Skycity Entertainment Group Limited · NZX:SKC
Skycity Entertainment — FY2010 Earnings Presentation
58 slides from Skycity Entertainment's earnings presentation, Aug 17, 2010
Slide 1: Full Year Result Presentation
Full Year Result Presentation SKYCITY Year ended 30 June 2010 Entertainment Group Limited 17 August 2010
Slide 2: SKYCITY Result Presentation Year ended 30 June 2010
SKYCITY Result Presentation Year ended 30 June 2010 FY10 Result Summary 3 Performance Commentary 8 Concluding Comments 19 Strategic Growth Opportunities 23 Appendices and Financial Summaries 40 www.skycityentertainmentgroup.com 2
Slide 3: FY10 Result Summary
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Slide 4: FY10 Net Profit After Tax
FY10 Net Profit After Tax FY10 FY09 Movement NPAT before Deferred Tax Adjustment $141.7m $115.3m +$26.4m +22.9% Less Deferred Tax Adjustment $39.7m - Net Profit After Tax $102.0m $115.3m ($13.3m) Normalised NPAT $129.1m $115.3m +$13.8m +12.0% Reported EPS (before DTA) at 24.6cps, up 5.1% from 23.4cp
Slide 5: FY10 Group Result Summary
FY10 Group Result Summary FY10 FY09 Movement $m $m $m % Revenue 837.8 846.5 (8.7) (1.0%) Expenses 539.6 546.0 6.4 1.2% EBITDA 298.2 300.5 (2.3) (0.8%) Depreciation and Amortisation 72.5 77.7 5.2 6.7% EBIT 225.7 222.8 2.9 1.3% Interest Cost 47.4 67.4 20.0 29.7% Net Profit Before Tax 178.3 155.4 22.9
Slide 6: FY10: EBITDA Summary by Business Unit
FY10: EBITDA Summary by Business Unit FY10 FY09 Change $m $m % Australian Casinos Adelaide (A$) 31.5 29.4 7.1% Darwin (A$) 38.4 39.9 (3.8%) Total Australia (A$) 69.9 69.3 0.9% (NZ$) 87.2 85.2 2.3% New Zealand Casinos Auckland 193.8 204.4 (5.2%) Hamilton 19.2 17.9 7.3% Christchurch, Queenst
Slide 7: FY10 Final Dividend 9.25cps - Full Year 17.25cps
FY10 Final Dividend 9.25cps - Full Year 17.25cps Final dividend of 9.25 cents per share, taking full year dividend to 17.25cps – final dividend up 42% on last year of 6.5cps – full year dividend up 11% on last year of 15.5cps – increased payout to the upper end of policy range of 60%-70%, at 70% of
Slide 8: Performance Commentary
SKYCITY ENTERTAINMENT GROUP Performance Commentary
Slide 9: SKYCITY Auckland
SKYCITY Auckland Continues to be a challenging economic environment Revenue, EBITDA and Margin – competitive consumer discretionary retail space 46.3% 45.3% – uncertainty re increasing GST (from 1 October) $404.6m $393.3m – continuing high unemployment at 6.8% Overall revenues softer by 2.3% , e
Slide 10: SKYCITY Auckland
SKYCITY Auckland Softening domestic (NZ) premium play – number of average bet $300+ per hand - down double digit – average bet less than $300 per hand – similar volumes to last year – small and medium business owners and operators; eg: – restaurant and bar owners, retail traders – property develop
Slide 11: Adelaide Casino
Adelaide Casino Second consecutive record result for Adelaide Casino with Revenue, EBITDA and Margin EBITDA up 7.1% to A$31.5m 20.7% 21.4% 24% per annum compound EBITDA growth over the last two $130.6m $135.4m years Pleasing revenue growth given the impact of ‘fiscal fade’ $29.4m $31.5m Marb
Slide 12: SKYCITY Darwin
SKYCITY Darwin Solid growth in first half but softer second half Revenue, EBITDA and Margin – introduction of smoking bans on 2 January 34.0% 33.1% – late arrival of the Dry Season and consequent late $109.0m $107.9m influx of southern tourist flows Despite non-smoking for 6 months of FY10 and t
Slide 13: SKYCITY Hamilton
SKYCITY Hamilton Hamilton achieved revenue growth of 2.3% with the Waikato Revenue, EBITDA and Margin dairy-based economy appearing to fare relatively better 43.8% than that of the major New Zealand cities 41.6% $39.8m In Hamilton the combination of revenue growth and cost $38.9m management deli
Slide 14: International Business
International Business International Business turnover increased 23% to $1.84bn Revenues: Actual v Theoretical $29.5m Strong turnover growth from China and other regions of $24.5m South East Asia $19.3m $19.9m Two thirds of International Business was transacted at our flagship property in Auck
Slide 15: Christchurch Casino
Christchurch Casino Christchurch Casino experienced a similar scenario to Revenue, EBITDA and Margin Auckland with the continuing challenging economic 32.1% 30.8% environment $66.3m $65.2m Christchurch Casino has undergone two major $21.3m refurbishments during the last two years with the final
Slide 16: Cinemas Divestment
Cinemas Divestment After successfully turning around the Cinemas business over the last two years, the business was divested in February realising $70m and achieving a gain over carrying value of $10.3m During the 8 months prior to the sale the SKYCITY Cinema Group earned: – An EBITDA of $9.8m –
Slide 17: Depreciation, Interest and Tax
Depreciation, Interest and Tax Depreciation: $72.5m, down $5.2m (7%) Depreciation expense lower in FY10 due to Cinemas divestment and low capex spend over recent years - maintenance capex reduced to $45m in FY10 Interest: $47.4m, down $20.0m (30%) Significant savings achieved from balance sheet
Slide 18: Balance Sheet Strength
Balance Sheet Strength SKYCITY has a sound and healthy balance sheet – No drawn bank debt - current undrawn $500m facility – NZ Capital Notes refinanced ($47m) at a reduced interest rate of 7.25% (previously 8.0%), with $103m in treasury stock available to reissue – Low gearing with Net Debt to EB
Slide 19: Concluding Comments
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Slide 20: Regulatory and Tax
Regulatory and Tax The Productivity Commission Report (Australia) has been finalised – The Federal Government has responded by recommending the introduction of a nationally consistent pre-commitment model for gaming machines, which we support – Other aspects of the Commission’s recommendations are
Slide 21: Summary and Outlook
Summary and Outlook The 2010 Financial Year Record underlying Net Profit, up 12% from $115.3m to $129.1m Increased dividend - up 11% to 17.25cps Successful divestment of Cinemas (gain on divestment $10.3m) Continued market share gains in our key markets Strong growth in International Busin
Slide 22: Disclaimer
Disclaimer All information included in this presentation is provided as at 17 August 2010. 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 wh
Slide 23: Strategic Growth Opportunities
Strategic Growth Opportunities
Slide 24: Strategic Growth Opportunities
Strategic Growth Opportunities Our core business is in land-based casino operations Our core focus remains upon optimising, growing and maximising the potential of our existing casino operations and licences; particularly Auckland, Adelaide, Darwin and Hamilton We are planning a series of exci
Slide 25: Auckland
" SKYCITY ENTERTAINMENT GROUP Auckland
Slide 26: Auckland
Auckland Federal Street Precinct Working closely with the Auckland City Council to transform Federal Street from an unattractive traffic thoroughfare to a destinational pedestrian-friendly restaurant, bar and entertainment precinct and fan zone Aiming to complete phase one in time for 2011 Rugby
Slide 27: Auckland - Federal Street Redevelopment
Auckland - Federal Street Redevelopment Pedestrianisation of Federal Street 27
Slide 28: Auckland - Federal Street Redevelopment
Auckland - Federal Street Redevelopment Creation of a new restaurant, bar and entertainment precinct 28
Slide 29: Auckland - Federal Street Redevelopment
Auckland - Federal Street Redevelopment Provides opportunities for ‘iconic’ food and beverage operators / brands in premium locations 29
Slide 30: Auckland - National Convention Centre
Auckland - National Convention Centre Development of a national tourism asset which will drive additional visitation into Auckland and New Zealand Leverages SKYCITY’s existing dominant position in conventions and events 30
Slide 31: Auckland - National Convention Centre
Auckland - National Convention Centre Linked via a pedestrian bridge back to the main site which features an extensive range of food and beverage, entertainment and accommodation facilities 31
Slide 32: Auckland - Home of the Warriors
Auckland - Home of the Warriors Major sponsorship of the Auckland Warriors 3 year deal SKYCITY to become the ‘Home of the Warriors’ 32
Slide 33: Adelaide
" SKYCITY ENTERTAINMENT GROUP Adelaide
Slide 34: Adelaide Casino Redevelopment
Adelaide Casino Redevelopment In discussions with the SA Government regarding further investment in South Australia including potential redevelopment of the Adelaide Casino Creation of a larger integrated gaming-based entertainment complex featuring a broader range of offerings, and which is mor
Slide 35: Adelaide Oval Redevelopment Proposal
Adelaide Oval Redevelopment Proposal Stadium estimates suggest between 30-50,000 potential attendees on major game/event days Plans include a pedestrian footbridge which passes in close proximity to the current Adelaide Casino site Adelaide Casino Site 35
Slide 36: Adelaide Convention Centre Expansion Proposal
Adelaide Convention Centre Expansion Proposal Expansion of existing Convention Centre capacity towards current Adelaide Casino site Plans include significant upgrades and landscaping of the Riverbank Promenade Adelaide Casino Site 36
Slide 37: Darwin
" SKYCITY ENTERTAINMENT GROUP Darwin
Slide 38: Darwin - Resort Development
Darwin - Resort Development Resort development (part of the Little Mindil project) is in final planning stages Will feature – additional accommodation including high end villa accommodation – a saltwater swimming lagoon – spa complex – investment to upgrade international gaming salons On track
Slide 39: Darwin - Resort Development
Darwin - Resort Development Features an expansion of the accommodation offering with a new salt water swimming lagoon as well as creation of high end villa accommodation for VIP customers 39
Slide 40: Appendices Financial Summaries
Appendices Financial Summaries Year ended 30 June 2010
Slide 41: P&L Summary by Business Unit
P&L Summary by Business Unit • Auckland FY09 EBITDA as reported includes $2.9m GST refund relating to prior years. For purposes of comparison, this amount should be deducted as a non-recurring item with EBITDA adjusted then being $204.4m. For purposes of comparison with FY10, the figure of $204.4m f
Slide 42: FY10: Revenue Summary by Business Unit
FY10: Revenue Summary by Business Unit FY10 FY09 Movement $m $m $m % Australian Casinos Adelaide (A$) 135.4 130.6 4.8 3.7% Darwin (A$) 107.9 109.0 (1.1) (1.0%) Total Australia (A$) 243.3 239.6 3.7 1.5% (NZ$) 303.8 294.6 9.2 3.1% New Zealand Casinos Auckland 393.3 404.6 (11.3) (2.8%) Hamilton
Slide 43: FY10: EBITDA Summary by Business Unit
FY10: EBITDA Summary by Business Unit FY10 FY09 Movement $m $m $m % Australian Casinos Adelaide (A$) 31.5 29.4 2.1 7.1% Darwin (A$) 38.4 39.9 (1.5) (3.8%) Total Australia (A$) 69.9 69.3 0.6 0.9% (NZ$) 87.2 85.2 2.0 2.3% New Zealand Casinos Auckland 193.8 204.4 (10.6) (5.2%) Hamilton 19.2 17.
Slide 44: FY10: Net Profit After Tax
FY10: Net Profit After Tax FY10 FY09 Movement $m $m $m % EBITDA 298.2 300.5 (2.3) (0.8%) Depreciation and Amortisation (72.5) (77.7) 5.2 6.7% EBIT 225.7 222.8 2.9 1.3% Net Interest Cost (49.3) (67.4) 18.1 26.9% Gain on USPP Debt Buyback 1.9 - 1.9 - Tax (47.1) (39.9) (7.2) (18.0%) Gain on Div
Slide 45: FY10: Reported and Normalised Earnings
FY10: Reported and Normalised Earnings FY10 FY09 Revenue EBITDA EBIT NPAT Revenue EBITDA EBIT NPAT $m $m $m $m $m $m $m $m Reported 837.8 298.2 225.7 102.0 846.5 300.5 222.8 115.3 Deferred Tax Adjustment - - - 39.7 - - - - Reported pre Deferred Tax Adjustment 837.8 298.2 225.7 141.7 846.5 300.5 222.
Slide 46: FY10: Notes re Reported and Normalised Earnings
FY10: Notes re Reported and Normalised Earnings Gain on debt buyback of $1.9m ($1.3m after tax) relates to the USPP debt bought back in July-August 2009 at an average discount to face value of 0.92% Brand Ad development costs of $1.2m relate to costs incurred on a new television commercial Non
Slide 47: FY10 Result - SKYCITY Auckland
FY10 Result - SKYCITY Auckland FY10 FY09 Movement $m $m $m % Revenues Machines 196.3 201.2 (4.9) (2.4%) Tables 124.0 134.9 (10.9) (8.1%) Gross gaming revenue (incl GST) 320.3 336.1 (15.8) (4.7%) Gaming Revenue (net of GST) 285.8 299.6 (13.8) (4.6%) Food and Beverage 35.5 35.3 0.2 0.6% Hotels and Con
Slide 48: FY10 Result - SKYCITY Adelaide
FY10 Result - SKYCITY Adelaide FY10 FY09 Movement A$m A$m A$m % Revenues Machines 60.6 59.9 0.7 1.2% Tables 71.0 69.0 2.0 2.9% Gross gaming revenue (incl GST) 131.6 128.9 2.7 2.1% Gaming Revenue (net of GST) 119.7 117.2 2.5 2.1% Food and beverage, other 15.7 13.4 2.3 17.2% Total Revenue 135.4 130.6
Slide 49: FY10 Result - SKYCITY Darwin
FY10 Result - SKYCITY Darwin FY10 FY09 Movement A$m A$m A$m % Revenues Machines 64.7 66.5 (1.8) (2.7%) Tables 13.9 14.0 (0.1) (0.7%) Keno 12.3 13.0 (0.7) (5.4%) Gross gaming revenue (incl GST) 90.9 93.5 (2.6) (2.8%) Gaming Revenue (net of GST) 82.7 85.0 (2.3) (2.7%) Food and beverage, hotel, other 2
Slide 50: FY10 Result - SKYCITY Hamilton
FY10 Result - SKYCITY Hamilton FY10 FY09 Movement $m $m $m % Revenues Machines 27.0 26.6 0.4 1.5% Tables 9.9 10.1 (0.2) (2.0%) Gross gaming revenue (incl GST) 36.9 36.7 0.2 0.5% Gaming Revenue (net of GST) 32.9 32.6 0.3 0.9% Food and beverage, other 6.9 6.3 0.6 9.5% Total Revenue 39.8 38.9 0.9 2.3%
Slide 51: FY10 Result - Queenstown
FY10 Result - Queenstown Steady performance for gaming machines FY10 FY09 and F&B in FY10 compared to prior period Revenue $6.4m $6.9m However local table games, like other sites, were down on prior year with average EBITDA $0.7m $0.9m spend per visit from this player group softer EBITDA % 9.9%
Slide 52: Consolidated Balance Sheet
Consolidated Balance Sheet SKYCITY Entertainment Group Limited As at 30/06/10 As at 30/06/09 NZ$m NZ$m Share Capital 732.9 733.1 Retained profits 17.4 (1.3) Reserves 7.9 9.0 Minority interests 1.3 1.5 Total Equity 759.5 742.3 Current Assets Cash and bank 102.5 275.6 Receivables and prepayments 23.2
Slide 53: Consolidated Balance Sheet (continued)
Consolidated Balance Sheet (continued) SKYCITY Entertainment Group Limited As at 30/06/10 As at 30/06/09 NZ$m NZ$m Total Assets (carried forward) 1,636.2 1,872.8 Current Liabilities Payables 101.8 110.3 Current tax liabilities 7.1 9.2 Subordinated debt - capital notes - 125.2 Subordinated debt - ACE
Slide 54: Balance Sheet Notes
Balance Sheet Notes Equity – The movement in share capital relates to the employee long term incentive plan – Retained profits increased by $18.7m: net profit after tax $102.0m (after DTA) less dividends $83.3m – The Reserves balance as at 30/06/10 is represented by foreign currency translation re
Slide 55: Balance Sheet Notes
Balance Sheet Notes Non-Current Assets (continued) – NZ IFRS requires that all derivatives are marked to market and recorded on the balance sheet as at the company’s reporting date. Derivative financial instruments represent the market value of interest rate swaps, cross currency interest rate swa
Slide 56: Interest and Debt
Interest and Debt Weighted average cost of debt at 6.82% for FY10, down from 7.33% in FY09 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 All collateral received on the cross cur
Slide 57: Australian Dollar Earnings Adelaide and Darwin
Australian Dollar Earnings Adelaide and Darwin FY10 NPAT result comparison to FY09 is not materially impacted by NZD/AUD exchange rate Average NZD/AUD cross-rate during FY10 0.7994 Average NZD/AUD cross-rate during FY09 0.8140 Restating FY09 prior period at 0.7994 to remove the FX differenti
Slide 58: Disclaimer
Disclaimer All information included in this presentation is provided as at 17 August 2010. 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 wh
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