TABCORP FULL YEAR RESULTS PRESENTATION · 2013-08-08 · Luxbet 335.6 25.9% 307.8 0.7% 643.4 12.4%...

9 August 2013 To: Australian Securities Exchange Companies Announcements Platform 20 Bridge Street Sydney NSW 2000

TABCORP FULL YEAR RESULTS PRESENTATION Attached is the presentation regarding Tabcorp’s full year results for the financial year ended 30 June 2013 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 full year results. 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 1943 Melbourne Australia 3001 Telephone 61 3 9868 2100 Facsimile 61 3 9868 2300 Website www.tabcorp.com.au

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Draft version 15 (01-08-13)

Tabcorp Holdings LimitedABN 66 063 780 709

2012/13Full Year Results Presentation

9 August 2013

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FY13 overview

Statutory NPAT of $126.6m

NPAT from continuing operations before significant items of $139.1m

EPS from continuing operations before significant items of 18.9 cents per share

Full year dividend 19 cents per share, fully franked

Strong revenue growth across the business

Total Wagering up 5.9% (including Victorian Racing Industry interest)

Media & International up 9.1%

Keno up 12.2%

EBITDA growth from continuing operations up 9.5%

Wagering earnings impacted by the change to the new Victorian licence structure

Strong contribution from Keno and TGS

Underpinned by disciplined expense management

In-principle agreement to extend NSW Wagering retail exclusivity to 2033

Keno Qld licence to be extended to 2047

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Definitions and major adjustments

FY13 results reflect significant changes to the business portfolio

Changeover to the new 50/50 Victorian Wagering JV on 16 August 2012, previously 75/25

Victorian Tabaret business ceased 15 August 2012

Gaming Services (TGS) business commenced on 16 August 2012

Net benefit from “significant items” after tax of $8.5m

GST refund $14.3m

Close out of a right held by TGS $7.5m

Prior year income tax benefit from acquisition of Tab Limited of $5.3m

Keno Victoria impairment $18.6m

Comparisons to the prior period are not an accurate reflection of the underlying performance

Key definitions used in this presentation include

Continuing operations = excludes Victorian Tabaret business

Discontinued operations = Victorian Tabaret business

Statutory = reported performance

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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 StandardsEarnings 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)

Health Benefit Levy expense of $3.7m (after tax). Contingent liability of $18.3m (after tax). Refer to media release supporting FY13 results announcement and financial reports.

$m FY13 FY12Changeon pcp

Revenues 2,003.2 1,964.3 2.0%

Variable contribution 885.6 828.0 7.0%

Operating expenses (421.7) (404.5) 4.3%

EBITDA from continuing operations before significant items 463.9 423.5 9.5%

D&A (151.1) (96.5) 56.6%

EBIT from continuing operations before significant items 312.8 327.0 (4.3%)

Interest (103.7) (94.7) 9.5%

Tax expense (70.0) (72.2) (3.0%)

NPAT from continuing operations before significant items 139.1 160.1 (13.1%)

Significant items (after tax) 8.5 - >100%

NPAT from discontinued operations (21.0) 179.9 (>100%)

Statutory NPAT 126.6 340.0 (62.8%)

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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 inter-company eliminations between Wagering and Media & International businesses, and unallocated items• Total group capex includes Corporate capex. This is apportioned within segment reporting in the statutory accounts.

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. Refer to appendix 4 for Wagering results on a pro-forma basis.

Group 2H expenses declined 1.1%

The financial information in the table above is before significant items

Wagering Change Media Change Gaming Change Keno Change Group Change

$m on pcp & Int'l on pcp Services on pcp on pcp on pcp

Revenues 1,558.0 (4.8%) 207.6 9.1% 86.3 >100% 205.4 12.2% 2,003.2 2.0%

Variable contribution 547.2 (7.8%) 185.0 3.3% 86.3 >100% 116.3 14.0% 885.6 7.0%

Operating expenses (282.2) (3.4%) (118.0) 2.3% (28.0) >100% (40.8) 0.5% (421.7) 4.3%

EBITDA 265.0 (12.0%) 67.0 5.0% 58.3 >100% 75.5 23.0% 463.9 9.5%

D&A (97.7) 35.3% (9.3) 6.9% (20.8) >100% (23.3) 52.3% (151.1) 56.6%

EBIT 167.3 (26.9%) 57.7 4.7% 37.5 >100% 52.2 13.2% 312.8 (4.3%)

EBIT/Revenue (%) 10.7% (3.3%) 27.8% (1.2%) 43.5% >100% 25.4% 0.2% 15.6% (1.0%)

Capex 52.2 (17.4%) 7.7 (51.9%) 36.6 29.8% 17.3 (42.7%) 123.5 (17.4%)

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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 5.9% including Victorian Racing Industry interest

Totalisator revenues benefited from the cessation of Tote Tas pooling and increased international business

Fixed Odds revenues assisted by expanded product and risk management

Racing revenue up 51%

Sport revenue up 2%

Subdued economic conditions impacted 2H trading

Digital turnover growth of 13.6% being driven predominantly through mobile

Distributions to Victorian Racing in excess of FY13 Minimum Performance Obligation of $337m

$m 1H13Changeon pcp

2H13Changeon pcp

FY13Changeon pcp

Revenues by product

Totalisator Vic 341.2 5.0% 299.5 4.7% 640.7 4.8%

Totalisator NSW 375.7 (2.2%) 331.2 (1.3%) 706.9 (1.8%)

Fixed Odds 195.6 28.4% 208.6 23.4% 404.2 25.8%

Trackside 45.5 8.9% 42.8 5.7% 88.3 7.3%

Luxbet 19.6 59.3% 19.5 25.0% 39.1 40.1%

Turnover by distribution

Retail Vic 1,568.6 (1.9%) 1,334.5 (7.9%) 2,903.1 (4.7%)

Retail NSW 2,040.9 0.9% 1,826.3 (3.2%) 3,867.2 (1.1%)

Digital 1,253.7 15.9% 1,198.9 11.2% 2,452.6 13.6%

Call Centre 398.5 (7.3%) 333.1 (15.8%) 731.6 (11.4%)

Other 582.4 30.3% 589.7 50.7% 1,172.1 39.9%

Luxbet 335.6 25.9% 307.8 0.7% 643.4 12.4%

Retail

Self service turnover Vic 53.2% 5.5% 57.1% 5.9% 55.0% 5.6%

Self service turnover NSW 40.5% 11.8% 45.7% 10.4% 43.0% 11.1%

Racing Industry contributions

Victoria (incl. Gaming) 187.1 8.2% 160.7 6.3% 347.8 7.3%

New South Wales 130.7 3.5% 119.1 6.1% 249.8 4.7%

Race fields 34.6 89.1% 32.4 64.5% 67.0 76.3%

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Wagering business positioned for the future

Removed current uncertainties in the retail environment

In-principle agreement to extend NSW Wagering retail exclusivity to 2033

“Betbox” case in NSW discontinued after success in the Victorian Betbox case

Continued drive for digital leadership and innovation

Enhancing the speed, usability and reliability of digital channels

Mobile devices accounted for 43% of digital sales in 2H up from 28% in 1H

Increased customer focus through investment in CRM and analytics

New brands launched – tab.com.au, Luxbet, TAB Rewards

Increased bookmaking capability and expanded markets

International co-mingling expanded with further opportunities progressing

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Media & International

Revenue growth from:

International – vision expansion and co-mingling

Increased subscriptions

Australian racing now broadcast in 51 countries

Significant investments in digital technology and distribution

Strong growth in Racing Industry contributions

FY14 focus is on negotiations for TVN media rights


Revenues 207.6 190.2 9.1%



EBITDA 67.0 63.8 5.0%

EBIT 57.7 55.1 4.7%

Broadcast Rights and Racing Industry contributions from International business

63.6 51.9 22.5%

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Gaming Services

TGS commenced operations 16 August 2012

Contracts cover approximately 8,500 EGMs in Victoria

75% 10 year contracts

25% minimum 6 year contracts

FY14 focus includes

Initial expansion into NSW market

Commence deployment of Stage 2 Loyalty program


Revenues 86.3 4.7 >100%

Operating expenses (28.0) (7.6) >100%

EBITDA 58.3 (2.9) >100%

EBIT 37.5 (3.2) >100%

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Keno

Revenue growth in tough economic conditions

Contribution from new Victorian business

Qld revenues up 2.8%

NSW revenues up 1.1%

Strong EBITDA growth largely driven by NSW and Qld

Expenses declined in 2H

Keno Qld licence to be extended to 2047

Keno Vic impairment $18.6m due to slower than anticipated customer adoption coupled with the short dated licence


Revenues 205.4 183.1 12.2%


EBITDA 75.5 61.4 23.0%

EBIT before impairment 52.2 46.1 13.2%

Venues 3,654 3,457 5.7%

Ticket Count (m) 99.9 95.8 4.3%

Avg ticket size ($) 10.6 10.4 1.9%

Self service turnover - NSW 14.2% 11.0% 3.2%

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FY10 FY11 FY12 FY13

Wagering Media & Int'l Gaming Services Keno Corporate

Capital expenditure and investments

Capex trend

FY14 expected D&A expense $165m - $170m

FY14 expected capex $130m - $140m

FY13 capex projects

TGS EGMs

Wagering

Retail refurbishments, terminal replacement

Expanded and enhanced products

Digital strategy and technology

New brands

Keno expansion - self service terminals, new products

FY14 capex projects

Wagering - digital strategy, technology

TGS EGMs and Loyalty

Keno continued expansion

FY14 Investments

Keno Qld licence extension $20m

Wagering NSW retail exclusivity $50m

Major capex projects

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FY14 FY15 FY16 FY17 FY18 FY19+

$m

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

Key capital features

Gross Debt/EBITDA2 at 2.6x

Undrawn bank facilities of $460m as at 30 June 2013

FY14 refinancing plans underway

DRP underwritten to 50% for the FY13 final dividend and FY14 interim dividend

FY14 target dividend payout is 80% of NPAT

Debt maturity profile

Notes 1 Tabcorp Subordinated Notes mature in March 2037, however illustrated above at the first call date in 20172 EBITDA is reported EBITDA

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Conclusion

FY13 summary

Business strongly positioned for the future

Licence extensions - in-principle agreement for NSW retail wagering exclusivity to 2033 and Keno Qld to be extended to 2047

EBITDA growth from continuing operations up 9.5%

Full year dividend of 19 cents per share, fully franked

FY14 focus

Drive market and digital leadership in Wagering

Increase customer focus through investment in CRM and analytics

Continue expanding international co-mingling opportunities

Finalise negotiations for TVN media rights

Expand Keno through product and technology

Expand TGS into NSW and enhance loyalty program in Victoria

Maintain expense discipline

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Appendices

1. Group results

2. Wagering: Financial data

3. Wagering: Revenues by state and product

4. Wagering: Pro-forma

5. Gaming Services: Financial data

6. Keno: Financial data

7. Discontinued – Victorian Tabaret: Financial data

8. Balance sheet

9. 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 StandardsEarnings before significant items presented to provide the most meaningful presentation of Tabcorp’s results


Revenues 2,003.2 1,964.3 2.0%

Government taxes & levies (359.4) (432.8) (17.0%)

Operating commissions (258.1) (245.4) 5.2%

Racing industry fees (500.1) (458.1) 9.2%



EBITDA from continuing operations before significant items 463.9 423.5 9.5%

D&A (151.1) (96.5) 56.6%

EBIT from continuing operations before significant items 312.8 327.0 (4.3%)

Interest (103.7) (94.7) 9.5%

Tax expense (70.0) (72.2) (3.0%)

NPAT from continuing operations before significant items 139.1 160.1 (13.1%)

Significant items (after tax) 8.5 - >100%

NPAT from discontinued operations (21.0) 179.9 (>100%)

Statutory NPAT 126.6 340.0 (62.8%)

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2. Wagering: Financial data

Notes Victorian revenue and expenses include 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’


Totalisator - Vic 352.5 464.3 (24.1%)

Totalisator - NSW 706.9 719.7 (1.8%)

Fixed Odds 328.2 289.3 13.4%

Trackside 64.1 70.1 (8.6%)

Luxbet 39.1 27.9 40.1%

Other 67.2 66.1 1.7%

Revenues 1,558.0 1,637.4 (4.8%)

Taxes, levies, commissions and fees (1,010.8) (1,044.1) (3.2%)

Operating expenses (282.2) (292.1) (3.4%)

EBITDA 265.0 301.2 (12.0%)

D&A (97.7) (72.2) 35.3%

EBIT 167.3 229.0 (26.9%)

EBIT/Revenue 10.7% 14.0% (3.3%)

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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 includes Tabcorp’s 50% proportional share of the new JV from 16 August 2012, previously 75%

NSW Change Vic Change Total Change

$m FY13 on pcp FY13 on pcp FY13 on pcp

Thoroughbred 461.7 (1.5%) 234.3 (23.1%) 696.0 (10.0%)

Harness 88.9 (2.7%) 48.2 (26.7%) 137.1 (12.8%)

Greyhound 156.3 (2.1%) 70.0 (25.3%) 226.3 (10.7%)

Totalisator 706.9 (1.8%) 352.5 (24.1%) 1,059.4 (10.5%)

Fixed Odds 244.2 26.5% 84.0 (12.7%) 328.2 13.4%

Trackside 36.7 9.2% 27.4 (25.1%) 64.1 (8.6%)

Luxbet 39.1 40.1%

Other 67.2 1.7%

Revenue 987.8 4.4% 463.9 (22.3%) 1,558.0 (4.8%)

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4. Wagering: Pro-forma

1. The new Victorian Wagering and Betting Licence commenced on 16 August 2012 on significantly different terms from the previous arrangements, with Tabcorp’s share of the new JV at 50% (previously 75%). Pro-forma adjustments have been made to the earnings of the Wagering segment as if the new terms had applied from 1 July 2012.

2. New race fields arrangements applied from 16 August 2012. Pro-forma adjustments have been made to the earnings of the Wagering segment as if the new terms had applied from 1 July 2012.

$m

FY13Reported

New Vic Wagering

Licence 1

Race

fields 2FY13

Pro-forma

Revenue 1,558.0 (22.9) 1,535.1

Taxes, commissions and fees (1,010.8) 13.6 (2.2) (999.4)

Variable contribution 547.2 (9.3) (2.2) 535.7

Operating expenses (282.2) 4.1 (278.1)

EBITDA 265.0 (5.2) (2.2) 257.6

D&A (97.7) (3.5) (101.2)

EBIT 167.3 (8.7) (2.2) 156.4

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5. Gaming Services: Financial data


Operating revenue 81.6 - >100%

Other revenue 4.7 4.7 0.0%

Revenues 86.3 4.7 >100%

Operating expenses (28.0) (7.6) >100%

EBITDA 58.3 (2.9) >100%

D&A (20.8) (0.3) >100%

EBIT 37.5 (3.2) >100%

EBIT/Revenue 43.5% (68.1%) >100%

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6. Keno: Financial data


Operating revenue 170.4 153.4 11.1%

Other revenue 35.0 29.7 17.8%

Revenues 205.4 183.1 12.2%

Taxes, levies, commissions and fees (89.1) (81.1) 9.9%


EBITDA 75.5 61.4 23.0%

D&A (23.3) (15.3) 52.3%

EBIT before impairment 52.2 46.1 13.2%

EBIT/Revenue 25.4% 25.2% 0.2%For

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7. Discontinued – Victorian Tabaret: Financial data

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


Operating revenue 130.1 1,073.2 (87.9%)

Other revenue 0.1 1.0 (90.0%)

Revenues 130.2 1,074.2 (87.9%)

Taxes, levies, commissions and fees (92.3) (761.0) (87.9%)

Operating expenses (7.7) (14.7) (47.6%)

Other income 16.3 3.2 >100%

EBITDA 46.5 301.7 (84.6%)

D&A (8.1) (37.0) (78.1%)

EBIT before goodwill write off 38.4 264.7 (85.5%)

Tax expense (12.2) (84.8) (85.6%)

NPAT before goodwill write off 26.2 179.9 (85.4%)

Goodwill write off (47.2) 0.0

NPAT after goodwill write off (21.0) 179.9 (>100%)

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8. Balance Sheet

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 reported3 Gross debt excludes value of subordinated notes, then divided by two. EBITDA is from 1 January 2013 to 30 June 20134 EBITDA and net interest relate to the period 1 January 2013 to 30 June 2013. Net interest excludes interest expense related to subordinated notes.

As at As at Change$m 30 Jun 13 30 Jun 12 on pcp

Total current assets 221.3 228.2 (3.0%)Licences 750.3 815.0 (7.9%)Other intangible assets 1,772.4 1,803.2 (1.7%)Property, plant and equipment 308.5 313.3 (1.5%)Other non current assets 92.1 89.5 2.9%Total assets 3,144.6 3,249.2 (3.2%)Total liabilities 1,731.4 1,843.4 (6.1%)

Shareholders’ funds 1,413.2 1,405.8 0.5%

Net debt 1,144.7 1,072.6 6.7%Shares on issue (m) 744.9 730.1 2.0%

RatiosGross debt / EBITDA (x) 1 2.6EBIT/Net interest (x) 2 3.4

Net debt / Equity (%) 81.0Subordinated notes ratiosGross debt / EBITDA (x) 3 2.2EBITDA/Net interest (x) 4 5.5F

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9. Cashflow

$m FY13 FY12Change on

pcp

Net operating flows 474.8 788.7 (39.8%)

Net interest payments (101.5) (104.9) (3.2%)

Income tax paid (108.4) (158.3) (31.5%)

Payments for PP&E and licences (204.2) (631.0) (67.6%)Sub-total 60.7 (105.5) >100.0%

Dividends paid (116.1) (111.4) 4.2%

Payment of transaction costs for demerger (10.7) (34.7) (69.2%)

Others 24.4 (4.6) >100%

Net debt at beginning of period 1,072.6 817.9 31.1%

Non cash movements 30.4 (1.5) >100.0%

Net debt at end of period 1,144.7 1,072.6 6.7%For

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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 announcementslodged 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. Theinformation contained in this Presentation is of a general nature and has been prepared by Tabcorp in good faith and with due care butno 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 offeringdocument under Australian or any other law. This Presentation does not constitute an offer, invitation or recommendation to subscribefor or purchase any security and neither this Presentation nor anything contained in it shall form the basis of any contract orcommitment.

This Presentation is not a recommendation to acquire Tabcorp shares. The information provided in this Presentation is not financialproduct advice and has been prepared without taking into account any recipient's investment objectives, financial circumstances orparticular needs, and should not be considered to be comprehensive or to comprise all the information which recipient may require inorder 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 anyinvestment 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 areintended 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 andunknown risks and uncertainties and may involve significant elements of subjective judgement and assumptions as to future eventswhich may or may not be correct. Such forward-looking statements are not guarantees of future performance and involve known andunknown risks, uncertainties and other factors, many of which are beyond the control of Tabcorp, that may cause actual results to differmaterially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differmaterially from these statements. You are cautioned not to place undue reliance on forward looking statements. Except as required bylaw 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 isnot) an indication of future performance.

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TABCORP FULL YEAR RESULTS PRESENTATION · 2013-08-08 · Luxbet 335.6 25.9% 307.8 0.7% 643.4 12.4%...

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Transcript of TABCORP FULL YEAR RESULTS PRESENTATION · 2013-08-08 · Luxbet 335.6 25.9% 307.8 0.7% 643.4 12.4%...