SkyCity Entertainment Group Limited · NZX:SKC
SkyCity Entertainment — FY2003 Earnings Presentation
46 slides from SkyCity Entertainment's earnings presentation, August 2003
Slide 1: SKYCITY Entertainment Group Limited Annual Result Year Ended 30 June 2003
SKYCITY ENTERTAINMENT GROUP LIMITED Annual Result Year Ended 30 June 2003
Slide 2: Financial Year 2003
Financial Year 2003 Year Ended 30 June 2003 Total Dividend 67cps Net Profit (NSAT) $107.2 million (+26%) Special Dividend (11/02) 20cps Interim Dividend (4/03) 21cps $M cps Final Dividend (10/03) 26cps $107.2m 50 47c 110 45 100 40 38c $85.1m* 90 80 35 31.5c $70.1m* 70 28c $60.3m 30 60 25 $45.6m 21.5
Slide 3: Dividend FY03
Dividend FY03 FY03 FY02 • Special Dividend 20.0cps Interim Dividend 21.0cps 47.0cps 15.5cps Final Dividend 26.0cps 22.5cps 67.0cps 38.0cps • Entitlement date 19 September • Payment date 3 October • Fully imputed • Calculated at 90% x NSAT after adding back Adelaide licence amortisation • Dividends p
Slide 4: Revenues and Cost and Margin Management
SKYCITY Entertainment Group Revenues and Cost and Margin Management • $46m of additional revenue converted into $29m of additional net (before tax) profit, as per below: Revenues $46m Direct Expenses $12m Gross Margin from 54% to 55% Indirect Expenses (incl. $7m depreciation and amortisation) EBITDA
Slide 5: Key Features of the Group Financial Result
Key Features of the Group Financial Result • Revenues increased at Auckland, Adelaide, Queenstown, Canbet • New revenue stream, Hamilton • Cinema revenues up 5% at SKYCITY Leisure • Margin gains in Auckland, Adelaide, Queenstown • Strong first “year” (9.3 months) at SKYCITY Hamilton • 26% increase i
Slide 6: FY03: Operating Revenue
FY03: Operating Revenue Revenues are stated net of complimentaries. All figures are stated in NZ$ unless otherwise indicated NZ$M 9% 600 $556m 17% $510m $68m 500 49% 38% $49m $437m $14m A$103m A$95m 9% 400 15% A$83m 15% $374m 300 8% $347m 8% $318m 9% $294m 8% $257m 200 100 0 FY99 FY00 FY01 FY02 FY03
Slide 7: FY03 EBITDA
FY03 EBITDA* %s identify the ratio of EBITDA to Revenue NZ$M 14% $252m 250 15% $24m 63% $221m 35% 37% $14m A$26m 31% $192m 29% 25% 200 A$20m A$16m 21% $199m 9% 19% 53% 16% $183m $172m 53% 150 54% 20% $140m 48% 100 $121m 47% 50 0 FY99 FY00 FY01 FY02 FY03 SKYCITY Auckland SKYCITY Adelaide Other New Ze
Slide 8: FY03 Group Revenues and EBIT
FY03 Group Revenues and EBIT # ( )) * /012 ! * + ! ) " # ! ,% - # . ,( # % ) $ % ! & %'
Slide 9: SKYCITY Auckland highlights
• Strong revenue growth across all sectors • EBITDA margin up 0.6% points to 53.3% • EBIT margin up 1.3% points to 46.2% • Gaming expansion to relieve capacity constraints On schedule for opening in early December • Convention and Exhibition Centre well advanced Scheduled for April 2004 • 320 room n
Slide 10: FY03 Result: SKYCITY Auckland
FY03 Result: SKYCITY Auckland • Strong result, growth continues, costs managed, margins maintained • Revenues 8% (+$27.2m) - Gaming 8% (+$23.0m) - F&B 10% (+$2.7m) - Hotel & Conference 7% (+$1.3m) - Sky Tower 7% (+$0.5m) - Carparking 1% (+$0.1m) • Gross Margin % 0.5% points at 64% (+$19.8m) • EBITDA
Slide 11: SKYCITY Auckland: FY03 Gaming +8%
SKYCITY Auckland: FY03 Gaming +8% • Revenue Growth Tables 7% Gaming Machines 8% • Gross Margin 1.1% points at 69% • Gaming Expansion (level 3) on schedule for December opening. Will increase capacity by 15% from 98 tables and 1,417 machines to 110 tables and 1,647 machines. Disruption to customers b
Slide 12: SKYCITY Auckland: FY03 Gaming +8% (cont)
SKYCITY Auckland: FY03 Gaming +8% (cont) • Gaming/Entertainment experience/excitement 1,800 jackpots of more than $10,000, 13 over $100,000 124 cars won (one every 3 days on average) Sky High jackpot (minimum $250,000) won 4 times. Biggest jackpot was $1.25 million ‘Cash Express’ Grand Jackpot (>$20
Slide 13: SKYCITY Auckland: FY03 Food and Beverage +10%
SKYCITY Auckland: FY03 Food and Beverage +10% • Revenue 10% to $30m • Gross Margin from 20% to 16% • Orbit restaurant refurbished September 2002. Period closed restricted to only 2 weeks • Observatory restaurant: 66,000 covers (5% ahead of expectation) in first year of operation since refurbishment/
Slide 14: SKYCITY Auckland: FY03 Hotel and Conference +7%
SKYCITY Auckland: FY03 Hotel and Conference +7% • Revenue 7% at $20m • Hotel Occupancy from 88% to 84% SARS impact in 2H03 (1H03 89%, 2H03 80%) • Hotel Room Rate 8% from $119 to $129 • Conference facilities not available from April 2003. Conference business accounts for 10% of room nights and 13% of
Slide 15: SKYCITY Auckland: FY03 Sky Tower +7%
SKYCITY Auckland: FY03 Sky Tower +7% • Revenues 7% at $7.6m • New “Eye in the Sky” interactive viewing feature • Refurbished entry/exit/retail experience opened August 2003 • Vertigo and Sky Jump successfully integrated into the Sky Tower profile • Community participation through Sky Tower lighting
Slide 16: SKYCITY Auckland: FY03 Carparking, Theatre
SKYCITY Auckland: FY03 Carparking, Theatre Carparking • Revenues 0.5% at $9.3m SKYCITY Theatre • 123,000 theatre visits during FY03 20,000 for the 34th Auckland Annual International Film Festival (79 screenings over 17 days) 35,000 for Rocky Horror Show (Auckland Theatre Company) • Other productions
Slide 17: SKYCITY Adelaide highlights
• Revenue up 9% • Margins improved • Increased gaming and entertainment profile
Slide 18: SKYCITY Adelaide: FY03
SKYCITY Adelaide: FY03 • Revenues up 9%, costs managed to +4%, margin gain • Revenues 9% to A$103m - Gaming 10% (+A$8m to A$92m) - Other 8% (+A$1.1m at A$15m) • Gross Margin 2.6% points from 32% to 35% (+A$6m) • EBITDA 4.4% points at 25% (+A$6.2m from A$19.7m to A$25.9m) • EBIT 3.9% points at 15% (+
Slide 19: SKYCITY Adelaide: FY03 Gaming +10%
SKYCITY Adelaide: FY03 Gaming +10% • Growth, new product initiatives, range of promotions • Revenue growth Tables 10% Gaming Machines 9% • Gaming Gross Margin from 34.6% to 38.1% • 113 new gaming machines and 180 game conversions - 43 new IGT Spectrum machines - 70 new Aristocrat Xcite machines Tota
Slide 20: SKYCITY Adelaide: FY03 Gaming +10% (cont)
SKYCITY Adelaide: FY03 Gaming +10% (cont) • New table games equipment for productivity chipping machines shuffling machines deck checkers • Grange Room VIP play expanded (programme play visitation and local turnover) • TAB outlet introduced in the Westend Grandstand Bar • Ongoing floor reconfigurati
Slide 21: SKYCITY Adelaide: FY03 Food and Beverage
SKYCITY Adelaide: FY03 Food and Beverage • Revenues 5% at A$13.2m • Gross Margin from 15.2% to 11.9% • Focus on gross margin during 2H03 saw a recovery from 10.1% (1H03) to 13.9% (2H03) • More than 450,000 meal covers in FY03 (average 1,240 per day) • Pullman restaurant refurbishment commenced
Slide 22: Other New Zealand Operations
OTHER NEW ZEALAND OPERATIONS
Slide 23: SKYCITY Hamilton
SKYCITY Hamilton • Successful opening 20 September 2002 • On time and on budget • Property is functioning well. Highly favourable response from customers • SKYCITY Hamilton well-established as a gaming and entertainment venue and community participant in the Hamilton/Waikato region • Very strong six
Slide 24: SKYCITY Hamilton (cont)
SKYCITY Hamilton (cont) • Since opening in September 2002: - 52 cars won - gaming facilities expanded to 23 tables and 339 machines (June 2003) - VIP gaming room (4 tables, 6 machines) opened (June 2003) - trading hours extended (August 2003) - conference facilities/fit-out announced. Opening antici
Slide 25: SKYCITY Queenstown Casino
SKYCITY Queenstown Casino • Revenues up, costs managed, significant turnaround in financial performance during FY03 • Revenues 15% to $6.0m • Gross Margin from 24% to 35% • EBITDA Ratio from 6% to 19% • Gaming Revenues Tables 17% Machines 28% • 10 new (IGT Spectrum) gaming machines installed (Novemb
Slide 26: SKYCITY Queenstown Casino (cont)
SKYCITY Queenstown Casino (cont) • Mr Cashman game installed in July 2003 - strong response from customers • VIP/premium play an important component of the revenue mix and expected to develop further • Plus functions, restaurant, live entertainment • Rebranded as SKYCITY Queenstown Casino (previousl
Slide 27: SKYCITY Leisure
SKYCITY Leisure 50.2% of shares, 77% of MCNs (fully diluted 74%) • Cinema revenues up 5% at $31.4m and cinema gross margin up 10% at $8.6m (+$810k) • EBITDA up 17% at $12.2m. Includes lessor fit-out contribution for St Lukes cinemas of $1.3m. Indirect expenses reduced from $2.0m in FY02 to $1.1m in
Slide 28: SKYCITY Leisure (cont)
SKYCITY Leisure 50.2% of shares, 77% of MCNs (fully diluted 74%) (cont) • Management Services Agreement with SKYCITY approved by shareholders at 2002 Annual Meeting: operational, marketing and corporate services efficiencies • Cinemas rebranded as Village SKYCITY from April 2003 • New Village SKYCIT
Slide 29: Canbet Limited
CANBET LIMITED • ASX-listed • Profit for FY03 of A$499k
Slide 30: Canbet: FY03
Canbet: FY03 • Turnover 33% to A$547m (FY02: A$410m) • Profit (NSAT) at A$499k (FY02: A$304k) • Successful relocation to UK - operative April 2003 • SKYCITY’s shareholding in Canbet is 32.6%
Slide 31: ACTION Loyalty Programme
ACTION LOYALTY PROGRAMME Key Driver of Group Revenue, Visitation, and Spend
Slide 32: ACTION Loyalty Programme
ACTION Loyalty Programme • Action programme continues to expand and integrate within the business • Strong driver of visitation and spend • 120,000 active cardholders during FY03 • 2.2 million cardholder visits across the group during FY03 • ACTION play accounts for 56% of total group gaming revenue
Slide 33: Regulatory, Community and Host Responsibility
REGULATORY COMMUNITY AND HOST RESPONSIBILITY
Slide 34: Regulatory and Compliance
Regulatory and Compliance • The New Zealand Gambling Bill (no new casino licences) is expected to be enacted within the next 1-2 months • SKYCITY has responsible gaming and responsible host programmes in place at each of its casino operations in New Zealand and South Australia • Relationships with g
Slide 35: Community Involvement
Community Involvement The SKYCITY Entertainment Group participates in and contributes to the local communities in which it operates, in many ways, including: • Host responsibility programmes at all SKYCITY properties • SKYCITY Starlight Symphony in Auckland. An estimated 250,000 people attended the
Slide 36: Host Responsibility
Host Responsibility Host Responsibility is a key focus at all Group properties • Problem gambling initiatives • Self-bar programmes • Responsible service of alcohol • Strict enforcement of age limits and customer behaviour • Strict enforcement of non-smoking areas • Education and support services an
Slide 37: Capital Management, Share Buyback
CAPITAL MANAGEMENT SHARE BUYBACK
Slide 38: Share Buyback
Share Buyback • On-market share buyback of $40-$60 million commenced 3 March 2003 1.56 million shares purchased at a total cost of $13.0 million Average price paid (ex the interim dividend paid on 4 April): $8.17 per share • Second buyback period commences 27 August 2003 and will run to 30 November
Slide 39: Auckland Convention and Exhibition Centre
SKYCITY Auckland Convention and Exhibition Centre • Will be Auckland’s largest convention and exhibition space, conveniently located in the central city • 5,400m2 of exhibition, banquet, conference space over three levels • Main banquet room of 1,300m2 plus 700m2 of foyer space (banquet capacity of
Slide 40: SKYCITY as at August 2003
SKYCITY as at August 2003 • Consistent growth in earnings since opening • Future earnings growth from existing assets • Strong balance sheet • Regulatory relationships on a good footing • Gaming market still developing (not mature) in New Zealand Turnaround/opportunity in South Australia • New produ
Slide 41: FY03 Results, FY04 Objectives
FY03 RESULTS FY04 OBJECTIVES
Slide 42: Objectives identified at the FY02 result for FY03
At the FY02 result we identified the following objectives for FY03 • Auckland - Continue revenue growth in all sectors - Convention Centre and Gaming Expansion projects to be advanced towards scheduled openings in April 2004 and December 2003 respectively - Achieve cross-property customer synergies
Slide 43: FY04 Objectives
FY04 Objectives • Auckland - Continue revenue growth in all sectors - Open gaming expansion and convention centre developments on time and to budget - Progress hotel project towards scheduled opening in April 2005 - Grow VIP and commission play • Adelaide - Enhance gaming and entertainment attractio
Slide 44: SKYCITY Entertainment Group Limited Year ended 30 June 2003
SKYCITY Entertainment Group Limited Year ended 30 June 2003 • Revenues $556m (+9%) • NSAT $107.2m (+26%) • Dividend 67cps Including special dividend of 20cps (11/02) • Increasing Profits • Consistent Growth • Strong Balance Sheet • Enhanced Shareholder Value - financial performance - dividends - sha
Slide 45: PPI and CEI
PPI and CEI • Both PPI and CEI are dependent on financial results • PPI and CEI are being paid in Auckland, Adelaide and Hamilton. Special bonus being paid in Queenstown • PPI subject to - financial result - individual performance • PPI Base Bonus Multipliers for FY03 are: Group 1.254 (Base +25.4%)
Slide 46: SKYCITY Entertainment Group Limited Annual Result
SKYCITY ENTERTAINMENT GROUP LIMITED Annual Result Year Ended 30 June 2003
SKYCITY Entertainment Group — FY2003 Earnings Presentation on 6ix