Tabcorp Holdings Limited · ASX:TAH
Tabcorp — H1 2020 Earnings Presentation
30 slides from Tabcorp's earnings presentation, Feb 19, 2020
Slide 1: 2019/20 First Half Results Presentation
TABCORP HOLDINGS LIMITED 2019/20 First Half Results Presentation for the 6 months ended 31 December 2019 19 FEBRUARY 2020 ABN 66 063 780 709
Slide 2: Table of Contents
TABLE OF CONTENTS 03 – 06 Group Overview 08 – 15 Business Results 17 Capital 19 Conclusion 21 – 28 Appendices
Slide 3: Group result driven by excellent Lotteries performance
GROUP RESULT DRIVEN BY EXCELLENT REVENUE CONTRIBUTION2 LOTTERIES PERFORMANCE 5% o Group revenue up 4.4% and EBITDA1 up 2.1% vs pcp 41% o Interim dividend maintained at 11.0 cps, fully franked 54% o Integration in the final phase • EBITDA benefits expected to be $100m in FY20 (previously $90m) • On t
Slide 4: First Half Results 1H20
FIRST HALF RESULTS REPORTED FIGURES THROUGHOUT THE PRESENTATION ARE RESTATED FOR AASB 16 CHANGES1 VS PCP REVENUE $2,913.9M UP 4.4% 1H20 EBITDA DIVIDEND (CONTINUING OPERATIONS BEFORE SIGNIFICANT ITEMS) $596.5M UP 2.1% PER SHARE (FULLY FRANKED) NPAT (CONTINUING OPERATIONS BEFORE SIGNIFICANT ITEMS) $21
Slide 5: Group Results
GROUP RESULTS $m 1H20 1H19 Change Revenues 2,913.9 2,790.2 4.4% Variable contribution 1,029.7 1,017.0 1.2% Operating expenses (433.2) (432.9) 0.1% EBITDA before significant items 596.5 584.1 2.1% D&A (192.3) (174.8) 10.0% EBIT before significant items 404.2 409.3 (1.2%) Interest (94.8) (105.0) (9.7%
Slide 6: Integration: Synergies & Business Improvements
INTEGRATION: SYNERGIES & BUSINESS IMPROVEMENTS INTEGRATION IN FINAL PHASE; REMAIN ON TRACK TO DELIVER FY21 TARGET OF $130M-$145M EBITDA o Significant progress on delivery of integration program EBITDA ($M) • Full insourcing of data centre and retail network management and associated recontracting no
Slide 7: Table of Contents
TABLE OF CONTENTS 03 – 06 Group Overview 08 – 15 Business Results 17 Capital 19 Conclusion 21 – 28 Appendices
Slide 8: Group & Business Results
GROUP & BUSINESS RESULTS 1 Lotteries & Keno Wagering & Media Gaming Services Group 1H20 $m Change $m Change $m Change $m Change Revenues 1,584.3 12.4% 1,179.5 (3.7%) 149.0 (4.4%) 2,913.9 4.4% Variable contribution 413.0 13.0% 472.7 (5.9%) 142.0 (4.0%) 1,029.7 1.2% Operating expenses (118.1) 6.2% (23
Slide 9: Lotteries & Keno
LOTTERIES & KENO STEP-CHANGE IN PERFORMANCE CONTINUES o Performance being driven by strategic Powerball game change, acceleration of digital and marketing investments, and deeper alignment with retail partners $m 1H20 1H19 Change o Active management of game portfolio to engage and excite players $m
Slide 10: Lotteries & Keno KPIs
JACKPOT PERFORMANCE (POWERBALL & OZ LOTTO) 26 LOTTERIES & KENO KPIs 23 8 23 18 6 8 2 14 2 300,000 ADDITIONAL ACTIVE REGISTERED PLAYERS AND GROWTH 16 17 18 15 12 ACROSS ALL CHANNELS Lotteries 1H18 2H18 1H19 2H19 1H20 Number of jackpots Number of jackpots o Strong jackpot sequences (including record $
Slide 11: Wagering & Media
WAGERING & MEDIA RESULT REFLECTS A SOFT MARKET AND A BUSINESS IN TRANSITION o Industry turnover1 down reflecting • Soft consumer discretionary spending $m 1H20 1H19 Change • Increased yields/pricing Revenues 1,179.5 1,224.6 (3.7%) • Impact of Soccer World Cup in pcp Variable contribution 472.7 502.1
Slide 12: Wagering & Media KPIs
ACCOUNT MARKET SHARE2 38.0% 36.9% WAGERING & MEDIA KPIs 1 34.6% 8.0% 8.8% 8.0% 34.3% 7.7% 32.2% 6.7% 23.7% 23.7% 23.7% 23.7% 23.1% 5.7% 5.4% 5.0% 4.6% 4.4% TAB TRANSFORMING AND COMPETITIVENESS IMPROVING; 26.6% 29.2% 28.9% 26.6% 25.5% UBET UPLIFT TO COME POST INTEGRATION 18.0% 18.3% 18.7% 18.5% 19.3%
Slide 13: Wagering & Media: Significant progress made on TAB transformation
WAGERING & MEDIA: SIGNIFICANT PROGRESS MADE ON TAB TRANSFORMATION (AND UBET CUSTOMERS WILL SOON ALSO BENEFIT) BRAND AND MARKETING CUSTOMER EXPERIENCE MEDIA A reinvigorated brand is now in market with Product and customer experience The media modernisation has progressed strong early customer respons
Slide 14: Wagering & Media: FY21 will be the first single transformed TAB offer
WAGERING & MEDIA: FY21 WILL BE THE FIRST TIME WE HAVE A SINGLE AND TRANSFORMED TAB OFFER ACROSS THE MARKET FY19 FY20 FY21+ Maintain active customer Modernise, Unique, personalised base & drive value digitalise & optimise customer experiences BIGGER THAN o A seamless omni-channel o Step up in promoti
Slide 15: Gaming Services
GAMING SERVICES BUSINESS UNDER REVIEW TO IMPROVE PERFORMANCE AND REALISE FULL POTENTIAL o Business performance impacted by: • Revenue decline due to contract expiries, contract extensions at lower daily rates and reduced project work $m 1H20 1H19 Change MAX Venue Services 102.0 107.2 (4.9%) • Non-re
Slide 16: Table of Contents
TABLE OF CONTENTS 03 – 06 Group Overview 08 – 15 Business Results 17 Capital 19 Conclusion 21 – 28 Appendices
Slide 17: Capital Management
CAPITAL MANAGEMENT Effective capital expenditure CAPITAL EXPENDITURE ($M) 152 o Business as usual (BAU) capex 30 • 1H20: $122m, up 32.6% vs pcp 109 • 2H20: c.$160m (e.g. retail roll-out of the Lott brand, Wagering 17 38 data/personalisation program) 44 • Subsequent return to more usual level of c.$2
Slide 18: Table of Contents
TABLE OF CONTENTS 03 – 06 Group Overview 08 – 15 Business Results 17 Capital 19 Conclusion 21 – 28 Appendices
Slide 19: Conclusion: The Trusted Gambling Entertainment Company
CONCLUSION: THE TRUSTED GAMBLING ENTERTAINMENT COMPANY POSITIONING FOR IMPROVED PERFORMANCE IN FY21 Group Business Units LOTTERIES & KENO o Diversified business mix delivered growth in o Lotteries & Keno group revenue and EBITDA in a soft environment for consumer discretionary • Excellent results th
Slide 20: Table of Contents
TABLE OF CONTENTS 03 – 06 Group Overview 08 – 15 Business Results 17 Capital 19 Conclusion 21 – 28 Appendices
Slide 21: 1. Significant Items (After Tax)
1. SIGNIFICANT ITEMS (AFTER TAX) 1H20 $m Implementation costs 11.0 Racing Queensland arrangements 8.2 Com bination w ith Tatts Group 19.2 ACTTAB POCT compensation (4.5) Total 14.7 Implementation costs o Implementation costs are non-recurring costs and comprise restructure charges, integration manage
Slide 22: 2. Balance Sheet
2. BALANCE SHEET $m Dec-19 Jun-19 Change Total current assets 787.1 766.4 2.7% Licences 2,200.7 2,254.4 (2.4%) Other intangible assets 9,238.7 9,184.1 0.6% Property, plant and equipment 487.0 554.6 (12.2%) Other non current assets 798.8 863.6 (7.5%) Total assets 13,512.3 13,623.1 (0.8%) Total liabil
Slide 23: 3. Cash Flow
3. CASH FLOW $m 1H20 1H19 Change Net operating cash flows 433.3 564.7 (23.3%) Net interest paid (98.3) (114.8) (14.4%) Income tax paid (98.4) (95.7) 2.8% Payments for PP&E and intangibles (177.8) (110.8) 60.5% Sub-total 58.8 243.4 (75.8%) Sun Bets operating cashflows and costs relating to closure -
Slide 24: 4. Group Operating Expenses
4. GROUP OPERATING EXPENSES Reported opex ex-synergies +4.1% +11.2% -0.2% +7.6%1 2 24 Notes: 1. Gaming Services growth rate reflects adjustment for $2.0m provision release in 1H19. Reported opex ex-synergies is 10.4% 2. 1H20 incremental cost synergies vs pcp of $17.3m (Lotteries & Keno $5.5m, Wageri
Slide 25: 5. Impact of AASB 16 Leases (by half)
5. IMPACT OF AASB 16 LEASES 1 (BY HALF) o AASB 16 Leases represents significant changes to how lessees account for operating leases. The adoption of AASB 16 will result in: • Higher assets and liabilities in the balance sheet; and • Charges to the income statement will be included in depreciation an
Slide 26: 6. Lotteries & Keno
6. LOTTERIES & KENO $m 1H20 1H19 Change Lotteries Revenue 1,466.8 1,292.8 13.5% Keno Revenue 117.5 116.4 0.9% Revenues 1,584.3 1,409.2 12.4% Lotteries Variable contribution 347.3 300.0 15.8% Keno Variable contribution 65.7 65.5 0.3% Variable contribution 413.0 365.5 13.0% Operating expenses (118.1)
Slide 27: 7. Wagering & Media KPIs
7. WAGERING & MEDIA KPIs 1H20 Com bined Change TAB Change ex UBET Change Turnover by distribution ($m ) 1 Retail 3,611.9 (9.0%) 2,740.4 (9.1%) 871.5 (8.8%) Digital 3,408.4 (4.9%) 2,884.8 (2.0%) 523.6 (18.1%) Call Centre 207.6 (12.7%) 159.8 (4.7%) 47.8 (31.8%) 2 Other 767.8 4.3% 581.2 7.4% 186.6 (4.1
Slide 28: 8. Glossary
8. GLOSSARY Term Definition Term Definition Lotteries and The Group’s business that operates lotteries and Keno, which are 1H Six months ended 31 December of the relevant financial year Keno games of chance 2H Six months ended 30 June of the relevant financial year MAX The Group’s Gaming Services br
Slide 29: 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 30: Tabcorp
Tabcorp RACING