Star Entertainment Group Limited · ASX:SGR
Star Entertainment — The Star Entertainment Group — FY2018 Earnings Presentation
40 slides from Star Entertainment's earnings presentation, Aug 24, 2018
Slide 1: Full Year Results Presentation (ASX Announcement)
ASX Announcement For personal use only 24 August 2018 FULL YEAR RESULTS PRESENTATION Attached is the presentation regarding the financial results of The Star Entertainment Group Limited (The Star Entertainment Group) for the year ended 30 June 2018, to be presented by Matt Bekier, Managing Director
Slide 2: Full Year 2018 Results Presentation
For personal use only THE STAR ENTERTAINMENT GROUP FULL YEAR 2018 RESULTS PRESENTATION FRIDAY 24 AUGUST 2018
Slide 3: Basis of Preparation and Non-IFRS Information
THE STAR ENTERTAINMENT GROUP THE STAR ENTERTAINMENT GROUP LIMITED (ASX: SGR) BASIS OF PREPARATION AND NON-IFRS INFORMATION For personal use only ♦ Information in this presentation is provided as at the date of the presentation unless specified otherwise. It should be read in conjunction with The Sta
Slide 4: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW MATT BEKIER – CEO 2. FINANCIALS CHAD BARTON – CFO 3. OUTLOOK AND PRIORITIES MATT BEKIER – CEO 4. Q&A 3
Slide 5: Highlights
HIGHLIGHTS NORMALISED STATUTORY STRONG FINANCIAL RESULTS For personal use only vs pcp vs pcp Gross Revenue $2,695m 15.3% $2,580m 6.1% EBITDA $588m 14.2% $484m (19.2%) NPAT $258m 20.3% $148m (44.0%) ♦ Record normalised and statutory Gross Revenue, record normalised EBITDA ♦ High quality result – broa
Slide 6: Highlights
HIGHLIGHTS EFFECTIVE PROJECT ♦ Gold Coast’s The Darling and enlarged MGF opened on time and budget in 3Q FY2018 For personal use only DELIVERY ♦ Construction of the first joint venture tower commenced, fixed price contract below the quantity surveyor’s estimates and previous guidance ♦ Expanded stra
Slide 7: Key Drivers
KEY DRIVERS $m For personal use only 900 282.0 217.0 22.0% 21.8% 800 EBITDA EBITDA margin margin 700 67.4 599.7 84.6 48.0 103.7 600 588.1 27.4 515.1 500 +14.2% 484.4 on pcp 400 300 200 100 0 - FY2017 International FY2017 Sydney Queensland International Gaming taxes, Operating FY2018 International FY
Slide 8: Sydney
SYDNEY OUTSTANDING UNDERLYING NORMALISED STATUTORY For personal use only GROWTH vs pcp vs pcp Gross Revenue $1,875m 17.5% $1,737m 3.0% EBITDA $410m 27.9% $286m (28.7%) ♦ Record normalised and statutory Gross Revenue, record normalised EBITDA ♦ Normalised EBITDA margin growth from effective cost mana
Slide 9: Queensland
QUEENSLAND GOLD COAST MOMENTUM, NORMALISED STATUTORY For personal use only BRISBANE STABILISATION vs pcp vs pcp Gross Revenue $820m 10.5% $843m 12.9% EBITDA $178m (8.4%) $199m (0.0%) ♦ Revenue growth across all segments, momentum improved as year progressed ♦ Successful relaunch of repositioned Gold
Slide 10: Gold Coast
GOLD COAST ♦ The Darling Gold Coast and MGF expansion opened in 3Q FY2018 on time, on budget. INVESTMENTS DELIVERED ON Gaming capacity increased For personal use only TIME, ON BUDGET • The Darling – 57 all suite hotel, private gaming room (Sovereign Resorts), VIP salons, Level 19 dining and pool dec
Slide 11: Gold Coast Works Delivered
GOLD COAST WORKS DELIVERED For personal use only The Darling Gold Coast Pool Deck The Darling Gold Coast Porte Cochere The Darling Gold Coast Penthouse Suite The Darling Gold Coast Penthouse Suite The Darling Gold Coast Entrance Sign 10
Slide 12: Gold Coast Works Delivered
GOLD COAST WORKS DELIVERED For personal use only Nineteen at The Star Nineteen at The Star Sports Bar The Darling Gold Coast Lobby 11
Slide 13: Gold Coast Events – Commonwealth Games and Logies
GOLD COAST EVENTS – COMMONWEALTH GAMES AND LOGIES For personal use only Commonwealth Games 2018 Celebration Lawn, Commonwealth Games 2018 Celebration Lawn, Commonwealth Games 2018 Red Carpet, The Logie Awards, 2018 12
Slide 14: EGM Market Share
EGM MARKET SHARE SYDNEY SYDNEY For personal use only 10.0% 9.6% 9.5% 9.3% ♦ Execution focus delivered increased market 9.1% 9.1% 9.2% 9.0% share in FY2018 vs pcp 9.0% 8.6% ♦ Sydney revenue up 9.8% in Q4 FY2018 vs pcp 8.5% driven by premium players 8.0% FY14 FY15 FY16 FY17 FY18 1H FY18 2H FY18 GOLD C
Slide 15: International VIP Rebate
INTERNATIONAL VIP REBATE TURNOVER UP 54%, ♦ Largest VIP business in Australia/ NZ ♦ Strong growth from all customer segments in FY2018 – sales-focused diversification For personal use only #1 MARKET SHARE strategy, market conditions returned to normal • VIP Rebate front money of $4.7bn, up 36.4% on
Slide 16: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW MATT BEKIER – CEO 2. FINANCIALS CHAD BARTON – CFO 3. OUTLOOK AND PRIORITIES MATT BEKIER – CEO 4. Q&A 15
Slide 17: Profit and Loss
PROFIT AND LOSS FY2018 FY2017 FY2018 FY2017 $M fav/(unfav) fav/(unfav) 2 2 2 fav/(unfav) 2 fav/(unfav) STATUTORY STATUTORY NORMALISED NORMALISED For personal use only Domestic Gaming Revenue 1,581.5 1,544.6 36.9 2.4% 1,581.5 1,544.6 36.9 2.4% International VIP Rebate (Gross) 711.5 639.6 71.9 11.2% 8
Slide 18: Balance Sheet
BALANCE SHEET $M JUNE 2018 JUNE 2017 ♦ Cash conversion of EBITDA of 105% (97% in FY2017) ASSETS ♦ Increase in trade and other receivables vs 30 June For personal use only Current Assets Cash and cash equivalents 110.3 113.7 2017 reflect increased International VIP Rebate activity Trade and other rec
Slide 19: Funding and Capital Expenditure
FUNDING AND CAPITAL EXPENDITURE FUNDING CAPITAL EXPENDITURE For personal use only ♦ Net interest expense of $34.3m down $7.4m (down 17.7%) ♦ FY2018 capital expenditure of $477m, consistent with prior on pcp despite 33% higher average net debt guidance, up $57m on pcp • Reduced interest expense drive
Slide 20: Key Metrics
KEY METRICS NORMALISED GROSS REVENUE ($M) NORMALISED NPAT ($M) EARNINGS PER SHARE - NORMALISED (CENTS) For personal use only CAGR 9.0% CAGR 19.2% CAGR 18.5% STATUTORY GROSS REVENUE ($M) STATUTORY NPAT ($M) EARNINGS PER SHARE - STATUTORY (CENTS) CAGR 8.0% CAGR 8.7% CAGR 8.0% DIVIDEND PER SHARE (CENTS
Slide 21: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW MATT BEKIER – CEO 2. FINANCIALS CHAD BARTON – CFO 3. OUTLOOK AND PRIORITIES MATT BEKIER – CEO 4. Q&A 20
Slide 22: Trading Update and Priorities
TRADING UPDATE AND PRIORITIES ♦ Broad-based revenue growth across the Group in early FY2019 POSITIVE START TO FY2019 For personal use only ♦ Improvement in domestic revenue growth trends from FY2018 into early FY2019, including strong Sydney PGR Table performance (higher hold and volumes) vs pcp ♦ W
Slide 23: Capital Expenditure
CAPITAL EXPENDITURE ♦ Group capital expenditure excluding JV investments to decline from FY2018 levels GROUP CAPEX HAS PEAKED ♦ FY2019-21 key elements: For personal use only • Maintenance capital expenditure ~$120m per annum • Sydney Sovereign Resorts ~$220m, largely FY2019 and FY2020 • Technology –
Slide 24: Sydney
SYDNEY ♦ Sovereign 1.5 opened 16 August 2018 – premium guests hosted in high quality SOVEREIGN 1.5 OPEN facilities For personal use only ♦ Upgraded and expanded permanent Sovereign Resorts expected completion 2H FY2020 ♦ Product levels maintained ♦ Member engagement – consulted on upgrade planning,
Slide 25: Sydney Sovereign 1.5
SYDNEY SOVEREIGN 1.5 For personal use only Sovereign 1.5 Sovereign 1.5 Chairman’s 1.5 24
Slide 26: Gold Coast
GOLD COAST ♦ Adds >700 keys, doubling capacity on property FIRST JV TOWER ♦ Presale targets achieved (over 85% sold) For personal use only COMMENCED ♦ Construction of the first joint venture tower commenced at a preferred contractor price below the quantity surveyor’s estimates • Estimated developme
Slide 27: Gold Coast Works in Progress
GOLD COAST WORKS IN PROGRESS For personal use only The Star Residences – Concept Image Only The Star Residences Joint Venture Tower – Concept Image Only Harvest Buffet– Concept Image Only 26
Slide 28: Queen's Wharf Brisbane
QUEEN’S WHARF BRISBANE ♦ Demolition work completed 3Q FY2018 KEY DATES* WORKS PROGRESSING TO ♦ Excavation work commenced 3Q FY2018 For personal use only PLAN Complete excavation and ♦ Shell, core and façade tender underway CY2019 commence basement car park ♦ Target debt funding structure in place CY
Slide 29: Delivering on Our Strategy
DELIVERING ON OUR STRATEGY OUR STRATEGY OUR DELIVERY For personal use only Evidence of investment delivering above system growth • Signature gaming 1 ♦ Broad-based growth • Premium hotel rooms • F&B ♦ Share gains in Slots (Sydney, Gold Coast), VIP • Retail (on site and ♦ Effective cost management pr
Slide 30: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW MATT BEKIER – CEO 2. FINANCIALS CHAD BARTON – CFO 3. OUTLOOK AND PRIORITIES MATT BEKIER – CEO 4. Q&A 29
Slide 31: Appendix
THE STAR ENTERTAINMENT GROUP APPENDIX STATUTORY RESULTS 31 For personal use only NORMALISED RESULTS 32 OPERATIONAL METRICS 33 SYDNEY PGR HOLD RATES 34 INTERNATIONAL VIP REBATE NORMALISATION 35 INTERNATIONAL VIP REBATE RECEIVABLES 36 CASH CONVERSION 37 GLOSSARY 38 30
Slide 32: Appendix: Statutory Results
APPENDIX STATUTORY RESULTS SYDNEY QUEENSLAND TOTAL $M FY2018 FY2017 fav/(unfav) fav/(unfav) FY2018 FY2017 fav/(unfav) fav/(unfav) FY2018 FY2017 fav/(unfav) fav/(unfav) For personal use only Slots 335.6 318.6 17.0 5.3% 326.0 308.8 17.2 5.6% 661.6 627.4 34.2 5.5% Domestic Tables 668.2 680.4 ( 12.2) (1
Slide 33: Appendix: Normalised Results
APPENDIX NORMALISED RESULTS SYDNEY QUEENSLAND TOTAL $M FY2018 FY2017 fav/(unfav) fav/(unfav) FY2018 FY2017 fav/(unfav) fav/(unfav) FY2018 FY2017 fav/(unfav) fav/(unfav) For personal use only Slots 335.6 318.6 17.0 5.3% 326.0 308.8 17.2 5.6% 661.6 627.4 34.2 5.5% Domestic Tables 668.2 680.4 ( 12.2) (
Slide 34: Appendix: Operational Metrics
APPENDIX OPERATIONAL METRICS KEY METRICS OPERATING EFFICIENCY For personal use only OPERATIONAL METRICS SYDNEY QUEENSLAND ♦ Group operating costs have grown from $867m in FY2014 FY2018 FY2017 FY2018 FY2017 to $1,038m in FY2018 (4.6% CAGR), whilst normalised Slots gross revenue has grown from $2.0bn
Slide 35: Appendix: Sydney PGR Hold Rates
APPENDIX SYDNEY PGR HOLD RATES ♦ Sydney PGR table hold rates have increased over time • Reflects increased time spent by customers in the PGR For personal use only • Driven by improvement to gaming facilities, service levels and marketing ♦ Over shorter periods of time, luck can have a significant i
Slide 36: Appendix: International VIP Rebate Normalisation
APPENDIX INTERNATIONAL VIP REBATE NORMALISATION ACTUAL WIN RATE VS THEORETICAL RECONCILIATION WITH ACTUAL For personal use only ♦ Normalised win rate of 1.35% is in line with the Group’s win CHANGE VS FY2018 FY2018 RESULTS COMPARISON ($M) FY2018 NORM rate experience and consistent with the Australia
Slide 37: Appendix: International VIP Rebate Receivables
APPENDIX INTERNATIONAL VIP REBATE RECEIVABLES INTERNATIONAL VIP REBATE 30 DAYS BUSINESS RECEIVABLES 0 - 30 DAYS 1 - 3 YEARS 3 YEARS + TOTAL For personal use only - 1 YEAR (BEFORE PROVISIONS) June 2018 ($m) Not yet due 163.7 163.7 Past due not impaired 0.5 17.8 10.4 28.7 Considered impaired 1.0 0.6 1
Slide 38: Appendix: Cash Conversion
APPENDIX CASH CONVERSION CATEGORY FY2018 FY2017 $M For personal use only Cash flows from operating activities before interest and income tax Net cash receipts from customers (inclusive of GST) 2,386.9 2,348.3 Payments to suppliers and employees (inclusive of GST) (1,371.2) (1,259.4) Payment of gover
Slide 39: Appendix: Glossary
APPENDIX GLOSSARY TERM DEFINITION For personal use only CAGR Compound Annual Growth Rate Capital expenditure Unless otherwise stated, capital expenditure is presented on an accruals basis and excludes investments in (capex) associates and equity acquisitions D&A Depreciation and Amortisation DBC Des
Slide 40: For personal use only
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The Star Entertainment Group — FY2018 Earnings Presentation on 6ix