SKYCITY Shareholder Newsletter issue 07 JUNE 2007 up with the PLAY A message FROM Evan Davies In May, I updated the market on SKYCITY s plan to improve business growth and drive shareholder value. We have had a difficult 12-18 months; however, progress is well under way to realise operational efficiencies, evaluate all assets across the business, reinvigorate gaming product at SKYCITY Auckland, and determinedly focus on enhancing customer experience. Core Focus Our core focus is on operational excellence achieving performance by driving revenues, reducing costs and maximising margins. We have developed a series of revenue driving and cost management programmes. These have, in part, been implemented in this financial year. They will be further phased in progressively over the next 12-18 months. Key areas include: + Delivering operational efficiencies of $33 million. + Implementation of a revenue recovery and development programme in Auckland. + Divestment of assets not delivering to the required return on invested capital (ROIC). + Enhancement of the customer strategy and tailoring of experiences to meet expectations of key customer segments. Operational Efficiencies Our focus is to significantly rationalise business structure and overheads leading to restored operating margins. We have identified $33 million in back of house operations and general overheads. Operational and cost efficiencies will be realised across the business with particular focus on these areas: + Rationalisation of business structure and reduction of staff + Reduced sponsorship + Lowered procurement costs. We will be looking to reduce by 230 full-time employees across the Group over the next 12-18 months to ensure that the organisational structure meets the needs of the business now and into the future. We are conducting a rationalisation of the Group structure through a centralisation of support services across our properties and identifying opportunities to streamline the way we operate. This is a business that is absolutely focused on the quality of service that our customers experience. Therefore this rationalisation initiative will be primarily focused on back of house rather than frontline to ensure we don t compromise customer service and focus. SKYCITY s long-term commitment to its local communities remains unchanged; however, we will reduce our level of investment in sponsorships. Our community trusts in Hamilton, Queenstown and Auckland will continue to provide an important connection with our communities. We will also do more to leverage our size and scale for the goods and services we purchase across the Group. Evaluating our assets We are nearing the completion of a review of all the assets and businesses in the Group. We will look to divest any assets or businesses not delivering, or that we think do not have the potential to deliver the required ROIC. Particular focus will be given to our shareholding in Christchurch, Cinemas and Adelaide. Continued next page
Sales achieved in the last nine months include the SKYCITY Metro building in Queen Street and the building in Symonds Street which houses the SKYCITY Cinema head office. We have confirmed that the Darwin redevelopment will proceed in response to increasing customer demand. This will be completed by December 2009, in accordance with the requirements of the casino licence extension which was advised earlier this year. The South Australian Cabinet approval for the Adelaide car park has been received. A number of follow-on consents are still required but the Cabinet approval has been critical to allowing this project to proceed. The Adelaide redevelopment will now be re-evaluated as to scope, scale and timing, and will depend on the company s assessment of the future potential of this asset. AuCKLAND GAmING experience The extensive refurbishment of Auckland s main gaming floor, aimed at reinvigorating the gaming experience, is well under way. An extended period of disruption has been generated by the building process, which has been challenging. However, by Christmas, 14 of the 17 stages in the project will have been completed and the remaining three stages will be finished in early 2008. New product and floor layouts have been introduced. The main gaming floor opened in 1996 and was appropriate for the time. It has served us well over the subsequent decade but what we need now and what our research tells us is that our customers want an environment that provides a series of tailored and segmented experiences. Our CuSTOmerS We have major initiatives under way to ensure our entertainment facilities are market-leading and meet customers preferences. After all, the heart of SKYCITY s business is the customer service and experience we offer. We continue to grow our customer base. The facilities we have developed, such as the Auckland Convention Centre, have worked well in extending SKYCITY s attraction to a wider range of the community. New technology is assisting us to enhance our understanding of customer preferences with access to more advanced analytical tools. This in turn helps us to more sharply customise our offerings as the new tools enable us to understand more effectively our customers behaviour and what they are looking for from us. We will use that information to shape both the way in which we communicate with them and the products that we provide. We will ensure that our offerings continue to meet the needs and entertainment aspirations of our Asian customers. These customers are an important and critical part of our gaming customer mix, and we are focused on providing them with the type of experience to which they aspire. This is the principle we aim to deliver for all our customer groups. Our revamped loyalty programme, Action, will be launched across all sites in early 2008. A range of incremental improvements has already been rolled out; further enhancements will be rolled out over the coming months and we will have completely relaunched that component of our customer relationship strategy during the 2008 financial year. Our FOCuS Underlying all of these initiatives is our continued focus on delivering market excellence, continuing to build our brand, our competitive edge and creating value for our shareholders. I look forward with confidence as we work to streamline and position the business for renewed growth into the future. Evan Davies managing DIreCTOr SKYCITY entertainment GrOuP POSITIve PrOGreSS FOr ADeLAIDe The South Australian Government has approved development of an underground car park, as part of refurbishment plans for SKYCITY Adelaide. While a number of follow-on consents are required, SKYCITY Entertainment Group Managing Director Evan Davies says the approval was an important step. This enables us to accurately re-evaluate and assess the future potential of the Adelaide business and any redevelopment plans. Mr Davies says completing the car park development was a prerequisite to further development of the property. This development will now be assessed in terms of the potential of the property with respect to future earnings relative to investment. While no decisions have been made at this stage, SKYCITY s commitment to proceeding with further redevelopment will depend on this assessment.
rebo hamilton expands CITY S DINING OPTIONS Rebo Restaurant & Bar, unveiled in May, is SKYCITY s newest addition to the Hamilton restaurant scene. Replacing the 140-seat The Post restaurant, Rebo provides SKYCITY guests with great food and service at great prices in a well-appointed, relaxed setting. The restaurant is part of a programme of activity which aims to position SKYCITY Hamilton as a one-stop entertainment destination for the Waikato region. Rebo will expand our restaurant customer base by attracting people that previously haven t considered SKYCITY as a dining option in Hamilton, says SKYCITY Hamilton General Manager Geoff Hogg. Created by two leading local chefs, the menu offers simple but flavourful, freshly prepared foods and the menu is complemented by a wine list that provides something for all tastes and budgets. The restaurant features an al fresco area where guests can soak up the experience and atmosphere of our wider complex. With a fireplace and comfortable lounge seating it is a perfect setting to enjoy coffee or wine. Rebo is also set to become a popular lunchtime destination for people working in the Hamilton CBD, with its quick, healthy and varied lunch menu. The restaurant is open daily from 11am to 11pm. SKYwALK 360 ANOTher IN A LINe OF FIrSTS SKYCITY s pioneering of urban adventure tourism takes another step with the upcoming opening of its latest thrilling activity in spring 2007. The company leveraged its participation at the tourism tradeshow, TRENZ, to soft-launch the product, which officially opens to the public in November. Close-Up host Mark Sainsbury featured SkyWalk 360 on his show in May and a video production featuring NZ Idol host Dominic Bowden has been produced for pre-launch promotions. Held securely in a safety harness connected to an overhead pendulum system, a walk on a narrow ledge 192 metres above the ground can only be described as living on the edge. Visitors will have the ability to circumnavigate the exterior of the Sky Tower taking in the best views of Auckland city, 82 km in all directions on a clear day. SKYCITY New Zealand General Manager Marketing Jill Birch says the experience will be 100% excitement. SKYCITY has provided many firsts to the tourism industry the first tower to use glass floors and first to launch a controlled base jump with our product Sky Jump. SkyWalk 360 will be a solid addition to the breadth of fun and entertainment experiences offered at SKYCITY Auckland.
A ChANGe IN The way we COmmuNICATe with YOu Changes to the Companies Act (the Act) come into force in June, altering the way companies communicate with shareholders. In the past, all SKYCITY shareholders automatically received a printed copy of our interim and annual reports and shareholder newsletters. From 30 June 2007, this will change. ImPOrTANT DATeS FY07 ANNuAL result ANNOuNCemeNT monday 20 August 2007 PrOFIT DISTrIBuTION AND ANNuAL report election NOTICeS mailed TO ShArehOLDerS wednesday 12 September 2007 ANNuAL report AvAILABLe ONLINe wednesday 26 September 2007 2007 ANNuAL meeting SKYCITY Auckland Convention Centre, Friday 26 October 2007 DeCemBer ShArehOLDer NewSLeTTer Friday 14 December 2007 The SKYCITY interim and annual reports will now be available on our website. To receive a hard copy, shareholders will need to request one using the reply, post-paid form to be sent to shareholders in September. SKYCITY is also changing the way shareholder publications are displayed online, to provide improved functionality and convenience. Shareholders will experience quicker download times and will also be able to register for reminders of important dates, announcements and reporting. These are positive changes and they will be in place by the end of July. As the internet increasingly becomes a key information source for many people, SKYCITY is committed to responding to the trend towards web-based communication. If you have any concerns about these changes and what they mean to you, please don t hesitate to email us through our website www.skycityentertainmentgroup.com ChanGInG address? If your address details are changing, please remember to let us know so you will continue to receive information from SKYCITY. Post your change-of-address notice to: SKYCITY Entertainment Group Limited c /- Computershare Investor Services Limited Private Bag 92119 Auckland 1020 New Zealand LeADerShIP PrOFILe: JANe hastings SKYCITY Entertainment Group has appointed award-winning marketing specialist Jane Hastings as General Manager Group Marketing. Jane s appointment adds fresh impetus to current initiatives aimed at growing business revenues within the Group by enhancing its customer relationship programmes and marketing initiatives. Her background in developing highly successful customer loyalty programmes will be central to reinvigorating and strengthening SKYCITY s relationships with customers. Jane brings extensive experience from the service sector as well as leading listed and Fortune 500 global brands including AIG, American Express, Shell, Singapore Airlines and TNT. She is a recognised force in the Asia-Pacific marketing and loyalty industry and joins SKYCITY from a position leading marketingadvertising agency TBWA/Tequila s Singapore office. As an entertainment destination with broad offerings, SKYCITY aims to deliver increasingly tailored and personalised fun experiences for all our customers. Jane s experience in the Asia-Pacific business and cultural environment, coupled with her internationally recognised customer marketing expertise, makes her a perfect fit for this role.
CODe: Shareholders Book a night in a Luxury room at the SKYCITY Grand hotel in Auckland for just $165+GST. Please call SKYCITY Auckland on 0800 SKYCITY to make your reservation and quote Shareholder offer: Grand hotel. The offer is strictly limited and subject to availability. The offer is valid for a Luxury room only and can be taken multiple times until the expiry date. expiry date: 31 July 2007 CODe: Shareholders Book a night at SKYCITY hotel Auckland for just $130+GST. Plus valet parking available at a fixed cost of $25 for entire stay. Please call SKYCITY Auckland on 0800 SKYCITY to make your reservation and quote Shareholder offer: SKYCITY hotel Auckland. The offer is strictly limited and subject to availability. The offer is valid for a Deluxe room only and can only be used once for one stay, however may include multiple nights. expiry date: 30 September 2007 DINING FOr A DIFFereNCe The refresh Getaway package includes: Three nights accommodation in a Deluxe room, breakfast for two each morning in Sunset restaurant, airport transfers to and from Darwin Airport and a A$100 gaming chip plus coffee and drink vouchers. The rate is inclusive of GST. For reservations, please phone SKYCITY Darwin on +61 8943 8888, toll-free within Australia on 1800 891 118 or via email at reservations@skycitydarwin.com.au. Please quote the SKYCITY shareholders special offer. The offer is strictly limited and subject to availability. expiry date: 30 April 2008 CODe: Share 07 SKYCITY Auckland is teaming up with leading New Zealand culinary celebrity, Peter Gordon, to recreate a Kiwi version of his successful London-based fundraiser Who s Cooking Dinner? Dining for a Difference, to be held at the SKYCITY Convention Centre on 30 June 2007, will raise money for the Leukaemia and Blood Foundation in New Zealand. Peter and 12 other internationally renowned chefs from Australia, New Zealand and the United States will cook a four-course meal for 270 dinner guests. This event provides the ultimate culinary experience while raising money for a worthy cause an ideal complement to the SKYCITY brand as a leading provider of entertainment experiences and as a responsible contributor to the community, says SKYCITY General Manager of Communications Megan McSweeney. Peter has been a strong supporter and campaigner for leukaemia causes since his sister Tracey was diagnosed with the disease over 10 years ago and he became her bone marrow donor. We re thrilled that the event has been booked out so far in advance, said Peter. Thanks to SKYCITY, Dining for a Difference is promising to be as successful as our London events and we re expecting to make a big difference in support of New Zealanders battling leukaemia. enjoy a Casino Grill platter for two accompanied by two glasses of wine, bread of the day, sorbet and a A$10 gaming chip for a total cost of A$75 (valued at A$105). For reservations, please phone +61 8 8218 4273. Bookings are subject to availability. ImPOrTANT INFOrmATION: Customers must be 18 years of age or over to enter SKYCITY gaming areas. The Casino Grill is open for dinner Thursday Saturday. expiry date: 30 September 2007 CODe: 302265 Buy a main course when you dine at rebo restaurant & Bar at SKYCITY hamilton and receive a second main course of equal or lesser value for Free. For reservations, please phone +64 7 834 4925. Bookings are subject to availability. One voucher only per shareholder. expiry date: 30 August 2007 CODe: 30392170
indulge yourself at skycity grand hotel, auckland $165 + GST Book a night in a Luxury Room at the SKYCITY Grand Hotel for just $165+GST. plan an auckland escape at skycity hotel $130 + GST Book a night at the SKYCITY Hotel, Auckland for $130+GST per night plus valet parking available at a fixed cost of $25+GST. refresh yourself with a skycity darwin getaway A$982 The Refresh Getaway package includes three nights accommodation in a Deluxe Room, breakfast for two each morning at Sunset Restaurant, transfers to and from Darwin Airport and a A$100 gaming chip, coffee and drink vouchers (A$1,457 value for A$982). SKYCITY s best on show at TRENZ SKYCITY s platinum sponsorship of the Tourism Rendezvous New Zealand (TRENZ) tradeshow provided unprecedented access to over 1,500 tourism operators, international travel buyers and media. SKYCITY also exhibited at PURE LUXURY, which is a new initiative at TRENZ. SKYCITY s exhibition featured our premium facility the SKYCITY Grand Hotel targeting the Asian business tourism market. Managed by the Tourism Industry Association New Zealand (TIANZ) in partnership with Tourism New Zealand, Air New Zealand and Qantas, TRENZ is New Zealand s largest and most important annual international tourism tradeshow. As a leader in the New Zealand tourism industry, the tradeshow was a successful platform for SKYCITY. We formed new and strengthened existing industry relationships, while bringing people up to date on our diverse and evolving tourism offerings, says Jill Birch, SKYCITY s New Zealand General Manager Marketing. DINE IN STYLE AT THE SKYCITY ADELAIDE CASINO GRILL A$75 Indulge in a terrific offer from the Casino Grill, SKYCITY Adelaide. Enjoy a Casino Grill platter for two accompanied by two glasses of wine, bread of the day, sorbet and a $10 gaming chip for a total cost of $75 (A$105 value for A$75). Free main course at Rebo Restaurant & Bar, new to SKYCITY Hamilton FREE Buy a main course when you dine at Rebo Restaurant & Bar at SKYCITY Hamilton and receive a second main course of equal or lesser value for FREE. Experience SKYCITY Winners of the Experience SKYCITY shareholder competition John and Pauline Hanning headed off for a first-hand experience of SKYCITY s fun and entertainment offerings in February. Following several days of Northern Territory warmth and sunshine, the Hannings returned to New Zealand for two days in Hamilton and two days at our boutique Queenstown property. The couple s highlights included the great southern hospitality at SKYCITY Queenstown and the beautiful setting of SKYCITY Darwin. As SKYCITY shareholders, it was particularly wonderful to experience the different properties and meet some of the people. We had a fantastic time, said Mrs Hanning.
Baccarat Room opened SKYCITY Auckland s new Baccarat room, the latest phase of the $40 million main gaming floor facelift, provides a glamorous setting in which to play this exciting game. With a commitment to providing fresh and compelling experiences for customers, great care has been taken over the design and appointment of the room, to achieve a welcoming environment. Opened on 14 April, the Baccarat room has received positive feedback from customers for its sumptuous design, vaulted ceilings, recessed artwork niches, rich colour scheme and water features. Designed by award-winning international casino developers, the Friedmutter Group, it includes eight playing tables, a bar, and easy access to an open-air deck overlooking Federal Street, providing convenience for customers who wish to smoke. Baccarat is particularly popular with Asian customers the primary reason behind consulting local Feng Shui practitioner Mary Lee, through the design phase. Mary Lee s input into the placement of key Feng Shui earth and water elements was an important part of the final design process. New software for enhanced customer experiences Maximising gaming performance and understanding customer preferences were key drivers behind SKYCITY s decision to implement casino software designed by Compudigm International. It is vital for SKYCITY to understand customer preferences, including how they are changing, quickly and efficiently. This helps us to provide targeted and high-quality experiences for all customers, says SKYCITY General Manager Group Information Services Colin Croft. The software assists in determining optimum game types, placement and player preferences as well as automating and streamlining the analysis of customer data. In addition, the technology will help to maximise marketing budgets as it informs precise customer loyalty programmes to enhance the gaming experience for our customers. Compudigm s technology is internationally well recognised and has received numerous accolades including Gold and Silver awards from Casino Journal s Most Innovative Gaming Technology Products competition, dual Smithsonian Computerworld Laureates, and the Data Warehousing Institute s Pioneering Product of the Year award.
SKYCITY Auckland scoops awards New tapas bar, Bellota, has cemented its position as a leading Auckland attraction by winning a prestigious Resene NZ Award for Architecture from the NZ Institute of Architects (NZIA). Award judges praised Bellota for sensitively delivering multiple possibilities in the layers of habitation it presents while stylishly capturing and blending unfussy, gutsy, earthy and rugged elements. Meanwhile, two-year-old restaurant dine by Peter Gordon proved its place as one of the city s finest by winning the 2006 Metro Best Dessert Award, following last year s Metro Award for Best New Restaurant. The judges described a visit to Peter Gordon s dine as a special thrill and the award-winning concoction consisted of a sorbet of avocado, salted yuzu and mango with passionfruit, coconut tapioca and a sesame almond tuile. These awards demonstrate SKYCITY s ability to meet the demands of a sophisticated market by providing fresh customer experiences, says SKYCITY Auckland General Manager David Christian. Darwin in the dry SKYCITY Darwin s annual 150 days of dry-season fun kicked off on 11 May. The season offers something for everyone from Chinese acrobatic performers, to sophisticated dinners and musical nights, to the high-energy Northern Territory round of the V8 Supercars. Highlights of the season include the Winemaker s Dinner series and the top-end tradition of a family-friendly outdoor jazz series, held on The Lawns. Guest winemakers include d Arenberg, Yalumba and Wyndham Estate who play host and introduce their wares in a series of dinners complemented with a menu by SKYCITY Darwin s Executive Chef Karl Ewald. Due to high demand in previous years, the Winemaker s Dinner series finale, Season s plate, will be held outdoors on The Lawns. Jazz buffs are well catered for in this season s concert series, which includes performances from well-known jazz legends Vince Jones, Ingrid James, the James Morrison Quintet and international awardwinner Monsieur Camembert. The season runs through until 15 September. Visit our SKYCITY Darwin website for more details.