Tabcorp Holdings Limited · ASX:TAH
Tabcorp — FY2024 Earnings Presentation
48 slides from Tabcorp's earnings presentation, Aug 28, 2024
Slide 1: Tabcorp full year results presentation ASX announcement
ASX ANNOUNCEMENT 28 August 2024 ASX Market Announcements Australian Securities Exchange 20 Bridge Street Sydney NSW 2000 Tabcorp full year results presentation For personal use only Attached is the presentation regarding Tabcorp Holdings Limited’s (Tabcorp’s) results for the financial year ended 30
Slide 2: FY24 Results
FY24 RESULTS For personal use only YEAR ENDED 30 JUNE 2024 ABN 66 063 780 709
Slide 3: The Line Up
THE LINE UP For personal use only SECTION 1 SECTION 2 SECTION 3 SECTION 4 SECTION 5 SECTION 6 FY24 FINANCIAL WAGERING GAMING OUTLOOK APPENDICES SUMMARY RESULTS & MEDIA SERVICES SLIDE SLIDE SLIDE SLIDE SLIDE SLIDE 03 19 29 33 36 39 Tabcorp FY24 Results | 2
Slide 4: FY24 Summary
SECTION 1 For personal use only FY24 SUMMARY Tabcorp FY24 Results | 3
Slide 5: FY24 Summary
FY24 SUMMARY FY24 RESULT WAGERING DELIVERING COMPETITIVENESS REFORM For personal use only Level playing field delivered in VIC, QLD, ACT, TAS Delivered competitive performance within a soft Performed well relative to major competitors wagering market Successfully transitioned to new Victorian Wageri
Slide 6: FY24 Result Summary
FY24 RESULT SUMMARY1 EPS before significant items3 and Dabble 1.4 CPS For personal use only $m FY24 FY23 % Revenue 2,338.9 2,434.4 (3.9%) 2H24 unfranked4 Variable Contribution2 931.7 968.4 (3.8%) dividend Opex2 (614.0) (577.4) (6.3%) 0.3 CPS EBITDA 317.7 391.0 (18.7%) 2H24 dividend payout ratio5 EBI
Slide 7: Win the Game: Unique Wagering Entertainment Experience
WIN THE GAME UNIQUE WAGERING ENTERTAINMENT EXPERIENCE For personal use only #2 digital SCALE #1 vision #1 retail & oncourse DIGITAL (~4,000 venues) ICE AT EV H ON D OM Multiple channels REACH to engage with E OUR customers across digital, ~4,000 TAB venues, and vision CUSTOMERS VISION & DESTINATIONS
Slide 8: Market Observations
WIN THE GAME MARKET OBSERVATIONS For personal use only Australian Wagering Industry Revenue1 The Australian wagering market is an attractive market: Delivering 6% revenue CAGR over the past decade, above GDP COVID impact growth History of innovation and product expansion CY14 – CY23 CAGR: +6% In the
Slide 9: Uplift in Digital Competitiveness
WIN THE GAME UPLIFT IN DIGITAL COMPETITIVENESS For personal use only FIRST TO MARKET 798k 63% AFL Miss By One Market Drifters Active digital Digital % of TAB domestic customers wagering turnover Popular Exotics Popular Multis +170 20 Sat 20 Faster Vision Jul New TAB App features & TAB App releases s
Slide 10: Digital Product and Experience Parity
WIN THE GAME DIGITAL PRODUCT AND EXPERIENCE PARITY For personal use only Independent market analysis1 - product and features MARKET LEADING PARITY IN MARKET PARITY IN PROGRESS NOT AT PARITY In market and competitive At parity in market and Product feature / Product / feature doesn’t with other wager
Slide 11: Investment in Data Analytics
WIN THE GAME INVESTMENT IN DATA ANALYTICS For personal use only Generosity efficiency (%)1 & Generosity spend ($m) Generosity efficiency (LHS) Generosity spend, $m p.a. (RHS) ($m, p.a.) DATA AND ANALYTICS CAPABILITY SIGNIFICANTLY 90% $385 UPLIFTED $380 85% FY23 $375 DELIVERING IMPROVED CUSTOMER EXPE
Slide 12: TAB Market Share (Index)
WIN THE GAME TAB MARKET SHARE (INDEX) For personal use only Digital wagering market relative performance – indexed1 Index provides an additional view of DIGITAL 105 TAB Digital Competitors TAB digital performance relative to competitors: TURNOVER 100 Index Represents 85%-90% of industry digital PERF
Slide 13: TAB Market Share (Existing Methodology)
WIN THE GAME TAB MARKET SHARE (EXISTING METHODOLOGY) For personal use only TAB MARKET SHARE 2H24 1H24 2H23 Existing methodology based on data supplied by some industry partners1 TOTAL REVENUE MARKET SHARE 32.1% 33.7% 32.9% Represents approx. 30% of the wagering market Based on gross revenue (before
Slide 14: Retail Rejuvenation
WIN THE GAME RETAIL REJUVENATION For personal use only STRONG RETAIL NEXT GEN RETAIL NEXT GEN PERFORMANCE PERFORMANCE UPGRADES TO 30 JUNE 20241 Cash wagering revenue +0.4% in FY24, 31 venues upgraded in FY24 Turnover +19% +5.3% in 2H24, outperforming the digital market Occurred across QLD, VIC and N
Slide 15: Level the Playing Field
SHAPE THE GAME LEVEL THE PLAYING FIELD For personal use only VIC NSW NEW WAGERING AND GOVERNMENT BETTING LICENCE REVIEW Exclusive 20-year licence Review of industry commenced 16 August 2024 funding model commenced Pro-forma FY24 EBITDA uplift of Expect government to complete the $115m1 review by end
Slide 16: Media: The Value of Vision
MEDIA: THE VALUE OF VISION LEVERAGED TO GLOBAL WAGERING GROWTH For personal use only SKY VALUE PROPOSITION TURNOVER IMPACT FOR DOMESTIC RACES ON SKY1 VS. SKY2 Wagering Operators Rights Owners Tabcorp 31% (WSPs) UNRIVALLED BREADTH OF GLOBAL DISTRIBUTION SKY REVENUE MODEL VISION/RIGHTS DELIVERS FOOTPR
Slide 17: Media: Diversified Market Leader
MEDIA: THE VALUE OF VISION DIVERSIFIED MARKET LEADER For personal use only FY24 Media revenue sources ($m) INTERNATIONAL DIGITAL DISTRIBUTION $122M (34%) External External $73m $115M (32%) Export revenue (% of turnover) to overseas $89m countries, including through Sky Racing World Revenue (% of tur
Slide 18: High Quality Integrity Services
SHAPE THE GAME HIGH QUALITY INTEGRITY SERVICES For personal use only Focused, high quality integrity services business with attractive economics Strong reputation with governments and regulators. Potential new monitoring opportunities domestically and in new jurisdictions over the medium term Tabcor
Slide 19: Player Safety
SHAPE THE GAME PLAYER SAFETY For personal use only Proactive engagement with regulators on player safety initiatives and improvement programs Investment in Customer Safety Team which has led to an increase in customer interventions Actively implementing our player safety strategy, including using AI
Slide 20: Financial Results
For personal use only SECTION 2 FINANCIAL RESULTS Tabcorp FY24 Results | 19
Slide 21: FY24 Group Results
FY24 GROUP RESULTS1 For personal use only $m FY24 FY23 CHANGE (%) Revenue 2,338.9 2,434.4 (3.9%) 2 Variable contribution 931.7 968.4 (3.8%) 2 Operating expenses (614.0) (577.4) (6.3%) EBITDA from continuing operations before significant items 317.7 391.0 (18.7%) Depreciation and Amortisation (220.3)
Slide 22: Significant Items
SIGNIFICANT ITEMS For personal use only Non-cash impairment charges predominantly relating to NSW and SA Impairment wagering assets, and goodwill relating to the Wagering and Media ($m) PRE TAX TAX POST TAX Segment Transformation Genesis program costs, including redundancies and one-off Non-cash imp
Slide 23: FY24 Results: Impairment
FY24 RESULTS: IMPAIRMENT For personal use only Following a review of the carrying value of assets, the Company has recognised non-cash impairment charges totalling $1,376.4m after tax in FY24 ($1,531.6m pre-tax) relating to the Wagering business, and predominantly the NSW and SA assets. This reflect
Slide 24: Group and Business Segment Results
GROUP AND BUSINESS SEGMENT RESULTS1 For personal use only $m FY24 FY23 CHANGE (%) Revenue Wagering & Media 2,162.8 2,230.8 (3.0%) Gaming Services 176.1 203.6 (13.5%) Group Revenue 2,338.9 2,434.4 (3.9%) EBITDA Wagering & Media 251.2 308.0 (18.4%) Gaming Services 66.5 83.1 (20.0%) Group EBITDA 317.7
Slide 25: Group EBITDA
GROUP EBITDA For personal use only ($m) Wagering market impact Revenue impact of partly offset by higher eBet ($12.9m) and yields MPS sale ($29.6m) Cost inflation, investment in TAB QLD level playing field Partially offset by brand, data, compliance margin improvement commencement of and regulatory
Slide 26: Group Opex: Genesis Offsetting High Inflation
GROUP OPEX GENESIS OFFSETTING HIGH INFLATION For personal use only ($m) +4.4% TAB brand Genesis savings Demerger Inflation investment (employee dis-synergies costs) Increased Sponsorships Partly offset by No short-term regulatory and Genesis savings incentive compliance (non-employee Data and costs
Slide 27: Capital Expenditure
CAPITAL EXPENDITURE INVESTING IN GROWTH AND TRANSFORMATION For personal use only Capital allocation1 ($m) Growth & 155 FY24 151 transformation CAPEX1 investment $151m 64% 15 27 (FY23: 49%) 97 76 FY25 D&A FY25 $190m– CAPEX ~$140m 39 52 $210m FY24 FY23 Maintenance Growth & Transformation Sustainabilit
Slide 28: Cash Flow
CASH FLOW For personal use only ($m) Operating cash conversion1 94% Working capital movement largely timing and a prepayment made under new sponsorship agreement Significant items cash flow includes costs related to transformation and Demerger, partly offset by tax refunds on finalisation of tax dis
Slide 29: Capital and Leverage
CAPITAL AND LEVERAGE STRONG BALANCE SHEET PROVIDING FLEXIBILITY For personal use only Debt maturity profile ($m) FUNDING AND LIQUIDITY 600 USPP (Drawn) Tabcorp continues to maintain access to diversified 500 SFA (Undrawn) funding sources and has no debt maturity until FY28 SFA (Drawn) 400 following
Slide 30: Wagering & Media
For personal use only SECTION 3 WAGERING & MEDIA Tabcorp FY24 Results | 29
Slide 31: Wagering & Media EBITDA
WAGERING & MEDIA EBITDA For personal use only ($m) Impact of softer QLD level playing field Cost inflation, wagering market margin improvement investment in TAB revenues partly offset by POCT brand, data, compliance increase in NSW ($6m) and regulatory costs, partly offset by Genesis cost savings In
Slide 32: FY24 Results: Wagering & Media
FY24 RESULTS WAGERING & MEDIA For personal use only $m FY24 FY23 CHANGE (%) Total wagering revenue down 2.7% driven by a soft Digital wagering revenue 922.0 942.7 (2.2%) trading environment Cash wagering revenue 821.8 818.4 0.4% Domestic wagering revenue 1,743.8 1,761.1 (1.0%) Digital revenue down 2
Slide 33: FY24 Domestic Wagering Revenue & KPIs
FY24 DOMESTIC WAGERING REVENUE & KPIs For personal use only DOMESTIC WAGERING DOMESTIC WAGERING FY24 FY23 CHANGE (%) FY24 FY23 CHANGE (%) REVENUE ($m) TURNOVER3 ($m) Digital Active users (‘000)1 798 805 (0.9%) Racing 11,361.2 11,946.5 (4.9%) Digital turnover2 8,809.1 9,266.7 (4.9%) Gross yield 16.8%
Slide 34: Gaming Services
For personal use only SECTION 4 GAMING SERVICES Tabcorp FY24 Results | 33
Slide 35: Gaming Services EBITDA
GAMING SERVICES EBITDA For personal use only ($m) Revenue impact of eBet ($12.9m) and MPS sale ($29.6m) Cost reduction through the sale of eBet and MPS Partially offset by commencement of Partly offset by costs Tasmanian monitoring associated with the licence, fee increases commencement of TAS and h
Slide 36: FY24 Results: Gaming Services
FY24 RESULTS GAMING SERVICES For personal use only $m FY24 FY23 CHANGE (%) MONITORED EGMs JUN-24 JUN-23 CHANGE (%) Gaming Services – Reported NSW 92,820 91,970 0.9% Revenue 176.1 203.6 (13.5%) QLD 29,510 28,710 2.8% EBITDA 66.5 83.1 (20.0%) TAS 2,250 - 100.0% EBIT 27.1 34.4 (21.2%) NT 1,570 1,530 2.
Slide 37: Outlook
For personal use only SECTION 5 OUTLOOK Tabcorp FY24 Results | 36
Slide 38: Outlook
OUTLOOK For personal use only Wagering Market We expect the macroeconomic environment for customers to remain challenging given expectations around interest rates remaining elevated and the high inflation levels that persist. In addition, the regulatory environment continues to tighten and impact th
Slide 39: Outlook: Other Items
OUTLOOK For personal use only Other items Annualisation of higher NSW POCT to impact variable contribution by approx. $6m in FY25 Gaming Services EBITDA is expected to be impacted by cycling the loss of earnings from the sale of MPS in FY24. MPS incurred $4m of direct costs in FY24 prior to its sale
Slide 40: Appendices
For personal use only SECTION 6 APPENDICES Tabcorp FY24 Results | 39
Slide 41: Tax
TAX For personal use only FY24 Effective tax rate (%) FY25 TAX EXPENSE Tax expense will include the impact of: • Non-deductible licence amortisation including the new Victorian Licence ($43m) • Non-deductible discount unwind on Victorian Licence ($23m) FY25 CASH TAX • Cash tax payable for FY25 expec
Slide 42: FY24 Group Results Reconciliation
FY24 GROUP RESULTS RECONCILIATION1 For personal use only CONSOLIDATED $m TRANSFORMATION VIC DEMERGER MPS ATO DISPUTE OTHER TAX BEFORE CONTINUING OPERATIONS STATUTORY IMPAIRMENT COSTS LICENCE COSTS COSTS DIVESTMENT SETTLEMENT MATTERS OTHER SIGNIFICANT ITEMS Revenue 2,338.9 - - - - - - - - 2,338.9 Tax
Slide 43: Group and Business Results
GROUP AND BUSINESS RESULTS1 For personal use only WAGERING & MEDIA GAMING SERVICES GROUP $m FY24 FY23 CHANGE FY24 FY23 CHANGE FY24 FY23 CHANGE Revenue 2,162.8 2,230.8 (3.0%) 176.1 203.6 (13.5%) 2,338.9 2,434.4 (3.9%) Variable contribution 758.2 775.0 (2.2%) 173.5 193.2 (10.2%) 931.7 968.4 (3.8%) Ope
Slide 44: Wagering & Media New Revenue Disclosure
WAGERING & MEDIA NEW REVENUE DISCLOSURE – HISTORICAL INFORMATION For personal use only $m FY24 2H24 1H24 FY23 2H23 1H23 Digital wagering revenue 922.0 448.6 473.4 942.7 449.7 493.0 Cash wagering revenue 821.8 401.2 420.6 818.4 381.0 437.4 Domestic wagering revenue 1,743.8 849.8 894.0 1,761.1 830.7 9
Slide 45: FY24 Results: Gaming Services
FY24 RESULTS GAMING SERVICES For personal use only $m FY24 FY23 CHANGE (%) 1 Integrity Services 129.1 117.9 9.5% Other Venue Services2 47.0 85.7 (45.2%) Gaming Services revenue 176.1 203.6 (13.5%) Integrity Services 127.4 116.2 9.6% Other Venue Services 46.1 77.0 (40.1%) Gaming Services VC 173.5 193
Slide 46: GEMBA Parity Assessment Definitions
WIN THE GAME DIGITAL PRODUCT AND EXPERIENCE PARITY For personal use only GEMBA PARITY ASSESSMENT DEFINITIONS PRODUCT / EXPERIENCE WHAT MARKET PARITY LOOKS LIKE SAME RACE MULTI • Same Race Multi is available on all codes (excl. Harness) SAME GAME MULTI • Same Game Multi is available on all codes • SO
Slide 47: Glossary
GLOSSARY 1H/2H Six months ended 31 December/30 June of the relevant financial year LHS Left Hand Side AAS Australian Accounting Standards LTM Last twelve months ACT Australian Capital Territory MAX The Group’s Gaming Services brand AFL MPS Max Performance Solutions For personal use only Australian F
Slide 48: Disclaimer
DISCLAIMER For personal use only This Presentation contains summary information about the current Any forecasts or other forward looking statements contained in this This Presentation does not constitute an offer to sell, or the solicitation of an activities of Tabcorp Holdings Limited (Tabcorp) and