SKYCITY ENTERTAINMENT GROUP LIMITED INTERIM REPORT 2012

Transcription

1 SKYCITY ENTERTAINMENT GROUP LIMITED IR INTERIM REPORT 2012

2 HIGHLIGHTS $78.8 Reported net profit after tax of mi up 17.4% on first half last year Record first half financial results Revenues (1) $m up 10.3% on first half last year auckland revenues $m up 14.4% on 1H11 EBITDA 11.5% UP on first half last year Rugby World Cup 2011 was a one-off boost to Revenue of $11.5m, EBITDA of $6.5m and NPAT of $4.7m. KEY FINANCIAL RESULTS 1H12 1H11 Movement Movement $ $ $ % Reported Group Revenues (1) Reported EBITDA Reported NPAT (1) On pages 1 to 6, revenues refer to gaming win (GST inclusive to facilitate Australasian comparisons) plus non-gaming revenues. CONTENTS CEO s Report 3 FINANCIAL STATEMENTS 7 Directory 25 pg 1

3 llion Earnings per share per 13.7cents share up from 11.7cps on first half last year Interim dividend of per 9.0cents share up 1.0cps from FY11 interim dividend NET DEBT EBITDA OF 2.0:1 Strong balance sheet with $585m committed undrawn facilities, Including new attractively priced 7-year $185m bank facility which will be partly used to repay the $256m USPP due in March KEY FINANCIAL RESULTS 1H12 1H11 Movement Movement $ $ $ % Normalised Group Revenues (1) Normalised EBITDA Normalised NPAT (1) On pages 1 to 6, revenues refer to gaming win (GST inclusive to facilitate Australasian comparisons) plus non-gaming revenues. A copy of the FY12 interim result presentation can be found in the investor centre on our company website; pg 2

4 CHIEF EXECUTIVE S REview ecord first half financial results Dear shareholder, I m pleased to report that the momentum which commenced in January 2011 has continued through the first half of the 2012 Financial Year and this calendar year also, creating a solid platform for a strong financial year. pg 3

5 CHIEF EXECUTIVE S REview NIGEL MORRISON / MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER Recent HIGHLIGHTS Group revenues $494m, up $46.3m (+10.3%) with flagship Auckland revenues $268.9m, up $33.8m (+14.4%). $50m capital investment in Auckland showing strong returns on invested capital and together with the Rugby World Cup, drove a record first half result with Reported NPAT of $78.8m, up $11.7m, (+17%). Positive negotiations continue with the New Zealand Government on the National Convention Centre. Continuing discussions with the South Australia Government on Adelaide re development and expansion. A strong balance sheet, enhanced by new attractively priced 7-Year $185m bank funding. Gearing (net debt:ebitda) remains strongly investment grade at 2.0 times, with $585m undrawn committed facilities. Earnings per Share of 13.7cps up 2 cps (+17%). Interim dividend of 9.0 cents per share, up 1.0 cent (+12.5%) on 1H11. The 2012 Financial Year had a pleasing start for SKYCITY with the first six months revenues up $46.3 million (+10.3 %) over last year and up $41.9m (+9.4%) on a normalised basis. We have delivered a record first half Net Profit after Tax of $78.8m up $11.7m (+17.4%) and $77.0m up $9.6m (+14.2%) on a normalised basis. Strong revenue growth has led to Group EBITDA increasing to $168.2m up $17.3m (+11.5%) over last year and to $165.5m up $14.1m (+9.3%) on a normalised basis. New Zealand While not as significant as we originally envisaged, the Rugby World Cup 2011 hosted in New Zealand in September and October, provided an influx of people across our properties in both Auckland and Hamilton, which we estimate delivered around $11.5m in revenues and $6.5m in EBITDA. However, our strong start to the financial year is mainly due to solid fundamentals in our core Auckland gaming businesses. This is attributable to the recent $50 million revitalisation of the Auckland property, continued improvements in gaming machines revenues and growth in our International Business following the opening of our Horizon suites and salons in July Auckland SKYCITY s solid results have been driven primarily out of the Auckland CapEx programme. The transformational $50 million pg 4

6 CHIEF EXECUTIVE S REview continued revitalisation of the Auckland property was completed part way through this first half year and has contributed significantly to the momentum in SKYCITY s Auckland results. The new Horizon suites and private gaming salons are attracting new international players, not previously visiting SKYCITY Auckland. First half International Business turnover in Auckland was up 26% against last year and up 195% against the same period in FY10, with turnover exceeding $1.4 billion to 31 December The Chinese New Year period in January and early February 2012 has continued to demonstrate growth, with international turnover in Auckland up over 50% on the prior year. Our refurbished VIP Platinum room and the successful opening of the new Diamond private gaming room resulted in increased market share for SKYCITY Auckland s gaming machines, which were up 16.7% on prior year revenue. The development of our three new signature restaurants and bars in Federal Street (Depot by Al Brown, The Grill by Sean Connolly and Red Hummingbird by Luke Dallow) has been a resounding success and introduced new customers to the SKYCITY precinct. It has reaffirmed SKYCITY s positioning as Auckland s leading entertainment destination. The new Fortuna Buffet is serving record numbers of gaming customers while The Nation s Clubrooms has provided a focal point for our major sponsorships, The Warriors, The SKYCITY Breakers and The Blues. Normalised revenues at our flagship Auckland property, including Auckland s share of International Business revenue, were $268.9 million, up $33.8 million (+14.4%) from $235.1 million. Non-gaming revenues from the SKYCITY Grand and SKYCITY Hotel, along with our bars, restaurants and other facilities were up $13 million (+23%), with this mainly due to the Rugby World Cup finals period in October and the opening of the new Federal Street outlets. As mentioned previously, the impact of the Rugby World Cup was less significant than expected, but still delivered approximately $10.7m revenue and $6m EBITDA to our Auckland property. Since the re-election of the National Government in November 2011, discussions with Government have been progressing proactively and we remain focused upon successfully negotiating an outcome which would see SKYCITY investing $350 million to deliver an iconic Convention Centre for New Zealand. In return, we are seeking an early renewal of the Auckland casino licence beyond 2021, an increase in gaming product to meet demand and provide for future growth and changes to gaming regulations which would increase the efficiency and attractiveness of the offering we are able to provide our customers. Shareholders should remain assured that unless we are confident of achieving acceptable returns on capital, the project will not proceed. Hamilton Our Hamilton property continues to perform well, with revenues of $26.5 million up $3.2 million (+13.7%) on the previous period. Of this, we estimate revenue of approximately $0.8 million is due to Rugby World Cup visitors who were present during the early stages of the tournament. Excluding the Rugby World Cup, underlying revenue growth remains strong at around 10% compared to the same period last year. The addition of a 4+ star hotel with 135 rooms above our Hamilton property is still being considered. We continue to believe this development would bring much needed quality hotel accommodation to central Hamilton and significantly improve the facilities that we are able to offer to our customers in a market which continues to demonstrate growth. pg 5

7 CHIEF EXECUTIVE S REview continued Adelaide Adelaide has continued its strong momentum with revenue up 6.9% and EBITDA up 12.9%. Strong volume growth in local table games increased revenue by more than 8% year on year and gaming machines delivered nearly 9% revenue growth. In October, the South Australian State Government released its Master Plan for the redevelopment of the Riverbank Precinct. The Government s Master Plan potentially provides for a significant expansion and redevelopment of the Adelaide Casino which would allow SKYCITY to create a truly world class integrated entertainment facility, featuring a boutique 5 star hotel, expanded gaming facilities, including International and VIP gaming suites and salons, signature restaurants and bars, a spa and roof top pool lounge. Since December, we have been working closely with the South Australian Casino Task Force regarding the future regulatory framework for the Adelaide Casino. The outcome of these discussions will allow us to determine whether to proceed or not with progressing our plans for the transformation of the Adelaide Casino. While we are excited about the outstanding growth opportunity this transformational project potentially represents for SKYCITY, shareholders should be assured that this project will only proceed if we can be confident of achieving an acceptable return on the potential investment. Darwin Our Darwin property has experienced some challenging times following the introduction of the smoking ban in 2010, the ban on live cattle exports, a soft tourism market and the high Australian dollar encouraging locals to travel abroad. However, our gaming revenues are now returning to growth and local table games in particular had a strong first half, with revenue growth up 11.9% on last year. After several periods of decline, EBITDA has now also returned to modest growth. Our Lagoon Resort is on budget and scheduled to open in July this year. The Lagoon Resort, now including a number of International VIP Villas and gaming pavilions, will provide our Darwin property with the opportunity to compete in the International VIP market. This together with the recently announced business class flights direct from Singapore, Darwin s proximity to Asia and the recently announced $32 billion Inpex Ichthys LNG project, gives us confidence that our Darwin property has a very bright future. Furthermore, we are pleased to advise that the SKYCITY Darwin casino licence has been successfully extended for a further five years to 30 June Outlook for 2012 Given the strong first half results, the continued momentum we have experienced in January and February, including a strong Chinese New Year, the increasing demand for our Horizon suites and salons and the success of our CapEx programme in Auckland, we expect Normalised Net Profit after Tax for the full year to be at the top end of our previous guidance range in the high $140 millions, up from $130.9m last year. Finally, I would like to thank my executive management team for their commitment and hard work, the Chairman Rod McGeoch and the Board for its guidance and support and all SKYCITY management and staff for their dedication and contribution to this result. Yours sincerely Nigel Morrison / Chief Executive OFFICER and managing director. 14 march 2012 pg 6

8 For the six month period ended 31 December 2011 trong Balance sheet Our strong balance sheet includes $585m committed undrawn facilities including new attractively priced seven-year $185m bank facility which will be partly used to repay the $256m USPP due in March pg 7

9 INDEPENDENT ACCOUNTANTS REPORT To the shareholders of SKYCITY Entertainment Group Limited Report on the Interim Financial Statements We have reviewed the interim condensed financial statements ( financial statements ) of SKYCITY Entertainment Group Limited ( the Group ) on pages 9 to 24, which comprise the balance sheets as at 31 December 2011, the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows for the period then ended, and the notes to the financial statements that include a summary of significant accounting policies and other explanatory information. Directors Responsibility for the Interim Financial Statements The Company s Directors are responsible for the preparation and presentation of the financial statements that present fairly the financial position of the Group as at 31 December 2011 and its financial performance and cash flows for the period ended on that date. Accountants Responsibility We are responsible for reviewing the financial statements presented by the Directors in order to report to you whether, in our opinion and on the basis of the procedures performed by us, anything has come to our attention that would indicate that the financial statements do not present fairly the matters to which they relate. A review is limited primarily to enquiries of company personnel and analytical review procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit on the financial statements and, accordingly, we do not express an audit opinion. We have reviewed the financial statements of the Group for the period ended 31 December 2011 in accordance with the Review Engagement Standards issued by the New Zealand Institute of Chartered Accountants. We have no relationship with, or interest in, SKYCITY Entertainment Group Limited other than in our capacities as accountants conducting this review, auditors, tax and accounting advisors. These matters have not impaired our independence as accountants of the Group. Opinion Based on our review, nothing has come to our attention that causes us to believe that the financial statements which have been prepared in accordance with International Accounting Standard 34 and New Zealand Equivalent to International Accounting Standard 34: Interim Financial Reporting do not present fairly the financial position of the Group as at 31 December 2011 and its financial performance and cash flows for the period ended on that date. Restriction on Distribution or Use This report is made solely to the Company s shareholders, as a body. Our review work has been undertaken so that we might state to the Company s shareholders those matters which we are required to state to them in an accountants report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company s shareholders as a body, for our review procedures, for this report or for the opinions we have formed. Chartered Accountants 15 February 2012 Auckland pg 8

10 Consolidated Income Statements UNAUDITED UNAUDITED AUDITED 6 MONTHS 6 MONTHS 12 MONTHS For the six month period ended 31 December 2011 notes $ 000 $ 000 $ 000 Total receipts including GST 3 505, , ,381 Less non-gaming GST 3 (14,512) (11,526) (22,562) Gaming win plus non-gaming revenue 3 490, , ,819 Less gaming GST 3 (42,721) (37,111) (76,674) Total revenue 3 447, , ,145 Revenue 3 447, , ,145 Other income ,261 Share of net profit of associate 2,419 3,222 5,976 Employee benefits expense (139,316) (130,076) (260,676) Other expenses 5 (53,099) (49,785) (92,623) Direct consumables (31,377) (24,950) (52,607) Gaming taxes and levies (32,337) (30,562) (61,275) Marketing and communications (25,587) (23,398) (44,886) Directors fees (535) (350) (741) Depreciation and amortisation expense 5 (36,236) (34,521) (69,710) Restructuring costs (800) (648) (3,298) Impairment of Christchurch Casino (15,000) Finance costs net 6 (25,498) (23,180) (43,772) Profit before income tax 106,497 93, ,794 Tax expense pre Government Budget changes (27,582) (26,025) (48,226) Profit before tax expense relating to Government Budget changes 78,915 67, ,568 Tax expense relating to Government Budget changes 5,435 Profit for the year 78,915 67, ,003 Income tax expense (27,582) (23,180) (42,791) Attributable to: Shareholders of SKYCITY Entertainment Group Limited 78,826 67, ,960 Profit attributable to non controlling interest ,915 67, ,003 Cents Cents Cents Earnings per share for profit attributable to the shareholders of the company Basic earnings per share (cents) Diluted earnings per share (cents) The above consolidated income statements should be read in conjunction with the accompanying notes. pg 9

11 STATEMENT OF COMPREHENSIVE INCOME UNAUDITED UNAUDITED AUDITED 6 MONTHS 6 MONTHS 12 MONTHS For the six month period ended 31 December 2011 $ 000 $ 000 $ 000 Profit for the period 78,915 67, ,003 Other comprehensive income Movement in cash flow hedges (1,111) (2,997) (13,733) Exchange differences on translation of overseas subsidiaries 6,898 18,235 5,397 Income tax relating to components of other comprehensive income 243 1,060 4,133 Other comprehensive income/(expenses) for the period, net of tax 6,030 16,298 (4,203) Total comprehensive income for the period 84,945 83, ,800 Total comprehensive income for the period is attributable to: Shareholders of the company 84,856 83, ,757 Non controlling interest ,945 83, ,800 The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes. pg 10

12 Consolidated balance sheets UNAUDITED UNAUDITED AUDITED as at 31 december 2011 notes $ 000 $ 000 $ 000 ASSETS Current assets Cash and bank balances 104,010 76, ,577 Receivables and prepayments 23,221 27,127 30,901 Inventories 7,975 8,592 6,970 Tax prepayment 36,428 9,872 36,637 Derivative financial instruments 2, Total current assets 174, , ,357 Non current assets Tax prepayment 14,580 30,491 27,789 Property, plant and equipment 1,031, , ,331 Intangible assets 419, , ,412 Investment in associate 75,210 86,028 73,782 Derivative financial instruments 21,700 2,667 Total non current assets 1,562,169 1,513,485 1,503,314 Total assets 1,736,429 1,635,834 1,682,671 LIABILITIES Current liabilities Payables 98,714 99, ,852 Current tax liabilities 9,430 9,846 5,349 Derivative financial instruments 1,013 10,102 Interest bearing liabilities 8 256, , ,267 Total current liabilities 365, , ,570 Non current liabilities Interest bearing liabilities 8,9 370, , ,202 Subordinated debt capital notes 56,405 56,393 56,400 Deferred tax liabilities 92,378 95,363 94,290 Derivative financial instruments 39,968 24,126 33,393 Total non current liabilities 559, , ,285 Total liabilities 924, , ,855 Net assets 811, , ,816 EQUITY Share capital , , ,616 Reserves 11(a) 9,712 24,183 3,682 Retained profits 11(b) 73,897 31,325 41,150 Parent entity interest 810, , ,448 Non controlling interest 1,457 1,351 1,368 Total equity 811, , ,816 The above consolidated balance sheets should be read in conjunction with the accompanying notes. pg 11

13 Consolidated statements of changes in equity foreign currency S share HEDGING TRANSLATION RETAINED MINORITY TOTAL capital reserves RESERVE PROFITS INTEREST EQUITY For the six month period ended 31 December 2011 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Balance as at 1 July ,616 (12,340) 16,022 41,150 1, ,816 Total comprehensive income/(expense) (868) 6,898 78, ,945 Shares issued under dividend reinvestment plan 4,736 4,736 Dividends (46,079) (46,079) Share rights issued for employee services Net purchase of treasury shares (7,492) (7,492) Balance as at 31 December ,565 (13,208) 22,920 73,897 1, ,631 Balance as at 1 July ,910 (2,740) 10,625 17,397 1, ,517 Total comprehensive income/(expense) (1,937) 18,235 67, ,450 Dividends (53,198) (53,198) Share rights issued for employee services Net purchase of treasury shares (3,810) (3,810) Balance as at 31 December ,559 (4,677) 28,860 31,325 1, ,418 Balance as at 1 July ,910 (2,740) 10,625 17,397 1, ,517 Total comprehensive income/(expense) (9,600) 5, , ,800 Shares issued under dividend reinvestment plan 6,101 6,101 Dividends (99,207) (99,207) Share rights issued for employee services 1,047 1,047 Net purchase of treasury shares (11,442) (11,442) Balance as at 30 June ,616 (12,340) 16,022 41,150 1, ,816 The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes. pg 12

14 statements of cashflows UNAUDITED UNAUDITED AUDITED 6 months 6 months 12 months For the six month period ended 31 December 2011 notes $ 000 $ 000 $ 000 Cash flows from operating activities Receipts from customers 455, , ,231 Payments to suppliers and employees (252,693) (238,014) (469,413) 202, , ,818 Dividends received Interest received Gaming taxes paid (28,699) (26,484) (54,896) Income taxes paid (11,752) (19,169) (62,496) Net cash inflow/(outflow) from operating activities , , ,365 Cash flows from investing activities Purchase of/proceeds from property, plant and equipment (82,254) (31,848) (74,822) Payments for intangible assets (5,205) (3,783) (1,893) Loan repayment from Christchurch Hotels Limited Net cash inflow/(outflow) from investing activities (87,299) (35,504) (76,521) Cash flows from financing activities New borrowings 163, ,799 Cash flows associated with derivatives (20,884) Repayment of borrowings (199,359) (362,359) Net purchase of treasury shares (7,492) (3,810) (11,442) Dividends paid to company s shareholders (41,343) (53,198) (93,106) Interest paid (27,885) (19,474) (44,781) Net cash (outflows) from financing activities (76,720) (112,841) (130,773) Net (decrease)/increase in cash and cash equivalents (567) (26,083) 2,071 Cash and bank balances at the beginning of the period 104, , ,506 Cash and cash equivalents at end of the half year 104,010 76, ,577 The above statements of cashflows should be read in conjunction with the accompanying notes. pg 13

15 Notes to the financial statements 1 General information SKYCITY Entertainment Group Limited (SKYCITY or the company and its subsidiaries or the Group) operates in the gaming/entertainment, hotel and convention, hospitality, recreation, and tourism sectors. The Group has operations in New Zealand and Australia. SKYCITY is a limited liability company incorporated and domiciled in New Zealand. The address of its registered office is Federal House, 86 Federal Street, Auckland. The company is dual listed on the New Zealand and Australian stock exchanges. SKYCITY is a company registered under the Companies Act 1993 and is an issuer in terms of the Securities Act These consolidated interim financial statements have been prepared in accordance with the requirements of the Financial Reporting Act These consolidated financial statements have been approved for issue by the board of directors on 15 February Summary of significant accounting policies These general purpose financial statements for the interim half year reporting period ended 31 December 2011 have been prepared in accordance with generally accepted accounting practice in New Zealand, International Accounting Standard 34 and NZ IAS 34 Interim Financial Reporting. The preparation of interim financial statements in accordance with NZ IAS 34 Interim Financial Reporting requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. These financial statements have been prepared under the historical cost convention except for the revaluation of certain financial instruments (including derivative instruments). The Group is designated as a profit oriented entity for financial reporting purposes. The Group has a negative working capital balance as a portion of the USPP debt is a current liability as at 31 December The Group has the ability to service and repay this debt. As detailed in note 9, the Group has significant committed long term bank facilities that are unutilised and available to repay the due debt. The accounting policies that materially affect the measurement of the Income Statements, Balance Sheets and the Statements of Cash Flows have been applied on a basis consistent with those used in the audited financial statements for the year ended 30 June 2011 and the unaudited financial statements for the six months ended 31 December These interim financial statements do not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June (a) Changes in accounting policies There have been no significant changes in accounting policies during the current period. Accounting policies have been applied on a basis consistent with prior half year and annual financial statements. pg 14

16 Notes to the financial statements continued 3 Revenue 6 MONTHS 6 MONTHS 12 MONTHS $ 000 $ 000 $ 000 Total receipts including GST 505, , ,381 Less non-gaming GST (14,512) (11,526) (22,562) Gaming win plus non-gaming revenue 490, , ,819 Less gaming GST (42,721) (37,111) (76,674) Total revenue 447, , ,145 Gaming 341, , ,051 Non gaming 106,252 93, ,094 Total revenue 447, , ,145 Included within gaming revenue is revenue relating to loyalty action points of $6,188,000 (31 December 2010: $4,861,000, 30 June 2011: $10,486,000). Included within non gaming revenue is revenue relating to loyalty action points of $155,000 (31 December 2010: $159,000, 30 June 2011: $306,000). Gaming win represents the gross cash inflows associated with gaming activities. Total receipts including GST and Gaming win plus non gaming revenue do not represent revenue as defined by NZ IAS 18 Revenue. The Group has decided to disclose these amounts as they give shareholders and interested parties a better appreciation for the scope of the Group s gaming activities and is consistent with industry practice adopted by casino operations in Australia. 4 Other income 6 MONTHS 6 MONTHS 12 MONTHS $ 000 $ 000 $ 000 Net gain on disposal of property, plant and equipment ,065 Interest income Christchurch Hotels Limited Dividend income ,261 pg 15

17 Notes to the financial statements continued 5 Profit before income tax 6 MONTHS 6 MONTHS 12 MONTHS $ 000 $ 000 $ 000 Profit before income tax includes the following specific expenses: Depreciation Buildings 12,648 12,640 24,198 Plant and equipment 17,187 14,184 31,402 Furniture and fittings 3,357 3,568 6,834 Motor vehicles Total depreciation 33,387 30,564 62,838 Amortisation Casino licence (Adelaide) 1,338 1,346 2,736 Software 1,511 2,611 4,136 Total amortisation 2,849 3,957 6,872 Total depreciation and amortisation 36,236 34,521 69,710 Other expenses includes: Utilities, insurance and rates 10,581 9,750 19,616 Community Trust donations 1,622 1,524 3,185 Minimum lease payments relating to operating leases 2,211 2,156 4,408 Other property expenses 8,032 7,690 15,302 Other items (including International commissions) 30,635 28,624 50,031 Provision for bad and doubtful debts ,099 49,785 92,623 Restructuring costs Redundancy and other staff payments ,471 Other restructuring costs ,298 pg 16

18 Notes to the financial statements continued 6 Finance costs net 6 MONTHS 6 MONTHS 12 MONTHS $ 000 $ 000 $ 000 Finance costs Interest and finance charges 27,718 24,914 50,280 Exchange gains (640) (780) (2,105) Interest Income (1,580) (954) (2,783) Gain on funding reorganisation (1,620) Total net finance costs 25,498 23,180 43,772 7 Significant Associates and Joint Ventures The Group holds a 50% (31 December 2010: 50%; 30 June 2011: 50%) interest in Christchurch Casinos Limited (33.3% direct and 16.7% indirect). 8 Current liabilities Interest bearing liabilities $ 000 $ 000 $ 000 Unsecured Syndicated Bank Facility 163,000 US Private Placement 256, ,267 Total current interest bearing borrowings 256, , ,267 Refer note 9 (Non current liabilities) for details of Syndicated Bank Facility and USPP. pg 17

19 Notes to the financial statements continued 9 Non current liabilities Interest bearing liabilities $ 000 $ 000 $ 000 Unsecured US Private Placement 372, , ,202 Deferred funding expenses (1,312) (814) Total unsecured non current interest bearing borrowings 370, , ,202 (a) United States Private Placement (USPP) On 15 March 2005 SKYCITY borrowed NZ$96,571,000, A$74,900,000 and US$274,500,000 with maturities between 2012 and 2020 from private investors (primarily US based) on an unsecured basis. In July and August 2009, the Group repurchased USD115,500,000 of USPP debt. All repurchased debt was previously maturing in March In March 2011, additional US$175,000,000 of USPP debt was raised, US$100,000,000 with 10 year maturity and US$75,000,000 with 7 years. The USPP fixed rate US dollar borrowings have been converted to New Zealand and Australian dollar floating rate borrowings by use of cross currency interest rate swaps to eliminate foreign exchange exposure to the US dollar within the Income Statement. Concurrent with the debt repurchase in 2009, all cross currency interest rate swaps and interest rate swaps hedging the relevant debt were closed out. March 2012 maturities of USPP (US$85,000,000, A$74,900,000, NZ$47,275,000) have been recognised as current liabilities (refer note 8). The movement in the USPP from 30 June 2011 relates to foreign exchange and interest rate movements. (b) Syndicated bank facility As at 30 June 2011, the revolving credit bank facility was $400,000,000 being two tranches of $200,000,000 (maturing April 2014 and June 2016). During the six months to 31 December 2011, the $200,000,000 tranche maturing April 2014 was extended to January Also, a NZ$85,000,000 revolving credit facility maturing March 2019 and an A$75,000,000 term facility maturing March 2019 were added. The funding syndicate is comprised of ANZ National Bank Limited, Bank of New Zealand Limited, Commonwealth Bank of Australia, New Zealand Branch and Westpac New Zealand Limited. As at 31 December 2011 the bank facility was undrawn (31 December 2010: $163,000,000; 30 June 2011: undrawn). pg 18

20 Notes to the financial statements continued 10 Share capital 31 December 31 December 30 June ShARES SHARES SHARES $ 000 $ 000 $ 000 Opening balance of ordinary shares issued 576,958, ,114, ,114, , , ,910 Share rights issued for employee services ,047 Employee share entitlements issued 610, ,034 Treasury shares issued (2,028,915) (275,034) Net purchase of treasury shares (7,492) (3,810) (11,442) Shares issued under dividend reinvestment plan 1,418,511 1,843,653 4,736 6, ,958, ,114, ,958, , , ,616 Included within the number of shares are treasury shares of 4,581,160 (31 December 2010: 2,426,800 and 30 June 2011: 4,351,766) held by the company. The movement in treasury shares during the period related to the purchase of shares by an external trustee as part of the executive long term incentive plan. Treasury shares may be used to issue shares under the company s employee incentive plan or upon the exercise of share rights/options. pg 19

21 Notes to the financial statements continued 11 Reserves and retained profits 6 MONTHS 6 MONTHS 12 MONTHS $ 000 $ 000 $ 000 (a) Reserves Hedging reserve cash flow hedges (13,208) (4,677) (12,340) Foreign currency translation reserve 22,920 28,860 16,022 9,712 24,183 3,682 Hedging reserve cash flow hedges Balance at the beginning of the period (12,340) (2,740) (2,740) Revaluation 27,728 (26,707) (77,025) Transfer to net profit (28,839) 23,710 63,292 Deferred tax 243 1,060 4,133 Balance 31 December (13,208) (4,677) (12,340) Foreign currency translation reserve Balance at the beginning of the period 16,022 10,625 10,625 Exchange differences on translation of overseas subsidiaries 6,898 18,235 5,397 Balance 31 December 22,920 28,860 16,022 (i) Hedging reserve cash flow hedges The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in equity. Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss. (ii) Foreign currency translation reserve Exchange differences arising on translation of the foreign operations are taken to the foreign currency translation reserve. The reserve is recognised in profit and loss when the net investment is disposed of. (b) Retained profit Movements in retained profit were as follows: Balance at the beginning of the period 41,150 17,397 17,397 Profit attributable to shareholders of the company 78,826 67, ,960 Dividends (46,079) (53,198) (99,207) Balance at the end of the period 73,897 31,325 41,150 pg 20

22 Notes to the financial statements continued 12 Dividends $ 000 $ 000 $ 000 Prior year s final dividend 46,079 53,198 53,198 Interim dividend 46,009 Total dividends provided for or paid 46,079 53,198 99,207 Subsequent to balance date the Board of Directors has resolved to pay a 60% imputed/60% franked interim dividend of 9 cents per share. Cents per share Prior year s final distribution/dividend Interim distribution/dividend n/a n/a Contingencies There are no significant contingent liabilities or assets (31 December 2010 and 30 June 2011: none). 14 Commitments (a) Capital commitments Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows: $ 000 $ 000 $ 000 Property, plant and equipment 61,296 26,412 59,695 (b) Operating lease commitments $ 000 $ 000 $ 000 Commitments for minimum lease payments in relation to non cancellable operating leases are payable as follows: Within one year 7,500 7,170 5,482 Later than one year but not later than five years 20,062 13,401 13,419 Later than five years 326, , , , , ,574 pg 21

23 Notes to the financial statements continued 15 Segment information Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer/ Managing Director that are used to make strategic decisions. The Group is organised into the following main operating segments: SKYCITY Auckland SKYCITY Auckland includes casino operations, hotels and convention, food and beverage, carparking, Sky Tower, and a number of other related activities. Rest of New Zealand Rest of New Zealand includes the Group s interest in SKYCITY Hamilton, SKYCITY Queenstown Casino and Christchurch Casino. SKYCITY Adelaide SKYCITY Adelaide includes casino operations and food and beverage. SKYCITY Darwin SKYCITY Darwin includes casino operations, food and beverage and hotel. International Business International Business includes commission and complimentary play. The international business segment is made up of customers sourced mainly from Asia, and the rest of the world. The revenue is generated at SKYCITY s Auckland, Darwin, Adelaide and Queenstown locations. Corporate/Group Head office functions including legal and regulatory, group finance, human resources and information technology, the Chief Executive s office and directors. skycity Rest of SKYCITY SKYCITY International Corporate/ Half year ended auckland New Zealand Adelaide Darwin Business Group Total 31 December 2011 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue from external customers and other revenue 228,121 27,001 93,683 75,658 24, ,863 Share of net profits of associate 2,419 2,419 Less Expenses (118,288) (15,317) (69,951) (48,849) (15,818) (14,828) (283,051) Depreciation and amortisation (19,495) (2,874) (5,301) (5,754) (2,812) (36,236) Segment profit/(loss) (Earnings before Interest and Tax) 90,338 11,229 18,431 21,055 8,582 (17,640) 131,995 Finance costs net (25,498) Profit before income tax 106,497 pg 22

24 Notes to the financial statements continued skycity Rest of SKYCITY SKYCITY International Corporate/ Half year ended auckland New Zealand Adelaide Darwin Business Group Total 31 December 2010 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue from external customers and other revenue 201,438 24,716 88,067 74,876 18, ,425 Share of net profits of associate 3,222 3,222 Less Expenses (104,583) (14,121) (67,309) (48,428) (12,295) (13,033) (259,769) Depreciation and amortisation (17,327) (2,512) (5,319) (5,875) (3,488) (34,521) Segment profit/(loss) (Earnings before Interest and Tax) 79,528 11,305 15,439 20,573 6,033 (16,521) 116,357 Finance costs net (23,180) Profit before income tax 93,177 skycity Rest of SKYCITY SKYCITY International Corporate/ year end ended auckland New Zealand Adelaide Darwin Business Group Total 30 JUNE 2011 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue from external customers and other revenue 396,208 49, , ,539 41, ,406 Share of net profits of associate 5,976 5,976 Less Expenses (205,522) (28,343) (135,629) (91,840) (25,356) (29,416) (516,106) Impairment of Christchurch Casino (15,000) (15,000) Depreciation and amortisation (35,089) (5,619) (10,976) (12,030) (5,996) (69,710) Segment profit/(loss) (Earnings before Interest and Tax) 155,597 6,666 33,831 32,669 16,215 (35,412) 209,566 Finance costs net (43,772) Profit before income tax 165,794 pg 23

25 Notes to the financial statements continued 16 Events occurring after the balance date Dividend On 15 February 2012, the directors resolved to provide for an interim dividend to be paid in respect of the six months ended 31 December The partially (60%) imputed, partially (60%) franked dividend of 9 cents per share will be paid on 5 April 2012 to all shareholders on the company s register at the close of business on 22 March Reconciliation of profit after income tax to net cash inflow from operating activities 6 MONTHS 6 MONTHS 12 MONTHS $ 000 $ 000 $ 000 Profit for the period 78,826 67, ,960 Non controlling interest Depreciation and amortisation 36,236 34,521 69,710 Finance costs net 25,498 23,180 43,772 Current period share rights expense ,047 Gain on sale of property, plant and equipment (778) (340) (1,065) Impairment of Christchurch Casinos 15,000 Share of profit of associate not received as dividends (1,428) (2,479) (5,233) Change in operating assets and liabilities Decrease/(increase) in receivables and prepayments 7,680 (3,946) (7,720) (Increase)/decrease in inventories (1,005) (1,430) 192 (Decrease)/increase in payables and accruals (12,138) (2,616) 9,052 (Decrease)/increase in deferred tax liability (1,912) 16 (1,057) Decrease/(increase) in net tax prepayment 17,499 5,779 (22,781) Capital items included in working capital movements 14,180 1,966 (14,555) Net cash inflow from operating activities 163, , ,365 pg 24

26 directory DIRECTORY REGISTERED OFFICE SKYCITY Entertainment Group Limited Level 6 Federal House 86 Federal Street PO Box 6443 Wellesley Street Auckland New Zealand Telephone: Facsimile: sceginfo@skycity.co.nz Registered Office in Australia c/o Finlaysons 81 Flinders Street GPO Box 1244 Adelaide South Australia Telephone: Facsimile: AUDITOR PricewaterhouseCoopers 188 Quay Street Auckland City Private Bag Auckland SOLICITORS Russell McVeagh Vero Centre 48 Shortland Street PO Box 8 Auckland Minter Ellison Rudd Watts Lumley Centre 88 Shortland Street PO Box 3798 Auckland Bell Gully Vero Centre 48 Shortland Street PO Box 4199 Auckland Finlaysons 81 Flinders Street GPO Box 1244 Adelaide South Australia SHARE REGISTRARS NEW ZEALAND Computershare Investor Services Limited Level Hurstmere Road Takapuna Private Bag Auckland Telephone: Facsimile: AUSTRALIA Computershare Investor Services Pty Limited Level 3 60 Carrington Street Sydney NSW 2000 GPO Box 7045 Sydney NSW 2000 Telephone: Facsimile: CAPITAL NOTES TRUSTEE The New Zealand Guardian Trust Company Limited Vero Centre 48 Shortland Street PO Box 1934 Auckland Telephone: Facsimile: pg 25

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