Crown Resorts : 2016 Annual General Meeting - Chairman and CEO Addresses

I will now hand you over to the CEO Rowen Craigie to present a summary of Crown's financial results for 2016.

Thank you Rob and welcome everyone.

The full details of Crown's results for the 2016 financial year were provided in our ASX results release in August and in our Annual Report which was sent to shareholders last month. Therefore I will provide just an overview of the financial results today.

Normalised Net Profit After Tax (NPAT) attributable to the parent was $406.2 million which was down 22.7% on the previous year.

Normalised Earnings Before Interest, Tax and Depreciation (EBITDA) was $855.8 million, up 3.8% on the previous year.

Crown's share of Melco Crown Entertainment's (MCE) normalised NPAT was $58.1 million, down $103.2 million or 64.0%.

Significant items after tax of $555.2 million includes the profit generated from the partial sale of Crown's shareholding in MCE.

Reported NPAT attributable to the parent of $948.8 million was up 146.4% after significant items.

On 7 October, Crown paid a final dividend to its shareholders of 39.5 cents per share, franked to 70%, bringing the full year dividend to 72.5 cents per share.

Overall, the F16 earnings were affected by challenging market conditions in Macau which impacted MCE's result. Crown's Australian operations delivered a solid performance.

Turning to our Australian resorts, main floor gaming generated revenue growth of 5.8% and non-gaming revenue grew by 1.5%. VIP program play revenue at our Australian resorts was down 8.0%.

Australian resorts EBITDA grew by 1.8% and the overall operating margin increased 0.3% to 28.9%.

In F16, normalised revenue across our Australian resorts increased by 0.8% to $3.2 billion.

Crown Melbourne's total revenue was up 3.5% compared to the prior comparable period and in Crown Perth total revenue was down 5.5%.

In F16, normalised EBITDA in Australian resorts increased by 1.8% to $933.2 million.

Crown Melbourne's normalised EBITDA was up 1.7% compared to the prior comparable period while at Crown Perth, normalised EBITDA was up 2.2%.

In F16, VIP program play turnover in Australia of $65.1 billion was down 8.0%, which was a reasonable outcome given the strong growth in the prior comparable period of 41.8% and the depressed nature of VIP gaming activity across Asia.

Normalised EBITDA from our London business, Crown Aspinalls, was $26.5 million, down 16.4% on the previous year.

EBITDA from Crown's wagering and online businesses, Betfair, CrownBet and DGN, was a loss of $5.4 million. Overall, the wagering and online social gaming businesses were profitable in the second half and revenue growth was strong.

Let me move now to Crown's investment in Macau through MCE, in which Crown held a 27.4% stake at 30 June 2016.

Crown's share of MCE's normalised NPAT for the year to 30 June 2016 was an equity accounted profit of

$58.1 million, down $103.2 million or 64.0% on the pcp. After adjusting for a below theoretical win rate and pre-opening costs, Crown's share of MCE's reported NPAT result for the year was an equity accounted profit of $42.7 million, down $79.3 million or 65.0% on the pcp.

Macau is currently experiencing a difficult period which has adversely affected all casino operators. Overall gross gaming revenue across the Macau market in the year to 30 June 2016 declined 22.5%.

As I mentioned earlier, the result includes significant items after tax of $555.2 million which includes the profit generated from the partial sale in May of Crown's shareholding in MCE, which is reported as a significant item. The sale of 155 million ordinary shares in MCE gave rise to a net gain on sale of $602.0 million.

Now let me update you on more recent trading.

Across our Australian resorts, for the period 1 July to 16 October 2016, revenue from main floor gaming (excluding VIP program play revenue) grew by 1% on the pcp and non-gaming revenue grew by 5%.

VIP program play turnover has been softer than the prior year across both properties. These results are to the trading week ending last Sunday and as such do not reflect the impact of the detention of Crown's staff in China given the short time period that has elapsed.

Our wagering and online businesses are showing good revenue growth.

Crown continues to invest significantly in its Australian properties so that they can remain competitive with the new integrated resorts emerging across Asia.

This slide provides an overview of Crown's actual capital expenditure from F12 to F16 and projected capital expenditure from F17 to F19.

Actual capex on Crown Melbourne in the period F12 to F16 was over $700 million and a further $233 million is forecast to be spent from F17 to F19, not including the proposed new One Queensbridge hotel tower.

Capex on Crown Perth in the period F12 to F16 was $1,116 million and a further $223 million is forecast to be spent from F17 to F19, which includes the completion of Crown Towers Perth.

Capex on Crown Sydney in the period F12 to F16 was $226 million and a further $1,220 million is forecast to be spent from F17 to F19.

This is a very significant investment by the company in large scale Australian tourism attractions and Rob will have more to say on this subject shortly.

The partial sale in May of Crown's shareholding in MCE, generated proceeds of $1,067.1 million, combined with $180.7 million in MCE dividends received during the year, and the group's net operating cash flows, has enabled Crown to reduce its net debt and to maintain a strong balance sheet and credit profile to fund existing Australian development projects. Crown's net debt position (excluding working capital cash) was $2.0 billion, a reduction of 20.4% from 30 June 2015.

This slide provides you with Crown's debt maturity profile. As at 30 June 2016, Crown had committed undrawn bank facilities of $1,289.3 million. It is important to note that Crown's capex projects all have staggered development time lines which can be funded from these undrawn facilities and ongoing cash flow. We are comfortable with Crown's financial position given the timing of Crown's capital projects.

Can I conclude by thanking the management team and all our employees for their hard work, enthusiasm and dedication over the past year. I would also like to thank all Board members for their continued guidance and support.

Thank you all for attending today and I will now hand you back to Rob. Thank you, Rowen.

Shareholders,

Welcome to Crown Resort's 2016 Annual General Meeting.

We are pleased to be in Perth, truly one of Australia's best cities. Despite the slowdown in the resources sector, this city and this state have a bright future - a future that we are investing in at Crown Resorts.

I really want to commence today by first addressing the matter of our Crown staff currently detained in China. For the Board, management team and staff, our major shareholder, James Packer, and myself, our immediate concern is the welfare and safety of our colleagues. Our number one priority is to provide them and their families with all the support we can at this difficult time.

Given the current lack of information available, it is not possible for anyone to be able to provide any informed commentary on these detentions. Likewise, any assessment at this time as to any material impact on our business is both premature and speculative.

We continue to work closely with the Department of Foreign Affairs, Australian and Malaysian consular officials - as well as our legal representatives in China - to obtain more information, understand the reasons for the detention and, ultimately, resolve this situation.

I acknowledge that the detention of our employees has occurred in a foreign country and we are therefore subject to its legal system. We accept their jurisdiction and we respect their laws. However, at this time there

have been no formal charges laid against our staff, the investigation continues and they are of course entitled to a presumption of innocence.

While I know we all have many questions, we must be very cautious and measured in our commentary at this sensitive time in the process.

To reiterate, our immediate focus is the welfare of our staff and their families. I'm sure you would all want to join me in passing on our support.

Now I'd like to turn my remarks to Crown's AGM here in Perth. As I said earlier, we are excited to be here. Perth is a city with all the ingredients to become a truly great, global city: a high quality of life, access to quality education and healthcare and a rich, vibrant culture.

We firmly believe that Perth, given its geographic location, is as well placed as any city in the world to capitalise on the rise of the Asian middle class and the economic opportunities, especially in tourism and services more broadly, that this will provide.

The size and scale of this opportunity could not be made any clearer than by the fact that direct employment in the tourism industry has overtaken mining operations in Western Australia. In numeric terms, 64,000 people are now directly employed in WA's tourism industry versus 59,000 in mining operations, with over 30,000 tourism-related businesses operating in the State - and these are great jobs!

While resources will always be critically important here, we think Perth will also reflect the expansion of Australia's economy to encompass greater industry diversity and resilience. In particular, the growth of our service sector will lead the charge.

The Economist Magazine's Intelligence Unit argues that by 2050 Perth will be within a short flight of three of the five largest economies in the world at that time - Indonesia, India and China. To further emphasise this point, if the ASEAN community was a single country, it would already be the seventh-largest economy in the world. McKinsey predicts it will be the fourth-largest economy in the world by 2050.

Perth's tourism numbers are already beginning to tell this tale.

In Financial Year 2016 Perth saw visitor numbers from Singapore increase by 15.8 per cent, China increase by 15.7 per cent and Malaysia increase by 18.6 per cent.

Crown is confident that the growth of the Asian middle-class will provide significant economic benefits to Western Australia - and the country as a whole - through increased tourism for decades to come.

Turning to our Australian businesses, the Crown Perth Resort remains a critical piece of Western Australia's tourism infrastructure. It contributes $1.4 billion dollars of economic value to the Western Australian economy every year and we are very proud to say that over 5,800 West Australians work here - making Crown the biggest single-site employer in the State.

We value the role we are playing in creating jobs in Perth and helping to build an even strong community.

The success of Crown Perth is due to the great partnerships we've been able to forge with governments and our suppliers and stakeholders, along with the talent and commitment of our staff. Over the past 10 years we have invested $1.5 billion dollars in upgrading and opening new attractions to ensure Crown Perth remains the pre-eminent tourism destination in the State.

Crown Perth is now one of Australia's most visited tourism destinations, with 10 million visits a year and our hotels enjoy occupancy rates above 90 per cent year-round - a testament to the quality of our offering and the attractions of this dynamic State be it Western Australia's world class wine region or incredible beaches.

And we're not standing still. In just over six weeks' time, on the 14th of December, we will be officially opening Perth's first luxury six-star hotel, Crown Towers Perth.