Tabcorp Holdings Limited · ASX:TAH
Tabcorp — FY2020 Earnings Presentation
38 slides from Tabcorp's earnings presentation, Aug 19, 2020
Slide 1: Tabcorp Full Year Results Presentation ASX announcement
For personal use only 19 August 2020 Australian Securities Exchange Companies Announcements Platform 20 Bridge Street Sydney NSW 2000 TABCORP FULL YEAR RESULTS PRESENTATION Attached is the presentation regarding Tabcorp Holdings Limited’s (Tabcorp’s) results for the financial year ended 30 June 2020
Slide 2: 2019-20 Full year results presentation
For personal use only TABCORP HOLDINGS LIMITED 2019-20 Full year results presentation for the year ended 30 June 2020 19 AUGUST 2020 ABN 66 063 780 709
Slide 3: Table of Contents
TA B L E O F C O N T E N T S For personal use only 03 ► 08 Group Overview 10 ► 18 Business Results 20 Capital 22 ► 23 Conclusion 25 ► 35 Appendices
Slide 4: Diversified portfolio helping to manage current market challenges
REVENUE CONTRIBUTION2 DIVERSIFIED PORTFOLIO HELPING TO MANAGE CURRENT MARKET CHALLENGES 4% For personal use only o Group revenue down 4.8% and EBITDA1 down 11.5% vs pcp primarily due to COVID-19: • Strong Lotteries performance – like-for-like sales up c.15-30% during COVID-19 restrictions 40% • Wage
Slide 5: FY Group Results
F Y 2 0 G R O U P R E S U LT S ( 1 O F 2 ) For personal use only FULL YEAR RESULTS HEAVILY IMPACTED BY COVID-19 AND NON-CASH GOODWILL IMPAIRMENT CHARGE FY20 1H20 2H20 VS PCP VS PCP VS PCP REVENUE $5,224M DOWN 4.8% UP 4.4% DOWN 14.4% EBITDA $995M DOWN 11.5% UP 2.2% DOWN 26.3% (BEFORE SIGNIFICANT ITEM
Slide 6: FY Group Results and goodwill impairment
F Y 2 0 G R O U P R E S U LT S ( 2 O F 2 ) For personal use only $m FY20 FY19 Change Goodwill2 ($m) FY20 FY19 Change Lotteries & Keno 5,304 5,304 - Revenues 5,224 5,488 (4.8%) Wagering & Media 1,734 2,639 (905) Variable contribution 1,799 1,986 (9.4%) Gaming Services 122 307 (185) Operating expenses
Slide 7: COVID-19: Impacts on FY EBITDA
C O V I D - 1 9 : I M PA C T S O N F Y 2 0 E B I T D A For personal use only IMPACT OF COVID-19 RESTRICTIONS PARTLY MITIGATED BY COST CONTROL INITIATIVES FY20 EBITDA ($M) Lotteries cycling large prior year jackpots1, like- Heavily impacted by for-like sales up c.15-30% during COVID-19; COVID-19, esp
Slide 8: COVID-19: Impacts and Response
C O V I D - 1 9 : I M PA C T S A N D R E S P O N S E For personal use only BROAD RANGE OF ACTIONS TAKEN TO SUPPORT OUR PEOPLE AND PARTNERS, AND TO MITIGATE THE IMPACT OF COVID-19 ON EARNINGS AND THE BALANCE SHEET VENUES REVENUE COST CAPITAL /EVENTS IMPACT & RESPONSE MANAGEMENT IMPACTED RESPONSE o Lo
Slide 9: From Integration to Optimisation
F R O M I N T E G R AT I O N T O O P T I M I S AT I O N For personal use only Tabcorp-Tatts Merger Integration Optimisation December 2017 January 2018 to FY21 FY21 to FY23 INTEGRATION EBITDA – COST SYNERGIES ($M) o Significant milestone achieved with account customer migration of UBET systems to TAB
Slide 10: Table of Contents
TA B L E O F C O N T E N T S For personal use only 03 ► 08 Group Overview 10 ► 18 Business Results 20 Capital 22 ► 23 Conclusion 25 ► 35 Appendices
Slide 11: Group & Business Results
G R O U P & B U S I N E S S R E S U LT S 1 , 2 For personal use only Lotteries & Keno Wagering & Media Gaming Services Group $m Change $m Change $m Change $m Change Revenues 2,917 1.8% 2,084 (10.1%) 221 (27.3%) 5,224 (4.8%) Variable contribution 761 2.6% 825 (13.2%) 210 (27.6%) 1,799 (9.4%) Operatin
Slide 12: Lotteries & Keno
LOTTERIES & KENO For personal use only RESULT DEMONSTRATES STRENGTH OF GAME PORTFOLIO $m FY20 FY19 Change AND SHIFT TO DIGITAL Revenues 2,917 2,865 1.8% o Strong underlying revenue growth notwithstanding: Variable contribution 761 742 2.6% Operating expenses (219) (229) (4.4%) • Cycling particularly
Slide 13: Lotteries & Keno KPIs
POWERBALL & OZ LOTTO JACKPOTS 49 14 39 32 LOTTERIES & KENO KPIs 4 11 35 28 28 For personal use only STRONG GROWTH IN ACTIVE REGISTERED CUSTOMERS; FY18 FY19 FY20 RESILIENT PERFORMANCE DURING COVID-19 Number of jackpots Number of jackpots $15M - $49M $50M or more LOTTERIES CUMULATIVE JACKPOT VALUE OFF
Slide 14: Lotteries & Keno: FY21 Key Focus Areas
LOTTERIES & KENO: FY21 KEY FOCUS AREAS For personal use only o Saturday Lotto game changes to launch in October: bigger Division 1 prize and more weekly winners supported by entry price increase GAME PORTFOLIO o Initiatives across the Instant Scratch-Its category to build on strong FY20 momentum o C
Slide 15: Wagering & Media
WAGERING & MEDIA For personal use only CHALLENGING YEAR WITH DIGITAL GROWTH PARTIALLY $m FY20 FY19 Change OFFSETTING RETAIL DECLINE Revenues 2,084 2,318 (10.1%) o Significant channel shifts, accelerated by COVID-19 Variable contribution 825 951 (13.2%) • Decline in retail and media revenue as a resu
Slide 16: Wagering & Media KPIs
PRE VS DURING COVID-19 PERFORMANCE2 Turnover Revenue Change on pcp % Account Retail Account Retail WA G E R I N G & M E D I A K P I s 1 1Q20 – 3Q20 (6%) (11%) (1%) (8%) 4Q20 33% (84%) 44% (82%) For personal use only Total 3% (28%) 10% (25%) ACCOUNT TURNOVER SIGNIFICANTLY UP DURING COVID-19; YIELD DR
Slide 17: Wagering & Media: FY21 Key Focus Areas
WA G E R I N G & M E D I A : F Y 2 1 K E Y F O C U S A R E A S For personal use only Complete retail integration and drive performance improvement with unified TAB INTEGRATION offer across a single improved platform Focus on driving the business with digitally integrated distribution and a leaner co
Slide 18: Gaming Services
GAMING SERVICES For personal use only BUSINESS SEVERELY IMPACTED DUE TO COVID-19 WITH THE $m FY20 FY19 Change MANDATORY CLOSURE OF HOTELS AND CLUBS MAX Venue Services 150 209 (28.2%) o Revenue decline predominantly COVID-19 related MAX Regulatory Services 71 95 (25.3%) • Temporary closure of hotels
Slide 19: Gaming Services: Operational and Strategic Review Update
G A M I N G S E R V I C E S : O P E R AT I O N A L A N D S T R AT E G I C R E V I E W U P D AT E For personal use only Implementation of operational review now underway o Leaner management and simplified operating structure o Develop and implement new products for core MAX Venue Services offer, targ
Slide 20: Table of Contents
TA B L E O F C O N T E N T S For personal use only 03 ► 08 Group Overview 10 ► 18 Business Results 20 Capital 22 ► 23 Conclusion 25 ► 35 Appendices
Slide 21: Capital Management
C A P I TA L M A N A G E M E N T For personal use only EQUITY RAISING TO STRENGTHEN THE BALANCE SHEET IN UNCERTAIN TIMES GEARING1 DEBT PROFILE3 CREDIT RATING o Revised gearing target: 2.5x – 3.0x Was 3.0x – 3.5x TARGET Minimise cost of borrowing Maintain investment grade Now 2.5x – 3.0x o Undrawn ba
Slide 22: Table of Contents
TA B L E O F C O N T E N T S For personal use only 03 ► 08 Group Overview 10 ► 18 Business Results 20 Capital 22 ► 23 Conclusion 25 ► 35 Appendices
Slide 23: Revenue: July
R E V E N U E : J U LY 2 0 2 0 1 For personal use only GROUP REVENUE UP 2.8% IN THE MONTH Revenue Revenue Revenue LOTTERIES & KENO up 4.7% WAGERING & MEDIA up 6.8% GAMING SERVICES down 52.2% o Lotteries sales up despite strong jackpot o Significant increase in digital o Venue closures, particularly
Slide 24: Conclusion: The Trusted Gambling Entertainment Company
LOTTERIES & KENO CONCLUSION: THE TRUSTED G A M B L I N G E N T E R TA I N M E N T C O M PA N Y For personal use only FOCUS ON NAVIGATING COVID-19 WHILE EXECUTING STRATEGIES TO CREATE VALUE FOR SHAREHOLDERS o Continued significant uncertainty regarding the severity and duration of COVID-19 impact o F
Slide 25: Table of Contents
TA B L E O F C O N T E N T S For personal use only 03 ► 08 Group Overview 10 ► 18 Business Results 20 Capital 22 ► 23 Conclusion 25 ► 35 Appendices
Slide 26: Significant Items (after tax)
1 . S I G N I F I C A N T I T E M S ( A F T E R TA X ) For personal use only $m FY20 FY19 Goodwill impairment 1,090 - Other impairments / onerous contract 19 - Tatts Group combination implementation costs 18 24 Racing Queensland arrangements 19 12 ACTTAB POCT compensation (5) (11) Total 1,141 25 GOO
Slide 27: Cash Flow and Balance Sheet
2. CASH FLOW AND BALANCE SHEET For personal use only CASH FLOW BALANCE SHEET $m FY20 FY19 Change $m Jun-20 Jun-19 Change Net operating cash flows1 966 1,258 (23.2%) Total current assets 727 766 (5.1%) Net interest paid (195) (213) (8.5%) Licences 2,148 2,254 (4.7%) Income tax paid (100) (183) (45.4%
Slide 28: Debt Structure and Capital Expenditure
3 . D E B T S T R U C T U R E A N D C A P I TA L E X P E N D I T U R E For personal use only DEBT STRUCTURE1 ($M) CAPITAL EXPENDITURE ($M) 800 308 700 262 75 600 2 49 500 83 59 400 300 233 213 200 109 117 100 41 37 0 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY1
Slide 29: Group Results
4 A . G R O U P R E S U LT S For personal use only $m 1H20 1H19 Change 2H20 2H19 Change FY20 FY19 Change Revenues 2,914 2,790 4.4% 2,310 2,698 (14.4%) 5,224 5,488 (4.8%) Variable contribution 1,030 1,017 1.3% 769 969 (20.6%) 1,799 1,986 (9.4%) Operating expenses (433) (433) - (371) (429) (13.5%) (80
Slide 30: Lotteries & Keno Results
4 B . L O T T E R I E S & K E N O R E S U LT S For personal use only $m 1H20 1H19 Change 2H20 2H19 Change FY20 FY19 Change Lotteries Revenues 1,467 1,293 13.5% 1,259 1,349 (6.7%) 2,726 2,642 3.2% Keno Revenues 117 116 0.9% 74 107 (30.8%) 191 223 (14.3%) Revenues 1,584 1,409 12.4% 1,333 1,456 (8.4%)
Slide 31: Wagering & Media Results
4 C . W A G E R I N G & M E D I A R E S U LT S For personal use only $m 1H20 1H19 Change 2H20 2H19 Change FY20 FY19 Change Revenues 1,179 1,225 (3.8%) 905 1,093 (17.2%) 2,084 2,318 (10.1%) Variable contribution 473 502 (5.8%) 352 449 (21.6%) 825 951 (13.2%) Operating expenses (239) (249) (4.0%) (215
Slide 32: Gaming Services Results
4 D . G A M I N G S E R V I C E S R E S U LT S For personal use only $m 1H20 1H19 Change 2H20 2H19 Change FY20 FY19 Change MAX Venue Services 102 107 (4.7%) 48 102 (52.9%) 150 209 (28.2%) MAX Regulatory Services 47 49 (4.1%) 24 46 (47.8%) 71 95 (25.3%) Revenues 149 156 (4.5%) 72 148 (51.4%) 221 304
Slide 33: Group Operating Expenses
5 . G R O U P O P E R AT I N G E X P E N S E S ( $ M ) For personal use only UNDERLYING OPEX +2.1% +6.1% +0.4% -2.8% 1 2 Notes: 32 1. FY20 cost mitigations of $47m (Lotteries & Keno $15m, Wagering & Media $22m, Gaming Services $10m) 2. FY20 incremental cost synergies vs pcp of $29m (Lotteries & Keno
Slide 34: Impact of AASB 16 Leases
6 . I M PA C T O F A A S B 1 6 L E A S E S 1 For personal use only o AASB 16 Leases represents significant changes to how lessees account for operating leases. The adoption of AASB 16 resulted in: • Higher assets and liabilities in the balance sheet; and • Charges to the income statement are include
Slide 35: Wagering & Media KPIs: FY Combined
7 . WA G E R I N G & M E D I A K P I s : F Y 2 0 C O M B I N E D For personal use only TAB Change Ex UBET Change Combined Change 1 Turnover by distribution ($m) Retail 4,070 (28.1%) 1,284 (27.5%) 5,354 (27.9%) Digital 5,972 5.9% 1,095 (6.4%) 7,067 3.8% Call Centre 296 (12.4%) 95 (22.8%) 391 (15.2%)
Slide 36: Glossary
8. GLOSSARY For personal use only TERM DEFINITION TERM DEFINITION 1H/2H Six months ended 31 December/30 June of the relevant financial year MAX The Group’s Gaming Services brand Three months ended 30 September/31 December/31 March/30 June of 1Q/2Q/3Q/4Q NM Not meaningful the relevant financial year
Slide 37: 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 38: For personal use only
For personal use only ®