INVESTOR DAY PRESENTATION

SKYCITY Entertainment Group Limited
Federal House 86 Federal Street PO Box 6443 Wellesley Street Auckland New Zealand
Telephone +64 (0)9 363 6141 Facsimile +64 (0)9 363 6140 www.skycitygroup.co.nz






27 March 2018


Client Market Services
NZX Limited
Level 1, NZX Centre
11 Cable Street
WELLINGTON


Copy to:

ASX Market Announcements
Australian Stock Exchange
Exchange Centre
Level 6
20 Bridge Street
Sydney NSW 2000
AUSTRALIA


RE: SKYCITY ENTERTAINMENT GROUP LIMITED (SKC)
INVESTOR DAY PRESENTATION


Please find attached a copy of the investor presentation to be delivered by the
company at a SKYCITY hosted investor day in Auckland today.

For any further information concerning the investor presentation, please contact:

Ben Kay
GM Corporate Development & Investor Relations
Email:
ben.kay@skycity.co.nz
Phone: +64 (9) 363 6067


Yours faithfully



Jo Wong
Company Secretary

SKYCITY
Entertainment
Group Limited
SKYCITY
Entertainment
Group Limited

2018 Investor Day

Investor
Presentation
27 March 2018

2
2
Disclaimer
All information included in this presentation is provided as at 27 March 2018
This presentation includes a number of forward-looking statements. Forward-looking statements, by their
nature, involve inherent risks and uncertainties. Many of those risks and uncertainties are matters which are
beyond SKYCITY’s control and could cause actual results to differ from those predicted. Variations could either
be materially positive or materially negative
This presentation has not taken into account any particular investors investment objectives or other
circumstances. Investors are encouraged to make an independent assessment of SKYCITY
All figures in NZ$ unless otherwise stated

3
3
Agenda
Time Event
9am Welcome and housekeeping
9.05am Strategic context
9.25am Strategic overview and portfolio review
9.45am Existing operations
10.30am Break: morning tea
10.45am Major projects
11.15am Capital allocation and financial settings
11.45am CSR / people and sustainability initiatives
12.15pm View from the Chairman and closing remarks
12.30pm Break: lunch
1pm Breakout session 1 (optional) – accounting workshop
1.30pm Breakout session 2 (optional) – property tour (including NZICC & Hobson St hotel development site)
2.30pm Close

4
4
Today’s presenters
Graeme Stephens, CEO
Luke Walker, GM Adelaide
Casino
Michael Ahearne, COO
Stewart Neish, IB President
Callum Mallett, GM NZICC
Operations
Rob Campbell, Chairman Rob Hamilton, CFO
Ben Kay, GM Corporate
Development & IR
Claire Walker, GM Human
Resources
Liza McNally, CMO

Strategic Context

6
6
What is SKYCITY? Our business
Location Opened / Acquired Activities Summary
Auckland, NZ Opened in 1996 1,877 EGMs, 150 tables, 240 ATGs
~630 hotel rooms
~20 restaurants and bars
~3,000 employees
Hamilton, NZ Opened in 2002
Acquired 100% ownership in 2005
339 EGMs, 23 tables
~400 employees
Queenstown, NZ SKYCITY Queenstown
Acquired 100% ownership in 2012

Wharf Casino
Acquired in 2013
SKYCITY Queenstown
86 EGMs, 12 tables
Wharf Casino
74 EGMs, 6 tables
~100 employees
Adelaide, South Australia,
Australia
Acquired in 2000 900 EGMs*, 70 tables**
~1,200 employees
*Allowance for 1,500. **Allowance for 200.
Darwin, Northern
Territory, Australia
Acquired in 2004 600 EGMs, 40 tables (no limits)
152 hotel rooms
~800 employees
Diversified business by activity and geography – currently ~4,100 EGMs, ~300 tables, ~800 hotel rooms and ~6,000
employees across the group

7
7
What is SKYCITY? Our licences
Exclusive casino licence to 2036
(for top 700kms of NT)
Exclusive casino licence to 2035 (for entire state
of SA) – full licence term to 2085
Exclusive casino licence to 2048


Exclusive casino licence to 2027
Exclusive casino licences to
2024 (Wharf)

and 2025
(Queenstown)

Long-term exclusive casino licences secured in all jurisdictions

8
8
What is SKYCITY? Our owners
Open, diversified shareholder base with largest shareholder owning ~8% of the company – top 10 shareholders
represent ~40% of issued capital (as at February 2018)
Institutional
(79%)
Retail (21%)
Shareholder mix by geography (February 2018) (%)
Shareholder mix by investor type
(Retail vs. Institutional) (February 2018) (%)
Australia
(45%)
NZ –retail
(20%)
NZ –
institutional
(10%)
UK / Europe
(11%)
North
America (11%)
Asia (3%)

9
9
What is SKYCITY? Our customers
Customers shape how solutions / services are
designed to drive loyalty
Customer
first

Aspire to deliver excellence at each customer
touch point
Increasing requirement for digital / technology-led
services
Experiences

Loyalty

Rewards and recognition important to add value to
customers which (in turn) creates value for
SKYCITY
Key Customer Themes
Diverse by age, preferences and
demographic
Have benefited from growing
population and supportive
demographics, particularly in Auckland

10
10
What is SKYCITY? Our employees
We have a diverse workforce by age, gender and ethnicity – over 70 different ethnicities represented
Employees by age
(1)

Employees by ethnicity
(1)

Employees by gender
(1)

Under 18
(1%)
18-24
years
(21%)
25-35
years
(35%)
36-55
years
(33%)
Over 55
years
(10%)
Male
(51%)
Female
(49%)
(1) Information based on collected data during March 2018
European
(primarily NZ /
Australia)
(44%)
Asian (40%)
Maori / Pasifika
(11%)
Other (5%)

11
11
What is SKYCITY? Financial metrics
Earnings have shown growth over recent years, despite FY17 being impacted by the Crown arrests in China
Group normalised EBITDA and NPAT: FY14-FY17 ($m) Group normalised EPS and DPS: FY14-FY17 (cps)
0
50
100
150
200
250
300
350
FY14FY15FY16FY17
Normalised EBITDANormalised NPAT
0
5
10
15
20
25
30
FY14FY15FY16FY17
Normalised EPSDPS

12
12
What are we good at?
Operating a range of entertainment and hospitality businesses, including: casinos, hotels, F&B, conventions and
other entertainment
Operating in environments with long-term exclusive casino licences
Operating in “first world” countries such as NZ and Australia
Operating best-in-class harm minimisation and host responsibility practices
1
3
2
4
Established casino and entertainment operator with attractive long-term casino licences, and a leader in host
responsibility

13
13
Where do we generate value for shareholders?
Diversified business geographically, yet Auckland generates over 70% of group EBITDA. Auckland earnings benefit
from contributions from higher margin businesses (i.e. gaming and hotels)
FY17 group EBITDA by property (%):
Group normalised EBITDA = $322m
(1)
FY17 group revenue by property (%):
Group normalised revenue = $1,031m
Auckland
(55%)
Hamilton (6%)
Queenstown
(1%)
Adelaide (15%)
Darwin (12%)
IB (11%)
Auckland
(72%)
Hamilton (7%)
Queenstown
(1%)
Adelaide (6%)
Darwin (8%)
IB (6%)
(1) EBITDA before corporate costs but after gaming taxes + restated corporate costs / operating expenses to reconcile to FY17 investor presentation

14
14
Local gaming
(76%)
IB (6%)
Keno
(1%)
Hotels (10%)
F&B / Other
(8%)
Where do we generate value for shareholders?
Local gaming (EGMs and tables) is the key value driver for the group, generating ~75% of EBITDA. Hotels are the
second most significant earnings contributor
FY17 group EBITDA by business activity (%):
Group normalised EBITDA = $322m
(1)

FY17 group revenue by business activity (%):
Group normalised revenue = $1,031m
(1)EBITDA before corporate costs but after gaming taxes + restated corporate costs / operating expenses to reconcile to FY17 investor presentation
(2)Local gaming includes EGM and tables revenue (ex IB) and contribution (ex IB) derived from casual visitors, members of loyalty programme, non-carded premium play and
domestic and international tourists
Local
gaming
(65%)
IB (11%)
Keno
(2%)
Hotels (8%)
F&B / Other
(14%)
(2)

(2)

15
15
What environment do we operate in? NZ
Stable NZ operating environment, with generally positive long-term economic outlook
NZ has experienced a period
of sustained economic
growth, underpinned by:
•Strong tourism inflows
(Auckland and Queenstown
primary benefactors)
•Robust construction sector
activity
•Low interest rate
environment
•Historic high net migration
Uncertain global economic
environment but generally
positive outlook for NZ
Relatively stable regulatory
and political environment
Long-term casino licence
secured in Auckland (2048)
and tax rate certainty to 2022
Licence renewals in Hamilton
(2027) and Queenstown (2024
and 2025)
Christchurch Casino going
through licence renewal in
2019 (the first of its kind in NZ)
Economy
Regulatory

16
16
What environment do we operate in? Australia
Australian operating environment more challenged, with subdued near-term economic prospects in both the NT and
SA, and less stable gaming regulation vs. NZ
Australian economy continues
to perform reasonably well,
but growth primarily
contained to eastern
seaboard
NT economy stabilising post
completion of Inpex LNG
project, but muted near-term
outlook
SA economy relatively
subdued, but with positive
longer-term outlook (i.e.
growth in defence industry,
business friendly new
Government)
Regulatory environment less
stable than NZ
Growth of gaming in suburban
venues (ex casinos) across
Australia subject of increasing
scrutiny due to social harm /
host responsibility issues
Long-term casino exclusivity
and tax rate certainty at both
Adelaide and Darwin, with
preferential premium gaming
concessions secured in
Adelaide
Economy
Regulatory

17
17
What environment do we operate in? Industry trends
Traditional land-based casinos typically exhibiting modest growth (outside of Asia)
Requirement to continually diversify offering to compete and capture broader customer base
1
2
Capital investment required to sustain / grow business – need to consider alternative models to improve returns
3
Positive secular growth trends in Asia with growing (and increasingly mobile) middle-class
5
Alternative forms of gaming (i.e. online, AR / VR, social gaming) and entertainment becoming increasingly popular
4
Enhanced focus on social licence to operate
6

18
18
What environment do we operate in? Shareholder views
Focus on improving operating performance
Focus on leveraging assets which contribute meaningful value to group
Manage execution risks on major projects and leverage opportunities associated with investments
1
2
3
Maintain focus on NZ and Australia
4
Re-establish credibility regarding ability to execute well on strategic initiatives
6
Improve returns from capital investments – where possible take an “asset-lighter” approach to allocating capital
5
Continue to pay dividend consistent with existing policy
7

Strategic Overview and Portfolio Review

20
20
Strategic overview
We are good at operating exclusive land-based casinos, hotels, F&B, conventions and broader
entertainment, but only casinos and hotels deliver meaningful earnings and value
Complementary activities (i.e. F&B, conventions) contribute to overall success of casinos and hotels
Maximise returns when all competencies are integrated and come together
Requirement to execute major projects well and achieve acceptable return on capital
Focus on leveraging and maximising potential of existing assets
Further operational improvements to be derived from existing businesses
Opportunity for performance improvement from investment in customer / loyalty / digital / IT initiatives
Balance sheet constrained to meaningfully pursue new growth opportunities outside of releasing capital
from existing assets
Intention to go “asset-lighter” to improve returns and to allocate capital more efficiently
Committed to dividend policy – dividends important to significant proportion of shareholder base
Key value drivers

Existing assets

Capital allocation
and financial
settings

21
21
Strategic overview
Important to provide entertainment which appeals to existing and new customers
Intention to broaden emphasis on entertainment beyond traditional gaming (i.e. All Blacks experience,
e-sports, AR / VR, online gaming)
Requirement to be fast followers of best global ideas of technology relevant to existing and future
operations
New forms of
entertainment

Maintain focus on NZ and Australia
Reliance on Auckland – Adelaide expansion, IB growth and online gaming opportunities to address this
to an extent. Continue to monitor land-based casino opportunities as they arise
Strong outlook for hotels in NZ and Australia – potential to become highly scalable asset class
Potential
future
diversification

Customer /
loyalty /
digital

CSR / people /
sustainability
initiatives

Customer demographics and behaviour changing and evolving
Need to adapt and leverage new channels / offerings to ensure on-going relevance
Data analytics / technology increasingly important to attract and retain customers
Focus on social licence to operate, community / people / youth development initiatives
Widely recognised as responsible corporate citizen

22
22
Portfolio review – NZ
Casino licence extension to 2048 underpins long-term value for key property
NZICC and Hobson St hotel project – important to execute well and leverage benefits
Master planning commenced – incorporates opportunities for further accommodation, F&B,
new gaming spaces, and broader entertainment
Additional property has been acquired – intention to consolidate control over precinct
Colliers appointed to sell Federal St car park – progressing well
Evaluating options with CBRE to monetise main site car parks
Strong financial performance over past 3-4 years
Positive outlook for Hamilton and broader Waikato region
Master planning commenced – reviewing opportunities to enhance existing property (could
incorporate opportunities for accommodation and Riverbank development)
Two small properties – currently immaterial to group
Considering options to leverage potential of casino licences and improve offering (particularly
IB)
Strong outlook for domestic and international tourism

23
23
Portfolio review – Australia & International Business
Continue to evaluate strategic options, including a full sale
Goldman Sachs appointed to test interest from selected parties
If sale can be concluded (at right price and with right buyer) proceeds used to repay debt (in
short-term) and fund strategic / growth initiatives
If no sale, then would continue to own a stable, cash generative business
Remain committed to growing IB – positive long-term outlook
Targeting IB to represent greater share of group EBITDA – up to 15%
New management team making a positive impact
Will continue to invest prudently in business
Expansion should significantly increase revenue and earnings at the property and deliver
acceptable return
Upgrades to existing property important to ensure integration between old and new buildings
and maximise overall returns
Stable management team now in place

Existing Operations

25
25
COO’s initial observations






Improving performance of EGM business a priority given
importance to group earnings and value
Strong operational management teams in place – potential for
additional EGM expertise, particularly in Auckland
Strong platform to pursue growth opportunities
1
2
3
Range of operational improvements to be pursued across the
business
4

26
26
Potential operational improvements






Improve visitor experience through high-quality customer
service and innovation
Investment in product mix and configuration
Improve customer acquisition and loyalty
2
4
3
Increase visitation via precinct activation and leveraging key
events
1

27
27
Potential operational improvements (cont.)






Investment in new gaming spaces, particularly in Auckland
Grow presence in international / interstate (eastern seaboard of
Australia) EGM market
5
6
Leverage facilities which complement core activities (i.e. F&B,
hotels, conventions)
7
Improve cost execution and productivity
8

28
28
Brand, loyalty and customer






Marketing and promotional initiatives important to appeal to
new (and retain existing) customers
Requirement to invest in digital offering to enhance end-to-end
customer experience
Rewards and recognition important to retain loyalty –
investing in CRM system and data analytics
1
2
3
Reviewing brand strategy across the group
4
Broader focus on entertainment to appeal to communities
within which we play
5

29
29
International Business – Overview
IB target high-net worth international players and junkets who visit casinos as part of their leisure activities
Key factors for success in IB:

Attractive destinations
Premium gaming facilities
Premium hotels and F&B
Outstanding levels of customer service
Access (airlift)
1
2
3
4
5

30
30
International Business – Market trends
The Australian / NZ IB market peaked in FY16 at ~A$125bn in turnover before falling by around 30% post the Crown
arrests in late 2016 – the market since recovered during 1H18
Australian & NZ IB turnover: FY12-1H18 (A$bn)
0
20
40
60
80
100
120
140
FY12FY13FY14FY15FY16FY171H18
SKCSGRCWN

31
31
International Business – Importance to group
IB as a % of group normalised EBITDA has fluctuated between 5-10% since FY12
IB EBITDA ($m) and % of group normalised EBITDA: FY12-1H18
0%
2%
4%
6%
8%
10%
12%
0
5
10
15
20
25
30
35
40
FY12FY13FY14FY15FY16FY171H18
IB EBITDA (LHS, NZ$m)% of Group EBITDA (RHS, %)

32
32
International Business – Recent performance
IB achieved strong growth in both turnover and normalised EBITDA during 1H18
Junkets becoming increasingly prominent – ~55% of total 1H18 turnover (vs. ~40% in FY17)
Significant improvement in operating margins in 1H18 due to benefits of operational review and lower bad debts
vs. pcp
Strong activity during Chinese New Year period in late February / early March – continue to consider $10bn in
turnover for FY18 as a realistic target
Remain committed to IB for the long-term – positive growth outlook
•Will continue to invest prudently in business to ensure competitive vs. peers
•On-going prudent approach to extending credit
• Margins sustainable at around 20%

33
33
International Business – Growth opportunities






Grow and diversify customer base (particularly via junkets) to reduce reliance on small number of larger customers
and increase market share
Ensure high-quality customer service and continue to invest prudently in the business
1
2
Leverage new facilities in Adelaide post expansion and proximity to eastern seaboard of Australia
3
Further optimise Auckland and Queenstown given attractiveness of both locations
4

Break: morning tea

Major Projects

Creating a brighter future
together

37
37
Vision for NZICC and Hobson St hotel project
Significant investment in future of Auckland
Significant job creation during construction phase and
once operational
Investment will support long-term growth in tourism
expenditure from international and domestic visitors
New infrastructure to be significant demand driver
for Auckland precinct (i.e. casino, hotels, F&B, Federal
St etc)
Hobson St hotel to generate significant incremental
earnings for SKYCITY Auckland
Casino licence extension (27 years to 2048)
successfully secured long-term earnings and value for
key property
Expect NZICC to be broadly earnings neutral but to
generate incremental visitation / demand

38
38
Project update
Positive change in construction on-site over the past 9 months – experienced Fletcher Construction team now in
place
Planning for completion late 2019
Construction contracts provide for liquidated damages which should mitigate losses through delay
Expect SKYCITY’s investment in the projects to be in-line with original budget (~$703m)
Remain comfortable with contractual arrangements, but legal challenges from Fletcher Construction are
possible
•Market-based contract agreed with Fletcher Construction following fair / robust tender process
•“Absolute focus on delivering our existing projects within existing provisions and to the highest quality for our
customers” (Fletcher Building, Trading Update, 14 February 2018)
First stage of NZICC car park (~600 spaces) to be completed in 2H18

39
39
Project update
Development site (as at March 2018)

40
40
Preparing for opening
Further develop sales and marketing capability
Finalise design / functional considerations –
FF&E, AV etc
FY18
FY19
FY20
Focus on programme delivery – progress
projects in coordination with Fletcher
Construction
Originate and execute new leads and
opportunities
Establish efficient and sustainable
operating model
Finalise pre-opening plan
Recruit and train key operational staff and
management
Soft opening required to test services, plant and
facilities
Official opening

41
41
NZICC marketing approach
Share
positive
stories
Build
stakeholder
partnerships
and
communities
Presenting
and bidding
for business
Brand
creation
and
marketing
Building
awareness
of Auckland
and NZ
Networking
with
industries and
clients

42
42
NZICC bookings
6 major bookings secured from 2020 – working on a number of new leads and opportunities
Customer Conference Timing Delegates (#)
Tripartite Colorectal Meeting February 2020 1,200 delegates
International Association for Prevention of Blindness March 2020 2,000 delegates
Asia Pacific Academy of Ophthalmology March 2020

3,500 delegates
World Veterinary Congress April 2020 1,200 delegates

World Organization of Family Doctors July 2020 2,000 delegates

International Union of Food Science and Technology August 2020 2,000 delegates

43
43
NZICC bookings – Positive benefits, an example
5 day conference in March 2020
~$10m economic benefit to Auckland and NZ
6,000 international visitors
$300+ in average spend
per person, per day
15,000
hotel room nights
2
1
4
3

44
44
Outlook for Hobson St hotel
Hobson St hotel expected to deliver attractive return
on investment and earnings of around $20m per year
post opening
•Value for shareholders enhanced by decision to
develop and retain asset
Current SKYCITY Auckland hotels operating at 90%
occupancy with 10%+ RevPar growth over past 3-4
years and market leading margins
Strong outlook for hotels in Auckland
Efficiencies to be derived from operating hotel
alongside SKYCITY hotel and Grand hotel
Proven hotel operator, with strong and recognised
brand

Adelaide Expansion

46
46
Overview of Adelaide expansion
Vision to transform the Adelaide Casino into a world-class casino and entertainment complex
Riverbank precinct to be the centre of entertainment for Adelaide
Significant opportunity to grow market share and turn around underperforming casino
Improved regulatory environment and new integrated facilities to address historic disadvantages
Key value driver is significant expected increase in gaming activity (combination of local, interstate and IB)
New hotel, F&B, car park and broader precinct activation to be demand drivers and complement core activities
Master planning to ensure effective integration between old and new building and refresh of legacy plant and
services
Project expected to deliver significant incremental earnings and an acceptable return

47
47
Project update
Tender process for construction contract nearing
completion – in discussions with preferred party
Construction contract to be largely fixed-price, lump-sum
– build only contract
Total project costs expected to be ~A$330m (including
appropriate contingency), in-line with previous guidance
Early works programme slightly delayed – main
construction works to commence before end of FY18
Expect car park to be opened contemporaneous with
expansion in 1H21
Regulatory review to commence by June 2018 and be
completed by early 2019

Expansion – view from Station entry
Expansion – view from Station Road

48
48
Project update
Early works programme progress (February 2018)

49
49
Adelaide Riverbank Precinct
Adelaide Convention
Centre
Upgraded Adelaide
Festival Centre
Festival Plaza
Adelaide Oval, via
bridge across the
Torrens
Adelaide Casino
expansion
New 20-storey office
tower
Existing heritage
building
~1,500 space car park
below ground
Parliament House

50
50
Operating plans pre-expansion
New leadership team established
Expand premium gaming rooms to
accommodate increased demand
Launch international and interstate EGM
strategy, in conjunction with group
FY18
FY19/20
FY21
Implement strategies to offset
construction disruption
Leverage premium gaming concessions
Grow table games business through
leveraging new technologies and
improved product mix / yield strategies
Revitalise existing gaming spaces that
appeal to local market
Targeted marketing and promotional
activities, supported by increased focus
on customer acquisition and loyalty
Improve staff engagement and culture
Focus on operating efficiencies to
deliver margin improvements
Re-launch cashless gaming technology for main
floor customers
Improve F&B offering through new outlets,
including destinational sports bar
Reintroduce broader on-site entertainment

51
51
Preparing for opening
Conclude master planning – focus on product
mix and configuration
FY18
FY19/20
FY21
Focus on programme delivery
Work with precinct partners to leverage
strategic location
Develop relationships with broader SA
tourism industry
Develop communications / PR plan for
key stakeholders
Develop brand for hotel and integrated
resort
Develop plan to minimise business
disruption during transition to new
integrated facility
Recruit and train key operational staff and
management
Ensure effective connection and circulation
between the expansion and existing building

Soft opening required to test services, plant
and facilities
Official opening

52
52
Auckland master plan – Auckland’s fundamentals






Population expected to increase from 1.5m to 2m by
2030 (and account for ~40% of total NZ population)
Significant tourism growth expected over next 5-10
years
Demand for hotel rooms expected to exceed supply
out to 2025
(1)
Significant investment in new CBD retail, commercial,
entertainment and accommodation precincts
City Rail Link to transform accessibility to CBD – Aotea
Station (on Albert St) to provide vital mid-town link
Auckland Council vision to make Auckland world’s
most liveable city (currently ranked 3
rd
by Mercer
(2)
1
2
3
4
5
6
(1)Source: Project Palace, Regional Hotel Market Forecasting & Analysis, Colliers, NZTE, 2016
(2)Mercer Quality of Living Survey, 2018

Aotea Station for
CRL open from
2023 /24
Acquisition of majority
interest in AA Centre settles
in July 2018
Main site, SKY Tower and
SKYCITY Hotel
Grand Hotel + 5,000 m
2
of
existing convention space
(available from 2019)

54
54
Auckland master plan – Our plan
Multi-year vision for the precinct
Opportunities for further accommodation, F&B,
new gaming spaces, and entertainment
(including broader emphasis on non-gaming
entertainment)
Critical property acquisitions complete
Any investment needs to meet internal return
thresholds – investment partly growth, partly
defensive (to ensure on-going relevance of CBD
and our precinct)
Intend to introduce development partners to
unlock value in precinct – consistent with “asset-
lighter” strategy
Near-term priority completing property
acquisitions and progressing concept
development / feasibility analysis

Capital Allocation and Financial Settings

56
56
Group financial profile
Continue to expect modest growth (vs. pcp) in FY18 group EBITDA
Near-term growth to be achieved by improving operating performance of existing assets
Medium-term earnings profile largely driven by major projects
Earnings from NZICC and Hobson St hotel project unlikely to offset higher depreciation and net interest
following project completion in FY20
Expect significant increase in Adelaide’s EBITDA following completion of expansion in FY21
•Should meet or exceed higher depreciation and net interest following project completion
•Property likely to take 3-4 years post expansion to reach full potential
Potential change to effective tax rate from FY19
Maintain prudent capital structure during investment phase of major projects and release capital from existing
assets to fund new strategic / growth initiatives
Maintain dividends at current levels and grow as EPS increases in the future (ex projects)

57
57
Financial settings
Committed to maintaining BBB- S&P credit rating
Maximum gearing of 3x Net Debt / EBITDA (including capitalised leases)
Expect total debt to peak at around $1bn in FY20, with S&P gearing peaking at slightly above 2.5x
Gearing

Committed to maintaining existing dividend policy
80% payout ratio based on NPAT adjusted for capitalised interest, subject to minimum 20cps per annum
Continue to operate DRP at 2% discount, subject to capital released from existing assets
Dividends

Capital allocation

Capital allocated to support strategic initiatives and maintain existing assets
Seeking to move to “asset-lighter” approach – monetise selected property assets, divest non-core
businesses and co-invest in new developments with suitable partners
Target minimum post-tax IRR for all growth projects of 12% (current WACC around 9%)

58
58
Future capex
Updated capex profile for major projects
provided
•Assumes NZICC and Hobson St hotel
project completes late 2019 and Adelaide
expansion completes in 1H21
•No change in previous guidance for total
quantum of capex
On-going annual maintenance capex of
around $70m, but may be higher in FY19 and
FY20 due to IT investment
Additional capex on growth projects, subject
to achieving target returns
Potential for further investment in Auckland
precinct to support master planning
Major projects capex: FY17-FY21 ($m)
248
198
224
28
5
29
37
110
136
17
0
50
100
150
200
250
300
Spent to
FY17
FY18FY19FY20FY21
NZICC & Hobson St hotel projectAdelaide expansion (A$)

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59
Future debt funding
Committed debt facilities (at hedged
exchange rates) of $1.1bn
New US$150m USPP debt issue now
completed and drawn
Average debt maturity of 4.3 years
Debt either fixed rate or currently fully
hedged to mitigate future interest rate risk
Average interest rate on current debt of
5.6% over NTM
Potential for further NZ bond issue, subject
to capital released from existing assets
Hedged debt maturity profile (as at March 2018) ($m)
$21
$108
$125
$15
$120
$300
$147
$70
FY18FY19FY20FY21FY22FY23FY24FY25FY26FY27FY28
USPP –ExistingNZ BondBank –Drawn
Bank –UndrawnUSPP –New Issue
$185

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60
IT investment
Investing in IT to upgrade aging infrastructure, create robust platform for further growth and enhance
customer experience
Gaming systems
CRM and loyalty
Website and mobile apps
Revenue management system (both gaming and hotels)
Staff rostering system
Digital signage / way finding
Future priorities

Current projects

New finance and supply chain system
Infrastructure upgrade (i.e. cloud network, data centres, cyber-security, Wi-Fi)
End-user computing upgrade (both software and hardware)
Communications system upgrade (i.e. telephony, video-conferencing, desktop collaboration)
Replace point-of-sale system (both software and hardware)
NZICC and Hobson St hotel IT network and systems (i.e. convention management and hotel
management)

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61
Initiatives to release capital
Seeking to monetise selected property assets and divest non-core businesses as part of “asset-lighter”
approach
Capital released used to repay debt (in short-term) and fund strategic / growth initiatives

Evaluating options with CBRE for monetising Auckland car park (ex Federal St)
Potential sale of long-term licence over Auckland car park (including new NZICC car park), subject to
satisfying operational needs of the business / ensuring priority access for key customer groups
Auckland
main site car
park

Darwin

Continue to evaluate strategic options, including a full sale
Goldman Sachs engaged to test interest from selected parties
Property stabilised in 1H18 and expected to deliver improved performance in 2H18 on the pcp
Federal St
car park

Sale process being managed by Colliers and progressing well
Expect to complete sale by end of FY18

CSR / People and Sustainability Initiatives

63
63
Commitment to CSR and sustainability
CSR / sustainability increasing in importance for asset owners when making investment decisions
Strive to be a responsible member of every community in which we operate
Focus on protecting social licence to operate via a range of CSR initiatives
“Sustainability – how we want to be in
this world – needs to be a factor in any
major decision we make”
(1)

(Rob Campbell, Chairman)
(1)Source: MEttle Issue Nine, 2018

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64
CSR pillars / initiatives
Continue to deliver comprehensive and well respected host responsibility programme
Responsibility to minimise risk and harm from problem gaming
Significant investment in customer support initiatives, training, security and surveillance
Host
responsibility

Commitment to build communities by developing people
Invest further in community – scholarship programmes, internships, apprenticeships and career
progression, and SKYCITY hospitality school
Youth-focused community development programmes targeted at vulnerable young people
Continue to invest through community trusts and meaningful key charity partnerships
Community
investment and
development

Human rights and
labour practices

On-going investment in staff care and development, including health, safety and well-being
Commitment to move to minimum wage in NZ of $20 per hour by 2020
New LTI / STI scheme (being finalised) to ensure alignment with shareholder outcomes

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65
CSR pillars / initiatives
Actively measuring and reporting against environmental footprint (i.e. carbon, energy, water and
waste)
Actively pursuing energy savings through infrastructure and technology improvements
Improving approach to recycling, including food waste composting
The environment

Actively promoting corporate responsibility and sustainability in supply chain
Engaging with supply chain to embed sustainability considerations into purchasing and procurement
On-going development of sustainability assessment processes, rating and vendor audit
Fair operating
practices

Performance against CSR pillars to be measured and reported against annually
Intention to combine CSR reporting with traditional annual report (and financial statements)
Continue to engage with key stakeholders on CSR issues / initiatives
CSR reporting

View from the Chairman

67
67
Background to the Chairman






Over 30 years’ experience in business and capital markets
Chairman of Summerset Group and Tourism Holdings, and director of Precinct Properties – NZX-50 companies
Director of (or advisor to) a range of investment funds and private equity groups
1
2
3

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68
The Board’s commitment to shareholders
Overseeing the development and execution of group strategy
Optimise creation of value from properties, lifting return on equity
Delivering sustainable shareholder returns – focus on returns on capital and effective capital allocation
1
2
3
Focusing on CSR initiatives to ensure long-term sustainability of the business
4

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69
Chairman’s initial impressions
Strong platform created to unlock value:
•Exclusive long-term casino licences in all jurisdictions
•Properties are major entertainment destinations
•Major projects will transform Auckland and Adelaide properties
•Strong management team in place after transitory period, well led by Graeme Stephens
Opportunity to generate sustainable shareholder returns

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70
Perspectives on Corporate Governance


Important to establish clear framework for oversight and management of operations
Focus on effective allocation and discharging of responsibilities and duties
Important role to play in setting standards of behaviour and culture
Important to recognise and manage risk
Critical to protect interests of all stakeholders (i.e. staff, shareholders, customers, suppliers, community)
1
2
3
4
5

Closing remarks

72
72
Closing remarks
Significant opportunity to unlock value leveraging strong platform
Opportunities to improve performance of existing businesses
1
2
On-going focus on effective capital allocation and improving returns on capital – intention to go “asset-lighter”
3
Stable management team now in place – energised, focused on execution and delivery
5
Focus on leveraging and maximising existing assets / casino licences before we go looking for more
4
Refreshed group strategy continues to be refined / finalised – further update at FY18 results
6

Break: lunch

Appendix I – Accounting Workshop

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75
Accounting treatment of major projects
Recognise fair value of new regulatory concessions on balance sheet
•Include as increase in casino licence (intangible asset) when concessions granted
•Recognise corresponding deferred licence value (liability) prior to development of associated PP&E
•Once development completed, offset deferred licence value against accounting (not tax) carrying value of
PP&E (tangible asset)
Adelaide casino licence value amortised over relevant licence period (2035 or 2085 depending upon whether
benefit associated with exclusivity period or full licence period)
Auckland casino licence not amortised but tested annually for impairment
During investment phase, interest costs associated with major projects capitalised (based on SKYCITY’s average
cost of debt) through to project completion


Accounting entries Feb-14 FY15 FY16 FY17 1H18
Assets (Intangibles – Regulatory Concessions)
NZICC and Hobson St hotel (Auckland) - - $405m $405m $405m
Adelaide expansion (A$) $165m $163m $160m $156m $155m
Liabilities (Deferred Licence Value)
NZICC and Hobson St hotel (Auckland) - - ($405m) ($405m) ($405m)
Adelaide expansion (A$) ($165m) ($143m) ($143m) ($143m) ($143m)

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Accounting impact post completion
Once each project is completed PP&E (excluding land, but including capitalised interest) starts to be depreciated
and interest is no longer capitalised
Earnings from NZICC & Hobson St hotel project unlikely to be sufficient to offset higher depreciation and
interest expense following project completion in FY20
Expect significant increase in Adelaide’s EBITDA following completion of expansion in FY21
•Should meet or exceed higher depreciation and interest expense following project completion
•Property likely to take 3-4 years to reach full potential

Capitalised interest
(2)
FY16 FY17 FY18 FY19 FY20 FY21 Total
NZICC and Hobson St hotel $7m $11m $19m $26m $11m - $73m
Adelaide expansion (A$) $2m $3m $4m $6m $12m $4m $30m
Accounting depreciation
(1)
FY16 FY17 FY18 FY19 FY20 FY21 FY22
NZICC and Hobson St hotel - - - - $8m $12m $13m
Adelaide expansion (A$) - - - - - $9m $11m
Deferred licence value not reversed into tangible asset base for tax accounting purposes
(1)Indicative estimates only
(2)Based on current expected total quantum and timing of capex / completion on major projects

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Effective tax rate
Australian Limited Partnership (“ALP”) has been part of group funding structure since 2004
•Established as part of acquisition of SKYCITY Darwin
•Issuer of USPP notes
Proposed changes to tax legislation in NZ and Australia will impact the treatment of the ALP and increase
effective tax rate in FY19
•Impact of proposed legislation (“share of partnership expenditure”) of around $6.0m per annum (was $6.2m
in FY17)
•FY17 effective tax rate would have increased by 3.0% to 29.2% (was 26.3%) if proposed legislative change had
applied in that year
Expected increase in effective tax rate to be substantially offset by accounting treatment (depreciation
differences) associated with completion of major projects

SKYCITY
Entertainment
Group Limited
SKYCITY
Entertainment
Group Limited