Tabcorp Holdings Limited · ASX:TAH
Tabcorp — H1 2006 Earnings Presentation
45 slides from Tabcorp's earnings presentation, February 2006
Slide 1: 2006 Interim Results Presentation
2006 Interim Results Presentation Matthew Slatter Chief Executive Officer 1
Slide 2: Agenda
Agenda ¾ Matthew Slatter Overview ¾ Matt Bekier Financial Performance ¾ Matthew Slatter Revenue update and focus for 2H 2006 Half Year Results 2
Slide 3: 1H 06 results – key numbers
1H 06 results – key numbers ¾ NPAT pre non-recurring items up 12.8% to $283.2m ¾ Normalised NPAT growth pre non-recurring items up 7.9% to $279.7m ¾ EPS pre non-recurring items growth of 10.0% to 54.0 cents. Up 5.2% on a normalised basis to 53.3 cents ¾ DPS up 10.0% to 44.0 cents per share Half Year
Slide 4: DPS & EPS growth
DPS & EPS growth Dividend per share1 Earnings per share2 5 yr CAGR – 12.0% 5 yr CAGR – 14.6% 60.0 54.0 81.4% 45.0 Payout Ratio 49.1 49.6 82.6% 81.5% 50.0 45.8 40.0 45.3 78.6% 90.4% 77.3% 35.0 85.1% 38.8 37.6 40.0 Earnings per share (c) Dividends per share (c) 30.0 25.0 35.0 36.0 40.0 41.0 44.0 30.0
Slide 5: Operating revenue summary by division
Operating revenue1 summary by division Actual growth 2.2% (1.1% on a normalised basis) to $1,925.4m 1,950 26.2 (4.8) (8.8) 1,925.4 (0.5) 2.1 5.1% (0.7% ) 26.9 (13.4% ) (11.5% ) 9.4% 1,900 3.1% 1,884.4 Normalised growth 1.1% 1.1% Actual growth 4.2% $ million 1,850 1,800 1H 05 Actual Casinos Gaming Wa
Slide 6: EBIT underlying growth by division
EBIT1 underlying growth by division Actual growth 6.1% (2.4% on a normalised basis) to $487.3m Total growth of $10m (7.4%) without increase in EGM levy 500 1.8 2.1 (2.6) 487.3 24.5 1.5% 11.0% (>100% ) 2.3 9.3% 475 1.7% 459.1 4.0% $ million 450 Normalised growth 4.0% Actual growth 13.3% 425 400 1H 05
Slide 7: Split racing picture
Split racing picture ¾ Racing vision split between Sky Channel and TVN since 4 May 2005 ¾ Detrimental impact on NSW and Victorian wagering revenue ¾ Proposals currently being evaluated to resolve disruptive impact: Wagering racing channel for retail network and Pay TV (Sky Channel) Showcase thor
Slide 8: Casinos – EGMs & smoking bans update
Casinos – EGMs & smoking bans update ¾ Expansion of smoking bans Qld casinos 66.6% smoke-free 1 Oct 2005 NSW 50% smoke-free 1 July 2005 ¾ Non rebate tables up 4.6% ¾ More significant impact on EGMs as tables already smoke-free due to stand-back policy ¾ EGM growth: Qld -0.9%; NSW -1.3% ¾ Perform
Slide 9: Casinos – table games
Casinos – table games ¾ Strong performance across all casinos with Casino MGF PGR table revenue up 11.7% Revenue Revenue Star City Down 3.0% Up 18.2% ¾ Private Gaming Rooms were up 16.2% with Gold Coast Up 1.3% Up 19.6% Star City up 18.2% Treasury Up 8.5% Up 4.9% Townsville Up 4.6% No PGR Some pul
Slide 10: Gaming
Gaming ¾ Operating revenue up 5.1% Victorian gaming up 4.5% Keno up 9.6% ¾ EBIT growth of 1.7% impacted by increase in Victorian EGM levy Normalising for this increase growth would have been 7.4% ¾ Solid customer service results, with loyalty database members growing from 519,000 to 647,000, u
Slide 11: International
International ¾ International Division operating revenue $4.1m for 1H06, EBIT pre non- recurring items -$2.6m ¾ Revenue derived from sales of gaming-related technologies to international and domestic customers ¾ China Technical Cooperation Agreement signed July 2005 and 1st stage (Keno central syste
Slide 12: Tab integration synergy update
Tab integration synergy update Synergies by Year 1,2 ¾ Operational integration remains on track for completion in September 40.0 2006 2.4 34.9 35.0 ¾ NSW Government announced on 9.4 23 December that pooling would 30.0 not be approved Synergy Benefits ($m) 2.4 25.0 Impairment charge of $6.8m recogn
Slide 13: The Tabcorp journey moves into a new phase
The Tabcorp journey moves into a new phase GROWTH 2006 – 2011 - Leverage scale and diversity - Drive aggressive domestic growth - Develop an international presence Integration 2004 - 2006 - Remove duplication - Identify and extract synergies Acquisition 1999 - 2004 Star City (1999) Jupiters (2003) T
Slide 14: New executives appointed
New executives appointed Objective – to drive next growth phase ¾ Elmer Funke Kupper - Chief Executive Australian Business Expertise in integrating customer experience across businesses Strong brand manager Experienced banker with significant consumer and network operation experience in financ
Slide 15: Managerial experience
Managerial experience ¾ Unparalleled experience Tabcorp Management Experience 30 6 ¾ 104 General Managers 25 ¾ Over 600yrs industry experience with Tabcorp 20 Average Service (Yrs) 3 ¾ Avg 5.9yrs industry experience 15 with Tabcorp 10 9 ¾ 49% GM’s employed at Tabcorp 9 5 7 5 for over 5yrs 0 ¾ Many h
Slide 16: Project Align
Project Align • Project to be complete by May 2006 • Update provided at FY 2006 Tabcorp Project deliverables Wagering Gaming Casinos by May and Keno -Alignment of key business processes Fully leveraged scale where there is value -Customer base -Diversity of products -Develop initiatives with -Distri
Slide 17: Cross-sell & up-sell opportunity
Cross-sell & up-sell opportunity ¾ Tabcorp has identified market opportunities by key customer segment e.g. 48% of Wagering customers also participate in Gaming 79% of table players also participate in Gaming 44% of table players also participate in Wagering 20% of Wagering & 44% of table pl
Slide 18: Financial performance
Financial performance Financial performance Half Year Results 18
Slide 19: Financial performance
Financial performance Actual Actual Normalised $m 6 months to 6 months to Change 6 months to 31 Dec 051 31 Dec 041 on pcp 31 Dec 051,2 Net operating revenue 1,925.4 1,884.4 2.2% 1,919.8 Other revenue3 20.5 20.5 0.4% 20.5 Taxes on gambling (523.4) (505.0) 3.6% (522.7) Operating commissions (220.0) (2
Slide 20: Financial performance cont’d
Financial performance cont’d 1000000 Actual Actual Normalised 6 months to 6 months to Change 6 months to 31 Dec 05 31 Dec 04 on pcp 31 Dec 051 Net profit after tax ($m) - Before non-recurring items 283.2 251.1 12.8% 279.7 - After non-recurring items 292.4 259.2 12.8% 288.9 Earnings per share (cents)
Slide 21: Tabcorp group – financial data
Tabcorp group – financial data # As at As at As at $m 31 Dec 05 30 June 05 31 Dec 04 Current assets 321.2 329.8 360.1 Licences / management agreements 1,234.7 1,239.4 1,490.3 Goodwill / other intangibles 3,580.6 3,644.9 3,373.6 Property, plant & equipment 1,460.1 1,442.8 1,522.1 Other non current as
Slide 22: Key ratios
Key ratios 1000000 Actual Actual Normalised 6 months to 6 months to Change 6 months to 31 Dec 05 31 Dec 04 on pcp 31 Dec 053 1 Capital expenditure (m) 93.2 50.3 85.3% 93.2 2 Gross debt / EBITDA (x) 2.2 2.5 (14.6)% 2.2 2 Net debt / Equity (%) 62.9% 74.8% (11.9)% 62.9% ROE 2 % 16.3% 15.5% 0.8% 16.1% N
Slide 23: Casinos – financial data
Casinos – financial data #### Actual Normalised $m 6 months to 6 months to Change 6 months to 31 Dec 051 31 Dec 041 31 Dec 051,2 Revenue from ordinary activities 663.8 634.9 4.5% 658.2 Taxes & operator commissions (123.5) (119.6) 3.2% (122.8) Other operating expenses (295.1) (292.7) 0.8% (295.1) Dep
Slide 24: Casinos – financial data cont’d
Casinos – financial data cont’d #### Actual $m 6 months to 6 months to Change 1 31 Dec 05 31 Dec 041 Net operating revenue Table games Gross rebate play at theoretical 16.9 23.3 (27.5)% Above/below theoretical 5.6 (14.1) (>100)% Rebate (9.2) (14.1) (34.7)% Rebate tables 13.3 (5.0) >100% Non rebate t
Slide 25: Gaming & Network Games – financial data
Gaming & Network Games – financial data #### Actual $m 6 months to 6 months to Change 31 Dec 051 31 Dec 041 Revenue from ordinary activities 550.9 523.6 5.2% Taxes & operator commissions (368.5) (344.2) 7.1% Other operating expenses (34.7) (32.5) 6.6% Depreciation & amortisation (11.6) (13.0) (11.1)
Slide 26: Gaming & Network Games – financial data cont’d
Gaming & Network Games – financial data cont’d Actual $m 6 months to 6 months to Change 1 1 31 Dec 05 31 Dec 04 Net operating revenue Victorian network Hotels 312.4 303.6 2.9% Clubs 168.9 156.8 7.7% Total Victorian gaming 481.3 460.4 4.5% Keno 59.5 54.3 9.6% Total net operating revenue 540.8 514.7 5
Slide 27: Wagering – financial data
Wagering – financial data #### Actual $m 6 months to 6 months to Change 31 Dec 051,2 31 Dec 041,2 Operating revenue - Victoria 254.4 249.5 2.0% Operating revenue - NSW 429.3 439.0 (2.2)% Other revenue 6.6 6.0 9.9% Revenue from ordinary activities 690.3 694.5 (0.6)% R.I., taxes & op. commissions (441
Slide 28: Wagering – financial data cont’d
Wagering – financial data cont’d NSW Change Vic Change Total Change $m 1H 061 1H 061 1H 06 Net operating revenue Racing Thoroughbred 280.5 (2.1)% 163.0 0.2% 443.5 (1.3)% Harness 52.3 (3.8)% 33.6 0.0% 85.9 (2.4)% Greyhound 69.1 (3.8)% 36.7 3.1% 105.8 (1.5)% Total racing 401.8 (2.6)% 233.3 0.6% 635.2
Slide 29: Media – financial data
Media – financial data #### Actual $m 6 months to 6 months to Change 1 31 Dec 05 31 Dec 041 Revenue from ordinary activities Sky Channel 44.1 52.7 (16.3)% Sky International Racing 7.6 7.2 5.6% 2KY & Others 5.2 5.9 (11.9)% Total 56.9 65.8 (13.5)% R.I., taxes & operating commissions (2.4) (2.8) (12.4)
Slide 30: International – financial data
International – financial data Actual $m 6 months to 6 months to Change 31 Dec 051 31 Dec 041 Net Operating Revenue Product & Technical Sales 4.1 4.6 (11.5)% Taxes & operator commissions - - - Other operating expenses (6.5) (4.7) 38.4% Depreciation & amortisation (0.2) 0.1 >(100)% EBIT (2.6) 0.1 >(1
Slide 31: Revenue update and focus for H2 2006
Focus for 2005 and conclusion Revenue update and focus for H2 2006 Half Year Results 31
Slide 32: Revenue update
Revenue update Net revenue ($m) Actual Normalised ¾Overall solid start to H2 2006 Group Group 562.4 592.2 5.3% 3.2% 0.9% ¾Strong growth at casinos 1.4 22.2% International impacted by above theoretical 1.8 15.0 12.3% 17.1 win rate in IRB play Media 209.5 178.3 ¾Gaming continues to grow at a Casinos 1
Slide 33: Focus for FY2006
Focus for FY2006 ¾ Substantially complete Tab integration ¾ Engage in 2007 Star City tax and exclusive licence review ¾ Embark on process for 2012 License renewal ¾ Complete Project Align ¾ Development of international opportunities ¾ Achieve FY 2006 normalised EPS growth of 2-4% Half Year Results 3
Slide 34: Appendices
Appendices Appendices Half Year Results 34
Slide 35: Appendix contents page
Appendix contents page 1. Non recurring items 2. Group cash flow 3. Casino division geographic revenue split 4. Segment earnings 5. Prior year comparatives reconciliation 6. AIFRS re-stated financial performance 7. AIFRS re-stated financial position 8. Tabcorp debt key features 9. Tabcorp debt key f
Slide 36: Non-recurring items
Non-recurring items $m Wagering G&NG Casinos Media Int'nal Unalloc Total 6 months to 31 Dec 2005 Restructure/integration costs1 (8.1) (0.1) (0.2) (0.0) (0.0) 0.0 (8.4) Asset sales and valuations2 - - 6.4 - - - 6.4 India claim release and provisioning 3 - - - - 3.7 - 3.7 Singapore integrated resort b
Slide 37: Group cash flow
Group cash flow Actual $m 6 months to 6 months to Change 31 Dec 2005 31 Dec 2004 Net operating flows excl interest/tax 550.6 546.9 0.7% Net interest payments (77.8) (91.3) (14.8)% Income tax paid (100.9) (117.2) (13.9)% Payments for PP&E (93.2) (50.3) 85.3% Net operating cash flows 278.7 288.1 (3.3)
Slide 38: Casinos – financial data cont’d
Casinos – financial data cont’d Actual $m 6 months to 6 months to Change 31 Dec 051 31 Dec 041 NSW Table games PGR 66.2 56.0 18.2% MGF 127.2 131.1 (3.0)% EGMs & other gaming 107.1 108.5 (1.3)% Non-gaming 48.0 48.6 (1.2)% Total NSW 348.5 344.2 1.3% QLD Rebate play At theoretical 16.9 23.3 (27.5)% Abo
Slide 39: Segment earnings
Segment earnings $m Wagering G&NG Casinos Media Int'nal Unalloc Total 6 months to 31 Dec 2005 Operating revenue 683.7 540.8 660.0 56.9 4.1 (20.1) 1,925.4 2 Other revenue 6.6 10.1 3.8 (0.0) 0.0 0.1 20.6 Total revenue 690.3 550.9 663.9 56.9 4.1 (20.0) 1,945.9 1 EBIT 122.7 136.2 209.2 21.7 (2.6) 0.0 48
Slide 40: Prior year comparatives reconciliation
Prior year comparatives reconciliation $m Wagering G&NG Casinos Media Int'nal Unalloc Total EBIT1 6 months to 31 Dec 2004 Prior year presentation 119.0 135.0 186.0 20.8 - - 460.8 Reclassify International operations - (0.1) - - 0.1 - - AGAAP & AIFRS adjustments 0.4 (0.3) 0.2 (1.4) - (0.2) (1.3) 2 Adj
Slide 41: AIFRS re-stated financial performance
AIFRS re-stated financial performance AGAAP AIFRS AIFRS adj $m 6 months to Adjustments Other 12 months to 31 Dec 041 31 Dec 041 adj3 31 Dec 041 Net operating revenue 1,884.4 - - 1,884.4 Other revenue2 27.7 1.1 (8.2) 20.6 Other operating expenses (1,375.7) (0.2) 7.1 (1,368.7) Depreciation & amortisat
Slide 42: AIFRS re-stated financial position
AIFRS re-stated financial position AGAAP AIFRS AIFRS as at Adjustments as at $m 30 Jun 05 30 Jun 05 30 Jun 05 Current assets 328.4 1.4 329.8 Licenses / management agreements 1,201.3 38.1 1,239.4 Goodwill / other intangibles 3,306.8 338.1 3,644.9 Property, plant & equipment 1,505.5 (62.7) 1,442.8 Oth
Slide 43: Tabcorp Group – debt key features
Tabcorp Group – debt key features Debt structure & maturity profile 700 600 500 $ millions 400 300 200 100 - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Bank Debt Medium Term Notes US Private Placement • Average debt maturity is 5.9 years at 31 December 2005 • Average
Slide 44: Tabcorp Group – debt key features
Tabcorp Group – debt key features Fixed rate swaps & fixed interest medium term notes 2,500 2,000 1,500 $ million 1,000 500 - 2006 2007 2008 2009 2010 Amounts at period end • 86.3% gross debt at fixed interest rates at 31 December 2005 • Average cost of fixed rate swaps and fixed interest medium ter
Slide 45: # TABARET.
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