Tabcorp Holdings Limited

Good day and thank you for standing by. Welcome to TAPC reporting's limited half-year results 2026. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised, today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Gillian McLaughlin, Managing Director and CEO. Please go ahead.

Good morning, everyone, and welcome to our results for the first half of FY26. I'm Gillian McLaughlin, and I'm joined on the call by CEO Mark Howell. I'm going to take the presentation at bread and talk you through the key areas. Starting slide two, we released our revised game plan a year ago and I believe we're executing on that plan. The numbers today reflect the progress we've made and we're steadily building a culture of doing what we say we will do. For me, that's critically important. I want to stress that we're midway through our turnaround plan and there's still work to do. We're not yet at the level I want us to be, but I'm pleased we're on track against our FY26 objectives and we made good progress in the first half. Approved execution continued with AFL Missed by 1 and Megapod during the footy season. We showed up strongly through the spring carnival with tap takeover and tap time continued to sell out. The spring carnival, however, was a customer's carnival. Yields from September to November were historically low because of an unusually high number of favourites winning major races. Despite those challenges, the diversification of our business allowed us to deliver a pleasing result. It was a company-wide effort, cost and capital discipline, and improved omni-channel customer offering and growth in banks. These are the outcomes of creating a fitter company with greater capability. If you look at slide six, we continue to execute our first pillar of the appointments of general managers to lead retail, banks, marketing and strategy. People are everything, and these appointments are part of our continuous journey of improvement. I now refer you to slide seven and our second pillar. We are going to deliver a national title, and our target remains the end of this financial year. One pool will increase the liquidity of the partners and in time create new product opportunities. Australian Racing will also have a greater global reach and potential for more world pools, which will better connect us to a global calendar. And we recently received ACMA clearance, and we are now working to build our launch plan for New South Wales. Discussions with other states are advanced. On this slide, I also want to call out our integrity service, Business Max. It's a consistent and growing business. And our key partnerships are renewed in the hub, and we're looking at opportunities which could expand our footprint. And now I'll push you to slide eight. The core pillar of our game plan is to deliver unrivaled omnichannel experiences. as something unique in the market. With all the great exclusive in-venue generosities that incorporate both racing and sport, it encourages more people to enter venues. With a strong product and generosity pipeline for both AFL and NRL seasons, which we launched in venues this week. I'll push you to slide nine now. And the TAB brand is becoming more youthful, sports-oriented and experiential. Turnover among 18 to 24-year-olds was up 14% in the first half of 2016. I want to touch on Live Golf and Super Bowl as an example of how we're talking to a new cohort of sports fans. We know customers want live experiences and attention spans are getting shorter. Story, sell and brand connection is increasingly more important. Tenfold assets like Super Bowl and Live Golf are examples of how we're delivering in this space. We'll be activating our brand and entertainment propositions across these assets and showcasing these activations on tabloid channels. We'll be unmissively green at more than just races. Flemington and Randwick will continue to be our flagship properties, but we know we also need to connect with more sporting audiences. On slide 10, some numbers there, and this refreshed offering is delivering. Digital and venue turnover increased 12% in the half, including growth in sport of 26%, and 42% growth in the 18- to 24-year-old cohort. Looking ahead, next-generation EVTs will commence rollout in July, and the injunctional our offer in the market. Slide 11. Our fourth pillar is about delivering growth underpinned by a sustainable retail channel. To do this, we'll invest in retail through redirecting generosity, developing new products and rolling out modernised betting terminals to attract customers and grow turnover for the benefit of the tab and our venue partners. To enable this, we must create a structurally profitable channel that is sustainable. This requires a new commercial model that improves alignment with our partner venues and simplifies existing frameworks. Finally, slides 12 and 13 showcase our media business. I said in August that the look and feel of Sky will be different during the spring race at Carnival than the team delivered. We introduced new content, evolved our talent and overhauled our magazine programs to be more contemporary. Our leading tifters have a permanent place on the homepage of the tab app. Every partner can access their tips with pre-filled business. It continues our evolution to a true omni-challenge experience. We've also strengthened our core rights football. Our focus remains on enhancing our core offering and content and expanding distribution both in Australia and internationally. I'll now hand over to Mark to talk you through the detailed financial results.

Thanks, Gil. Morning, everyone. As Gil mentioned, the growth in earnings in the first half of 2016 reflects a modestly improving turnover environment, strong strategic execution and cost and capital discipline. We have delivered a pleasing set of results given the impact of below average wagering yields and have responded to the revenue environment with continued focus on cost control and disciplined capital investment. This has led to earnings growth, margin expansion and a reduction in our leverage ratio to one and a half times net debt to EBITDA at the end of the calendar year. Before I run you through the results in detail, there are four key aspects I want to call out. First, domestic wagering revenue pre-VRI impacts fell by 2.5% despite modest growth in turnover due to below-average yields during the half. The reduction in yield versus longer-term averages was due to a run of customer-friendly results during the NRL AFL final and through the spring racing carnival. Some of this softer yield was recovered through the back end of November and in December when yields were very strong. We estimate the net yielded impact across the period was around 15 basis points, or about $10 million of net revenue when compared to longer-term averages. Second, the benefit of the reformed Victorian wagering licence applied for the whole six months of the half versus only four and a half months in the PCP. We estimate this to live in an increment of $12.2 million of EBITDA in the first half of 2016. Third, we continue to focus on improving cost discipline across the business. OpEx adjusted for the reformed Victorian license decreased by 3.7%. This, together with some modest revenue growth and some benefits from phase one of the new retail commercial model, helped us deliver operating leverage and 190 basis point improvement in EBITDA margin to 16.2%. Fourth, we continue to focus on efficient investment of capital. In the first half 26, CapEx reduced by 11% on the PCP to $51 million. This provides additional capacity to invest in growth for the second half, including the rollout of new modernised bedding terminals in retail venues to support an improved customer experience in venue and support our omni-channel strategy. Our leverage ratio reduced to one and a half times, providing us with significant balance sheet flexibility as we deliver our strategies. So now moving on to the results. Slide 15 sets out the first half 26 group financial results. Group revenue grew 1%, 1.34 billion. Variable contribution increased 4.3%, while reported OPEX decreased 1.1%. Delivering 14.3% growth in EBITDA to 217.4 million and 18.9% growth in EBIT to $110.2 million. Net interest expense decreased due to the reduced net debt as we continue to deliver. As discussed in prior Tadcorp results, the high effective tax rate in the P&L was driven by non-deductible VIC licence amortisation and the interest discount unwind. And finally, NPAT for forcing items grew at 61.5%. An interim dividend of 1.5 cents per share has been declared, representing a 56% payout ratio and a 50% increase on the PCP. For the remainder of the presentation, I'll focus on three areas. The drivers of EBITDA growth, cost control to deliver operating leverage, and the freedom balance sheet. So turning to slide 17, you can see the drivers of the 14% EBITDA growth delivered during the arm. We are pleased to deliver this level of earnings growth in light of the modest turnover environment, which, as I've already discussed, was also impacted by unfavorable yields. The incremental earnings uplift from the Reformed Victorian Majoring License contributed an incremental $21.7 million to VC, which was offset by $9.5 million of cost to deliver a net benefit to EBITDA of $12.2 million. As discussed earlier, Other benefits to earnings include the increase in integrity services VC as a result of the annual CPI fee increase, as well as increased project work. And some benefit to VC from phase one of the new retail commercial model. Underlying costs improved by $13.5 million, which I'll turn to now. Slide 18 demonstrates the focus on costs, which we have had over the last 18 months. with first half 26 OPEX benefiting from the annualisation of actions taking net 25, as well as the continuation of cost discipline on discretionary costs. Cost inflation remains an ongoing headwind, particularly in technology, so we've more than offset this with $13.9 million of cost reduction and a further $10.5 million of cost benefits relating to A&P timing and some other smaller cost-related actions. Looking forward in the second half, we continue our ongoing focus to offset inflation. We also expect to incur additional advertising and promotion spend of around $5 million in relation to the 2026 FIFA World Cup. Slide 19 demonstrates a continued focus on capital discipline, with CapEx for the first half of 2026 reducing 11% to $51 million. Together with the increase in profitability, this has given a 360 basis point improvement on return on invested capital relative to the prior corresponding period. Our F26 CapEx forecast remains unchanged at $120 to $140 million, implying an uplift in the second half fund rate related to the rollout of the modernised betting terminals under the new retail commercial model. Turning to slide 20 in cash flow, underlying cash conversion was 86%, impacted by the timing of some large payments in the first half. This is in line with expectations and similar to the first half of last year. We continue to expect that on a full year basis, cash conversion to be between 90% and 100%. One point to note is that cash interest expense of $54.6 million includes $24.9 million of interest relating to our annual payment each August for the Victorian licence. This will not reoccur in the second half, but all things being equal, the cash interest in the second half should be closer to $30 million. On to slide 21. In November, we issued $300 million under a new Australian median term date program. The notes carried a competitively priced AUD fixed coupon of 5.99% and a tenner of five and a half years. The AMTN delivered on our three objectives, being to diversify our funding sources, extend our average maturity, which now stands at 5.4 years, and increase liquidity. The strong AMTN outcome reflected the significant improvement in the company's prospects over the last 18 months. Slide 22 shows that our balance sheet remains strong and provides us with the necessary flexibility in funding capacity to pursue our strategy. At 31 December, we've reached 1.5 times, well below our target range of less than 2.5 times through the cycle. As I remarked at the outset, overall this is a sound result and we continue to deliver on our strategic agenda. I'll now hand you back to Gil for some closing remarks.