Tabcorp Holdings Limited · ASX:TAH
Tabcorp — FY2019 Earnings Presentation
36 slides from Tabcorp's earnings presentation, Aug 14, 2019
Slide 1: Tabcorp Full Year Results Presentation (ASX cover letter)
14 August 2019 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 2019 to be presented by Da
Slide 2: 2018/19 Full Year Results Presentation
TABCORP HOLDINGS LIMITED 2018/19 FULL YEAR RESULTS PRESENTATION 14 AUGUST 2019 ABN 66 063 780 709
Slide 3: Table of Contents
TABLE OF CONTENTS Group Overview 3-8 Business Results 10 - 16 Capital 18 - 19 Conclusion 21 - 22 Appendices 24 - 33 2
Slide 4: Strong Group Result Reflects Compelling Investment Fundamentals
STRONG GROUP RESULT REFLECTS COMPELLING INVESTMENT FUNDAMENTALS o Revenue up 8.7% and EBITDA up 7.6% (vs pro-forma pcp): • Positive step change in performance, with record Lotteries & Keno result from successful game portfolio initiatives, strong growth in digital and retail channels, and favourable
Slide 5: FY19 Results and Dividend
FY19 RESULTS VS REPORTED PCP 1,2 VS PRO-FORMA PCP3 REVENUE $5,482.2M UP 45.9% UP 8.7% EBITDA FY19 (CONTINUING OPERATIONS DIVIDEND BEFORE SIGNIFICANT ITEMS) $1,064.7M UP 38.4% UP 7.6% PER SHARE NPAT (FULLY FRANKED) (CONTINUING OPERATIONS BEFORE SIGNIFICANT ITEMS) $397.6M UP 42.5% 22.0 cents (STATUTOR
Slide 6: FY19 Group Results
FY19 GROUP RESULTS vs Statutory pcp1 vs Pro-forma pcp2 $m FY19 FY18 Change FY18 Change Revenues 5,482.2 3,757.3 45.9% 5,045.3 8.7% Variable contribution 1,979.2 1,501.1 31.9% 1,904.4 3.9% Operating expenses (914.5) (731.6) 25.0% (915.2) (0.1%) EBITDA before significant items 1,064.7 769.5 38.4% 989.
Slide 7: Diversified Portfolio
DIVERSIFIED PORTFOLIO LOTTERIES & WAGERING & GAMING KENO GROUP MEDIA SERVICES FY19 SHARE OF REVENUE 52% 42% 6% 100% VC MARGIN 26% 41% 95% 36% OPEX / REVENUE 8% 23% 49% 17% EBITDA MARGIN 18% 18% 46% 19% EBIT MARGIN 15% 12% 22% 14% Wagering: 720k active Relationships with 3,500+ Lotteries: 3.3m active
Slide 8: Integration: Synergies & Business Improvements
INTEGRATION: SYNERGIES & BUSINESS IMPROVEMENTS SUCCESSFUL YEAR WITH SIGNIFICANT COST SAVINGS REALISED AHEAD OF PLAN FY19 highlights o Savings realised from consolidated management structures across the Group EBITDA ($M) o Corporate functions consolidated; back office integration completed; property
Slide 9: Nearly 70% of Revenue Returned to Government, Racing Industry and Retail Partners
NEARLY 70% OF REVENUE RETURNED TO GOVERNMENT, RACING INDUSTRY AND RETAIL PARTNERS Gaming $0.3bn (5%) Services Operating costs $1.1bn (excl. employee costs) (18%) & financing costs $0.4bn (7%) Employee costs Wagering $2.7bn & (45%) $0.8bn Media Retail partners (13%) $1.0bn (17%) Racing industry2 Lott
Slide 10: Table of Contents
TABLE OF CONTENTS Group Overview 3-8 Business Results 10 - 16 Capital 18 - 19 Conclusion 21 - 22 Appendices 24 - 33 9
Slide 11: FY19 Group & Business Results
FY19 GROUP & BUSINESS RESULTS ( VS PRO-FORMA PCP) 1,2 Lotteries & Keno Wagering & Media Gaming Services Group FY19 $m Change $m Change $m Change $m Change Revenues 2,864.9 22.8% 2,312.2 (3.6%) 304.0 (3.5%) 5,482.2 8.7% Variable contribution 741.9 22.1% 944.3 (5.0%) 290.0 (3.7%) 1,979.2 3.9% Operatin
Slide 12: Lotteries & Keno
LOTTERIES & KENO (VS PRO -FORMA PCP) 1 RECORD RESULT; POSITIVE STEP CHANGE IN PERFORMANCE o Continued innovation of game portfolio • Game changes delivering as planned; successfully managed key portfolio initiative in Powerball, designed to deliver bigger and more frequent jackpots and more winners
Slide 13: Lotteries & Keno KPIs
JACKPOT PERFORMANCE (POWERBALL & OZ LOTTO) LOTTERIES & KENO KPIS (VS PRO -FORMA PCP) 1 80 40.0 70 $38.4m 35.0 CUSTOMER ACQUISITION AND GROWTH IN ALL CHANNELS 60 $28.8m $28.4m 30.0 50 49 45 $24.2m 25.0 6 14 LOTTERIES 40 20.0 31 32 o Targeted marketing drove customer acquisition and growth in all chan
Slide 14: Wagering & Media: Strategy for Sustained Profitable Market Leadership
WAGERING & MEDIA: STRATEGY FOR SUSTAINED PROFITABLE MARKET LEADERSHIP FY19 FY20 FY21 Maintain active customer Modernise, Unique, personalised ‘Bigger than the base & drive value digitalise & optimise customer experiences Bet’ with a differentiated o Step up in promotions and o Establishing unique br
Slide 15: Wagering & Media
WAGERING & MEDIA (VS PRO-FORMA PCP) 1 EXECUTION OF STRATEGY ON TRACK o A strategically important year as we integrate and transform the business o Competition remained intense post the introduction of point of consumption tax o TAB competed well with active customer numbers up and TAB perceived valu
Slide 16: Wagering & Media KPIs
WAGERING & MEDIA KPIs (VS PRO-FORMA PCP) 1 o TAB’s digital channel continued to perform well with growth of FY19 Com bined Change TAB Change UBET Change 2 11.2% on pcp. Digital growth slowed in 2H19, reflecting Turnover by distribution ($m ) general wagering market conditions Retail 7,428.5 (7.4%) 5
Slide 17: Gaming Services
GAMING SERVICES (VS PRO-FORMA PCP) 1 CREATING A SUSTAINABLE BASE FOR THE FUTURE o An integrated suite of end-to-end venue solutions and a new structure under the MAX brand • MAX Venue Services (venue solutions, gaming systems and support services) • MAX Regulatory Services (monitoring and related se
Slide 18: Table of Contents
TABLE OF CONTENTS Group Overview 3-8 Business Results 10 - 16 Capital 18 - 19 Conclusion 21 - 22 Appendices 24 - 33 17
Slide 19: Capital Expenditure
CAPITAL EXPENDITURE (VS PRO -FORMA PCP) NON-BAU PROJECTS OF $142M ACROSS FY19 AND FY20 o FY19 BAU capex of $233m broadly in line with historical levels o Integration capex $70m • FY19: $30m; FY20: $40m o Consolidated data centre in Brisbane $38m • FY19: $23m; FY20: $15m o New Brisbane workplace $34m
Slide 20: Capital Management and Dividends
CAPITAL MANAGEMENT AND DIVIDENDS STRONG BALANCE SHEET DEBT STRUCTURE ($M) o Gross Debt1 / EBITDA ratio of 3.2x at 30 June 2019; target range of 3.0-3.5x 1,200 o Syndicated bank facilities of $1.86bn extended in July 2019 o Headroom available under bank facilities of $0.5bn after 1,000 repayment of T
Slide 21: Table of Contents
TABLE OF CONTENTS Group Overview 3-8 Business Results 10 - 16 Capital 18 - 19 Conclusion 21 - 22 Appendices 24 - 32 20
Slide 22: A Strong and Diversified Portfolio of High Quality Businesses
Photos to be updated A STRONG AND DIVERSIFIED PORTFOLIO OF HIGH QUALITY BUSINESSES Unique and attractive portfolio of businesses Significant future upside potential Strong and sustainable foundations underpins high dividend payout ratio xxxxxxxxx xxxxxxxxx o Diversified portfolio of well regulated o
Slide 23: Conclusion: Excitement with Integrity
CONCLUSION: EXCITEMENT WITH INTEGRITY WELL POSITIONED FOR LONG TERM PROFITABLE GROWTH LOTTERIES & KENO Group Business Units o Strong and diversified business model is o Lotteries & Keno has strong momentum delivering in a period of significant change and is well positioned to increase its share of t
Slide 24: Table of Contents
TABLE OF CONTENTS Group Overview 3-8 Business Results 10 - 16 Capital 18 - 19 Conclusion 21 - 22 Appendices 24 - 33 23
Slide 25: Group & Business Results (vs Reported pcp)
1. GROUP & BUSINESS RESULTS ( VS REPORTED PCP) 1,2 Lotteries & Keno Wagering & Media Gaming Services Group FY19 $m Change $m Change $m Change $m Change Revenues 2,864.9 >100.0% 2,312.2 9.0% 304.0 21.7% 5,482.2 45.9% Variable contribution 741.9 89.0% 944.3 7.6% 290.0 23.2% 1,979.2 31.9% Operating exp
Slide 26: Significant Items (After Tax)
2. SIGNIFICANT ITEMS (AFTER TAX) FY19 $m Implementation costs 24.1 Racing Queensland arrangements 11.8 Combination with Tatts Group 35.9 ACTTAB POCT compensation (10.6) Total 25.3 Implementation costs o Implementation costs are non-recurring costs and comprise restructure charges, integration manage
Slide 27: Balance Sheet
3. BALANCE SHEET $m Jun-19 Jun-18 Change Total current assets 764.8 667.7 14.5% Licences 2,254.4 2,361.1 (4.5%) Other intangible assets 9,184.1 9,142.0 0.5% Property, plant and equipment 562.0 488.2 15.1% Other non current assets 533.8 281.8 89.4% Total assets 13,299.1 12,940.8 2.8% Total liabilitie
Slide 28: Cash Flow
4. CASH FLOW $m Jun-19 Jun-18 Change 1 Net operating cash flows 1,186.5 768.2 54.5% Net interest paid (196.2) (148.6) 32.0% Income tax paid (184.0) (126.1) 45.9% Payments for PP&E and intangibles (278.4) (282.3) (1.4%) Sub-total 527.9 211.2 >100.0% Sun Bets operating cash flows and costs relating to
Slide 29: Group Results
5A. GROUP RESULTS (VS PRO-FORMA PCP) 1 $m 1H19 1H18 Change 2H19 2H18 Change FY19 FY18 Change Revenues 2,787.4 2,626.2 6.1% 2,694.8 2,419.1 11.4% 5,482.2 5,045.3 8.7% Variable contribution 1,013.3 982.7 3.1% 965.9 921.7 4.8% 1,979.2 1,904.4 3.9% Operating expenses (459.0) (474.0) (3.2%) (455.5) (441.
Slide 30: Lotteries & Keno
5B. LOTTERIES & KENO (VS PRO-FORMA PCP) 1 $m 1H19 1H18 Change 2H19 2H18 Change FY19 FY18 Change Lotteries Revenues 1,292.8 1,080.9 19.6% 1,349.1 1,031.3 30.8% 2,641.9 2,112.2 25.1% Keno Revenues 116.4 112.2 3.7% 106.6 107.9 (1.2%) 223.0 220.1 1.3% Revenues 1,409.2 1,193.1 18.1% 1,455.7 1,139.2 27.8%
Slide 31: Wagering & Media
5C. WAGERING & MEDIA (VS PRO-FORMA PCP) 1 $m 1H19 1H18 Change 2H19 2H18 Change FY19 FY18 Change Revenues 1,221.8 1,270.4 (3.8%) 1,090.4 1,127.4 (3.3%) 2,312.2 2,397.8 (3.6%) Variable contribution 498.4 518.3 (3.8%) 445.9 475.5 (6.2%) 944.3 993.8 (5.0%) Operating expenses (267.8) (278.9) (4.0%) (260.
Slide 32: Gaming Services
5D. GAMING SERVICES (VS PRO-FORMA PCP) 1 $m 1H19 1H18 Change 2H19 2H18 Change FY19 FY18 Change Venue Services Revenues 107.2 113.1 (5.2%) 101.7 106.4 (4.4%) 208.9 219.5 (4.8%) Regulatory Services Revenues 48.6 49.2 (1.2%) 46.5 46.3 0.4% 95.1 95.5 (0.4%) Revenues 155.8 162.3 (4.0%) 148.2 152.7 (2.9%)
Slide 33: Wagering: TAB & UBET KPIs
6. WAGERING: TAB & UBET KPI S 1 TAB UBET 1H19 Change 2H19 Change FY19 Change 1H19 Change 2H19 Change FY19 Change 2 Turnover by distribution ($m ) Retail 3,014.6 (5.6%) 2,643.2 (7.0%) 5,657.8 (6.2%) 955.1 (10.0%) 815.6 (11.8%) 1,770.7 (10.8%) Digital 2,944.8 15.3% 2,693.0 7.0% 5,637.8 11.2% 639.3 (2.
Slide 34: Glossary
7. GLOSSARY Term Definition Term Definition Lotteries and The Group’s business that operates lotteries and Keno, which 1H Six months ended 31 December of the relevant financial year Keno are games of chance 2H Six months ended 30 June of the relevant financial year MAX The Group’s Gaming Services br
Slide 35: Disclaimer
DISCLAIMER 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 lodged with the Australi
Slide 36: Official Lotteries
ie Official Lotteries Tabcorp ~ TAB