For personal use only 1H20 Results Presentation 19 February 2020
Contents For personal use only Key Stakeholders 3 About Redcape 4 Strategic Growth Drivers 5 1H20 Highlights 6 1H20 Financials 10 Outlook 14 Appendices 16 Redcape Hotel Group 19 February 2020 1H20 Results Presentation 2
Focussed on Key Stakeholders For personal use only Care Collaborate Courage We seek to understand others. We’re open to sharing our concerns, knowledge, We are curious and We recognise and praise great behaviour. experience & success. We value our promises. think innovatively. Team Promise We create and nurture an environment of trust SO THAT... Our people have clarity of purpose and feel enriched, empowered, energised and valued. +50 4.5/5 +9.2cps Customer NPS 1 Redcape Staff Satisfaction Distributable Earnings Guidance 2 +34 Current 4.1 Current 8.8 cps FY19 1. Management use Net Promoter Score as a tool to measure customer advocacy and loyalty. NPS rating scale between -100 and +100. 3 2. Distributable earnings are not prepared in accordance with IFRS and are not audited.
About Redcape Australian For personal use only Venue Locations A leading hospitality group with scalable systems Townsville 2 freehold assets and capable people, led by an experienced and proven management team driving growth through active management of a high quality real estate backed portfolio. Mackay 2 freehold assets Greater Brisbane 32 21 5 1 1 leasehold asset 32 Gold Coast 1 freehold asset 30 Freehold 21 in greater Sydney 5 Year refurbishment Going Concerns pipeline of assets High growth suburban infjll Total Freehold ownership markets, many with latent Asset optimisation program allows for responsive land value opportunities. delivering community hubs. Greater Sydney refurbishment and asset 21 freehold assets optimisation optionality. 1 leasehold asset Shellharbour / Wollongong 4 freehold assets 1. Portfolio consists of 30 Freehold Going Concerns and 2 Leasehold Going Concerns Redcape Hotel Group 19 February 2020 1H20 Results Presentation 4
Strategic For personal use only Growth Drivers Enhance Growth Capital Corporate Social Operations Capital Optimisation Responsibility (‘CSR’) • Invest in our people • Grow high-quality asset base • Capital structure to support growth • Continuous improvement of operating governance frameworks • Data insights driving effjciencies • Refurbishment pipeline maximises • Flexible debt arrangements portfolio value • Advancement of harm minimisation • Data insights providing lead • Active portfolio management programs indicators • Asset optimisation and alternate use • Contribution to local communities • Customer experience focused Redcape Hotel Group 19 February 2020 1H20 Results Presentation 5
1H20 Results Presentation For personal use only 1H20 Highlights Dan Brady, CEO
1H20 Overview For personal use only Financial Performance Operational Performance Portfolio & Capital Management 4.78cps $160.6m 35.9% 1H20 Distributable Earnings 1 up 10.9% 2 on pcp Revenue, up 12.7% Gearing at lower end of 35%-45% target range 6 >9.20 cps full year distributable earnings guidance 3 upgrade LFL 4 revenue growth 6.2% Interest Cover Ratio of 4.65x 7 4.41cps $17.4m $6.8m 1H20 Distributions Statutory NPAT up +$29.0m 5 Growth Capex 8 Spend 8.75 cps full year guidance unchanged Underlying NPAT $21.4m FY20 progressing to budget and schedule 7.81% $26.4m $1.06b 9 Annualised Distribution Yield based on Distributable earnings increase by 20.8% 2 on pcp Portfolio value $1.12 share price as at 18 February 2020 Strong operating performance, portfolio enhancement 32 venues including 1 acquisition and 1 divestment in 1H20 1. Distributable earnings defjned as underlying NPAT adjusted for non-cash items such as fair value adjustments, depreciation and amortisation and other unrealised and non-recurring items less maintenance capex. Refer to reconciliation on P13. Distributable earnings are not prepared in accordance with IFRS and are not audited. 2. The difference in absolute distributable earnings growth and distributable earnings per security growth is due to the increase in number of weighted average securities on issue from 1H19 to 1H20. 3. Subject to no change in economic conditions, standard management fee construct and/or portfolio numbers. 4. Like for Like (“LFL”) revenue growth is based on venues that traded for the full year FY19 and 1H20 and thus excludes any part year acquisitions and divestments. 5. Refer to reconciliation on P14 for an explanation of the differences between Statutory and Underlying NPAT. 6. Gearing defjned as total borrowings less cash as a percentage of total assets less cash. 7. Interest Cover Ratio (“ICR”) calculated as Total EBITDA / Net Finance costs less amortisation of borrowing costs (on a 12 month rolling basis). 8. Growth Capex includes major refurbishments, one off acquisition costs and tactical capital expenditure. 9. Includes asset held for sale, Royal Hotel Granville. Redcape Hotel Group 19 February 2020 1H20 Results Presentation 7
1H20 Financial For personal use only Highlights 1H20 3 1H19 3 $ % $m Underlying Underlying Change Change Gaming revenue 102.7 90.7 12.0 13.2% On-premise revenue 33.0 26.4 6.6 24.8% 24.8 5 Off-Premise revenue 24.3 (0.5) (2.1%) • Full year distributable earnings guidance lifted to 9.20 cps 1 or greater Other revenue 0.6 0.5 0.1 25.1% Total revenue 160.6 142.5 18.1 12.7% • Distributable earnings 2 per security of 4.78 cents, up 10.9% on pcp Gross profjt 85.7 75.2 10.5 14.0% • Distribution of 4.41 cents per security 38.7 6 Operating EBITDA 32.3 6.4 19.8% • Distributable earnings of $26.4m were 20.8% up on pcp due to the normalisation of acquired venues and strong growth in underlying earnings • LFL revenue up 6.2%, total revenue up 12.7% to $160.6m Distributable earnings ($m) 26.4 21.9 4.5 20.8% – Gaming revenue up 13.2% on pcp Distributable earnings (cps) 4.78 4.31 0.47 10.9% – Food and beverage revenue up 24.8% on pcp mainly refmecting hotel Distribution (cps) 4.41 4.41 - - portfolio composition and refurbishment program – All trading departments delivered positive LFL revenue growth $m 1H20 1H19 $ Change • Operating EBITDA of $38.7m 3 , up 19.8% refmecting strong revenue growth Statutory NPAT 17.4 (11.6) 29.0 and cost out initiatives implemented in 2H19 • Operating cashfmow excluding non-recurring items 4 of $24.5m versus distribution to security holders of $24.3m, which demonstrates the highly cash generative nature of the business and the sustainability of distributions 1. Subject to no change in economic conditions and/or further acquisitions or divestments. 2. Distributable Earnings is not prepared in accordance with IFRS and are not audited. 3. Revenue, gross profjt and expenses reclassifjed to comply with accounting standards with no net change to operating EBITDA. 4. Non-recurring operating cash fmow costs comprise refjnancing and establishment costs of $4.5m and hedge break costs of $3.8m. 5. 1H19 includes divested Belrose Hotel Liquor Store. 6. AASB16 increases 1H20 EBITDA by $0.9m. 1H20 EBITDA is 17.1% higher on pcp on comparable basis. Redcape Hotel Group 19 February 2020 1H20 Results Presentation 8
1H20 For personal use only • Acquisitions made in FY19 fully integrated and trading well Portfolio • Active portfolio management 1 - 2 acquisitions and 2 divestments – Acquisition of Eden Brewhouse, Redbank Plains for $11.5m (LGC 2 ) – Sale of St George Hotel, Belmore for $47.1m at a premium to book value 5 (FGC) Update Contracted to settle in 2H: – Acquisition of the Kings Head Tavern 3 , South Hurstville for $27.0m (FGC 4 ) – Sale of Royal Hotel, Granville 3 for $51.0m at a premium to book value 5 (FGC) • Executing on fjve year pipeline of refurbishment opportunities – Smaller projects completed on Australian Hotel & Brewery, Central Hotel, Crescent Hotel, Shamrock Hotel, Vauxhall Hotel and Unanderra Hotel – Mt Annan major refurbishment progressing • Progressing asset optimisation optionality – Cabramatta - A proponent lead planning proposal with a 6.1:1 FSR is expected to be lodged in 4Q20 consistent with recent urban design studies – Keighery - A development application is currently in progress for a mixed use residential scheme consistent with the new draft Auburn Town Centre LEP – Revesby Pacifjc - Aged Care option considered to be suboptimal to highest and best use being a pub, ongoing assessment to continue • Directors NAV per security of $1.16 7 1. All values exclude transaction costs. 2. LGC – Leasehold Going Concern. 3. Target settlement date 24 February 2020. 4. FGC – Freehold Going Concern. 5. Premium over book value as at 30 June 2019. 6. Excludes Eden Brewhouse acquisition (valued at acquisition price) and St George divestment. 7. Statutory NAV $1.15 refmects net increment to land only in accordance with accounting standards. Redcape Hotel Group 19 February 2020 1H20 Results Presentation 9
1H20 Results Presentation For personal use only 1H20 Financials Tim Fawaz, CFO
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