Skycity Entertainment Group Limited · NZX:SKC
Skycity Entertainment — Investor Day (May 2015)
130 slides from Skycity Entertainment's investor day presentation, May 27, 2015
Slide 1: ASX cover letter: Investor Day Presentations and Trading Update
27th May, 2015 ASX Market Announcements Australian Stock Exchange Exchange Centre Level 6 20 Bridge Street Sydney NSW 2000 Australia Dear Sir/Madam RE: SKYCITY ENTERTAINMENT GROUP LIMITED (SKC) Investor Day Presentations and Trading Update Please see our Market Release and Presentation attached. You
Slide 2: Market Release: Investor Day Presentations and Trading Update
MARKET RELEASE 27 May 2015 Investor Day Presentations and Trading Update SKYCITY Entertainment Group Limited (NZX/ASX:SKC) is hosting investor presentations in Auckland today and Adelaide tomorrow. The presentations being given are attached to this release. As part of the investor presentations, SKY
Slide 3: Release note and investor relations contact
Note: Normalised revenue is adjusted for IB at a theoretical win rate of 1.35%. For more information on the content of this release please contact: Ben Kay Investor Relations & Corporate Development Manager DDI:+64 9 363 6067 E-mail ben.kay@skycity.co.nz 2
Slide 4: SKYCITY Entertainment Group Limited Auckland & Adelaide Investor Day(s)
SKYCITY Entertainment Group Limited Auckland & Adelaide Investor Day(s) Investor Presentation May 2015
Slide 5: Auckland Investor Day 27 May 2015
Auckland Investor Day 27 May 2015
Slide 6: Introduction
Introduction Nigel Morrison CEO
Slide 7: Introduction & Welcome
Introduction & Welcome Aspirations for the Investor Day(s) 1 Update the market on our current thinking on group strategy, and the challenges and opportunities associated with each of our businesses 2 Map out our approach to capital management and delivery of shareholder returns 3 Provide a current
Slide 8: Senior Management Presenting
Senior Management Presenting Simon Jamieson, Group GM - Nigel Morrison, CEO Rob Hamilton, CFO NZICC Development & Tourism Ejaaz Dean, President IB Matt Ballesty, Assistant GM, Aaron Morrison, Acting GM, SKYCITY Auckland SKYCITY Adelaide Michele Baillie, GM, SKYCITY Callum Mallet, Acting GM Hamilton
Slide 9: Programme: Auckland, 27 May
Programme: Auckland, 27 May Time Event Speaker / coordinator 10.00am- Registration at Conservatory, Level 7, SKYCITY Ben Kay & Stephanie Warren 10.30am Grand Hotel 10.35am Welcome Nigel Morrison 10.45am Property tour Matthew Ballesty, Ben Kay & Judd Hallas 11.45am Group update and trading Nigel Morr
Slide 10: Programme: Adelaide, 28 May
Programme: Adelaide, 28 May Time Event Speaker / coordinator 10.30am- Registration at Station Road Entry Vestibule, Ben Kay & Judy Salvemini 11.00am Adelaide Casino 11.00am Welcome Rob Hamilton 11.15am Property tour & walk of Riverbank precinct Aaron Morrison, Tim White & Ben Kay 12.30pm Lunch: Pres
Slide 11: Group Update and Trading
Group Update and Trading Nigel Morrison
Slide 12: Strategy & Vision
Strategy & Vision Primary objective of the SKYCITY Board of Directors and Senior Management team is to drive earnings growth in order to maximise total shareholder return Key tenets to deliver growth and maximise shareholder value: 1. Maximising the potential of our existing casino licences 2. E
Slide 13: Key Elements of Strategy
Key Elements of Strategy NZICC and Adelaide expansion projects should deliver significant lift in both earnings and dividends 10
Slide 14: Investment in Brand
Investment in Brand Please find a copy of the recent SKYCITY advert at https://youtu.be/i5wJkcjKbbs 11
Slide 15: Overview of Recent Performance
Overview of Recent Performance Significant investment (over $250 million over past 3 years) in new projects delivering growth Horizon IB suites and salons across Auckland, Adelaide and Darwin Auckland premium gaming spaces (Black, Platinum, Baccarat Room, Eight) World-class restaurant precin
Slide 16: Overview of Recent Performance: Revenue Update YTD May 2015
Overview of Recent Performance Revenue Update for YTD to 24 May 2015 2H15 2H14 FY15 FY14 Movement Movement HY YTD HY YTD May YTD May YTD $m $m % $m $m % New Zealand Casinos ■ Auckland 247.5 216.2 14.5% 550.1 474.2 16.0% ■ Hamilton 19.9 18.7 6.3% 45.1 43.6 3.4% ■ Queenstown / Other 10.4 5.7 83.8% 16.
Slide 17: Property by Property Growth Rates (ex-IB)
Overview of Recent Performance Property by Property Growth Rates (ex-IB) 2H15 2H14 1H15 1H14 Movement Movement HY YTD HY YTD $m $m % $m $m % New Zealand Casinos (ex IB) ■ Auckland 214.0 193.3 10.7% 257.5 235.6 9.3% ■ Hamilton 19.8 18.6 6.0% 25.2 24.9 1.2% ■ Queenstown / Other 5.3 5.0 5.1% 5.8 5.9 (2
Slide 18: Observations & Trends (1 of 2)
Overview of Recent Performance Observations & Trends (1 of 2) Normalised group revenue (including gaming GST) is up 10.0% for 2H15 YTD, as compared to 9.2% in 1H15 Actual group revenue (including gaming GST) is up 17.9% for 2H15 YTD, reflecting a significantly improved IB win rate Auckland has
Slide 19: Observations & Trends (2 of 2)
Overview of Recent Performance Observations & Trends (2 of 2) Darwin has continued to experience challenging trading conditions, with normalised revenue (including gaming GST but excluding IB revenue) down 2.8% for 2H15 YTD IB has continued to achieve strong growth: Group turnover for FY15 YTD
Slide 20: Key Events Since 1H15 Result
Key Events Since 1H15 Result (11 February 2015) NZICC project NZ Government confirmed no financial contribution to NZICC (February 2015) SKYCITY and NZ Government agreed Preliminary Design (26 May 2015) Adelaide car park SA Govt and Walker Corp agreed A$610 million transformation of Festiv
Slide 21: Key Milestones for Remainder of 2015
Key Milestones for Remainder of 2015 NZICC planning and approvals Resource Consent Procurement of building works contract Activation of gaming concessions Commencement of construction Adelaide expansion project Finalising plans for expanded casino and six-star hotel Preparatory works
Slide 22: Summary & Conclusions
Summary & Conclusions Exclusive long-term casino licences secured in all jurisdictions Properties are major entertainment destinations in all key markets Diversified revenue and earnings base – by both geography and business activity Achieving organic growth following recent capital investme
Slide 23: Questions?
Questions?
Slide 24: Group Performance and Capital Management
Group Performance and Capital Management Rob Hamilton CFO
Slide 25: Focus as New CFO
Focus as New CFO Working in partnership with businesses Enhancing financial performance across the Group Maximising returns for our shareholders Supporting major projects and strategic initiatives Sourcing and allocating capital efficiently Mitigating key financial risks across the Group
Slide 26: Group Financial Performance – Property Mix
Group Financial Performance – Property Mix Auckland the bedrock of Group earnings generating ~70% of Group EBITDA 1H15 Normalised Revenue 1H15 Normalised EBITDA 1% 0% 5% 6% 9% 16% 14% 19% 59% 72% Auckland Adelaide Auckland Darwin Darwin Hamilton Adelaide Hamilton Queenstown / other Queenstown / othe
Slide 27: Group Financial Performance – Business Mix
Group Financial Performance – Business Mix Gaming revenues represent ~75% of total Group revenues 1H15 Normalised Revenue: gaming vs. non-gaming 1H15 Normalised Revenue by business segment 4% 2% 7% 25% 37% 12% 15% 75% 24% Gaming Non-gaming EGMs Tables (ex IB) F&B IB Hotels & Conventions Other non-ga
Slide 28: Group Financial Performance – EGMs
Group Financial Performance – EGMs Lowest EGM WPU being achieved by Adelaide, only 40% of Auckland YTD average YTD average WPU by property Group weighted average Auckland Hamilton Darwin Queenstown Adelaide 0 20 40 60 80 100 Index = 100 (YTD Auckland EGM WPU) 25
Slide 29: Group Financial Performance – Tables (ex-IB)
Group Financial Performance – Tables (ex-IB) Adelaide tables WPU is around 60% of Auckland YTD average YTD average WPU (ex-IB) by property Group weighted average Auckland Adelaide Hamilton Queenstown Darwin 0 20 40 60 80 100 Index = 100 (YTD Auckland tables (ex IB) WPU) 26
Slide 30: Group Financial Performance – Key Observations
Group Financial Performance – Key Observations Significant recent investment in properties now delivering organic growth Auckland continues to be the standout performer, with strong growth across all business segments, underpinned by combination of good management and positive external factors
Slide 31: Macroeconomic Environment – NZ
Macroeconomic Environment – NZ Auckland Hamilton Real GDP growth +3.4% in year to year to Dec 2014 +2.9% in year to year to Dec 2014 Employment +3% in year to Dec 2014 +1.9% in year to Dec 2014 Unemployment 5.7% at Dec 2014 8.1% at Sept 2014 Population 1.53m (est.) at June 2014 (~22% Asian) 153k (es
Slide 32: Macroeconomic Environment – Australia
Macroeconomic Environment – Australia Adelaide, SA Darwin, NT Real GSP growth ~2% in year to year to June 2015 ~5% in year to year to June 2015 Employment +0.3% in year to March 2015 +0.9% in year to March 2015 Unemployment 6.7% at March 2015 4.3% at March 2015 Population 1.30m (est.) at Dec 2014 (~
Slide 33: Queenstown Medium-Term Opportunities
Queenstown Medium-Term Opportunities Two small properties, SKYCITY Queenstown and SKYCITY Wharf, only 200m apart Combined gaming product of 156 gaming machines and 18 tables FY14 normalised revenue of $14 million and normalised EBITDA of $2 million Venue licences expire in 2025 and 2024 resp
Slide 34: Ownership & Research Coverage
Ownership & Research Coverage Member of ASX 200 and NZX10 indices Open register with largest shareholder around 7% Consistently within top 5 most liquid stocks traded on NZX Covered by 14 brokers – 5 from NZ, 9 from Australia SKYCITY share register (April 2015) Brokers covering SKYCITY 4% (A
Slide 35: TSR Performance – Last 4 Years (NZX)
TSR Index (Set to 100 at May 2015) 100 140 80 60 40 120 160 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 21% Apr-12 SKC (NZ$) Jun-12 Aug-12 Oct-12 7% Dec-12 Feb-13 EGP (A$) 32 Apr-13 Jun-13 4 Year TSR Aug-13 37% Oct-13 CWN (A$) Dec-13 Feb-14 Apr-14 TSR Performance – Last 4 Years (NZX) Jun-14 67% Aug-14 Relati
Slide 36: TSR Performance – Last 4 Years (ASX)
TSR Index (Set to 100 at May 2015) 100 140 80 60 40 120 160 Jun-11 Aug-11 Oct-11 Dec-11 47% Feb-12 Apr-12 SKC (A$) Jun-12 Aug-12 Oct-12 7% Dec-12 Feb-13 EGP (A$) 33 Apr-13 Jun-13 4 Year TSR Aug-13 37% Oct-13 CWN (A$) Dec-13 Feb-14 TSR Performance – Last 4 Years (ASX) Apr-14 Jun-14 23% Aug-14 Relativ
Slide 37: Driving Future TSR Performance
Driving Future TSR Performance Organic EBITDA and EBIT growth Focus on improving our core businesses Deliver world-class casino entertainment for our customers Benefits of operating and financial leverage (i.e. improving margins) Efficient capital usage within the existing business Prude
Slide 38: Property Assets
Property Assets Current market value of land and buildings estimated at $1.39 billion vs. book value (at March NZ $million Book Value(1) Market Value(2) 2015) of $0.89 billion Land Value of land and buildings represents 43% of Auckland 229 342 SKYCITY's enterprise value of $3.25 billion Hamilton
Slide 39: Funding & Balance Sheet Outlook (1 of 2)
Funding & Balance Sheet Outlook (1 of 2) Current debt outstanding of $696 million as at 24 May 2015 $399 million of bank debt $297 million of USPP notes Current unutilised debt funding capacity of $190 million considered sufficient for expected funding requirements out to the start of FY18
Slide 40: Funding & Balance Sheet Outlook (2 of 2)
Funding & Balance Sheet Outlook (2 of 2) Still progressing NZ senior bond issue and exploring USPP options Expect to launch NZ senior bond issue post FY15 result announcement USPP options more expensive but offer longer maturities Seeking committed facilities of at least $1.0 billion by Dece
Slide 41: Dividend Policy
Dividend Policy SKYCITY remains committed to its stated dividend policy for the foreseeable future Dividend payout ratio of not less than 80% of normalised NPAT Subject to minimum dividend of 10cps interim, 10cps final Continuation of dividend reinvestment programme, with a 2% discount 38
Slide 42: Summary & Conclusions
Summary & Conclusions Diverse group by geography and business mix, with key drivers continuing to be Auckland and gaming business units Macroeconomic outlook continues to be favourable in NZ, although weaker conditions persisting in Australia Management maintains a clear focus on the key drive
Slide 43: Questions?
Questions?
Slide 44: Update on NZICC Project
Update on NZICC Project Nigel Morrison & Rob Hamilton
Slide 45: Update on NZICC project (1 of 2)
Update on NZICC project (1 of 2) Preliminary Design agreed with the NZ Government SKYCITY and the Crown have agreed and executed an amended agreement for the development of the NZICC Increase in SKYCITY’s minimum capital investment from $402 million to $430 million Relocation of FDU land fro
Slide 46: Update on NZICC project (2 of 2)
Update on NZICC project (2 of 2) Previously announced (and remain committed) to the development of a new 300 room five-star hotel on Hobson Street, adjacent to the NZICC Estimated cost of developing the hotel will be in the order of $130-$140 million (excluding land) Forms part of the resource
Slide 47: Expected Total Costs
Expected Total Costs SKYCITY estimates the total project cost of the NZICC (as defined in the NZICC Agreement) will increase to $450-470 million (including land) Reduced from previous upper estimate of $530 million, announced in December 2014 Reflects a significant reduction in the allowance f
Slide 48: Activation of NZICC Gaming Concessions (1 of 4)
Activation of NZICC Gaming Concessions (1 of 4) Concession Timing vs. Signing Contract Comment TiTo/Cashless/Bill Acceptors Effective immediately In July 2013, Korda Mentha (“KM”) estimated TiTo/Cashless would provide a 6% lift on EGM GGR and represent a $90 million NPV to SKYCITY 230 new EGMs Vast
Slide 49: Activation of NZICC Gaming Concessions (2 of 4)
Activation of NZICC Gaming Concessions (2 of 4) Gaming concessions become operative following signing NZICC building works contract Plans to activate various gaming concessions are well advanced and split into two stages Stage 1: 70% of new product on existing gaming floor within 3 months of
Slide 50: Activation of NZICC Gaming Concessions (3 of 4)
Activation of NZICC Gaming Concessions (3 of 4) Gaming concessions activation plan (indicative only) Current Stage 1 Sub-Total Stage 2 Total EGMs 1,608 250 1,858 19 1,877 ATGs 39* 80 119 121 240 Tables 110 22 132 18 150 Ratio of EGMs & 15.0:1 15.0:1 14.1:1 ATGs to Tables *Currently included within d
Slide 51: Activation of NZICC Gaming Concessions (4 of 4)
Activation of NZICC Gaming Concessions (4 of 4) Allowed up to $50 million of additional capital expenditure for activation Internal building works at existing Auckland properties Purchase of new gaming product Roll-out of cashless and TITO systems SKYCITY remains confident that the NZICC p
Slide 52: NZICC Preliminary Design
NZICC Preliminary Design Simon Jamieson NZICC Project Director
Slide 53: Design Philosophy
Design Philosophy The design philosophy for the NZICC maximises functionality through the inherent flexibility of spaces. It provides adaptable and multi-function areas that meet the changing needs and diversity of customers and the convention industry The NZICC design is an opportunity to create a
Slide 54: Design Overview (1 of 2)
Design Overview (1 of 2) Very proud of the exceptional design and are happy to have reached this milestone Revised design is for a slightly smaller centre, but is smart, streamlined and flexible which makes for a clever use of space More than 32,000sqm total floor space Five times larger tha
Slide 55: Design Overview (2 of 2)
Design Overview (2 of 2) Able to attract new Conventions business between 1,000 and 3,000 delegates Not possible to host such events in NZ today – opportunity to win export dollars from Australian cities who have this business now Ability to host two of these concurrently All facilities of i
Slide 56: Hobson Street View
Hobson Street View 53
Slide 57: Nelson Street View
Nelson Street View RA sSKYCITY 540 TER TAINMENT CROUP
Slide 58: Cross-Section
Cross-Section 55
Slide 59: Exhibition Hall
Exhibition Hall 56
Slide 60: Laneway (1 of 2)
Laneway (1 of 2) 57
Slide 61: Laneway (2 of 2)
Laneway (2 of 2) Laneway to house a number of cafes, bars & restaurants Aim to create another Federal Street-style eating and entertainment precinct Potential to house boutique shopping/retail offerings Hub of activity to support the atmosphere of the NZICC and the office population of the a
Slide 62: Next Steps
Next Steps Secure resource consent from Auckland Council Sign a building works contract – activate gaming concessions Subject to receipt of non-notified resource consent, expect to start construction later this year Estimated 3 year build from signing a contract (estimated completion early 2
Slide 63: Questions?
Questions?
Slide 64: Auckland Operations
Auckland Operations Matt Ballesty Assistant General Manager, SKYCITY Auckland
Slide 65: Introduction to Management
Introduction to Management John Mortensen, COO NZ and Matt Ballesty, Assistant GM, GM SKYCITY Auckland SKYCITY Auckland 62
Slide 66: Brief Overview of Business
Brief Overview of Business Opened in 1996 Award winning and leading NZ tourism and entertainment destination Business activities include gaming, hotels, car parking, restaurants & bars, convention facilities, out-catering and the Sky Tower 3,300 employees FY14 normalised revenue of $533 mi
Slide 67: Recent Financial Performance – Auckland (FY11 – 1H15)
Recent Financial Performance – Auckland (FY11 – 1H15) 350.0 50% 48% 300.0 46% 250.0 44% NZ$ million 42% 200.0 40% 150.0 38% 100.0 36% 34% 50.0 32% 0.0 30% 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 EBITDA margin (% RHS) Revenue (incl Gaming GST) Revenue (ex-IB) EBITDA EBITDA (ex-IB) 64
Slide 68: Recent Financial Performance
Recent Financial Performance Strategic initiatives over past 18 months delivering strong organic growth Auckland has delivered 5 quarters of consecutive EBITDA growth, reflecting benefits of being able to offer world-class integrated entertainment facilities Strong performance, both local and
Slide 69: Recent Strategic Initiatives Driving Growth
Recent Strategic Initiatives Driving Growth Investment in gaming facilities IB / Horizon Premium gaming spaces (Black, Baccarat room, Eight, Platinum) New floor refurbishment Investment in world-class dining offerings in Federal Street (Masu, the Grill, Gusto, Depot, Fed Deli, Sugar Club)
Slide 70: Challenges & Opportunities Over The Medium-Term
Challenges & Opportunities Over The Medium-Term Opportunities Challenges / Risks Activation and optimisation of NZICC Increased competition in gaming machine regulatory concessions space, particularly in premium gaming (offshore) Leveraging brand Changes to laws / regulations around Contin
Slide 71: Conclusions & Outlook
Conclusions & Outlook NZ’s leading entertainment destination Strong and focused management team in place Strategic initiatives delivering strong growth Well positioned to capitalise on new business opportunities over the medium-term Operating in strong macroeconomic environment NZICC to
Slide 72: Questions?
Questions?
Slide 73: Hamilton Operations
Hamilton Operations Michelle Baillie General Manager, SKYCITY Hamilton
Slide 74: Introduction to Management
Introduction to Management Michelle Baillie, GM SKYCITY John Mortensen, COO NZ Hamilton 71
Slide 75: Brief Overview of Business
Brief Overview of Business Waikato’s leading gaming and entertainment destination, situated on the banks of the Waikato River Opened in 2002, 100% ownership since July 2005 Located ~150kms south of Auckland Business activities include gaming, bars and restaurants, a function centre, Bowling
Slide 76: Recent Financial Performance – Hamilton (FY11 – 1H15)
Recent Financial Performance – Hamilton (FY11 – 1H15) 30.0 44% 25.0 42% 20.0 40% NZ$ million 38% 15.0 36% 10.0 34% 5.0 32% 0.0 30% 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 EBITDA margin (% RHS) Revenue (incl Gaming GST) Revenue (ex-IB) EBITDA EBITDA (ex-IB) 73
Slide 77: Recent Financial Performance
Recent Financial Performance Property returned to revenue and EBITDA growth in 1H15 under new management Growth has further accelerated into 2H15, with normalised revenue (including gaming GST but excluding IB revenue) up 6.0% for 2H15 YTD, with EBITDA margins improving on the pcp Continued im
Slide 78: Recent Strategic Initiatives Driving Growth
Recent Strategic Initiatives Driving Growth Leadership team changes, with Michelle Baillie's appointment as GM in April 2014, reporting to John Mortensen, COO NZ 2nd tier management restructure in September 2014 Investment in and repositioning of gaming facilities i.e. Premium gaming spaces (D
Slide 79: Challenges & Opportunities Over the Medium-Term
Challenges & Opportunities Over the Medium-Term Opportunities Challenges / Risks Utilise great CBD and riverside location Shift of economic activity “hub” away from casino precinct to the Southern end of the Potential activation of vacant car park city and to suburban areas space and River fro
Slide 80: Conclusions & Outlook
Conclusions & Outlook Property has returned to growth under new management 2015 has been a year of change with a new leadership team in place Clear vision for the business, and a renewed focus on new products, marketing and promotions, and on building strong community connections SKYCITY to
Slide 81: Questions?
Questions?
Slide 82: Conclusions & Closing Remarks
Conclusions & Closing Remarks Nigel Morrison
Slide 83: Conclusions & Closing Remarks
Conclusions & Closing Remarks Primary objective is to drive earnings growth in order to maximise total shareholder return Effective monopoly casino licences secure for the long-term Strategic initiatives are delivering organic growth across core business Robust trading momentum YTD across un
Slide 84: Adelaide Investor Day 28 May 2015
Adelaide Investor Day 28 May 2015
Slide 85: Presentation from Renewal SA
Presentation from Renewal SA
Slide 86: Presentation from Renewal SA
Presentation from Renewal SA Please contact judy.salvemini@adelaidecasino.com.au for a copy of the Renewal SA presentation 83
Slide 87: Adelaide Operations
Adelaide Operations Aaron Morrison Acting General Manager, SKYCITY Adelaide
Slide 88: Introduction to Management
Introduction to Management Aaron Morrison, Acting General Matt Hardman, Assistant Manager General Manager 85
Slide 89: Brief Overview of Business
Brief Overview of Business Acquired in 2000 from SA Government Situated in heritage-listed historic Adelaide Railway Station building In its current configuration, the casino has: An allowance for 1500 gaming machines (currently ~900), 300 ATGs (currently ~60) and 200 tables (currently ~65)
Slide 90: Adelaide Redevelopment Project – Overview
Adelaide Redevelopment Project – Overview Vision is to transform the Adelaide Casino into a full-service world-class entertainment complex Significant opportunity to grow market share locally and with international customers and to turnaround a long-term underperforming casino Interim Redevelo
Slide 91: Revised Adelaide Regulatory Framework
Revised Adelaide Regulatory Framework New ALA and CDA, which commenced in February 2014, address many of the historic disadvantages experienced by the Adelaide Casino and levels the playing field with competitor casino peers Allow for modern, contemporary gaming product and systems (TITO and cas
Slide 92: Recent Financial Performance – Adelaide (FY11 – 1H15)
Recent Financial Performance – Adelaide (FY11 – 1H15) 100.0 24% 80.0 22% 20% 60.0 A$ million 18% 40.0 16% 14% 20.0 12% 0.0 10% 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 EBITDA margin (% RHS) Revenue (incl Gaming GST) Revenue (ex-IB) EBITDA EBITDA (ex-IB) 89
Slide 93: Recent Financial Performance
Recent Financial Performance FY14 and 1H15 operations significantly effected by disruption caused by interim transformation works EBITDA margins were significantly impacted in 1H15 due to higher costs associated with launch of new facilities and high fixed labour costs over the period Improvin
Slide 94: Strategic Initiatives Implemented Post Interim Redevelopment
Strategic Initiatives Implemented Post Interim Redevelopment Brand re-launch New marketing and promotional campaigns (to both local and interstate customers) Management team restructure Delivery of a customer friendly TiTo and cashless product Delivery of short term car parking solution
Slide 95: Investment in Brand
Investment in Brand Please find attached a copy of the recent SKYCITY Adelaide advert at https://youtu.be/AYG_0K_77WM 92
Slide 96: Adelaide Redevelopment
Adelaide Redevelopment Aaron Morrison & Tim White
Slide 97: Expansion Update
Expansion Update SKYCITY is committed to expanding and reconfiguring the existing Adelaide Casino and constructing a 6-star boutique hotel adjoining the expanded Adelaide Casino Requirement of Approved Licensing Agreement (“ALA”) signed in late 2013 Must be completed and open by 30 June 2019 (
Slide 98: Macro Gaming Opportunity (1 of 3) – Share of Total Gaming Expenditure
Macro Gaming Opportunity (1 of 3) – Share of Total Gaming Expenditure (2013) Share of Total Gambling Expenditure - 2013 100% 8% 6% 10% 13% 10% 12% 90% 1% 17% 0% 3% 23% 1% 29% 2% 11% 10% 19% 11% 1% 9% 80% 13% 1% 10% 70% 12% 2% 60% 24% 47% 50% 66% 35% 55% 52% 56% 65% 0% 73% 40% 30% 45% 20% 7% 29% 29%
Slide 99: Macro Gaming Opportunity (2 of 3) – Per Capita Casino Expenditure
Macro Gaming Opportunity (2 of 3) – Per Capita Casino Expenditure Per Capita Casino Expenditure 800 700 600 500 $A 400 300 200 100 0 NSW VIC TAS QLD SA ACT WA NT Source - Australian Gambling Statistics 30th Edition 96
Slide 100: Macro Gaming Opportunity (3 of 3) – Casino Expenditure as a % of HDI
Macro Gaming Opportunity (3 of 3) – Casino Expenditure as a % of HDI Casino Expenditure as a % of HDI 2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 NSW VIC TAS QLD SA ACT WA NT Source - Australian Gambling Statistics 30th Edition 97
Slide 101: Riverbank Precinct (1 of 2)
Riverbank Precinct (1 of 2) Riverbank Precinct Close to A$4.5 billion being invested 98
Slide 102: Riverbank Precinct (2 of 2)
Riverbank Precinct (2 of 2) 99
Slide 103: Festival Plaza Development
Festival Plaza Development SA Government and Walker Corporation agreed A$610 million transformation of Festival Plaza precinct Includes 1,560 space underground car park adjacent to Adelaide Casino, in addition to a 25 storey office tower, retail / F&B precinct and the creation of a new Civic pla
Slide 104: Concept Design (1 of 2)
Concept Design (1 of 2) Concept design progressing, with current features including: 6 star boutique all-suite hotel (~100 rooms) Expanded gaming, hospitality and entertainment facilities Dedicated International VIP ‘Horizon’ table games floor Expanded premium and main gaming / non-premium
Slide 105: Concept Design (2 of 2)
Concept Design (2 of 2) 102
Slide 106: Timing
Timing Planning approval of 2-3 months following confirmation of final design Expected build program of up to three years so need to commence construction by June 2016 Key first step is completion of Government roads project to divert road and other infrastructure within the proposed expansion
Slide 107: Summary & Conclusions
Summary & Conclusions Interim redevelopment completed, on time and on budget World-class facilities now available, with contemporary gaming product Underlying financial performance gradually improving Management firmly focused on delivering sustained revenue and earnings growth New, signif
Slide 108: Questions?
16) 3) P e e e SKYCITY' cy) Questions? °.
Slide 109: International Business
International Business Ejaaz Dean President International Business
Slide 110: Introduction to Management
Introduction to Management Ejaaz Dean, President International Business 107
Slide 111: Brief Overview of Business
Brief Overview of Business SKYCITY participates in the highly competitive segment referred to as International Business (“IB”) IB comprises of high-worth players and/or groups who visit casinos as part of their leisure activities SKYCITY competes with casinos in Australia, Singapore, Macau, Ma
Slide 112: Recent Financial Performance
Recent Financial Performance Sustained turnover growth across IB, with a 36% CAGR since from July 2012 to December 2014 Strong growth underpinned by: Success of our expanded sales and marketing team Increased recognition of our ‘Horizon’ brand and offering Higher table differential levels
Slide 113: Reasons to Visit
Reasons to Visit SKYCITY offers players incentives to visit our properties, including (but not limited to): Cash rebates based on play volumes (turnover) Complementary benefits including free airfares, accommodation, food and beverage Lucky Money (Ang Poa) is also offered during times of cel
Slide 114: Recent Strategic Initiatives Driving Growth
Recent Strategic Initiatives Driving Growth Investment in gaming facilities i.e. Horizon in Auckland, Queenstown and Darwin Investment in world-class F&B offerings in Auckland Darwin Lagoon resort and gaming salons Establishment of market leading sales & marketing team Prudent approach to
Slide 115: State of Play in Macau & Broader Casino Industry Affecting IB
State of Play in Macau & Broader Casino Industry Affecting IB Austerity drive in Macau under new Chinese leadership Significant fall VIP revenues in Macau over last 12 months (down ~50% yoy) Some evidence of a transition of Macanese VIP revenues into regional and Australasian casinos (ref Crow
Slide 116: Vision for the Business
Vision for the Business Sustained double digit growth is a realistic goal Significant opportunity across the medium-term Step change in Adelaide, post expansion, given its location and attractiveness as an IB location (Barossa, golf courses) Upside in Darwin, if airlift issues are alleviated
Slide 117: Summary & Conclusions
Summary & Conclusions Location Gaming Hotel F&B Access Auckland aaaaa aaaaa aaaaa aaaaa Adelaide today aa aa aa aa Adelaide post expansion aaaaa aaaaa aaaaa aaa Darwin aaaa aaaa aa a Queenstown aa aa aa aa aSKYCITY aExternal 114
Slide 118: Questions?
16) 3) P e e e SKYCITY' cy) Questions? °.
Slide 119: Darwin Operations
Darwin Operations Callum Mallet Acting General Manager, SKYCITY Darwin
Slide 120: Introduction to Management
Introduction to Management Callum Mallet, Acting General Grant Dewsbury, Finance & Manager Strategy Manager 117
Slide 121: Brief Overview of Business
Brief Overview of Business Acquired in 2004 from MGM Grand Leading entertainment facility in Northern Territory Situated 2km from the CBD, directly on Mindil Beach Strategic location close to Asia Home of Darwin major events including the annual gala Ball (up to 5,000 pax) Business activ
Slide 122: Recent Financial Performance – Darwin FY11 to 1H15
Recent Financial Performance – Darwin FY11 to 1H15 80.0 40% 35% 60.0 30% A$ million 40.0 25% 20% 20.0 15% 0.0 10% 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 EBITDA margin (% RHS) Revenue (incl Gaming GST) Revenue (ex-IB) EBITDA EBITDA (ex-IB) 119
Slide 123: Recent Financial Performance
Recent Financial Performance Strong performance since acquisition Flat revenues from FY11 to FY15 due to challenging local macroeconomic environment Soft visitor numbers Infrastructure projects not having expected impact on local economy Itinerant population driving up cost of living Inc
Slide 124: Recent Strategic Initiatives Driving Growth
Recent Strategic Initiatives Driving Growth Investment in and repositioning of gaming facilities Investment in world-class accommodation / dining offerings (Lagoon Resort, ‘Aces’ Sports Bar) Introduction of TiTo Customer stratification and identification Focus on cost control and subsidy m
Slide 125: Community Benefit Levy, Gaming Tax Review & Regulatory Changes
Community Benefit Levy, Gaming Tax Review & Regulatory Changes The Northern Territory Government has announced that it will impose a new Community Benefit Levy (“CBL”) on SKYCITY Darwin 10% of the gross profits of electronic gaming machines The CBL will be effective from 1 July 2015 SKYCITY
Slide 126: Challenges & Opportunities Over the Medium-Term
Challenges & Opportunities Over the Medium-Term Opportunities Challenges / Risks VIP opportunity / JV with junket operator(s) Upcoming tax review to build volumes and alleviate access issues Sluggish economic growth Investment in private jet Small, itinerant population, with low Leverage
Slide 127: Conclusions & Outlook
Conclusions & Outlook Strong performance since acquisition Focus on cost control and subsidy management delivering EBITDA growth in a challenging market Longer-term growth for property underpinned by promotion of IB play, potential activation of Little Mindil site and further investment in exi
Slide 128: Questions?
16) 3) P e e e SKYCITY' cy) Questions? °.
Slide 129: Disclaimer
Disclaimer All information included in this presentation is provided as at 27 May 2015 The presentation includes a number of forward-looking statements. Forward looking statements, by their nature, involve inherent risks and uncertainties. Many of those risks and uncertainties are matters which
Slide 130: SKYCITY
e ® ry Nr SKYCITY
SKYCITY Entertainment Group — Investor Day (May 2015) on 6ix