Star Entertainment Group Limited · ASX:SGR
Star Entertainment — The Star Entertainment Group — FY2019 Earnings Presentation
42 slides from Star Entertainment's earnings presentation, Aug 16, 2019
Slide 1: ASX Announcement: Full Year Results Presentation
ASX Announcement For personal use only 16 August 2019 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 2019, to be presented by Matt Bekier, Managing Director
Slide 2: Full Year 2019 Results Presentation
For personal use only THE STAR ENTERTAINMENT GROUP FULL YEAR 2019 RESULTS PRESENTATION FRIDAY 16 AUGUST 2019
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 2. FINANCIALS 3. OUTLOOK AND PRIORITIES 4. Q&A 3
Slide 5: Highlights
HIGHLIGHTS ♦ Results in line with guidance SOLID DOMESTIC 1 For personal use only OFFSET BY VIP ♦ Domestic EBITDA up 5.4% with margin expansion, 88% of group EBITDA ♦ EGM share gains in Qld and consolidation in Sydney (group PGR up 9.1%). Tables up 4.0% (PGR up 6.9%) ♦ VIP normalised EBITDA down 35.
Slide 6: Highlights
HIGHLIGHTS DOMESTIC GROWTH, STATUTORY VS PCP NORMALISED VS PCP For personal use only VIP DECLINED Net Revenue $2,158m 3.6% $2,161m (0.9%) EBITDA $553m 14.1% $557m (2.0%) NPAT (before Significant Items) $216m 17.1% $224m (8.4%) Significant Items ($18m) 49.9% Statutory NPAT $198m 33.7% ♦ Solid growth
Slide 7: Sydney
SYDNEY CONTINUED DOMESTIC STATUTORY VS PCP NORMALISED VS PCP For personal use only GROWTH, VIP DECLINED Net Revenue $1,308m (0.5%) $1,375m (4.0%) EBITDA $308m 7.6% $367m (5.7%) ♦ Continued domestic growth – revenue up 3.1%, EBITDA up 5.0% ♦ VIP normalised revenue declined 39.7% ♦ Overall visitation
Slide 8: The Star Sydney 2H FY2019 Milestones
THE STAR SYDNEY 2H FY2019 MILESTONES For personal use only JADE RABBIT – NEW MGF F&B OPENED APRIL 2019 THE STAR LOBBY OPENED MAY 2019 CHUUKA GRAND FOYER OPENED JUNE 2019 OPENED MAY 2019 7
Slide 9: Queensland
QUEENSLAND STATUTORY VS PCP NORMALISED VS PCP CONTINUED GROWTH For personal use only Net Revenue $850m 10.5% $786m 5.2% EBITDA $245m 23.5% $189m 5.9% ♦ Continued growth – normalised and statutory net revenue and EBITDA ♦ All segments contributed to growth. Gold Coast ramp up continuing ♦ Visitation
Slide 10: EGM Market Share
EGM MARKET SHARE ♦ Sydney market share consolidated SYDNEY SYDNEY • PGR growth continued – high value For personal use only 10.0% patrons attracted to improved offer (exclusive and high limit product, 9.5% 9.1% 9.3% 9.3% customer service) 9.0% • MGF impacted by disruption 8.5% 8.0% FY17 FY18 FY19 ♦
Slide 11: Domestic Performance
DOMESTIC PERFORMANCE ♦ Long-term domestic revenue and earnings growth LONG-TERM GROWTH ♦ Reflects investment in gaming and non-gaming offerings, service levels, loyalty For personal use only TRENDS GROUP SYDNEY QUEENSLAND Domestic Revenue Domestic Revenue Domestic Revenue 2,000 1,917 1,300 750 1,859
Slide 12: International VIP Rebate
INTERNATIONAL VIP REBATE SOLID SALES IN SLOWER ♦ VIP unique customers up 10% on pcp For personal use only MARKET ♦ Continued growth from International Premium Mass • Turnover up 19% on pcp (65% CAGR since FY2017) • Comprised 5% of FY2019 VIP turnover ♦ VIP $4.4bn front money down 7.1% on pcp (FY2018
Slide 13: International VIP Rebate: Low Turn Impacts Normalised Results
INTERNATIONAL VIP REBATE LOW TURN IMPACTS ♦ Normalised gross revenue of WIN RATE AND TURNS (FY12 TO FY19) Chart Title $573m down 30.7% vs pcp For personal use only NORMALISED RESULTS 1.70% ♦ FY2019 turn of 9.6 times with 1.38% win rate well outside 1.60% FY17 historical relationship 1.50% FY13 ♦ Low
Slide 14: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW 2. FINANCIALS 3. OUTLOOK AND PRIORITIES 4. Q&A 13
Slide 15: Overview
OVERVIEW ♦ Operating costs flat on pcp FLAT FY2019 COSTS, For personal use only ~$40M COST OUTS TO DATE ♦ Domestic volumes growth, higher wages and higher interim service levels (new Gold Coast assets, Sydney Sovereign transition) offset by lower VIP volumes and cost management ♦ Cost management ini
Slide 16: EBITDA Bridge
EBITDA BRIDGE Share of EBITDA $m International VIP Domestic EBITDA up FY19 88% 12% For personal use only Rebate EBITDA down 5.4% vs pcp 35.6% vs pcp FY18 82% 18% Domestic International FY2018 International FY2018 Sydney Queensland Sydney Queensland FY2019 International FY2019 Statutory VIP Rebate No
Slide 17: Profit and Loss
PROFIT AND LOSS FY2019 FY2019 ♦ AASB 215 from 1 July 2 2018, restated $M fav/(unfav) 2 fav/(unfav) 2 2 comparables For personal use only STATUTORY NORMALISED Domestic Gaming revenue 1,638.8 3.6% 1,638.8 3.6% ♦ Actual win rate drives difference between International VIP Rebate 586.0 (17.6%) 572.9 (30
Slide 18: Balance Sheet
BALANCE SHEET $M JUN 2019 JUN 2018 ♦ Capital programs progressed ASSETS • Increased assets (property, plant and For personal use only Current Assets Cash and cash equivalents 114.3 110.3 Trade and other receivables 235.5 221.5 equipment), mainly by completed assets at Inventories 17.5 15.5 Gold Coas
Slide 19: Cost Management: Restructure Drives Benefits
COST MANAGEMENT RESTRUCTURE DRIVES BENEFITS ENHANCED OPERATING CENTRES OF EXCELLENCE COST MANAGEMENT DRIVERS For personal use only MODEL ♦ Capability – improved and consolidated ♦ Consolidation – reduce duplication (data capture, analytics, execution) ♦ Economies of scale – leverage ♦ Processes – up
Slide 20: Cost Management: Risk Monitoring and Mitigation
COST MANAGEMENT RISK MONITORING AND MITIGATION Risk Area Mitigation Strategies RISK MITIGATION IN PLACE For personal use only Customer ♦ Customer service levels maintained experience ♦ Customer engagement to manage small number of customer facing managers affected ♦ Customer satisfaction monitoring
Slide 21: Capital Expenditure
CAPITAL EXPENDITURE ♦ Significant growth and maintenance capital works completed by end FY2020 FY2020-21 CAPEX OPTIMISED • Sydney and Gold Coast repositioned and upgraded, including all gaming areas For personal use only • Upgraded gaming areas provide capacity to leverage JV project demand drivers
Slide 22: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW 2. FINANCIALS 3. OUTLOOK AND PRIORITIES 4. Q&A 21
Slide 23: Recap: Delivering on Our Strategy
RECAP: DELIVERING ON OUR STRATEGY OUR STRATEGY OUR DELIVERY For personal use only 1 Continued above system growth in domestic gaming ♦ Signature gaming ♦ Premium hotel rooms ♦ Slots market share gains, consolidation at all properties ♦ F&B ♦ Solid tables growth ♦ Retail (on site and ♦ Continued PGR
Slide 24: Sydney: Sovereign Resort Upgrade Progressing to Plan
SYDNEY SOVEREIGN RESORT UPGRADE PROGRESSING TO For personal use only PLAN ♦ Upgraded and expanded Sovereign Resort progressing in line with management plans ♦ Completion expected 4Q FY2020. Limited impact on disruption to property expected prior to opening ♦ Strategies to address new entrant risks p
Slide 25: Gold Coast: JV Towers Progressing
GOLD COAST JV TOWERS PROGRESSING For personal use only ♦ First JV tower construction commenced • >700 keys, doubles capacity • $370m lump sum contract, below $400m expectations • FY2022 expected completion ♦ Second JV tower presales commenced. Execution subject to presales and all other approvals DO
Slide 26: Queen's Wharf Brisbane: Works Progressing to Plan
QUEEN’S WHARF BRISBANE WORKS PROGRESSING TO PLAN For personal use only ♦ Excavation work completed July 2019, in line with project timetable and budget ♦ ~60% of project costs under lump sum contract terms – shell, core and façade stage contracted July 2019 ♦ Further ~28% of project costs under cont
Slide 27: Queen's Wharf Brisbane
QUEEN’S WHARF BRISBANE For personal use only CONCEPT IMAGE CONCEPT IMAGE FRONT FACADE PORTE COCHERE CONCEPT IMAGE CONCEPT IMAGE GEORGE STREET VIEW HARRIS LANE 26
Slide 28: Priorities: Improve and De-risk Returns Across the Group
PRIORITIES For personal use only IMPROVE AND DE-RISK RETURNS ACROSS THE GROUP ♦ Leverage improved capabilities Execute on Centre of Excellence operating 1 ♦ Extract and retain efficiencies model ♦ Build on solid PGR performance, improve MGF performance ♦ Sydney ♦ Gold Coast masterplan 2 Deliver on i
Slide 29: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW 2. FINANCIALS 3. OUTLOOK AND PRIORITIES 4. Q&A 28
Slide 30: Appendix
THE STAR ENTERTAINMENT GROUP APPENDIX STATUTORY RESULTS 30 For personal use only NORMALISED RESULTS 31 OPERATIONAL METRICS 32 INTERNATIONAL VIP REBATE NORMALISATION 33 INTERNATIONAL VIP REBATE RECEIVABLES 35 CASH CONVERSION 36 FUNDING 37 JOINT VENTURE PROJECTS 38 KEY LONG-TERM METRICS 39 GLOSSARY 40
Slide 31: Appendix: Statutory Results
APPENDIX STATUTORY RESULTS SYDNEY QUEENSLAND TOTAL For personal use only $M FY2019 FY2018 fav/(unfav) fav/(unfav) FY2019 FY2018 fav/(unfav) fav/(unfav) FY2019 FY2018 fav/(unfav) fav/(unfav) Slots 347.1 335.6 11.5 3.4% 335.4 326.0 9.4 2.9% 682.5 661.6 20.9 3.2% Domestic Tables 694.8 668.2 26.6 4.0% 2
Slide 32: Appendix: Normalised Results
APPENDIX NORMALISED RESULTS SYDNEY QUEENSLAND TOTAL For personal use only $M FY2019 FY2018 fav/(unfav) fav/(unfav) FY2019 FY2018 fav/(unfav) fav/(unfav) FY2019 FY2018 fav/(unfav) fav/(unfav) Slots 347.1 335.6 11.5 3.4% 335.4 326.0 9.4 2.9% 682.5 661.6 20.9 3.2% Domestic Tables 694.8 668.2 26.6 4.0%
Slide 33: Appendix: Operational Metrics
APPENDIX OPERATIONAL METRICS SYDNEY QUEENSLAND OPERATIONAL METRICS FY2019 FY2018 FY2019 FY2018 For personal use only Slots Revenue ($m) 347 336 335 326 NMR/machine/day 638 616 296 282 MTGMs Revenue ($m) 102 102 41 38 NMR/machine/day 476 448 284 278 Domestic Tables (excl. MTGMs) Revenue ($m) 592 566
Slide 34: Appendix: International VIP Rebate Normalisation
APPENDIX INTERNATIONAL VIP REBATE NORMALISATION HISTORICAL ACTUAL WIN RATE (%) For personal use only ACTUAL WIN RATE VS THEORETICAL 2.00% 1.75% 1.62% 1.62% ♦ Normalised win rate of 1.35% is in line 1.55% with the Group’s win rate experience 1.50% 1.33% 1.50% 1.27% and consistent with the Australia a
Slide 35: Appendix: Impact of Change in Normalisation of Commissions
APPENDIX INTERNATIONAL VIP REBATE NORMALISATION IMPACT OF CHANGE IN NORMALISATION OF COMMISSIONS - ANNOUNCED 1H FY2019 For personal use only FY2017 FY2018 FY2019 GROUP EBITDA – VIP Commissions not normalised 515.1 588.1 541.0 Normalising VIP Commissions (14.8) (20.1) 15.5 EBITDA – VIP Commissions no
Slide 36: Appendix: International VIP Rebate Receivables
APPENDIX INTERNATIONAL VIP REBATE RECEIVABLES For personal use only INTERNATIONAL VIP REBATE 30 DAYS - BUSINESS RECEIVABLES (BEFORE 0 - 30 DAYS 1 - 3 YEARS TOTAL 1 YEAR PROVISIONS) June 2019 ($m) Not yet due 145.4 - - 145.4 Past due not impaired - 44.5 10.2 54.7 Considered impaired 2.8 1.3 7.2 11.3
Slide 37: Appendix: Cash Conversion
APPENDIX CASH CONVERSION CATEGORY For personal use only Jun-19 Jun-18 $M Cash flows from operating activities before interest and income tax Net cash receipts from customers (inclusive of GST) 2,162.7 2,084.4 Payments to suppliers and employees (inclusive of GST) (1,158.8) (1,068.7) Payment of gover
Slide 38: Appendix: Funding
APPENDIX FUNDING DEBT MATURITY PROFILE AT 30 JUNE 2019 DEBT MATURITY PROFILE AS AT 3 JULY 2019 For personal use only Undrawn bank debt Drawn Bank Debt USPP Undrawn bank debt Drawn Bank Debt USPP 1,000 1,000 900 900 800 800 470 700 700 600 600 500 500 400 400 300 300 16 510 58 200 369 200 369 134 100
Slide 39: Appendix: Joint Venture Projects
APPENDIX JOINT VENTURE PROJECTS Gold Coast – Dorsett Sydney – The Ritz-Carlton PROJECTS Queen’s Wharf Brisbane For personal use only Hotel and Residences Hotel and Residences CONCEPT IMAGE CONCEPT IMAGE CONCEPT IMAGE ♦ New integrated resort ♦ First joint venture mixed ♦ The Ritz-Carlton Tower use to
Slide 40: Key Long-Term Metrics
KEY LONG-TERM METRICS REVENUE GEARING For personal use only Interest Cover (EBIT/ Net Gearing (Net Debt/ Statutory Normalised Gross Revenue ($m) Domestic Revenue ($m) Interest Expense) (times) EBITDA) (times) 3,000 2,500 12 3.0 2,500 10 2.5 2,000 2,000 8 2.0 1,500 1,500 6 1.5 1,000 1,000 4 1.0 500 5
Slide 41: 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 Domesti
Slide 42: The Star Entertainment Group
For personal use only THE STAR ENTERTAINMENT GROUP
The Star Entertainment Group — FY2019 Earnings Presentation on 6ix