Tabcorp Holdings Limited · ASX:TAH
Tabcorp — Investor Day (October 2012)
64 slides from Tabcorp's investor day presentation, Oct 18, 2012
Slide 1: Tabcorp Holdings Limited Investor Day
For personal use only Tabcorp Holdings Limited ACN 66 063 780 709 Investor Day 18 October 2012
Slide 2: Disclaimer
Disclaimer This Presentation contains summary information about the current activities of Tabcorp Holdings Limited and its subsidiaries (Tabcorp Group). It should be read in conjunction with Tabcorp Group’s other periodic and continuous disclosure announcements lodged with the For personal use only
Slide 3: 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 Strategy & Exec GM Business Development Distribution Doug Freeman Adam Rytenskild Exec GM Corporate Exec GM Legal & Regulatory Marketing Kerry Willcock Davi
Slide 4: Market leading businesses
Market leading businesses Tabcorp has a unique multi-product, multi-channel gambling entertainment business For personal use only Note: Above statistics are as at 30 September 2012 unless otherwise stated, rounded % of Revenue and % of EBITDA based on FY12 results, excluding Victorian Tabaret, and T
Slide 5: Investment highlights
Investment highlights Tabcorp has an attractive investment case – defensive earnings, strong cash flow and growth For personal use only from new investments ¾ Quality integrated gambling entertainment business with multiple channels delivering market leading products Strong trusted brands Geogra
Slide 6: A successful 12 months
A successful 12 months Transition priorities were well executed For personal use only ¾ Demerger implemented and separation completed ¾ Seamless transition to new Victorian Wagering and Betting Licence ¾ Successful launch of new Victorian Keno business ¾ Smooth transition out of Victorian Tabaret ¾
Slide 7: FY12 financial performance
FY12 financial performance Tabcorp delivered solid earnings growth in FY12 For personal use only Group financial performance $m FY12 FY11 Change Revenues 3,038.5 2,947.5 3.1% Variable contribution 1,141.3 1,082.5 5.4% Operating expenses (416.1) (395.7) 5.2% EBITDA before impairment 725.2 686.8 5.6%
Slide 8: 1Q13 trading update
1Q13 trading update Tabcorpʼs revenue growth continued into 1Q13. Wagering declined due to change in For personal use only Victorian Licence terms Revenue ($m) 1Q13 1Q12 Change Wagering 384.6 394.1 (2.4%) Media & International 49.5 46.6 6.2% TGS 13.1 1.1 >100% Keno 53.9 45.8 17.7% Total - continuing
Slide 9: 1Q13 trading update – Wagering KPIs
1Q13 trading update – Wagering KPIs Growth in fixed odds revenues more than offset the decline in totalisator revenues in 1Q13 For personal use only $m 1Q13 1Q12 Change Revenue by product Totalisator - Vic 144.9 145.1 (0.1%) Totalisator - NSW 172.6 180.9 (4.6%) Fixed Odds 94.7 72.7 30.3% Trackside 2
Slide 10: Key strategies
Key strategies Strategies remain focussed on leadership in retail and digital For personal use only ¾ Optimise distribution footprint ¾ Deliver full suite of products and related services ¾ Lead with world-class self-service technology Build on strength in retail ¾ Broadcast rights retention ¾ Manag
Slide 11: Doug Freeman – Market Trends
Doug Freeman – Market Trends For personal use only Tabcorp Investor Day, 18 October 2012 11
Slide 12: Australian gambling market
Australian gambling market Tabcorp is diversified across three core segments of the Australian Gambling Market For personal use only Total Gambling Revenue Lotteries A$20.1b (FY12 est) Wagering ¾ Operators 7 ¾ Operators 4 State TABʼs + ¾ Ownership Govt/Corporate 9 NT Bookmakers ¾ Revenue A$2.6b ¾ Ow
Slide 13: Wagering market
Wagering market Tabcorp has improved market share in a highly competitive environment For personal use only TOTAL AUSTRALIAN WAGERING MARKET ONLINE AUSTRALIAN WAGERING MARKET Total Market = $26.0b Turnover Total Market = $9.1b Turnover (FY11) Market Growth in FY12 = 3.0% Online share of Total Wageri
Slide 14: Racing and Sport markets
Racing and Sport markets Tabcorp has grown turnover in the Racing and Sports markets For personal use only AUSTRALIAN RACING WAGERING MARKET AUSTRALIAN SPORTS WAGERING MARKET Total Market = $21.5b Turnover Total Market = $4.0b Turnover Market Growth in FY12 = 2.1% Market Growth in FY12 = 3.6% 0.9 (4
Slide 15: Lottery market
Lottery market Turnover growth in Tabcorpʼs Keno business has outperformed the broader lottery market For personal use only AUSTRALIAN LOTTERIES CAGR FY12 Turnover ~$6.3 billion FY07 – FY12 Total 4.1% 7,000 4.3% 6,000 1,008 845 860 7.3% 5,000 942 724 Turnover ($m) 711 3.6% 4,000 3,000 2,000 1,000 0
Slide 16: Electronic gaming machine market
Electronic gaming machine market The EGM market is a growth opportunity for our TGS business For personal use only NUMBER OF EGMs IN AUSTRALIA (000ʼs) GAMING TURNOVER BY STATE FY12 ($b) Total Number of EGMs = 188,000 Total Market Value = $116.1b Turnover Growth in EGM Numbers in FY12 = 1.1% Market G
Slide 17: Domestic consumer trends
Domestic consumer trends Tabcorp has developed capabilities to meet domestic consumer trends For personal use only Digital devices & real time access Customer service & convenience are key ¾ Popularity of mobile devices & apps ¾ Customisation of your experience ¾ Social media ¾ 24/7 access is expect
Slide 18: International gambling trends
International gambling trends Tabcorp is further developing its capabilities in line with international trends For personal use only Global pari-mutuel pools Online growth ¾ Pool size is critical ¾ Technology enhances distribution ¾ 24/7 demand for product ¾ Convergence across channels/devices ¾ Inc
Slide 19: David Ginnane - Marketing
David Ginnane - Marketing For personal use only Tabcorp Investor Day, 18 October 2012 19
Slide 20: Tabcorp's competitive strengths
Tabcorp’s competitive strengths Tabcorp has a powerful and unique arsenal of competitive strengths For personal use only Customer Base Multiple Channels Multiple Brands Total Customers Wagering 1,800,000 Trackside 200,000 Luxbet 27,500 Keno 1,400,000 Sky 1,500,0001 ¾ Underpinned by an extensive cust
Slide 21: Customer acquisition
Customer acquisition Active TAB customers have grown by over 6% between FY11 and FY12 For personal use only Active TAB account customers 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 FY10 FY11 FY12 Active customers New accounts opened ¾ Online and mainstream marketing programs generating
Slide 22: Customer retention and growth
Customer retention and growth CRM is the new battleground in marketing as the cost of customer acquisition increases For personal use only ¾ Appending transactional data to individual customers across multiple brands provides a powerful “single view of customer” ¾ CRM is simply about leveraging insi
Slide 23: Brand choice in wagering
Brand choice in wagering Brand and Service are the most important drivers of betting choice for wagering customers For personal use only ¾ Price alone is less influential in customer betting choice Source: TLE Customer Emersion and positioning research, n=1,000 non rejecters of betting, Oct 2011 Tab
Slide 24: New TAB brand
New TAB brand Our new TAB brand is a powerful differentiator For personal use only ¾ TAB re-branding aims to further enhance one of Australia’s most iconic brands ¾ TAB is the hero brand in the market, with 95%+ awareness* ¾ The new TAB brand clearly differentiates TAB in a cluttered market while at
Slide 25: TAB brand relaunch
TAB brand relaunch Positioning the new TAB brand as contemporary, fresh and relevant for todayʼs customers For personal use only Tabcorp Investor Day, 18 October 2012 25
Slide 26: Product Innovation
Product Innovation Product innovation capabilities are strong, underpinned by a ʻmarket driven / customer ledʼ For personal use only development process NPD Innovation funnel Idea Idea Idea Idea Idea 1) Ideation: identification of customer opportunities 2) Concept paper: feasibility paper supported
Slide 27: Recent product innovations
Recent product innovations For personal use only TAB Trackside Keno Keno Super ePOS Flexi Touch Roulette Multi Tabcorp Investor Day, 18 October 2012 27
Slide 28: Adam Rytenskild - Distribution
Adam Rytenskild - Distribution For personal use only Tabcorp Investor Day, 18 October 2012 28
Slide 29: Distribution: Broadest range of channels and products
Distribution: Broadest range of channels and products Tabcorpʼs distribution is unique and delivers key competitive advantages For personal use only RETAIL ¾ 2,850 wagering venues 61% of wagering turnover ¾ 2,700 of these venues now have Trackside 100% of Trackside ¾ 3,510 Keno venues 100% of Keno ¾
Slide 30: Distribution: Strong retail partnerships
Distribution: Strong retail partnerships Our strong retail partnerships are exclusive and underpin our retail business For personal use only ¾ Tabcorp has exclusive agreements in place with the key retail industry bodies for both NSW and Vic AHA NSW & Clubs NSW: exclusive agreement for wagering &
Slide 31: Distribution: Successful execution
Distribution: Successful execution FY12 priorities have been well executed For personal use only ¾ Retail expansion for wagering, Trackside and Keno largely complete. Net increase in venues over the last 12 months: 239 wagering, 500 Trackside and 736 Keno ¾ 148 Retail upgrades completed in the bes
Slide 32: Looking ahead
Looking ahead Quality integrated gambling entertainment business with multiple channels delivering market For personal use only leading products ¾ Optimise distribution footprint Build on strength in retail ¾ Deliver full suite of products and related services ¾ Lead with world-class self-service te
Slide 33: Retail execution: next 12 months
Retail execution: next 12 months Drive growth from retail investments made to date For personal use only ¾ Retail excellence: optimise customer experience in the venues to drive performance Increase product penetration in hotels and clubs Improve merchandising standards Extend products across
Slide 34: Retail execution: next 12 months – Keno
Retail execution: next 12 months Drive growth in Keno through new product expansion For personal use only ¾ Expand Victorian Keno ¾ Launch and expand Keno Roulette in NSW ¾ Launch and expand Keno self-service in Qld1 ¾ New initiatives1: Keno Player Card Keno Racing Note 1: Subject to regulatory
Slide 35: Digital strategy
Digital strategy To be the Australian market leader for online and mobile For personal use only ¾ Tabcorpʼs digital leadership position will be measured by: Growth in digital market share (currently 24.5%) Competitor benchmarking Customer choice ¾ Underpinned by promotions in Tabcorp’s retail
Slide 36: Digital execution: next 12 months
Digital execution: next 12 months Tabcorp will continue to invest in digital initiatives For personal use only ¾ Tabcorp’s immediate focus: Continued refinement of new website and Apps Launch new IPTV App for Samsung TVs Broaden digital payment options for customers ¾ New digital initiatives t
Slide 37: Distribution: The key points
Distribution: The key points Tabcorpʼs multi-product multi-channel strategy is unique For personal use only ¾ Tabcorp’s unique distribution is delivering key competitive advantages Broadest range of channels, including a large retail network Broadest range of products, including unique games suc
Slide 38: Steven Wooding - Tabcorp Gaming Solutions
Steven Wooding - Tabcorp Gaming solutions For personal use only Tabcorp Investor Day, 18 October 2012 38
Slide 39: TGS and the gaming machine value chain
TGS and the gaming machine value chain The gaming machine market can be segmented into four subcategories. TGS is focused on For personal use only services and distribution 1 2 3 4 Manufacturers/ Venue Owners Monitoring Services & Content Suppliers Providers Distribution Providers Gaming services in
Slide 40: TGS contracts
TGS contracts TGS has over 8,500 EGMs signed up in Victoria, with 32% market share For personal use only TGS contract summary Breakdown of Victorian EGM market 10,000 Consulting Services only Signed with 24% TGS 8,000 10 year contract 32% with termination 2,000 1 option Number of EGMs 6,000 4,000 6,
Slide 41: TGS strategic growth platform
TGS strategic growth platform Value improvement is likely to be delivered in 3 horizons For personal use only ¾ Additional customer wins and CPI linked price increases Build on strength in retail ¾ Diamond Rewards ™ Loyalty Program, 65,000 members signed to date ¾ Expand service offering to Clubs an
Slide 42: Craig Nugent - Fixed odds
Craig Nugent - Fixed odds For personal use only Tabcorp Investor Day, 18 October 2012 42
Slide 43: Fixed odds market
Fixed odds market Tabcorp is the market leader and has grown market share For personal use only ¾ FY12 trends were positive for Tabcorp: Growth in the wagering market is coming from fixed odds Fixed Odds Racing and Sport continued to grow Tabcorp’s fixed odds market share increased Australian
Slide 44: Fixed odds racing
Fixed odds racing Tabcorp has increased its share of Fixed Odds market turnover significantly For personal use only ¾ Tabcorp is the market leader Wagering Fixed Odds Racing Turnover share ¾ Key performance drivers: FY12 FY11 FY10 Increased product offering to customers TAB 17.1% 10.4% 5.4% Luxbet
Slide 45: Fixed odds sports
Fixed odds sports Sports betting continues to grow strongly For personal use only ¾ Tabcorp is the market leader Wagering Fixed Odds Sport Turnover share ¾ Growth has been driven by: FY12 FY11 FY10 Increased product offering to customers TAB 38.1% 37.2% 36.0% Price integration and advertising in
Slide 46: Fixed odds sports – multis
Fixed odds sports Multis remain the most important sports product generating 68% of TAB sports revenue For personal use only ¾ The Tabcorp super multi product is the best in the market with the ability for customers to: Take up to 20 legs, Take a flexi/systems bet up to 10 legs and Take multis
Slide 47: Fixed odds sports – domestic and international split
Fixed odds sports Tabcorp sports turnover is split evenly between domestic and international events For personal use only ¾ American sports growth is outperforming domestic sports ¾ A diversified sports offering leaves Tabcorp less susceptible to a series of abnormal results in any one sport ¾ Produ
Slide 48: Luxbet
Luxbet During FY12 Luxbet continued to successfully grow revenue and customer acquisition For personal use only Financials Customers $m FY11 FY12 FY11 FY12 Active Customers 21,662 28,700 Turnover 558.5 572.2 Direct Acquisition 6,671 7,263 Net Revenue 20.7 27.9 Affiliated Acquisition 6,904 8,954 EBIT
Slide 49: Luxbet - Domestic Product Offering
Luxbet - Domestic Product Offering Luxbet has a highly competitve product offering for Australian sports For personal use only ¾ FY12 / FY13 expanded its offering with new products for AFL and NRL, i.e. Pick Your Own Total and Pick Your Own Line Fixed Odds Offered on Racing and Sports 9 Tote Derivat
Slide 50: Luxbet Digital Applications & CRM
Luxbet Digital Applications & CRM Technology, innovation and CRM are key focuses for Luxbet For personal use only CRM – Communicating to a New look and feel Segment of One • Optimise functionality Best practice automated system • 1.5m ClickTale All communications based on customer recordings dep
Slide 51: Luxbet Revolution
Luxbet Revolution New brand launched 25 September 2012 For personal use only Reinforce association with Tabcorp Highlight the unique element in the name Stand out from competitors Tabcorp Investor Day, 18 October 2012 51
Slide 52: Brendan Parnell - Media and International
Brendan Parnell - Media and International For personal use only Tabcorp Investor Day, 18 October 2012 52
Slide 53: Business overview
Business overview Sky Racing – world leader in Australian and international race broadcasting For personal use only Business overview ¾ Sky Racing, a premier thoroughbred, harness and greyhound racing multimedia broadcaster Sky Racing channels (Sky Racing1, Sky Racing2 and Sky Racing World) Sky
Slide 54: Sky Racing value chain
Sky Racing value chain Sky Racing costs base delivers operating scale For personal use only Up Link/ Channels and Race Tracks Communications Services Distribution Customers ¾ 230 Australian tracks ¾ DVN Fibre Link from Main Channels ¾ Optus Satellites (x2) ¾ Racetracks ¾ 270+ international 170 track
Slide 55: Broadcast rights
Broadcast rights Sky broadcasts every race, every code For personal use only Domestic ¾ Sky has secured all media rights that have Race Rights Type New Media expired over the last three years Meets Held NSW (non ¾ Victorian and Sydney thoroughbred rights: 512 3 3 Metro) Sky’s contract with TVN exp
Slide 56: International
International Tabcorp’s international business is growing through export / import of racing vision For personal use only ¾ International manages: Export of Australasian racing (including data, vision and co-mingled wagering) including Racing World Australia channel1 Import of international racin
Slide 57: Tabcorp co-mingling overview
Tabcorp co-mingling overview Tabcorp has been the pioneer of co-mingling domestically and is a leader in global co-mingling For personal use only ¾ Co-mingling creates a superior customer proposition via less odds volatility and greater viability of returns ¾ Acquisition of new customers with bigger
Slide 58: Premier Gateway International (PGI)
Premier Gateway International (PGI) PGI is a global gateway into Australian racing pools For personal use only ¾ PGI expedites connectivity to global tote pools and reduces significant co-mingling establishment costs and time ¾ PGI will increase export exposure and returns for Australian racing ¾ PG
Slide 59: Damien Johnston - CFO
Damien Johnston - CFO For personal use only Tabcorp Investor Day, 18 October 2012 59
Slide 60: Capex
Capex Tabcorp invested significant capital into new investments in FY12 For personal use only Capex Spend - Growth vs BAU Major capex projects ¾ Major capex projects in FY12 $m 200 New Victorian Keno roll out TGS loyalty system and EGMs 150 150 New tab.com.au website 119 Venue expansion 100
Slide 61: Capital structure
Capital structure Tabcorp has a well diversified debt structure For personal use only $m 900 800 700 600 500 400 300 284 200 400 400 250 100 211 150 0 FY13 FY14 FY15 FY16 FY17 FY18 FY19+ Bank facilities Medium Term notes (May 2014) Tabcorp Retail bonds (May 2014) Tabcorp Subordinated notes US Privat
Slide 62: Entitlement to refund in relation to Victorian licences
Entitlement to refund in relation to the Victorian Gaming Licence and the Victorian Wagering Licence For personal use only ¾ Tabcorp Holdings Limited filed a claim in the Supreme Court of Victoria on 24 August 2012 seeking a payment from the State of Victoria of $686.8 million ¾ That payment relates
Slide 63: Conclusion
Conclusion Tabcorp is an attractive investment case For personal use only ¾ Quality integrated gambling entertainment business with multiple channels delivering market leading products. Strong trusted brands Geographic diversification Long dated licences ¾ Our strategies are focussed on leader
Slide 64: For personal use only
For personal use only Tabcorp Investor Day, 18 October 2012 64