sections of the Annual Report af ter the date of this auditor’s report .
form of assurance conclusion thereon.
Our opinion on the financial report does not cover the other informat ion and we do not and will not express any
In connection wit h our audit of the financial report , our responsibility is to read the other informat ion and, in doing
form of assurance conclusion thereon.
so, consider whether the other information is materially inconsistent wit h the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
In connection wit h our audit of the financial report , our responsibility is to read the other informat ion and, in doing
so, consider whether the other information is materially inconsistent wit h the financial report or our knowledge
If, based on the work we have performed on the other informat ion obtained prior to the date of this auditor’s
obtained in the audit or otherwise appears to be materially misstated.
report , we conclude that there is a material misstatement of t his other informat ion, we are required to report that
fact. We have nothing to report in this regard.
If, based on the work we have performed on the other informat ion obtained prior to the date of this auditor’s
report , we conclude that there is a material misstatement of t his other informat ion, we are required to report that
Responsibilit ies of t he Dir ect ors for t he Financial Repor t
fact. We have nothing to report in this regard.
The directors of the Company are responsible for the preparat ion of the financial report that gives a true and fair
Responsibilit ies of t he Dir ect ors for t he Financial Repor t
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable t he preparation of the financial report that gives a t rue
The directors of the Company are responsible for the preparat ion of the financial report that gives a true and fair
and fair view and is f ree from material misstatement, whet her due to fraud or error.
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable t he preparation of the financial report that gives a t rue
In preparing t he financial report , the directors are responsible for assessing the Group’s ability to continue as a
and fair view and is f ree from material misstatement, whet her due to fraud or error.
going concern, disclosing, as applicable, matters relat ing to going concern and using the going concern basis of
accounting unless t he directors either intend to liquidate the Group or to cease operat ions, or have no realistic
In preparing t he financial report , the directors are responsible for assessing the Group’s ability to continue as a
alternative but to do so.
going concern, disclosing, as applicable, matters relat ing to going concern and using the going concern basis of
accounting unless t he directors either intend to liquidate the Group or to cease operat ions, or have no realistic
Audit or's Responsibilit ies for t he Audit of t he Financial Repor t
alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free f rom
Audit or's Responsibilit ies for t he Audit of t he Financial Repor t
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
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free f rom
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
can arise f rom fraud or error and are considered material if, individually or in the aggregate, they could reasonably
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
be expected to influence the economic decisions of users taken on the basis of this financial report.
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise f rom fraud or error and are considered material if, individually or in the aggregate, they could reasonably
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and
be expected to influence the economic decisions of users taken on the basis of this financial report.
maintain professional scepticism throughout the audit. We also:
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:
Identif y and assess t he risks of material misstatement of the financial report , whether due to f raud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence t hat is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
Identif y and assess t he risks of material misstatement of the financial report , whether due to f raud or error,
resulting from f raud is higher than for one resulting from error, as fraud may involve collusion, forgery,
design and perform audit procedures responsive to those risks, and obtain audit evidence t hat is sufficient
intentional omissions, misrepresentat ions, or the override of internal control.
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from f raud is higher than for one resulting from error, as fraud may involve collusion, forgery,
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
intentional omissions, misrepresentat ions, or the override of internal control.
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
t he Group’s internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
t he Group’s internal control.
and related disclosures made by the directors.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based
and related disclosures made by the directors.
on the audit evidence obtained, whet her a material uncertainty exist s related to events or conditions that
may cast significant doubt on t he Group’s ability to cont inue as a going concern. If we conclude that a
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
on the audit evidence obtained, whet her a material uncertainty exist s related to events or conditions that
disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
may cast significant doubt on t he Group’s ability to cont inue as a going concern. If we conclude that a
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, fut ure
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
event s or conditions may cause t he Group to cease to continue as a going concern.
disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, fut ure
event s or conditions may cause t he Group to cease to continue as a going concern.
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85
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017 INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2017
SHAREHOLDER INFORMATION
AS AT 25 AUGUST 2017
Evaluate the overall presentation, structure and content of the f inancial report , including the disclosures,
and whether the financial report represents the underlying transactions and event s in a manner that
achieves fair presentation.
Evaluate the overall presentation, structure and content of the f inancial report , including the disclosures,
and whether the financial report represents the underlying transactions and event s in a manner that
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
achieves fair presentation.
activities within the Group to express an opinion on t he financial report . We are responsible for the
direct ion, supervision and performance of the Group audit. We remain solely responsible for our audit
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
opinion.
activities within the Group to express an opinion on t he financial report . We are responsible for the
direct ion, supervision and performance of the Group audit. We remain solely responsible for our audit
We communicate wit h the directors regarding, among other matters, the planned scope and timing of the audit and
opinion.
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We communicate wit h the directors regarding, among other matters, the planned scope and timing of the audit and
We also provide the directors with a st atement that we have complied with relevant ethical requirements regarding
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
independence, and t o communicate with them all relationships and other matters that may reasonably be t hought
to bear on our independence, and where applicable, related safeguards.
We also provide the directors with a st atement that we have complied with relevant ethical requirements regarding
independence, and t o communicate with them all relationships and other matters that may reasonably be t hought
From the matters communicated to the directors, we determine those matters t hat were of most significance in the
to bear on our independence, and where applicable, related safeguards.
audit of the financial report of the current year and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulat ion precludes public disclosure about the matter or when, in extremely
From the matters communicated to the directors, we determine those matters t hat were of most significance in the
rare circumstances, we determine that a matter should not be communicated in our report because the adverse
audit of the financial report of the current year and are therefore the key audit matters. We describe these matters
consequences of doing so would reasonably be expected to outweigh the public interest benef its of such
in our auditor’s report unless law or regulat ion precludes public disclosure about the matter or when, in extremely
communication.
rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benef its of such
communication.
Report on t he Audit of t he Remunerat ion Report
Opinion on t he Remunerat ion Repor t
Report on t he Audit of t he Remunerat ion Report
We have audited the Remunerat ion Report included in pages 15 to 32 of the directors' report for the year ended
Opinion on t he Remunerat ion Repor t
30 June 2017.
We have audited the Remunerat ion Report included in pages 15 to 32 of the directors' report for the year ended
In our opinion, the Remunerat ion Report of The Star Entert ainment Group Limited for the year ended 30 June
30 June 2017.
2017, complies with section 300A of the Corporations Act 2001.
In our opinion, the Remunerat ion Report of The Star Entert ainment Group Limited for the year ended 30 June
Responsibilit ies
2017, complies with section 300A of the Corporations Act 2001.
The directors of the Company are responsible for t he preparat ion and present ation of the Remuneration Report in
Responsibilit ies
accordance with section 300A of the Corporations Act 2001. Our responsibilit y is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing St andards.
The directors of the Company are responsible for t he preparat ion and present ation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibilit y is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing St andards.
Ernst & Young
Ernst & Young
John Robinson
Partner
Sydney
John Robinson
23 August 2017
Partner
Sydney
23 August 2017
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ORDINARY SHARE CAPITAL
The Star Entertainment Group Limited has 825,672,730 fully paid ordinary shares on issue.
SHAREHOLDING RESTRICTIONS
The Star Entertainment Group’s Constitution, as well as certain agreements entered into with the New South Wales Independent
Liquor and Gaming Authority and the Queensland Office of Liquor and Gaming Regulation, contain certain restrictions prohibiting
an individual from having a voting power of more than 10% in The Star Entertainment Group without the written consent of the
New South Wales Independent Liquor and Gaming Authority and of the Queensland Minister. The Star Entertainment Group may
refuse to register any transfer of shares which would contravene these shareholding restrictions or require divestiture of the shares
that cause an individual to exceed the shareholding restrictions.
In July 2012, written consent was granted by the New South Wales Independent Liquor and Gaming Authority and the relevant
Queensland Minister for Perpetual Investment Management Limited to increase its shareholding in The Star Entertainment
Group from 10% up to a maximum of 15% of issued shares.
In May 2013, written consent was granted by the New South Wales Independent Liquor and Gaming Authority and the relevant
Queensland Minister for Crown Resorts Limited to increase its potential voting power in The Star Entertainment Group from
10% up to an effective maximum of 23% (which may be adjusted in certain circumstances).
In December 2015, written consent was granted by the New South Wales Independent Liquor and Gaming Authority and the
relevant Queensland Minister for Genting Hong Kong Limited and its associates to increase their aggregate potential voting power
in The Star Entertainment Group from 10% up to an effective maximum of 23% (which may be adjusted in certain circumstances).
VOTING RIGHTS
All ordinary shares issued by The Star Entertainment Group Limited carry one vote per share. Performance options and
performance rights do not carry any voting rights.
Gambling legislation in New South Wales and Queensland and The Star Entertainment Group’s Constitution contain
provisions regulating the exercise of voting rights by persons with prohibited shareholding interests, as well as the
regulation of shareholding interests.
The relevant Minister has the power to request information to determine whether a person has a prohibited shareholding interest.
If a person fails to furnish these details within the time specified or, in the opinion of the Minister, the information is false
or misleading, then the Minister can declare the voting rights of those shares suspended.
Failure to comply with gambling legislation in New South Wales and Queensland or The Star Entertainment Group’s Constitution,
including the shareholder restrictions mentioned above, may result in suspension of voting rights.
SUBSTANTIAL SHAREHOLDERS
The following is a summary of the substantial shareholders as at 25 August 2017 pursuant to notices lodged with ASX in accordance
with section 671B of the Corporations Act 2001:
NAME
DATE OF INTEREST
NUMBER OF
ORDINARY SHARES (i)
% OF ISSUED
CAPITAL (ii)
FIL Limited, FIL Investment Management
(Australia) Limited and FIL Pension Management
Commonwealth Bank of Australia
and its related bodies corporate
Yarra Funds Management Limited,
Yarra Capital Management Holdings Pty Ltd,
Yarra Management Nominees Pty Ltd, AA Australia
Finco Pty Ltd, TA SP Australia Topco Pty Ltd and
TA Universal Investment Holdings Ltd
Ellerston Capital
Perpetual Limited and its related bodies corporate
(including Perpetual Investment Management Limited)
31 May 2017
16 June 2017
6 July 2017
13 July 2017
14 July 2017
49,777,604
6.03%
53,280,893
6.45%
41,568,222
5.0345%
41,896,846
121,592,298
5.07%
14.73%
(i) As disclosed in the last notice lodged with the ASX by the substantial shareholder.
(ii) The percentage set out in the notice lodged with the ASX is based on the total issued share capital of The Star Entertainment Group Limited at the date of interest.
133
ANNUAL REPORT 2017THE STAR ENTERTAINMENT GROUP SHAREHOLDER INFORMATION
AS AT 25 AUGUST 2017
SHAREHOLDER INFORMATION
AS AT 25 AUGUST 2017
LESS THAN MARKETABLE PARCELS
DISTRIBUTION OF SECURITIES HELD
There were 6,736 shareholders holding less than a marketable parcel of 95 ordinary shares (valued at $500 or less, based on a market
price of $5.28) at the close of trading on 25 August 2017 and they hold a total of 428,124 ordinary shares.
RANGE OF HOLDING
NO. OF HOLDERS
NO. OF SECURITIES
NO. OF HOLDERS
NO. OF SECURITIES
ORDINARY SHARES
PERFORMANCE RIGHTS 1
SECURITIES PURCHASED ON-MARKET
The following securities were purchased on-market during the financial year for the purposes of The Star Entertainment Group’s
Short Term Performance Plan (STPP) and General Employee Share Plan (GESP).
Ordinary Shares (for STPP)
Ordinary Shares (for GESP)
613,992
30,177
$5.75
$5.7295
NUMBER OF SHARES PURCHASED
AVERAGE PRICE PAID PER SHARE
TWENTY LARGEST REGISTERED SHAREHOLDERS – ORDINARY SHARES*
RANK NAME
NUMBER OF SHARES
HELD
% OF ISSUED
CAPITAL
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
HSBC CUSTODY NOMINEES
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
UBS NOMINEES PTY LTD
AMP LIFE LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD
WOODROSS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
SBN NOMINEES PTY LIMITED <10004 ACCOUNT>
SEYMOUR GROUP PTY LTD
BNP PARIBAS NOMS (NZ) LTD
CS THIRD NOMINEES PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD
MUTUAL TRUST PTY LTD
PACIFIC CUSTODIANS PTY LIMITED
256,525,111
167,107,559
75,064,095
71,525,994
34,936,431
30,218,655
28,468,874
25,228,696
4,556,733
4,036,871
3,972,776
3,233,380
2,693,299
2,265,400
1,750,000
1,393,030
1,282,637
1,271,059
1,206,724
1,187,005
31.07%
20.24%
9.09%
8.66%
4.23%
3.66%
3.45%
3.06%
0.55%
0.49%
0.48%
0.39%
0.33%
0.27%
0.21%
0.17%
0.16%
0.15%
0.15%
0.14%
Total of top 20 registered shareholders
717,924,329
86.95%
*on a grouped basis
134
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
48,945
19,762
2,433
1,078
63
72,281
16,908,427
41,651,579
16,910,470
21,625,678
728,576,576
825,672,730
0
0
0
9
8
17
0
0
0
353,899
2,865,363
3,219,262
1. Performance Rights were issued pursuant to The Star Entertainment Group’s Long Term Performance Plan. Refer to the Remuneration Report for more information about
The Star Entertainment Group’s Long Term Performance Plan.
VOLUNTARY ESCROW
SHAREHOLDER ENQUIRIES
There are no securities under voluntary escrow.
SHARE BUY-BACKS
There is no current or planned buy-back of The Star
Entertainment Group’s shares.
Investors seeking information about their shares in The Star
Entertainment Group should contact The Star Entertainment
Group’s share registry. Investors should have their Shareholder
Reference Number (SRN) or Holder Identification Number
(HIN) available to assist the share registry in responding to
their enquiries.
ANNUAL REPORT
This Annual Report is available on-line from The Star
Entertainment Group’s website:
www.starentertainmentgroup.com.au.
Annual Reports will only be sent to those shareholders who have
requested to receive a copy.
Shareholders who no longer wish to receive a hard copy of the
Annual Report or wish to receive the Annual Report electronically
are encouraged to contact the share registry. This will assist
with reducing the costs of production of the hard copy of the
Annual Report.
WEBSITE
The Star Entertainment Group’s website
www.starentertainmentgroup.com.au offers investors a wide
range of information regarding its activities and performance,
including Annual Reports, interim and full year financial results,
webcasts of results and Annual General Meeting presentations,
major news releases and other company statements.
SHAREHOLDER RELATIONS
Investors seeking more information about the Company are
invited to contact The Star Entertainment Group’s Shareholder
Relations Team:
Address:
GPO Box 13348
George Street Post Shop
Brisbane QLD 4003
Telephone: +61 7 3228 0000
+61 7 3228 0099
Facsimile:
investor@star.com.au
Email:
SHARE REGISTRY
LINK MARKET SERVICES LIMITED
Address:
Level 12, 680 George Street
Sydney NSW 2000
Postal
address:
The Star Entertainment Group Limited
C/- Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Australia
Telephone: +61 1300 880 923 (toll free within Australia)
Facsimile: +61 2 9287 0303
E-mail:
Website:
starentertainment@linkmarketservices.com.au
www.linkmarketservices.com.au
GENERAL ENQUIRIES
Investor information is available on The Star Entertainment
Group’s website www.starentertainmentgroup.com.au,
including major announcements, Annual Reports, and
general company information.
2017 CORPORATE GOVERNANCE STATEMENT
The 2017 Corporate Governance Statement can be
found on The Star Entertainment Group’s website
www.starentertainmentgroup.com.au/corporate-governance.
2017 ANNUAL GENERAL MEETING
The Annual General Meeting of The Star Entertainment
Group Limited will be held on Thursday, 26 October 2017 in
the Sydney Lyric Theatre at The Star Sydney, 80 Pyrmont Street,
Pyrmont, New South Wales, commencing at 11:00am
(Sydney time).
135
THE STAR ENTERTAINMENT GROUP ANNUAL REPORT 2017
COMPANY DIRECTORY
REGISTERED OFFICE
QUEEN’S WHARF BRISBANE
KEY DATES FOR FY2017/18*
The Star Entertainment Group Limited
Level 3, 159 William Street
Brisbane Qld 4000
Telephone:
Facsimile:
Email:
+ 61 7 3228 0000
+ 61 7 3228 0099
investor@star.com.au
WEBSITE
www.starentertainmentgroup.com.au
NEW SOUTH WALES OFFICE
Ground Floor, 60 Union Street
Pyrmont NSW 2009
Telephone:
+ 61 2 9657 7600
QUEENSLAND OFFICE
Level 3
159 William Street
Brisbane QLD 4000
Telephone:
+ 61 7 3228 0000
STOCK EXCHANGE LISTING
The Star Entertainment Group’s
securities are quoted on the Australian
Securities Exchange (ASX) under the
share code “SGR”.
THE STAR SYDNEY
80 Pyrmont Street
Pyrmont NSW 2009
Reservations: 1800 700 700
Telephone:
www.thestarsydney.com.au
+ 61 2 9777 9000
THE STAR GOLD COAST
Broadbeach Island
Gold Coast QLD 4218
Reservations: 1800 074 344
Telephone:
www.thestargoldcoast.com.au
+ 61 7 5592 8100
TREASURY CASINO
AND HOTEL BRISBANE
George Street
Brisbane QLD 4000
Reservations: 1800 506 889
Telephone:
+ 61 7 3306 8888
www.treasurybrisbane.com.au
136
1800 104 535
GENERAL ENQUIRIES
Telephone:
Email:
qwbenquiries@destinationbrisbane.com.au
www.queenswharfbrisbane.com.au
FY2017 FULL YEAR RESULTS
ANNOUNCEMENT
23 August 2017
FINAL DIVIDEND RECORD DATE
29 August 2017
AUDITOR
Ernst & Young
ABOUT THIS ANNUAL REPORT
CURRENCY
References to currency in this Annual
Report are in Australian Dollars unless
otherwise stated.
COPYRIGHT
Information in this report has been
prepared by The Star Entertainment
Group Limited, unless otherwise indicated.
Information may be reproduced provided
it is reproduced accurately and not in a
misleading context. Where the material
is being published or issued to others,
the sources and copyright status should
be acknowledged.
FINAL DIVIDEND PAYMENT DATE
26 September 2017
2017 ANNUAL GENERAL MEETING
26 October 2017
FY2018 HALF YEAR RESULTS
ANNOUNCEMENT
16 February 2018
2018 FINANCIAL YEAR END
30 June 2018
FY2018 FULL YEAR RESULTS
ANNOUNCEMENT
24 August 2018
2018 ANNUAL GENERAL MEETING
1 November 2018
*Dates are subject to change
INVESTMENT WARNING
This Annual Report may include
forward looking statements and
references which, by their very nature,
involve inherent risks and uncertainties.
These risks and uncertainties may be
matters beyond The Star Entertainment
Group’s control and could cause actual
results to vary (including materially)
from those predicted.
Forward looking statements are not
guarantees of future performance. Past
performance of shares is not indicative
of future performance and should not
be relied upon as such. The value of
investments and any income from them
is not guaranteed and can fall as well
as rise. The Star Entertainment Group
recommends that investors make their
own assessments and seek independent
professional advice before making
investment decisions.
PRIVACY
The Star Entertainment Group respects
the privacy of its stakeholders. The Star
Entertainment Group’s Privacy Policy
Statement is available on The Star
Entertainment Group’s website at
www.starentertainmentgroup.com.au.
THE STAR ENTERTAINMENT GROUP
ANNUAL REPORT 2017