Financial Statements
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SKY CITY ENTERTAINMENT GROUP LIMITED ( 1 ) ADDITIONAL INFORMATION 30 June 2001 SUBSIDIARY COMPANIES The changes to subsidiary company directorships during the 12 month period ended 30 June 2001 were as below. On 28 March 2001, T. Kuhlman ceased to be a director of SkyCity Adelaide Pty Limited*. On 20 March 2001, P.E. Francis, P.T. Garner and D.L. Presland-Tack and on 20 July 2001, subsequent to year-end, J.R. Kirby, ceased to be directors of Force Corporation Limited. On 20 March 2001, P.E. Francis resigned all his directorships of Force Corporation subsidiary companies. S.R. Solomon ceased to be a director of Riverside Casino Construction Limited on 29 June 2001. The following people held office as directors of subsidiaries of Sky City Limited as at the end of the 2001 financial year, being 30 June 2001. Sky City Auckland Holdings Limited, Sky City Auckland Limited, Sky City Casino Management Limited Sky City Management (Auckland) Limited, Abdiel Investments Limited, Sky City Construction Limited, Sky Tower Limited, Sky City Wellington Limited, Sky City International Holdings Limited, Sky City International ApS, SkyCity Investments Limited, SkyCity Action Management Limited, Riverside Fund Limited, Queenstown (Hard Rock) Investments Limited Sky City Australia Pty Limited, SkyCity Adelaide Pty Limited (1)E.W. Davies, P.J. Mason (alternate G.F. Hawkins), A.B. Ryan. Queenstown Casinos Limited Riverside Casino Limited Riverside Casino Construction Limited Force Corporation Limited Force Holdings Limited, Force Cinemas Limited, Cine-Force Limited, Ab Initio Holdings No.13 Limited Force Entertainment Centre Limited Planet Hollywood (Civic Centre) Limited Village Force Cinemas Limited Village Rialto Cinemas Limited Force Cinemas (Fiji) Limited * On 20 March 2001, the registered name of Adelaide Casino Pty Limited was changed to SkyCity Adelaide Pty Limited. REMUNERATION OF DIRECTORS Remuneration paid to directors of Sky City Entertainment Group Limited(1)during the year ended 30 June 2001 was:
The Managing Director, E.W. Davies, is not paid directors fees. The amount shown next to his name represents the salary and performance bonus paid to him as an employee of the company. In addition, Mr Davies became entitled to exercise 275,000 options in the company which were issued to him in August 1999. These options, at the date of issue, had an assessed value of 45 cents per option. Directors fees, as above, were paid as to $10,000 for non-executive directors and $20,000 for the chairperson by way of options in the company issued in accordance with the Non-Executive Director Share Option Plan as approved at the companys Annual Meeting on 26 October 2000. Remuneration paid to directors, or former directors, of Force Corporation Limited during the year ended
Force Corporation Limited executive directors marked as (E)above are not paid directors fees. The amounts shown next to their names represent the total remuneration and value of benefits received by them as employees of Force Corporation Limited. Remuneration paid to directors of Queenstown Casinos Limited during the year ended 30 June 2001 was:
Director fees for E.W. Davies and A.B. Ryan were paid to Sky City Entertainment Group Limited(1)and were not received personally by Messrs Davies or Ryan. Apart from the amounts listed above, no remuneration is received by the directors of the subsidiary companies in their capacity as directors of those companies. No director of the group or parent company has, since the end of the financial year, received or become entitled to receive a benefit other than the reimbursement of expenses incurred in relation to company matters or as disclosed elsewhere in this Annual Report. DIRECTORS AND OFFICERS INSURANCE AND INDEMNITY In July 2000 the company effected directors and officers liability insurance coverage through HIH Casualty and General Insurance (NZ) Limited, for the period July 2000 to July 2001, with an aggregate limit of liability of $30 million. In July 2000 the company effected statutory liability insurance through HIH Casualty and General Insurance (NZ) Limited, for the period July 2000 to July 2001, with an aggregate limit of liability of $3 million. Directors and Officers liability insurance cover has been renewed covering the 15 month period to 30 September 2002 at an aggregate limit of liability of $50 million. Indemnities have been given to directors and senior managers of the Sky City group to cover acts or omissions of directors or senior managers in their capacity as such. Disclosure of Directors Interests Section 140 (1) of the Companies Act 1993 requires a director of a company to disclose certain interests. Under subsection (2) a director can make disclosure by giving a general notice in writing to the company of a position held by a director in another named company or entity. The following are particulars as entered in the companys Interests Register as at 30 June 2001 with the notices given by directors during the period ended 30 June 2001 marked with an asterisk.
The following details included in the Interests Register as at 30 June 2000 or entered during the year ended 30 June 2000 have been removed during the year ended 30 June 2001. E.W. Davies is no longer chairman of the Auckland 2000 Trust. P.L. Reddy is no longer a director of Caterpillar New Zealand Funding Company or Georgia-Pacific New Zealand Company, or a director of any the subsidiaries of Infinity Group Limited. E. Toime is no longer a director of the New Zealand Symphony Orchestra. W.G. Ward-Holmes is no longer a director of ASB Bank Limited or any of its subsidiaries or a trustee of the ASB Charitable Trust or the ASB Bank Community Trust. B.M. Wickham is no longer a director of ENZA Cool Limited. Disclosure of Directors Interests in Shares Directors disclosed, pursuant to section 148 of the Companies Act 1993 and Rule 10.5.3 of the Listing Rules of the New Zealand Stock Exchange, the following acquisitions and disposals of relevant interests in Sky City shares during the period ended 30 June 2001.
* 12,794 shares are held by trusts of which Ms Reddy is a trustee and /or beneficiary. Includes 1,295 shares held by associated persons of Mr Toime. In addition to the above acquisitions and dispositions, during the year directors transferred (for a short period) relevant interests in Sky City shares to a third party pending the receipt of certain approvals under the Casino Control Act 1990. The relevant interests in those Sky City shares were transferred back to the directors as soon as those approvals had been obtained. Disclosure of Directors Interests in Options and Capital Notes
* Includes 138,000 options held by an associated person of Mr Davies. 200,000 capital notes are hled by a trust of which Mr Trotter is a trustee. Options issued to Mr. Davies and associated persons of Mr. Davies are issued pursuant to the Executive Share Option Plan approved by shareholders at the Annual Meeting of the company held on 28 October 1999. Options issued to the non-executive directors are issued pursuant to the Non-Executive Director Share Option Plan approved by shareholders at the Annual Meeting of the company held on 26 October 2000. Options are exercisable not earlier than one year after the date of issue at the exercise price determined pursuant to the Plan, and lapse if they are not exercised within five years of the date of issue. Force Corporation directors made the following disclosures in the Interests Register of that company. P.E. Francis disclosed on 24 October 2000 his interest as a director of Domain Centre Developments Limited (Domain) in respect of the entry into by Force Holdings Limited of a guarantee to ANZ Banking Group (New Zealand) Limited (ANZ) for its share of a loan from ANZ to Domain. M.J. McConnell made a general disclosure on 12 December 2000 with regards to Shamrock of California Inc. P.T. Garner and D.L. Presland-Tack noted on 8 March 2001 their interest in proposed letters relating to employment matters. E.W. Davies, D.I. Kennedy and A.B. Ryan made general disclosures on 11 May 2001 in respect of any discussion or transactions relating to Sky City Limited or its group companies. On 20 March 2001, P.E. Francis sold 77,724,246 shares in Force Corporation Limited to Sky City Limited at 25 cents per share. Between 14 April 2001 and 23 April 2001, M.W. Daniel purchased 1,816,266 Force Corporation Limited shares at an average price of 26 cents per share. His total holding at 30 June 2001 was 3,128,487 shares. EMPLOYEE REMUNERATION The numbers of employees or former employees of the company and its subsidiaries, not being directors of the company, who received remuneration and other benefits in their capacity as employees, the value of which was in excess of $100,000 during the financial year ended 30 June 2001, are listed below.
DONATIONS Donations are referred to in Note 3 of the financial statements. WAIVERS FROM THE NEW ZEALAND STOCK EXCHANGE (NZSE) LISTING RULES The following waivers from the NZSE Listing Rules were effective as at balance date. As part of the companys Executive Share Option Plan, approved by shareholders at the 1999 Annual Meeting, the NZSE has granted a waiver from compliance with Listing Rule 7.3.2 in respect of the issue of options to E.W. Davies, the Managing Director of the company, pursuant to the Plan. Listing Rule 7.3.2 would have required that all issues of options to Mr Davies under the Plan be made within 12 months of the shareholders resolution approving the issue. The waiver enables the third issue of options specified in the shareholders resolution to be made more than 12 months after the date on which the resolution approving the issue was approved. As part of the Non-Executive Director Share Option Plan, approved by shareholders at the 2000 Annual Meeting, the NZSE has granted a waiver from compliance with Listing Rule 7.3.2 enabling the issue of options to be made to each non-executive director under the Plan in the financial years ending 30 June 2002 and 30 June 2003, being more than six months after the date on which the resolution approving the issue was approved. The effect of all other waivers had ceased by 30 June 2001. EVENTS SUBSEQUENT TO BALANCE DATE The directors are not aware of any matter or circumstance since the end of the financial year not otherwise dealt with in this report that has significantly or may significantly affect the operations of Sky City Entertainment Group Limited(1)or any of its subsidiary companies. The 2001 Annual Report of Sky City Entertainment Group Limited(1)is signed on behalf of the board by the following two directors:
CORPORATE GOVERNANCE Corporate governance at Sky City encompasses the companys decision-making structures and the mechanisms used to manage the organisation. The board of Sky City has a comprehensive set of corporate governance practices and procedures in place to ensure that these responsibilities are met. Role of the Board The board currently comprises eight directors, including a non-executive chairman, an executive director and six non-executive directors. Details of directors in office at 30 June 2001 are set out on pages 24 and 25 of this annual report. Procedures for the operation of the board, including the appointment and removal of directors, are governed by the companys constitution. The board met 12 times during the year to review company performance and consider strategic issues. Code of Business Practice Audit and Risk Committee Governance and Remuneration Committee Governance Charters and Policies The board itself operates under detailed terms of reference which set out the duties and responsibilities of directors. The board delegates authority to management for decision-making under a comprehensive delegated authorities policy which is formally reviewed on a regular basis. A separate treasury policy covers treasury dealings, most of which relate to interest rate and foreign exchange management, treasury transaction authorities and procedures, and board reporting. Independent Professional Advice
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