Tabcorp Holdings Limited · ASX:TAH
Tabcorp — Investor Day (October 2014)
64 slides from Tabcorp's investor day presentation, Oct 16, 2014
Slide 1: Tabcorp Holdings Limited
For personal use only Tabcorp Holdings Limited ABN 66 063 780 709 1
Slide 2: Tabcorp senior leadership team
Tabcorp senior leadership team For personal use only Tabcorp MD & CEO David Attenborough COO CFO Wagering Damien Johnston Craig Nugent Exec GM Corporate COO Legal & Regulatory Keno and Gaming Kerry Willcock Adam Rytenskild Exec GM COO Commercial Development Media & International Doug Freeman Brendan
Slide 3: Investor Day 2014
Investor Day 2014 For personal use only Overview and priorities David Attenborough (CEO) Capital Damien Johnston (CFO) Craig Nugent (COO Wagering) Wagering Kim Wenn (CIO) Media & International Brendan Parnell (COO Media & International) Keno Adam Rytenskild (COO Keno & Gaming) Gaming Services Adam R
Slide 4: FY14 overview
FY14 overview For personal use only EBITDA and NPAT up 4.8% and 7.4% respectively Strong cash flow conversion Gross Debt / EBITDA at 2.2x Dividend payout ratio of 81% Target 90% in FY15 Refinancing of May 2014 bond maturities completed Licence extensions completed NSW Wagering retail
Slide 5: Key priorities
Key priorities For personal use only Capital Optimise the use of and return on invested capital Wagering Lead industry transformation Media & International Enhance integration with wagering Keno Improve customer experience to drive participation Gaming Services Grow through venue, product
Slide 6: Tabcorp has an attractive investment case
Tabcorp has an attractive investment case For personal use only Portfolio of quality integrated gambling Licence Expiry entertainment businesses Wagering Long dated licences NSW 2098 Geographic diversification Victoria 2024 Underpinned by strong relationships with stakeholders ACT 2064 Luxbe
Slide 7: Capital – Damien Johnston
Capital – Damien Johnston For personal use only 7
Slide 8: Optimise the use of and return on invested capital
Optimise the use of and return on invested capital For personal use only ROIC Productivity Target Return on Invested Capital Target opex to revenue 14% 20-21% Balance sheet Shareholders FY14 Gross debt / EBITDA Target FY15 dividend payout 2.2x 90% of NPAT 8
Slide 9: Increase return on invested capital
Increase return on invested capital For personal use only 14% 12.9% 12.4% FY13 FY14 Target Notes: 1. ROIC target of 14%, following the integration of ACTTAB 2. Return on Invested Capital is calculated as EBIT / Invested Capital (average of opening and closing Invested Capital for a year) 3. EBIT is
Slide 10: Drive group-wide productivity improvement
Drive group-wide productivity improvement For personal use only Productivity is a key focus: FY14 Operating Expenses $434m FY14 opex / revenue of 21% Target opex / revenue of 20-21% Other Employment Project “Future Fit” commenced in FY13 to 26% identify opportunities to improve operating 38%
Slide 11: Maintain strong balance sheet
Maintain strong balance sheet For personal use only Well diversified debt structure with next maturity in June 2016 Investment grade credit rating Gross debt / EBITDA of 2.2x at 30 June 2014 ACTTAB acquisition to be funded from existing bank facilities 400 400 84 250 150 127 FY15 FY16 FY17 F
Slide 12: Increase returns to shareholders
Increase returns to shareholders For personal use only FY15 target payout ratio increased to 90% of NPAT Dividend payout ratio (%) 90% 81% 81% FY13 FY14 FY15 target 12
Slide 13: Wagering – Craig Nugent
Wagering – Craig Nugent For personal use only 13
Slide 14: Tabcorp is the market leader across all channels
Tabcorp is the market leader across all channels For personal use only Tabcorp is Australia’s largest wagering operator and is maintaining market leadership via its two brands – TAB and Luxbet Market share of ~52% (revenue)1 More than 2 million customers Accepts 850 million bets per annum
Slide 15: Maintain market leadership and drive transformation
Maintain market leadership and drive transformation For personal use only Customer Product Distribution Develop deep customer Offer a full range of products Across a unique multi- relationships channel distribution model Overlaid with risk management tools to enhance and optimise yield 15
Slide 16: Tabcorp has the largest customer base
Tabcorp has the largest customer base For personal use only Market leading wagering customer base of more than 2 million across our unparalleled breadth of distribution channels TAB active account customer base of ~370k at June 2014 TAB active account customer growth 1 +33k +27k +18k FY12 FY13 F
Slide 17: The customer is at the core of everything we do
The customer is at the core of everything we do For personal use only Brand Market leading dual brand strategy Build and Focus on Loyalty CRM and CRM expand TAB Rewards analytics 17
Slide 18: Market leading dual brand strategy – TAB and Luxbet
Market leading dual brand strategy – TAB and Luxbet For personal use only TAB and Luxbet focus on different customer segments, as well as different geographies Customer segment 1 2 3 4 5 0% 100% 0% Campaign Focus 18
Slide 19: TAB is the first choice wagering brand in key markets
TAB is the first choice wagering brand in key markets* For personal use only First choice Seriously consider NSW Might consider Never consider 38% Sportsbet Sportingbet Tom Waterhouse 9% 4% 2% VIC 38% Sportsbet Sportingbet 11% Tom Waterhouse 4% 3% *Based on research conducted by Millward-Brown Brand
Slide 20: CRM and analytics focus is driving improved retention
CRM and analytics focus is driving improved retention For personal use only Sophisticated analytics and CRM capabilities support Tabcorp’s market leadership position Analytics focus on driving a data advantage from customer and transactional information CRM focus on customer retention and reac
Slide 21: TAB loyalty program is unique across the market
TAB loyalty program is unique across the market For personal use only TAB Rewards is a tiered points loyalty scheme. Key features include: Points earned per dollar of turnover Customers can redeem points for free bets, sports and racing experiences, and merchandise Access to various members-
Slide 22: Loyalty program brings CRM to retail cash customers
Loyalty program brings CRM to retail cash customers For personal use only Loyalty in retail Provides direct communication to retail cash customers, including Trackside Allows the extension of promotional offerings to retail customers Improved customer proposition driving better retention out
Slide 23: Race fields mitigation strategies have been developed
Race fields mitigation strategies have been developed For personal use only FY15 will be impacted by the announced increases in Race Fields fees from racing codes in Victoria, Queensland, South Marketing Australia and Western Australia CRM/ Radio Loyalty Focus is on increasing promotion of highe
Slide 24: Offer a full range of products
Offer a full range of products For personal use only Customer Product Distribution Develop deep customer Offer a full range of products Across a unique multi- relationships channel distribution model Overlaid with risk management tools to enhance and optimise yield 24
Slide 25: Tabcorp offers a complete product range
Tabcorp offers a complete product range For personal use only The combination of TAB and Luxbet brands provides Tabcorp with a differentiated and complete market offering FY14 Tabcorp turnover $11.9b Tote Pari-mutuel Trackside Derivatives Fixed odds Trackside Fixed odds Tote derivatives
Slide 26: Racing fixed odds yields continue to expand
Racing fixed odds yields continue to expand For personal use only Revenue $m Racing remains the dominant product in 323 Australia’s wagering market, representing 236 ~81% of turnover 156 Recent years have seen customer preferences shift from pari-mutuel to fixed 80 odds products Win/place bet
Slide 27: Multi-bets continue to boost overall sports yield
Multi-bets continue to boost overall sports yield For personal use only Revenue $m TAB’s sports fixed odds yields expanded to 14.4% 188 in FY14 165 168 147 Sports yields driven by multi-bets yield of ~25% Tabcorp’s risk management system enables market leading multi-bet management across all c
Slide 28: TAB fixed odds sports offering expanded via AMM
TAB fixed odds sports offering expanded via AMM TAB average daily sports markets For personal use only 26,000 Expanding the number of sporting events that customers can bet on is a key driver of growth 5,000 4,000 FY13 1H14 2H14 Rolling 12 months sports turnover1 Following the implementation of
Slide 29: TAB has a diversified sports book
TAB has a diversified sports book For personal use only A diversified sports offering leaves Tabcorp less susceptible to a series of abnormal results in any one sport – this is a key difference with the UK market that is dominated by soccer TAB sports product sales share 1 20% 15% 10% 5% 0% Basket
Slide 30: Trackside is a differentiated product for Tabcorp
Trackside is a differentiated product for Tabcorp For personal use only Trackside is exclusive to Tabcorp in Australia and is one of the highest margin products Priorities include: Retail performance optimisation, increased focus and investment on high potential venues Increase brand awarene
Slide 31: Key drivers of Luxbet performance
Key drivers of Luxbet performance For personal use only Revenue $m Performance metrics over the past 12 months were 48 positive 39 FY14 revenue growth 23% 28 FY14 EBITDA $3.4m 21 Average revenue per active customer at $1,027 (+3.7%), with cost per acquisition of $227 (-10%) Luxbet’s yields
Slide 32: Unique distribution model with differentiated digital
Unique distribution model with differentiated digital For personal use only Customer Product Distribution Develop deep customer Offer a full range of products Across a unique multi- relationships channel distribution model Overlaid with risk management tools to enhance and optimise yield 32
Slide 33: Tabcorp has a multi-channel customer approach
Tabcorp has a multi-channel customer approach For personal use only Our aim is to provide a consistent and superior customer experience across all touch points Customers embrace the multi-channel offering 61% of all account deposits are with cash in retail outlets Customers representing more
Slide 34: Extracting full value from our exclusive retail network
Extracting full value from our exclusive retail network For personal use only Our aim is to create a preferred, appealing and multi-channel offering, delivered through Tabcorp’s retail network, that will: Attract new customers Deliver consistently satisfying customer experience Enable increa
Slide 35: Our digital journey has established the right foundation
Our digital journey has established the right foundation For personal use only Phase 1 Phase 2 Phase 3 DEVELOP DELIVER GROW • Build the team, • Rollout new customer • Define a strategic establish practices offerings and replace vision across all and processes underperforming brands and channels • Tr
Slide 36: Resulting in digital leadership across the market
Resulting in digital leadership across the market For personal use only Tabcorp is the market leader in digital wagering ~$1bn more digital turnover than our nearest competitor Digital turnover growth in 2H14 for TAB of 21% and Luxbet of 16% Mobile execution has been a clear focus – in 1Q15
Slide 37: Delivering innovative solutions with a quick turnaround
Delivering innovative solutions with a quick turnaround For personal use only Goal Deliver a dedicated Soccer World Cup digital hub including pre-game news and stats, live match center and post match info combined with integrated betting Part of the broader “Back Gold” Soccer World Cup campaig
Slide 38: Clearly established digital vision
Clearly established digital vision For personal use only Our vision is to re-imagine and create the ultimate wagering and entertainment experience for consumers Digital & Customer Data & retail experience content convergence Customer-centred design We must place the customer at the heart of our stra
Slide 39: Initial customer centric prototypes
Initial customer centric prototypes For personal use only Studying Choosing Placing Watching Checking Checking Other My the your sports or Form a bet type Account the bet the event results balance races Developed concept 200 ideas Refined into 22 prototypes that span our generated service concepts c
Slide 40: Ongoing digital pathway
Ongoing digital pathway For personal use only Onboarding Funnel New tab.com.au Mobile Development Live Match Centre Enhancements • Launched • App development now • Include Live Match • New account opening beta.tab.com.au in-house Centre functionality, funnel in tab.com.au • Launch tab.com.au in • Si
Slide 41: Media & International – Brendan Parnell
Media & International – Brendan Parnell For personal use only 41
Slide 42: Enhance integration with wagering
Enhance integration with wagering For personal use only Product Customer International Secure and extend media Expand digital media and Expand international co- rights and broaden product optimise content to provide mingling and the export / base differentiated wagering offer import of racing Provid
Slide 43: Sky Racing is a global leader in race broadcasting
Sky Racing is a global leader in race broadcasting For personal use only The integration of Sky Racing channels with Tabcorp’s wagering offering is critical to growing funding for the racing industry A synchronised source of content provides a richer customer experience Wagering is stimulated
Slide 44: Secure rights and broaden product base
Secure rights and broaden product base For personal use only Number Rights Location Digital of meets held Sydney1 114 x2 Sky has been successful in renewing NSW prov / and extending a number of rights 525 agreements over the past 12 months country VIC1 501 x2 Thoroughbred Racing SA Gre
Slide 45: Expand the wagering day to 24/7
Expand the wagering day to 24 / 7 For personal use only With the introduction of imported racing product from the Americas and an expansion of European product, Tabcorp recently moved to offering 20 hours of racing coverage to customers (8am to 4am) on 4 days per week The aspiration is to achiev
Slide 46: Provide content to drive differentiated digital wagering
Provide content to drive differentiated digital wagering For personal use only Through Sky’s digital media rights, the TAB digital wagering offer is truly differentiated In-app viewing of all racing content, except Sydney and Victorian thoroughbreds Unique services such as “Watch & Bet” Expa
Slide 47: Expand international co-mingling and export of racing
Expand international co-mingling and export of racing For personal use only Sky’s international wagering / media strategy has three key drivers of returns Export of Australasian racing to international markets Co-mingling of international turnover on Australian racing into Tabcorp’s domestic p
Slide 48: Expand international co-mingling and export of racing
Expand international co-mingling and export of racing For personal use only Export Hosting Import Guesting Export / hosting New Zealand S-TAB S-TAB Sky currently exports Australian racing to more than 50 countries Singapore PGI/NSW S-TAB Wagering turnover on Australian USA / Canada
Slide 49: Sky Racing World US
Sky Racing World US For personal use only Tabcorp acquired its US vision agent in early Nth America turnover 2014 – now renamed Sky Racing World (US) on Aus/NZ racing US$m Income is generated through the export of 16% CAGR 176 Australian and New Zealand racing product to more than 425 wagering o
Slide 50: Keno – Adam Rytenskild
Keno – Adam Rytenskild For personal use only 50
Slide 51: Keno has a broad player base
Keno has a broad player base For personal use only Keno appeals to a broad base of players Estimated 2.7m people play the game each year Keno player base is broadly Keno cross product utilisation (%) 2 representative of the population 1 Play Trackside 12% Bought scratchies 59% Play poker machine
Slide 52: Improve customer experience to drive participation
Improve customer experience to drive participation For personal use only Customer Channel Product Increase participation across Drive optimal retail Refresh, extend and develop existing and new customers experience and develop Keno product range digital integration Foundation of a well recognised br
Slide 53: Brand has strong recognition but needs new energy
Brand has strong recognition but needs new energy For personal use only Keno has strong brand recognition with more Keno is a well recognised brand than 80% recognition across Tabcorp’s Keno markets 93% 86% 80% However, the brand has low differentiation across the lotteries market and requires r
Slide 54: Drive optimal retail experience with digital integration
Drive optimal retail experience with digital integration For personal use only Keno is a pure retail product today, with very limited digital interaction with customers Limited sensory engagement for customers Ability to improve in-venue placement Two key priorities for Keno are Optimise t
Slide 55: Refresh, extend and develop the product range
Refresh, extend and develop the product range For personal use only Product innovation is core to refreshing the Keno proposition to existing and new customers Review and enhance existing product lines Improve game delivery and display Jackpot pooling, subject to regulatory approvals Goal
Slide 56: The benefits of large jackpots
The benefits of large jackpots For personal use only Regulatory approval being sought to pool jackpots between states Initially NSW and Victoria Queensland to follow Pooling would accelerate the frequency of jackpots reaching the $2m+ level Higher jackpots drive sales Queensland Spot-10 –
Slide 57: Gaming Services – Adam Rytenskild
Gaming Services – Adam Rytenskild For personal use only 57
Slide 58: Grow through venue, product and interstate expansion
Grow through venue, product and interstate expansion For personal use only Performance Services Interstate Drive outperformance to Expand value added services Expand into other generate further venue sign- across the existing network jurisdictions, with an initial ups focus on NSW Strengthen relatio
Slide 59: Outperformance evident in Victoria
Outperformance evident in Victoria For personal use only TGS venues outperformed the broader Victorian gaming market in FY14 TGS outperformance reflects Business intelligence analytics driving optimal floor positioning Commitment to ongoing floor refreshment Diamond Rewards loyalty system
Slide 60: In-EGM loyalty adding value to venues
In-EGM loyalty adding value to venues For personal use only The expansion of In-EGM loyalty is a key initiative to capture increased market share in Victoria First-mover advantage Exclusive distribution of the IGT Advantage system First with voluntary pre-commitment in Victoria More than 4
Slide 61: Diamond Rewards program provides broader benefits
Diamond Rewards program provides broader benefits For personal use only Diamond Rewards is the unique loyalty program of TGS More than 170,000 members Benefits to TGS venues include 1:1 marketing / communication opportunity with key customers Tiered loyalty to reward best customers Incre
Slide 62: Expand TGS into other jurisdictions
Expand TGS into other jurisdictions For personal use only TGS has now entered NSW with a tailored offering for this market Phase 1 – sign initial venues to demonstrate performance Phase 2 – approach wider group of venues to increase TGS’ presence 1,186 EGM’s Target market in NSW is “mid-size
Slide 63: Disclaimer
Disclaimer This Presentation contains summary information about the current activities of Tabcorp Holdings Limited (Tabcorp) and its For personal use only subsidiaries (Tabcorp Group). It should be read in conjunction with the Tabcorp Group’s other periodic and continuous disclosure announcements lo
Slide 64: For personal use only
raph Luxbet RACING Pafet fram egaeience &« Tabcorp