Star Entertainment Group Limited · ASX:SGR
Star Entertainment — Echo Entertainment Group — FY2013 Earnings Presentation
35 slides from Star Entertainment's earnings presentation, Aug 22, 2013
Slide 1: Full Year Results Presentation (ASX cover announcement)
22 August 2013 FULL YEAR RESULTS PRESENTATION Attached is a presentation regarding Echo Entertainment Group Limited’s (Echo) full year results for the financial year ended 30 June 2013 to be presented by John Redmond, Managing Director and Chief Executive Officer, and Matt Bekier, Chief Financial Of
Slide 2: Echo Entertainment Group Full Year 2013 Results Presentation
ECHO ENTERTAINMENT GROUP LIMITED FULL YEAR 2013 RESULTS PRESENTATION 22 AUGUST 2013 1
Slide 3: Basis of Preparation and Non-IFRS Information
BASIS OF PREPARATION AND NON-IFRS INFORMATION □ Information in this presentation is provided as at the date of the presentation unless specified otherwise. It should be read in conjunction with Echo Entertainment Group Limited’s financial report for the full year ended 30 June 2013 and other disclos
Slide 4: Agenda
AGENDA 1. Overview John Redmond, CEO 2. Financials Matt Bekier, CFO 3. Q&As John Redmond, CEO 3
Slide 5: FY13 Results Overview
FY13 RESULTS OVERVIEW □ Statutory NPAT of $83.5m for the year up 97.9% on pcp. Prior period impacted by higher significant items and a lower win rate. Normalised NPAT of $126.9m □ Statutory EBITDA (including significant items) up 25.8% on pcp to $334.6m with growth from The Star offset by weakness a
Slide 6: Key Drivers of FY13 Result
KEY DRIVERS OF FY13 RESULT EBITDA ($m) 140 11 82 42 386 0 391 19 373 38 335 FY12 The Star QLD Revenue Gaming taxes, The Star Opex QLD Opex FY13 VIP Actual EBITDA Significant FY13 Statutory Normalised Revenue Growth levies, Growth Growth Normalised Normalisation (before sig Items EBITDA (after EBITDA
Slide 7: FY13 Key Achievements
FY13 KEY ACHIEVEMENTS □ Cost optimisation program largely completed - expected to deliver total cost savings in excess of $60m with an incremental $30m of cost reduction in FY14 (relative to FY13 base) □ Strong momentum built in VIP business – revenue momentum, improved collections and receivables p
Slide 8: Operational Benchmarks
OPERATIONAL BENCHMARKS The Star QLD Casinos FY12 FY13 FY12 FY13 Comment Slots □ The Star Slots NMR lower due to higher Revenue ($m) 239 241 283 276 NMR/machine/day 452 443 251 242 average machines in the period (1,494 in MTGM's FY13 vs 1,444 in FY12) Revenue ($m) 56 65 8 9 □ Queensland revenue per t
Slide 9: The Star – FY13 Performance Tracking
THE STAR – FY13 PERFORMANCE TRACKING □ Overall revenue performance at The Star solid (actual +18%) although not consistent: VIP, MTGM, MGF tables and Non-gaming solid and generally in-line to above management expectations PGR and Slots revenue performance soft and below management expectations □ 2H1
Slide 10: The Star – FY13 Revenue Performance
THE STAR – FY13 REVENUE PERFORMANCE 1,300 The Star - FY13 Revenue Performance ($m) 1,243 Gaming 40 1,250 1,200 136 3 1,203 □ VIP rebate significant driver of revenue 1,150 growth with strong, consistent momentum 1,100 1,050 1,024 18 2 24 □ Domestic revenue seeing growth at more 3 1,000 modest levels
Slide 11: Queensland – FY13 Performance Tracking
QUEENSLAND – FY13 PERFORMANCE TRACKING □ Overall revenue performance at Queensland properties soft (actual -3%) for FY13: Main Gaming Floor and PGR revenue generally in-line with management expectations VIP, Slots and Non-gaming revenue performance soft and below management expectations □ Operating
Slide 12: Queensland – FY13 Revenue Performance
QUEENSLAND – FY13 REVENUE PERFORMANCE 700 Queensland - FY13 Revenue Performance ($m) Gaming 690 680 □ Domestic table games is the best performing 666 20 670 660 7 4 1 1 15 658 segment with revenue +3% on the pcp 650 644 640 2 □ Slot performance weak for FY13 with 630 620 revenue -2.5% on pcp and sha
Slide 13: VIP Business Continues Positive Momentum in FY13
VIP BUSINESS CONTINUES POSITIVE MOMENTUM IN FY13 □ VIP front money up 35% to $2,095m, gross revenue up 42.8% to $387m (normalised gross revenue up 26.9% to $442m) □ Actual win rate in-line with historical average at 1.62% - turns of 11.4 times below historic average (13.0 times average over the last
Slide 14: FY14 Key Priorities
FY14 KEY PRIORITIES □ Drive top-line growth at The Star Leverage relaunched loyalty program to drive increased frequency and spend from card holder base and help drive incremental new visits Restructure and expand marketing offer to improve visitation and activation of the property Increase utilisat
Slide 15: Strategy to Drive Top-Line Momentum at The Star
STRATEGY TO DRIVE TOP-LINE MOMENTUM AT THE STAR □ Elevation and restructure of Marketing Re-configuration of marketing function and resources across the Group to support strategy Significant market and customer analysis undertaken during 2H13 which is informing re-invigoration of marketing strategy
Slide 16: Treasury Brisbane Relocation
TREASURY BRISBANE RELOCATION □ Discussion with Queensland Government over potential investment in Brisbane and Gold Coast continuing □ Echo is looking at a “global” solution for SE Queensland – given proximity of the markets a complementary investment in both Brisbane and Gold Coast provides the gre
Slide 17: Trading Update and FY14 Outlook
TRADING UPDATE AND FY14 OUTLOOK □ Actual revenue up 6.8% (+9.6% normalised) for seven weeks from 1 July 2013 to 18 August 2013 with strong growth in VIP revenue offset by softer performance in the domestic business □ Domestic revenue growth not directly comparable given pcp revenue boosted by high l
Slide 18: Agenda
AGENDA 1. Overview John Redmond, CEO 2. Financials Matt Bekier, CFO 3. Q&As John Redmond, CEO 17
Slide 19: Echo Group Financials
ECHO GROUP FINANCIALS $ millions FY13 FY12 Growth FY13 FY12 Growth Actual Actual % Norm b Norm b % Gross Revenuea 1,846.8 1,689.3 9.3% 1,901.8 1,773.3 7.2% Variable contribution 1,241.6 1,160.0 7.0% 1,260.1 1,213.6 3.8% Operating expenditure ( 868.7) ( 827.5) 5.0% ( 868.7) ( 827.5) 5.0% EBITDA (befo
Slide 20: Progress of Cost Reduction Program
PROGRESS OF COST REDUCTION PROGRAM □ The cost optimisation program implemented since April 2012 beginning to flow through with an estimated $38m reduction in FY13 group operating expenditure relative to 2H12 run rate □ Total cost saving initiatives on track to exceed guidance of $60m for FY14 – impa
Slide 21: The Star EBA and Significant Items
THE STAR EBA AND SIGNIFICANT ITEMS □ Total significant items of $38m in FY13 which relate to Restructuring costs - $22m The Star EBA - $11m Unsolicited Proposal to the NSW Government - $5m □ The Star EBA re-negotiation relates to an upfront payment made in FY13 in order to secure lower future wage i
Slide 22: Update of Normalisation Metrics
UPDATE OF NORMALISATION METRICS FY13 FY13 FY13 □ Echo normalises VIP earnings based on a rolling 5 year @ FY13 @ FY12 $m Actual Normalisation Normalisation average for both turns of front money and win rate Rate Rate Slots 518.2 518.2 518.2 □ For FY12 the average applied for normalisation was a win
Slide 23: Balance Sheet and Dividend
BALANCE SHEET AND DIVIDEND $m 30 Jun 13 30 Jun 12 □ Cash balance reduced due to repayment of debt in current year ASSETS Current assets Cash and cash equivalents 265.5 342.6 Trade and other receivables 84.8 322.3 □ Receivables balance reduced due to $187m relating to retail Inventories 7.2 7.4 Incom
Slide 24: Capital Expenditure
CAPITAL EXPENDITURE □ FY13 capex $155m, including $63m for Project Star □ Project Star now completed on time and on budget □ Capex levels coming down post completion of Project Star – discussions continuing with Queensland Government around Brisbane relocation □ Growth capex in FY14 focused on EGM o
Slide 25: Echo Funding
ECHO FUNDING □ FY13 Net debt of $707.3m (FY12 $793.3m) Net interest rate Swap impact in FY13 Expiry date □ FY13 Undrawn bank facilities of $265m (FY12 $80m) ($m) and an average debt maturity of 4.76 years $250m SFA Tranche 1 6.9 9-Jun-14 □ FY13 Net interest $79.4m (FY12 $93.9m) $235m SFA Tranche 2 7
Slide 26: Agenda
AGENDA 1. Overview John Redmond, CEO 2. Financials Matt Bekier, CFO 3. Q&As John Redmond, CEO 25
Slide 27: Appendix
APPENDIX The Star and Queensland results – Actual Page 27 The Star and Queensland results – Normalised Page 28 Normalised results reconciliation – FY12 vs FY13 Page 29 Receivables Aging Page 30 Gaming Tax – The Star Page 31 Cash Collection Ratio Page 32 Glossary Page 33 26
Slide 28: The Star and Queensland Results – Actual
THE STAR AND QUEENSLAND RESULTS – ACTUAL Actual The Star QLD Total fav/ (unfav) fav/ (unfav) fav/ (unfav) FY13 FY12 FY13 FY12 FY13 FY12 $m on pcp on pcp on pcp Slots 242.1 239.4 1.1% 276.2 283.2 ( 2.5%) 518.2 522.6 ( 0.8%) Main Gaming Floor 347.0 328.7 5.6% 145.1 140.9 3.0% 492.1 469.6 4.8% PGR* 127
Slide 29: The Star and Queensland Results – Normalised
THE STAR AND QUEENSLAND RESULTS – NORMALISED Normalised** The Star QLD Total fav/ (unfav) fav/ (unfav) fav/ (unfav) FY13 FY12 FY13 FY12 FY13 FY12 $m on pcp on pcp on pcp Slots 242.1 239.4 1.1% 276.2 283.2 ( 2.5%) 518.2 522.6 ( 0.8%) Main Gaming Floor 347.0 328.7 5.6% 145.1 140.9 3.0% 492.1 469.6 4.8
Slide 30: Normalised Results Reconciliation – FY12 & FY13
NORMALISED RESULTS RECONCILIATION – FY12 & FY13 Normalised** The Star QLD Total fav/ (unfav) fav/ (unfav) fav/ (unfav) FY13 FY12 FY13 FY12 FY13 FY12 $m on pcp on pcp on pcp Slots 242.1 239.4 1.1% 276.2 283.2 ( 2.5%) 518.2 522.6 ( 0.8%) Main Gaming Floor 347.0 328.7 5.6% 145.1 140.9 3.0% 492.1 469.6
Slide 31: Receivables Aging
RECEIVABLES AGING Overdue Credit Summary ($m) FY13 FY12 Ageing Gross Provision Net Gross Provision Net 3+ Years 30 25 5 17 10 7 1-3 Years 28 12 16 22 14 8 Less than 1 Year 18 4 14 52 6 45 TOTAL 76 41 35 91 30 60 % provided* 54% 34% * Excludes NSW gaming tax credit 30
Slide 32: Gaming Tax – The Star
GAMING TAX – THE STAR □ The Star gaming tax increased 11.7% to FY13 - Tax Bands $234.3m as a result of gaming revenue growth Lower Band Upper Band Tax Rate (including VIP) and a base tax increase on 0 673,700,000 27.50% domestic revenues of 1% to 27.5% for FY13 673,700,000 679,400,000 28.50% 679,400
Slide 33: Cash Collection Ratio
CASH COLLECTION RATIO Category Jun-13 Jun-12 Jun-11 $m Cash flows from operating activities before interest and income tax Net cash receipts in the course of operations 1,757.4 1,643.6 1,489.0 Payments to suppliers, service providers and employees (982.2) (1,046.9) (799.6) Payments of government lev
Slide 34: Glossary
GLOSSARY CAGR Compound Annual Growth Rate Capital expenditure Unless otherwise stated, capital expenditure is presented on an accruals basis and excludes intangible assets, (CAPEX) investments in associates and equity acquisitions. It is shown gross of any fixed asset disposals proceeds Customer fro
Slide 35: Disclaimer
DISCLAIMER □ This presentation is prepared for information purposes only and does not take into consideration any individual investor’s circumstances. Echo Entertainment Group recommends investors make their own assessments and seek independent professional advice before making investment decisions.
Echo Entertainment Group — FY2013 Earnings Presentation on 6ix