Tabcorp Holdings Limited · ASX:TAH
Tabcorp — Investor Day (October 2013)
66 slides from Tabcorp's investor day presentation, Oct 17, 2013
Slide 1: Tabcorp Holdings Limited Investor Day
For personal use only Tabcorp Holdings Limited ABN 66 063 780 709 Investor Day 17 October 2013 1 Draft version 15 (01-08-13)
Slide 2: Tabcorp senior leadership team
Tabcorp senior leadership team For personal use only TABCORP CEO & MD David Attenborough CFO MD Fixed Odds Damien Johnston Craig Nugent Exec GM Corporate Exec GM Legal & Regulatory Distribution Kerry Willcock Adam Rytenskild Exec GM Exec GM Commercial Development Marketing Doug Freeman David Ginnane
Slide 3: Agenda
Agenda Priorities David Attenborough For personal use only Capital Damien Johnston Wagering Market Trends Doug Freeman Wagering: A) Customer David Ginnane Wagering: B) Channel Adam Rytenskild Wagering: C) Product Craig Nugent Media and International Brendan Parnell Keno David Ginnane Gaming Services
Slide 4: Tabcorp has an attractive investment case
Tabcorp has an attractive investment case For personal use only Quality integrated gambling entertainment businesses Long dated licences Strong trusted brands Unique multi-product / multi-channel distribution Geographic diversification Strong cash generating businesses and defensive earn
Slide 5: Key priorities
Key priorities For personal use only Capital Optimise the use of and return on invested capital Wagering Lead wagering transformation Media & International Enhance integration with wagering Keno Drive growth through product expansion Gaming Services Grow through venue, product and intersta
Slide 6: Capital - Damien Johnston
Capital - Damien Johnston For personal use only Tabcorp Investor Day 17 October 2013 6
Slide 7: Optimise the use of and return on invested capital
Optimise the use of and return on invested capital For personal use only Returns Increase return on invested capital Productivity Drive group-wide productivity improvement Balance sheet Maintain strong balance sheet Tabcorp Investor Day 17 October 2013 7
Slide 8: Tabcorp's objective is ROIC of at least 14% by FY16
Tabcorp’s objective is ROIC of at least 14% by FY16 For personal use only 14%+ 12% FY13 FY16 Notes: 1. Return on Invested Capital (ROIC) is calculated as EBIT / Invested Capital (average of opening and closing Invested Capital for a year) 2. EBIT is Earnings Before Interest & Tax before significant
Slide 9: Drive group-wide productivity improvement
Drive group-wide productivity improvement Productivity is a key focus: For personal use only FY13 Operating Expenses $423m FY13 opex/revenue of 21% Target opex/revenue of 20-21% Employment Other Project “Future Fit” commenced in FY13 to identify opportunities to improve operating 25% process
Slide 10: Maintain strong balance sheet
Maintain strong balance sheet For personal use only $m Well diversified debt structure 600 Investment grade credit rating 500 Refinancing underway with bank facility extended. Focus on May 2014 bond maturities 400 300 284 200 400 400 400 250 100 150 127 84 0 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Slide 11: Wagering market trends – Doug Freeman
Wagering market trends – Doug Freeman For personal use only Tabcorp Investor Day 17 October 2013 11
Slide 12: The wagering market has shown consistent growth
The wagering market has shown consistent growth For personal use only Australian Wagering Market 26 24 22 Annual Turnover ($b) 20 18 16 14 FY01 - FY07 FY08 - FY13 CAGR 7.9% 4.1% 12 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Source: ARB Fact Books, internal Tabcorp data, include
Slide 13: Tabcorp's share of wagering turnover
Tabcorp’s share of wagering turnover Tabcorp market share has remained relatively stable since the recent increase in competition For personal use only Share of turnover 57.2% 57.5% 55.7% 56.3% 55.6% 56.4% 42.8% 42.5% 44.3% 43.7% 44.4% 43.6% FY08 FY09 FY10 FY11 FY12 FY13 TAH share Other Source: AR
Slide 14: Tabcorp total wagering revenue CAGR of 4.7% since 2008
Tabcorp total wagering revenue CAGR of 4.7% since 20081 For personal use only 1,900 1,700 1,500 1,300 1,100 900 700 FY08 FY09 FY10 FY11 FY12 FY13 Growth 7.6% 5.2% 0.5% 4.2% 5.9% on pcp % Fixed odds expansion, yield improvement, Trackside, and international have contributed to the 4.7% CAGR Notes 1
Slide 15: Lead wagering transformation
Lead wagering transformation For personal use only Customer Drive deep customer relationships Channel Digital leadership, underpinned by exclusive retail network Product Expand product and optimise yield Tabcorp Investor Day 17 October 2013 15
Slide 16: Wagering customer - David Ginnane
Wagering customer - David Ginnane For personal use only Tabcorp Investor Day 17 October 2013 16
Slide 17: Drive deep customer relationships
Drive deep customer relationships For personal use only Customer Base Channels Brands Total Customers TAB1 1,850,000 Luxbet 40,000 Trackside1 220,000 Sky Racing2 1,500,000 Total Est. 2,000,000+ customer base Unparalleled breadth of customers, channels and brands in the domestic category underpins
Slide 18: Customer acquisition and engagement continues to grow
Customer acquisition and engagement continues to grow For personal use only TAB account customers 350,000 300,000 CAGR FY10 – FY13 250,000 6.4% 200,000 5.7% 150,000 100,000 50,000 0 FY10 FY11 FY12 FY13 Active customers Acquired customers Unique active customers: customers who placed a bet during t
Slide 19: The new TAB brand is the category leader in customer preference
The new TAB brand is the category leader in customer preference For personal use only NSW Nearest ranked Nearest ranked First Choice competitor (1) competitor (2) Seriously consider Might Consider Never Consider VIC Nearest ranked Nearest ranked competitor (1) competitor (2) First Choice Seriously c
Slide 20: Analytics, CRM and loyalty
Analytics, CRM and loyalty Sophisticated analytics, CRM and loyalty capabilities support Tabcorp’s leadership position For personal use only Scale and analytics tools driving a big data advantage Talent sourced from a range of highly developed CRM categories, including the UK wagering sector A
Slide 21: Customer retention rates improve as CRM accelerates
Customer retention rates improve as CRM accelerates Customer retention rates For personal use only 90% 88% 86% 86% 85% 84% 84% 83% 85% 86% 82% 82% 85% 81% 85% 80% 85% 82% 83% 80% 81% 79% 79% 79% 61% CY12 retention rate Post-SRC effect CY13 retention rate 59% Note: seasonality applies Sep Oct Nov Dec
Slide 22: Loyalty program 1:1 communication to retail cash customers
Loyalty program 1:1 communication to retail cash customers For personal use only TAB Rewards member base (est FY14) 300 250 200 150 100 50 0 Account members Retail cash members Customer retention rates underpinned by account customer CRM program New loyalty program brings CRM to retail cash cust
Slide 23: Our social and digital platforms provide extensive reach
Our social and digital platforms provide extensive reach For personal use only Facebook: translates retail and on-course experiences into digital experiences Twitter: rapid communication of product, price, event and service information YouTube: new TAB branded YouTube page launch Social plat
Slide 24: Wagering channel - Adam Rytenskild
Wagering channel - Adam Rytenskild For personal use only Tabcorp Investor Day 17 October 2013 24
Slide 25: Digital leadership, underpinned by exclusive retail network
Digital leadership, underpinned by exclusive retail network Wagering Turnover by Channel For personal use only CAGR 3.5% 10% 9% 8% 11% 17% 24% 63% 58% FY10 FY13 Retail Digital Call centre Other Wagering distribution channels work together for overall growth Customers enjoy the multi-channel offe
Slide 26: Digital and retail strategies
Digital and retail strategies For personal use only 1. Digital strategy for TAB and Luxbet Increase capability and scale Enhance mobile Digital pathway 2. Retail and digital integration Self-service Digital information displays Digital incentive program 3. Retail Extract full value fro
Slide 27: Increase digital capability and scale
Increase digital capability and scale For personal use only In-housing and increasing digital capability to accelerate speed to market Digital team to build to 40 people by January 2014, offset by saving of third party expenses Digital leadership roles recruited in Commercial, Marketing and Te
Slide 28: Enhance mobile
Enhance mobile Mobile platform in place, continued enhancement to drive future performance For personal use only Mobile driving digital growth At least 6 major releases for iPhone, iPad and Android each year to drive continuous improvement Luxbet and Sky Mobile integrated to development Tabc
Slide 29: Digital pathway
Digital pathway Provide the best experience on chosen device across all TAB channels & Luxbet For personal use only Continue to enhance current TAB.com.au and Luxbet.com Speed to load on TAB.com.au improved more than 50% in last 12 months New Luxbet site released in September 2013 HTML pat
Slide 30: Retail and digital integration
Retail and digital integration Self-service acts as the middle ground for retail and digital transactions For personal use only Self Service Terminal (SST) expansion has extended reach and improved customer experience Digital platform in place - self-service to be integrated and then operator
Slide 31: Extract full value from exclusive retail channel
Extract full value from exclusive retail channel For personal use only Retail foundation secured – network expansion complete increasing footprint 13% FY10-FY13 Tiered venue model, supported by an efficient Kiosk offer, has enabled extended reach Sales team re-structured to drive top tier perf
Slide 32: Fixed odds wagering product - Craig Nugent
Fixed odds wagering product - Craig Nugent For personal use only Tabcorp Investor Day 17 October 2013 32
Slide 33: Tabcorp continues to be the fixed odds market leader
Tabcorp continues to be the fixed odds market leader Tabcorp is Australia’s largest bookmaker and is maintaining market leadership via its two For personal use only brands TAB and Luxbet Our dual brand strategy allows us to offer customers all wagering products, across all distribution channels
Slide 34: Fixed odds racing - growing tickets, turnover and yields
Fixed odds racing - growing tickets, turnover and yields For personal use only Tickets (millions) Turnover $m 46 1,660 Ticket and turnover growth shows the popularity of fixed 1,254 29 odds racing 674 16 Fixed odds racing accounted for 25% of the ‘win and place’ FY11 FY12 FY13 FY11 FY12 FY13 rac
Slide 35: Fixed odds sport market remains competitive
Fixed odds sport market remains competitive Tickets (millions) Turnover $m For personal use only 31 1,326 30 1,259 1,245 28 Turnover performance impacted by shift in customer mix FY11 FY12 FY13 FY11 FY12 FY13 Revenue $m Yield % 168 147 165 13.5% Growth in yields driven by enhanced risk managemen
Slide 36: TAB has increased people and technology capability
TAB has increased people and technology capability Risk Management Structure For personal use only Enhanced risk management structure driving more quality product at better 64 Employees yields Fixed odds risk management employees Racing Team Sport Team have increased by over 50% since FY11 Alg
Slide 37: Fixed odds products expansion
Fixed odds products expansion Expansion of fixed odds products - a key driver of revenue growth For personal use only FY14 fixed odds product expansion: Expanded books in greyhounds and harness to maintain market leadership Automated Market Management (AMM) – Sports books scaled to match glo
Slide 38: Multi-bets remain a key driver of fixed odds performance
Multi-bets remain a key driver of fixed odds performance The sports turnover to revenue conversion remained strong in FY13 For personal use only Multi-bets represented 38% of turnover, converting to 66% of revenue due to the higher yields 100.0% Single bets Single bets 80.0% 60.0% 40.0% 20.0% Mu
Slide 39: International sports product continues to grow in popularity
International sports product continues to grow in popularity American sports growth is outperforming domestic sports For personal use only A diversified sports offering leaves Tabcorp less susceptible to a series of abnormal results in any one sport Product fees to sports controlling bodies ar
Slide 40: Yield optimisation will continue to be a focus
Yield optimisation will continue to be a focus Fixed Odds Racing For personal use only Revenue $m Yield Customer demand for fixed odds 115 23.1% racing increasing 71 16.2% Higher levels of pari-mutuel 50 7.7% substitution in < $20 range, with favourable impact on yields <= $20 > $20 to <=$200 >
Slide 41: The Luxbet offering differs to TAB and growth is continuing
The Luxbet offering differs to TAB and growth is continuing Turnover $m Revenue $m For personal use only 643 39 68% of Luxbet Sales 559 572 476 are derived from Credit 28 21 and Tote derivative products which are not 12 able to be offered by TAB Wagering FY10 FY11 FY12 FY13 FY10 FY11 FY12 FY13 Yie
Slide 42: Key drivers of Luxbet's performance
Key drivers of Luxbet’s performance Significant growth in active customers in FY13 following the successful relaunch of the Luxbet For personal use only brand in 2012 Active customers increased 37% while average cost per acquisition (CPA) fell ~6% Direct customer acquisition of 63% in FY13, up
Slide 43: Luxbet has a broad and innovative product range
Luxbet has a broad and innovative product range For personal use only “Best of the best” in racing AFL and NRL markets expanded AFL Fantasy football Integrated with social wagering site “favourit” Tabcorp Investor Day 17 October 2013 43
Slide 44: Media and International - Brendan Parnell
Media and International - Brendan Parnell For personal use only Tabcorp Investor Day 17 October 2013 44
Slide 45: Enhance integration with wagering
Enhance integration with wagering For personal use only Product Secure rights and broaden product base Customer experience Expand digital media and optimise content International Expand international co-mingling and export of racing Tabcorp Investor Day 17 October 2013 45
Slide 46: Sky Racing – world leader in race broadcasting
Sky Racing – world leader in race broadcasting Sky and Wagering – a symbiotic relationship For personal use only Betting stimulated by synchronised racing vision and commentary Promoting betting through data, vision and audio display International and local relationships – foster wagering and
Slide 47: Secure rights and broaden product base
Secure rights and broaden product base Aim to secure and extend rights For personal use only Media Rights Overview Renew TVN media rights Race Rights Type New Media Extend media rights portfolio Meets Held QLD/NT 517 Broaden base of product WA 259 Expanded wagering day SA 177
Slide 48: Expand digital media and optimise content
Expand digital media and optimise content TAB-SKY Watch & Bet Expand digital media For personal use only Seeking TVN digital content Unique digital services - Watch & Bet Customisable products i.e. Dual screen player Optimise content to support wagering Race scheduling enhancement Wage
Slide 49: Expand international co-mingling and export of racing
Expand international co-mingling and export of racing Co-mingling includes Direct or Indirect as well as Hosting and Guesting. For personal use only Benefits include: Increased pool liquidity Enhanced viability of product Tabcorp International provides a 1 stop shop Integrated form, data &
Slide 50: Keno - David Ginnane
Keno - David Ginnane For personal use only Tabcorp Investor Day 17 October 2013 50
Slide 51: Drive Keno growth through product expansion
Drive Keno growth through product expansion For personal use only Customer Increase participation by lotteries and EGM players Product Extend and develop product range Channel Drive optimal retail experience Tabcorp Investor Day 17 October 2013 51
Slide 52: Increase participation by lotteries and EGM players
Increase participation by lotteries and EGM players Tabcorp’s Keno customers are awarded more than $68m per month in prizes For personal use only Games are offered on average every 3 minutes Prizes range from $1 to multi million dollar jackpots Australian Lotteries 8,000 FY13 Turnover ~$6.9 bi
Slide 53: Increase participation by lotteries and EGM players
Increase participation by lotteries and EGM players There are opportunities to shift share of the ‘gambling wallet’ with a compelling Keno product For personal use only and prize offers Keno customer cross-product utilisation (%) Play Trackside 14% Play poker machines 65% Bought scratch cards 60%
Slide 54: Extend and develop product range
Extend and develop product range Product innovation is core to refreshing the Keno proposition to existing and new customers For personal use only Keno Racing Jackpot Pooling Keno Roulette • Pilot underway in QLD • Intention to pool jackpots • NSW only • Animated racing offer • Accelerates win fre
Slide 55: Drive optimal retail experience
Drive optimal retail experience Leveraging the strengths of our expansive Keno retail channel of 3,500+ outlets continues to For personal use only be a major focus Keno Touch Keno Player Card Brand Engagement • VIC, NSW and QLD • Favourite games and numbers • New sales team structure • Expanded tr
Slide 56: Gaming Services - Adam Rytenskild
Gaming Services - Adam Rytenskild For personal use only Tabcorp Investor Day 17 October 2013 56
Slide 57: Grow through venue, product and interstate expansion
Grow through venue, product and interstate expansion For personal use only Customer Expand value added services Expand in Victoria Drive performance to generate new venue sign-ups Expand interstate Expand TGS into other jurisdictions, an initial focus on NSW Tabcorp Investor Day 17 October 201
Slide 58: Solid foundation laid in first year
Solid foundation laid in first year TGS Model: For personal use only Built on core gaming expertise Long term contracts; 75% 10 years, 25% minimum 6 years Transportable to other jurisdictions, especially where other Tabcorp businesses exist Product: over 3,000 new EGMs and Game upgrades de
Slide 59: Value added services
Value added services EGM procurement - large scale purchase and exclusivity of key machines For personal use only EGM advice and business intelligence – floor analysis, product mix and predictive analytics Loyalty - Customer behaviour analytics - tailor product and service to local customer
Slide 60: Expand value added services
Expand value added services For personal use only In-EGM loyalty will further differentiate TGS TGS expected to gain first-mover advantage in the Victorian market for in-EGM loyalty, with exclusive distribution of the IGT Advantage system First with Voluntary Pre-Commitment capability in Victo
Slide 61: Drive performance to generate new sign-ups
Drive performance to generate new sign-ups TGS growth levers include machine top ups, key account expansion and new account For personal use only acquisition Performance drivers in place and building Focus on value for Key Account partners to drive performance Product mix and speed to market
Slide 62: Expand TGS into other jurisdictions
Expand TGS into other jurisdictions An initial focus on NSW For personal use only Well understood market due to existing wagering and keno business Mid-sized Clubs a sizeable immediate market 2-3 TGS venues initially to demonstrate performance 1,186 EGM’s 42,730 EGMs 0 EGM’s 12,744 EGM’s NSW
Slide 63: Conclusion
Conclusion For personal use only Long term licences Unique multi product / multi channel customer proposition Experienced management team Focus on increasing returns Tabcorp Investor Day 17 October 2013 63
Slide 64: Appendix: Business overview
Appendix: Business overview For personal use only Product Brands Licence expiry % EBITDA Retail distribution NSW 2,130 outlets NSW 2097 Victoria 750 outlets Wagering Victoria 2024 260 with oncourse wagering facilities NSW 2097 NSW 2,100 outlets 57% Victoria 2024 Victoria 750 outlets NT 2015 NSW 2022
Slide 65: Disclaimer
Disclaimer This Presentation contains summary information about 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 Australian Securities Exchange (AS
Slide 66: For personal use only
For personal use only Tabcorp Investor Day 17 October 2013 66