Star Entertainment Group Limited · ASX:SGR
Star Entertainment — The Star Entertainment Group — FY2020 Earnings Presentation
41 slides from Star Entertainment's earnings presentation, Aug 20, 2020
Slide 1: ASX Announcement: Full Year Results Presentation
ASX Announcement For personal use only 20 August 2020 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 2020, to be presented by Matt Bekier (Managing Director
Slide 2: FY2020 Results Presentation
For personal use only THE STAR ENTERTAINMENT GROUP FY2020 RESULTS PRESENTATION THURSDAY 20 AUGUST 2020
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 3. PRIORITIES 4. Q&A 3
Slide 5: Highlights
HIGHLIGHTS STRONG PERFORMANCE ♦ Strong performance July 2019 to February 2020 vs pcp: • Normalised Group revenue up 7.5%, EBITDA up 12.1%, NPAT up 15.6% For personal use only PRE-COVID19 • Domestic EBITDA up 8.3% with margin expansion ♦ Actions focused on controllable levers SUBSTANTIAL COVID19 ACTI
Slide 6: Highlights: Strong Domestic Result Pre-COVID19
HIGHLIGHTS STRONG DOMESTIC RESULT ♦ Trends from 1H FY2020 continued into Jan-Feb 2020 (including early COVID19 effects) For personal use only PRE-COVID19 ♦ Domestic EBITDA up 8.3% on 2.4% revenue growth (Jul 19-Feb 20 vs pcp) ♦ Sydney and Queensland EBITDA margin expansion (Jul 19-Feb 20 vs pcp) Dom
Slide 7: Highlights: Staged Reopening and Early FY2021 Trading
HIGHLIGHTS ♦ All properties closed from 23 March 2020 STAGED REOPENING FY2020 For personal use only ♦ Sydney highly restricted reopening 1 June 2020. Initially max 500 patrons, increased to 900 ♦ Sydney restrictions eased 1 July 2020, tightened 24 July 2020 (max 300 FY2021 patrons per area) ♦ Queens
Slide 8: COVID19 Response
COVID19 RESPONSE ♦ 2 weeks pandemic leave ($18m) OUR PEOPLE For personal use only ♦ “Star Offers Support” financial hardship payments to over 600 staff ($3m) ♦ Enhanced mental and physical well-being communications and programs ♦ COVID-Safe practices incorporated into existing workplace health and s
Slide 9: Sydney
SYDNEY SOLID DOMESTIC GROWTH ♦ Domestic EBITDA up 5.3% on 0.7% revenue growth (Jul 19-Feb 20 on pcp) For personal use only PRE-COVID19 ♦ Domestic gaming revenue flat on strong pcp (up 7.5% in July 18-Feb 19 on pcp) ♦ Non-gaming revenue up 4.6%. Hotel cash revenue up 5.4% (higher occupancy and rate).
Slide 10: Queensland
QUEENSLAND STRONG DOMESTIC GROWTH ♦ Quality broad-based growth – total domestic revenue up 5.2% (Jul 19-Feb 20 vs pcp) • Slots up 4.2% (PGR up 14.1%) For personal use only PRE-COVID19 • Tables up 6.2% (PGR up 11.9%) • Non-Gaming up 5.4% ♦ Domestic EBITDA up 13.9% (Jul 19-Feb 20 vs pcp) • Gold Coast
Slide 11: Gold Coast
GOLD COAST STRONG EARNINGS GROWTH Normalised EBITDA - By Half Domestic EBITDA - Includes For personal use only FROM INVESTMENTS 100 shutdown Jan/Feb vs pcp 23 Mar- 29% ♦ Jan/Feb 20 domestic EBITDA 30Jun 20 growth up 29% vs pcp (normalised 32 75 EBITDA up 116%) 52 38 ♦ Earnings lift from The Darling
Slide 12: Domestic Performance
DOMESTIC PERFORMANCE GROWTH TRENDS ♦ Pre-COVID19 performance (Jul 19-Feb 20) continued longer term trends ♦ Growth trends reflect investments (gaming and non-gaming), service levels, loyalty For personal use only CONTINUED GROUP SYDNEY QUEENSLAND Domestic Revenue Domestic Revenue Domestic Revenue 51
Slide 13: International VIP Rebate
INTERNATIONAL VIP REBATE TURNOVER UP PRE-COVID19, ♦ Credible performance in challenging markets, IPM diversification (Jul 19-Feb 20 on pcp) • IPM front money up 52.8%, VIP ex IPM down 9.2% For personal use only STRONG IPM GROWTH • IPM turnover up 20.2%, VIP ex IPM up 25.5% (impacted by small number
Slide 14: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW 2. FINANCIALS HARRY THEODORE – CFO 3. PRIORITIES 4. Q&A 13
Slide 15: Financials Overview
OVERVIEW ♦ Operating costs flat on pcp (Jul19-Feb 20 vs pcp) FLAT OPERATING COSTS ♦ Above system domestic volume growth, higher wages and higher VIP volumes offset by For personal use only PRE-COVID19 cost out program ($45m annualised run rate pre-COVID19) ♦ JobKeeper net wage subsidy of $9.6m in 4Q
Slide 16: Overview: Restructure and Projects Funding
OVERVIEW ♦ July 2020 VIP, property development and IT restructure delivers ~$10m annualised JULY 20 RESTRUCTURE, operating cost benefit For personal use only NON-VIP COSTS REVIEW ♦ VIP reflects updated market performance and outlook, mix shift to IPM • Reduce aircraft from 2 to 1, sell VIP motor yac
Slide 17: EBITDA Bridge
EBITDA BRIDGE $m International VIP Domestic EBITDA Rebate EBITDA up Jul18- 43.6% (Jul19-Feb 20 Feb19 336 vs pcp) For personal use only Jul19- 364 Feb20 Domestic EBITDA up 8.3% (Jul19-Feb 20 vs pcp) FY2019 International FY2019 Sydney Queensland International Group FY2020 International FY2020 Statutor
Slide 18: Capital Expenditure
CAPITAL EXPENDITURE ♦ $239m FY2020 capex ($180m growth, $59m maintenance), excluding JV contributions GROUP CAPEX REDUCING • Down $81m on pcp For personal use only • Growth capex largely new Sydney Sovereign ♦ FY2021 expected capex of ~$100m (~$175m guidance at 1H FY2020 results), $125- 150m for FY2
Slide 19: Profit and Loss – July 2019 to February 2020
PROFIT AND LOSS – JULY 2019 TO FEBRUARY 2020 $M JUL19-FEB20 fav/(unfav) JUL19-FEB20 2 fav/(unfav) ♦ Domestic 2 gaming2 up 1.9% vs pcp STATUTORY NORMALISED 2 2 (Jul18-Feb19 up 6.2% on pcp) For personal use only Domestic Gaming revenue 1,142.9 1.9% 1,142.9 1.9% International VIP Rebate 240.0 (40.5%) 4
Slide 20: Profit and Loss – FY2020
PROFIT AND LOSS – FY2020 $M FY2020 fav/(unfav) FY2020 2 fav/(unfav) ♦ March-June 2 20202 period impacted by STATUTORY NORMALISED 2 2 property closures, travel restrictions. For personal use only Domestic Gaming revenue 1,243.9 (24.1%) 1,243.9 (24.1%) Sydney restricted opening from 1 June Internation
Slide 21: Balance Sheet
BALANCE SHEET $M JUN 2020 JUN 2019 ♦ Capital programs progressed ASSETS • Property, plant and equipment increased, mainly For personal use only Current Assets Cash and cash equivalents 66.1 114.3 Trade and other receivables 99.5 235.5 new Sydney Sovereign Inventories 16.4 17.5 • Investment in associ
Slide 22: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW 2. FINANCIALS 3. PRIORITIES MATT BEKIER – CEO 4. Q&A 21
Slide 23: Recap: Respond to COVID19, Strategy Unchanged
RECAP: RESPOND TO COVID19, STRATEGY UNCHANGED OUR STRATEGY OUR DELIVERY For personal use only 1 Solid domestic earnings growth pre-COVID19 ♦ Privileged assets and ♦ Above system growth partnerships ♦ Signature gaming ♦ Gold Coast investments deliver growth ♦ Premium hotel rooms, ♦ Restructure cost b
Slide 24: Priorities
PRIORITIES ♦ COVID19 earnings recovery – safely and effectively lift performance. 1 OPERATIONS Rapid refocus on local markets, domestic tourism For personal use only ♦ Sydney competition – new Sovereign, loyalty upgrade, marketing and sales plans, key staff retention ♦ Operating expenses – maintain
Slide 25: Priorities – Address Crown Sydney
PRIORITIES – ADDRESS CROWN SYDNEY BROAD AND DEEP OFFER, NOT REPLICABLE COMPETITION READY For personal use only 1 Table and Regulatory and customer advantage EGM ♦ Table/ Slot overlap – individuals, small groups Gaming ♦ Casino EGM exclusivity 2 PGRs Unmatched size and range ♦ New Chairman’s and Sove
Slide 26: Gold Coast: Construction Uninterrupted by COVID19
GOLD COAST CONSTRUCTION UNINTERRUPTED BY COVID19 For personal use only ♦ Dorsett Hotel and Residences (first JV tower) uninterrupted by COVID19 • On time and budget for FY2022 completion • Equity contributions completed. $260m project level debt facility in place ♦ Second JV tower presales progressi
Slide 27: Queen's Wharf Brisbane
QUEEN’S WHARF BRISBANE WORKS ON TIME AND BUDGET, FUNDING COMPLETED For personal use only ♦ Shell, core and façade underway – construction progressed above ground ♦ ~75% project costs under lump sum terms following ~15% hotel fit out contracted 2H FY2020. Additional ~13% for next stage of hotel fit o
Slide 28: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW 2. FINANCIALS 3. PRIORITIES 4. Q&A 27
Slide 29: Appendix
THE STAR ENTERTAINMENT GROUP APPENDIX STATUTORY RESULTS 29 For personal use only NORMALISED RESULTS 31 OPERATIONAL METRICS 33 INTERNATIONAL VIP REBATE NORMALISATION 34 INTERNATIONAL VIP REBATE RECEIVABLES 35 CASH CONVERSION AND FUNDING 36 KEY FINANCIAL METRICS 37 KEY SUSTAINABILITY METRICS 38 GLOSSA
Slide 30: Statutory Results – July 2019 to February 2020
APPENDIX STATUTORY RESULTS – JULY 2019 TO FEBRUARY 2020 SYDNEY QUEENSLAND TOTAL For personal use only $M Feb YTD Feb YTD Feb YTD Feb YTD Feb YTD Feb YTD fav/(unfav) fav/(unfav) fav/(unfav) fav/(unfav) fav/(unfav) fav/(unfav) FY2020 FY2019 FY2020 FY2019 FY2020 FY2019 Slots 235.2 238.1 ( 2.9) (1.2%) 2
Slide 31: Statutory Results – FY2020
APPENDIX STATUTORY RESULTS – FY2020 SYDNEY QUEENSLAND TOTAL For personal use only $M FY2020 FY2019 fav/(unfav) fav/(unfav) FY2020 FY2019 fav/(unfav) fav/(unfav) FY2020 FY2019 fav/(unfav) fav/(unfav) Slots 258.7 347.1 ( 88.4) (25.5%) 250.6 335.4 ( 84.8) (25.3%) 509.3 682.5 ( 173.2) (25.4%) Domestic T
Slide 32: Normalised Results – July 2019 to February 2020
APPENDIX NORMALISED RESULTS – JULY 2019 TO FEBRUARY 2020 SYDNEY QUEENSLAND TOTAL For personal use only $M Feb YTD Feb YTD Feb YTD Feb YTD Feb YTD Feb YTD fav/(unfav) fav/(unfav) fav/(unfav) fav/(unfav) fav/(unfav) fav/(unfav) FY2020 FY2019 FY2020 FY2019 FY2020 FY2019 Slots 235.2 238.1 ( 2.9) (1.2%)
Slide 33: Normalised Results – FY2020
APPENDIX NORMALISED RESULTS – FY2020 SYDNEY QUEENSLAND TOTAL $M For personal use only FY2020 FY2019 fav/(unfav) fav/(unfav) FY2020 FY2019 fav/(unfav) fav/(unfav) FY2020 FY2019 fav/(unfav) fav/(unfav) Slots 258.7 347.1 ( 88.4) (25.5%) 250.6 335.4 ( 84.8) (25.3%) 509.3 682.5 ( 173.2) (25.4%) Domestic
Slide 34: Operational Metrics
APPENDIX OPERATIONAL METRICS SYDNEY QUEENSLAND SYDNEY QUEENSLAND OPERATIONAL METRICS Feb YTD Feb YTD Feb YTD Feb YTD FY2020 FY2019 FY2020 FY2019 For personal use only FY2020 FY2019 FY2020 FY2019 Slots Revenue ($m) 235 238 235 226 259 347 251 335 NMR/machine/day 644 657 311 301 477 638 225 296 MTGMs
Slide 35: International VIP Rebate Normalisation
APPENDIX INTERNATIONAL VIP REBATE NORMALISATION ACTUAL WIN RATE VS THEORETICAL RECONCILIATION WITH ACTUAL For personal use only ♦ Unusually low FY2020 0.76% win rate (1.38% in pcp). JUL19-FEB20 VS PCP COMPARISON ($M) JUL19- REVENUE REVENUE SHARE JUL19-FEB20 COMMISSION NORM FEB20 NORMALISATION Includ
Slide 36: International VIP Rebate Receivables
APPENDIX INTERNATIONAL VIP REBATE RECEIVABLES * INTERNATIONAL VIP REBATE ♦ 30 June 2020 past due not For personal use only 30 DAYS - BUSINESS RECEIVABLES 0 - 30 DAYS 1 - 3 YEARS TOTAL impaired receivables down on 30 1 YEAR (BEFORE PROVISIONS) June 2019, reflecting additional June 2020 ($m) $84m pre-
Slide 37: Cash Conversion and Funding
APPENDIX CASH CONVERSION AND FUNDING CATEGORY Jun-20 Jun-19 CASH CONVERSION $M For personal use only Cash flows from operating activities before interest and income tax Net cash receipts from customers (inclusive of GST) 1,640.1 2,162.7 Payments to suppliers and employees (inclusive of GST) (1,103.8
Slide 38: Key Financial Metrics
APPENDIX KEY FINANCIAL METRICS REVENUE GEARING For personal use only Normalised Gross Revenue ($m) Domestic Revenue ($m) Interest Cover (EBIT/ Net Gearing (Net Debt/ Statutory Interest Expense ) (times) EBITDA) (times) 3,000 2,500 12.0 6.0 2,500 2,000 10.0 5.0 2,000 1,335 1,224 1,500 1,164 921 926 8
Slide 39: Key Sustainability Metrics
APPENDIX KEY SUSTAINABILITY METRICS For personal use only GLOBAL LEADER Casino and Gaming Category, 2016, 2017, 2018, 2019 >50% portfolio with environmental Over 100 initiatives completed to ENVIRONMENTAL ratings, 90% by 2022 reduce environmental impact 20,000L water saved daily at Launched “Beyond
Slide 40: 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 Domesti
Slide 41: The Star Entertainment Group
For personal use only THE STAR ENTERTAINMENT GROUP
The Star Entertainment Group — FY2020 Earnings Presentation on 6ix