KEY POINTS:
As a member of the SkyCity Entertainment board, Elmar Toime signed off on the cost-cutting target of $33 million announced in May.
But when he took over as acting chief executive in June following Evan Davies' resignation, it became his job to deliver those savings.
"The information that
was available when I stepped in as manager wasn't enough to assign budgets to individual responsibility areas of the business," Toime said.
"I wanted as a manager now - shifting from a director role where the cost savings are embedded in the global company budgets - I wanted to see them specifically nailed against individual managers' budgets. That's how my management style is."
Toime's comments come after he stunned the market at last week's profit result by saying $11.6 million of those cost savings had already been achieved - just six weeks after the target was announced.
Investors queried whether the cost savings were effectively a downgrade to its $98.4 million full year net profit. The profit met analysts' expectations, but that was without taking into account the $11.6 million cost savings.
Davies resigned just a month after the market was told about the cost-cutting plan, which had failed to mollify institutional investors dissatisfied with SkyCity's performance. One of Toime's first priorities as acting chief executive was to restructure head office management and accountability.
"Coming in as a manager now, my mind immediately turned to looking to see what's been achieved in the company, what can be achieved, who's done what, where is the detail and how do managers know what their new targets are against costs," Toime said.
"That picked up the $11 million - it brought forward future savings and removed some speculative savings."
Towards the end of the 2006 financial year the company identified the need to look deeper into costs because revenue and income was not as strong as expected. Cost cutting got under way this year and would focus on staff utilisation, rostering, absenteeism, procurement, waste, consumables, sponsorship and marketing.
"It's really bread and butter stuff here," Toime said. "I've actually put some costs back into the company to make sure that we're not jeopardising customer service in the properties."
Toime said it was understood by the market that cost savings would start in the 2007 year, but not the extent of the savings.
In retrospect the initial announcement could have been better.
"To the extent that people were saying to me, 'We didn't understand it', then I have to acknowledge a better job could have been done in May to explain all of that."
The market uncertainty regarding the saving programme had been a surprise, he said.
"What I wanted to do after I went around talking to people and understanding the level of discomfort with disclosures in the business [is] that I wanted to make that clearer."
Some of the initial planned savings had been dependent on quite difficult regulatory changes or environmental conditions that were somewhat speculative, Toime said. "They've been removed from the mix. So we've still got the $33 million, it's now coming in earlier to be concluded in FY08 year and they're things that have been embedded in management budgets."
Shares in SkyCity rose 2c to $4.57.
