Melbourne-based gaming company Tabcorp Holdings brought forward its 2008 interim results yesterday as part of a $450 million capital raising that saw trading in the shares halted.
The shares closed at $6.79 on Wednesday with the profit and fund raising revealed yesterday morning.
The company, which operates betting and gambling businesses in NSW, Victoria and Queensland, revealed a 3.7% fall in first half profit down 3.7% on the first half of last year.
Tabcorp said net profit for the first half was $263.2 million, down from $273.4 million for the December half of 2007.
Tabcorp declared an interim dividend of 35c, steady with last year.
The announcement came a couple of days after the company got the green light for a multi-million dollar revamp of the Star City casino in Sydney.
That could cost $475 million, a bit more than the new capital raising when completed.
"The results were positive in light of a tougher economic environment and the additional licence amortisation charge in Victoria,” chairman John Story said in a statement to the ASX.
Tabcorp confirmed a $300 million institutional share placement and a follow-on share purchase plan for shareholders to raise a further $150 million.
The placement was made to institutional investors at a fixed price of $5.80 per share, representing a 9.9% discount to that $6.79 close on Wednesday.
That will be followed by a share purchase plan at the same price, with maximum subscriptions of $5,000 per eligible shareholder.
Tabcorp said it reserved the right to scale back applications if they exceed $150 million in total.
The capital raising is intended to strengthen Tabcorp’s balance sheet and to provide additional financial flexibility, while work happens to expand Star City casino.
"(It will) further strengthen Tabcorp’s liquidity position as it invests $475 million to expand Sydney’s Star City casino and transform it into a world-class entertainment destination,” the company said.
The trading halt will last for two days, until an announcement to the market on the outcome of the placement, or until opening of trading on Monday, February 2.
Tabcorp criticised new charges levied on it by the racing industry and gaming taxes affecting its Queensland casinos.
"These are very unwelcome imposts on our business, at a time when state governments and racing industries should encourage investment by businesses that provide a critical source of revenue and employ thousands of people,” Tabcorp chief executive Elmer Funke Kupper said.
He said management would continue to develop initiatives to help mitigate the impact of these new fees and taxes.
Tabcorp had cut its capital development program in fiscal 2010 by 30%.
"In the case of wagering, we have already started adjusting our business model to reflect the new wagering market,” Mr Kupper said.
"We have launched Luxbet, our Northern Territory bookmaking operation, and stepped up promotional activities with our totalisator business.”
Earnings before interest and taxes (EBIT) for Tabcorp’s casinos business dropped 12.7% to $165.9 million, down 12.7%, with revenues from electronic gaming machines down marginally, while revenues from the main gaming floor were up following an increase in multi-terminal gaming machines.
The EBIT for wagering was $145.4 million, up 14.9%, with revenue up 13% as activity recovered from last year’s equine influenza outbreak and sports betting returns rose.
The company’s gaming EBIT rose 11.1% to $144.1 million, with revenue from the Victorian Gaming business up 5%. Keno revenue rose 7.9% as the business expanded in NSW hotels.
Meanwhile, the housing slump in Australia and New Zealand took its toll on Alesco Corporation which yesterday posted a near 60% fall in first half profit and suspended its interim dividend.
The company joined Boral, a building products major, in reporting a severe hit to profits from the housing downturn.
In Boral’s case it was not only an underperforming Australian business (especially NSW), but also exposure to the depressed US new home sector where new home starts continued to fall.
Alesco said yesterday the rest of the 2009 year will be challenging as it struggles to meet the impact of the downturns on both sides of the Tasman .
The kitchen products, hardware and heavy equipment distributor said the interim result was dented by deteriorating conditions in the Australia and New Zealand housing markets.
That was despite a 4.3% rise in sales to $563.25 million.
Net profit for the six months ended November 30 fell to $12.65 million, from $31.5 million in the previous corresponding period.
Earnings before interest, tax, amortisation and significant items fell 16% to $50.8 million.
"Consistent with market guidance given in 2008, trading EBITA for the six months to 30 November 2008 was 16% lower, and earnings per share before amortisation and significant items was 33.1% lower than the prior corresponding period.
"Given the current environment, the 2009 interim dividend has been suspended in order to strengthen Alesco’s balance sheet and repay debt."
Alesco said it was in a sound financial position, trading within its banking covenants and confident it
