For personal use only use personal For Silver Heritage Limited (ASX:SVH) 1H2018 Results & Trading Update CONTENTS
1. 1H 2018 RESULTS PRESENTATION 2. AUGUST 2018 TRADING UPDATE 3. TIGER PALACE - DEEP DIVE
4. TIGER PALACE - LOCAL INFRASTRUCTRE UPDATE
5. TIGER PALACE – THE OPPORTUNITY
HIGHLIGHTS
Strong Revenue Growth as Tiger Palace commenced operations in 1H 2018
Group moved from Adjusted EBITDA loss in 1H2018 to Positive in July/August
Tiger Palace gaining significant traction and property level EBITDA positive in August
Tiger Palace impacted by delay in highway completion & monsoon season
Post June 30th all properties seeing strong revenue and earnings growth For personal use only use personal For
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2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 2
FIRST HALF 2018 RESULTS For personal use only use personal For
•3 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 3 1. 1H 2018 RESULTS
First Half 2018 was a transition period as Tiger Palace commenced operations at the start of the period
Revenue increased in 1H2018 of prior period from commencement of operations at Tiger Palace Resort
Property level EBITDA & Group Adjusted EBITDA was impacted by costs associated with start-up cost associated Tiger Palace
Company has taken a number of one off restructure and impairments in 1H2018 totaling US$2,403,000
US$ 1H2018 1H2017 Change Revenue $11.28m $8.04m 40% Other Revenue $0.10m $0.04 181% Property Level EBITDA ($0.25m) $3.37m -88% Adjusted* EBITDA ($1.88m) $1.19m -259% Deprecation & Amortization ($3.14m) ($1.38m) 128% Finance Costs ($2.63m) ($1.90m) 39% One off Items, Impairment & ($2.40m) ($1.43m) 68% Restructure Statutory NPAT ($10.05m) ($3.51m) 186% Underlying NPAT ($7.66m) ($2.09) 267% NTA 3.94c 5.59c -30%
Share Price @ 31st August 2.37c (3.3c AU$) For personal use only use personal For
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* Adjusted EBITDA excludes one off items, impairments & restructures costs
2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 4 BALANCE SHEET AT 30 JUNE 2018
Balance Sheet Equity Value US$29.65m (AU$41.2m)
Market Cap @ US$0.0237 (AU$0.033) US$13.9m (AU$19.3m)
US$ 1H2018 Current Assets $11,79m Includes $6.567m cash Noncurrent Assets $57.07m
Current Liabilities $20.62m Includes $12m debt to OCP* & Nepal Bank Debt
Noncurrent Liabilities $18.59m Remainder of OCP* & Nepal Bank Debt
Equity $29.64m
* Existing debt terms, the Company is currently renegotiating terms with the debt provider OCP For personal use only use personal For
•5 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 5 1H18 CASHFLOW ANALYSIS - Upside from Tiger Palace Ramp-up
Opportunity to reduce finance costs if refinanced Includes significant OCP Bonds one off investment in Tiger Palace Currently improving as Tiger 12,000 Palace continues ramp up 1,081 10,000
8,000 2,656
1,508 6,000 563
US$ 000 US$ 4,000
2,000
11,231 6,567
- Cash 31-Dec-17 Finance Costs Capex - includes Tiger Cashflow Operating Other Cash 30-Jun-18 Palace investment Palace Balance Balance
Ø Decrease in cash on hand of US$4.66m during the half is expected to improve in subsequent periods as Tiger Palace continues its ramp-up Ø The Group only requires approximately US$3m in working capital to fund operations
For personal use only use personal For Ø 3Q trading update demonstrating that assets are now profitable at the property level
SILVER HERITAGE GROUP 3-Sep-2018 Page 6 SEGEMENT OVERVIEW AND RESULTS
Tiger Palace Resort Bhairahawa TMCCK Phoenix International Club
Photo - Tiger Palace Resort Bhairahawa Photo - TMCCK Rendering - Phoenix International Resort Location: Rupandehi, Nepal Location: Kathmandu, Nepal Location: Bac Ninh City, Vietnam
Owner & Operator & License Holder Operator and License Holder Casino Manager
Premises: Tiger Palace Resort Leased Premises (Shangri-La Hotel) Premises: Phoenix International Hotel
US$52.4m invested US$2.6m invested US$11.5m invested
1H2018 Revenue US$2,799,000 1H2018 Revenue US$2,376,000 1H2018 Revenue US$5,928,000
1H2018 EBTIDA -US$2,795,000 1H2018 EBTIDA US$42,000 1H2018 EBTIDA US$2,443,000
For personal use only use personal For HK Head Office, AU Listing & Corporate Overheads 1H2018 US$1.8m
Plus $152k of revenue from none core LAOS operations
•7 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 7 2. AUGUST 2018 TRADING UPDATE
SIGNIFICANT REVENUE INCREASES
COSTS FLAT TO DECLINING
GROUP RETURNED TO POSITIVE ADJUSTED EBTIDA
GROWTH ACCELERATING OVER Q1/Q2
TIGER PALACE REACHES POSITIVE PROPERTY LEVEL EBITDA For personal use only use personal For
•8 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 8 JULY & AUGUST GROUP EBITDA POSITIVE
1Q18 A. EBITDA: (US$1.9m) 2Q18 A. EBITDA: US$61,000 July & August: US$541,926 Group Adjusted EBITDA - Moving to Positive since June
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000 364,795 278,028 177,131 9,506 $0 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 -226,882 -303,521 -$500,000
-744,462 -$1,000,000 -895,382
For personal use only use personal For Adjusted EBITDA Total Revenue Total Costs
• AUGUST numbers are management estimates • Adjusted EBITDA excludes one off items, impairments & restructures costs
2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 9 JULY & AUGUST GROSS GAMING REVENUE
July & August gaining traction over Q2 2018 which itself was strong when compared to Q1
Tiger Palace – the first 2 months of Q3 has done 97% of previous (Q2) revenue
July & August as a GGR $USD 1Q2018 2Q 2018 July & August % of 2Q 2018 Tiger Palace $0.91m $1.34m $1.30m 97% TMCCK $0.85m $1.52m $1.02m 67% Phoenix $6.43m $8.52m $5.66m 66%
Gross Gaming Revenue $8.19m $11.38m $7.98m 70% For personal use only use personal For
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Gross Gaming Revenue is before partner share
2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 10 PROPERTY LEVEL REVENUE & EBITDA
1H2018 REVENUE US$ July August Monthly Average Tiger Palace $ 467,000 $ 571,000 $ 975,000 TMCCK $ 396,000 $ 625,000 $ 401,000 Phoenix $ 988,000 $ 1,094,000 $1,189,000 Other Income $ 30,000 $ 13,000 $ 9,000 Group Revenue $ 1,881,000 $ 2,303,000 $2,574,000
EBITDA US$ Tiger Palace $ (466,000) $ (206,000) $ 175,000 TMCCK $ 7,000 $ 172,000 $ 30,000 Phoenix $ 407,000 $ 490,000 $ 570,000 Property EBITDA $ (52,000) $ 456,000 $ 775,000
Property EBITDA is EBITDA at operational entity level
For personal use only use personal For •11
2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 11 3. TIGER PALACE – DEEP DIVE
Not a typical border casino.
This is a world class, 1st world quality resort casino on the border with India
Unique opportunity to invest in an ASX listed business leveraged to Indian growth / rising Indian middle class
Tiger Palace now operational, proven and growing fast
Significant traction in first 8 months – more recently during monsoon season
All progress is before the local road and airport infrastructure is completed For personal use only use personal For
•12 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 12 TIGER PALACE DEEP DIVE
TIGER PALACE REACHES POSITIVE PROPERTY LEVEL EBITDA IN AUGUST 2018
ALL STATISTICS SHOW SIGNIFICANT TRACTION DURING SEASONALLY SLOW MONSOON PERIOD For personal use only use personal For
•13 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 13 TIGER PALACE – MONTHLY PERFORMANCE
Rate of new registered members is increasing Steady 60-70% of monthly visitors are returning vs new visitors July & August has been strong Monsoon and poor road conditions
Casino Registered Members Casino Visitors 24,895 16,000
22,000 21,194 14,000
17,366 12,000 17,000
10,000
12,181 12,000 8,000 9,231 6,000 6,915 7,000 4,000 3,944 2,441
For personal use only use personal For 2,000 2,000 Jan Feb Mar Apr May Jun Jul Aug Jan Feb Mar Apr May Jun Jul Aug
2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 14 TIGER PALACE – DROP & REVENUE
11% Compound Monthly Growth rate in Drop (Drop is money exchanged for chips)
15.5% Compound Monthly Growth Gross Gaming Revenue (Money won by the house)
Casino Drop Gross Gaming Revenue $2,750,000 $900,000
$800,000
$2,250,000 $700,000
$600,000 $1,750,000
$500,000
$1,250,000 $400,000
$300,000 $750,000
$200,000
$250,000 $100,000 For personal use only use personal For Jan Feb Mar Apr May Jun Jul Aug Jan Feb Mar Apr May Jun Jul Aug
*August numbers early estimates Gross Gaming Revenue is before partner share on EGMs
•15 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 15 TIGER PALACE – NON GAMING REVENUE
Occupancy effected by July & August Monsoonal rains Record forward hotel bookings of >1,000 nights in next 90 days Gaining traction in major event bookings post Monsoon Trip advisor 5 star rating (165 Excellent & Very Good reviews out of 172)
Tiger Palace - Rooms Occupancy % Non-Gaming Revenue 90% $250,000
80%
70% $200,000
60% $150,000 50%
40% $100,000 30%
20% $50,000 10%
0% $0 For personal use only use personal For
Jan•16 Feb Mar Apr May Jun Jul Aug Jan Feb Mar Apr May Jun Jul Aug
2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 16 TIGER PALACE TOTAL REVENUE & COST
17% compound monthly Revenue growth rate Growth achieved while reducing property costs Fixed cost base already showing significant operational leverage
Monthly Total Costs Monthly Total Revenue 1,200,000 1,000,000 975,268
1,100,000 900,000
778,453 800,000 1,000,000
700,000 900,000 17% CMGR597,361 SINCE OPENING 600,000 570,711 800,000 500,000 467,303 397,256 700,000 400,000
281,440 600,000 300,000 278,008
200,000 500,000
100,000 400,000
For personal use only use personal For Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 •17
*August numbers are early estimates.
2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 17 TIGER PALACE PROPERTY EBTIDA
Tiger Palace Property Level EBTIDA Positive ~$175,000 August 2018 Reached after only 7 months of operations Those results achieved during Monsoon Season Without completion of main highway or international airport
Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18
200,000
100,000
-
-100,000
-200,000
-300,000
-400,000
-500,000
-600,000
For personal use only use personal For -700,000 •18
Property level EBITDA is EBITDA at operational entity level August numbers are early estimates and may vary slightly
2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 18 4. TIGER PALACE – LOCAL INFRASTRUCTURE UPDATE
Highway from India - near Tiger Palace For personal use only use personal For Completed Section north of Tiger Palace
•19 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 19 TIGER PALACE – HIGHWAY FROM INDIA TO RESORT
• When completed it will be a new 24km 4-6-lane highway connecting India with Nepal’s major East-West Highway 24km new 6-lane highway from the border to Butwal and the East-West Highway and connect Indian to within a few hundred meters of Tiger Palace
• Access to around Tiger Palace from India has many sections is not yet complete (still dirt road)
• Visitors impacted significantly especially during monsoon when road is almost un-drivable
• Entire 24km project due for completion December 2018
NEPAL
INDIA
Completed section of Highway For personal use only use personal For Completed Section north of Tiger Palace
•20 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 20 TIGER PALACE – INTERNATIONAL AIRPORT
GAUTAM BUDDHA INTERNATIONAL AIRPORT, BHAIRAHAWA
• Gautam Buddha Airport is currently domestic (Nepal) only - due to become Nepal’s 2nd International Airport
• Located just 10km from Tiger Palace Resort
• Upgrading works to add a 3,000m runway (structurally complete save for tarmac commencing September)
• Runway will cater to wide-body jets including Boeing 777 and Airbus A330 with enough land for A380
• Terminal construction, control tower, and parking bay Photo - Gautam Buddha International Airport Construction, July 2018 construction all underway (see photo)
• Project completion target of the Nepal Government is July 2019
• Project Financing is ADB (Asian Development Bank) OFID (OPEC Fund for International Development) and the Civil Aviation Association of Nepal
10km by road • The expanded airport is expected to cater to at least
30% of all international inbound air traffic to Nepal For personal use only use personal For
Map - Gautam Buddha International Airport and Tiger Palace: 10km by road
•21 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 21 5. TIGER PALACE – WHAT IS THE SHORT TERM OPPORTUNITY
Tiger Palace Resort Bhairahawa TMCCK Phoenix International Club
# Tables: 45 # Tables: 15 # Tables: 15
GGR per Table per day: US$252 GGR per Table per day: US$829 GGR per Table per day: US$5,353
# EGMs: 216 # EGMs: 37 # EGMs: 94
GGR per EGM per day: US$7 GGR per EGM: US$46 / Day (1H18) GGR per EGM per day: US$155 (1H18)
1H2018 Revenue US$2,799,000 1H2018 Revenue US$2,376,000 1H2018 Revenue US$5,928,000
TIGER PALACE REVENUE (at TMCCK GGR & EGM rates per day)
> USD$17,500,000 p/a
• Complete VIP Gaming Rooms
• Commence Junkets Entirely possible to move towards Phoenix level GGR/EGM per table
For personal use only use personal For • Local Infrastructure upgrades will attract bigger players
•22 2Q18 Results and Trading Update │ SILVER HERITAGE GROUP 3-Sep-2018 Page 22 Disclaimer
This document dated 30 August 2018 has been prepared by Silver Heritage Group Limited ACN 604 188 445 (Company) and is provided for information purposes only. It contains summary information about the Company and its activities and is current as at the date of this document. It should be read in conjunction with the Company's periodic and continuous disclosure announcements filed with the Australian Securities Exchange, available at www.asx.com.au.
This document does not constitute an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any security in the Company nor does it constitute financial product advice. This document is not a prospectus, product disclosure statement or other offer document under Australian law or under any other law. This document has not been filed, registered or approved by regulatory authorities in any jurisdiction.
The information contained in this document is not intended to be relied upon as advice or a recommendation to investors and does not take into account the investment objectives, financial situation, taxation situation or needs of any particular investor. An investor must not act on the basis of any matter contained in this document but must make its own assessment of the Company and conduct its own investigations and analysis. Investors should assess their own individual financial circumstances and consider talking to a financial adviser, professional adviser or consultant before making any investment decision. Past performance is no guarantee of future performance.
By reading this document you agree to be bound by the limitations set out in this document. No representation or warranty, expressed or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this document. To the maximum extent permitted by law, none of the Company and its related bodies corporate, or their respective directors, employees or agents, nor any other person accepts liability for any loss arising from the use of this document or its contents or otherwise arising in connection with it, including, without limitation, any liability from fault or negligence.
This document may contain forward-looking statements including statements regarding our intent, belief or current expectations with respect to the Company's business and operations, market conditions, results of operations and financial condition, specific provisions and risk management practices. When used in this document, the words 'plan', 'will', 'anticipant', 'expect', 'may', 'should' and similar expressions, as they relate to the Company and its management, are intended to identify forward-looking statements.
For personal use only use personal For Forward-looking statements involve known and unknown risks, uncertainties and assumptions and other important factors that could cause the actual results, performances or achievements of the Company to be materially different from future results, performances or achievements expressed or implied by such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document.
3Q18 TRADING UPDATE │ SILVER HERITAGE GROUP 30-Aug-2018 Page 23