Quote 1 is lifted from the last TTS report and quote 2 is from...

Quote 1 is lifted from the last TTS report and quote 2 is from the SA Lotteries ann:


Quote 1:
"It is not our practice to give profit guidance. However, we are conscious of the changes flowing from the end of Tatts Pokies and its impact on profitability. Analysts who offer views on these matters think that EBITDA from our operations in FY2013 will be between $471M and $508M. The middle of this range of $489M is a reasonable representation of the potential of the company based on trading for the first three months of the financial year. Without any accounting adjustments or contribution from any changes in the asset mix, this would be expected to convert into profit after tax of around $215M. Using a dividend payout ratio somewhere within the 95% range, it implies a total dividend of around 15 cents per share."

Remember that Quote 1 was made prior to the SA Lotteries ann.


Quote 2:
"The SA Lottery business has an attractive fiscal regime for retail lottery sales with an operator margin of 15.8%. Keno produces an operator margin of 5%. This compares with average margins of 10.5%, 9.2% and 3.9% for the QLD, NSW and VIC lottery regimes respectively.
Golden Casket and NSW Lotteries will have doubled their EBITDA within four years of Tatts ownership. The inclusion of the South Australia Lotteries business is anticipated to produce broadly similar outcomes and is expected to contribute to Tatts Lotteries EBITDA exceeding $300M in FY2014, in a normal year of jackpots. Tatts Lotteries EBITDA will be boosted further in FY2015 from the migration of SA’s lottery system to Tatts’ in-house system."

(The following are important to note and from the SA Lotteries ann)

"Term of Agreement – 40 years from December 2012

Integration costs are not material and EPS accretion is immediate."

TTS have a track record of improving EBITDA very well from acquisitions and as all profit from Aus divs will remain fully franked and "predictable". (I see the irony of that statement having seen what the Vic Govt did with the pokies lic's). It is easy to get caught up in the fact that the TTS share price tumbled once. Don't forget that was due to circumstances beyond the control of the board. (That is the Vic Govt). Apart from that, the company has a wonderful track record of improving share holder wealth.

I'll keep quoting: Again from the last report "We are in Queensland today, and we have quite a few of the initial TABQ Limited shareholders here. It is worth my while reflecting just a little on the merger which took the company away from Queensland in 2006. The merger gave UNiTAB shareholders 4.33 TTS shares for the $2 they paid when TABQ listed in November 1999. A TTS dividend today of 23 cents would equate to a fraction of a cent short of $1 on that 1999 share. Not a bad outcome. This outcome is even better when we think that these old $2 shares have accumulated the equivalent of $7.68 in fully franked dividends to date. And, by the way, with a TTS share price of around $2.90 it means that each of the old $2 shares are worth $12.56."

Well I found all of that interesting. Hope at least a few of you do.