I apologize in advance for my lack of subtitles. But on behalf of SkyCity, on behalf of NZICC, and as [Non-English Content] here, the cultural advisor of this whare, of this building, of [Non-English Content] , it is my privilege, it is my honor to welcome you this morning. When you arrive to NZICC, to [Non-English Content] , you are met with the embrace of our artworks that wrap around the building like a [Non-English Content] a cloak of protection. [Non-English Content] marks the edge of a [Non-English Content] or a homestead. The threshold between the outside world and a space of protection within. [Non-English Content] as you can see on our glass panels just out here, unites human and plant life into a single metaphor. [Non-English Content] as people and [Non-English Content] as leaves.
The many elements to form a canopy, reminding us that like forests, communities thrive through collective strength. This is NZICC. This is [Non-English Content] , and we would like to extend this [Non-English Content] of protection to you all today. We welcome you on behalf of the local people [Non-English Content] . We welcome you to the flowing waters of the Waitemata Harbour, or what we, the local people, like to say, [Non-English Content] the sea of 100 nets, which symbolizes the many people, connections, and cultures that are made right here in Aotearoa New Zealand.
As we gather today, I am reminded of the importance that Māori place on coming together face to face. In [Non-English Content] , whenever there are matters of significance to discuss, people gather. 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 is a [Non-English Content] 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 gatherings 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 Māori understanding that a waka moves best when everyone on board is interested in the direction it is heading. Not everyone will always agree on the route, but the destination is always important to all of us. For generations, our tupuna, our ancestors, gathered on marae to discuss matters affecting their people. Some conversations were straightforward; 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. 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 a lot 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 is a good day indeed. Before I conclude, I would like to acknowledge our SkyCity employee resource group, our ERGs, who will support this welcome through [Non-English Content] is 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 ahead. Whatever discussions take place today, may they be guided with respect, openness, and shared commitment to the collective good [Non-English Content]. Just to conclude before my [Non- English Content] , I would just like to place a blessing on our occasion to ensure that everyone goes smoothly for these ones sitting right next to me. [Non-English Content]. Let us pray.
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Thank you and enjoy your morning.[Non-English Content]
[Non-English Content]. Good morning, ladies and gentlemen. I'm Julian Cook, Chair of the SkyCity Board, and it is 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 and the SkyCity security officers. They will direct you to the nearest emergency 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 one 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. In the event 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 October 31 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 in attendance in the NZICC today. In attendance to my left, sorry. Jason Walbridge, SkyCity's Chief Executive Officer, and SkyCity Directors Kate Hughes, Chad Barton, and David Attenborough. In attendance on my right is Phil Leightley, SkyCity's General Counsel and Company Secretary, and SkyCity Directors Glenn 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 advisors, Chapman Tripp. 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 SkyCity 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 Centre. 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 NZD 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 NZICC in February. Underlying group EBITDA was NZD 181.6 million, 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 NZD 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 NZD 18.2 million, down 38% from last year. We delivered a substantial improvement in operating cash flow, which alongside the funds raised from share issuance, reduced debt from the prior year.
The NZICC investment cycle closes this year with only final retention payments to come. Consistent with our stated priority of strengthening the balance sheet, we did not declare a dividend for FY 2026. We have made great progress on the strategic initiatives we outlined at the FY 2025 result and the capital raise in August of last year.
We have progressed our asset monetization program, which will deliver close to NZD 300 million in gross proceeds by the end of this year, with the sale of the commercial building settling at NZD 74.5 million in September, and the sale of the Grand Hotel for NZD 221 million likely to settle in December 2026. The NZICC opened in February on time and within our NZD 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 NZD 30 million in FY 2027, increasing to NZD 70 million in FY 2028. 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 non-binding 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 auction for the right to apply for licenses concluded last week, and we secured the right to apply for two licenses at NZD 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 1st of May of this year, creating a regulated market estimated at more than NZD 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, non-binding, highly conditional, and indicative in nature. The board carefully considered each proposal with input from management and our advisors. We concluded unanimously that both were opportunistic and undervalued 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 interests 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 Tripp have been appointed as investment banking and legal advisors, 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 FY2026, our board governance evolved to reflect the maturation of our transformation programs. 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 FY2027 and beyond, our strategic focus remains clear. Strengthen our core operations, capitalize on NZICC'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. FY2027 and FY2028 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 two times 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 FY2028 financial year. I want to thank my board colleagues, Jason Walbridge, 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, and to our communities, we remain committed to being a responsible and active corporate citizen. I will now hand over to Jason Walbridge, 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 Cook. Good morning, everyone, and thank you for being here in 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 is winning global awards and one that we can all be very proud of. FY2026 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 30th June 2026, and I will update you on key initiatives underway for 2027 and beyond. Julian Cook has already spoken to the overall group results, and gaming revenue declined because of the implementation of carded play in New Zealand and weaker premium play across the group. The economy, which was difficult for consumers, particularly in the fourth quarter of FY2026, 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 NZD 179.8 million for the year.
Gaming revenue fell for the reasons that I have already given. With carded 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 FY2027 plans, and I will come back to this shortly. Hamilton had a better year than we expected. Carded 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, support a 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 counter-terrorism 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 FY2028. As Julian mentioned, we reached a non-binding 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. 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 FY2026 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 NZD 300 million in gross proceeds by December 2026. Those proceeds are expected to bring our net debt to underlying EBITDA ratio to around two times by the end of FY2027, 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 in investing capital in the areas of our business that provide the best returns to shareholders. In August 2025, we set a target of NZD 10 million of cost reduction in FY2026. We exceeded this and have now expanded the program. We are now targeting NZD 30 million of realized benefits in FY2027, building to NZD 70 million in FY2028. 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 four 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 have reviewed our external supplier contracts across the group, and we have identified significant savings opportunities. Thirdly, we are investing in technology, including artificial intelligence, to run processes more efficiently than we have been able to until now. Fourth, we are pursuing new growth initiatives, some of which we have already implemented, with more to follow in FY 2028. Organizational changes are difficult for any business and affect people in a real and consequential way.
We have 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 have now implemented carded play across all our New Zealand casinos, and carded play has greatly strengthened our ability to reduce gambling harm and safeguard against money laundering. It is giving us the tools to shape a safer, more enjoyable experience for our customers, ensuring we meet our casino license obligations. Carded 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 wellbeing and our license obligations at the heart of every decision. We, of course, opened the New Zealand International Convention Center in February. It is 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 months, we have hosted 141 events and recorded more than 100,000 visitations, and customer feedback has been strong.
Forward bookings for FY 2027 are encouraging, and we are expecting to host more than 350 events and 350,000 visitations across the year. We are 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, and the last 18 months has brought significant change for our company. Carded play, a new operating model, the cost out program, a new convention center, asset sales, and pending regulatory resolution and sales process in 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 put our customers at the center of everything that we do, and our values 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 NZD 3.3 million. Turning now to the key priorities for the remainder of FY 2027. Beyond asset monetization, Adelaide, and the cost out program, which I have already covered, two of our most important priorities for FY 2027 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 two online casino gambling licenses, and we are 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 three allowable licenses to two, 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 two 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 New Zealanders know 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 have not 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 FY2027 is something we will be watching closely.
We are well underway with our efforts to unlock the cross-precinct benefit here in Auckland with the combined openings of the NZICC and the CRL. With the sale of 99 Albert Street, the associated Victoria Street properties, and the binding conditional deal to sell the Grand, 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 do not just pass through, but they stay, play, and explore all elements of our Auckland precinct. We will 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 FY2027 has been consistent with the fourth quarter of FY2026.
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 a quarter of the expected annual benefits already achieved.
While it is early in the year, we remain confident in the earnings outlook we provided at the FY2026 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 non-recurring items that will affect our FY2027 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 NZD 17 million and NZD 22 million, impacting FY2027 reported earnings. Capital expenditure is likely to be in the middle of the range provided in August of NZD 80 million to NZD 100 million.
With the online auction now complete and the rights for two licenses set at NZD 30 million for us, we expect our total capital expenditure will be around NZD 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 FY2027 and into FY2028. 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 FY2028. 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 option 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 one 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, October 19th. We have also provided details of the proxy voting for each of the three resolutions. We now move to the three formal resolutions to be considered by the meeting. There will be an opportunity for in-person shareholder questions after each resolution is moved. To ask a question, please make your way to the end of your row to use the microphone. Please, can you limit your questions at this time to the specific resolutions? There will be an opportunity for general questions after the end. Please have your attendance card or voting form with you and introduce yourself and note whether you are a shareholder or bondholder.
To ensure all shareholders have a fair opportunity to ask questions, we will be limiting questions to one shareholder per resolution. The first two 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 one, reelection of the director, David Attenborough. It is my pleasure to move resolution one to reelect David Attenborough as a director of the company. David was appointed to the SkyCity board in March 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.
Thank you, and 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 well more than 30 years across the U.K., Africa, and Australia, holding senior roles in all three countries. I suppose my most well-known and the most recent position, I spent about 12 years as CEO of Tabcorp in Australia. At SkyCity, I chair the online committee, sit on the audit committee, the people and culture committee, and the governance and nominations committee. You have heard from Julian and Jason today on the good progress the business is making on a number of the key strategic issues. This has been a demanding but exciting period for the SkyCity team.
It has not been easy, but we are starting to build what I believe, and the board believe, is some real momentum in the business. I think that came through in some of the words that wrapped up the speech from Jason today. It is particularly pleasing for us to secure, at the auction this month, the rights to apply for two online licenses in New Zealand. 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.
I have done a lot of the similar work before, at scale and under close regulations in other countries. This is not new to me. 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? No. Thank you. Are there questions online relating to this resolution?
Yes, there are. The first question is, how old is our David Attenborough, and is he intending to serve a full three-year term on our board? What does he regard as the two best decisions SkyCity has made during his first three-year term on the board?
I am 63. I am putting myself up for re-election and will serve the three years at the board's discretion and shareholders' discretion. I intend to see it through. In my view, the best or the two primary decisions we have made, one is to sort out the balance sheet. It is never easy to sell strategic assets like the Grand, but it was really important to sort out the balance sheet. 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 two licenses, absolutely critical. Thank you.
Thanks, Dave. The second question, which is for both Directors, but for you, David, first. Directors are seeking re-election based on their contribution to shareholder value. Looking at the company's poor performance over the last three 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. 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've 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 one. It is my pleasure now to move resolution two, to reelect Donna Cooper as a Director of the company. Donna was appointed to the SkyCity 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 re-election. I now ask Donna to address the meeting.
[Non-English Content]. My name is Donna Cooper, and I am 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. 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.
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.
[Non-English Content] Thank you.
Thank you, Donna. I move that the meeting reelects Donna 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 online.
All right. Thank you. I have moved the resolution, so I now put the resolution. Shareholders should select their voting direction for resolution two. Resolution three 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 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 three. 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 one of the ballot boxes on your way out of the theater. All votes will be counted and then scrutinized by our company share registrar, Computershare. The results will then be advised to the New Zealand and Australian stock exchanges later today. I will now pause to allow those attending online to finalize their votes before voting closes. Is that long enough?
Think so.
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 to the annual meeting?
No, there were not.
No. 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 one topic, amalgamated together. Due to time constraints, we may not also be able to answer all of the questions. Perhaps we take two of the online questions, then we will go to the floor.
Sure, Julian. The first question relates to remuneration report. Kiwi AGMs are often boring because there are so few items of business to vote on. Given that we are 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?
That is from Steven Mayne, Australian shareholder. I think he asked that same question last year, Steven. We have considered it. We will not be 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. 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.
Sure. Another question also from Steven Mayne. Isn't selling off the Grand Hotel in the Auckland precinct an example of selling off the crown jewels? Does NZD 221 million represent a profit against both book value and our historic investment in the asset?
It is absolutely a profit on historic investment in the asset, and I think book value also. Look, it is 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 forwards and to be able to grow and invest in the business, particularly online, and return ourselves to dividends. It is a great hotel. I would comment that we still have two 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.
There is one over here.
Yes, sir.
There is a microphone coming to you.
Thank you. 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. Riki Manarangi, New Zealand Shareholders Association, and just got a few questions. Just one perhaps off the back of Steven Mayne's question. The Grand Hotel sale under the non-binding 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 if the sale doesn't proceed on acceptable terms, and how that might affect the de-leveraging timetable?
It's only conditional on OIO, so it's not subject to DD. We do await the OIO's decision, but we would be fairly confident in receiving a positive outcome there.
Okay, so pretty confident on that one?
Yep.
Okay. Thank you. And just while I've got you, just a question around the skills matrix. I think I might have brought it up last year, actually. Thanks for the disclosure on the skills matrix in the annual report. Helpful to see it in terms of overall competency. But given SkyCity's ongoing financial reset 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? If not, would welcome any understanding from the board's behalf.
Yeah, thank you. You did raise that last year. We did consider it. We have chosen not to. The reasons for that are a number. Firstly, we have all our bios are available on the website. So to the extent we have our skills in specific sectors, people can see that. Our Directors regularly offer themselves for re-election at these meetings where the credentials are presented and shareholders get to vote on that. But I think fundamentally and ultimately, the Board functions as a collective. We really want to focus on our collective matrix to assess where there are gaps which we can then use to focus for new Directors. We are looking for Directors to bring an overall contribution, and we don't really want to reduce it down to a simple checkbox with skills. Yeah. Coralie.
I'm Coralie van Camp, shareholder, and on behalf of family interests, I just want 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. Part of it is a restructure of headcount within the business to reflect 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 on it, will you make a huge loss overall for having had it 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 and 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 does not get away from the fact that it would likely be a loss on the initial cash into that.
Right. Lastly, have you sorted everything with Fletcher over the cost for the convention center?
No.
There is still ongoing litigation?
There is a court case which is slowly making its way through the courts. I think we are in the discovery phase of that, and I would anticipate there is at least another couple of years. Couple of years. Few years. Few years to run on that, yeah.
Right. Thank you.
Thank you. Maybe we just go to a couple online, then sir, we'll come to you.
Sure. This is from shareholder Hong Yu Ching. I'll split it into two parts, Julian. The first part, management has stated that net debt/underlying EBITDA is expected to reduce from 3.1x to below two times in FY2027 through asset sales and debt reduction. Assuming the announced asset sales complete as expected, what specific financial metrics must be achieved before dividends can resume, and what is the board's current expectation for dividend reinvestment?
Well, as I noted in my speech and as Jason, we expect that we should be able to recommence dividends in the FY2028 year. When we look at the combination of asset sales, cost out program, we believe that we will be in a position of sufficient cash flow to be able to start returning funds to shareholders.
The second part. So why should shareholders trust another turnaround plan? A quote from a previous announcement we have made, "In FY2026, underlying NPAT fell to NZD 38 million. No dividend was paid, and shareholders suffered significant dilution through the NZD 240 million equity raise at NZD 0.70 per share." What evidence can the board provide that FY2027 will be materially better, and what KPIs should shareholders use to judge whether management is actually delivering on the turnaround?
Well, we fully acknowledge that this has been a very painful period for shareholders, and as David touched on, there has been a significant reset in the regulatory environment for casinos within Australia and New Zealand. That commenced in around 2020 to 2021, and has seen significant regulatory action and changes within businesses, not just the SkyCity business, but other businesses across Australia. We see much tighter controls over customers. We see much higher investment in compliance and systems, and we have spent a lot of time and a lot of money to get to this point. We have focused heavily on achieving good standards and compliance in regulatory settlements. Those are now done. So I think shareholders should judge us by firstly that. We have got through that period. We have kept our licenses. We were found a suitable shareholder as license holder in Adelaide.
Going forwards, I think measure us on our ability to achieve our cost out program, our ability to launch online and launch it profitably, and our ability to return to dividends in FY2028. Now, sir, we will just take in the room. There is a microphone coming.
Hi, Rod Deru. You've got a big cash flow. I wonder if you'd consider mopping up some of those huge wads of shares you've got on issue.
Well, we hope to have a huge cash flow, and hopefully in FY2028, we will be able to give some of that cash flow to yourselves. Look, that is something we will consider at the right time, but at present, no intentions to do any buybacks. Yes, sir.
My name is Norman Ng, shareholder. I got three questions. One is, are we having a conducted tour of the NZICC today or are we having one in the future? If not, why don't we have a video presentation of the whole complex? Two, you talk about a takeover offer coming. What is the indicated pricing? Three, you sold the hotel. How many more bedrooms or how many beds do you still have left in Auckland here?
All right. Thank you, Norman. I'll ask Jason Walbridge to address the first question around the tour.
I can cover hotel rooms. Good morning. Unfortunately, we cannot give you a tour today because we have a number of different events in the convention center going on. We have a Dig This conference. Last week, we had over 800 hematologists in town for a blood conference. We have a number of other different events going on. Unfortunately, many of the rooms are occupied. We would love to be able to organize something for you at some stage. But unfortunately, our customers have booked us out. In terms of video presentations that you asked about around to be able to see through the convention center, we have actually posted some videos up on some social media websites.
Perhaps I will get one of the team, Chris, if you would not mind just chatting afterwards, and perhaps you could show this gentleman where those video footages are of all the different rooms and facilities, we have available. You also asked about hotel rooms. Today, we operate around about 1,000 hotel rooms here in the Auckland precinct across the three hotels. Each hotel is approximately 300 rooms. With the sale of the Grand, when it closes, we will continue to operate 600 hotel rooms that we will own. Noting that we will actually continue to operate the Grand through to June 30 next year. And we will be in conversations with the new owner of the hotel through that period about who is going to operate on an ongoing basis after that.
Norman, your second question just in relation to the takeover offers. We received two approaches earlier in the year. One was for NZD 0.70 per share, one was for NZD 0.75 per share. Both of them were highly conditional and required due diligence, so I would not really call them offers. They were just indications of interest. The board determined that those undervalued the business considerably. In terms of what happens to those going forwards, as we have stated, we will run a structured process which will allow these bidders, these two parties who presented offers as well as others, access to due diligence information to work up proposals for the business. If we believe those offers are in the interests of shareholders to bring to yourselves, we will do that, but we can make no guarantees that there will be any such offers forthcoming.
Now we have a question online. We just might take that.
Another question from Stephen Mayne online. How many audit tenders have we run during PwC's uninterrupted 30-year run as external auditor of our business? If the answer isn't zero, when was the last tender, and when are we next likely to run an audit tender?
Well, I actually can't tell you over the 30-year period. I can say we haven't run one in the last five years. I should say PwC give us very good service, and we certainly have no complaints, and I think they hold us to account on making sure that we have appropriately presented sets of accounts. We will be intending to run an audit tender within the coming year. Sorry, now we just have a question over here. Yes, sir.
Douglas Lowe, shareholder. Julian, is there any particular domain expertise or functional skills you're looking for in the new Director?
Yeah, there is. I think what we are looking for, and I think what we are likely to be able to achieve, is more a focus on customer, marketing, brand. Yeah.
Only one. I was just wondering, are there two or three key metrics the board will be looking at to assess success for the online business?
Sorry. We've actually built some pretty extensive models, and we've hired a really strong team across some of the best operators globally. When we're measuring success, it really comes down to achieving a return on invested capital that's above our targeted benchmarks. I'm not about to start unpacking those models today, but I can assure you we are very focused. We have a detailed plan. We have a really good team. We have one of the best brands in New Zealand. We know this market well. We're really excited about the opportunity to launch this next year .
Yes, ma'am. Down the front here.
Thank you. My name is Haley Ching. I'm a shareholder. Whenever I go to the SkyCity restaurants, I will choose the fish dishes. I wish to know which company you order the fish from.
Oh, I don't know if we can. Is the fish good?
Can you answer that question?
No, I don't know the name of the supplier off the top of our head, but we will certainly get that answer for you straight after we break today.
Oh, why I said that is that I'm a shareholder of Sanford. Sanford is one of the longest listing New Zealand brand companies. Their fish is number one.
Okay.
I wish that you, what should I say, get the fish from them.
Okay.
It is really good.
All right.
Also, I wish to know, in Australia, what about the fish coming from? Is it Sanford as well? I doubt it very much because by reading the annual report, the revenue from Australia is many times less than several years ago. I just wish that they earn more money from Australia because you have several casinos scattered in Australia. So please help the New Zealand company as well. We are in the same boat. Thank you.
Thank you. If you could ask Sanford to give us a really good price. We will love to talk to them. Yes, sir. Yeah. Oh, yeah, just down the front.
Just it was a supplementary to that question I asked, just in terms of the governance. Board's been substantially renewed over the last five years. Directors appointed predominantly between 2021 and 2023. Average tenure now is around four years. That renewal was clearly necessary, and we appreciate the fresh perspective it brings. We are also mindful that staggered succession helps retain that institutional knowledge. So, could you or the board share its thinking about how orderly rotation going forward might be part of retaining your corporate memory, I suppose?
Well, look, we absolutely agree with all of those things, particularly around staggered renewal, and we want to make sure we don't see blocks of our directors leaving all at the same time. So, we are actively turning our mind to that currently. We will be announcing a seventh director shortly. And over the coming years, I think just continue to watch this space. Any other. Yes, over this side.
Morena. Sophie Woodier, shareholder. You've spoken a little bit about skill mix for directors, and I'd be interested to know what actions you're taking to increase the diversity of the board.
Well, I think the key gap, which I just mentioned to Douglas before, which we are trying to fill at the moment, is there is a lot of finance, legal, regulatory, gaming experience on the board. Which I think for the last few years has served us well given the regulatory reset that this industry has gone through, and there have been some reasonably serious and weighty issues for us to work through. But we are now at a point where, particularly with the DIA we settled a year or two years ago. Adelaide, all our regulatory matters there are now settled and finalized. And we'd actually like to get back to running a real business. We have been running a real business, but turning our focus back to that, running a successful online business and continuing to build a really great precinct around here.
The gap which we would like to build here is particularly around customer online marketing brand. I don't think any of us would say that we are experts in any of that area. So that is the particular piece where we'd like to build a bit more diversity around the board table and watch this space in the coming weeks. We hope to be able to fill that. That's it. Well, what diversity are you talking about?
You're talking that room of shareholders got really diverse, and I don't think that the board represents the diversity that's in the room.
Well, specifically, can you help me?
Age, potentially background, ethnicity, gender. You can pick.
Well, we-
I'm asking for your actions on it and not trying to criticize. What I'm asking is what are you doing to actively improve the diversity? There's really clear research that diverse boards result in more effective and successful companies. I'm asking as a shareholder.
Yes, and I'm telling you we are looking to appoint a seventh director shortly. You are yet to see this person, but hopefully, that does add to your perspective on diversity. Any other Yes, sir.
I'm a lucky shareholder from the beginning. You've got several operations I would like to see. Well, I've checked the share price graph from, let's go back five years, from 2021 to It has gone in a straight line going downwards and downwards. Yesterday was NZD 0.67, and no dividend has been paid for the last three years. Now, what component do you think is dragging you down? Is it the casino operation, which I think is the fault in this one? If I had my way, I would get rid of the casino, really. It's worth nothing. Nobody would buy or lease it out, and the best option, of course, will be to get rid of it. So which component is dragging you down the share price and the, what you call, dividend?
Yeah. It's been touched on a couple of times. Over the last five years, there's been a significant change to casinos in Australia and New Zealand. If you look back to when the casino industry was first set up and launched in a legal sense in Australia and New Zealand, you're talking about late 1980s, mid-1990s, and this has been the first major regulatory overhaul since that period. That has impacted earnings across all businesses in this sector significantly. If you look at the SkyCity business in the late 2010s, so 2018, 2019, 2020, this business was well over NZD 300 million of EBITDA. We're now looking at a business of circa NZD 180 million. That is nearly a halving. What has been the cause of this? It's been two factors. One has undoubtedly been economic.
We are in tougher economic times, and the situation in the Middle East has had a significant effect on this particular business with consumer discretionary spend. The bigger part, however, has been the regulatory overhaul. That can be simply boiled into two parts. One is significantly tighter restrictions on customers and seeking to make sure there is no money laundering happening within casinos, and also much tighter restrictions in terms of problem gambling or host responsibility. That has meant that a number of customers are just simply not in this business anymore. That was an essential thing to do to make sure that we operate legally within the law, and it is absolutely imperative that we do that to be able to retain our licenses. That has been a significant impact.
The other impact has been the overhaul of our compliance systems to be able to support and ensure that that happens, and that has undoubtedly added a lot more cost into this business. It has added this cost into all of the casino businesses within the sector. We make no apologies for that. Again, it is essential for us that we retain our licenses and we operate in accordance with the law, both the letter and the spirit. I think if you really step back and say, "Well, what would be the driver of that decline over the last five years?" I feel your pain. I came in at NZD 3.60. It would be those two things, but primarily that regulatory overhaul.
I think going forwards, we would like to think that as this business is now stabilized, we should return to a conservative capital structure, and we should return to cash flow and dividends, that hopefully that is reflected in the share price. Yes, sir. Just down the front.
Yeah. Hi there. Steve Schroeder, shareholder. Congratulations, first up, on getting the online gambling licenses over the line. It is a great initiative. Just a question about that. Are they just able to allow us to operate in New Zealand or is it going to be able to operate globally?
Morning, Steve. The license is just for New Zealand, so we'll geo-fence all play only to be within New Zealand. We also hold a Malta gaming license as well. That gives us the opportunity should we choose to participate in other markets. But right now, our focus is absolutely on New Zealand. It does not include Adelaide. That's correct, yeah. Online casino gambling in Australia is illegal.
Any more questions in the room? No. Right. Let me find where I am. Where do I go? Thank you, Phil. Right. Right. So, to close the meeting, thank you for attending the 2026 SkyCity annual meeting today. For those in attendance, light refreshments are available in the foyer at the close of the meeting. And for those shareholders who would like their car park ticket validated, go and see Computershare desk out the front. You're only allowed one ticket. Don't get more than one. Representatives of [Non-English Content] I will now formally close the meeting.
[Non-English Content ] Just to close our proceedings today, I just want to put a blessing over the [Non-English Content], giving thanks to our speakers for sharing their importance with us today. [Non-English Content ] Let us pray. [Non-English Content ]
[Non-English Content] Now, just to bless on our [ Non-English Content] Ju st outside. I will just have a moment to bless our [ Non-English Content ]
[Non-English Content] Dear God, we love our bread, we love our butter, but most of all, we love each other.