Tabcorp Holdings Limited · ASX:TAH
Tabcorp — FY2006 Earnings Presentation
49 slides from Tabcorp's earnings presentation, August 2006
Slide 1: 2005/06 Full Year Results Presentation
2005/06 Full Year Results Presentation 1
Slide 2: Agenda
Agenda ¾ Matthew Slatter 2005/06 key results ¾ Matt Bekier 2005/06 financial performance review ¾ Matthew Slatter Focus for 2006/07 2006 Full Year Results 2
Slide 3: Full Year 2005/06 results – key numbers
Full Year 2005/06 results – key numbers ¾ NPAT pre non-recurring items up 7.0% to $547.3m ¾ Normalised NPAT growth pre non-recurring items up 4.0% to $535.8m ¾ EPS pre non-recurring items growth of 5.3% to 104.3 cents. Up 2.4% on a normalised basis to 102.1 cents ¾ Final DPS up 9.8% to 45 cents per
Slide 4: DPS & EPS growth
DPS & EPS growth Dividend per share1 Earnings per share2 5 yr CAGR – 11.8% 5 yr CAGR – 13.5% 89 110 104.3 90 99.0 81 100 92.5 80 71 90 70 67 63 80 74.8 71.5 60 Earnings per share (c) 70 Dividends per share (c) 50 60 50 40 40 30 30 20 20 10 10 0 0 01/02 02/03 03/04 04/05 05/06 01/02 02/03 03/04 04/05
Slide 5: Operating revenue summary by division
Operating revenue1 summary by division Actual growth 2.1% (1.4% on a normalised basis) to $3,778.6m $ million, percent growth (1.2) (13.8) 36.0 (0.6) 0.3 3,778.6 3.6% (0.1% ) 55.3 (10.8% ) 0.9% (6.1% ) 2.0% 2.1% Actual growth 4.3% Normalised growth 2.3% 2.3% 3,702.4 2004/05 Casinos Gaming Wagering M
Slide 6: EBIT underlying growth by division
EBIT1 underlying growth by division Actual growth 3.4% (1.0% on a normalised basis) to $939.7m $ million, percent growth EBIT growth of 5.1% without Total Gaming growth of $16.3m (6.3%) increase in EGM levy without increase in EGM levy (5.3) 38.3 2.1 (5.3) 0.9 939.7 (2.4)% 5.1% 0.3% (>100%) 5.6% Act
Slide 7: FY06 key features
FY06 key features ¾ Split racing picture ¾ Gaming ¾ Casinos – table games MGF/PGR ¾ Casinos – IRB ¾ Smoking bans update ¾ Football World Cup performance ¾ Tab integration 2006 Full Year Results 7
Slide 8: Split racing picture – turnover impact
Split racing picture – turnover impact Rolling 12 month wagering turnover Index 100 = Wagering turnover as at 4th July 2004 (NSW = $3,443m, Vic $2,449m) 108 106 Vic NSW 104 Split picture period 102 100 98 Growth: Vic 5.7% 0.8% 3.0% 96 NSW 2.9% (3.6% ) 2.1% Total 4.1% (1.8%) 2.4% 94 Jul-04 Sep-04 Dec
Slide 9: Split racing picture – resolution
Split racing picture – resolution ¾ Expect the agreement to be earnings positive to the Tabcorp group (before non- recurring items): Summary of financial impacts of split picture resolution terms Wagering Media $m $m Savings in racing vision fees 5.0 Broadcast rights to TVN (22.0) Additional free to
Slide 10: Gaming
Gaming ¾ Operating revenue up 3.6% Victorian gaming up 3.4%, up 2.2% in 2H Keno up 4.8% ¾ Victorian Market Share steady at 50.3% (2005/06) ¾ Improving customer service resulted in Tabaret membership increasing 12% from 343,000 to 383,000 ¾ 63.2% of EGMs in network are now jackpot machines ¾ Thre
Slide 11: Casinos – table games
Casinos – table games ¾ Strong performance in table games across all Casino MGF PGR Total casinos with non rebate table revenue up 4.5% Revenue Revenue ¾ Private Gaming Rooms were up 8.0% Star City Up 1.8% Up 4.5% Up 2.7% Gold Coast Down 1.0% Up 26.2% Up 8.4% ¾ Main Gaming Floors were up 2.7%. Some
Slide 12: Casinos – IRB
Casinos – IRB ¾ Successful re-commencement of international Casinos IRB Turnover 2005/06 ($M) Total $6.0 billion 2,681 rebate business at Star City on 1 January 2006 helping to generate an additional $19m in net 1,999 revenue ¾ Total IRB revenue of $57.1m vs $12.7 in 2005, 794 540 including $18.6m a
Slide 13: Smoking ban update
Smoking ban update EGM Rolling 12 months net revenue Index 100 = EGM annual revenue as at July 2004 115 Gold Coast Brisbane 110 105 Refurbishment commences 100 33% Smoke free 67% Smoke free 100% Smoke free 1 January 2005 1 October 2005 1 July 2006 95 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06
Slide 14: Football World Cup
Football World Cup ¾ Highly successful 2006 World Cup sportsbetting program ¾ Total sales of $97.4m, producing $16.7m in revenue $11.6m of revenue in FY06 $5.1m of revenue in FY07 ¾ 77% increase in sales over 2002 World Cup despite negative time zone impact 2006 2002 % KPIs World Cup World Cup p
Slide 15: Tab integration synergy update
Tab integration synergy update ¾ System integration remains on track for completion in September 2006 ¾ Additional systems development cost of $18m substantially due to pooling decision ¾ Close to $9m in additional synergies targeted in FY07 resulting from: Consolidation of call centres Completi
Slide 16: Financial performance
Financial performance Financial performance 2006 Full Year Results 16
Slide 17: Financial performance
Financial performance Actual Normalised $m 12 months to Change 12 months to Change 1 1,2 30 June 06 on pcp 30 June 06 on pcp Net operating revenue 3,778.6 2.1% 3,760.0 1.4% Other revenue3 38.8 (6.9)% 38.8 (6.9)% Taxes on gambling (1,018.7) 3.1% (1,016.6) 2.8% Operating commissions (426.8) 2.6% (426.
Slide 18: Financial performance key ratios
Financial performance key ratios ## Actual Normalised 12 months to Change 12 months to Change 30 June 061 on pcp 30 June 061,2 on pcp Earnings per share (cents) - Before non-recurring items 104.3 5.3% 102.1 2.4% - After non-recurring items 103.6 23.5% 101.4 21.8% Dividends per share (cents)3 89.0 9.
Slide 19: Balance sheet
Balance sheet 1000000 As at As at Change $m 30 June 06 30 June 05 on pcp Current assets 278.6 329.8 (15.5)% Licences / management agreements 1,230.1 1,239.3 (0.7)% Goodwill / other intangibles 3,611.4 3,645.0 (0.9)% Property, plant & equipment 1,507.4 1,442.9 4.5% Other non current assets 127.7 116.
Slide 20: Casinos – financial data
Casinos – financial data 1,000,000.0 Actual Normalised $m 12 months to Change 12 months to Change 30 June 061 on pcp 30 June 061,2 on pcp Revenue from ordinary activities 1,337.3 4.1% 1,318.8 2.1% Taxes & operator commissions (246.5) 2.4% (244.5) 1.2% Other operating expenses (595.2) 1.6% (595.2) 1.
Slide 21: Casinos – revenue by product
Casinos – revenue by product #### Actual $m 12 months to 12 months to Change 30 June 061 30 June 051 on pcp Net operating revenue Rebate tables 57.1 12.7 >100% Non rebate tables 549.7 526.0 4.5% Total tables 606.7 538.8 12.6% EGMs & other 501.0 514.7 (2.7)% Total gaming 1,107.8 1,053.5 5.2% Accomoda
Slide 22: Gaming & Network Games – financial data
Gaming & Network Games – financial data #### Actual $m 12 months to 12 months to Change 30 June 061 30 June 051 on pcp Revenue from ordinary activities 1,066.5 1,028.0 3.7% Taxes & operator commissions (715.0) (675.4) 5.9% Other operating expenses (68.8) (69.9) (1.5)% Depreciation & amortisation (22
Slide 23: Gaming & Network Games – revenue by product
Gaming & Network Games – revenue by product Actual $m 12 months to 12 months to Change 1 30 June 06 30 June 051 on pcp Net operating revenue Victorian network - Hotels 604.1 591.8 2.1% - Clubs 329.0 310.5 6.0% Total Victorian gaming 933.2 902.3 3.4% Keno 113.0 107.8 4.8% Total net operating revenue
Slide 24: Wagering – financial data
Wagering – financial data 1000000 Actual $m 12 months to 12 months to Change 30 June 061,2 30 June 051,2 on pcp Operating revenue - Victoria 486.4 475.4 2.3% Operating revenue - NSW 832.2 844.3 (1.4)% Other revenue 10.7 10.4 3.8% Revenue from ordinary activities 1,329.4 1,330.1 (0.1)% R.I., taxes &
Slide 25: Wagering – revenue by product
Wagering – revenue by product NSW Change Vic Change Total Change $m FY 061 on pcp FY 06 1 on pcp FY 06 on pcp Net operating revenue Racing Thoroughbred 529.2 (2.7)% 303.9 0.0% 833.0 (1.7)% Harness 103.0 (3.9)% 67.0 (0.5)% 170.0 (2.6)% Greyhound 131.6 (3.6)% 70.8 3.4% 202.4 (1.2)% Total racing 763.8
Slide 26: Media – financial data
Media – financial data 1000000 Actual $m 12 months to 12 months to Change 30 June 061 30 June 051 on pcp Revenue from ordinary activities Sky Channel 89.5 102.9 (13.0)% Sky International Racing 14.1 13.4 4.7% 2KY & Others 10.2 11.2 (9.2)% Total 113.7 127.5 (10.8)% R.I., taxes & operating commissions
Slide 27: International – financial data
International – financial data Actual $m 12 months to 12 months to Change 30 June 061 30 June 051 on pcp Net Operating Revenue Product & Technical Sales 9.4 10.0 (6.1)% Taxes & operator commissions - - - Other operating expenses (15.0) (10.9) (37.7)% Depreciation & amortisation (0.6) (0.0) >(100)% E
Slide 28: Focus for 2006/07 and revenue update
Focus for 2005 and conclusion Focus for 2006/07 and revenue update 2006 Full Year Results 28
Slide 29: Focus for FY2007
Focus for FY2007 ¾ Customer development - Gold Coast refurbishment ¾ Victorian license renewal ¾ China Keno update ¾ Project Align – benefits ¾ Tabcorp’s journey ¾ Revenue update 2006 Full Year Results 29
Slide 30: Customer development – Gold Coast refurbishment
Customer development – Gold Coast refurbishment ¾ The $53.5m refurbishment of Conrad Jupiters is on budget and slightly ahead of schedule, with completion due for October 2006 ¾ The refurbished casino will contain tailored products and areas designed to appeal to specific customer segments, introduc
Slide 31: Victorian license renewal timeline
Victorian license renewal timeline March2 March 2006 ¾ Government released issues papers and calls for submissions 2006 May 2006 ¾ >100 submissions received from industry players, local councils, 4 May 2006 and community groups: Majority commenting on the Gaming industry structure, significant sup
Slide 32: China Keno update
China Keno update Activities in FY 06 Plan for 07 ¾ TIHK signed technical co-production agreement ¾ Complete commercial pilot with CLO in July 2005 ¾ Rollout program in 07: - likely several thousand ¾ Keno host system installed in Beijing on 8 January 06 terminals ¾ Rollout of pilot terminals conclu
Slide 33: Project Align - benefits
Project Align - benefits Objective: Leverage scale and diversity Outcomes: Reduce costs Accelerate growth Build Capability ¾ Drive central purchasing ¾ Acceleration of growth in high ¾ Creation of Australian Business capability potential areas such as - Integrate Racing and Media Sportsbetting - Bui
Slide 34: The Tabcorp journey
The Tabcorp journey Growth 2006-2011 Integration Acquisition 2004-2006 1999-2004 Leverage Leveragescale scaleand and Remove Removeduplication duplication diversity diversity Star Identify Identify andextract and Drive Drivegrowth StarCity City(1999) (1999) extract growth Jupiters (
Slide 35: Revenue update
Revenue update 1 Net revenue ($M) Actual Normalised ¾ Overall mixed start to 2006/07, with 2005/06 2006/07 performance to date significantly bolstered Group 512.8 499.6 (2.6%) 5.6% 37.6% by strong World Cup revenue and additional International 0.9 1.2 16.4 Saturday in the period to 19th August 17.5
Slide 36: Appendices
Appendices Appendices 2006 Full Year Results 36
Slide 37: Appendix contents page
Appendix contents page 1. Non recurring items 2. Balance sheet 3. Cash flow 4. Casino theoretical win rate 1.35% adoption vs 1.265% 5. Casinos revenue by state 6. Reconciliation of 2004/05 normalised earnings per share (EPS) 7. Capital expenditure 8. AIFRS re-stated financial performance 9. AIFRS re
Slide 38: Non-recurring items
Non-recurring items [duplicate slide] $m Wagering G&NG Casinos Media Int'nal Unalloc Total 12 months to 30 June 2006 Restructure/integration costs1 (14.3) (1.0) (1.3) (0.1) (0.9) - (17.5) Asset sales and valuations2 - - 5.5 - - - 5.5 India claim release and provisioning 3 - - - - 3.7 - 3.7 Singapore
Slide 39: Cashflow
Cashflow Actual $m 12 months to 12 months to Change 30 June 06 30 June 05 on pcp Net operating flows excl interest/tax 1,076.8 1,059.7 1.6% Net interest payments (153.2) (173.6) (11.8)% Income tax paid (218.4) (224.7) (2.8)% Payments for PP&E (236.1) (119.5) 97.6% Net operating cash flows 469.1 541.
Slide 40: Casinos – adoption of 1.35% theoretical win rate
Casinos – adoption of 1.35% theoretical win rate ¾Tabcorp has adopted 1.35% win-rate for IRB, rationale being: Previous win-rate of 1.265% did not include outcomes as a result of “tied” bets Long-term experience at Tabcorp is that win-rate is greater than 1.35% Consistency of reporting with th
Slide 41: Casinos revenue by state
Casinos revenue by state $m 12 months to 12 months to Change 1 1 30 June 06 30 June 05 on pcp NSW Net Rebate play at theoretical 21.3 n/a Above/below theoretical (2.3) n/a 19.0 n/a Table games PGR 128.6 123.0 4.6% MGF 252.9 248.4 1.8% EGMs & other gaming 210.4 212.5 (1.0)% Non-gaming 91.5 90.8 0.8%
Slide 42: Reconciliation of 2004/05 normalised EPS
Reconciliation of 2004/05 normalised EPS Normalised EPS reconciliation 100 99.8 (0.4) 0.3 99.7 100 Cents per share 99 99 98 EPS pre goodwill previously AIFRS adjustments pre Adoption of 1.35% win rate 2004/05 EPS comparative reported (1) goodwill Notes 1. Pre non-recurring items and adjusted for abo
Slide 43: Capital expenditure
Capital expenditure Actual $m 12 months to 12 months to Change 30 June 06 30 June 05 on PCP Wagering 74.1 27.5 >100% Gaming & Network Games 33.8 30.8 9.7% Casinos 85.4 38.7 >100% Media 2.8 2.2 26.7% International 0.6 - >100% Corporate 27.2 12.0 >100% Total 223.8 111.2 >100% Major 2005/06 projects Wa
Slide 44: AIFRS re-stated financial performance
AIFRS re-stated financial performance AGAAP AIFRS AIFRS adj $m 12 months to Adjustments Other 12 months to 30 Jun 051 30 Jun 051 reclass3 30 Jun 051 Net operating revenue 3,702.4 - - 3,702.4 Other revenue2 43.7 1.5 (3.5) 41.7 Other operating expenses (2,686.1) (3.2) 6.2 (2,683.1) Depreciation & amor
Slide 45: 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 Licenses1 1,201.3 38.0 1,239.3 Goodwill & other intangibles2 3,306.8 338.2 3,645.0 Property, plant & equipment3 1,505.6 (62.7) 1,442.9 Other non current assets
Slide 46: Deferred tax liability on prior business combinations
Deferred tax liability on prior business combinations Balance Sheet P&L $m Retained Tab Income Earnings Goodwill Tax Benefit Intangible assets Acquired prior to 1 July 2004 Star City casino licence 69.4 0.8 Queensland keno licence 12.6 0.7 Brisbane casino licence 11.6 0.2 Acquired after 30 June 2004
Slide 47: Tabcorp Group – debt key features
Tabcorp Group – debt key features Debt structure & maturity profile 700 600 500 $ millions 400 300 200 100 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Bank Debt Medium Term Notes US Private Placement ¾ Average debt maturity is 5.4 years at 30 June 2006 ¾ Average interest
Slide 48: 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 ¾ 85.6% gross debt at fixed interest rates at 30 June 2006 ¾ Average cost of fixed rate swaps and fixed interest medium term no
Slide 49: # TABARET.
# TABARET. a ~< tab sp®rtsbet Cw StarCity x CONRAD Ss} : TREASURY wrt jupi > ~ % = vy 4 \ Iters gold | convention and rad 7 TOWNSYILLE —— coast | exhibition centre a ¥ . ; ; _ & Tabcorp the bigger better game