Tabcorp Holdings and Crown Resorts - First Impressions from Reporting

Bell Potter

Tabcorp Holdings (TAH): Reported Net Loss $20.8m due to significant items (after tax) comprising AUSTRAC civil proceedings $61.8m, AFP Cambodia investigation $1.9m, proposed combination with Tatts $53.9m, Intecq acquisition $4.9m, Sun Bets operating loss $47.6m, Sun Bets assets impairment $20.7m and Melbourne premises relocation $8.9m

  • EBITDA of $504.1m was in-line with our forecast and within pre-guidance of $500-510m. Wagering and Media missed our expectations ($350m EBITDA vs. Citi $360m) from lower than expected margins, but was offset by Gaming services ($82m vs Citi $75m) from higher than expected margins.
  • Segment EBITDA: Wagering & Media down 8.4% to $350m, Gaming Services up 17.1% to $82.1m, Keno up 2.4% to $72m.
  • Net operating cash flow down 21.6% to $359.1m.
  • TAH/TTS merger update: Both TAH and TTS have agreed to defer the release of the merger scheme booklet until after TTS reports on 17th Aug and provide to TTS shareholders in Sep-17, with TTS shareholder vote expected to be held in Oct-17. Merger implementation is expected to complete by the end of 2017, subject to the ACCC and CrownBet’s appeal against the Aust Competition Tribunal decision (which was in favour of the merger) to be heard on 28/19th Aug-17.

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Crown Resorts (CWN):

  • Reported NPAT up 97% to $1866.1m (sig. items $1557.2m- largely comprising gains from sale of shares in Melco Resorts.
  • Normalised EBITDA: Australian Resorts down 10.7% to $933.2m, Aspinalls up 0.4% to $26.6m, Wagering and Online $14.8m as compared to ($5.4m) pcp.
  • Melco Crown: Crown’s share of MRE’s normalised NPAT was an equity accounted profit of $42.4m, down 27%.
  • Australian Resorts: VIP program play turnover of $33.3 billion, down 48.9%.
  • Net operating cash flow for the period of $465.7m as compared to $482.7m in the pcp.
  • In addition to the Initial Share Buy-Back, Crown intends to undertake a further on-market share buy-back of up to approximately 29.3 million shares which together with the Initial ShareBuy-Back represents no more than 10% of the smallest number of shares on issue during the last 12 months of approximately 688.8 million shares.

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