Skycity Entertainment Group Limited · NZX:SKC

Skycity Entertainment — FY2008 Earnings Presentation

51 slides from Skycity Entertainment's earnings presentation, Aug 25, 2008

  1. Slide 1: 2008 Full Year Result Presentation

    For personal use only SKYCITY Entertainment Group Limited 2008 Full Year Result Presentation

  2. Slide 2: Agenda

    Agenda For personal use only I. Highlights and Result Summary 3 II. Business Unit Results 10 III. Financial Results 23 IV. Strategy and Outlook 30 V Appendix 35 2 This annual results presentation is dated 25 August 2008

  3. Slide 3: Highlights and Result Summary

    For personal use only Summary FY08 Highlights and Result Strategy Financial Business Highlights Appendix and Results & Outlook Results Unit Results summary

  4. Slide 4: Result Highlights: The Bottom Line

    FY08 Result Highlights The Bottom Line For personal use only 2008 2007 Movement NPAT Reported $49.9m $98.4m (49.3%) Non Recurring Items (“NRIs”)¹ $62.0m ($4.6m) - NPAT Adjusted For NRIs² $111.9m $93.8m 19.3% EPS Adjusted For NRIs 24.2cps 21.2cps 14.2% 1 NRIs include Cinemas writedown of $58.4m and o

  5. Slide 5: Result Highlights: The Bottom Line Normalised for IB Win Rate

    FY08 Result Highlights The Bottom Line Normalised for IB Win Rate For personal use only 2008 2007 Movement NPAT Adjusted For NRIs1 $111.9m $93.8m 19.3% EPS Adjusted For NRIs 24.2cps 21.2cps 14.2% NPAT Normalised2 $102.0m $95.4m 6.9% EPS Normalised 21.9cps 21.6cps 1.4% 1 “Adjusted” financials are the

  6. Slide 6: Adjusted and Normalised Earnings

    FY08 Result Highlights Adjusted and Normalised Earnings For personal use only Adjusted (for NRIs)¹ Normalised (for IB)² FY08 FY07 FY08 FY07 Δ% Δ% $m $m $m $m Revenue $818.8 $805.1 1.7% $805.1 $807.5 (0.3%) EBITDA excluding Cinemas $306.4 $284.5 7.7% $292.7 $286.9 2.0% EBITDA including Cinemas $311.2

  7. Slide 7: Underlying Cashflow

    FY08 Result Highlights Underlying Cashflow For personal use only FY08 FY07 Movement $m $m % Receipts from customers 803.5 798.4 0.6% Payments to suppliers 446.8 467.9 (4.5%) 356.7 330.5 7.9% Taxes 81.6 73.8 10.6% Interest (Net) 76.0 83.7 (9.2%) Underlying Cashflow 199.1 173.0 15.1% Debt retirement 9

  8. Slide 8: Key Metrics All Improved

    FY08 Result Highlights Key Metrics All Improved For personal use only EPS (Adjusted for NRIs) Operating Cashflow 27.1cps $286.4m 24.2cps $267.5m 21.2cps $250.8m 2006 2007 2008 2006 2007 2008 Net Debt / EBITDA Interest Cover (EBITDA/Net Interest) 4.1 x 3.8 x 3.4 x 3.3 x 3.3 x 3.3 x 2006 2007 2008 200

  9. Slide 9: Sound Result in Challenging Economic Environment

    FY08 Result Highlights Sound Result in Challenging Economic Environment For personal use only ƒ Adjusted1 NPAT of $111.9m up 19% on FY07 ($93.8m) ƒ Results in line with February guidance2 of $108m – $110m Financial ƒ Adjusted1 EBITDA (ex Cinemas) of $306.4m up 8% on FY07 ($284.5m) Highlights ƒ Under

  10. Slide 10: Business Unit Results

    For personal use only and Results Highlights summary Unit Results Business Business Unit Results Financial Results & Outlook Strategy Appendix Comparative figures in the following section have been restated from the FY07 presentation due to International VIP Commission Business being separated from

  11. Slide 11: Revenue Summary by Business Unit

    Revenue Summary by Business Unit For personal use only FY08 FY07 Movement $m $m % Auckland 402.3 398.5 1.0% Adelaide (A$) 118.2 123.7 (4.4%) Darwin (A$) 100.8 93.6 7.7% International VIP 34.0 32.5 4.6% Hamilton 39.0 39.7 (1.8%) Other New Zealand 21.3 21.3 - (inc Christchurch, Queenstown) Non-recurri

  12. Slide 12: EBITDA Summary by Business Unit

    EBITDA Summary by Business Unit For personal use only FY08 FY07 Movement $m $m % Auckland 208.3 208.6 (0.1%) Adelaide (A$) 20.7 20.9 (1.0%) Darwin (A$) 40.1 35.2 13.9% International VIP 17.2 6.6 260.6% Hamilton 18.5 19.5 (5.1%) Other New Zealand 6.0 9.8 (38.8%) (inc Christchurch, Queenstown) Group O

  13. Slide 13: Casino Divisions

    For personal use only Casino Divisions Business Unit Results Strategy Financial Business Highlights Appendix and Results & Outlook Results Unit Results summary

  14. Slide 14: SKYCITY Auckland

    FY08 Business Unit Results SKYCITY Auckland For personal use only Revenue Breakdown EBITDA and EBITDA Margin Total Gross: $435.5m Total Gross: $439.8m 48.1% 47.9% 47.4% Total Net: $398.5m Total Net: $402.3m Non- Non- Gaming Gaming $102.4m $102.7m $214.9m $208.6m $208.3m Tables Tables $119.7m $131.6m

  15. Slide 15: Key Features SKYCITY Auckland

    FY08 Business Unit Results Key Features SKYCITY Auckland For personal use only ƒ Sound result in challenging economic environment ƒ New Auckland management team has strong focus on core business with strategic concentration on product, mix, pricing, presentation, customer service, marketing and loya

  16. Slide 16: SKYCITY Adelaide

    FY08 Business Unit Results SKYCITY Adelaide For personal use only ƒ Solid result given impact from 3Y Historic Revenue, EBITDA and Margin smoking ban (from 1 November 2007) 17.2% 15.6% 16.1% $131.2 m $123.7 m $118.2 m – Revenue impact less significant than anticipated – Minimal impact on table gamin

  17. Slide 17: SKYCITY Darwin

    FY08 Business Unit Results SKYCITY Darwin For personal use only ƒ Solid growth achieved in Darwin 3Y Historic Revenue, EBITDA and Margin ƒ Regional economic momentum 35.4% 36.9% continues 34.9% $100.8 m $93.6 m $86.3 m ƒ Stage 1 expansion (A$30m) commenced October 2007. $40.1 m $33.0 m $35.2 m Sched

  18. Slide 18: International Business

    FY08 Business Unit Results International Business For personal use only 3Y Historic Revenue and EBITDA ƒ Strong result from International $31.7m $32.5m $34.0m VIP Commission Business (turnover $1.4bn) $17.7m $17.2m $6.6m ƒ Revenue assisted by favourable actual to theoretical win rate. FY08 win rate

  19. Slide 19: SKYCITY Hamilton

    FY08 Business Unit Results SKYCITY Hamilton For personal use only 3Y Historic Revenue, EBITDA and Margin ƒ Steady performance in FY08 45.1% 44.4% 42.9% $39.7 m ƒ New management team with $34.9 m $39.0 m significant additional casino and $19.5 m gaming experience $17.4 m $18.5 m ƒ Current focus on in

  20. Slide 20: Other NZ Casinos

    FY08 Business Unit Results Other NZ Casinos For personal use only Christchurch Christchurch Contribution ƒ Solid performance from Christchurch Casino in FY08 2006 2007 2008 ƒ Phased refurbishment initiated to renew/refresh the overall property, Contribution $5.3m $5.6m $5.7m self-funded from cash fl

  21. Slide 21: Cinemas

    For personal use only Cinemas Business Unit Results Strategy Financial Business Highlights Appendix and Results & Outlook Results Unit Results summary

  22. Slide 22: SKYCITY Cinemas

    FY08 Business Unit Results SKYCITY Cinemas For personal use only ƒ Cinema’s result for FY08 was very Historic Revenue² disappointing – Cinemas suffered from good weather $67.6m during FY08 summer and $67.4m¹ $66.2m management distraction during the sale process – New management team now appointed an

  23. Slide 23: Financial Results

    For personal use only Financial Results Strategy Financial Business Highlights Appendix and Results & Outlook Results Unit Results summary

  24. Slide 24: Reported to Normalised EBITDA and NPAT

    FY08 Financial Results Reported to Normalised EBITDA and NPAT For personal use only Reported EBITDA to Normalised EBITDA Bridge $303.4m $7.8m $297.5m ($13.7)m Reported EBITDA Restructure & International Business Normalised EBITDA Transactional Costs above theoretical Reported NPAT to Normalised NPAT

  25. Slide 25: Guidance Reconciliation

    FY08 Financial Results Guidance Reconciliation For personal use only FY08 Guidance $m $m 1H08 NPAT (excluding Cinemas write-down) 61.3 61.3 2H08 NPAT (as reported) 47.0 Adjusted for items not included in guidance Restructuring & transaction costs 3.0 Write-off of Adelaide car park development costs

  26. Slide 26: FY07 – FY08 Reported EBITDA Bridge

    FY08 Financial Results FY07 – FY08 Reported EBITDA Bridge For personal use only Reported EBITDA Bridge from FY07 to FY08 $10.6m $2.5m ($1.0)m $6.3m ($3.8)m $303.4m $297.2m $0.1m ($8.2)m ($0.3)m EBITDA Auckland Adelaide Darwin IB Hamilton Other Corporate Cinemas EBITDA 07 08 26

  27. Slide 27: FY07 – FY08 Normalised NPAT Bridge

    FY08 Financial Results FY07 – FY08 Normalised NPAT Bridge For personal use only Normalised NPAT Bridge from FY07 to FY08 $102.0m $9.6m $1.9m $95.4m $0.6m ($0.5m) ($5.0m) NPAT FY07 Tax Minority Funding Depreciation & EBITDA NPAT FY08 Normalised Interest Amortisation Normalised 27

  28. Slide 28: Funding Structure Remains Strong

    FY08 Financial Results Funding Structure Remains Strong For personal use only ƒ Very strong liquidity position ƒ Cash and undrawn facilities of ~$400m ƒ Debt repayment of $92m in FY08 ƒ No maturity events until May 2010 – Capital Notes mature in May 2010, but the securities offer good rollover flexi

  29. Slide 29: FY08 Total Distribution: 21.5cps

    FY08 Financial Results FY08 Total Distribution: 21.5cps For personal use only ƒ Total distribution 21.5cps for FY08 Full Year Dividends/Distributions (21.0cps FY07) (cents per share) ƒ Final distribution of 10.5 cents per share 26.5 26.0 (12.0cps FY07) ƒ Entitlement/record date 12 September. 23.5 24

  30. Slide 30: Strategy & Outlook

    For personal use only Strategy & Outlook Strategy Financial Business Highlights Appendix and Results & Outlook Results Unit Results summary

  31. Slide 31: New Executive Team

    Strategy & Outlook New Executive Team For personal use only A newly appointed executive management team to drive the company’s performance in FY09 31

  32. Slide 32: Strategic Priorities for FY09

    Strategy & Outlook Strategic Priorities for FY09 For personal use only ƒ The core objective for 2009 is to maximise the potential of our existing assets ƒ SKYCITY’s new management team is focused on delivering revenue growth, driving operational efficiencies and maximising EBITDA, while tightly cont

  33. Slide 33: FY09 Capex

    Strategy & Outlook FY09 Capex For personal use only Focus is on improving existing businesses Maintenance Capex Project Capex ƒ FY09 will include significant ƒ Completion of Darwin Stage 1 reinvestment in core business expansion operations ƒ Completion of Manukau Cinema ƒ Primary use of maintenance

  34. Slide 34: FY09 Outlook

    Strategy & Outlook FY09 Outlook For personal use only ƒ Results and progress achieved in FY08 provide solid platform for FY09 ƒ Business plans budget for growth in FY09 ƒ SKYCITY’s most recent revenue indicators suggest it is trading satisfactorily in current economic environment ƒ The new managemen

  35. Slide 35: Appendix: Further Financial Details and Explanatory Notes

    For personal use only Appendix Further Financial Details and Explanatory Notes Strategy Financial Business Highlights Appendix and Results & Outlook Results Unit Results summary

  36. Slide 36: Index to Appendix Items

    Index to Appendix Items For personal use only I. Normalised Earnings and NPAT 37 II. P&L Summary by Division 38 III. FY08 Result – SKYCITY Auckland 39 IV. FY08 Result – SKYCITY Adelaide 40 V. FY08 Result – SKYCITY Darwin 41 VI. FY08 Result – International Business 42 VII. FY08 Result – SKYCITY Hamil

  37. Slide 37: Normalised Earnings and NPAT

    I. Normalised Earnings and NPAT For personal use only FY08 FY07 EBITDA EBIT NPAT EBITDA EBIT NPAT $m $m $m $m $m $m Reported Earnings 303.4 229.6 49.9 297.2 224.9 98.4 Cinema write-down 60.0 Restructuring Costs 4.6 4.6 4.6 4.3 4.3 4.3 Transaction Costs 3.2 3.2 3.2 Adelaide Carpark Costs 1.1 1.1 Capi

  38. Slide 38: P&L Summary by Division

    II. P&L Summary by Division For personal use only SKYCITY Entertainment Group Limited Result Summary Year ended 30 June 2008 FY08 FY07 New Zealand operations Operations Operations Corporate Corporate Sub-Total Sub-Total expressed in Int'tional Int'tional Auckland Auckland Hamilton Hamilton Other NZ

  39. Slide 39: FY08 Result – SKYCITY Auckland

    III. FY08 Result – SKYCITY Auckland For personal use only FY08 FY07 Movement $m $m $m Revenues Machines 205.5 213.4 (7.9) Tables 131.6 119.7 11.9 Gross gaming revenues 337.1 333.1 4.0 Less GST on gaming revenues 37.5 37.0 0.5 Gaming Revenues (net of GST) 299.6 296.1 3.5 Food and beverage 34.7 34.4 0

  40. Slide 40: FY08 Result – SKYCITY Adelaide

    IV. FY08 Result – SKYCITY Adelaide For personal use only FY08 FY07 Movement A$m A$m A$m Revenues Machines 57.3 62.0 (4.7) Tables 56.5 56.2 0.3 Gross gaming revenues 113.8 118.2 (4.4) Less GST on gaming revenues 10.3 10.7 (0.4) Gaming Revenues (net of GST) 103.5 107.5 (4.0) Food and beverage, other 1

  41. Slide 41: FY08 Result – SKYCITY Darwin

    V. FY08 Result – SKYCITY Darwin For personal use only FY08 FY07 Movement A$m A$m A$m Revenues Machines 63.9 58.3 5.6 Tables 12.1 12.2 (0.1) Keno 11.9 11.1 0.8 Gross gaming revenues 87.9 81.6 6.3 Less GST on gaming revenues 8.0 7.4 0.6 Gaming Revenues (net of GST) 79.9 74.2 5.7 Hotel 6.4 6.1 0.3 Food

  42. Slide 42: FY08 Result – International Business

    VI. FY08 Result – International Business For personal use only FY08 FY07 NZ$m NZ$m Revenue 34.0 32.5 Less commission, comps & taxes 11.4 19.6 Net win 22.6 12.9 Other direct expenses 5.4 6.3 International VIP Commission Business EBITDA 17.2 6.6 Revenue at theoretical 20.3 34.9 Net win above/(below) t

  43. Slide 43: FY08 Result – SKYCITY Hamilton

    VII. FY08 Result – SKYCITY Hamilton For personal use only FY08 FY07 Movement $m $m $m Revenues Machines 26.7 26.6 0.1 Tables 10.0 10.9 (0.9) Gross gaming revenues 36.7 37.5 (0.8) Less GST on gaming revenues 4.1 4.2 (0.1) Gaming Revenues (net of GST) 32.6 33.3 (0.7) Food and beverage, other 6.4 6.4 -

  44. Slide 44: FY08 Result – SKYCITY Cinemas

    VIII. FY08 Result – SKYCITY Cinemas For personal use only FY08 FY07 Movement Cinemas Exhibition $m $m $m Revenue 66.2 67.6 (1.4) EBITDA 4.8 8.7 (3.9) Note: 44 • FY07 revenues and EBITDA exclude non-recurring items relating to SKYCITY Metro and the Symonds Street building.

  45. Slide 45: Revenue and EBITDA Margin

    IX. Revenue and EBITDA Margin For personal use only SKYCITY reports revenue net of GST. In order to facilitate comparison with Australian peers (who report revenues which effectively include gaming GST), revenues are shown below grossed up for gaming GST. FY08 FY07 $m $m Reported Revenue (Net) 818.8

  46. Slide 46: Consolidated Balance Sheet

    X. Consolidated Balance Sheet For personal use only As at As at 30/6/08 30/6/07 NZ$000 NZ$000 Equity Share Capital 460,779 364,068 Retained profits (24,300) 31,044 Reserves 33,993 (16,069) Minority interests 1,883 2,491 Total Equity 472,355 381,534 Current Assets Cash and bank 61,914 71,537 Receivab

  47. Slide 47: Consolidated Balance Sheet (Continued)

    X. Consolidated Balance Sheet (Continued) For personal use only As at As at 30/6/08 30/6/07 NZ$000 NZ$000 Total Assets 1,683,669 1,642,969 Current Liabilities Payables 121,668 119,501 121,668 119,501 Non-Current Liabilities Term borrowings 677,884 753,002 Subordinated debt 310,310 285,166 Deferred t

  48. Slide 48: Balance Sheet Notes

    XI. Balance Sheet Notes For personal use only Equity ƒ Share capital increased by $96.7m as a result of bonus shares issued under the company’s Profit Distribution Plan in October 2007 and April 2008, shares issued to SKYCITY personnel under the company’s incentive remuneration plan, and shares issu

  49. Slide 49: Balance Sheet Notes (Continued)

    XI. Balance Sheet Notes (Continued) For personal use only Non-Current Assets ƒ The $51.1m increase in property, plant and equipment relates primarily to the Auckland main gaming floor refurbishment, Darwin stage 1 development, new cinema developments, and new gaming machines and conversions, offset

  50. Slide 50: Balance Sheet Notes (Continued)

    XI. Balance Sheet Notes (Continued) For personal use only Non-Current Liabilities ƒ Term borrowings represent funds drawn down on the senior debt facility ($129m) and US Private Placement debt (NZ$552m), less deferred funding expenses ($3m). The $75m reduction in term borrowings from FY07 consists o

  51. Slide 51: Disclaimer

    Disclaimer For personal use only All information included in this presentation is provided as at 25 August 2008. 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 uncertaint

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