Skycity Entertainment Group Limited · NZX:SKC
Skycity Entertainment — Debt Investor Presentation (April 2021)
43 slides from Skycity Entertainment's debt investor presentation, Apr 30, 2021
Slide 1: SkyCity Entertainment Group Limited Retail Bond Offer
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Slide 2: Disclaimer & Important Notice (1 of 3)
Disclaimer & Important Notice (1 of 3) This presentation has been prepared by SkyCity Entertainment Group Limited ("SkyCity’) in relation to the offer of unsecured, unsubordinated, fixed rate bonds described in this presentation ("Bonds"). SkyCity has lodged e Product Disclosure Statement dated 30 A
Slide 3: Disclaimer & Important Notice (2 of 3)
Disclaimer & Important Notice (2 of 3) Disclaimer None of SkyCity, the Supervisor, the Arranger, the Joint Lead Managers nor their related companies and affiliates including, in each case, their respective shareholders, directors, officers, employees, affiliates, agents and advisers, as the case may
Slide 4: Disclaimer & Important Notice (3 of 3)
Disclaimer & Important Notice (3 of 3) NZX + Application has been made to NZX for permission to quote the Bonds on the NZX Debt Market and all the requirements of NZX relating thereto that can be complied with on or before the date of this presentation have been duly complied with. However, the Bond
Slide 5: Contents
Contents 01 02 03 04 Offer Highlights Corporate Overview Business Update Historical Financial Performance OS 06 O7 08 Capital Management Key Terms and Offer Timetable Key Credit Highlights Appendices sherry
Slide 6: Offer Description
Description Expected Issue Credit Rating Term & Maturity Date Offer Amount Purpose Quotation Joint Lead Managers SkyCity Entertainment Group Limited Unsecured, unsubordinated, fixed rate bonds BBB- from S&P Global Ratings 6 years, maturing on 21 May 2027 Up to $125m (with ability to accept oversubsc
Slide 7: Corporate Overview
Corporate Overview sherry
Slide 8: SkyCity at a Glance
SkyCity at a Glance Founded in 1996 - leading gaming, entertainment and hospitality operator in New Zealand (“NZ”) and South Australia Launched online casino in August 2019 - pursuing omnichannel opportunity Significant private sector employer (around 4,200 staff across the business) — diverse workf
Slide 9: Portfolio Overview and Casino Licences
Portfolio Overview and Casino Licences skyciry Ww Exclusive casino licence in Adelaide to 2035 - full licence term to 2085 Exclusive casino licence in Auckland to 2048) S hiv ITY an. skvcity Exclusive casino licence in Hamilton to 20277) o foye Shyerry Exclusive casino licences to 2024 (Wharf) and 2
Slide 10: Key Business Features
Key Business Features Opened in 1996 1,877 EGMs, 150 tables, 240 ATGs ~630 hotel rooms ~20 restaurants and bars Opened in 2002 339 EGMs, 23 tables Acquired 100% ownership in 2005 SkyCity Queenstown SkyCity Queenstown Acquired 100% ownership in 2012 86 EGMs, 12 tables Wharf Casino Wharf Casino (curre
Slide 11: Our Vision
Our Vision “To be the leader in gaming, entertainment and hospitality in our communities” sherry 11
Slide 12: Group Strategic Plan
Group Strategic Plan Key strate. pillars (core focus, Complete major projects and optimise portfolio Pursue the omnichannel opportunity Operational excellence at our core and people Sustainable total shareholder return growth Key financial settings (i.e. dividends, credit rating etc) Capital allocat
Slide 13: Competitive Advantages
Competitive Advantages = Strong brand/reputation = Stable regulatory framework in key NZ market = Exclusive long-term casino licences and significant entertainment destinations = Strong cashflow generation expected as major projects complete = Resilient operating model, particularly local gaming "Re
Slide 14: Commitment to CSR/Sustainability
Commitment to CSR/Sustainability Sustainability Casino industry needs increasing in to be doing more than importance for most to justify social asset owners licence Materiality assessment Important to succeed critical in allocation of across both financial resources into and non-financial sustainabi
Slide 15: Host Responsibility
Host Responsibility Board Governance & Oversight senior Management Governance & Oversight G2) Reports to the Regulator Host Responsibility Programmes Host Responsibility Roles and Duties . (ii) le, Software and Algorithme to Monitor Gaming @) Learning & Trak Monitoring Development & Reporting Framew
Slide 16: AML/KYC Controls
AML/KYC Controls Board Governance & Oversight Senior Management AML Governance & Oversight G3) Roles & Duties Learning & Development (e) External Advisors ws, (@) Programmes Anti-Money Laundering Control Framework Independent Assurance AML Risk IT systems Assessment Board (Audit & Risk) Committee re
Slide 17: Response to Covid-19
Response to Covid-19 Prioritised safety for staff, customers and broader community Properties in NZ and Adelaide required to close for extended periods Implemented significant cost saving initiatives in response to pandemic Labour restructure in NZ during 4Q20 (annualised opex savings around $40m) S
Slide 18: Near-Term Strategic Priorities
Near-Term Strategic Priorities Navigate through uncertainty of Covid-19 operating environment Implement new management structure Progress NZICC/Horizon Hotel reinstatement everage new assets in Auckland, particularly in /premium gamin L ts in Auckland, particularly in VIP/
Slide 19: Business Update
Business Update sherry
Slide 20: NZICC/Horizon Hotel Project
NZICC/Horizon Hotel Project Ks SADE View from Hobson St — new linkway bridge Significant investment in future of Auckland NZICC/Horizon Hotel to be world-class tourism infrastructure adding to SkyCity Auckland precinct Project secured exclusive casino licence for key Auckland property out to 2048 an
Slide 21: Adelaide Expansion (1 of 2)
Adelaide Expansion (1 of 2) Vision to transform Adelaide into world-class casino and entertainment complex Significant opportunity to grow market share and turn around underperforming casino Project represents a significant investment in the future of Adelaide World-class entertainment/tourism preci
Slide 22: Adelaide Expansion (2 of 2)
Adelaide Expansion (2 of 2) aes sataee| = Project handed over on-time and on-budget = New gaming spaces, EoS by SkyCity and majority of F&B venues opened during first week of December 2020 = Focus initially on local and_ interstate customers (given expected ongoing international border closures) = W
Slide 23: Online Gaming
Online Gaming Online casino launched in August 2019 via Malta-based subsidiary Strategic entry into growth category Optimising offshore venture with GiG, despite operational constraints Support future regulation in NZ Emphasis needs to be on protecting harm and community benefits Significant omnicha
Slide 24: Historical Financial Performance
Historical Financial Performance sherry
Slide 25: Key Earnings Streams & Value Drivers
Key Earnings Streams & Value Drivers SkyCity’s earnings streams e Local gaming e International Business (“IB”) e Online gaming Oma » Local gaming key value driver for Group in terms of business activity * SkyCity Auckland (Group's key property) represents around 80% of Group normalised EBITDA » Larg
Slide 26: Historical Financial Performance (1 of 2)
Historical Financial Performance (1 of 2) Group EBITDA and operating cashflows: FY15-FY20 ($m) Group total assets and capital employed: FY15-FY20 ($m) 400 3000 Covid-19 Pre Covid-19 Pre Covid-19 i | Covid-19 i 1 350 2500 300 2000 250 200 soe 150 1,000 — 100 500 _ 50 0 o a VIG v7 y vI9 720 FYIS FvI6
Slide 27: Historical Financial Performance (2 of 2)
Historical Financial Performance (2 of 2) Group local and IB EBITDA: FYI5-FY20 ($m)! Group local gaming revenue: FYO0-FY20 ($m)?) 400 100% 700 Global Financial Pre Covid-19 owe Changes to Crisis 350 | f ry 600 smoking laws in NZ 100 50 25% CAGR 0% 300 1 a 509 F sas 230 £0% 400 Covia-19 200 es} 75% 3
Slide 28: 1H21 Performance
1H21 Performance 600 on Pre Covid-19 Pre Covid-19 i 1 wo } 1 500 I i . 400 i | Covid-19. 140 120 300 E | rt] 100 | ° 200 i | 80% of 60 pre-Covid-19 average 100 aq : 40 20 ° oO 1H?) 2HI7. so 1HI8- 2HI8-1HI9) 219-120. 2H20_—«1H2 1H 2HI7 THI 2HIR THI, «219. 1H20.-2H20 THI ™ Local gaming (excl Darwin) N
Slide 29: Capital Management
Capital Management sherry
Slide 30: Capital Structure (1 of 2)
Capital Structure (1 of 2) mbe Actual = Debt used to fund operations and capital commitments Drawn Undrawel Total] Drawn Undrawr{ Total] Maturity . . . . Debt sm $m | $m sm gm | $m * Fluctuates depending on trading performance, working capital Bank debt balances and status of investment projects Tra
Slide 31: Capital Structure (2 of 2)
Capital Structure (2 of 2) Pro-forma Debt Maturity Profile ($m)(as at 31 December 2020, = Average maturity of committed debt facilities around 3.5 years = UsS$100m ($108m) USPP notes redeemed during March 2021 - i) ' 1 1 300 ! ! funded by drawdown of bank facility (Tranche A) 1 ot ao 1 * $499m in pr
Slide 32: Capital Expenditure
Capital Expenditure Total capex"): FY15-FY26F ($m) 400 2500 2,000 300 200 100 500 50 vI6 FYIT ~FYI8 FYIS FY20 FY2IF FY22F FY23F FY24F FY25F FY26F MME Stay-incbusiness capex mm Growth capex Total capex (cumulative, RHS) Capex peaked in FYI9 and FY20 Adelaide expansion completed? Around $140m of net c
Slide 33: Key Terms and Offer Timetable
Key Terms and Offer Timetable sherry
Slide 34: Key Terms of the Offer (1 of 2)
Key Terms of the Offer (1 of 2) Issuer SkyCity Entertainment Group Limited Description Unsecured, unsubordinated, fixed rate bonds Issuer Credit Rating BBB- (Stable Outlook) from S&P Global Ratings Reng Issue Credit BBB- from S&P Global Ratings Term & Maturity Date 6 years, maturing on 21 May 2027 O
Slide 35: Key Terms of the Offer (2 of 2)
Key Terms of the Offer (2 of 2) Offer Details SkyCity gives certain financial undertakings to Bondholders, namely that + Total Prior Ranking Debt at no time exceeds 10% of Guaranteeing Group Total Tangible Assets ("TTA"); and + Net Group Debt does not exceed 75% of the aggregate of Net Group Debt, S
Slide 36: Key Dates of the Offer
Key Dates of the Offer PDS Lodgment Date Friday, 30 April 2021 Indicative Issue Margin and minimum Interest Rate announced Monday, 10 May 2021 Opening Date Monday, 10 May 2021 Closing Date Friday, 14 May 2021 at 12pm (NZ time) Rate Set Date Friday, 14 May 2021 Issue Date and allotment date Friday, 2
Slide 37: Key Credit Highlights
Key Credit Highlights @ High-quality/defensive earnings - resilient performance despite Covid-19 disruptions and international border closures Major projects underpin medium-term earnings growth - opportunity to become omnichannel gaming operator Major capital investment programme concluding - stron
Slide 38: Appendices
Appendices sherry
Slide 39: Board Of Directors
Board Of Directors" Rob Campbell Chair Rob is currently?) the Chair of Summerset Group Holdings Limited, Tourism Holdings Limited, Ultrafast Fibre Limited, New Zealand Rural Land Company Limited, Ara Ake Limited and WEL Networks Limited and a director of Precinct Properties New Zealand Limited. Rob
Slide 40: Executive Team (1 of 2)
Executive Team (1 of 2) Michael Ahearne Chief Executive Officer Michael joined SkyCity in December 2017 as Group Chief Operating Officer and was appointed Chief Executive Officer in November 2020. Michael has significant global experience in the gaming industry across both land-based and online casi
Slide 41: Executive Team (2 of 2)
Executive Team (2 of 2) Claire Walker Chief People & Culture Officer Claire was appointed General Manager Human Resources in August 2016 and Chief People & Culture Officer in April 2019, She is responsible for leading the developmentimplementation of best practice human resource strategy across SkyC
Slide 42: Glossary of Terms
Glossary of Terms) Term Explanation AML Anti-money laundering ATGs Automated table games Bonds Bonds described in this presentation CPS Cents per share csR Corporate Social Responsibility DIA Department of Internal Affairs (NZ gambling regulator) EBITDA Earnings before interest, tax, depreciation an
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