Skycity Entertainment Group Limited · NZX:SKC
Skycity Entertainment — H1 2022 Earnings Presentation
49 slides from Skycity Entertainment's earnings presentation, Feb 14, 2022
Slide 1: SkyCity Entertainment Group Limited 1H22 Result
SkyCity Entertainment Group Limited 1H22 Result Investor Presentation 14 February 2022 a e sherry
Slide 2: Important Information
Important Information Average NZ$ vs. A$ cross-rate for 1H22 = 0.9525 and 1H21 = 0.9334 Weighted average number of shares (excl treasury stock) for 1H22 = 757,507,871 and 1H21 = 756,373,566 Normalised revenue (incl gaming GST), calculated as gaming win (incl GST) plus non-gaming revenue (excl GST),
Slide 3: Contents
Contents Ol 1H22 Key Features O05 Trading Update & Outlook O02 1H22 Results 06 Appendices 03 Financial Resilience & Capital Allocation O4 CEO Update & Group Strategy sherry
Slide 4: 1H22 Key Features
1H22 Key Features 1H22 materially impacted by Covid-19 disruptions, but resilient local gaming activity when open/fully operational and NZ online casino performing well Positive EGM activity when open - record New Year's Eve performance in NZ and Adelaide revenue up 33% vs. pcp with stable market sh
Slide 5: Management Priorities
Management Priorities Navigate through ongoing uncertaii y of Covid-19 operating environment Return business to FY19 earnings levels Progress NZICC/Horizon Hotel reinstatement with Fletcher Construction Enhancement of Host Responsibility and AML programmes - respond to AUSTRAC investigation in Adela
Slide 6: 1H22 Results
1H22 Results sherry
Slide 7: 1H22 Results Overview
1H22 Results Overview 1H22 1H21 Movement $m $m Reported Revenue 289.8 449.9 (160.1) (35.6%) Reported EBITDA 20.4 150.5 (130.1) (86.4%) Reported NPAT (33.7) 773 (171.6) (143.3%) Reported EPS (4.5cps) 10.3cps (14.8cps) (143.2%) 1H22 1H21 Movement $m $m Normalised Revenue (incl Gaming GST)” 260.8 386.9
Slide 8: 1H22 Revenue by Business
1H22 Revenue by Business 1H22 1H21 Movement $m $m % Properties (excl IB) Auckland 18.5 230.8 (48.7%) Hamilton 24.4 36.8 (33.7%) Queenstown 5.0 59 (16.3%) NZ Other?) 3.6 1.0 259.9% Adelaide (A$) 92.8 89.5 3.7% Total Property Revenue (excl IB)() 248.8 370.5 (32.8%) Normalised |B Revenue 25 8.2 (69.2%)
Slide 9: 1H22 EBITDA by Business
1H22 EBITDA by Business 1H22 1H214) Movement $m $m % Properties (excl IB) Auckland") 16.0 94.9 (83.1%) Hamilton") 9.6 18.1 (47.1%) Queenstown"! VA 22 (36.9%) Adelaide (A$)(2) 10.8 23.9 (54.9%) Total Property EBITDA (excl 1B)((2) 38.3 141.0 (72.8%) Normalised 1B EBITDA" (1.9) (2.8) 31.6% Corporate Co
Slide 10: Impact of Covid-19 in NZ and South Australia
Impact of Covid-19 in NZ and South Australia South Australia NZ properties significantly impacted by Covid-19 during 1H22 » Auckland closed for 107 days before reopening on 3 December 2021 at “Red” setting * Hamilton and Queenstown closed for 65 and 22 days, respectively, with extended periods under
Slide 11: Response to Covid-19 disruptions
Response to Covid-19 disruptions Continue to benefit from labour restructure implemented during 2020 Further cost/capital saving initiatives implemented during 1H22 * Significant reduction of non-essential expenses and stay-in-business capex » Reduction of corporate bonus and deferral of wage increa
Slide 12: 1H22 Result Commentary (1 of 3)
1H22 Result Commentary (1 of 3) Group NZ Properties o £o Zc cf 08 INES) z Group financial performance significantly impacted by Covid-19 disruptions, particularly in Auckland Strong start to 1H22 (consistent with trends in 4Q21) prior to NZ property closures Cost saving initiatives implemented in re
Slide 13: 1H22 Result Commentary (2 of 3)
1H22 Result Commentary (2 of 3) International Ao] ra o ® 2 2 5 ro £ i} e) o z x o so] < Business n o a < o a x wi a s x ° Covid-19 disruptions and other external factors impacted performance but EBITDA comparable vs. pcp on a like-for-like basis” * Expanded facilities continue to be well received by
Slide 14: 1H22 Result Commentary (3 of 3)
1H22 Result Commentary (3 of 3) ~ > ra o £ © a cy c a = Board Changes Accounting Impacts Key senior management appointments to enhance AML function Board renewal confirmed and successful transition of Chair from Rob Campbell to Julian Cook during January 2022 Complex set of financial results due to
Slide 15: Financial Resilience & Capital Allocation
Financial Resilience & Capital Allocation sherry
Slide 16: Financial Resilience (1 of 2)
Financial Resilience (1 of 2) NZ combined revenue vs. pre-Covid-19 aver. July 2020-January 2022 ($m) 120% 01) = NZatAlert Levell (no restrictions) Je (NZ combined e |: Auckland closed for 19 days during August 2020 (Alert Level2 for 37 days) = Hamilton and Queenstown at Alert Level2 for 41 days © |
Slide 17: Financial Resilience (2 of 2)
Financial Resilience (2 of 2) Balance sheet well positioned to meet near-term challenges from Covid-19 and to deliver on strategic plan * Net hedged debt"! as at 31 December 2021 of $685m (increase of $95m from 30 June 2021) * Committed liquidity of $258m to fund future commitments and withstand one
Slide 18: Debt Capital
Debt Capital Pro-forma h 300 250 200 Ibo 00 50 FY? maturi rofil 1 December 2021 ($m, ns FY FY FS USPP mBank-Drawn © Bank -Undrawn S175 F7 FY m Lease related liabilities NZ Bond FY other Committed debt facilitates (at hedged exchange rates) of around $940m (incl lease-related liabilities) as at 31 De
Slide 19: Capital Allocation
Capital Allocation Total capex (2); FYI5S-FY26F ($m) 400 = Focused on effective cost and capital discipline soo = Capex peaked in FYI9 and FY20 = Adelaide expansion completed 30c = Around $120m of net capex remaining on NZICC/Horizon Hotel project 250 * Excludes reinstatement costs funded via insura
Slide 20: CEO Update & Group Strategy
‘s) CEO Update & Group Strategy sherry
Slide 21: Group Strategic Plan
Group Strategic Plan Key strate. pillars (core focus, : Complete major eee projects and optimise portfolio Pursue the omnichannel opportunity Operational excellence at our core Sustainable total shareholder return growth Key financial settings (i.e. dividends, credit rating etc) Capital allocation f
Slide 22: Host Responsibility & AML
Host Responsibility & AML Host Responsibility AML = Promotion of responsible/safe gaming at heart of business = Board (Sustainability) Committee oversees Harm Minimisation framework = Internal governance group meets monthly to consider Host Responsibility matters. = Regular engagement with regulator
Slide 23: NZICC/Horizon Hotel Project
NZICC/Horizon Hotel Project View from Hobson St — new linkway bridge Significant investment in future of Auckland Project secured exclusive casino licence for key Auckland property out to 2048 and other gambling concessions NZICC fire causing significant project delays Project remains complex - rein
Slide 24: Online Casino Strategy
Online Casino Strategy sherry
Slide 25: Online Gaming — Global Context
Online Gaming — Global Context Global land-based vs. online casino growth rate: 2003-2024F (%) 1200 pee ee eee ee eee ee eee Significant growth in online gaming globally vs. land-based 1,000 Transition from land-based to online channel, accelerated by impact of Covid-19 Significant web and mobile pe
Slide 26: NZ Online Casino — Strategic Context (1 of 2)
NZ Online Casino — Strategic Context (1 of 2) Optimising NZ online casino with GiG Performing effectively despite operational constraints and market increasingly targeted by offshore operators Strong operating metrics - low acquisition costs and bonusing vs. peers due to strong brand/loyalty Support
Slide 27: NZ Online Casino — Strategic Context (2 of 2)
NZ Online Casino — Strategic Context (2 of 2) 60 30 20 10 Monthly gross gaming revenue): FY20-FY22 YTD to 31 January 2022 ($m) Spike in activity.due ta Covid-19 lockdown Consistent performance during FY2I NS site optimised during if ) prolonged Covid-19 lockdown —— site launched in | ol SRageg RF FR
Slide 28: Expansion of Strategic Partnership with GIG
Expansion of Strategic Partnership with GIG Binding term sheet signed in December 2021 to provide GiG with €25m (around $40m) of new equity * Funding to support GiG's acquisition of 100% of France-Pari/Sportnco (Sportnco) for headline €70m (with an earn-out opportunity) * SkyCity to become GiG's lar
Slide 29: Trading Update & Outlook
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Slide 30: Trading Update (1 January to February 2022)
Trading Update (1 January to 12 February 2022) rn g * Local gaming activity at “Orange” setting comparable to pre-Covid-19 levels, particularly EGMs in Auckland and Hamilton 3 * Auckland impacted since going to “Red” setting on 23 January 2022, but solid weekend trading and holiday period peaks - Ha
Slide 31: FY22 Outlook
FY22 Outlook Group un 3 oo a0 o2 a) Corporate Uncertain near-term outlook due to Covid-19 - unable to provide detailed earnings guidance Local gaming businesses in NZ expected to perform well when fully operational, particularly EGMs NZ tourism-related businesses to continue to be negatively impacte
Slide 32: Appendices
Appendices sherry
Slide 33: Reported and Normalised Results (1 of 3)
Reported and Normalised Results (1 of 3) * SkyCity's objective of producing normalised financial information is to provide data that is useful to the investment community in understanding the underlying operations of the Group - the intention is to provide information which: * Is representative of S
Slide 34: Reported and Normalised Results (2 of 3)
Reported and Normalised Results (2 of 3) = The differences between 1H22 reported and normalised financial information are summarised overleaf * 1H22 adjustments (from reported to normalised) * Treat IB commissions as an expense rather than a reduction in revenue which reduces both reported revenue a
Slide 35: Reported and Normalised Results (3 of 3)
Reported and Normalised Results (3 of 3) 1H22 1H21 Revenue EBITDA $m Revenue EBITDA $m $m (27.4) (33.7) IB revenue adjustment Os - - - Gaming GST 20.7 - - - 35.3 - - - IB at theoretical win rate 23 25 25 W7 45 3.6 3.6 25 NZICC fire impacts (52.5) 71 71 62 (66.8) 3.2 3.2 23 Liquidated damages - - - -
Slide 36: Presentation of 1H22 Results
Presentation of 1H22 Results = Comparability of underlying (or “like-for-like”) normalised earnings of the Group in 1H22 vs. pcp significantly impacted by: Closure of SkyCity Auckland during August to December 2021 due to Covid-19 Closure of SkyCity Hamilton during August/September 2021 and October/
Slide 37: 1H22 Result - Reported
1H22 Result —- Reported 1H22 Movement $m $m Reported Revenue 289.8 449.9 (160.1) (35.6%) Expenses (269.4) (299.4) 30.1 10.0% Reported EBITDA 20.4 150.5 (130.1) (86.4%) Depreciation & Amortisation (47.8) (41.1) (6.8) (16.5%) Reported EBIT (27.4) 109.4 (136.9) (125.1%) Net Interest (17.2) (14.0) (3.2)
Slide 38: 1H22 Result — Normalised
1H22 Result — Normalised 1H22 1H21 Movement $m $m Normalised Revenue (incl Gaming GST) 260.8 386.9 (126.0) (32.6%) Gaming GST (20.9) (35.8) 149 41.6% Normalised Revenue 239.9 351.1 (111.2) (31.7%) Expenses (203.7) (233.3) 29.6 12.7% Normalised EBITDA 36.2 117.8 (81.6) (69.2%) Depreciation & Amortisa
Slide 39: SkyCity Auckland
SkyCity Auckland 1H22 Movement $m % Revenue Gaming Machines 60.0 120.8 (50.3%) Tables 235 631 (62.8%) Gaming Revenue (incl GST) 83.5 183.9 (54.6%) Non-Gaming Revenue (25.5%) ota Normalised Revers ts. Gaming GST 54.6% eerie ws. Expenses 18.2% Normalised EBITDA (excl IB) (83.1%) EBITDA Margin (excl 1B
Slide 40: SkyCity Hamilton
SkyCity Hamilton = Property closed for 65 days and further 42 days at Alert 1H22 1H21 Movement Level2 $m $m & * Strong performance prior to property closure on Revenue 17 August 2021 Gaming Machines 169 265 (36.1%) * Record like-for-like EBITDA performance In July 2021 Tables 3.3 5.2 (36.0%) * Stron
Slide 41: SkyCity Queenstown/Wharf Casino
SkyCity Queenstown/Wharf Casino Movement % Revenue Gaming Machines 34 4.0 (14.2%) Tables 1.0 1.0 (4.3%) Gaming Revenue (incl GST) 44 5.0 (12.1%) Non-Gaming Revenue ‘otal Normalised Revenue incl gaming GST) (excl IB) (16.3%) excl gaming GST) (excl IB) (16.9%) Expenses (3.0) (3.1 2.3% Normalised EBITD
Slide 42: SkyCity Adelaide
SkyCity Adelaide 1H22 Movement A$m % Revenue Gaming Machines 34.4 25.8 33.3% Tables 361 38.3 (5.8%) Gaming Revenue (incl GST) 70.5 641 10.0% Non-Gaming Revenuel ‘otal Normalised Revenue incl gaming GST) (excl IB) Gaming GST otal Revenue (excl gaming GST) (excl 1B) Expenses (75.8) 59.8) (26.7% EBITDA
Slide 43: International Business
International Business Normalised Revenue!!! 25 82 (69.2% Reported Revenue 02 33 oast sed EBITDA) Total Reported EBITDA (4.4) (64) 32.2% Actual Win (%) 0.1% 0.61% - Margin (%) (75.0%) (33.7%) : Significantly impacted by ongoing international border closures Cost control reduced expected losses vs. p
Slide 44: NZ Online Casino
NZ Online Casino Operating KPIs Customer registrations 293k 24.4k 20.2% First time depositors (new actives) 17.7k 141k 25.6% Deposit conversion (%) 59.3% 60.0% . Total bets ($m) 568.2 413.2 37.5% 1H22 1421 Gaming revenue GiG costs and bonusing (6.8) (3.8) (79.4%) NZ GST (35.2%) Gaming revenue (attri
Slide 45: GiG Overview
GiG Overview GiG Who is GiG today? Sky Strategic Partnership Certified/licensed B2B online gaming operator in 14 jurisdictions globally (with 5 pending) Headquartered in Malta with offices in Spain, Latvia and Denmark —around 450 staff GiG Inc a Delaware (US) incorporated company - listed on Oslo an
Slide 46: GiG Acquisition Of Sportnco
GiG Acquisition Of Sportnco GiG/Sportnco global market coverage post-transaction Strategic Rationale for GiG New Jersey/lowa (current) Pennsylvania/Illinois (pending) - paiee | | ==} — ennzs | "al i Ontario (pending) /P North America South America _—Ga NZ —- ae bi 20+ licences/certifications * High-
Slide 47: Net Debt (as at December 2021)
Net Debt (as at 31 December 2021) Movement in net hedged debt ($m) 800 32 (20) a 7) | me oo =—- = fH 50C «eo 300 » . Opening net debt Reported EBITDA Casi funding NZICC fire related Divdends Working (June 2021) costs/cash tax income capital/other (net, pre-funded) 55 Capex 685, Closing net debt [Dec
Slide 48: Disclaimer
Disclaimer All information included in this presentation is provided as at 14 February 2022 This 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 whic
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SkyCity Entertainment Group — H1 2022 Earnings Presentation on 6ix