Tabcorp Holdings Limited · ASX:TAH
Tabcorp — H1 2018 Earnings Presentation
41 slides from Tabcorp's earnings presentation, Feb 8, 2018
Slide 1: ASX cover letter: Half Year Results Presentation
For personal use only 8 February 2018 Australian Securities Exchange Companies Announcements Platform 20 Bridge Street Sydney NSW 2000 TABCORP HALF YEAR RESULTS PRESENTATION Attached is the presentation regarding Tabcorp’s half year results ended 31 December 2017 to be presented by David Attenboroug
Slide 2: 2017/18 First Half Results Presentation
For personal use only TABCORP HOLDINGS LIMITED 2017/18 FIRST HALF RESULTS PRESENTATION 8 FEBRUARY 2018 ABN 66 063 780 709
Slide 3: Table of Contents
TABLE OF CONTENTS For personal use only Reshaping Tabcorp and 1H18 Overview 3-4 Tabcorp Results 6 - 12 Tatts Results 14 - 19 Pro-forma Combined Group Results 21 - 22 Capital Management 24 Regulatory Update 26 Integration Update 28 Conclusion 30 Appendices 32 - 38 2
Slide 4: Reshaping Tabcorp
RESHAPING TABCORP For personal use only o Tabcorp and Tatts combination completed in December 2017 • Creates a world-class, diversified gambling entertainment group • Large national footprint and a diverse product offering across Wagering & Media, Lotteries & Keno, and Gaming Services • Combined Exe
Slide 5: 1H18 Overview – Tabcorp
1H18 OVERVIEW – TABCORP 1,2 For personal use only o Statutory results • Revenues $1,376.2m, up 18.7% • NPAT $24.6m, down 58.2% • EPS3 2.6 cents per share, down 63.4% • NPAT and EPS adversely impacted by significant items after tax of $57.4m o Results before significant items • Revenues $1,376.2m, up
Slide 6: Table of Contents
TABLE OF CONTENTS For personal use only Reshaping Tabcorp and 1H18 Overview 3-4 Tabcorp Results 6 - 12 Tatts Results 14 - 19 Pro-forma Combined Group Results 21 - 22 Capital Management 24 Regulatory Update 26 Integration Update 28 Conclusion 30 Appendices 32 - 38 5
Slide 7: Group Results
1,2 GROUP RESULTS For personal use only $m 1H18 1H17 Change Revenues 1,376.2 1,159.3 18.7% Variable contribution 568.7 521.5 9.1% Operating expenses (299.1) (251.1) 19.1% EBITDA before significant items 269.6 270.4 (0.3%) D&A (99.8) (86.7) 15.1% EBIT before significant items 169.8 183.7 (7.6%) Inter
Slide 8: Business Results
BUSINESS RESULTS For personal use only Wagering Change Gaming Change Change 2 Change 3 Change Change Keno Sun Bets Tatts Group $m & Media on pcp Services on pcp on pcp on pcp on pcp on pcp Revenues 1,000.7 1.4% 83.3 38.4% 112.2 0.1% 3.7 n/a 176.3 n/a 1,376.2 18.7% Variable contribution 391.6 (1.5%)
Slide 9: Wagering & Media
WAGERING & MEDIA For personal use only $m 1H18 1H17 Change o Wagering revenue growth ex-Luxbet up 2.6% Wagering revenue 911.5 897.9 1.5% o Continued investment in product and content Media revenue 89.2 89.1 0.1% • Multiplier launched during the Spring Racing Revenues 1,000.7 987.0 1.4% Carnival, str
Slide 10: TAB: KPIs
TAB: KPIs For personal use only o Digital turnover growth of 16.5%, driving total turnover $m 1H18 1H17 Change % growth of 3.1% Turnover by distribution ($m) Retail 3,192.6 3,302.5 (3.3%) • Digital turnover from mobile now represents 71.0% of Digital 2,555.0 2,192.5 16.5% total digital turnover (67.
Slide 11: Gaming Services
GAMING SERVICES For personal use only $m 1H18 1H17 Change o Gaming Services benefited from 6 months of Revenues 83.3 60.2 38.4% Intecq trading compared to 1 month in the pcp EBITDA 46.3 36.0 28.6% o TGS EBIT 26.3 20.7 27.1% • Approximately 10,550 EGMs under contract (Vic 8,600; NSW 1,950), with 89%
Slide 12: Keno
KENO For personal use only $m 1H18 1H17 Change o Turnover down 1.9% on the pcp, impacted by an Revenues 112.2 112.1 0.1% unfavourable jackpot sequence, particularly in 1Q18 EBITDA 39.2 40.2 (2.5%) • 1Q18 down 6.8% EBIT 27.0 29.4 (8.2%) • 2Q18 up 3.5% Venues 3,631 3,599 0.9% o Revenue up 0.1% on the
Slide 13: Sun Bets
SUN BETS For personal use only $m 1H18 1H17 Change o Sun Bets performance remained unsatisfactory in Turnover 158.3 96.8 63.5% 1H18, despite a better trading performance in 2Q18 Revenues 3.7 1.5 >100% o A number of new product and customer initiatives were introduced including improved integration o
Slide 14: Table of Contents
TABLE OF CONTENTS For personal use only Reshaping Tabcorp and 1H18 Overview 3-4 Tabcorp Results 6 - 12 Tatts Results 14 - 19 Pro-forma Combined Group Results 21 - 22 Capital Management 24 Regulatory Update 26 Integration Update 28 Conclusion 30 Appendices 32 - 38 13
Slide 15: Tatts 1H18 Overview
TATTS 1H18 OVERVIEW For personal use only o Slides 14 to 19 of this presentation include additional details of Tatts Group’s results for the first half of the 2018 financial year which includes the trading period prior to acquisition by Tabcorp1 o Statutory result: NPAT of $102.4m, down 16.6% - impa
Slide 16: Tatts Group Results
1 TATTS GROUP RESULTS For personal use only $m 1H18 1H17 Change Total revenue and other income 1,481.9 1,419.5 4.4% The Tatts results in this presentation have been adjusted to reflect Tabcorp accounting Government share (702.1) (655.9) 7.0% methodology in respect of the following three Venue share/
Slide 17: Tatts Business Results
TATTS BUSINESS RESULTS For personal use only Change Change Gaming Change Change Lotteries Wagering Group $m on pcp on pcp Services on pcp on pcp Revenue 1,081.2 6.2% 311.1 (2.0%) 91.8 4.8% 1,481.9 4.4% EBITDA 161.1 10.8% 55.9 (10.1%) 35.4 9.5% 244.4 1.9% EBIT 142.7 12.6% 41.5 (17.9%) 28.3 23.6% 204.
Slide 18: Tatts Lotteries
TATTS LOTTERIES For personal use only $m 1H18 1H17 Change Jackpot performance Number of jackpots $50m or more Number of jackpots $15m or more $31.7m Revenues 1,081.2 1,018.4 6.2% $30.4m Average value of jackpot at $15m or more $28.6m EBITDA 161.1 145.4 10.8% $26.9m $26.9m $26.7m $25.8m $25.3m EBIT 1
Slide 19: Tatts Wagering
TATTS WAGERING For personal use only $m 1H18 1H17 Change $m 1H18 1H17 Change Turnover 2,019.6 2,040.7 (1.0%) Turnover by distribution ($m) Revenues 311.1 317.5 (2.0%) Retail 1,072.6 1,135.4 (5.5%) EBITDA 55.9 62.2 (10.1%) Digital 655.5 576.2 13.8% EBIT 41.5 50.5 (17.9%) Call Centre 86.2 97.6 (11.6%)
Slide 20: Tatts Gaming Services
TATTS GAMING SERVICES For personal use only $m 1H18 1H17 Change o Revenue up 4.8% reflecting contracted increases in Revenues 91.8 87.6 4.8% monitoring fees, increased uptake of MAXconnect, and increased TITO installations EBITDA 35.4 32.4 9.5% o Business mix (revenue) 52% monitoring, 24% value- EBI
Slide 21: Table of Contents
TABLE OF CONTENTS For personal use only Reshaping Tabcorp and 1H18 Overview 3-4 Tabcorp Results 6 - 12 Tatts Results 14 - 19 Pro-forma Combined Group Results 21 - 22 Capital Management 24 Regulatory Update 26 Integration Update 28 Conclusion 30 Appendices 32 - 38 20
Slide 22: 1H18 Overview – Pro-forma Combined Group
1H18 OVERVIEW – PRO-FORMA COMBINED GROUP For personal use only o Group pro-forma1 results before significant items • Revenues $2,666.2m, up 3.1% • EBITDA $485.4m, down 1.2% • EBIT $350.8m, down 3.1% o Operational highlights • Lotteries & Keno revenues up 5.6% with both digital and retail sales seein
Slide 23: Pro-forma Combined Group Business Results
PRO-FORMA COMBINED GROUP BUSINESS RESULTS For personal use only Wagering Change Lotteries & Change Gaming Change Change 2 Change Sun Bets Group $m & Media on pcp Keno on pcp Services on pcp on pcp on pcp Revenues 1,304.4 0.6% 1,193.5 5.6% 167.7 3.5% 3.7 >100% 2,666.2 3.1% Variable contribution 517.9
Slide 24: Table of Contents
TABLE OF CONTENTS For personal use only Reshaping Tabcorp and 1H18 Overview 3-4 Tabcorp Results 6 - 12 Tatts Results 14 - 19 Pro-forma Combined Group Results 21 - 22 Capital Management 24 Regulatory Update 26 Integration Update 28 Conclusion 30 Appendices 32 - 38 23
Slide 25: Capital Management
CAPITAL MANAGEMENT For personal use only DEBT STRUCTURE ($m) o Headroom available under bank facilities of $948m at 31 December 2017 Tatts Bonds1 o Bridge financing of $1.8bn expected to be refinanced in debt 194 Bridge finance capital markets Cash-settled equity swap US Private Placement o Cash-set
Slide 26: Table of Contents
TABLE OF CONTENTS For personal use only Reshaping Tabcorp and 1H18 Overview 3-4 Tabcorp Results 6 - 12 Tatts Results 14 - 19 Pro-forma Combined Group Results 21 - 22 Capital Management 24 Regulatory Update 26 Integration Update 28 Conclusion 30 Appendices 32 - 38 25
Slide 27: Regulatory Update
REGULATORY UPDATE For personal use only o In March 2017, the Federal Treasurer announced an agreement with State and Territory Treasurers to work together on a national framework for state-based wagering point of consumption taxes • Point of consumption tax commenced in South Australia from 1 July 2
Slide 28: Table of Contents
TABLE OF CONTENTS For personal use only Reshaping Tabcorp and 1H18 Overview 3-4 Tabcorp Results 6 - 12 Tatts Results 14 - 19 Pro-forma Combined Group Results 21 - 22 Capital Management 24 Regulatory Update 26 Integration Update 28 Conclusion 30 Appendices 32 - 38 27
Slide 29: Integration Update
INTEGRATION UPDATE For personal use only o On 21st December 2017, Tabcorp successfully implemented the combination of Tabcorp and Tatts, and announced its new Executive Leadership Team o Since implementation, collaboration between Tabcorp and Tatts executives has been extensive and productive • Tabc
Slide 30: Table of Contents
TABLE OF CONTENTS For personal use only Reshaping Tabcorp and 1H18 Overview 3-4 Tabcorp Results 6 - 12 Tatts Results 14 - 19 Pro-forma Combined Group Results 21 - 22 Capital Management 24 Regulatory Update 26 Integration Update 28 Conclusion 30 Appendices 32 - 38 29
Slide 31: Conclusion
CONCLUSION For personal use only o 1H18 Overview • Tabcorp and Tatts combination completed in December 2017 • Strategic investments to enhance competitive position in Australian gambling market • Luxbet ceased operations and Odyssey Gaming Services divested o Future priorities • Deliver the benefits
Slide 32: Table of Contents
TABLE OF CONTENTS For personal use only Reshaping Tabcorp and 1H18 Overview 3-4 Tabcorp Results 6 - 12 Tatts Results 14 - 19 Pro-forma Combined Group Results 21 - 22 Capital Management 24 Regulatory Update 26 Integration Update 28 Conclusion 30 Appendices 32 - 38 31
Slide 33: Appendices
APPENDICES For personal use only 1. Wagering & Media: Financial data 2. Wagering & Media: Revenues by state and product 3. Balance sheet 4. Cashflow 5. Tatts Segment Reconciliation 6. Group pro-forma Reconciliation 32
Slide 34: 1. Wagering & Media: Financial Data
1. WAGERING & MEDIA: FINANCIAL DATA 1,2 For personal use only $m 1H18 1H17 Change Revenues 1,000.7 987.0 1.4% Taxes, levies, commissions and fees (609.1) (589.3) 3.4% Variable contribution 391.6 397.7 (1.5%) Operating expenses (209.8) (201.6) 4.1% EBITDA 181.8 196.1 (7.3%) D&A (62.0) (60.6) 2.3% EBI
Slide 35: 2. Wagering & Media: Revenues by State and Product
2. WAGERING & MEDIA: REVENUES BY STATE AND PRODUCT 1,2,3 For personal use only NSW Change Vic Change ACT Change Total Change $m 1H18 on pcp 1H18 on pcp 1H18 on pcp 1H18 on pcp Racing 491.2 3.0% 229.8 0.9% 14.7 8.1% 735.7 2.4% Sports 75.4 8.5% 20.9 10.6% 1.7 30.8% 98.0 9.3% Trackside 17.9 (7.7%) 10.8
Slide 36: 3. Balance Sheet
3. BALANCE SHEET For personal use only $m Dec 17 Jun 17 Change Total current assets 1,453.1 556.6 >100% Licences 1,627.0 637.5 >100% Other intangible assets 9,484.4 2,058.0 >100% Property, plant and equipment 501.8 339.4 47.8% Other non current assets 289.2 149.3 93.7% Total assets 13,355.5 3,740.9
Slide 37: 4. Cashflow
4. CASHFLOW For personal use only $m 1H18 1H17 Change Net operating cash flows 323.5 211.9 52.7% Net interest paid (63.3) (34.8) 81.9% Income tax (paid) / refunded (21.5) (34.2) (37.1%) Payments for PP&E and intangibles (105.9) (78.3) 35.2% Sub-total 132.8 64.6 >100% Ordinary dividends paid (104.4)
Slide 38: 5. Tatts Segment Reconciliation
5. TATTS SEGMENT RECONCILIATION For personal use only Corporate SA Keno Restated Lotteries, $m 1H17 Elims Costs 1 Reclass 2 1H17 Revenues 1,018.1 - 0.3 - 1,018.4 Notes: Variable contribution 227.7 - 0.2 - 227.9 1. Unallocated corporate costs have been allocated across segments Operating expenses (67
Slide 39: 6. Group Pro-forma Reconciliation
6. GROUP PRO-FORMA RECONCILIATION For personal use only o Combined Group pro-forma income statement for the six months ended 31 December 2017 Adjustments Combined Tabcorp Tatts Tatts 18 Odyssey Sun Bets Intecq Elims Group Reported Reported days Divestment $m pro-forma Revenue 1,376.2 1,481.9 (176.3)
Slide 40: Disclaimer
DISCLAIMER For personal use only 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 announcements lo
Slide 41: To Advance the Way We Play
For personal use only TO ADVANCE THE WAY WE PLAY