Skycity Entertainment Group Limited · NZX:SKC
Skycity Entertainment — H1 2010 Earnings Presentation
44 slides from Skycity Entertainment's earnings presentation, Feb 16, 2010
Slide 1: FY10 Interim Result
FY10 Interim Result SKYCITY Six month period ended 31 December 2009 Entertainment Group Limited 16 February 2010
Slide 2: SKYCITY Interim Result 1H10
SKYCITY Interim Result 1H10 I. 1H10 Group Result Highlights 3 II. Outlook and Guidance FY10 14 Appendices Business Unit Commentaries, Financial 19 Summaries and Notes www.skycityentertainmentgroup.com 2
Slide 3: 1H10 Group Result Highlights
1H10 Group Result Highlights
Slide 4: Reported and Normalised Net Profit (NPAT)
1H10 Group Result Highlights Reported and Normalised Net Profit (NPAT) 1H10 1H09 Movement NPAT Reported $71.0m $54.8m $16.2m Non Recurring Items (NRI) ($0.2m) $0.8m ($1.0m) NPAT Adjusted for NRI $70.8m $55.6m $15.2m EPS Reported 12.3cps 11.6cps 0.7cps NPAT Normalised for IB $68.4m $55.6m $12.8m EPS
Slide 5: Reported Results
1H10 Group Result Highlights Reported Results 1H10 1H09 Change $m $m % Revenue 447.0 422.1 5.9% EBITDA § Australian Casinos 48.2 44.0 9.5% § New Zealand Casinos 114.9 114.7 0.2% § International Business 5.3 0.8 562.5% § Corporate (14.0) (13.5) (3.7%) § Brand Ad Development Cost (0.9) - - EBITDA (exc
Slide 6: Adjusted, Normalised and Reported Earnings
1H10 Result Adjusted, Normalised and Reported Earnings 1H10 1H09 Revenue EBITDA EBIT NPAT Revenue EBITDA EBIT NPAT $m $m $m $m $m $m $m $m Reported 447.0 160.1 122.3 71.0 422.1 148.5 111.7 54.8 Restructuring Costs - 0.7 0.7 0.5 - 1.2 1.2 0.8 Brand Ad Production Cost - 0.9 0.9 0.6 - - - - Gain on Deb
Slide 7: 1H10 Result Highlights - Normalised Basis
1H10 Result Highlights - Normalised Basis n Revenues of $443.2m, up 5.0% n EBITDA of $158.3m, up 5.7% n EBIT of $120.5m, up 6.7% n NPAT of $68.4m, up 23.0% n Lower interest costs (down $11.1m) due to the equity raising and subsequent repayment of debt have contributed favourably to the first half NP
Slide 8: Revenue Summary by Business Unit
1H10 Result Revenue Summary by Business Unit 1H10 1H09 Change $m $m % Australian Casinos § Adelaide (A$) 67.9 64.5 5.3% § Darwin (A$) 61.2 57.5 6.4% Total Australia (A$) 129.1 122.0 5.8% (NZ$) 159.1 147.2 8.1% New Zealand Casinos § Auckland 202.8 202.9 - § Hamilton 20.1 19.9 1.0% § Christchurch, Que
Slide 9: EBITDA Summary by Business Unit
1H10 Result EBITDA Summary by Business Unit 1H10 1H09 Change $m $m % Australian Casinos § Adelaide (A$) 15.2 14.2 7.0% § Darwin (A$) 23.8 22.3 6.7% Total Australia (A$) 39.0 36.5 6.8% (NZ$) 48.2 44.0 9.5% New Zealand Casinos § Auckland 101.4 102.1 (0.7%) § Hamilton 9.7 8.8 10.2% § Christchurch, Quee
Slide 10: Key Features of 1H10 Result
Key Features of 1H10 Result n Continued growth by Australian businesses (6% revenues, 7% EBITDA) in an environment of ‘fiscal fade’, softening retail activity, and contraction of pub and club gaming revenues across Australia in the latter part of 1H10 n Flat Auckland revenues and EBITDA in a challen
Slide 11: Strong Balance Sheet and Effective Capital Management
Strong Balance Sheet and Effective Capital Management n USPP debt of US$115.5m (NZ$177m) bought back during July/August 09 has reduced the March 2012 maturity from $448m as at 30 June 09 to NZ$257m at 31 December 09 (including FX movements) n Gain on buyback of USPP debt of $1.9m ($1.3m after tax, d
Slide 12: Interim Dividend
1H10 Interim Dividend n Interim dividend 8.0cps (9.0cps 1H09 under the previous distribution policy of 90% of NPAT) n Interim dividend at 65% of NPAT in line with new dividend policy (60%-70% of NPAT) introduced in 2009 n PDP discontinued following payment of the 1H09 interim distribution n Record (
Slide 13: Cinemas Divestment
Cinemas Divestment n Cinemas business in New Zealand and Fiji sold to Amalgamated Holdings Limited for $61.1m n Divestment of the remaining Cinema assets (not included in the AHL transaction) expected to be concluded before the end of the financial year n Overall, a gain of more than $10m over carry
Slide 14: Outlook and Guidance FY10
a” SsKYCITY Outlook and Guidance FY10
Slide 15: Outlook FY10 New Zealand Businesses
Outlook FY10 New Zealand Businesses New Zealand n We anticipate the challenging environment to continue in New Zealand with unemployment having risen above 7% and continuing contraction of gaming machine revenues in pubs and clubs n While we do not foresee any significant earnings growth for our Auc
Slide 16: Outlook FY10 Australian Businesses
Outlook FY10 Australian Businesses n Our Australian businesses are faced with a more challenging environment than has been evident in the past due to the ‘fading’ of the fiscal stimulus packages that applied in FY09 n As has been the case in New Zealand for some time, in the last two months of the f
Slide 17: FY10 Guidance
FY10 Guidance Guidance for Financial Year FY10 n As a Group we expect our second half earnings to be not dissimilar to the normalised earnings achieved in second half last year n We have previously stated our objective of double digit NPAT growth in FY10, albeit in a challenging economic environment
Slide 18: Disclaimer
Disclaimer n All information included in this presentation is provided as at 16 February 2010. n 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
Slide 19: Appendices
1H10 Interim Result Six month period ended 31 December 2009 Appendices Business Unit Commentaries Financial Summaries and Notes
Slide 20: Index
Index Appendix I Business Unit Commentaries 21 II Business Unit Financial Summaries 28 III Balance Sheet and Notes 34 IV FX, Interest, Tax, Debt Movement 39 20
Slide 21: Result - SKYCITY Auckland
1H10 Result - SKYCITY Auckland n Recessionary pressures that were restricting Revenue, EBITDA and Margin the business in previous reporting periods, as 46.1% 45.9% recently demonstrated by higher than $202.9m $202.8m expected unemployment statistics, were Non- again evident Non- Gaming during 1H10 G
Slide 22: Result - SKYCITY Adelaide
1H10 Result - SKYCITY Adelaide Revenue, EBITDA and Margin (A$) n Revenue growth (5.3%) continued in the first 20.2% 20.6% half of FY10 across all sectors of the business - machines, tables and F&B $64.5m $67.9m n Revenue growth achieved in spite of the ‘fiscal fade’ and softening gaming machine reve
Slide 23: Result - SKYCITY Darwin
1H10 Result - SKYCITY Darwin n New facilities (il Piatto Italian restaurant, Revenue, EBITDA and Margin (A$) Sandbar and Platinum Room for VIP machine players) opened during latter part of FY09 36.0% 36.1% n Extended casino facilities (additional 200 $57.5m $61.2m machines: 550 up to 750) operationa
Slide 24: Result - SKYCITY Hamilton
1H10 Result - SKYCITY Hamilton Revenue, EBITDA and Margin n Revenues steady despite recessionary 43.9% pressures, full PID application from 1 July, 40.0% increased unemployment levels and contracting machine revenues in the pub $19.9m $20.1m and club sector $9.7m $8.8m n Effective cost management ha
Slide 25: Result - International Business
1H10 Result - International Business n Continuing to develop International Business Turnover Win Rate n Continued growth achieved with 1H10 turnover $m % up 18% at $758m 1H10 758 1.86% n 1H10 win rate of 1.86% above theoretical of 1.33% n Normalised EBITDA of $1.9m (19% margin) doubles 1H09 640 1.32
Slide 26: Result - Christchurch and Queenstown
1H10 Result - Christchurch and Queenstown Christchurch Christchurch Earnings n Second stage of casino refurbishment 1H10 1H09 completed during 1H10 Revenue $35.1m $33.7m n Revenues up 4% (VIP revenues up, main EBITDA $12.5m $11.3m floor revenues flat) EBITDA % 35.6% 33.5% n EBITDA up 11% on the back
Slide 27: Result - SKYCITY Cinemas
1H10 Result - SKYCITY Cinemas n Strong revenue and earnings performance Revenues continued n Cinemas sale will realise a gain of ~$10m over $45.4m $37.4m carrying value ($59.7m). Settlement scheduled for 18 February n Revenues 1H10 $45.4m +21% 1H09 1H10 1H09 $37.4m n EBITDA EBITDA and EBIT 1H10 $6.6
Slide 28: Appendix II Business Unit Financial Summaries
Appendix II Business Unit Financial Summaries 28
Slide 29: P&L Summary by Business Unit
P&L Summary by Business Unit 1H10 1H09 International International C orporate / C orporate / O pe rations O pe rations New Zealand operations Sub-Total Sub-Total Ham ilton Ham ilton Auckland Auckland O the r N Z O the r N Z Bus ine ss Bus ine ss Ade laide Ade laide SKY C ITY SKY C ITY C ine m as C i
Slide 30: Result - SKYCITY Auckland
1H10 Result - SKYCITY Auckland 1H10 1H09 Movement $m $m $m % Revenues Machines 101.1 102.7 (1.6) (1.6%) Tables 64.9 65.7 (0.8) (1.2%) Gross gaming revenue (incl GST) 166.0 168.4 (2.4) (1.4%) Gaming Revenue (net of GST) 148.0 149.7 (1.7) (1.1%) Food and beverage 18.4 17.4 1.0 5.7% Hotels and conventi
Slide 31: Result - SKYCITY Adelaide
1H10 Result - SKYCITY Adelaide 1H10 1H09 Movement A$m A$m A$m % Revenues Machines 30.8 29.6 1.2 4.1% Tables 35.1 33.6 1.5 4.5% Gross gaming revenue (incl GST) 65.9 63.2 2.7 4.3% Gaming Revenue (net of GST) 59.9 57.5 2.4 4.2% Food and beverage, other 8.0 7.0 1.0 14.3% Total Revenue 67.9 64.5 3.4 5.3%
Slide 32: Result - SKYCITY Darwin
1H10 Result - SKYCITY Darwin 1H10 1H09 Movement A$m A$m A$m % Revenues Machines 37.1 34.9 2.2 6.3% Tables 7.9 7.4 0.5 6.8% Keno 6.5 6.4 0.1 1.6% Gross gaming revenue (incl GST) 51.5 48.7 2.8 5.7% Gaming Revenue (net of GST) 46.8 44.3 2.5 5.6% Food and beverage, hotel, other 14.4 13.2 1.2 9.1% Total
Slide 33: Result - SKYCITY Hamilton
1H10 Result - SKYCITY Hamilton 1H10 1H09 Movement $m $m $m % Revenues Machines 13.5 13.5 - - Tables 5.1 5.1 - - Gross gaming revenue (incl GST) 18.6 18.6 - - Gaming Revenue (net of GST) 16.6 16.5 0.1 0.6% Food and beverage, other 3.5 3.4 0.1 2.9% Total Revenue 20.1 19.9 0.2 1.0% Expenses 10.4 11.1 0
Slide 34: Appendix III Balance Sheet and Notes
Appendix III Balance Sheet and Notes 34
Slide 35: Consolidated Balance Sheet
Consolidated Balance Sheet SKYCITY Entertainment Group Limited As at 31/12/09 As at 30/6/09 NZ$m NZ$m Share Capital 733.7 733.1 Retained profits 32.4 (1.3) Reserves 12.4 9.0 Minority interests 1.5 1.5 Total Equity 780.0 742.3 Current Assets Cash in house 45.2 36.4 Cash at bank 72.9 239.2 Receivables
Slide 36: Consolidated Balance Sheet (continued)
Consolidated Balance Sheet (continued) SKYCITY Entertainment Group Limited As at 31/12/09 As at 30/6/09 NZ$m NZ$m Total Assets (carried forward) 1,667.2 1,872.8 Current Liabilities Payables 92.1 110.3 Current tax liabilities 3.6 9.2 Derivative financial instruments 0.2 5.7 Subordinated debt – capita
Slide 37: Balance Sheet Notes
Balance Sheet Notes n Equity – Share capital increased by $0.6m as a result of shares issued to SKYCITY personnel under the company’s incentive remuneration plan – Retained profits increased by $33.7m: net profit after tax $71.0m, less FY09 final dividend paid $37.3m – The Reserves balance as at 31/
Slide 38: Balance Sheet Notes (continued)
Balance Sheet Notes (continued) n Non-Current Assets (continued) – Investments in Associates comprises SKYCITY’s investment in Christchurch Casinos Limited (CCL). SKYCITY’s effective shareholding in CCL is 45.7% – All derivatives are discussed under the non-current liabilities section (below) n Curr
Slide 39: Appendix IV FX, Interest, Tax, Debt Movement
Appendix IV FX, Interest, Tax, Debt Movement 39
Slide 40: Australian Dollar Earnings Adelaide and Darwin
Australian Dollar Earnings Adelaide and Darwin n 1H10 NPAT result comparison to 1H09 not materially impacted by NZD/AUD exchange rate n Average NZD/AUD cross-rate during 1H10 0.8107 n Average NZD/AUD cross-rate during 1H09 0.8312 n Restating 1H09 prior period at 0.8107 to remove the FX differential
Slide 41: Interest and Tax
Interest and Tax n Funding cost for 1H10 includes $1.9m gain on US$115.5m (NZ$177m) USPP debt bought back (July/August 2009) at an average discount of 0.92% n Funding cost favourable to 1H09 by $13.0m (inclusive the one-off gain referred to above) due to lower debt levels arising from equity raising
Slide 42: Debt Movement
Debt Movement n The balance sheet debt movement is summarised below. All figures are in NZD n Exposure to NZD/USD exchange rate is fully hedged. Debt revaluations are fully offset in the balance sheet in Derivative Financial Instruments and Equity Reserves n US$115.5m (NZ$177m) of USPP debt maturing
Slide 43: Hedged Debt Position: USPP
Hedged Debt Position: USPP n SKYCITY’s USD debt (US Private Placement) is fully hedged by cross-currency interest rate swaps (CCIRS) which align with the maturity dates of the USPP n Fair value of the CCIRS fell from NZ$65.4m at 30/6/09 to NZ$2.5m at 31/12/09 primarily as a result of the close-out o
Slide 44: Disclaimer
Disclaimer n All information included in this presentation is provided as at 16 February 2010. n 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
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