Skycity Entertainment Group Limited · NZX:SKC

Skycity Entertainment — Investor Day (November 2019)

117 slides from Skycity Entertainment's investor day presentation, Nov 7, 2019

1. Slide 1: ASX cover letter: Investor Day presentation

   7 November 2019 For personal use only Client Market Services NZX Limited Level 1, NZX Centre 11 Cable Street WELLINGTON Copy to: ASX Market Announcements Australian Stock Exchange Exchange Centre Level 6 20 Bridge Street Sydney NSW 2000 AUSTRALIA RE: SKYCITY ENTERTAINMENT GROUP LIMITED (SKC) INVESTO

2. Slide 2: 2019 Investor Day, Adelaide

   SkyCity Entertainment Group Limited For personal use only 2019 Investor Day Adelaide, South Australia 7 November 2019

3. Slide 3: Disclaimer

   Disclaimer   All information included in this presentation is provided as at 7 November 2019 This presentation includes a number of forward-looking statements. Forward-looking For personal use only statements, by their nature, involve inherent risks and uncertainties. Many of those risks and uncer

4. Slide 4: 2019 Investor Day Agenda

   2019 Investor Time (ACDT) Event Speaker Location Day By 8.30am Registration/refreshments - Adelaide Convention Centre For personal use only Agenda 8.45am Welcome/opening remarks Rob Campbell/Ben Kay Adelaide Convention Centre 9.15am Adelaide expansion Bruce Carter/Exec. team Adelaide Convention Cent

5. Slide 5: Today's Presenters

   Today’s Presenters For personal use only Rob Campbell, Chair Bruce Carter, Deputy Graeme Stephens, CEO Nick Jones, Exec. Director, Chair Destination Development, SATC Brenton Cox, CFO, Michael Ahearne, COO Rob Hamilton, CFO Claire Walker, Chief Adelaide Airports People & Culture Officer Stewart Neis

6. Slide 6: Welcome and Opening Remarks

   For personal use only Welcome and Opening Remarks (Rob Campbell, Ben Kay)

7. Slide 7: Welcome

   Welcome  “Welcome to Country” (David Christian, GM, Adelaide Casino) For personal use only  Thank you for your attendance  Appreciate your ongoing support  Agenda and housekeeping  Today’s presenters  Opportunities for Q&A at end of each session 6

8. Slide 8: Aspirations for the Day

   Aspirations for the Day 1 For personal use only Update on Adelaide expansion 2 Progress update on Group strategic plan 3 Provide clarity on strategic priorities for next 1-2 years 4 Articulation of longer-term strategic opportunities/considerations 5 Enhanced appreciation of SkyCity’s long-term valu

9. Slide 9: NZICC Fire – Chair's Thoughts

   NZICC Fire – Chair’s Thoughts  Significant fire at NZICC site For personal use only  Difficult for NZICC team who have worked hard over many years to deliver the project  Good response across the business to deal with challenging situation  Grateful for support of fire and emergency services  S

10. Slide 10: Board's Commitment to Shareholders

    Board’s Commitment to Shareholders For personal use only Focus on effective capital allocation and governance Oversee development/execution of Group strategy around major investments Ensure long-term sustainability of business – Optimise value from existing assets protect/enhance social licence Deli

11. Slide 11: Board's Scorecard

    Board’s Scorecard For personal use only Strong platform to unlock value and leverage growth Sound financial performance being achieved potential Group strategy focused on leveraging core Robust financial position − critical to remain disciplined competencies and exclusive licences and recognise/mana

12. Slide 12: Year Aspirations

    5 Year Aspirations For personal use only Significant increase in earnings following completion of Growing presence in online/digital channels major projects in Adelaide and Auckland Steady and growing free cash flow and dividends Industry-leading CSR/sustainability practices Enhanced Hamilton and Qu

13. Slide 13: Adelaide Expansion

    For personal use only Adelaide Expansion (Bruce Carter, David Christian and Graeme Stephens)

14. Slide 14: Introduction – Deputy Chair

    Introduction – Deputy Chair For personal use only Activities of Adelaide Expansion Sub-Committee Bruce Carter, Deputy Chair Oversee delivery of expansion  Joined SkyCity as Director in 2010  Based in Adelaide  Founding partner of Ferrier Hodgson in Adelaide and Responsible for modernisation of ex

15. Slide 15: Economic Outlook − Adelaide (SA)

    Economic Outlook − Adelaide (SA) ANZ Stateomater Chart (August 2019(1)) For personal use only Above trend, decelerating Above trend, accelerating SA economy holding up despite broader Australia slowdown 1.5 Construction activity/major infrastructure projects (i.e. 1.0 defence, resources, transport)

16. Slide 16: Adelaide Expansion − Our Vision/Thesis

    Adelaide Expansion − Our Vision/Thesis only  Transform Adelaide Casino into a world-class casino and entertainment complex Investment Rationale  Significant opportunity to grow market share and turnaround an underperforming casino  Project represents a significant investment in the future of Adel

17. Slide 17: Our Journey in Adelaide (so far…)

    Our Journey in Adelaide (so far…) For personal use only SkyCity signs SkyCity launches new SkyCity’s casino licensing construction gaming areas, ‘North’ and duty agreements SkyCity lodges design contract for SkyCity plans for the restaurant, ‘LOCO’ bar with the SA Government for expansion with the e

18. Slide 18: Our Track Record

    Our Track Record For personal use only Adelaide Casino normalised revenue and EBITDA (A$m): Adelaide Casino local gaming revenue (A$m) and EGM market share FY09-FY19 (%): FY09-FY19 200 100 200 8.4% 150 75 150 7.8% Market Share (%) Revenue Revenue EBITDA 100 50 100 7.2% 50 25 50 6.6% 0 0 0 6.0% FY09

19. Slide 19: Adelaide Expansion − Thesis Revisited

    Adelaide Expansion − Thesis Revisited For personal use only  Historical disadvantages being addressed through investment, precinct enhancements and regulatory changes Historical disadvantages Changes – present and future Undesirable/underinvested precinct World-class entertainment/tourism precinct

20. Slide 20: Adelaide Expansion − Regulatory Environment

    Adelaide Expansion − Regulatory Environment Old New For personal use only Licence term expiry  2085  No change Casino exclusivity  2015  2035  EGMs: Main floor – 50.0%, Premium – 20.0% Gaming taxes  EGMs: 43.5% (main floor and premium)  Tables: Main floor – 12.5%, Premium – 10.0%, IB – 10.0%

21. Slide 21: Adelaide Expansion site map

    Existing heritage Adelaide Casino CBD, hotels, building expansion retail/commercial precincts Adelaide Convention For personal use only Centre Adelaide Festival Centre Proposed 20-storey office tower 1,500 space car park (below ground) Adelaide Oval, via Festival Plaza bridge across the River Torren

22. Slide 22: Adelaide Expansion − Riverbank Precinct

    Adelaide Expansion − Riverbank Precinct Adelaide Convention Centre Festival Plaza For personal use only  A$600m investment by Walker  Significant expansion completed in Corporation and SA Government 2019  Includes 1,500 car park, F&B/retail and  Capacity of up to 4,000 pax revitalisation of publ

23. Slide 23: Adelaide Expansion – Existing Building Changes

    Adelaide Expansion – Existing Building Changes For personal use only  Revitalisation of existing gaming spaces that will appeal to local market  Refurbishment, expansion and relocation of restaurants & bars • The Guardsman (F&B venue) due to open early 2020  Creation of live entertainment venues

24. Slide 24: Existing venue images

    Alpha Gaming Chandelier Bar For personal use only The Guardsman Northern Gaming 23

25. Slide 25: Enhancements to public realm and façade

    For personal use only Significant enhancements to public realm on North Terrace and external façade of building 24

26. Slide 26: Adelaide Expansion − New Facilities/Product

    Adelaide Expansion − New Facilities/Product Current New For personal use only  Significantly expanded gaming and entertainment facilities  Multi-level casino podium  Main gaming floor  ~35% increase in gaming product post expansion  Marble Hall Gaming (~1,100 EGMs, ~130 tables (including 30 for

27. Slide 27: Expansion renderings

    Expansion (at night) Expansion (from Festival Plaza) For personal use only Rooftop Bar Standard hotel room 26

28. Slide 28: Opportunity – Local Gaming (1 of 3)

    Opportunity – Local Gaming (1 of 3) Australian and NZ casino vs. pubs & clubs EGM win per unit A$: FY19 Adelaide (SA) EGM market (A$m): FY19 For personal use only >$10m >$10m Adelaide >$10m >$10m >$10m Brisbane >$10m ~$27m Gold Coast ~$46m ~$134m ~$351m Auckland Melbourne Sydney 0 200 400 600 800 20

29. Slide 29: Opportunity – Local Gaming (2 of 3)

    Opportunity – Local Gaming (2 of 3) Gaming expenditure as a % of HDI for Australian states: Tables games (excl IB) penetration for Australian states (%): For personal use only 2008-2017(1) 2008-2017(2) 2.5 30% 25% 2.0 20% Table Penetration 1.5 % of HDI 15% 1.0 10% 0.5 5% 0.0 0% 2008 2009 2010 2011 2

30. Slide 30: Opportunity – Local Gaming (3 of 3)

    Opportunity – Local Gaming (3 of 3) For personal use only  Significant local gaming market/propensity to gamble • A$500m of EGM revenue within 50km of casino (A$700m in SA) • Gaming expenditure as % of HDI in SA comparable with other Australian states (just not at casino historically) • Local demog

31. Slide 31: Opportunity – International Business (1 of 2)

    Opportunity – International Business (1 of 2) For personal use only Total Australian IB market (A$bn) and market share (%): FY19 SkyCity Auckland and Adelaide Casino IB market share (%): FY10-FY19 80 12% 1% 0% 70 7% 10% 60 13% 8% 40% 50 40 6% 30 4% 20 39% 10 2% 0 FY19 0% FY10 FY11 FY12 FY13 FY14 FY1

32. Slide 32: Opportunity – International Business (2 of 2)

    Opportunity – International Business (2 of 2) For personal use only  Historically challenging for Adelaide to address IB market due to lack of accommodation and limited gaming facilities  New IB facilities to be best in Group and comparable to peers  Adelaide an attractive location for VIPs – imp

33. Slide 33: Opportunity – Non-Gaming (1 of 2)

    Opportunity – Non-Gaming (1 of 2) For personal use only Adelaide visitor nights (domestic and international): 2011-2018  International and domestic visits have been growing strongly over the last 5-10 years 30 3.7% CAGR  Positive outlook for visitor nights in SA 25  Boutique all-suite hotel, comp

34. Slide 34: Opportunity – Non-Gaming (2 of 2)

    Opportunity – Non-Gaming (2 of 2)  Car park critical to thesis − no dedicated car parking For personal use only SkyCity Auckland car park volumes by user group: FY19 historically Total exits = 1.8m  SkyCity to exclusively lease 750 spaces (of 1,500) adjacent to casino 4% 15% • Direct underground a

35. Slide 35: Opportunity – Margins

    Opportunity – Margins For personal use only Adelaide Casino normalised EBITDA margin (incl IB) (%) vs.  Expect margins of around 20% (including IB) (comparable Australian peers: FY11-FY19 with peers) post expansion underpinned by: 35% • Increased contribution from higher margin businesses 30% (i.e.

36. Slide 36: Project Update

    Project Update  Good progress with project on-time and on- For personal use only Adelaide expansion site (as at November 2019) budget  “Topping off“ of new facility in September – hotel/casino levels and public spaces well established  Continue to have positive working relationship with Hansen Yu

37. Slide 37: Opportunity – Financial Returns

    Opportunity – Financial Returns For personal use only  Expect expansion to deliver required return (12% post-tax IRR and 9% ROIC by year 3)  Feasibility analysis based on comparison to counterfactual had SkyCity not proceeded with expansion  Material lift in earnings required to deliver required

38. Slide 38: Preparing for Opening

    Preparing for Opening For personal use only November 2019  Conclude master planning for existing building  Recruit and train key staff and management (already commenced)  Execute construction programme on-time and on-budget  Work with precinct partners to leverage strategic location  Develop co

39. Slide 39: Adelaide Expansion – Closing Remarks

    Adelaide Expansion – Closing Remarks For personal use only Opportunity to turnaround underperforming casino Project progressing on-time and on-budget Significant addressable market to unlock Plans for operationalisation and opening well advanced (combination of local, interstate and IB) World-class

40. Slide 40: Precinct Partners – Panel Session

    For personal use only Precinct Partners – Panel Session (SATC, Adelaide Airports, Renewal SA) (Panel Moderator: Ben Kay)

41. Slide 41: Precinct Partners – Introduction to Panel

    Precinct Partners – Introduction to Panel For personal use only ■ SATC assists in securing economic and social benefits for SA through promoting the State as a tourism destination and further developing the visitor economy ■ Tourism expenditure exceeded A$7bn in the year to March 2019 and visitor ni

42. Slide 42: Tour of Expansion Site

    For personal use only Tour of Expansion Site

43. Slide 43: Tour of Expansion Site

    Tour of Expansion Site For personal use only  Split into 3 groups (by surname)  Required to wear hard hat/steel-capped shoes/long-sleeved shirt to access expansion site  Phased approach to site entry – 30 min gap between groups (Group A: 11am, Group B: 11.30am, Group C: 12pm)  Plan to walk perim

44. Slide 44: Break: Lunch

    For personal use only Break: Lunch

45. Slide 45: Strategic Overview

    For personal use only Strategic Overview (Graeme Stephens)

46. Slide 46: Group Strategic Plan

    For personal use only Group Strategic Plan

47. Slide 47: Progress – Business Goals

    Progress – Business Goals For personal use only  Record (normalised) financial performances achieved in FY18 and FY19 performance Improve our operating  Improved performances across all business units (including Adelaide on like-for-like basis)  Stable operating margins despite cost pressures acr

48. Slide 48: Progress – Character & Culture Goals

    Progress – Character & Culture Goals For personal use only  Implementing Health & Safety plan – focus on building awareness and preventing harm and safe place Offer a great to work  New values agreed with staff – “Own it, Share it, Live it”  Being recognised for Diversity & Inclusion – Deloitte T

49. Slide 49: Distributions to Stakeholders (FY19)

    Distributions to Stakeholders (FY19) For personal use only $301m in $161m in $342m taxes to capital salaries & Government invested across wages to staff (NZ and the business Australia) “ Better communities at the heart of what we’re doing” $14m $178m $136m of in community in payments to dividends pa

50. Slide 50: FY20/FY21 Strategic Priorities

    FY20/FY21 Strategic Priorities For personal use only Confirm plan for recommissioning of NZICC & Horizon Complete Adelaide expansion and leverage benefits Hotel project following fire Consolidate opportunity to address online casino Progress master planning initiatives in market in NZ Auckland/Hamil

51. Slide 51: Strategic/Industry Themes – Two Years On (1 of 2)

    Strategic/Industry Themes – Two Years On (1 of 2) For personal use only Traditional land-based gaming maturing with exception of VIP/premium Online gaming growing significantly (and faster than land-based) – several jurisdictions have legalised/regulated online casinos/sports betting or plan to do s

52. Slide 52: Strategic/Industry Themes – Two Years On (2 of 2)

    Strategic/Industry Themes – Two Years On (2 of 2) For personal use only US/China trade war and global recession fears impacting sentiment around global gaming stocks (particularly those with levered balance sheets) Gaming REITs expanding their presence in US with institutional investors pushing for

53. Slide 53: Long-Term Value Proposition

    Long-Term Value Proposition For personal use only Increase casino, entertainment and hospitality revenue Develop new, complementary business Achieve operating leverage and efficiencies across the Group Earnings growth and diversification Allocate capital to higher returning assets and businesses A M

54. Slide 54: Improve Our Operating Performance

    For personal use only Improve Our Operating Performance (Michael Ahearne, Stewart Neish)

55. Slide 55: What's Worked? COO's Perspectives

    What’s Worked? COO’s Perspectives 2 Years in… For personal use only  Improved focus on marketing/promotions driving visitation and loyalty  Investment in new product and greater emphasis on leveraging data  Benefits of product mix and floor layout being recognised  Improved performance in EGMs p

56. Slide 56: Operational Leadership Team

    Operational Leadership Team For personal use only Matt Ballesty, Exec GM, Brad Burnett, GM, SkyCity Callum Mallett, Exec GM, Gaming, SkyCity Auckland Hotels Group Hospitality, SkyCity Auckland 20 years experience across Significant international 20 years experience in tourism, Macau, US, Canada and

57. Slide 57: Key Value Drivers

    Key Value Drivers Group normalised EBITDA by activity (%): FY19 ($343m) Group EGMs and table games (excl IB) revenue ($m): FY14-FY19 For personal use only 750 600 15% 12% 450 48% Revenue 300 26% 150 EGMs Tables IB Non-gaming 0 FY14 FY15 FY16 FY17 FY18 FY19 Tables EGMs Source: Company information Sou

58. Slide 58: Customer Trends/Themes

    Customer Trends/Themes For personal use only Casinos/integrated resorts continue to be a source of entertainment/socialising Online/alternative forms of gaming gaining popularity globally Traditional forms of gaming being challenged to remain popular with younger demographic Marketing/promotional in

59. Slide 59: Premium/VIP Gaming

    Premium/VIP Gaming Premium/VIP gaming growth (%): 5 Year CAGR For personal use only 50% Premium/VIP Gaming  Premium/VIP segments fastest growing parts of land- based casinos 40% Adelaide  Trend applies to both EGMs and table games 30% Auckland  Growth driven by positive demographic/economic facto

60. Slide 60: Product Initiatives − EGMs

    Product Initiatives − EGMs For personal use only  Launching new product consistently New games and links  Engaging marketing campaigns to create exciting launch events  Consistent “New Game Zone” graphics Creation of new zones – improved wayfinding  Additional jackpot signage to showcase new lin

61. Slide 61: Product Initiatives − Table Games

    Product Initiatives − Table Games For personal use only  Effective customer segmentation Leveraging loyalty and tiers PREMIUM ACQUIRE MASS MASS VIP promotion  Yield management through loyalty tiers promotion New product and  Introduce/leverage new products and game derivatives (i.e. Lucky 6, inno

62. Slide 62: Product Initiatives − ATGs

    Product Initiatives − ATGs For personal use only  Signage improvements across all Enhanced signage sites  Terminals to face result displays Enhanced  Specific branding to ensure customer recognition and underpin branding/customer promotions/future marketing recognition campaigns  Introduction of

63. Slide 63: Operating Model Review

    Operating Model Review For personal use only Australian and NZ casino normalised EBITDA margins  Remain focused on achieving operating efficiencies (incl IB) by property (%): FY19 where possible to offset cost pressures 50%  FY19 Group normalised EBITDA consistent with pcp 40% (30.6%)  SkyCity Au

64. Slide 64: Key Operational Strategies for FY20/FY21

    Key Operational Strategies for FY20/FY21 For personal use only Further investment in product/mix/configuration Leverage loyalty/digital capability/data analytics to (ref. pages 59-61) improve customer yields Leverage new premium gaming spaces once Enhance CXM through customer service and innovation

65. Slide 65: International Business – Global Market

    International Business – Global Market Global IB revenue (US$bn): FY10-FY19 Global IB market share (%): FY19 For personal use only 20 Las Vegas 18 Manilla (5%) (4%) Russia (0%) 16 Cambodia (5%) 14 Australia and NZ (4%) 12 Korea (2%) 10 8 Singapore (5%) 6 4 Macau (75%) 2 0 1H10 2H10 1H11 2H11 1H12 2H

66. Slide 66: International Business – Sector Themes

    International Business – Sector Themes  Strong long-term secular outlook for North/Southeast Asia For personal use only • Latent demand, increasing wealth creation, improving connectivity • Increasingly mobile (150m outbound trips from China in 2018) • Gaming expenditure in China as % of GDP 0.28%

67. Slide 67: International Business – SkyCity Overview

    International Business – SkyCity Overview SkyCity IB EBITDA ($m) and % of Group normalised EBITDA: FY14- Australian and NZ IB Market (A$bn) and SkyCity market share (%): For personal use only FY19 FY10-FY19 50 15% 140 16% 14% 40 120 12% 12% 100 30 9% 10% Turnover (A$bn) Market share (%) 80 20 8% 6%

68. Slide 68: International Business – SkyCity Outlook

    International Business – SkyCity Outlook  Record FY19 turnover and normalised EBITDA (albeit benefiting from lower win rate) For personal use only • 2nd largest EBITDA contributor for Group (behind Auckland) • Remain predominately a direct business (70% of FY19 turnover) • Improvements in EBITDA ma

69. Slide 69: International Business – Growth Opportunities

    International Business – Growth Opportunities For personal use only Grow and diversify customer base – reduce reliance on Leverage new facilities in Adelaide post expansion and small number of larger players proximity to eastern seaboard of Australia Progress proposed Queenstown VIP gaming/hotel Con

70. Slide 70: Optimise Existing Portfolio

    For personal use only Optimise Existing Portfolio (Graeme Stephens)

71. Slide 71: Asset Sale Programme

    Asset Sale Programme For personal use only  Sold Darwin Casino to Delaware North for A$188m in April 2019 Darwin Casino  Property deemed non-core and ex-growth  Sale price 8x pro-forma FY19 EBITDA  Conditional sale agreement signed for Little Mindil (adjacent beach front land, book value A$11m)

72. Slide 72: NZICC & Horizon Hotel – Investment Thesis

    NZICC & Horizon Hotel – Investment Thesis For personal use only  Significant investment in future of Auckland and NZ  Significant job creation once operational  Investment will support long-term growth in tourism expenditure  New infrastructure to be significant demand driver for Auckland precin

73. Slide 73: NZICC & Horizon Hotel − Project Update (1 of 2)

    NZICC & Horizon Hotel − Project Update (1 of 2)  Fire at NZICC site on Tuesday 22 October 2019 For personal use only  Project had good momentum prior to fire with Fletcher Construction and SkyCity collaborating well  Good response from crisis management team • SkyCity Auckland fully operational •

74. Slide 74: NZICC & Horizon Hotel − Project Update (2 of 2)

    NZICC & Horizon Hotel − Project Update (2 of 2)  SkyCity has until 1 January 2023 to complete the NZICC under existing commitments with NZ Government For personal use only  At this stage, no change to contractual position with Fletcher Construction • Fletcher Construction required to complete proj

75. Slide 75: NZICC & Horizon Hotel − Project Insurance

    NZICC & Horizon Hotel − Project Insurance For personal use only  Indemnity against loss or damage suffered to the NZICC and/or Horizon Hotel  Fletcher Construction and sub-contractors are insured parties under the policy for their respective rights, interests and liabilities  Lead insurer is a su

76. Slide 76: Master Planning – Auckland

    Master Planning – Auckland  Multi-year vision for precinct For personal use only  Positive long-term fundamentals in Auckland – population and tourism growth and ongoing CBD/urban renewal  Significant option value embedded in precinct • 2,500m2 of land available to be developed (corner of Victori

77. Slide 77: Non-Gaming Attractions

    Non-Gaming Attractions For personal use only  Partnering with two iconic brands in Auckland – All Blacks and Weta Workshop • Attractions to appeal to broad customer base and ensure long-term relevance • Interactive/immersive customer experiences leveraging world-class technology (i.e. AR/VR) • Auck

78. Slide 78: Master Planning – Hamilton/Queenstown

    Master Planning – Hamilton/Queenstown For personal use only  Continue to evaluate development opportunities in Hamilton and Queenstown  Riverbank opportunity in Hamilton includes potential hotel development, gaming expansion and entertainment  Land acquired in Queenstown for future hotel developm

79. Slide 79: Break: Afternoon Tea

    For personal use only Break: Afternoon Tea

80. Slide 80: Grow & Diversify Our Business

    For personal use only Grow & Diversify Our Business

81. Slide 81: Hotel Strategy

    For personal use only Hotel Strategy (Rob Hamilton)

82. Slide 82: Strategic Context

    Strategic Context For personal use only  Limited opportunity to scale core gaming business in NZ and Australia  Hotels key component of integrated offering and to support core activities  Significant operating expertise in managing hotels and well recognised hotel brand  Competitive advantage gi

83. Slide 83: Long-Term Demand Thesis

    Long-Term Demand Thesis  Positive outlook for hotel demand in NZ (and Australia) For personal use only NZ visitor arrivals (domestic and international) (m): 2001-2025F 25 • Global tourism boom driven by growing China/Asian middle class 20 • Increasing airline capacity/visitor arrivals 15 • Global r

84. Slide 84: SkyCity Hotels – Track Record of Success

    SkyCity Hotels – Track Record of Success SkyCity Auckland hotels revenue and EBITDA ($m) and margin (%): For personal use only SkyCity Auckland hotels: RevPar vs. market: FY15-FY19 FY15-FY19 300 60 70% 50 65% 250 40 60% 200 30 55% 150 20 50% 100 10 45% 0 40% 50 EBITDA EBITDA EBITDA EBITDA EBITDA Rev

85. Slide 85: SkyCity Hotels – Outlook

    SkyCity Hotels – Outlook For personal use only SkyCity Hotels EBITDA outlook (including Adelaide Hotel and  SkyCity Hotels expected to deliver $55m-$60m in EBITDA post Horizon Hotel) ($m) completion of major projects in Adelaide and Auckland 60 • Hotels to be 2nd largest business activity behind ga

86. Slide 86: Future Opportunity and Strategic Priorities

    Future Opportunity and Strategic Priorities  Focus on evaluating opportunities in existing precincts For personal use only  Internal restructure underway to transparently disclose/position hotel portfolio as standalone business  Hotel management business established • Primary function to manage S

87. Slide 87: Online Strategy

    For personal use only Online Strategy (Michael Ahearne)

88. Slide 88: Strategic Themes

    Strategic Themes For personal use only Global land-based vs. online gaming revenue growth (%): Significant growth in online gaming globally vs. land-based 2003-2024F 1,200 Transition from offline to online across most industries – gaming 1,000 no different Rebased to 100 at 2003 800 Significant web

89. Slide 89: Global Online Gambling Regulation

    Global Online Gambling (including casinos) Regulation (as at November 2019) Strategic Themes For personal use only Only New Jersey, Pennsylvania and Delaware, allow online casino gambling Regulated Unregulated Illegal Regulation of online gambling is a growing trend globally, particularly in develop

90. Slide 90: Online Casinos – Case Study (New Jersey)

    Online Casinos – Case Study (New Jersey (NJ), US) New Jersey online casino revenue (US$m): 2013-2019 For personal use only Journey to online gambling regulation 45  1976 – NJ legalises casinos, restricted to Atlantic City 40 35  1978 – First casinos become operational 30 25 20  2011 – NJ legislat

91. Slide 91: New Jersey Case Study − Thoughts/Observations

    New Jersey Case Study − Thoughts/Observations For personal use only Significant growth in NJ online casino revenue post regulation (LTM revenues of US$400m) Total NJ casino market (land-based and online) grown post establishing online market – land-based growth +5% per year Effective channeling of o

92. Slide 92: NZ Online Casino Market – Outside In Perspective

    NZ Online Casino Market – “Outside In” Perspective For personal use only Significant unregulated online gaming market developed over last 10 years - +$250m in annual gross gaming revenue(1) Current legislation allows for offshore operators to address NZ online gaming market Majority of offshore oper

93. Slide 93: SkyCity Pathway to Market

    SkyCity Pathway to Market  Online casino launched in August 2019 via Malta-based subsidiary For personal use only • ~1,500 sign ups to date, with sequential growth month-on-month since launch  Partnership with GIG provides turnkey online solution for NZ customers • GiG provide technical platform,

94. Slide 94: Long-Term Opportunity – Omnichannel

    Long-Term Opportunity – “Omnichannel” For personal use only  Potentially significant long-term opportunity if Omnichannel opportunity online market regulated in NZ and SkyCity granted licence(s) One-time registration • Online gaming expected to continue to grow faster than land-based Automatically

95. Slide 95: Sustainability

    For personal use only Sustainability (Claire Walker)

96. Slide 96: Commitment to Sustainability (1 of 2)

    Commitment to Sustainability (1 of 2) For personal use only Casino industry needs to be doing more than most to Sustainability increasing in importance for asset owners justify social licence Strive to be responsible member of every community in Materiality assessment critical in allocation of which

97. Slide 97: Commitment to Sustainability (2 of 2)

    Commitment to Sustainability (2 of 2) For personal use only “The aim of SkyCity is to be a business which succeeds in financial, social and environmental terms in the long-run” (1) (Rob Campbell, SkyCity Chair) (1) FY19 SkyCity Annual Report 96

98. Slide 98: Sustainability Framework

    Sustainability Framework For personal use only  Be responsible hosts >>>>>> Happy, safe customers  Ensure safe and enjoyable opportunities for customers/staff/communities  Inspire our people >>>>>> Great, safe place to work  Create a great place to work where people are empowered to grow and ach

99. Slide 99: Culture & Character Goals − Progress

    Culture & Character Goals − Progress For personal use only Be responsible leaders in our Offer a great and safe place to work Always put customers first communities  Implementing Health & Safety plan –  Ongoing investment in ICT/digital –  Taken leadership position on climate focus on building aw

100. Slide 100: Financial Overview

     For personal use only Financial Overview (Rob Hamilton)

101. Slide 101: TSR Performance

     TSR Performance Relative Total Shareholder Return: 2014-2019 For personal use only TSR Index (Set to 100 at November 2019) 160 140 120 100 80 60 40 20 Feb 15 Feb 16 Feb 17 Feb 18 Feb 19 Dec 15 Dec 16 Dec 17 Dec 14 Dec 18 Jun 15 Aug 15 Jun 16 Aug 16 Jun 17 Aug 17 Jun 18 Jun 19 Aug 18 Aug 19 Apr 15 Ap

102. Slide 102: Capital Allocation Framework

     Capital Allocation Framework For personal use only “ The primary task of the SkyCity Board is the efficient allocation of capital.” Rob Campbell, SkyCity Chair’s Review, Annual Report 2019 Key Objectives: Consistent with strategic goals − efficient capital allocation, maximise sustainable shareholde

103. Slide 103: Historical Capital Allocation

     Historical Capital Allocation For personal use only Sources of capital by %: FY14-FY19 Uses of capital by %: FY14-FY19 (14%) (18%) (32%) (18%) (33%) (64%) (6%) (9%) (6%) Operating cash flow Asset sales Stay-in-business capex Growth investments Equity issues (including DRP) Property acquisitions/othe

104. Slide 104: ICT Investment (1 of 2)

     ICT Investment (1 of 2) For personal use only Group ICT capex ($m): FY16-FY20F  ~$60m of capex to remove ICT "tech debt" over FY17-FY22F with 35 over 75% spent to date 30  Corresponding increase in ICT opex due to increase in licences required, staff hires and shift to cloud-based services 25  Ex

105. Slide 105: ICT Investment (2 of 2)

     ICT Investment (2 of 2)  With the ICT “tech debt” now largely addressed, focus is now shifting to new digital platforms to better leverage data For personal use only and to enhance customer experience Recent Projects (FY17-FY19) Current and Future Projects  Infrastructure upgrade (cloud network, d

106. Slide 106: Capital Allocation Priorities

     Capital Allocation Priorities For personal use only  Committed to maintaining BBB- credit rating Key Financial Settings  Total debt expected to peak at ~$800m in FY21/22 (but final profile/timing depends on revised NZICC & Horizon Hotel construction programme)  Committed to current dividend polic

107. Slide 107: YTD Trading and Outlook Update

     YTD Trading and Outlook Update For personal use only  Domestic and international economic environment continues to be challenging with increased cost pressures Group  YTD to 3 November 2019 • Normalised Group revenue (incl IB) flat vs. pcp on a like-for-like(1) basis • Domestic revenue (excl. IB)

108. Slide 108: Medium-Term Financial Profile

     Medium-Term Financial Profile  Medium-term earnings profile driven largely by completion of major projects For personal use only  Expect incremental earnings from Adelaide expansion (including IB) to meet or exceed higher depreciation and net interest in first-full year (FY22) following completion

109. Slide 109: Value Recognition

     Value Recognition  SkyCity wholly owns its assets − no current intention to separate For personal use only EBITDA multiple for SkyCity vs. property/hotels/online comparables: 2015-2019  Parts of SkyCity have different investment characteristics when 30x compared to SkyCity’s exclusive land-based c

110. Slide 110: Key Investment Themes

     Key Investment Themes 1 For personal use only Exclusive long-term casino licences in attractive gaming markets – high-quality/defensive earnings 2 Major projects underpin mid-term earnings and free cash flow growth 3 Strong financial platform to leverage future growth opportunities and focused on ef

111. Slide 111: Closing Remarks

     For personal use only Closing Remarks (Graeme Stephens)

112. Slide 112: Key Themes/Takeaways

     Key Themes/Takeaways For personal use only We are continuing to deliver on strategic plan Critical to deliver Adelaide expansion and recommission NZICC & Horizon Hotel project Strong medium-term outlook for EPS/dividend/free cash flow growth Significant opportunity to unlock long-term value leveragi

113. Slide 113: Thank You

     For personal use only Thank You

114. Slide 114: Appendices

     For personal use only Appendices

115. Slide 115: Adelaide Expansion – Accounting Treatment (1 of 2)

     Adelaide Expansion – Accounting Treatment (1 of 2)  Provided detailed guidance at 2018 Investor Day around accounting treatment associated with major projects For personal use only • With Adelaide expansion nearing completion, prudent to reaffirm accounting impacts • Accounting for NZICC & Horizon

116. Slide 116: Adelaide Expansion – Accounting Treatment (2 of 2)

     Adelaide Expansion – Accounting Treatment (2 of 2) For personal use only Accounting for Adelaide Expansion(1)  Once project is completed PP&E (ex land but including capitalised interest) is depreciated and FY19 FY20 FY21 FY22 interest no longer capitalised A$m A$m A$m A$m  Earnings from Adelaide e

117. Slide 117: For personal use only

     eo For personal use only

SkyCity Entertainment Group — Investor Day (November 2019) on 6ix