Star Entertainment Group Limited · ASX:SGR
Star Entertainment — Echo Entertainment Group — H1 FY2014 Earnings Presentation
32 slides from Star Entertainment's earnings presentation, Feb 5, 2014
Slide 1: Half Year Results Presentation ASX cover announcement
5 February 2014 HALF YEAR RESULTS PRESENTATION Attached is the presentation regarding the financial results of Echo Entertainment Group Limited (Echo) for the half year ended 31 December 2013, to be presented by John Redmond, Managing Director and Chief Executive Officer, and Matt Bekier, Chief Fina
Slide 2: Echo Entertainment Group Half Year 2014 Results Presentation
ECHO ENTERTAINMENT GROUP LIMITED HALF YEAR 2014 RESULTS PRESENTATION 5 FEBRUARY 2014 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 half year ended 31 December 2013 and other dis
Slide 4: Agenda
AGENDA 1. OVERVIEW JOHN REDMOND – CEO 2. FINANCIALS MATT BEKIER – CFO 3. OUTLOOK AND PRIORITIES JOHN REDMOND – CEO 4. Q&A JOHN REDMOND – CEO 3
Slide 5: 1H14 Results Overview
1H14 RESULTS OVERVIEW □ Normalised NPAT for 1H14 of $71.5m up 1.3% on pcp. Statutory NPAT of $46.1m down 30.5% on pcp as a result of lower win rate in VIP Rebate, lower hold in the private gaming rooms, additional levies imposed in NSW and QLD and one-off expense associated with closing out the out-
Slide 6: Key Drivers of 1H14 Result
KEY DRIVERS OF 1H14 RESULT EBITDA ($m) 210.0 210.3 12.4 20.0 13.9 7.3 196.4 1H13 Normalised EBITDA impact of Additional Levies Opex 1H14 Normalised VIP Rebate Actual EBITDA EBITDA (excluding revenue decline (VC)* Reduction EBITDA (excluding Normalisation Impact significant items) significant items)
Slide 7: 1H14 vs 1H13 Like for Like Growth
1H14 VS 1H13 LIKE FOR LIKE GROWTH □ Normalised EBITDA growth of 0.2% in 1H14 was negatively impacted by a number of items: Additional levies in Queensland and NSW of $7.3m commenced in FY14 and not in pcp Hold in PGRs(1) in 1H14 was materially below pcp and historic levels (15.6% vs 17.5% in pcp) VI
Slide 8: Progress of Cost Optimisation Program
PROGRESS OF COST OPTIMISATION PROGRAM □ Cost optimisation program initiated in April 2012 and completed in 1H14 – total cost saving initiatives expected to exceed guidance of $60m for FY14 □ 1H14 opex of $425.3m was down $20.1m on pcp (4.5%) – despite inflation and increased operating footprint in F
Slide 9: Operational Benchmarks
OPERATIONAL BENCHMARKS The Star QLD Casinos Comment Operational Benchmarks 1H13 1H14 1H13 1H14 □ Queensland Slots NMR lower due to Slots combination of higher average Revenue ($m) 124 122 143 137 NMR/machine/day 451 449 247 230 machines in the period (3,214 in 1H14 vs 3,110 in 1H13) and lower revenu
Slide 10: The Star – 1H14 Performance Tracking
THE STAR – 1H14 PERFORMANCE TRACKING □ Overall revenue performance at The Star soft (normalised revenue down 3.9%) Normalised gross gaming revenue (down 6.1%) Non-gaming revenue strong as new product continues to gain momentum □ Taxes, levies, rebates and commissions down 9.5% - average tax rate 28%
Slide 11: Queensland – 1H14 Performance Tracking
QUEENSLAND – 1H14 PERFORMANCE TRACKING □ Overall revenue performance at Queensland properties soft (normalised revenue down 6.6%) Gross gaming revenue across all lines of business down on pcp impacted by a a soft consumer environment Gold Coast property negatively impacted by disruption associated w
Slide 12: VIP Rebate Business 1H14 Performance
VIP REBATE BUSINESS 1H14 PERFORMANCE □ VIP Rebate front money down 3.5% to $921.8m, normalised gross revenue down 9.0% to $194.4m (actual gross revenue down 20.5% to $166.1m) □ Actual win rate of 1.56% slightly below historical average at 1.62% and below prior period of 1.69% □ Average commissions d
Slide 13: Agenda
AGENDA 1. OVERVIEW JOHN REDMOND – CEO 2. FINANCIALS MATT BEKIER – CFO 3. OUTLOOK AND PRIORITIES JOHN REDMOND – CEO 4. Q&A JOHN REDMOND – CEO 12
Slide 14: Echo Group Financials
ECHO GROUP FINANCIALS $ millions 1H14 1H13 Growth 1H14 1H13 Growth 2 2 Actual Actual % Norm Norm % Gross Revenue1 901.3 971.8 ( 7.3%) 929.6 976.7 ( 4.8%) Variable contribution 621.7 659.3 ( 5.7%) 635.6 655.4 ( 3.0%) Operating expenditure ( 425.3) ( 445.4) 4.5% ( 425.3) ( 445.4) 4.5% EBITDA (before s
Slide 15: Echo Funding
ECHO FUNDING □ 1H14 Net debt of $765.8m (FY13 $707.3m) □ Undrawn bank facilities of $365.0m and average drawn debt maturity of 4.1 years □ 1H14 statutory net finance costs of $58.5m includes costs of $22.2m associated with the closing out of certain out of the money interest rate swaps and costs rel
Slide 16: Balance Sheet and Dividend
BALANCE SHEET AND DIVIDEND $m 31 Dec 2013 30 Jun 2013 □ Cash balance reduced due to close out of interest rate swaps and ASSETS Current assets repayment of debt Cash and cash equivalents 127.0 265.5 Trade and other receivables 106.0 84.8 □ Net trade receivables balance of $94.7m includes $47.3m of I
Slide 17: Capital Expenditure
CAPITAL EXPENDITURE □ 1H14 capex $62m with capex levels coming down post completion of Project Star – process around Brisbane opportunity to take time and proposed investment in Gold Coast to commence after required approvals received (expected FY15) □ Growth capex in 1H14 of $34m – majority of grow
Slide 18: Agreement to Sell Jupiters Townsville
AGREEMENT TO SELL JUPITERS TOWNSVILLE □ As announced on 24 January 2014, Echo has entered into an agreement to sell Jupiters Townsville to Colonial Leisure Group (CLG) for $70m □ The transaction is for the sale of all the shares and units in Breakwater Island Limited and Breakwater Island Trust □ On
Slide 19: Agenda
AGENDA 1. OVERVIEW JOHN REDMOND – CEO 2. FINANCIALS MATT BEKIER – CFO 3. OUTLOOK AND PRIORITIES JOHN REDMOND – CEO 4. Q&A JOHN REDMOND – CEO 18
Slide 20: Strategic Priorities
STRATEGIC PRIORITIES □ Improve operational performance at both The Star and Queensland properties Continued progress made over last 12 months to set business up well for the future Marketing, customer service and improvement in processes/systems underway Continuing incremental investment program at
Slide 21: Strategic Priorities – Gold Coast Expansion
STRATEGIC PRIORITIES – GOLD COAST EXPANSION □ Development approval being sought for $345m expansion and refresh of Jupiters Gold Coast announced at 2013 AGM □ Investment subject to various third party approvals – target for approvals to be finalised and works expected to commence in FY15 □ Investmen
Slide 22: Strategic Priorities – Gold Coast Expansion
STRATEGIC PRIORITIES – GOLD COAST EXPANSION CONCEPT IMAGES ONLY 21
Slide 23: Trading Update and 2H14 Outlook
TRADING UPDATE AND 2H14 OUTLOOK □ Domestic revenue has shown growth on last year in every property in January - EGMs experiencing a strong start to the year, particularly in Queensland, and VIP Rebate has seen solid bookings for Chinese New Year □ Given the short period, fluctuations based on win ra
Slide 24: Agenda
AGENDA 1. OVERVIEW JOHN REDMOND – CEO 2. FINANCIALS MATT BEKIER – CFO 3. OUTLOOK AND PRIORITIES JOHN REDMOND – CEO 4. Q&A JOHN REDMOND – CEO 23
Slide 25: Appendix
APPENDIX The Star and Queensland results – Actual Page 25 The Star and Queensland results – Normalised Page 26 Normalised results reconciliation – 1H12 vs 1H13 Page 27 Cash Collection Ratio Page 28 Receivables Aging Page 29 Glossary Page 30 Disclaimer Page 31 24
Slide 26: The Star and Queensland Results – Actual
THE STAR AND QUEENSLAND RESULTS – ACTUAL Actual The Star QLD Total fav/ (unfav) fav/ (unfav) fav/ (unfav) 1H14 1H13 1H14 1H13 1H14 1H13 $m on pcp on pcp on pcp Slots 122.3 124.1 ( 1.4%) 136.7 142.6 ( 4.1%) 259.0 266.6 ( 2.8%) Main Gaming Floor 182.5 182.6 ( 0.1%) 71.8 72.6 ( 1.2%) 254.2 255.2 ( 0.4%
Slide 27: The Star and Queensland Results – Normalised
THE STAR AND QUEENSLAND RESULTS – NORMALISED Normalised* The Star QLD Total fav/ (unfav) fav/ (unfav) fav/ (unfav) 1H14 1H13 1H14 1H13 1H14 1H13 $m on pcp on pcp on pcp Slots 122.3 124.1 ( 1.4%) 136.7 142.6 ( 4.1%) 259.0 266.6 ( 2.8%) Main Gaming Floor 182.5 182.6 ( 0.1%) 71.8 72.6 ( 1.2%) 254.2 255
Slide 28: Normalised Results Reconciliation – 1H13 & 1H14
NORMALISED RESULTS RECONCILIATION – 1H13 & 1H14 Normalised* The Star QLD Total fav/ (unfav) fav/ (unfav) fav/ (unfav) 1H14 1H13 1H14 1H13 1H14 1H13 $m on pcp on pcp on pcp Slots 122.3 124.1 ( 1.4%) 136.7 142.6 ( 4.1%) 259.0 266.6 ( 2.8%) Main Gaming Floor 182.5 182.6 ( 0.1%) 71.8 72.6 ( 1.2%) 254.2
Slide 29: Cash Collection Ratio
CASH COLLECTION RATIO Category Dec-13 Jun-13 Dec-12 Jun-12 $m Cash flows from operating activities before interest and income tax Net cash receipts in the course of operations 851.9 1,757.4 933.8 1,643.6 Payments to suppliers, service providers and employees (522.9) (982.2) (560.2) (1,046.9) Payment
Slide 30: Receivables Aging
RECEIVABLES AGING Receivables Aging Summary ($m) Dec-13 Jun-13 Dec-12 Ageing Debtor balance Debtor balance Debtor balance Ageing profile Ageing profile Ageing profile before provision before provision before provision 3+ Years 8.9 15.2% 8.9 11.7% 8.9 11.1% 1-3 Years 21.7 37.1% 49.4 64.9% 44.8 55.9%
Slide 31: Glossary
GLOSSARY CAGR Compound Annual Growth Rate Capital Unless otherwise stated, capital expenditure is presented on an accruals basis and excludes intangible expenditure assets, investments in associates and equity acquisitions. It is shown gross of any fixed asset disposals (capex) proceeds Customer Dep
Slide 32: 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 — H1 FY2014 Earnings Presentation on 6ix