SKYCI TY ENTERTAI NMENT GROUP LI MI TED FY0 6 I nterim Result Half Year Ended 3 1 Decem ber 2 0 0 5
SKYCI TY Entertainm ent Group Lim ited 1H06 cf 1H05 1 H0 6 1 H0 5 % $ m $m $m Movement Movement Revenue $386.3 $349.8 10.4% + $36.5 EBITDA $154.6 $150.8 2.5% + $3.8 EBIT $119.7 $121.6 1.6% -$1.9 Net Profit $58.6 $59.6 1.7% -$1.0 Earnings per Share 14.0cps 14.3cps 2.1% -0.3cps - 1H05 restated for IFRS. 1H05 Net Profit previously reported at $57.1m. Restated under IFRS at $59.6m - EBITDA = Earnings before interest, tax, depreciation, amortisation. EBIT = Earnings before interest and tax - In this result presentation interest received, foreign exchange gains/ losses, and gains/ losses from interest and currency swaps are included within Funding Costs. This treatment is designed to separate the operational and financial performance of the business and thereby assist interpretation and understanding of the business outcome for the period. This presentation differs from the IFRS-compliant format as set out in the company’s financial statements in which interest received and interest and cross currency interest rate swap gains or losses are reported as other income. 2
SKYCI TY Entertainm ent Group Lim ited 1H06 cf 2H05 The summary below compares the 1H06 result against the preceding half year period (2H05) which was the first period after implementation of smoking bans in New Zealand and smoking restrictions in South Australia. These comparisons show a significant turnaround performance for the Group with the main contributors being SKYCITY Auckland and SKYCITY Adelaide. 1 H0 6 2 H0 5 % $ m $m $m Movement Movement Revenue $386.3 $329.8 17.1% + $56.5 EBITDA $154.6 $129.9 19.0% + $24.7 EBIT $119.7 $100.3 19.3% + $19.4 Net Profit $58.6 $46.8 25.2% + $11.8 Earnings per Share 14.0cps 11.2cps 25.0% + 2.8cps 3
FY06 First Half Result Profits and Distributions Interim Dividend/ Distribution Net Profit : $58.6m 12.0cps 7/ 4/ 06 NZ$m $59.6m $58.6m cps 60 $55.1m 12.0c 12.0c $51.7m* 11.0c 50 10.5c 10 40 $37.9m* 7.75c $33.2m 7.0c 30 $27.7m 6.0c 5 20 10 0 0 1H00 1H01 1H02 1H03 1H04 1H05 1H06 1H00 1H01 1H02 1H03 1H04 1H05 1H06 * Before non-recurring items 1H05 Net Profit restated from NZ GAAP ($57.1m) to NZ IFRS ($59.6m) 4 4
Key Elements of the 1H06 Result + Group Net Profit has shown strength in the post smoking ban implementation period with the 1H06 net profit result only marginally below the 1H05 period. The majority of the 1H05 comparative period was prior to the introduction of smoking bans in New Zealand and smoking restrictions in South Australia in December 2004 + 1H06 Net Profit at $58.6m is 25% ahead of the 2H05 result of $46.8m. 2H05 was the first six month reporting period post smoking ban introduction in New Zealand and smoking restrictions in South Australia 5
Key Elements of the 1H06 Result (continued) + Earnings performance (EBITDA, EBIT) shows strength across the Group, as summarised below: – SKYCITY Auckland in line with 1H05 (despite smoking bans) due to strong performances from gaming, convention and restaurant operations and the new revenue stream from the SKYCITY Grand Hotel – SKYCITY Adelaide result for 1H06 turns around the result reported for 2H05 with the expanded gaming area, North Restaurant and Loco Bar facilities attracting new patronage and a favourable response from existing customers – SKYCITY Darwin continues to perform strongly and its 1H06 growth has largely covered removal of the community slots rebate from 1 July 2005 6
Key Elements of the 1H06 Result (continued) – SKYCITY Hamilton’s revenues and earnings were supported by the new entertainment facilities acquired as part of the acquisition of the Riverside Entertainment Centre – Christchurch Casino is performing in line with prior period, despite the smoking ban implications – SKYCITY Queenstown is down on prior period due to a combination of factors including limited international VIP/ commission play and lower visitation numbers to the Queenstown/ Southern Lakes region. Whilst Queenstown is an important component of the overall SKYCITY mix, its financial result remains relatively immaterial to the Group outcome – SKYCITY Leisure held revenues and earnings despite increased competition in the Auckland cinema market and a lack of strength in film product during 1H06 7
Interim Distribution (Dividend) 12.0 cents per share (12.0 cps 1H05) + Entitlement/ record date 10 March + + Payment date 7 April + New structure for the 1H06 interim distribution as a non-taxable bonus share issue but with a cash alternative available (fully- imputed). The cash alternative will leave shareholders who elect that option in the same position they would have been in under a fully-imputed cash dividend + Cash alternative effected by way of an off-market buyback of the bonus shares: shareholder elections to share registry due not later than 5 April + Dividend Reinvestment Plan discontinued: replaced by the new distribution structure Distribution calculated (as has historically been the practice) at + 90% x Net Profit after adding back Adelaide and Darwin casino licence amortisation Distribution weighting for interim: final ratio maintained at 45: 55 + 8
Interim Distribution (Dividend) (continued) A flexible distribution structure in the best interests of shareholders + – reduced cash distribution and imputation credit utilisation – distribution in shares with cash alternative – can elect full or partial cash conversion/ retention of shares – can elect cash alternative for 1H06 and not required to repeat that election for future distributions + Strike price for bonus share issue for interim 1H06 will be the weighted average of SKC on the NZSX during the 5 day period 13-17 March, less a discount of 2.5% Advice of number of bonus shares to be issued, copy of the profit + distribution plan document and the shareholder election notice (for the share buyback/ cash option) will be sent to shareholders on 22 March, following determination of the bonus issue strike price 9
FY06 First Half Result Operating Revenues 10% NZ$m $386m 400 18% $41m $350m 3% 350 $43m (3) A$46m 5% 13% 20% $296m 13% $283m 300 A$39m (4) 17% $31m $38m A$66m $250m 22% 24% 18% 250 48% $25m A$53m A$53m A$56m $213m 13% 6% 200 A$41m A$47m 13% 150 $144m $160m $168m $192m $198m $206m $224m 13% 11% 5% 14% 3% 4% 9% 100 50 0 1H00 1H01 1H02 1H03 1H04 1H05 1H06 (2) SKYCI TY Auckland SKYCI TY Adelaide SKYCI TY Darwin Other New Zealand Operations (1) Notes (1) – (4) refer page 12 1 0
FY06 First Half Result EBITDA NZ$m 3% 16% $155m 160 $151m $15.5m (3) 11% 4% $17.5m (2) 140 24% $130m 41% $125m A$18.0m 12% $12.4m (1) A$16.1m (4) $9.0m 120 38% 36% 7% A$13.8m $101m A$11.9m A$11.7m 18% 38% A$11.7m 2% 2% $94m 60% $6.6m 100 A$9.0m A$7.3m 19% 80 60 $69m $82m $85m $101m $104m $103m $105m 15% 21% 4% 19% 3% 1% 1% 40 20 0 1H00 1H01 1H02 1H03 1H04 1H05 1H06 SKYCI TY Auckland SKYCI TY Adelaide SKYCI TY Darwin Other New Zealand Operations Notes (1) – (4) refer page 12 1 1
FY06 First Half Result Operating Revenues and EBITDA Notes re Revenue Graphs ( page 10 ) (1) Other New Zealand Operations include SKYCITY Hamilton, SKYCITY Queenstown, SKYCITY Leisure and Christchurch Casino. SKYCITY Hamilton commenced operations September 2002, SKYCITY Darwin acquired July 2004, 40.5% shareholding in Christchurch Casino acquired June 2004 (2) Restated from NZ GAAP to NZ IFRS (3) The 1H05 result for Christchurch Casino included approximately $1.8m of revenues arising from the purchase agreement with Aspinall (NZ) Limited which distorts the 1H06 to 1H05 comparison (refer note 2 on page 17) (4) The 1H05 result for Darwin covers a reporting period of 162 days, from 22/ 7/ 04-31/ 12/ 04: ie. effectively a 5.3 month period. 1H06 covers a full 6 month period ie. 184 days) Notes re EBI TDA Graphs ( page 11) (1) 1H04: Hamilton $6.9m, Leisure $5.6m (2) 1H05: Hamilton $7.5m, Queenstown $0.3m, Leisure $5.5m, Christchurch $4.5m (3) 1H06: Hamilton $7.9m, Queenstown ($0.1m), Leisure $5.2m, Christchurch $2.7m (4) The 1H05 result for Darwin covers a reporting period of 162 days, from 22/ 7/ 04-31/ 12/ 04: ie. effectively a 5.3 month period. 1H06 covers a full 6 month period (ie. 184 days) 1 2
FY06 First Half Result Revenues and EBIT Composition Group Revenues EBIT Gaming/ Non-Gaming $386m $120m Revenues Auckland NZ$ 2 2 4 m 5 8 % Auckland NZ$ 8 4 m 7 0 % Other NZ NZ$ 4 1 m 1 1 % Other NZ NZ$ 1 2 m 1 0 % Gam ing $ 2 9 5 m 7 6 % Adelaide A$ 6 6 m 1 8 % Adelaide A$ 9 m 8 % Non-Gam ing $ 9 1 m 2 4 % Darw in A$ 4 6 m 1 3 % Darw in A$ 1 4 m 1 2 % TOTAL NZ$ 3 8 6 m TOTAL NZ$ 1 2 0 m 1 3
SKYCI TY Auckland FY06 First Half Result Comparison to corresponding prior period (1H05) Revenues $223.5m 8.6% + $17.7m - Gaming $177.1m 4.5% + $7.7m - Other $46.4m 27.5% + $10.0m EBITDA $104.7m 1.4% + $1.4m EBIT $84.1m 2.8% -$2.4m EBITDA, despite smoking ban implementation, up 1.4% at $104.7m. + EBITDA ratio to revenue holding well at 47% despite revenue mix change, with an increasing proportion of non-gaming revenue (17.7% in 1H05 to 20.8% in 1H06) Increased depreciation charges, as a consequence of recent major + capital programmes, resulted in EBIT being marginally below 1H05 at $84.1m ($86.5m in 1H05) 1 4
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