TABCORP HALF YEAR RESULTS PRESENTATION

Transcription

1 Tabcorp Holdings Limited ACN Bowen Crescent Melbourne Australia 3004 GPO Box 1943 Melbourne Australia 3001 Telephone Facsimile Website 4 February 2016 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 2015 to be presented by David Attenborough, Managing Director and Chief Executive Officer. This presentation will be webcast on Tabcorp s website at 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.

2 Tabcorp Holdings Limited ABN /16 First Half Results Presentation 4 February 2016 Draft version 15 ( )

3 1H16 overview Statutory results NPAT $81.9m, down 33.1% EPS 9.9 cents per share, down 38.1% Results impacted by significant items after tax of $15.6m in 1H16, compared to a one-off tax benefit of $31.5m in the pcp Results before significant items EBITDA $266.0m, up 1.8% NPAT $97.5m, up 7.3% EPS 11.7 cents per share, down 1.7%, following capital raising in 2H15 Interim dividend 12.0 cents per share, fully franked, up 20.0% ACTTAB integration successfully completed Victorian thoroughbred media rights secured for a further 5 years Keno transformation on track, driving increased customer participation Gaming Services expanded to 9,550 machines under contract, up from 8,820 at June 2015 As of 31 December 2015, Tabcorp has adopted an enhanced AML/CTF program Chief Risk Officer has been appointed and dedicated AML/CTF team has been established New UK online wagering and gaming business, Sun Bets, to be launched with News UK in 4Q16 2

4 Group Results $m 1H16 1H15 Change Revenues 1, , % Variable contribution % Operating expenses (241.3) (234.6) 2.9% EBITDA before significant items % D&A (89.5) (84.2) 6.3% EBIT before significant items (0.3%) Interest (34.7) (40.2) (13.7%) Tax expense (44.3) (46.0) (3.7%) NPAT before significant items % Significant items (after tax) (15.6) 31.5 (149.5%) Statutory NPAT (33.1%) Significant items (after tax) comprises costs relating to the AUSTRAC civil proceedings ($7.2m) and preparations for launch of the Sun Bets business ($8.4m) Notes: Earnings before significant items presented to provide the most meaningful presentation of Tabcorp s results 3

5 Business results Wagering Change Gaming Change Change Change Keno Group $m & Media on pcp Services on pcp on pcp on pcp Revenues % % % 1, % Variable contribution % % % % Operating expenses (195.8) (0.1%) (18.6) 15.5% (24.5) 12.9% (241.3) 2.9% EBITDA % % % % D&A (65.5) 6.5% (14.2) 5.2% (9.8) 6.5% (89.5) 6.3% EBIT % 19.6 (3.4%) % (0.3%) Opex / Revenue (%) 20.1% (0.3%) 35.2% 3.4% 22.3% 1.4% 21.2% 0.2% EBIT / Revenue (%) 13.5% (0.1%) 37.1% (2.9%) 25.5% (0.5%) 15.5% (0.4%) Capex 28.4 (23.0%) % % 62.1 (9.7%) Note: Business results do not aggregate to Group total due to unallocated expenses of $2.4m (1H15: $0.9m), largely related to merger discussions with Tatts 4

6 Wagering & Media: KPIs $m 1H16 1H15 Change % Revenue by product TAB Racing - Totalisator (3.7%) - Fixed Odds % Total TAB Racing % TAB Sports (8.1%) Trackside (2.9%) Luxbet (5.7%) Media (0.6%) Turnover by distribution Retail 3, ,438.2 (1.4%) Digital 1, , % Call Centre (7.2%) Other % Luxbet % Returns to the Racing Industry % Business continues to invest in product and technology, and remains well positioned as market leader Active TAB account customers now exceed 420,000, up 5% TAB Racing revenues continue to reflect customer preferences shifting to Fixed Odds, with yields maintained TAB Sports performance (excluding the impacts of Soccer World Cup in the pcp): Turnover up 10.7% Revenue flat due to strong yield performance in the pcp Media revenues reflect: Savings passed on to venues in respect of Victorian thoroughbred racing vision Offset by growth from international vision and co-mingling Notes: - Other turnover includes Oncourse, Premium Customers and PGI - Victorian revenue includes JV partner interest 5

7 Ongoing initiatives to maintain market leadership Future Retail program leading to increased digital integration in retail 16 pilot sites currently live, with further sites to be upgraded OneTab app (mobile bar tab service) to be launched 2H16 Product enhancements continue to be launched Partial Cash Out product launched in January 2016 Exclusive Australian agreement with Longitude LLC to implement software that will deliver enhanced parimutuel betting options (subject to regulatory approval) Online betting on live sport is illegal. The Federal Government must act now to address operators who continue to circumvent the law Market leading digital capability with continued expansion of in-house team up 80% over the past 6 months New online wagering and gaming business to be launched with The Sun (owned by News UK) in 4Q16 Tabcorp is establishing a local office in the UK, approximately 50 employees, fully integrated with our bookmaking and back office capability in Australia 6

8 Gaming Services: KPIs $m 1H16 1H15 Change Revenues % EBITDA % EBIT (3.4%) Victoria 8,850 EGMs under contract. 85% contracted through to 2022 Loyalty members up 21% to 412,000 New venues include Powell Hotel and Jim Dandy Hotel New South Wales 700 EGMs under contract, including 400 to commence billing in 4Q16 New venues include Woodburn Evans Head RSL, Woolgoolga Diggers, Club Jervis Bay and Callala RSL Country Club Additional venues under negotiation Regulatory approval received for the ACT 7

9 Keno: KPIs $m 1H16 1H15 Change Revenues % EBITDA % EBIT % Venues 3,625 3,635 (0.3%) Ticket Count (m) % Avg ticket size ($) % Avg games per ticket % Total network turnover up 6.0% Revenue performance Vic up 15.8% NSW up 8.6% QLD up 2.2%, impacted by favourable jackpot activity Brand transformation during 1H16 has driven increased participation and appeal Business performance improved through jackpot initiatives Jackpot pooling commenced between NSW and Victoria Queensland jackpot pooling remains a priority for 2016 (subject to regulatory approval) Investment in enhanced customer experience through 7 retail concept venues 8

10 Capital expenditure and investments Capex trend Major capex projects Wagering & Media Digital strategy Future Retail Technology enhancements Sun Bets Gaming Services EGMs NSW expansion 1H15 2H15 1H16 Keno Gaming Services Wagering & Media FY16 D&A expected to be approximately $185m reflecting increased investments in digital, product and business expansion Pre-commitment technology Keno Product expansion Digital strategy Rebranded venue fit-out FY16 capex expected to be up to $160m, including growth capex for TGS and Sun Bets 9

11 Key capital features Debt Structure $m Bank facilities Tabcorp Subordinated notes US Private Placement FY16 FY17 FY18 FY19 FY20 FY21 FY22 Undrawn bank facilities of $445m at 31 December 2015 Gross debt / EBITDA 2 of 1.9x Notes: 1 Tabcorp Subordinated Notes mature in March 2037, however illustrated above at first call date in Gross debt includes USPP debt at the A$ principal repayable under cross currency swaps and EBITDA is before significant items 10

12 Conclusion Progress on the strategic agenda during the half ACTTAB integration successfully completed Victorian thoroughbred media rights secured New online wagering and gaming business, Sun Bets, to be launched in the UK in 4Q16 Keno transformation on track Gaming Services expanded venue footprint Business well positioned for 2H16 Wagering & Media further Future Retail pilot rollout, product innovation and launch of Sun Bets Gaming Services driving venue performance and continued expansion Keno jackpot pooling in Queensland and implementation of digital strategy Continued focus on delivering returns for shareholders Interim dividend 12.0 cents per share, fully franked, up 20.0% FY16 target dividend payout ratio of 90% of NPAT before significant items and amortisation of Victorian Wagering and Betting Licence High Court judgement on claim against the State of Victoria expected 2H16 Well positioned to drive future performance, maintain expense discipline and achieve 14% ROIC by FY17 11

13 Appendices 1. Wagering & Media: Financial data 2. Wagering & Media: Revenues by state and product 3. Balance sheet 4. Cashflow 12

14 1. Wagering & Media: Financial data $m 1H16 1H15 Change Revenues % Taxes, levies, commissions and fees (580.5) (572.6) 1.4% Variable contribution % Operating expenses (195.8) (195.9) (0.1%) EBITDA % D&A (65.5) (61.5) 6.5% EBIT % Ratios 1H16 1H15 Change Variable contribution / Revenue 40.3% 40.4% (0.1%) Opex / Revenue 20.1% 20.4% (0.3%) EBIT / Revenue 13.5% 13.6% (0.1%) Returns to the Racing Industry 1H16 1H15 Change Victoria (4.6%) New South Wales % Race Field Fees % Media & International (5.1%) Total Returns to the Racing Industry % 13

15 2. Wagering & Media: Revenues by state and product NSW Change Vic Change ACT Change Total Change $m 1H16 on pcp 1H16 on pcp 1H16 on pcp 1H16 on pcp Racing % % % % Sports 60.8 (10.3%) 18.5 (5.6%) % 80.2 (8.6%) Trackside 22.3 (4.3%) 14.1 (2.8%) 0.3 n/a 36.7 (2.9%) Luxbet 25.0 (5.7%) Media 85.8 (0.6%) Other 34.2 (3.1%) Revenues % % % % Notes: - NSW and ACT represents 100% of revenue - Vic includes Tabcorp s 50% proportional share of the JV - ACT prior period includes operations from 14 October

16 3. Balance Sheet $m Dec 15 Jun 15 Change Total current assets (32.7%) Licences (3.2%) Other intangible assets 1, , % Property, plant and equipment (4.0%) Other non current assets % Total assets 3, ,384.0 (3.2%) Total liabilities 1, ,693.9 (6.7%) Shareholders funds 1, , % Net debt (reported) (5.5%) Net debt (economic) (7.8%) Shares on issue (m) % Ratios 1,2 Gross debt / EBITDA (x) EBIT / Net interest (x) Subordinated notes ratios 3,4 Gross debt / EBITDA (x) EBITDA / Net interest (x) Notes 1 Debt includes USPP debt at the A$ principal repayable under cross currency swaps 2 EBITDA, EBIT and net interest are last 12 months (continuing operations and excluding significant items). EBIT excludes amortisation of the Victorian Wagering and Betting Licence 3 Gross debt excludes subordinated notes, then divided by two 4 EBITDA (including significant items) and net interest are last 6 months. Net interest excludes interest on subordinated notes 15

17 4. Cashflow $m 1H16 1H15 Change Net operating flows (15.1%) Net interest payments (34.1) (40.6) (16.0%) Income tax paid 32.8 (29.5) (>100%) Payments for PP&E and intangibles (73.2) (76.7) (4.6%) Sub-total % Ordinary dividends paid (73.5) (51.3) 43.3% Health Benefit Levy - (32.9) (100.0%) ACTTAB acquisition - (103.3) (100.0%) Others (7.3) (4.2) 73.8% Net cash flow 72.8 (69.7) (>100%) Net debt at beginning of period % Non cash movements (51.5%) Net debt at end of period ,074.7 (13.2%) Note: Health Benefit Levy relates to discontinued operations, refer to 1 July and 28 July 2014 ASX releases 16

18 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 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 recipients may require in order 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 forwardlooking 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. 17

19 Draft version 14 ( ) 18