Star Entertainment Group Limited · ASX:SGR
Star Entertainment — Echo Entertainment Group — H1 2013 Earnings Presentation
33 slides from Star Entertainment's earnings presentation, Feb 21, 2013
Slide 1: Half Year Results Presentation announcement
21 February 2013 HALF YEAR RESULTS PRESENTATION Attached is the presentation regarding the financial results of Echo Entertainment Group Limited (Echo Entertainment) for the half year ended 31 December 2012. The presentation will be webcast from 10:00am (Sydney time) today, on Echo Entertainment’s w
Slide 2: Echo Entertainment Group Half Year 2013 Results Presentation
ECHO ENTERTAINMENT GROUP LIMITED HALF YEAR 2013 RESULTS PRESENTATION 21 February 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 half year ended 31 December 2012 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&As John Redmond, CEO 3
Slide 5: 1H13 Results Overview
1H13 RESULTS OVERVIEW □ NPAT of $66.5m for the half down 5.3% on the pcp. Decline in NPAT largely the result of a lower tax rate in 1H12 and higher depreciation and amortisation. Interim dividend of 4 cent per share fully franked □ Statutory EBITDA (including significant items) up 8.4% on pcp to $20
Slide 6: Key Drivers of 1H13 Result
KEY DRIVERS OF 1H13 RESULT EBITDA ($m) 76.3 (8.5) 8.5 (38.0) 38.0 (28.8) 28.9 3.9 3.8 213.8 (9.8) 9.8 209.2 0.4 210.0 204.0 1H12 The Star QLD Revenue Gaming The Star QLD Opex 1H13 VIP Win Rate Actual Significant 1H13 Normalised Revenue Growth taxes, levies, Opex Growth Normalised EBITDA Items Statut
Slide 7: Event Centre – Project Star Completed
EVENT CENTRE – PROJECT STAR COMPLETED □ The Event Centre opened to the public on 24 January 2013 □ Multi-use entertainment facility able to host concerts, banquets, conference and convention events □ Opening of Event Centre marks the completion of $870m Project Star investment, completed on time and
Slide 8: The Star – The Awards
THE STAR – THE AWARDS □ New product has been well received with numerous accolades for new areas □ Momentum continues to build in new areas of The Star – more work to do on marketing the new destination THE STAR MOMOFUKU SEIOBO □ Australasia’s Leading Casino Resort □ Three Chefs Hats □ Winner for Co
Slide 9: Operational Benchmarks
OPERATIONAL BENCHMARKS The Star QLD Casinos 1H12 1H13 1H12 1H13 Comment Slots □ The Star revenue per table (Excl VIP Revenue ($m) 125 124 144 143 NMR/machine/day 477 451 256 247 Rebate) lower due to increased MTGM's capacity (265 tables on average for Revenue ($m) 27 34 4 4 1H13 vs 228 in 1H12) NMR
Slide 10: The Star – 1H13 Performance Tracking
THE STAR – 1H13 PERFORMANCE TRACKING □ Overall revenue performance at The Star solid (actual +15%) although not broad-based: Tables, VIP and non-gaming strong and generally in-line to above management expectations Slots revenue performance soft and below management expectations □ Operating expen
Slide 11: The Star 1H13 Revenue Performance
THE STAR 1H13 REVENUE PERFORMANCE The Star - Average Daily Activity (% change on pcp) Visitation 35% 30% □ Average daily activity to property up (estimated +13%) 25% 20% 15% □ Non-gaming product driving incremental visitation to the 10% property with flow through into gaming 5% 0% Oct-11 Mar-12 Oct-
Slide 12: VIP Business Continues Positive Momentum in 1H13
VIP BUSINESS CONTINUES POSITIVE MOMENTUM IN 1H13 □ VIP front money up 28% to $955m, gross revenue up 15.3% to $208.8m (normalised gross revenue up 18.5% to $213.6m) □ Actual win rate above trend at 1.69% - turns of 13.0 slightly below historic average (14.0 times average over the last 5 years) □ VIP
Slide 13: The Star – 1H13 Revenue Performance Slots
THE STAR – 1H13 REVENUE PERFORMANCE SLOTS □ Rate of slots growth at The Star has reduced over the last 12 months as effectiveness of marketing and loyalty program has stagnated □ Strong slots growth of recent years (CAGR of +8.3% from 1H09-1H13) driven by: Implementation of a new loyalty program a
Slide 14: Queensland 1H13 Revenue Performance
QUEENSLAND 1H13 REVENUE PERFORMANCE Qld Casinos Domestic tables (Incl MTGM) Table Games (ex VIP & MTGM) PCP Revenue Growth □ Table game performance soft with drop +2% and 25% 20% revenue -1% on the pcp 15% 10% □ Win rate negatively impacted growth in the period 5% 0% □ Momentum improved slightly ove
Slide 15: Agenda
AGENDA 1. Overview John Redmond, CEO 2. Financials Matt Bekier, CFO 3. Outlook and priorities John Redmond, CEO 4. Q&As John Redmond, CEO 14
Slide 16: Echo Group Financials
ECHO GROUP FINANCIALS $ millions 1H13 1H12 Growth 1H13 1H12 Growth Actual Actual % Norm b Norm b % a Gross Revenue 971.8 908.2 7.0% 976.7 908.9 7.5% Variable contribution 659.3 633.7 4.0% 655.4 626.2 4.7% Operating expenditure ( 445.5) ( 417.0) 6.8% ( 445.5) ( 417.0) 6.8% EBITDA 213.8 216.8 ( 1.4%)
Slide 17: Progress of Cost Reduction Program
PROGRESS OF COST REDUCTION PROGRAM □ Benefits of cost optimisation program implemented since April 2012 beginning to flow through with an estimated $14m reduction in 1H13 group operating expenditure relative to 2H12 run rate □ Despite cost reduction program, 1H13 operating expenses increased $28.4m
Slide 18: VIP Win Rate and Management
VIP WIN RATE AND MANAGEMENT □ VIP business continued strong momentum in 1H13 with front money of $955m, up 28% on the pcp □ Win rate of 1.69%, down slightly on the pcp but above the five year rolling average of 1.60% □ Total bad and doubtful debt expense for 1H13 of $8.0m, equates to 3.8% of actual
Slide 19: Balance Sheet and Dividend
BALANCE SHEET AND DIVIDEND $m ASSETS 31 Dec 12 30 Jun 12 □ Receivables balance reduced due to $187m relating Current assets to retail component of the Entitlement Offer included Cash and cash equivalents 199.5 342.6 Receivables 127.6 322.3 in receivables at 30 June 12 Inventories 8.1 7.4 Current tax
Slide 20: Capital Expenditure
CAPITAL EXPENDITURE □ 1H13 capex $92m*, including $49m for Project Star and expenditure for Queensland expansion (Project Icon) □ Project Star now completed on time and on budget - $8m remaining to be spent in 2H12 □ FY13 capex expected to be under $200m □ Capex levels coming down post completion of
Slide 21: Echo Funding
ECHO FUNDING □ Net debt of $717m at 31 December 2012 □ Undrawn bank facilities of $475m at 31 December 2012 and an average debt maturity of 4.4 years □ FY13 net interest expected to be around $85m □ Target average dividend payout ratio of 50% of statutory net profit after tax for the full year Echo
Slide 22: Agenda
AGENDA 1. Overview John Redmond, CEO 2. Financials Matt Bekier, CFO 3. Outlook and priorities John Redmond, CEO 4. Q&As John Redmond, CEO 21
Slide 23: Treasury Brisbane Relocation
TREASURY BRISBANE RELOCATION □ Discussion with Queensland Government over potential investment in Brisbane and Gold Coast continuing □ Given proximity of the properties, investment needs to be evaluated as a single market and positioned accordingly □ Treasury Brisbane generated actual revenue of $27
Slide 24: Outlook and Priorities
OUTLOOK AND PRIORITIES □ Key priorities for the Echo in the near term □ Improve operational performance – through a combination of cost savings and revenue enhancing initiatives □ Secure growth profile for Queensland properties – work with the Queensland Government to make a game changing investment
Slide 25: Agenda
AGENDA 1. Overview John Redmond, CEO 2. Financials Matt Bekier, CFO 3. Outlook and priorities John Redmond, CEO 4. Q&As John Redmond, CEO 24
Slide 26: Appendix
APPENDIX The Star and Queensland results – Actual Page 26 The Star and Queensland results – Normalised Page 27 Normalised results reconciliation – 1H12 vs 1H13 Page 28 Gaming Tax – The Star Page 29 Cash Collection Ratio Page 30 25
Slide 27: The Star and Queensland Results – Actual
THE STAR AND QUEENSLAND RESULTS – ACTUAL Actual The Star QLD Total fav/ (unfav) on fav/ (unfav) on fav/ (unfav) on 1H13 1H12 1H13 1H12 1H13 1H12 $m pcp pcp pcp Slots 124.1 125.2 ( 0.9%) 142.6 144.3 ( 1.2%) 266.6 269.5 ( 1.1%) Main Gaming Floor 182.6 165.2 10.6% 72.6 72.8 ( 0.3%) 255.2 238.0 7.3% PGR
Slide 28: The Star and Queensland Results – Normalised
THE STAR AND QUEENSLAND RESULTS – NORMALISED Normalised** The Star QLD Total fav/ (unfav) on fav/ (unfav) on fav/ (unfav) on 1H13 1H12 1H13 1H12 1H13 1H12 $m pcp pcp pcp Slots 124.1 125.2 ( 0.9%) 142.6 144.3 ( 1.2%) 266.6 269.5 ( 1.1%) Main Gaming Floor 182.6 165.2 10.6% 72.6 72.8 ( 0.3%) 255.2 238.
Slide 29: Normalised Results Reconciliation – 1H12 & 1H13
NORMALISED RESULTS RECONCILIATION – 1H12 & 1H13 Normalised** The Star QLD Total fav/ (unfav) on fav/ (unfav) on fav/ (unfav) on 1H13 1H12 1H13 1H12 1H13 1H12 $m pcp pcp pcp Slots 124.1 125.2 ( 0.9%) 142.6 144.3 ( 1.2%) 266.6 269.5 ( 1.1%) Main Gaming Floor 182.6 165.2 10.6% 72.6 72.8 ( 0.3%) 255.2 2
Slide 30: Gaming Tax – The Star
GAMING TAX – THE STAR □ The Star gaming tax increased 13.1% to $123.9m as a result of gaming revenue growth (including VIP) and a base tax increase on domestic revenues of 1% to 27.5% for FY13 □ Average tax rate (excluding VIP and Domestic Rebate) now around 28% □ FY13 domestic gaming revenue taxed
Slide 31: Cash Collection Ratio
CASH COLLECTION RATIO Category Dec-12 Jun-12 Dec-11 Jun-11 $m Cash flows from operating activities before interest and income tax Net cash receipts in the course of operations 933.8 1,643.6 851.2 1,477.4 Payments to suppliers, service providers and employees ( 560.2) ( 1,046.9) ( 542.9) ( 799.6) Pay
Slide 32: 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 33: 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 2013 Earnings Presentation on 6ix