Star Entertainment Group Limited · ASX:SGR
Star Entertainment — The Star Entertainment Group — H1 FY2019 Earnings Presentation
41 slides from Star Entertainment's earnings presentation, Feb 21, 2019
Slide 1: ASX Announcement: Half Year Results Presentation
ASX Announcement For personal use only 21 February 2019 HALF YEAR RESULTS PRESENTATION Attached is the presentation regarding the financial results of The Star Entertainment Group Limited (The Star Entertainment Group) for the half year ended 31 December 2018, to be presented by Matt Bekier, Managin
Slide 2: Half Year 2019 Results Presentation
For personal use only THE STAR ENTERTAINMENT GROUP HALF YEAR 2019 RESULTS PRESENTATION THURSDAY 21 FEBRUARY 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 MATT BEKIER – CEO 2. FINANCIALS CHAD BARTON – CFO 3. OUTLOOK AND PRIORITIES MATT BEKIER – CEO 4. Q&A 3
Slide 5: Highlights
HIGHLIGHTS STATUTORY NORMALISED RECORD EARNINGS For personal use only vs pcp vs pcp Gross Revenue $1,334m 5.0% $1,277m (6.1%) Net Revenue $1,150m 14.9% $1,110m 0.9% EBITDA $331m 65.9% $297m 2.6% NPAT $149m 351.4% $124m (2.4%) ♦ Record earnings – EBITDA (statutory and normalised), statutory NPAT ♦ Hi
Slide 6: Highlights
HIGHLIGHTS ♦ New assets performing well. Gold Coast visitation up 11.8% on pcp EXECUTING TO OPTIMISE For personal use only RETURNS ♦ Effective capital project management • Gold Coast expansion and Sydney Sovereign Resorts upgrade progressing to plan • QWB lump sum price contract expected 4Q FY2019 (
Slide 7: Sydney
SYDNEY STRONG DOMESTIC STATUTORY NORMALISED For personal use only PERFORMANCE vs pcp vs pcp Gross Revenue $803m (7.3%) $812m (15.4%) EBITDA $171m 59.0% $190m (6.3%) ♦ Record domestic revenue and EBITDA ♦ Effective cost management supports margin growth ♦ Visitation up 1.7% on pcp DOMESTIC GAMING UP
Slide 8: The Star Sydney 1H FY2019 Milestones
THE STAR SYDNEY 1H FY2019 MILESTONES For personal use only ASTRAL HOTEL RECEPTION SOVEREIGN 1.5 OPENED JULY 2018 OPENED AUGUST 2018 FLYING FISH RESTAURANT NEW BAR AND TEA HOUSE “G&TEA” OPENED DECEMBER 2018 OPENED DECEMBER 2018 7
Slide 9: Queensland
QUEENSLAND STATUTORY NORMALISED RECORD EBITDA For personal use only vs pcp vs pcp Gross Revenue $531m 31.3% $466m 16.1% EBITDA $160m 74.0% $107m 23.5% ♦ Record normalised and statutory gross revenue and EBITDA ♦ High quality result – all segments contributed to growth, EBITDA margin expansion ♦ Visi
Slide 10: Gold Coast
GOLD COAST ♦ Refurbished Oasis PGR and Harvest Buffet opened December 2018 to plan NEW ASSETS SUCCESSFULLY ♦ Continued favourable response to newly commissioned assets – visitation up 11.8% on For personal use only COMMISSIONED pcp ♦ Broad-based growth on pcp • Normalised gross revenue up 22.6% • Do
Slide 11: The Star Gold Coast 1H FY2019 Milestones
THE STAR GOLD COAST 1H FY2019 MILESTONES For personal use only CONCEPT IMAGE DORSETT HOTEL AND RESIDENCES MASTERPLAN APPROVAL GROUND BREAKING AUGUST 2018 ANNOUNCEMENT NOVEMBER 2018 OASIS DOMESTIC PGR HARVEST BUFFET OPENED DECEMBER 2018 OPENED DECEMBER 2018 10
Slide 12: EGM Market Share
EGM MARKET SHARE ♦ Continued execution focus delivers 9.9% SYDNEY SYDNEY revenue growth in 1H FY19 on pcp and For personal use only 10.0% record market share of 9.4% 9.4% ♦ Solid NMR gains, particularly PGR through 9.5% 9.1% 9.3% 9.0% focus on high value guests (increased 9.0% exclusive and high bet
Slide 13: International VIP Rebate
INTERNATIONAL VIP REBATE ♦ Solid sales performance in slower market – unique customers up 10% on pcp SOLID SALES PERFORMANCE ♦ $2.1bn front money flat on pcp (1H FY2018 up 24.8%), $20.7bn turnover down 33.0% on For personal use only pcp (1H FY2018 up 47.6%) ♦ Strong Queensland performance – front mo
Slide 14: International VIP Rebate: Normalisation of Commissions
INTERNATIONAL VIP REBATE NORMALISATION OF ♦ From 1H FY2019 commissions normalised on revenue share deals For personal use only COMMISSIONS ♦ Reflects increased share of turnover from revenue share deals – 40% in 1H FY2019, up from 26% in 1H FY2018 and 2% in 1H FY2014 ♦ Normalising commissions on rev
Slide 15: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW MATT BEKIER – CEO 2. FINANCIALS CHAD BARTON – CFO 3. OUTLOOK AND PRIORITIES MATT BEKIER – CEO 4. Q&A 14
Slide 16: Overview
OVERVIEW ♦ $166m 1H FY2019 capital expenditure ($106m growth, $60m maintenance) down $116m CAPITAL PROGRAMS ON TIME on pcp For personal use only AND BUDGET • Growth largely Gold Coast (Oasis PGR) and Sydney (Sovereign Resorts) • Excludes $41m JV contributions, largely Queen’s Wharf Brisbane and firs
Slide 17: EBITDA Bridge
EBITDA BRIDGE $m 21.3% 23.3% For personal use only EBITDA EBITDA margin margin 350 331.2 21.7 (44.9) 34.1 33.4 297.1 300 289.5 (0.9) (1.7) 250 89.9 199.6 200 150 100 50 0 1H FY2018 International 1H FY2018 Sydney Queensland International Gaming taxes, Operating 1H FY2019 International 1H FY2019 Statu
Slide 18: Profit and Loss
PROFIT AND LOSS $M 1H FY2019 fav/(unfav) 1 1H FY2019 fav/(unfav) 1 ♦ AASB 215 from 1 July 2 2018, restated STATUTORY NORMALISED comparables 2 2 For personal use only Domestic Gaming revenue 847.8 6.4% 847.8 6.4% ♦ High actual 1.62% win rate drives International VIP Rebate 336.6 2.5% 280.0 (33.0%) di
Slide 19: Balance Sheet
BALANCE SHEET $M DEC 2018 JUN 2018 DEC 2017 ♦ Capital programs progressed ASSETS • Increase in property, plant and For personal use only Current Assets Cash and cash equivalents 109.2 110.3 188.6 Trade and other receivables 173.0 221.5 258.3 equipment (mainly Gold Coast and Inventories 17.7 15.5 13.
Slide 20: Key Metrics
KEY METRICS Normalised Gross Revenue ($m) Normalised NPAT ($m) Earnings Per Share - Normalised (cents) 1,500 150 20 For personal use only 7.4% CAGR 11.3% CAGR 21.8% CAGR 1,250 15 1,000 100 750 10 500 50 5 250 0 0 0 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 1H 2H 1H 2H 1H 2H 1
Slide 21: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW MATT BEKIER – CEO 2. FINANCIALS CHAD BARTON – CFO 3. OUTLOOK AND PRIORITIES MATT BEKIER – CEO 4. Q&A 20
Slide 22: Trading Update and Priorities
TRADING UPDATE AND PRIORITIES ♦ Positive domestic revenue growth trends continuing from 1H FY2019 into early 2H TRENDS CONTINUE INTO 2H FY2019 across slots, tables and non-gaming For personal use only FY2019 ♦ VIP trends in early 2H FY2019 similar to 1H FY2019. Comparisons with pcp are difficult giv
Slide 23: Centres of Excellence to Optimise Returns
CENTRES OF EXCELLENCE TO OPTIMISE RETURNS ♦ Created centres of excellence for core competencies ORGANISE – AROUND For personal use only CENTRES OF EXCELLENCE • Gaming – led by Greg Hawkins, Chief Casino Officer • Marketing – led by George Hughes, Chief Marketing Officer ♦ Focused talent injection –
Slide 24: Sydney: Sovereign Upgrade Underway
SYDNEY SOVEREIGN UPGRADE UNDERWAY For personal use only ♦ Upgraded and expanded Sovereign Resort progressing in line with management plans ♦ Completion expected mid CY2020 CAPITAL PROGRAM PROGRESSING TO PLAN CONCEPT IMAGE GRAND FOYER AND ♦ All major capital works projects progressing to plan MAIN GA
Slide 25: Gold Coast: First JV Tower Underway
GOLD COAST FIRST JV TOWER UNDERWAY For personal use only ♦ Construction of first JV tower (>700 keys, doubles property capacity) underway ♦ Lower estimated development cost of ~$370m vs ~$400m previously. ~$30m equity requirement for 1/3 SGR share (before apartment sale proceeds) ♦ FY2022 expected c
Slide 26: Queen's Wharf Brisbane: Works Progressing to Plan
QUEEN’S WHARF BRISBANE WORKS PROGRESSING TO PLAN For personal use only ♦ Excavation work commenced 3Q FY2018 • Expected completion 2H CY2019 in line with project timetable ♦ Shell, core and façade tender underway • Lump sum terms • Expected 4Q FY2019 • Results in ~60% of project costs under contract
Slide 27: Queen's Wharf Brisbane
QUEEN’S WHARF BRISBANE For personal use only CONCEPT IMAGE QUEEN’S WHARF BRISBANE BRISBANE STEPS PLAZA CONCEPT IMAGE CONCEPT IMAGE QUEEN’S WHARF BRISBANE QUEEN’S WHARF BRISBANE ROSEWOOD AND DORSETT HOTEL TOWER INTEGRATED RESORT GEORGE STREET ENTRANCE 26
Slide 28: 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 at all properties ♦ F&B ♦ Solid tables growth ♦ Retail (on site and proximate) 2 New assets perform
Slide 29: Agenda
THE STAR ENTERTAINMENT GROUP AGENDA For personal use only 1. OVERVIEW MATT BEKIER – CEO 2. FINANCIALS CHAD BARTON – CFO 3. OUTLOOK AND PRIORITIES MATT BEKIER – CEO 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 JOINT VENTURE PROJECTS 37 FUNDING 38 GLOSSARY 39 29
Slide 31: Statutory Results
APPENDIX STATUTORY RESULTS SYDNEY QUEENSLAND TOTAL $M 1H FY2019 1H FY2018 fav/(unfav) fav/(unfav) 1H FY2019 1H FY2018 fav/(unfav) fav/(unfav) 1H FY2019 1H FY2018 fav/(unfav) fav/(unfav) For personal use only Slots 180.5 164.3 16.2 9.9% 169.7 164.9 4.8 2.9% 350.2 329.3 20.9 6.3% Domestic Tables 359.7
Slide 32: Normalised Results
APPENDIX NORMALISED RESULTS SYDNEY QUEENSLAND TOTAL $M 1H FY2019 1H FY2018 fav/(unfav) fav/(unfav) 1H FY2019 1H FY2018 fav/(unfav) fav/(unfav) 1H FY2019 1H FY2018 fav/(unfav) fav/(unfav) For personal use only Slots 180.5 164.3 16.2 9.9% 169.7 164.9 4.8 2.9% 350.2 329.3 20.9 6.3% Domestic Tables 359.
Slide 33: Operational Metrics
APPENDIX OPERATIONAL METRICS KEY METRICS OPERATING EFFICIENCY For personal use only OPERATIONAL METRICS SYDNEY QUEENSLAND ♦ Group operating costs have grown from $430m in 1H 1H FY2019 1H FY2018 1H FY2019 1H FY2018 FY2014 to $535m in 1H FY2019 (4.5% CAGR), whilst Slots normalised gross revenue has gr
Slide 34: International VIP Rebate Normalisation
APPENDIX INTERNATIONAL VIP REBATE NORMALISATION ACTUAL WIN RATE VS THEORETICAL RECONCILIATION WITH ACTUAL For personal use only ♦ Normalised win rate of 1.35% is in line with the Group’s win 1H FY2019 RESULTS REVENUE REVENUE SHARE 1H FY2019 1H FY2019 COMMISSION NORM rate experience and consistent wi
Slide 35: International VIP Rebate Normalisation: Adjusted Historical Results
APPENDIX INTERNATIONAL VIP REBATE NORMALISATION ADJUSTED HISTORICAL NORMALISED REVENUE AND EBITDA For personal use only 1H FY17 2H FY17 1H FY18 2H FY18 1H FY19 International VIP Rebate Front Money ($bn) 1.7 1.8 2.1 2.6 2.1 International VIP Rebate Turns (x) 12.3 11.0 14.5 11.6 9.7 International VIP
Slide 36: International VIP Rebate Receivables
APPENDIX INTERNATIONAL VIP REBATE RECEIVABLES INTERNATIONAL VIP REBATE 30 DAYS BUSINESS RECEIVABLES (BEFORE 0 - 30 DAYS 1 - 3 YEARS 3 YEARS + TOTAL For personal use only - 1 YEAR PROVISIONS) December 2018 ($m) Not yet due 53.2 - - - 53.2 Past due not impaired 6.2 62.4 7.6 - 76.2 Considered impaired
Slide 37: Cash Conversion
APPENDIX CASH CONVERSION CATEGORY Dec-18 Dec-17 $M For personal use only Cash flows from operating activities before interest and income tax Net cash receipts from customers (inclusive of GST) 1,153.0 1,027.2 Payments to suppliers and employees (inclusive of GST) (600.0) (539.1) Payment of governmen
Slide 38: 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 39: Funding
APPENDIX FUNDING DEBT MATURITY PROFILE AS AT 31 DECEMBER 2018 For personal use only 400 350 300 5 250 200 369 145 150 238 100 200 20 50 98 100 80 64 0 12 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 Undrawn bank debt Drawn Bank Debt USPP 38
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 — H1 FY2019 Earnings Presentation on 6ix