SkyCity Entertainment Group Limited (SKC) Earnings Call Transcript

[Foreign Language] I apologize in advance for my lack of subtitles -- but on behalf of Sky City, on behalf of NZICC and as [indiscernible] here, the cultural adviser of the study of this building of Tetu. It is my privilege, it's my honor to welcome you this morning. When you arrived to NZICC [indiscernible] you are met with the embrace of our artworks that wrap around the building like a quarter a cloak of protection. [indiscernible] marks the edge of our propane or a homestead. The threshold between the outside world in the space of protection within as you can see on our glass panels just out here, unites human and plant life into a single metaphor, EW as people and row as leaves. The many elements to form a canopy reminding us that like forests, communities thrive through collective strength. This is NZICC. This is Tetsumu, and we would like to see and extend this quarter way of protection to you all today. We welcome you on behalf of the local people [indiscernible] to our lofty mountains [indiscernible] Welcome you to the flowing orders of the Waitemata Harbor or what we the local people like to say, Waitemata [indiscernible] the sea of 100 nits, which symbolizes the many people, connections in cultures that are made right here in [indiscernible] New Zealand. Now as we gather today, I'm reminded of the importance that [ Moltiplace ] on coming together face-to-face. And [indiscernible] whenever there are matters of significance to discuss people together, we sit together, we listen, we question, we contribute. And ultimately, we seek a way forward together. That principle has guided our people for generations. There's [indiscernible] My success is never the work of one alone, but of many. While often associated with achievement, I believe it also speaks to responsibility. Strong community, strong organizations and strong relationships are built when people are willing to engage, to share their views and to take an active interest in the future of something that we all care about. And that is why gathering such as this are so important. You have all come here today with different experiences, different perspectives and perhaps a different list of questions tucked away in your pocket. Yet, we are all here for the same reason because the future matters. In many ways, that reflects an old multi understanding that [indiscernible] moves best when everyone on board is interested in the direction that is heading. Not everyone will always agree on the route but the destination is always important to all of us. For generations, our [indiscernible] our ancestors gathered on [indiscernible] to discuss matters affecting their people. Some conversations were straight forward others were a little bit more challenging. But the act of gathering itself was always valued because it demonstrated commitment to the collective. I see the same spirit reflected here today. Now I should also acknowledge that my job this morning is simply to welcome you and to open ourselves up with a blessing. The agenda becomes considerably braver after I leave the stage. So for the next few minutes, at least, I suspect I may be one of the most popular speakers of this morning. And as Aucklanders, regardless of what brings us together I think there is one thing we can all agree on. Any day spent inside NZICC, while Auckland decides what season it wants to be in as a good day indeed. Now before I conclude, I'd like to acknowledge our SkyCity Employee Resource Group, our ERGs, who will support this welcome through [indiscernible] a way to more than a song, it uplifts the words that have been spoken strengthens the sense of unity within the room and marks the beginning of the journey a hit. So what have the discussions take place today may they be guided with respect openness and shared commitment to the collective good. [indiscernible] Just to conclude before my [indiscernible] I'd just like to place a blessing on our occasion to ensure that everyone goes smoothly for these ones sitting right next to me. [Foreign Language] [Presentation]

Good morning, ladies and gentlemen. I'm Julian Cook, Chair of the SkyCity Board, and it's my pleasure to welcome you all to the 2026 SkyCity Annual Meeting. Thank you for joining us online and in person today. For those attending in the NZICC in the event of an emergency, please remain calm, follow the instructions of our NZICC ushers in the SkyCity security officers. They will direct you to the nearest of urgency exits. . Moving to the order of business for the meeting today, I declare the 32nd Annual Meeting of SkyCity open and confirm that the meeting has been duly convened with a quorum present. Firstly, some administrative matters for those attending virtually today. Instructions on how to participate are set out in the Notice of Meeting in the virtual meeting guide available on Computershare's meeting platform. Shareholders can ask questions and vote on the resolutions to be put to the meeting on their selected devices. However, bondholders who are not also shareholders are not entitled to vote on the resolutions or ask questions. Shareholders can submit questions on their selected devices at any time. If your question relates to 1 of the resolutions set out in the notice of meeting, please note in your question, which resolution your question relates to. Note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. Due to time constraints, we may not also be able to answer all of your questions. Voting today will be conducted by way of poll on all items of business. Online voting will shortly open for all resolutions. If you are eligible to vote at this meeting, the resolutions and voting options will appear on your screen at that time. You can vote for all resolutions at once or by each resolution. I now declare voting open online on all items of business. You can submit your votes at any time. I will give you a warning before I move to close voting. And the invent you experience any technological issues today, a recording of today's meeting will also be available on the company's website following the meeting. The minutes of the 2025 SkyCity Annual Meeting held on the 31st of October of last year have been posted on the company's website and are held by the Company Secretary. These minutes are available for inspection by any shareholder or bondholder should they wish to do so. I will now introduce the SkyCity Board and management and attendance in the NZICC today. In attendance to my right -- let left, sorry, Jason Walbridge, SkyCity's Chief Executive Officer; and Sky City Directors, [ Kate Hughes, Chad Barton and David Ettenburg ] In attendance on right is Phil like Lee SkyCity's General Counsel and Company Secretary; and Sky City Directors, Glen Davis and Donna Cooper. Also in attendance in the front row of the theater today are members of our SkyCity senior management team as well as representatives from our audit partner, PricewaterhouseCoopers and Legal Advisers Chairman Trip. The business of the meeting today is as set out in the notice of meeting. Firstly, I will present my chair's address. Secondly, SkyCity's Chief Executive Officer; Jason Walbridge will summarize SkyCity's performance during the past financial year. and provide an update on current trading. Thirdly, we will move to the previously notified resolutions including any questions on those resolutions. The meeting will conclude with a general question-and-answer session on matters relating to the management and operations of the company. At the close of the meeting, you are invited to join the Sky City directors and management team for light refreshments in the foyer outside this meeting room. Chair's address. Good morning, everyone. It is a pleasure to welcome you here to SkyCity's Annual Shareholder Meeting held for the first time at the New Zealand International Convention Center. It has certainly been a long time coming, but we are delighted with the result of this facility and customer feedback has been very positive. Hopefully, you have had a chance to look around today, although I should note there are some other events being held today which is a nice problem to have. We look forward to welcoming you here for future events. Thank you for joining us today and for your continued support as we navigate a rapidly evolving gaming and entertainment landscape and position SkyCity for sustainable long-term growth. The 2026 financial year was a period of meaningful reset and progress for SkyCity despite challenging economic headwinds, particularly in the latter months of the year, with the Middle East conflict affecting consumer discretionary spending, we made significant progress against the strategic priorities and commitments we presented to shareholders at the August 2025 capital raise. Our key focus for the year was to fulfill those strategic commitments whilst managing the business through a difficult operating environment. Underlying revenue was broadly flat at $822.7 million. Gaming revenue declined 5.9%, reflecting the implementation of carded play and weaker premium play. Whilst non gaming revenue increased 13.4% led by the opening of the NCD ICC in February. Underlying group EBITDA was $181.6 million, down from down 22.3% year-on-year, reflecting the difficult operating environment and the investments we made to embed compliance and implement carded play across New Zealand casinos. Reported EBITDA of $120.5 million reflects a number of one-off transactions and accounting adjustments and the ongoing costs of our Adelaide transformation program. Reported net profit after tax was $18.2 million, down 38% from last year. We delivered a substantial improvement in operating cash flow, which alongside the funds raised from share assurance, reduced debt from the prior year. The NZICC investment cycle closes this year with only final retention payments to come. Consistent with our stated polar priority of strengthening the balance sheet, we did not declare a dividend for FY '26. We have made great progress on the strategic initiatives we outlined at the FY '25 result in the capital raise in August of last year. We have progressed our asset monetization program, which will deliver close to $300 million and gross proceeds by the end of this year with the sale of the commercial building settling at $74.5 million in September and the sale of the Grand Hotel for $221 million likely to settle in December 26. The NZICC opened in February on time and within our $750 million cost envelope. We successfully implemented carded play across all our New Zealand casinos alongside our refreshed show by SkyCity loyalty program. We expanded our cost-out program, which now targets $30 million in FY '27, increasing to $70 million in FY '28. This includes a business reorganization that will impact around 250 roles predominantly in corporate and back-of-house functions. Turning now to Adelaide. We reached a nonbinding heads of agreement with the Minister of Consumer and Business Affairs to fully and finally resolve all outstanding regulatory matters arising from the independent review and the findings of the [ Brian Martin ] report. The agreement includes a fine of AUD 21 million and sets out the necessary governance and operating standards for the business. We have also decided to commence a formal sales process for this business. Let me now turn to online gambling in New Zealand. As you will have seen, the option for the right to apply for licenses concluded last week and we secured the right to apply for 2 licenses at $15 million each. This is a long-awaited and important step for the business that has arisen since the online casino gambling act took effect on the first of May of this year, creating a regulated market estimated at more than $1 billion per year. I would now like to talk through the previously disclosed proposals to acquire the entire business that the Board received earlier in the year. Both were unsolicited, nonbinding, highly conditional and indicative in nature. The board carefully considered each proposal with input from management and our advisers. We concluded unanimously that both were opportunistic and unvalued the business. We have received no further improved proposals since then nor any other whole of business proposal from anyone new. However, the Board does remain aware of continued interest in the whole business. In the interest of shareholders, the Board has decided to seek proposals through a structured process. This will involve engaging with interested parties and giving them access to due diligence information to help them develop their proposals. UBS and Chapman trip have been appointed as investment banking and legal advisers, respectively, for this process. The Board remains confident that our current strategy is robust. However, if a proposal emerges that does deliver greater value for shareholders than that strategy, the Board will consider it carefully. We are now establishing the structure for this process, which will take some time to implement. It is important to stress that there is no certainty that this process will result in any transaction or offer and we will update shareholders as appropriate. During FY '26, our Board governance evolved to reflect the maturation of our transformation program. The transformation subcommittee was wound up as land-based transformation is now embedded across the business and overseen by the Board or other existing committees. We have established an online subcommittee to oversee our market entry and have recently established a new structured review subcommittee to guide the organization through the review process over the coming months. We are also close to appointing a seventh director and expect to announce the appointment in the coming weeks. As we look ahead to FY '27 and beyond, our strategic focus remains clear, strengthen our core operations, capitalize on NZ ICC's contribution to the Auckland precinct deliver our cost-out program, complete our asset monetization program and secure our position in the online casino market. FY '27 and FY '28 will benefit from the NZICC reaching full operation, our cost reduction program delivering substantial benefits and online casino operations moving from investment to operating mode. We remain focused on improving free cash flow and on the capital management objectives set out in the August 2025 equity raise, maintaining our investment credit grade rating and returning net debt to around 2x underlying EBITDA. The Board is confident that with disciplined execution of these priorities, we will achieve our financial targets and deliver long-term shareholder value. Once we achieve our capital management and operating objectives we aim to resume paying dividends. This should be in the FY '28 financial year. I want to thank my Board colleagues, Jason, our management team and our more than 4,600 employees across the group who have carried out the weight of significant change delivered important operational achievements and upheld high service standards. I also want to thank our shareholders for their patience and ongoing support as we turn around the business. To our customers, thank you for your loyalty and trust into our communities. We remain committed to being a responsible and active corporate citizen. I will now hand over to Jason, who will speak in more detail about our financial performance and how we are meeting the strategic priorities I have set out. Thank you.

Thank you, Julian. Good morning, everyone, and thank you for being here on our newly opened New Zealand International Convention Center and for your continued interest in the company. The people who have delivered this building and the people who now run it have given us an asset that's winning global awards and one that we can all be very proud of. . FY '26 did not deliver the results that we expected, but we are in a stronger position than we were a year ago. The major land-based investments are behind us. The balance sheet is being reset and the cost-out program is progressing well. Our transformation still has further to go, reducing debt, improving underlying EBITDA and cash flow continue to be our principal focuses. Let me take you through the year ending 30 June 2026, and I'll update you on key initiatives underway for '27 and beyond. Julian has already spoken to the overall group results, and gaming revenue declined because of the implementation of Carter play in New Zealand and weaker premium play across the group. The economy, which was difficult for consumers, particularly in the fourth quarter of FY '26 was a headwind for discretionary spending that impacted all parts of our business. Turning to the performance of our individual property precincts. Auckland here is the largest business and remains the center of the group. Underlying EBITDA for the precinct was $179.8 million for the year. Gaming revenue fell for the reasons that I've already given with Cartel cart of play, having the greatest impact here in Auckland given it is our largest gaming operation. We are well advanced with enhancing our offering to gaming customers with a new mobile app soon to launch providing players with more information at their fingertips and a refreshed loyalty program. Pleasingly, non gaming revenue rose 16%, driven with the opening of the NZICC adding conference and event revenue, bringing more guests into our hotels restaurants and bars. Non-gaming revenue now makes up 30% of Auckland's revenue, up from 30% a year ago. Our hotels sold nearly 270,000 room nights across the year, up 8.8% over the prior year. Auckland is where the NZICC and the City Rail Link come together, and it is central to our FY '27 plans, and I will come back to this shortly. Hamilton had a better year than we expected Carter Play landed more easily than here in Auckland. We lodged our application to renew the Hamilton license for a 15-year term. from September 2027. In Queenstown, we secured a 15-year renewal of our casino license. International visitation numbers, particularly from Australia, supported performance along with additional airline capacity. In Adelaide, revenue was flat on the prior year table games and electronic gaming machines both grew, and that growth was offset by lower premium play. Our market share improved to 8.3% in June. From 7.9% a year earlier. We are continuing to address the cost base while maintaining through a challenging economic environment in Australia. The building a better business program has momentum and is continuing to lift our host responsibility anti-money laundering and counterterrorism financing practices. We expect to submit the final elements of the program to the independent monitor and South Australian regulator by June 2027 and receive approval and formal completion in early FY '28. As Julian mentioned, we reached a nonbinding heads of agreement to resolve the outstanding regulatory matters. And this is following the release of the Martin review that concluded that SkyCity Adelaide is suitable to hold its casino license. Interested parties approached us following the strategic review of the Adelaide business that was announced in August, and we have now commenced a formal sales process. There is no certainty that this process will result in a sale, and we will inform the market when there is something material to report. Turning now to the good progress that we made during FY '26 in transforming our business. We are close to completing our asset monetization program with last week's announcement of the sale of the Grand Hotel and together with the other asset sales, it will deliver close to $300 million in gross proceeds by December 2026. Those proceeds are expected to bring our net debt to underlying EBITDA ratio to around 2x by the end of FY '27, maintaining our investment-grade metrics. This includes the cost of the online licenses. We are gaining neighbors rather than simply selling buildings. The new owners of the grand of 99 Albert Street and of the other commercial buildings want the same thing for this part of Auckland that we do, which is a thriving midtown. Having made progress in resetting our balance sheet and completed the NZICC and the online auction, we continue to remain disciplined and targeted and investing capital in the areas of our business that provide the best returns to shareholders. In August 2025, we set a target of $10 million of cost reduction in FY '26. We exceeded this and have now expanded program. We are now targeting $30 million of realized benefits in FY '27 building to $70 million in FY '28. We are progressing well with meaningful savings already delivered, and we have a clear detailed plan to achieve these targets. The program that delivers these realized benefits has 4 parts. The first is a reset of the group operating model to match the business's direction and includes all of our land-based operations. The changes primarily affect corporate and back-of-house roles, impacting almost 250 positions across the group with most of the changes here in New Zealand already implemented. Secondly, we've reviewed our external supplier contracts across the group, and we've identified significant savings opportunities. Thirdly, we're investing in technology, including artificial intelligence to run processes more efficiently than we have been able to until now. Fourth, we're pursuing new growth initiatives, some of which we've already implemented with more to follow in FY '28. Organizational changes are difficult for any business and affect people in a real and consequential way. We've sought to build an understanding for the need for change and run a transparent and fair process and offer support to those that are leaving us. We've now implemented Carter play across all our New Zealand casinos and Carter play has greatly strengthened our ability to reduce gambling harm and safeguard against money laundering. It's giving us the tools to shape a safer, more enjoyable experience for our customers. ensuring we meet our casino license obligations. Carter play is also giving us a much richer understanding of how our customers play used responsibly, these insights will help us strengthen our customer engagement while keeping player well-being and our license obligations at the heart of every decision. We, of course, opened the New Zealand International Convention Center in February. It's a significant milestone for us as a company and is also an important piece of infrastructure for Auckland and for New Zealand. In its first month, we've hosted 141 events and recorded more than 100,000 visitations and customer feedback has been strong. Forward bookings for FY '27 are encouraging, and we are expecting to host more than 350 events and 350,000 visitations across the year. We're still early in realizing value from this asset. And I will come back to that as part of the exciting future we see for Auckland. More than 4,600 people work across our group in the last 18 months has brought significant change for our company. Carter play a new operating model, the cost-out program, a new convention center, asset sales and pending regulatory resolution and sales process and Adelaide all of which have directly impacted many of our employees. To anchor these changes, we have launched a new purpose and customer-focused ambition. For the company and also refreshed our values. Our purpose and our ambition puts our customers at the center of everything that we do and our value shape how we become stronger and better together. We continue to invest in the communities that we operate in both financially and in kind. Here in Auckland, SkyCity's Community Trust made grants during the year totaling $3.3 million. Turning now to the key priorities for the remainder of FY '27. Beyond asset monetization, Adelaide and the cost-out program, which I've already covered, 2 of our most important priorities for FY '27 that speak to the growth opportunities for our business are establishing SkyCity in the regulated New Zealand online casino market and realizing the value here in our Auckland precinct. As we announced last week, we are progressing through the online licensing process following our success in the auction where we secured the right to apply for 2 online casino gambling licenses, and we're now preparing our license applications. The auction settled at a price within the scenarios we modeled and we are confident we can achieve the appropriate return on capital invested. It was a deliberate capital allocation decision to reduce from the maximum 3 allowable licenses to 2, ensuring we remained within our risk-adjusted return on capital targets. This is not a new market. New Zealanders have been playing these online games for years with offshore operators operating outside any of New Zealand regulation. Regulating this market means only licensed operators will be permitted to offer online casinos. If licensed, we will be 2 of the 15 brands with everyone adhering to the regulations, ensuring a level playing field. We believe we can compete strongly in this important market, being a land-based operator for over 30 years, we have a brand in New Zealanders now and trust which is the most important attribute of online brands and we will now be able to advertise and market our online presence, which we haven't been able to before. Importantly, we clearly understand New Zealand host responsibility and AML requirements as they are similar or the same across land and online. We do expect this to be a competitive market and the level of potential advertising when the market goes live in the second half of FY '27 is something we will be watching closely. We're well underway with our efforts to unlock the cross precinct benefit here in Auckland with the combined openings of the NZICC and the [indiscernible] with the sale of 99 Albert Street, the associated Victoria Street properties and the binding conditional deal to sell the grant. These buildings have and soon will have owners who are investing in them. That was part of our intention. We want this part of the city further developed and now with the NZICC and the CRL open. Excitingly, the new owners of 99 Albert Street have already begun renovations. The NZICC is bringing delegates and visitors to our doorstep and the city rail link makes it easier than ever for them and for all rail passengers across Auckland to visit our precinct. Our focus is on making sure they don't just pass through, but they stay, play and explore all elements of our Auckland precinct. We'll continue to enhance our food and beverage offerings and refresh our gaming floors using customer data to deploy capital where returns are highest and that deliver expected customer and financial returns. Before I close, let me turn to current trading. Group trading in the first quarter of FY '27 has been consistent with the fourth quarter of FY '26 as we discussed when we released our full year results in August. Consumer conditions in New Zealand and Australia remain subdued with higher fuel prices and interest rates weighing on household spending. Despite these conditions, we are pleased with the positive start to the year. Revenue is tracking in line with our expectations, and our cost savings program is ahead of schedule in delivering the full year targeted benefits with around 1/4 of the expected annual benefits already achieved. While it's early in the year, we remain confident in the earnings outlook we provided at the FY '26 result in August, noting that this now needs to reflect the sale of the Grand Hotel. As with last year, there are a number of one-off and nonrecurring items that will affect our FY '27 result or reported results, including the continued delivery of the B3 program, the sale of the Grand Hotel and the costs associated with our cost-out program. The one-off charges for the cost-out program are expected to be between $17 million and $22 million impacting FY '27 reported earnings. Capital expenditure is likely to be in the middle of the range provided in August of $80 million to $100 million. With the online auction now complete and the rights for 2 licenses set at $30 million for us, we expect our total capital expenditure will be around $120 million. We are not providing formal guidance at this stage, given the timing of the online casino market entry is still to be determined and the ongoing uncertainty of the macroeconomic environment, both here in New Zealand and in Australia. In closing, we continue to focus on delivering against our stated goals and the things that we can control. Carded Play was delivered within guidance. The NZICC is open and trading. The cost out program is progressing well, and the asset monetization program is close to completion. We recognize these steps have not yet improved outcomes for shareholders. We do expect the cost savings, lower debt, improved cash flow and a disciplined entry into online to deliver the needed improvement through FY '27 and into FY '28. And as I noted in my opening remarks, these principles will enable us to achieve our capital management and operating objectives such that we should resume paying dividends in FY '28. We have a clear plan that we are executing against. The foundations are in place and we are confident in what we can deliver to our shareholders, thank you. Thank you for your patience and your continued support. To our customers. Thank you for your continuing loyalty. And to the more than 4,600 people across the business who have delivered -- in a demanding year, I am very grateful for all of your hard work. I will now hand back to Julian for the formal business of the meeting. Thank you.

All right. Thank you, Jason. Before we move to the formal resolution set out in the notice of meeting, I will briefly outline today's voting procedures. Voting will be by way of poll. Persons attending the meeting who are not shareholders, proxy holders or corporate representatives of a shareholder may not vote on today's resolutions. . For those attending online, select your voting direction from the options shown on your screen. Your vote has been cast when the green tick appears on your screen. To change your vote at any time before voting closes select change your vote on the screen. For those attending in person today, please complete and sign your voting paper and place your completed voting paper in 1 of the ballot boxes on your way out at the close of the meeting today. Many shareholders who are not attending this meeting have already voted by proxy. Approximately 760 million proxy votes, representing approximately 69% of the shares on issue were received prior to the cutoff for proxy voting at 10:00 a.m. on Monday, the 19th of October. We have also provided details of the proxy voting for each of the 3 resolutions. We now move to the 3 formal resolutions to be considered by the meeting. There will be an opportunity for in-person shareholder questions after each resolution has moved. [Operator Instructions] please have your attendance card or voting form with you and introduce yourself and note whether you are a shareholder or a bondholder -- to ensure all shareholders have a fair opportunity to ask questions, we will be limiting questions to 1 shareholder per resolution. The first 2 items of business concern the reelection of directors. In accordance with the requirements of the NZX listing rules, David Attenborough and Donna Cooper will retire at this meeting and being eligible, offer themselves for reelection. Resolution 1, reelection of the Director, David Attenborough. It is my pleasure to move Resolution 1 to reelect David Attenborough as a Director of the company. David was appointed to the SkyCity Board in March of 2023 and elected by shareholders at the annual meeting in that year. The Board considers David to be an independent director and unanimously recommends that shareholders vote in favor of his reelection. I will now ask David to address the meeting.

Good morning. Hopefully, this mic is working. As Julian said, I joined the Board in March 2023. And my background is solidly in gambling, hospitality and entertainment. In fact, I spent more than -- well more than 30 years across the U.K., Africa and Australia, holding senior roles in all 3 countries. And I suppose [indiscernible] well known in the most recent position, I spent about 12 years as CEO of Tabcorp in Australia to the SkyCity, I chair the online committee. Sit on the Audit Committee, the People and Culture Committee and the Governance and Nominations Committee. And you've heard from Julian and Jason today on the good progress the business is making on a number of the key strategic issues. And this has been a demanding but exciting period for the Sky City team. It's not been easy but we're starting to build what I believe and the Board believe is some real momentum in the business. And I think that came through in some of the words that's wrapped up the speech from Jason today. And it's particularly pleasing for us to secure at the auction this month the rights to apply for 2 online licenses in New Zealand. And as Chair of the Online Committee, my and the committee's focus is on ensuring we take a disciplined and responsible approach to setting up the online business to compete in this important market that we know well and which is likely to go live in the second half of next year. Launching online is the most significant new step SkyCity will take over the next few years. And I've done a lot of the similar work before at scale and under close regulations in other countries. This is not new to me. And if reelected, I want to continue to bring this experience to this Board and I ask for your support. Thank you.

Thank you, David. I move that the meeting reelects David Attenborough as a director. Are there any questions from the floor relating to this resolution? Are there questions online relating to this resolution?

So the first question is how old is are David Attenborough and is intending to serve a full 3-year term on our Board. What do we regard as the 2 best decisions SkyCity has made during his first 3-year term on the Board.

So I'm 63 I am putting myself up reelection, and we'll serve the 3 years at the Board's discretion and shareholders' discretion. I intend to see it through. And in my view, the best or the 2 primary decisions we've made. One is to sort out the balance sheet. It's never easy to sell strategic assets like the grand but it was really important to sort out the balance sheet. And for me, obviously, the closest and most important is this online market that we are going to get a crack at next year. and getting the rights and securing the rights to apply for 2 licenses, absolutely critical. Thank you.

Thanks, Dave. The second question, which is for both directors. But for you, David, first, directors are seeking reelection based on their contribution to shareholder value, looking at the company's poor performance over the last 3 years, what do you consider to be your most significant achievement as a director and why should shareholders vote to reelect you today?

The casino industries in both Australia and New Zealand have been through a challenging time. particularly in Australia, and we've seen it with the Adelaide business, a real need to transform and make sure that we can set it up for the future given the focus of the regulators and the changing landscape that we're facing into. I think certainly coming on board in 2023 facing into the issues, the Board and management have delivered a lot of change and have set the business up now for the future. and the value that I believe will be unlocked as we look forward in the coming years will reflect well on really the performance that I have seen since coming on board in 2023. No further questions.

All right. I have moved the resolution. So I now put the resolution. Shareholders should select their voting direction for resolution 1. It is my pleasure now to move Resolution 2 to reelect Donna Cooper as a Director of the company. Donna was appointed to the Sky City Board in 2023 and elected by shareholders at the annual meeting in that year -- the Board considers Donna to be an independent director and unanimously recommends shareholders vote in favor of her reelection. I now ask Donna to address the meeting.

[indiscernible] My name is Donna Cooper, and I'm here today asking for your support for a further term. I joined this Board because SkyCity matters to New Zealand. It is a major employer, it supports tourism, local businesses and the wider Auckland and New Zealand economy. And through its community trusts, it returns money to the communities it operates in. I bring over 30 years experience, leading and governing financial services and regulated businesses, delivering compelling experiences for customers, leading change in regulated environments, building strong executive teams and resolving complex regulatory issues. That experience is directly relevant here. from 2024 to 2026, I chaired the Board's transformation subcommittee, overseeing the establishment of a whole of organization program to strengthen the company's capability culture and risk position. And Phil, to answer the question that I believe was directed earlier, I see this as the most significant contribution I have made to the Board and the business during my first term. I now chair the People and Culture Committee, ensuring we have the leadership, culture and remuneration settings to continue to deliver that change. I also sit on the risk and online committees. SkyCity has made considerable progress, lifting its compliance maturity, its leadership, culture and setting the foundations for growth. The work is not finished. The test is how it shows up consistently in how we operate every day, including how we build a successful online business that customers and regulators can trust. This is where I want to keep my focus, and I am optimistic about what we can achieve together. If reelected, I look forward to continuing that work. alongside the Board and management team.

Thank you, Donna. I move that the meeting reelects Dona Cooper as a Director. Are there any questions from the floor relating to this resolution? Nothing from the floor. We had one question online, which Donna has already addressed. Is there anything else?

No, there's no further questions.

Thank you . I have moved the resolution. So I now put the resolution. Shareholders should select their voting direction for Resolution 2. Resolution 3 involves the setting of the remuneration for the auditor. PricewaterhouseCoopers is the auditor for SkyCity, and that firm has indicated its willingness to continue as auditor of the company. I move that the directors be authorized to fix the auditor's remuneration. Are there any questions from the floor relating to this question, this resolution? Nothing from the floor. Are there any questions online?

No questions online.

Thank you, Phil. I have moved the resolution. So now I put the resolution. Shareholders should select their voting direction online for resolution 3. Thank you for your attendance to the resolutions. That concludes our discussion on the items of business. Voting will shortly close online, please ensure that you have cast your vote on all resolutions. For those attending in person, please sign and place your completed voting paper in 1 of the ballot boxes on your way out of the theater. All votes will be counted and then scrutinized by our company's share register Computershare. The results will then be advised to the New Zealand and Astra Stock Exchanges later today. I will now pause to allow those attending online to finalize their votes before voting closes. Voting is now closed online. To conclude the meeting, we will now take questions on general matters. In the notice of meeting, we invited shareholders and bondholders to submit questions prior to the annual meeting. Were there any questions submitted prior in your meeting?

No, they were not.

Thank you. Next, we will address questions online. We have a number of questions online, so we might take them in a couple and then some from the floor. Please note that questions may be moderated or if we receive multiple questions on 1 topic, amalgamated together. Due to time constraints, we may not also be able to answer all of the questions. Perhaps we take 2 of the online questions, and then we'll go to the floor.

Sure, Julian. So the first question relates to remuneration reports. So QE AGMs are often boring because there are so few items of business to vote on. Given that we're dual listed on the ASX, could you please give shareholders a chance to vote on your remuneration report next year as is mandatory in Australia?

And it is from Stephen Mayne, Australian shareholder. We had -- I think he asked the same question last year, Stephen. We have considered it. We will not be making that putting that remuneration report to vote. We are fully compliant with the NZX and New Zealand companies law, and we remain a New Zealand company. So we have no intention to change that. But shareholders are always more than welcome to ask any question in these annual shareholder meetings or to come direct to myself or anyone on the company if they have any particular views on our remuneration practices .

Another question also from Stephen Maine. Isn't selling off the Grand Hotel and the Auckland precinct, an example of selling off the crown jewels does $221 million represent a profit against both book value and our historic investment in the assets.

It is absolutely a profit on historic investment in the asset and, I think, book value also Look, it's not a sale we undertook willingly as was well telegraphed. We had an asset monetization program designed to reduce our gearing and our leverage down to put the business in a much more conservative position. . That builds our foundation to take us forward and to be able to grow and invest in the business, particularly online and return ourselves to dividends. So it was -- it is a great hotel, I would comment that we still have 2 fantastic hotels in this precinct being Horizon and our main site SkyCity hotels, which is the number of hotels we had up until just a couple of years ago when we opened Horizon. Maybe we go to the floor now.

Thank you, gentlemen. And thank you, Julian, and Jason, for answering a few questions that I had in advance, which also helps as part of the session go well. Ricky Manan, New Zealand Shareholders' Association. And I just got a few questions. Just one perhaps off the back of Steven Main's question. The Grand Hotel sale under the nonbinding heads of agreement is a positive step -- we appreciate the update. Given it remains subject to DD and OIO approval could the Board share any contingency thinking that the sale doesn't proceed on acceptable terms. And how that might affect the deleveraging timetable? It's only conditional on IO. So it's not subject to DD. So we do await the LEOs decision, but we would be fairly confident in receiving a positive outcome there.

Okay. So we're pretty confident on that one. Yes. -- and just while I've got you, just question around your -- the skills matrix. I think I might have brought it up last year actually.

Thanks for the disclosure on SkillMatrix and the annual report. Helpful to see it. in terms of overall competency. But given SkyCity's ongoing financial receipts and significant board renewal over the recent years would be interested to know. Does the Board have any plans to expand the scope of the skills matrix to identify individual director skills. And if I would welcome any understanding from Boards half?

Yes, thank you. You did raise it last year, we did consider it. We have chosen not to -- I mean, the reasons for that are a number. Firstly, we have our buyers are available on the website. So -- to the extent we have skills in specific sectors, people can see that. Our directors regularly offer themselves for reelection of these meetings where the credentials are presented and shareholders get to vote on that. But I think all and ultimately, the Board functions as a collective. And so we really want to focus on our collective metric to assess where there are gaps, which we can then use to focus for new directors. And we are looking for directors to bring an overall contribution, and we don't really want to reduce it down to a simple check box with skills.

I'm Carol [indiscernible] shareholder and on behalf of Family interests. I just wanted to ask a few questions about costs going forward. The cost out program, what exactly is that? Is that because you're getting rid of 250 jobs .

Well, that's part of it. So part of it is a restructure of headcount within the business to reflect current -- the current scope and nature of the business. but it's also cost savings in a range of other kind of areas where we can achieve it. .

The Adelaide casino. If you do get a sale or not, will you make a huge loss overall for having had in the first place?

Well, if you were to go back and look at what had been previously invested in that business when it was originally bought and then when the expansion in hotel was done to it Yes, absolutely. That would be a loss. A number of those losses have been taken through our books to date, but it doesn't get away from the fact that it would likely be a loss on the [indiscernible] cash today.