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RGB YE2011 Corporate ReviewRGB YE2011 Corporate Review
7th March 2012
This presentation contains forward-looking statements (including, without limitation, statements
regarding the enhancement of shareholder value, and information and future guidance on our goals,
priorities, orders, revenues, demand, growth opportunities, customer service and innovation plans,
new product introductions, financial condition, earnings, liquidity, capital structure, operating
performance, cost structure, cyclicality, the continued strengths and expected growth of the markets
we sell into, operations, operating earnings, balance sheet models and our ability to be free cash flow
positive under any normal economic environment) that involve risks and uncertainties that could
cause results of RGB to differ materially from management's current expectations. Factors that could
cause demand to be different from RGB’s expectations include customer acceptance of RGB and
competitors’ products; changes in customer order patterns, including order cancellations; changes in
the level of inventory at customers; and changes in business and economic conditions and the timing
of award exercises by employees. RGB’s results could be impacted by unexpected economic, social,
political and physical/infrastructure conditions in the countries in which RGB, its customers or its
suppliers operate, including military conflict and other security risks, natural disasters, infrastructure
disruptions, health concerns and fluctuations in currency exchange rates.
Safe Harbor StatementSafe Harbor Statement
2
ContentContent
Page
Highlights 4
Financial Overview 6
Business Segments Updates 9
Outlook, Targets & Strategies 18
3
HighlightsHighlights
4
Highlights of FY2011Highlights of FY2011
Business The Group manage to achieve favourable EBITDA in FY2011 (RM40.7 million)
through improvement in average machines performance, effective cost
cutting exercise and closure of non performing outlets
The Group is confident to achieve even better EBITDA in FY2012 with the
expected installation of approximately RM45 million new machines at various
regions, commencement of new concessions as well as increase in SSM sales
Financial Improvement of Operating Cash Flow from RM3.1 million (FY2010) to RM54.6
million (FY2011)
Trade Receivables reduced by RM28.6 million (37%) in FY2011
Corporate Proposed disposal of 32% equity interest in Chateau to Diplomat Technology
Co. Ltd
Repayment of RM28.4 million CP/MTN and Term Loans in FY2011
Proposed fund raising exercise to retire the CP/MTN
5
Financial OverviewFinancial Overview
6
FY2011 PerformanceFY2011 Performance
FY 2011 RM ‘000
FY 2010 RM ‘000
Difference %
Revenue 118,211 158,614 - 25.5%
EBITDA * 40,719 30,512 + 33.5%
Loss Before Tax (32,904) (59,469) + 44.7%
Loss Attributable to Owners of the Parent (30,849) (50,884) + 39.4%
Basic Net Loss Per Share (sen) (2.68) (4.44) + 39.6%
Net Assets Per Share (sen) 5 7 - 28.6%
* EBITDA = Earnings before interest, tax, depreciation, amortization, impairment of property, plant & equipment,
intangible assets and investments
7
Improved profitability
Key RatiosKey Ratios
Better profitability and liquidity
12 months ended
31 Dec 2011 31 Dec 2010
Gross profit margin (%) 19% 3%
Current ratio (times) 1.10 0.62
Quick ratio (excluding inventory) (times) 0.97 0.56
Gearing ratio borrowings (times)
- Gross 1.64 1.38
- Net 1.23 1.21
8
Business Business Segments UpdatesSegments Updates
9
Revenue by Business SegmentsRevenue by Business Segments
Year-on-Year (“YoY”) Group Revenue reduced by RM40.4 million (25%) as compared to FY2010 is mainly due to the following :-
SSM YoY 35% - RM24.1mil
• One-off sales of 267 used machines to ex-concession Partner at RM11.2 million in FY2010
• Sales of 270 units of new machines at a service fee of RM0.42 million in FY2011
• However, the revenue drop was offset by RM7.9 million increase in sales of machines in Malaysia & Vietnam in FY2011
TSM YoY 11% - RM7.7mil
• Additional 5% management fees imposed by PAGCOR resulting in approximately 7.3% drop in Philippines income
• Closure of non performing outlets • Slight competition in Cambodia
regions
L&E YoY 55% - RM8.5mil
• Cessation of operation in Chateau Notes: L&E: consist of revenue from companies involved in
gaming and leisure activities Others: consist of revenue from manufacturing activities
research & development and inter-segment transactions
10
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
SSM TSM L&E OTHERS
45.1
63.0
6.9 3.2
69.2 70.7
15.3
3.4
RM'mil FY2011 - RM118.2 mil
FY2010 - RM158.6 mil
FY2011 SSM revenue decreased by 35% (RM24.1 mil) as compared to FY2010 mainly due to : One-off sales of 267 used machines at RM11.2 mil to ex-concession Partner upon cessation of outlet in FY2010 Sales of 270 unit of machines for RM0.42 million under service fee arrangement with manufacturers in FY2011
FY2011 SSM revenue decreased by 35% (RM24.1 mil) as compared to FY2010 mainly due to : One-off sales of 267 used machines at RM11.2 mil to ex-concession Partner upon cessation of outlet in FY2010 Sales of 270 unit of machines for RM0.42 million under service fee arrangement with manufacturers in FY2011
SSM FY2011 Revenue ReviewSSM FY2011 Revenue Review
11
* Actual Machines Sold in FY 2011
* Actual Machines Sold in FY 2010
Difference
Units RM’000 Units RM’000 %
Cambodia - 1,260 16 1,693 -25.5%
Macau 103 # 3,515 107 12,131 - 71.0%
Malaysia 67 6,683 20 3,684 + 81.4%
Philippines 486 # 20,540 413 28,960 - 29.1%
Singapore 30 1,972 72 4,156 - 52.6%
Vietnam 124 10,732 75 5,836 + 83.9%
Others - 413 9 1,526 - 72.9%
Total 810 45,115 712 57,986 - 22.2%
One-off sales of 267 used machines to Partner upon cessation of outlet
- - 267 11,200 -100.0%
Grand Total 810 45,115 979 69,186 - 34.8%
* Included in SSM sales are revenue from slot machines and other casino related equipments # Included in SSM Sales are selling of 30 machines (Macau) and 240 machines (Philippines ) via service fees arrangement with manufacturer
TSM FY2011 Revenue ReviewTSM FY2011 Revenue Review
Country
No. of Machines placed Revenue (RM’000)
As at Dec 2011 (37 Outlets)
As at Dec 2010 (36 Outlets)
Difference Units
As at Dec 2011
As at Dec 2010
Difference %
Cambodia 2,475 2,192 + 283 27,060 29,641 - 8.7%
Philippines 2,011 1,824 + 187 26,951 29,061 - 7.3%
Vietnam - 58 -58 152 346 - 56.1%
Macau 396 426 -30 5,285 3,569 + 48.1%
Laos 185 159 + 26 3,198 5,497 - 41.8%
Singapore - - - - 349 -100%
Others - - - 373 2,258 -83.5%
Total 5,067 4,659 + 408 63,019 70,721 -10.9%
12
10.9% drop in FY2011 TSM revenue as compared to FY2010 is mainly due to : Additional 5% Management Fees imposed by PAGCOR in FY2011 resulting in approximately 7.3% drop in
Revenue Closure of outlets in Vietnam (1), Laos (1), Macau (2), Philippines (2) and Singapore (1) Slight competition in Cambodia Competition at 1 of the outlets in Laos where upgrading of machines only took place in late 2011 However, revenue drop in the above regions have been offset by 48% revenue increment in Macau
10.9% drop in FY2011 TSM revenue as compared to FY2010 is mainly due to : Additional 5% Management Fees imposed by PAGCOR in FY2011 resulting in approximately 7.3% drop in
Revenue Closure of outlets in Vietnam (1), Laos (1), Macau (2), Philippines (2) and Singapore (1) Slight competition in Cambodia Competition at 1 of the outlets in Laos where upgrading of machines only took place in late 2011 However, revenue drop in the above regions have been offset by 48% revenue increment in Macau
TSM: New Concessions in FY 2011TSM: New Concessions in FY 2011
No. Country Concession Venues Units of
machines deployed
Commencement Date
YTD EBITDA Generated (RM’000)
1 Philippines PAGCOR Club Carmona 12 28th Jan 2011 (3)
2 Cebu Parkmall Satilie Casino 84 11th Mar 2011 505
3 Widus Casino 38 29th Jun 2011 646
4 Crown Regency Casino 12 18th Nov 2011 (11)
Sub-total Philippines : 4 146 1,137
5 Cambodia Le Macau Casino 39 5th Feb 2011 43
Sub-total Cambodia : 1 39 43
Grand Total 185 1,180
13
TSM: Cessation of NonTSM: Cessation of Non--Performance Performance Concessions in FY2011Concessions in FY2011
No Country Concession location Date of Cessation
YTD EBITDA Impact
(RM’000)
Remarks
1 Cambodia Silver World Casino 15th Mar 2011 (8) Closure of Casino
2 Macau Golden Dragon Casino 25th Feb 2011 (193) Unprofitable site. All machines relocate to Greek Mythology Casino (new concession site)
3 Vietnam Prince Club 2nd Apr 2011 26 All machines under concession sold to JV Partner
4 Philippines Carmona 9th Nov 2011 (3) Closure due to non performing of outlet
Grand Total (178)
14
EBITDA by Business SegmentsEBITDA by Business Segments
Despite a RM40mil drop in Group Revenue, FY2011 YoY EBITDA improved by RM10.2mil (33%) This is mainly due to effective cost control implementation and closure of non-performing outlets
SSM YoY 667% +RM4.0mil
• Reversal of RM1.3million provision for sales return
• Effective cost cutting measure implemented by management
TSM YoY 8% -RM3.5mil
• Additional 5% management fees imposed by PAGCOR resulting approximately 7.3% drop in income
• Closure of non -performing outlets
• Slight competition in Cambodia
L&E YoY 91% +RM12.8mil
• Reduction in operating expenses
• Cessation of operations in late 2011 Notes:
L&E: consist of revenue from companies involved in gaming and leisure activities
Others: consist of revenue from manufacturing activities research & development and other unallocated expenses
15
(20.0)
(10.0)
-
10.0
20.0
30.0
40.0
50.0
SSM TSM L&E OTHERS
3.4
42.1
(1.3) (3.5) (0.6)
45.6
(14.1) (0.3)
RM 'mil FY2011 - RM40.7 mil
FY2010 - RM30.5 mil
Major Cost Components in FY2011Major Cost Components in FY2011
16
FY2011 RM’000
FY2010 RM’000
Variance RM’000
Variance %
TOTAL REVENUE 118,211 158,614 (40,403) - 25.5%
TOTAL EXPENSES
Purchases 39,475 33% 67,742 43% (28,267) - 41.7%
Depreciation 49,824 42% 72,340 46% (22,516) - 31.1%
Staff Cost 15,141 13% 19,265 12% (4,124) - 21.4%
Finance Cost 9,570 8% 10,639 7% (1,069) - 10.0%
Leasing Fee 3,886 3% 3,596 2% 290 + 8.1%
Professional & Consultancy Fees 5,310 4% 4,207 3% 1,103 + 26.2%
Rental Expenses 1,937 2% 3,241 2% (1,304) - 40.2%
Travelling Expenses 2,173 2% 2,684 2% (511) - 19.0%
Sales & Marketing Expenses 2,947 3% 4,032 2% (1,085) - 26.9%
Upkeep of Machineries and Other Maintenance 1,555 1% 2,134 1% (579) - 27.1%
Utilities 1,413 1% 2,066 1% (653) - 31.6%
Other Expenses 2,491 2% 4,228 3% (1,737) - 41.1%
Junket & Complimentary Room Expenses 1,654 2% 13,109 8% (11,455) - 87.3%
Impairment / Written off of PPE & Receivables 14,452 12% 11,014 7% 3,438 + 31.2%
Total Expenses 151,828 128% 220,297 139% (68,469) - 31.1%
TSM: Update on Mobilisation PlanTSM: Update on Mobilisation Plan
As at Dec 2010 - Units at warehouse 1,240 Commentary
Sites: Mobilized The remaining 122 units of machines are allocated for the upcoming cruise ship operation
Cambodia 38
Philippines 109
Myanmar 31
Laos 16
Sub-total of mobilized units for FY2011 (194)
Impairment and written off of machines with zero value
(924)
Units to be mobilized in FY2012 122
17
Outlook, Targets & Outlook, Targets & StrategiesStrategies
18
A better outlook ahead
Outlook for FY2012Outlook for FY2012
Division Outlook Targets Strategies
SSM Relatively promising
• Expected to sell 900 machines by FY2012
• Entered new venture with Bingo machine manufacturer to start distribution and concession of Bingo Machines in Philippines
• Bingo machines are popular as it expects to replace the traditional Bingo in Philippines market
• Establish more sales presence in Cambodia, Vietnam and Korea
TSM Sustainable income
• Approximately 600 additional machines will be installed by end of FY2012
• Deployment of 122 fully impaired machines on cruise ships
• TSM Income from Bingo Machines
• Continuous exploration of new concessions in Indo-China, Philippines and Macau
• Placing of new machines to improve yield • Focus on the disposal of used machines at
warehouse • New concession of Bingo Machines on
profit sharing basis in Philippines
19
A better outlook ahead
Outlook for FY2012 (cont)Outlook for FY2012 (cont)
Division Outlook Target Strategies
L&E Recurring Rental Income
• Generate additional rental income
• No operating losses
• Continue to look for tenants for the remaining floor space
• Continue to look for potential buyers for the disposal of remaining equity interest in Chateau
Others Positive • Launching of new RGBGames in Q3 2012 under collaboration with Top Games Designer
• We have entered into agreement with a renowned games development company to develop new RGBGames
Operating Cash Flow
Positive • Additional RM15mil repayment for CP/MTN
• Reduction of Finance Cost
• Debts Reduction plan • Conversion of CP to Term Loans
20
THANK YOUTHANK YOU
For information, please contact RGB International Bhd. at Telephone: +604-2631111 | Email: [email protected]