SKYCITY Entertainment Group Limited Income Statement For the six month period ended 31 December Restated Unaudited 6 months 31 December

Transcription

1

2 Income Statement Unaudited Unaudited Audited Notes Continuing operations Gaming win plus non-gaming revenue 458, , ,614 Gaming GST (48,815) (45,591) (91,786) Total revenue 409, , ,828 Other income 1, ,405 Share of losses from associates (201) (75) (347) Employee benefits expense (146,497) (134,915) (278,246) Other expenses 5 (46,266) (44,291) (86,373) Directors fees (591) (692) (1,273) Gaming taxes (19,457) (19,613) (38,422) Direct consumables (31,101) (30,373) (62,061) Marketing and communications (12,396) (11,845) (24,406) Community contributions, levies and sponsorships (6,707) (6,801) (14,260) Fair value adjustment to investment property - - (799) Earnings Before Interest, Taxes, Depreciation and Amortisation Expenses (EBITDA) 148, , ,046 Depreciation and amortisation expense 5 (40,669) (40,277) (80,861) Earnings Before Interest and Taxes (EBIT) 107, , ,185 Net finance costs 7 (5,957) (6,260) (12,526) Profit Before Income Tax 101, , ,659 Income tax expense (32,888) (30,193) (57,827) Profit from continuing operations 68,824 84, ,832 Profit from discontinued operations 14 14,000 8,576 10,687 Profit for the Period Attributable to Shareholders of the Company 82,824 93, ,519 Earnings per share for Profit Attributable to the Shareholders of the Company: Cents Cents Cents Attributable to continuing operations: Basic and diluted earnings per share Attributable to discontinuing operations: Basic earnings per share (cents) The above Income Statement should be read in conjunction with the accompanying notes. -1-

3 Statement of Comprehensive Income Unaudited Unaudited Audited Notes Profit for the period 82,824 93, ,519 Other Comprehensive Income Items that may be Reclassified Subsequently to Profit or Loss Exchange differences on translation of overseas subsidiaries (9,988) 10,917 8,436 Cashflow Hedge Reserve - Cash flow hedges - revaluations 5,068 (4,604) (18,241) - Cash flow hedges - transfer to finance costs (4,470) 569 8,376 - Cash flow hedges - income tax (229) 1,179 2,855 Cost of Hedging Reserve - Cost of hedging reserve - costs incurred 442 (2,828) (2,622) - Cost of hedging reserve - transfer to finance costs (233) - (135) - Cost of hedging reserve - income tax (58) Other Comprehensive (Expense) / Income for the Period Net of Tax (9,468) 6,025 (559) Total Comprehensive Income for the Period 73,356 99, ,960 The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes. -2-

4 Balance Sheet As at 2018 Unaudited Audited Unaudited Notes ASSETS Current Assets Cash and bank balances 59, ,774 75,955 Receivables and prepayments 30,597 21,279 23,379 Inventories 7,695 8,584 7,570 Current tax receivables 1,682 5,149 4,799 Derivative financial instruments 1,913 9,448 - Assets classified as held for sale 13 32,987-22,175 Assets of discontinued operations held for sale , Total Current Assets 345, , ,878 Non-Current Assets Property, plant and equipment 1,447,542 1,467,947 1,498,610 Investment properties 43,400-35,300 Intangible assets 788, , ,833 Investment in associate 2,089 2,562 2,290 Derivative financial instruments 48,768 38,245 42,597 Total Non-Current Assets 2,330,431 2,340,435 2,410,630 Total Assets 2,676,034 2,500,669 2,544,508 LIABILITIES Current Liabilities Payables 171, , ,725 Current tax liabilities 4,348 2,088 7,376 Derivative financial instruments 25 1, Interest bearing liabilities 8-105,678 - Liabilities of discontinued operations held for sale 14 18, Total Current Liabilities 194, , ,635 Non-Current Liabilities Interest bearing liabilities 9 643, , ,453 Provisions 2,007 3,166 3,288 Deferred tax liabilities 79,904 84,922 84,547 Derivative financial instruments 26,870 26,232 28,770 Deferred licence value 555, , ,835 Total Non-Current Liabilities 1,307,532 1,080,237 1,185,893 Total Liabilities 1,502,133 1,370,418 1,387,528 Net Assets 1,173,901 1,130,251 1,156,980 EQUITY Share capital 10 1,163,576 1,127,877 1,152,260 Reserves (73,397) (57,345) (63,929) Retained earnings 83,722 59,719 68,649 Total Equity 1,173,901 1,130,251 1,156,980 The above Balance Sheet should be read in conjunction with the accompanying notes. -3-

5 Statement of Changes in Equity Cashflow Foreign Currency Cost of Share Hedging Translation Hedging Retained Total Capital Reserve Reserve Reserve Earnings Equity Notes Balance as at 1 July 2018 as previously reported 1,152,260 (21,491) (40,453) (1,985) 69,695 1,158,026 Adjustment on adoption of IFRS (1,046) (1,046) balance at the beginning of the half-year 1,152,260 (21,491) (40,453) (1,985) 68,649 1,156,980 Total comprehensive income/(expense) (9,988) ,824 73,356 Dividends provided for or paid (67,751) (67,751) Share rights issued for employee service 10 2, ,475 Share rights issued under Dividend Reinvestment Plan 10 8, ,591 Net issue of treasury shares Balance as at ,163,576 (21,122) (50,441) (1,834) 83,722 1,173,901 Balance as at 1 July 2017 as previously reported 1,100,792 (14,481) (48,889) - 33,515 1,070,937 Adjustment on adoption of IFRS (1,046) (1,046) balance at the beginning of the half-year 1,100,792 (14,481) (48,889) - 32,469 1,069,891 Total comprehensive income/(expense) - (2,856) 10,917 (2,036) 93,460 99,485 Dividends provided for or paid (66,210) (66,210) Share rights issued for employee service 10 1, ,489 Share rights issued under Dividend Reinvestment Plan 10 25, ,596 balance as at ,127,877 (17,337) (37,972) (2,036) 59,719 1,130,251 Balance as at 1 July 2017 as previously reported 1,100,792 (14,481) (48,889) - 33,515 1,070,937 Adjustment on adoption of IFRS (1,046) (1,046) balance at the beginning of the year 1,100,792 (14,481) (48,889) - 32,469 1,069,891 Total comprehensive income/(expense) - (7,010) 8,436 (1,985) 169, ,960 Dividends provided for or paid (133,339) (133,339) Share rights issued under Dividend Reinvestment Plan 10 48, ,257 Share rights issued for employee service 10 2, ,983 Net issue of treasury shares balance as at ,152,260 (21,491) (40,453) (1,985) 68,649 1,156,980 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. -4-

6 Statement of Cash Flows Unaudited Unaudited Audited Notes Cash flows from operating activities Receipts from customers 462, , ,852 Payments to suppliers and employees (278,667) (231,311) (508,830) 183, , ,022 Gaming taxes paid (31,119) (30,731) (59,189) Income taxes paid (32,707) (41,530) (62,744) Net cash inflow from operating activities , , ,089 Cash flows from investing activities Purchase of property, plant and equipment (162,262) (146,438) (206,466) Payment for investment in associate - (2,637) (2,637) Payments for investment property (8,100) - (36,099) Payments for intangible assets (11,316) (3,059) (8,589) Net cash (outflow) from investing activities (181,678) (152,134) (253,791) Cash flows from financing activities Cash flows associated with derivatives 697 (7,697) 9,736 New borrowings 133, , ,956 Repayment of borrowings - - (112,459) Net issue / (purchase) of treasury shares Dividends paid to company shareholders (59,160) (40,614) (85,082) Interest paid (19,405) (15,083) (35,449) Net cash inflow / (outflow) from financing activities 55,382 46,606 (16,070) Net Movement in cash and bank balances (6,534) 59,047 19,228 Cash and bank balances at the beginning of the period 75,955 56,727 56,727 Cash and bank balance classified as discontinued operations 14 (9,481) - - Cash and cash equivalents at end of the period 59, ,774 75,955 The above Statement of Cash Flows should be read in conjunction with the accompanying notes. -5-

7 1 GENERAL INFORMATION (SKYCITY or the company and its subsidiaries or the Group) operates in the gaming, entertainment, hotel, convention, hospitality 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. The interim financial statements of the Group have been prepared in accordance with the requirements of the Financial Reporting Act 2013, the Companies Act 1993 and the New Zealand Stock Exchange (NZX). SKYCITY Entertainment Group Limited is a company registered under the Companies Act 1993 and is an FMC Reporting Entity under part 7 of the Financial Markets Conduct Act These financial statements have been approved for issue by the Board of Directors on 12 February SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These general purpose financial statements for the interim half-year reporting period ended 2018 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. The same significant judgements, estimates and assumptions included in the notes to the financial statements for the year ended 2018 have been applied to these interim financial statements. These financial statements have been prepared under the historical cost convention except for the revaluation of certain financial instruments (including derivative instruments) and investment properties. The Group is designated as a profit-oriented entity for financial reporting purposes. Other than the adoption of NZ IFRS 15, the accounting policies that materially affect the measurement of the Income Statement, Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and the Statement of Cash Flows have been applied on a basis consistent with those used in the audited financial statements for the year ended 2018 and the unaudited financial statements for the six months ended 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 In the current period the Darwin operations have been accounted for as a discontinued operation (note 14). As a result: - The Income Statement has been adjusted (including prior periods) to disclose the results of the Darwin operations as a single line. Revenue and expenses are separately disclosed in note 14 - Assets and liabilities of the Darwin operations in the 2018 Balance Sheet have been adjusted to a single line in current assets and currently liabilities respectively. The prior period Balance Sheets have not been adjusted - The Statement of Cash Flows includes the Darwin operations in all periods - Income Statement and Balance Sheet notes are consistent with the relevant primary statement (a) Changes in Accounting Policies The following new standards impacting disclosures are mandatory for the first time for the financial period commencing 1 July 2018: NZ IFRS 15, Revenue from Contracts with Customers -6-

8 (continued) NZ IFRS 15, 'Revenue from Contracts with Customers', deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. Revenue is recognised net of rebates to International Business customers. The standard replaced NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The Group adopted NZ IFRS 15 from 1 July The Group used the full retrospective approach to applying the new standard. As part of the impact of adopting NZIFRS 15, the Group reassessed how certain arrangements with International Business customers should be treated. As a result of adopting this new standard "Revenue" and "Other expenses" in the Income Statement and "Receipts from customers" and "Payments to suppliers and employees" in the Cash Flow Statement are all reduced by $44.7 million, $31.1 million and $68.6 million for periods ending 2018, 2017 and 30 June 2018 respectively. Also, liabilities for loyalty points increased by $1.0 million, with the adjustment being recognised in the 1 July 2017 opening retained earnings and payables. 3 SEGMENT INFORMATION Accounting policy Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Chief Executive Officer (CEO). SKYCITY Darwin has been treated as a discontinued operation within the financial statements. For internal management reporting purposes SKYCITY Darwin continues to be reported to the CEO on the same basis as previously and therefore the segment information note has been prepared on a consistent basis with prior periods. Consistent with internal management reporting, revenue from external customers within the segment note does not include the impact of NZ IFRS 15. Six Months Ended SKYCITY Rest of New SKYCITY SKYCITY International Corporate / 2018 Auckland Zealand Adelaide Darwin Business Group Total $'000 Revenue from external customers and other income 279,298 33,845 77,320 60,789 65, ,071 Share of net profit / (losses) of associates - (201) (201) Expenses (141,328) (20,597) (63,945) (44,127) (64,450) (16,663) (351,110) Depreciation and amortisation (23,666) (2,818) (9,435) (4,804) - (4,751) (45,474) Segment profit / (loss) (Earnings before Interest and Tax) 114,304 10,229 3,940 11,858 1,369 (21,414) 120,286 Net finance costs (including discontinued operations) (5,937) Discontinued operations before tax (note 14) (12,637) Profit before income tax from continuing operations 101,712 Six Months Ended SKYCITY Rest of New SKYCITY SKYCITY International Corporate / 2017 Auckland Zealand Adelaide Darwin Business Group Total Revenue from external customers and other income 263,150 32,845 78,832 63,331 66, ,624 Less Expenses (132,169) (19,440) (64,586) (45,047) (47,706) (15,099) (324,047) Depreciation and amortisation (25,187) (2,681) (9,087) (6,847) - (3,321) (47,123) Segment profit / (loss) (Earnings before Interest and Tax) 105,794 10,724 5,159 11,437 18,760 (18,420) 133,454 Net finance costs (including discontinued operations) (6,225) Discontinued operations before tax (note 14) (12,152) Profit before income tax from continuing operations 115,077-7-

9 (continued) 3 SEGMENT INFORMATION (continued) Year Ended SKYCITY Rest of New SKYCITY SKYCITY International Corporate / 2018 Auckland Zealand Adelaide Darwin Business Group Total Revenue from external customers and other income 531,028 65, , , , ,187 Share of net profit / (losses) of associates - (347) (347) Expenses (270,319) (36,315) (124,971) (85,020) (105,834) (35,653) (658,112) Depreciation and amortisation (50,385) (5,401) (18,287) (13,515) - (6,789) (94,377) Segment profit / (loss) (Earnings before Interest and Tax) 210,324 23,285 6,138 13,863 33,183 (42,442) 244,351 Net finance costs (including discontinued operations) (12,458) Discontinued operations before tax (note 14) (15,234) Profit before income tax from continuing operations 216,659 4 REVENUE Gaming win plus non-gaming revenue 458, , ,614 Gaming GST (48,815) (45,591) (91,786) Total revenue 409, , ,828 Gaming 306, , ,880 Non-gaming 103, , ,948 Total revenue 409, , ,828 Gaming win represents the gross cash inflows associated with gaming activities. Gaming win plus non gaming revenue does not represent revenue as defined by NZ IFRS 15 Revenue from Contracts with Customers. 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. Revenue has been restated for the impact of NZ IFRS 15 and the sale of Darwin (note 14). 5 EXPENSES Utilities, insurance and rates 10,941 10,420 21,405 Property expenses 5,589 5,792 11,440 Other items 26,946 24,906 46,970 Lease payments relating to operating leases 2,194 2,336 4,870 Provision for bad and doubtful debts ,688 Total other expenses 46,266 44,291 86,373-8-

10 (continued) 5 EXPENSES (continued) Depreciation 34,548 34,298 68,913 Casino licence amortisation (Adelaide) 2,811 2,856 5,786 Computer software amortisation 3,310 3,123 6,162 Total depreciation and amortisation 40,669 40,277 80,861 Income tax expense 32,888 30,193 57,827 The 2018 income tax expense includes a A$3.5 million adjustment following a review completed by the Australian Tax Office. 6 DIVIDENDS Prior year's final dividend 67,751 66,210 66,210 Interim dividend ,129 Total dividends provided for or paid 67,751 66, ,339 Cents per share Prior year's final dividend Interim dividend Subsequent to balance date the Board of Directors has resolved to pay an interim dividend of 10 cents per share. 7 NET FINANCE COSTS Interest and finance charges 20,528 17,260 35,915 Exchange (gains) / losses (67) 61 (136) Interest income (245) (102) (354) Capitalised interest (14,259) (10,959) (22,899) Total net finance costs 5,957 6,260 12,526-9-

11 8 CURRENT LIABILITIES - INTEREST BEARING LIABILITIES (continued) United States Private Placement (USPP) notes - 105,678 - Total current interest bearing borrowings - 105,678 - Refer note 9 for details of the USPP notes. 9 NON-CURRENT LIABILITIES - INTEREST BEARING LIABILITIES USPP notes 388, , ,658 Syndicated bank facility 133, ,000 - NZ bond 125, , ,000 Deferred funding expenses (2,789) (3,389) (3,205) Total non-current interest bearing borrowings 643, , ,453 (a) United States Private Placement Notes The USPP fixed rate US dollar borrowings have been converted to New Zealand and Australian dollar floating rate borrowings by using cross-currency interest rate swaps to eliminate foreign exchange exposure to the US dollar within the Income Statement. USPP notes mature between March 2020 and March The movement in the amount of the USPP notes from 2018 relates to foreign exchange movements. (b) Syndicated Bank Facility The syndicated banking facility is provided by ANZ (New Zealand and Australia), Commonwealth Bank of Australia, Bank of New Zealand, National Australia Bank and Westpac (New Zealand and Australia). As at 2018, SKYCITY had in place revolving credit facilities of: NZ$200.0 million maturing 2020 NZ$120.0 million maturing 15 March 2021 A$280.0 million maturing 31 March 2022 (c) New Zealand Bond $125 million of unsubordinated, unsecured, redeemable fixed rate bonds were issued on 28 September 2015 with a maturity of seven years. -10-

12 (continued) 10 SHARE CAPITAL Shares Shares Shares Opening balance of ordinary shares issued 680,342, ,376, ,376,523 1,152,260 1,100,792 1,100,792 Share rights issued for employee services ,475 1,489 2,983 Net movement in treasury shares value Shares issued under dividend reinvestment plan 2,104,431 6,959,092 12,965,585 8,591 25,596 48, ,446, ,335, ,342,108 1,163,576 1,127,877 1,152,260 Included within the number of shares are treasury shares of 5,190,841 ( 2017: 5,515,841 and 2018: 5,515,841) held by the company. Treasury shares may be used to issue shares under the company's employee incentive plan or upon the exercise of share rights. 11 CONTINGENCIES (a) Contingent liabilities The Group has no contingent liabilities at (b) Contingent assets Included within the Fletcher Construction Company Limited (FCC) construction contracts for the New Zealand International Convention Centre and Horizon Hotel is the right to liquidated damages if certain milestones are not met. To date SKYCITY has withheld $30.0 million from payments to FCC for liquidated damages. The amounts withheld have been recognised as part of current liabilities as ultimate recovery is not able to be considered virtually certain due to the fact that SKYCITY s right to retain these liquidated damages is disputed by FCC. There are no other significant contingencies at 2018 (2017: nil). 12 COMMITMENTS (a) Capital Commitments Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows: Property, plant and equipment 375, , ,512 The majority of the capital commitments relate to the construction of the New Zealand International Convention Centre, Horizon Hotel and the Adelaide Redevelopment. -11-

13 (continued) 12 COMMITMENTS (continued) (b) Operating Lease Commitments Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one year 4,685 4,666 4,947 Later than one year but not later than five years 12,860 12,359 13,150 Later than five years 328, , ,068 Total commitments for minimum lease payments 345, , , ASSETS CLASSIFIED AS HELD FOR SALE Land 18,617-9,850 Buildings 14,334-12,292 Plant and equipment Total assets classified as held for sale 32,987-22,175 Assets held for sale consist of the Auckland Federal Street carpark ($22.2 million ( 2017: nil and 2018: $22.2 million)) and the Darwin Little Mindil site ($10.8 million ( 2017 and 2018: nil)). 14 DISCONTINUED OPERATIONS (a) Sale of Darwin Operations On 8 November 2018 SKYCITY announced the sale of the Darwin business to Delaware North. A sale and purchase agreement for A$188 million has been signed subject to regulatory approval. Accordingly the Darwin business is reported as a discontinued operation within the 2019 interim financial statements. Financial information relating to the discontinued operation is set out below. As a result of the classification of the Darwin operations as discontinued operations: - Depreciation and amortisation of Darwin assets ceased from 8 November Deferred tax liability relating to Darwin was reversed to reflect the future realisation of the underlying assets and liabilities At 2018, there was a $27.4 million debit balance in the Foreign Currency Translation Reserve associated with SKYCITY Darwin. -12-

14 (continued) 14 DISCONTINUED OPERATIONS (continued) (b) Financial performance Revenue 60,789 63, ,395 Expenses (48,152) (51,179) (97,161) Profit before income tax 12,637 12,152 15,234 Income tax expense 1,363 (3,576) (4,547) Profit after income tax of discontinued operations 14,000 8,576 10,687 (c) Carrying amounts of assets and liabilities 2018 $'000 Cash on hand 9,481 Receivables and prepayments 1,695 Inventories 979 Property, plant and equipment 163,238 Intangible assets 35,396 Total assets 210,789 Payables (14,832) Current tax liabilities (3,440) Total liabilities (18,272) Net assets 192, EVENTS OCCURRING AFTER THE BALANCE SHEET DATE (a) Dividend On 12 February 2019, the Board of Directors resolved to provide for an interim dividend to be paid in respect of the six months ended The unfranked, fully imputed dividend of 10 cents per share will be paid on 15 March 2019 to all shareholders on the company's register at the close of business on 1 March (b) Announcement of share buy-back On 12 February 2019, the Board of Directors resolved to undertake a share buy back programme to acquire up to 5% of the ordinary shares in the company (as at 18 February 2018) on market, at market value, during the period from 18 February 2019 to

15 (continued) 16 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES Profit for the period 82,824 93, ,519 Depreciation and amortisation (including discontinued operations) 45,474 47,123 94,377 Net finance costs (including discontinued operations) 5,937 6,225 12,458 Current period employee share entitlement 2,475 1,489 2,983 Fair value adjustment to investment property Share of net loss of associate Gain on sale of fixed assets (580) (644) (1,071) Change in operating assets and liabilities Change in receivables and prepayments (7,218) (3,916) (6,016) Change in inventories (125) (1,547) (533) Change in tax payable (3,028) (11,653) (6,365) Change in payables and accruals (21,769) 42,955 56,109 Change in deferred tax liability (4,643) 4,901 4,526 Change in net tax receivable - current 3,117 (3,081) (2,731) Change in provisions (1,281) Working capital relating to discontinued operations 15, Capital items included in working capital movements 2,780 (11,035) (35,658) Net cash inflow from operating activities 119, , ,

16 } purc Independent reuiew report To the shareholders of R ep r n" t r nt t he in t e rint fi.nctnc i al.s f o f ernen ls We have reviewed the accompanying interim financial statements of SKYCITY Entertainment Group Limited (the Company) and its subsidiaries (the Group) on pages 1to 14, which comprise the balance sheet as at 81 December 2018, and the income statement, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the period ended on that date, and a summary of significant accounting policies and selected explanatory notes. l)ireclo r'.s rc.spo n.s i6 i lity fu r t h t: itt t e r int Jin an c i u l.s f o ter n e n t.s The Directors are responsible onbehalfofthe Group forthe preparation andfair presentation ofthese interim financial statements in accordance with International Accounting Standard 34 Interim Financial Reporting (IAS a+) and New Zealand Equivalent to International Accounting Standard 34 Interim Financial Reporting (NZ IAS g+) and for such internal control as the Directors determine is necessary to enable the preparation of interim financial statements that are free from material misstatement, whether due to fraud or error. Our responsibi/irr7 Our responsibility is to express a conclusion on the accompanying interim financial statements based on our review. We conducted our review in accordance with the New Zealand Standard on Review Engagements 2410 Reuiew of Financial Statements Performed by the Independent Auditor of the EntiU (NZ SRE z4to). NZ SRE z4ro requires us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements, taken as a whole, are not prepared in all material respects, in accordance with IAS g+ and NZ IAS a+. As the auditors of the Company, NZ SRE z4ro requires that we comply with the ethical requirements relevant to the audit of the annual financial statements. A review of interim financial statements in accordance with NZ SRE z4ro is a limited assurance engagement. The auditor performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing (New Zealand) and International Standards on Auditing. Accordingly, we do not erpress an audit opinion on these interim financial statements. We are independent of the Group, in accordance with Professional and Ethical Standard r (Revised) Code of Ethics.for Assur ance Practitioners (PES t) issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. Our firm carries out other services for the Group in the areas of tax compliance, tax advisory, accounting assistance, executive remuneration benchmarking, and immigration advisory services. The provision of these other services has not impaired our independence. PriceusqterhouseCoopers, fis Quay Street, Priuate Bag 9zt6z, Auckland u4z, New Zea.lqnd T: SSS 8ooo, F: Soot, pwc.co.rv

17 I purc Conclusion Based on our review, nothing has come to our attention that causes us to believe that these interim financial statements of the Group do not present fairly, in all material rrispects, the financial position of the Group as at zot8, and of its financial performance and cash flows for the period then ended, in accordance with IAS 34 and NZ IAS 34. Who ue repot't to 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 our review report and for no other pur?ose. 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 conclusion we have formed. For and on behalfof: Chartered Accountants rz Februaryzorg AucHand PwC 16