Tabcorp Holdings Limited ACN 063 780 709 5 Bowen Crescent - - PDF document

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Tabcorp Holdings Limited ACN 063 780 709 5 Bowen Crescent - - PDF document

Tabcorp Holdings Limited ACN 063 780 709 5 Bowen Crescent Melbourne Australia 3004 GPO Box 1943R Melbourne Australia 3001 Telephone 61 3 9868 2100 Facsimile 61 3 9868 2300 Website www.tabcorp.com.au 7 February 2013 To: Australian


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7 February 2013 To: Australian Securities Exchange Market Announcements 20 Bridge Street Sydney NSW 2000 TABCORP HALF YEAR RESULTS PRESENTATION Attached is the presentation regarding Tabcorp’s half year results ended 31 December 2012 to be presented by David Attenborough, Managing Director and Chief Executive Officer. This presentation will be webcast on Tabcorp’s website at www.tabcorp.com.au from 10.00am (Melbourne time) today. The information contained in this announcement should be read in conjunction with today’s announcement of Tabcorp’s half year results and Tabcorp’s most recent annual financial report. Kerry Willcock Executive General Manager – Corporate, Legal and Regulatory Enc.

Tabcorp Holdings Limited ACN 063 780 709 5 Bowen Crescent Melbourne Australia 3004 GPO Box 1943R Melbourne Australia 3001 Telephone 61 3 9868 2100 Facsimile 61 3 9868 2300 Website www.tabcorp.com.au

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Tabcorp Holdings Limited

ABN 66 063 780 709

2012/13

Half Year Results Presentation 7 February 2013

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1H overview

  • Statutory NPAT of $72.9m
  • NPAT from continuing operations before significant items of $71.6m
  • EPS from continuing operations before significant items of 9.8 cents per share
  • Interim dividend of 11 cents per share, fully franked
  • Includes earnings from discontinued operations and significant items
  • Strong revenue growth across the business
  • Total Wagering revenue up 6.2% (including Victorian Racing Industry interest)
  • Media & International up 8.1%
  • Keno up 15.3%
  • TGS EBITDA currently running at an annualised run rate above $55m
  • Keno QLD and NSW delivering strong EBITDA growth with the new Victorian business contributing

significantly to top line growth

  • Distributions to Victorian Racing Industry ahead of run rate required to meet FY13 MPO
  • Growth achieved whilst managing significant changes to the business portfolio
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Definitions and major adjustments

  • 1H results reflect significant changes to the business portfolio
  • Changeover to the new 50/50 Victorian Wagering JV on 16 August, previously 75/25
  • Victorian Tabaret business ceased 15 August
  • Gaming Services (TGS) business commenced on 16 August
  • The business benefited from “significant items” after tax of $22.9m – GST refund of $14.3m

(previously announced) and one-off profit of $8.6m on the close out of an option held by TGS

  • The results include one-off costs of $4m relating to re-branding the TAB and Luxbet businesses,

and launch of new tab.com.au

  • Comparisons to the prior period are not an accurate reflection of the underlying performance
  • Key definitions used in this presentation include
  • Statutory = reported performance
  • Continuing operations = excludes Victorian Tabaret business
  • Discontinued operations = Victorian Tabaret business
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Group Results

Notes: Variable contribution and EBITDA is non-IFRS financial information and has not been audited or reviewed in accordance with Australian Auditing Standards Earnings before significant items presented to provide the most meaningful presentation of Tabcorp’s results

  • NPAT from discontinued operations includes
  • Goodwill write off of $47.2m (previously advised)
  • Provision for Health Benefit Levy of $3.7m (after tax). Final outcome to be determined (refer to the media release

supporting the 1H13 results announcement and 1H13 financial reports) $m 1H13 1H12 Change

  • n pcp

Revenues 1,034.9 1,013.8 2.1% Variable contribution 450.0 424.7 6.0% Operating expenses (218.7) (199.3) 9.7% EBITDA from continuing operations before significant items 231.3 225.4 2.6% D&A (70.9) (47.6) 48.9% EBIT from continuing operations before significant items 160.4 177.8 (9.8%) Interest (52.5) (42.6) 23.2% Tax expense (36.3) (40.6) (10.6%) NPAT from continuing operations before significant items 71.6 94.6 (24.3%) Significant items (tax effected) 22.9

  • 100%

NPAT from discontinued operations (21.6) 94.7 (>100%) Statutory NPAT 72.9 189.3 (61.5%)

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Business results – continuing operations

Notes: Variable contribution and EBITDA is non-IFRS financial information and has not been audited or reviewed in accordance with Australian Auditing Standards Business results do not aggregate to Group total due to intercompany eliminations between Wagering and Media & International businesses, and unallocated items

  • Wagering reported results impacted by change over to new Victorian Wagering and Betting licence which commenced 16

August 2012. The proportionate interest under the new Joint Venture is 50/50, previously 75/25.

  • Gaming Services division represents the TGS business

Wagering Change Media Change Gaming Change Keno Change Group Change $m

  • n pcp

& Int'l

  • n pcp

Services

  • n pcp
  • n pcp
  • n pcp

Revenues 816.1 (4.0%) 101.5 8.1% 37.8 >100% 106.5 15.3% 1,034.9 2.1% Variable contribution 285.8 (7.0%) 92.0 4.1% 37.8 >100% 59.0 14.1% 450.0 6.0% Operating expenses (147.9) 2.9% (59.8) 4.7% (12.4) >100% (22.3) 13.2% (218.7) 9.7% EBITDA 137.9 (15.8%) 32.2 2.9% 25.4 >100% 36.7 14.7% 231.3 2.6% D&A (46.6) 25.9% (4.7) 20.5% (8.6) 100% (11.1) 65.7% (70.9) 48.9% EBIT 91.3 (27.9%) 27.5 0.4% 16.8 >100% 25.6 1.2% 160.4 (9.8%) EBIT/Revenue (%) 11.2% (3.7%) 27.1% (2.0%) 44.4% >100% 24.0% (3.4%) 15.5% (2.0%) Capex 24.0 (9.1%) 3.3 (52.9%) 27.8 >100% 8.9 (25.8%) 68.4 8.9%

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Wagering: KPIs

Notes: * Other includes Oncourse, Premium Customers and PGI Victorian revenue includes JV partner interest, NSW represents 100% of revenue

  • Total revenue growth of 6.2% including Victorian Racing Industry interest
  • Totalisator revenues benefited from the cessation of ToteTas pooling

transferring to direct betting, and PGI approvals in NSW and Victoria

  • Fixed Odds yields assisted by expanded products and risk management
  • Racing revenue up 46% in 1H13
  • Sport revenue up 9% in 1H13
  • Luxbet marketing investments and risk management driving revenue

growth

  • Retail performance reflects both the continued transfer to the digital

channel and the relatively soft retail conditions

  • Strong digital turnover growth of 15.9%
  • Mobile devices were 28% of digital turnover, up from 9% in the pcp
  • Increased contributions to the Racing Industry
  • Including benefit of GST refund of $6.8m
  • Ahead of required run rate for FY13 Victorian MPO of $337m

$m 1H13 1H12 Change Revenues by product Totalisator Vic 341.2 325.1 5.0% Totalisator NSW 375.7 384.3 (2.2%) Fixed Odds 195.6 152.3 28.4% Trackside 45.5 41.8 8.9% Luxbet 19.6 12.3 59.3% Turnover by distribution Retail Vic 1,568.6 1,598.6 (1.9%) Retail NSW 2,040.9 2,023.5 0.9% Digital 1,253.7 1,081.3 15.9% Call Centre 398.5 429.8 (7.3%) Other 582.4 446.9 30.3% Luxbet 335.6 266.6 25.9% Retail Self service turnover Vic 53.2% 47.7% 5.5% Self service turnover NSW 40.5% 28.7% 11.8% Racing Industry contributions Victoria (incl. Gaming) 185.3 173.0 7.1% New South Wales 130.7 126.3 3.5% Race fields 34.6 18.3 89.1%

*

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Wagering: commentary

  • 1H investments include
  • Brands launched, new website and digital
  • Increased bookmaking capability and expanded markets
  • Customer acquisition during Spring Racing Carnival
  • Multi channel strategy
  • Digital investments driving revenue and market share growth (TAH market share in digital

channels up from 25% in FY10 to 28% in FY12)*

  • Retail expansion complete
  • Fixed Odds and international co-mingling opportunities are progressing
  • Disciplined marketing and media strategy
  • Selective major code and broadcast partnerships
  • Ongoing investment in CRM and digital marketing capabilities
  • “Betbox” case in NSW discontinued after the State and Tabcorp’s win in the Victorian Betbox case
  • Effectively upholds the prohibition on the use of self service internet betting kiosks by corporate

bookmakers.

Note: *Sourced from Australian Racing Board Fact book and Tabcorp estimates

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Media & International

  • Revenue growth from
  • Increased subscriptions
  • International growth – co-mingling & vision
  • Expenses increase due to
  • Digital investments (Distribution & Apps)
  • Outside Broadcast and media rights
  • Strong growth in Racing Industry contributions
  • 2H13 focus
  • Negotiations for TVN media rights

$m 1H13 1H12 Change Revenues 101.5 93.9 8.1% Operating expenses (59.8) (57.1) 4.7% EBITDA 32.2 31.3 2.9% EBIT 27.5 27.4 0.4% Broadcast Rights and Racing Industry contributions from International business 28.8 25.6 12.5%

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Gaming Services

  • Commenced operations 16 August 2012
  • Sign ups covering over 8,500 EGM’s
  • 75% 10 year contracts
  • 25% minimum 6 year contracts
  • EBITDA currently running at an annualised

run rate above $55m

$m 1H13 1H12 Change Revenues 37.8 2.2 >100% Operating expenses (12.4) (3.8) >100% EBITDA 25.4 (1.6) >100% EBIT 16.8 (1.6) >100% Venues (period end) 173

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Keno

  • Revenue performance
  • Contribution from new Victorian

business

  • Qld revenues up 6.2%
  • NSW revenues up 2.3%
  • Expense growth reflects commencement
  • f Victorian Keno
  • Venue expansion driven by Victorian Keno

rollout

$m 1H13 1H12 Change Revenues 106.5 92.4 15.3% Operating expenses (22.3) (19.7) 13.2% EBITDA 36.7 32.0 14.7% EBIT 25.6 25.3 1.2% Venues 3,573 2,918 22.4% Ticket Count (m) 51.2 47.7 7.3% Avg ticket size ($) 10.1 10.5 (3.8%) Self service turnover - NSW 13.7% 10.4% 3.3%

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Capital expenditure and investments

Major FY13 capex projects Capex trend

  • Gaming Services
  • TGS EGMs
  • Wagering
  • Retail
  • Digital strategy and technology
  • New brands
  • Victorian Wagering and Betting systems
  • Keno expansion
  • Self service terminals
  • New products
  • FY13 capex guidance is $130m-$140m

(previously $150m)

62.8 86.8 68.4 1H12 2H12 1H13

Wagering Media & Int'l Gaming Services Keno Corporate

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400 400 150 284 250 211 100 200 300 400 500 FY13 FY14 FY15 FY16 FY17 FY18 FY19+ $m

Bank facilities Medium Term notes (May 2014) Tabcorp Retail bonds (May 2014) Tabcorp Subordinated notes US Private Placement

Key capital features

  • Gross Debt/EBITDA2 at 2.1x, expected to be in the mid-2x range at 30 June 2013
  • Tabcorp Subordinated Notes are accounted for as debt and included in financial covenant ratios
  • Standard and Poor's assign 100% equity credit to the Notes
  • S&P are currently reviewing their criteria for assigning “high” equity credit to hybrid securities
  • FY13 target dividend payout is 80% of NPAT, excluding Vic Gaming goodwill write-off booked in 1H13
  • Debt maturity profile

1

Notes 1 Tabcorp Subordinated Notes mature in March 2037, however illustrated above at the first call date in 2017 2 EBITDA is last 12 months reported (statutory) EBITDA

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Summary

  • 1H performance
  • Strong revenue growth across all business lines
  • Invested in growth markets and products (Fixed Odds, PGI, TGS and Keno)
  • Managed significant change (decommissioned Victorian Tabaret, launched TGS and

transitioned to the new Victorian Wagering and Betting licence)

  • Interim dividend of 11 cents per share, fully franked
  • 2H focus
  • Digital leadership
  • Executing selected further growth opportunities (Fixed Odds, PGI, Keno and TGS)
  • Expense management
  • Negotiations for TVN media rights
  • NSW wagering retail exclusivity
  • 1H revenue trends continued into January
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Appendices

  • 1. Group results
  • 2. Wagering: Financial data
  • 3. Wagering: Revenues by state and product
  • 4. Gaming Services: Financial data
  • 5. Keno: Financial data
  • 6. Discontinued – Victorian Tabaret: Financial data
  • 7. Balance sheet
  • 8. Cashflow
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  • 1. Group results

Notes: Variable contribution and EBITDA is non-IFRS financial information and has not been audited or reviewed in accordance with Australian Auditing Standards Earnings before significant items presented to provide the most meaningful presentation of Tabcorp’s results

$m 1H13 1H12 Change

  • n pcp

Revenues 1,034.9 1,013.8 2.1% Government taxes & levies (195.7) (225.4) (13.2%) Operating commissions (131.7) (124.4) 5.9% Racing industry fees (257.5) (239.3) 7.6% Variable contribution 450.0 424.7 6.0% Operating expenses (218.7) (199.3) 9.7% EBITDA from continuing operations before significant items 231.3 225.4 2.6% D&A (70.9) (47.6) 48.9% EBIT from continuing operations before significant items 160.4 177.8 (9.8%) Interest (52.5) (42.6) 23.2% Tax expense (36.3) (40.6) (10.6%) NPAT from continuing operations before significant items 71.6 94.6 (24.3%) Significant items (tax effected) 22.9 0.0 100% NPAT from discontinued operations (21.6) 94.7 (>100%) Statutory NPAT 72.9 189.3 (61.5%)

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  • 2. Wagering: Financial data

Notes Victorian revenue and expenses represent Tabcorp’s 50% proportional share of the new JV from 16 August 2012, previously 75% NSW represents 100% of revenue and expenses with a wagering incentive fee paid to the NSW racing industry equivalent to 25% of profits included in ‘Taxes, levies, commissions and fees’

$m 1H13 1H12 Change Totalisator - Vic 191.2 247.0 (22.6%) Totalisator - NSW 375.7 384.3 (2.2%) Fixed Odds 160.2 136.8 17.1% Trackside 33.7 35.5 (5.1%) Luxbet 19.6 12.3 59.3% Other 35.7 34.2 4.4% Revenues 816.1 850.1 (4.0%) Taxes, levies, commissions and fees (530.3) (542.6) (2.3%) Operating expenses (147.9) (143.8) 2.9% EBITDA 137.9 163.7 (15.8%) D&A (46.6) (37.0) 25.9% EBIT 91.3 126.7 (27.9%) EBIT/Revenue 11.2% 14.9% (3.7%)

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  • 3. Wagering: Revenues by state and product

Notes NSW represents 100% of revenue before fees paid to the NSW racing industry Victorian is Tabcorp’s 50% proportional share of the new JV from 16 August 2012, previously 75%

NSW Change Vic Change Total Change $m 1H13

  • n pcp

1H13

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1H13

  • n pcp

Thoroughbred 247.9 (2.6%) 128.5 (22.4%) 376.4 (10.4%) Harness 44.8 (3.2%) 24.7 (24.7%) 69.5 (12.1%) Greyhound 83.0 (0.6%) 38.0 (21.8%) 121.0 (8.4%) Totalisator 375.7 (2.2%) 191.2 (22.6%) 566.9 (10.2%) Fixed Odds 116.8 29.2% 43.4 (6.5%) 160.2 17.1% Trackside 18.6 11.9% 15.1 (20.2%) 33.7 (5.1%) Luxbet 19.6 59.3% Other 35.7 4.4% Revenue 511.1 4.0% 249.7 (20.1%) 816.1 (4.0%)

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  • 4. Gaming Services: Financial data

$m 1H13 1H12 Change Operating revenue 35.3 0.0 >100% Other revenue 2.5 2.2 13.6% Revenues 37.8 2.2 >100% Operating expenses (12.4) (3.8) >100% EBITDA 25.4 (1.6) >100% D&A (8.6) (0.0) 100% EBIT 16.8 (1.6) >100% EBIT/Revenue 44.4% (72.7%) >100%

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  • 5. Keno: Financial data

$m 1H13 1H12 Change Operating revenue 89.5 77.8 15.0% Other revenue 17.0 14.6 16.4% Revenues 106.5 92.4 15.3% Taxes, levies, commissions and fees (47.5) (40.7) 16.7% Operating expenses (22.3) (19.7) 13.2% EBITDA 36.7 32.0 14.7% D&A (11.1) (6.7) 65.7% EBIT 25.6 25.3 1.2% EBIT/Revenue 24.0% 27.4% (3.4%)

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  • 6. Discontinued – Victorian Tabaret: Financial data

Note Discontinued revenues and expenses are net of 25% allocation to JV partner

$m 1H13 1H12 Change Operating revenue 130.1 559.2 (76.7%) Other revenue 0.1 0.5 (80.0%) Revenues 130.2 559.7 (76.7%) Taxes, levies, commissions and fees (92.9) (395.4) (76.5%) Operating expenses (6.8) (6.6) 3.0% Other income 14.2

  • 100%

EBITDA 44.7 157.7 (71.7%) D&A (7.2) (18.6) (61.3%) EBIT before goodwill write off 37.5 139.1 (73.0%) Tax expense (11.9) (44.4) (73.2%) NPAT before goodwill write off 25.6 94.7 (73.0%) Goodwill write off (47.2)

  • 100%

NPAT after goodwill write off (21.6) 94.7 (<100%)

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  • 7. Balance Sheet

1

As at As at Change $m 31 Dec 12 30 Jun 12

  • n pcp

Total current assets 209.3 228.2 (8.3%) Licences 792.3 814.8 (2.8%) Other intangible assets 1,762.6 1,803.2 (2.3%) Property, plant and equipment 316.7 313.3 1.1% Other non current assets 78.8 89.5 (12.0%) Total assets 3,159.7 3,249.0 (2.7%) Total liabilities 1,757.2 1,843.2 (4.7%) Shareholders’ funds 1,402.5 1,405.8 (0.2%) Net debt 1,127.3 1,072.6 5.1% Shares on issue (m) 734.0 730.1 0.5% Ratios Gross debt / EBITDA (x) 1 2.1 EBIT/Net interest (x) 2 4.6 Net debt / Equity (%) 80.4

Notes 1 EBITDA is last 12 months reported (statutory) 2 EBIT is last 12 months reported (statutory) and excludes amortisation of new Victorian Wagering and Betting Licence, net interest is last 12 months reported

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  • 8. Cashflow

Change $m 1H13 1H12

  • n pcp

Net operating flows 274.9 385.9 (28.8%) Net interest payments (51.0) (43.0) 18.6% Income tax paid (71.5) (94.8) (24.6%) Payments for PP&E and licences (157.6) (142.6) 10.5% Sub-total (5.2) 105.5 (>100%) Dividends paid (68.8) (65.2) 5.5% Payment of restructuring costs for demerger (6.7) (21.0) (68.1%) Others 25.1 (3.2) (>100%) Net debt at beginning of period 1,072.6 817.9 31.1% Non cash movements (0.9) 1.7 (>100%) Net debt at end of period 1,127.3 803.5 40.3%

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Disclaimer

This Presentation contains summary information about the current activities of Tabcorp Holdings Limited (Tabcorp) and its subsidiaries (Tabcorp Group). It should be read in conjunction with the Tabcorp Group’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au. No member of the Tabcorp Group gives any warranties in relation to the statements or information contained in this Presentation. The information contained in this Presentation is of a general nature and has been prepared by Tabcorp in good faith and with due care but no representation or warranty, express or implied, is provided in relation to the accuracy or completeness of the information. This Presentation is for information purposes only and is not a prospectus, product disclosure statement or other disclosure or offering document under Australian or any other law. This Presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither this Presentation nor anything contained in it shall form the basis of any contract or commitment. This Presentation is not a recommendation to acquire Tabcorp shares. The information provided in this Presentation is not financial product advice and has been prepared without taking into account any recipient's investment objectives, financial circumstances or particular needs, and should not be considered to be comprehensive or to comprise all the information which recipient may require in

  • rder to make an investment decision regarding Tabcorp shares.

All dollar values are in Australian dollars (A$) unless otherwise stated. Neither Tabcorp nor any other person warrants or guarantees the future performance of Tabcorp shares or any return on any investment made in Tabcorp shares. This Presentation may contain certain 'forward-looking statements'. The words 'anticipate', 'believe', 'expect', 'project', 'forecast', 'estimate', 'likely', 'intend', 'should', 'could', 'may', 'target', 'plan' and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, financial position and performance are also forward- looking statements. Any forecasts or other forward looking statements contained in this Presentation are subject to known and unknown risks and uncertainties and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Tabcorp, that may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. You are cautioned not to place undue reliance on forward looking statements. Except as required by law or regulation (including the ASX Listing Rules), Tabcorp undertakes no obligation to update these forward-looking statements. Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

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