TABCORP HOLDINGS LIMITED 2016/17 FULL YEAR RESULTS PRESENTATION 4 AUGUST 2017 ABN

Transcription

1 TABCORP HOLDINGS LIMITED 2016/17 FULL YEAR RESULTS PRESENTATION 4 AUGUST 2017 ABN

2 A STRATEGICALLY IMPORTANT YEAR Annunced and significantly prgressed the cmbinatin with Tatts Grup, which is expected t cmplete by the end f 2017 Acquired Intecq, a cmplementary gaming systems and mnitring business Launched ur UK start-up, Sun Bets Cntinued t invest in and embed scalable risk management and regulatry cmpliance capability; settled the AUSTRAC civil prceedings Onging digital expansin; strengthened retail partnerships thrugh digital cmmissins mdel and launch f Ken digital play 2

3 FY17 OVERVIEW Statutry result: NPAT lss f $20.8m (EPS -2.5 cps), adversely impacted by significant items after tax f $199.7m Results befre significant items 1 Revenues $2,229.6m, up 1.9%, within guidance ($2,220m - $2,240m) EBITDA $504.1m, dwn 2.3%, within guidance ($500m - $510m) NPAT $178.9m, dwn 3.8%, within guidance ($173m - $180m) EPS 21.4 cents per share, dwn 4.5% Final dividend 12.5 cents per share, fully franked, taking the full year rdinary dividend t 25.0 cents per share, fully franked, up frm 24.0 cents per share in the pcp 3 Nte: 1 In line with trading update prvided n 20 June 2017, refer t ASX release Tabcrp prvides update n Tabcrp/Tatts transactin and trading perfrmance

4 GROUP RESULTS 1 $m FY17 FY16 Change Revenues 2, , % Variable cntributin 1, % Operating expenses (502.2) (468.7) 7.1% EBITDA befre significant items (2.3%) D&A (178.7) (178.6) 0.1% EBIT befre significant items (3.5%) Interest (68.3) (69.9) (2.3%) Tax expense (78.2) (81.4) (3.9%) NPAT befre significant items (3.8%) 2 Significant items (after tax) (199.7) (16.2) >100% Statutry NPAT (20.8) (>100%) 1. Results include 7 mnths cntributin frm Intecq frm December 2016, refer t slide 10 fr further details 2. Significant items (after tax) f $199.7m cmprise: AUSTRAC civil prceedings $61.8m, AFP Cambdia investigatin $1.9m, prpsed cmbinatin with Tatts $53.9m (including impact f the Tatts cash-settled equity swap), Intecq acquisitin $4.9m, Sun Bets perating lss $47.6m and impairment $20.7m and Melburne premises relcatin $8.9m 4

5 BUSINESS RESULTS Wagering Change Gaming Change Change Change 1 2 Ken Grup $m & Media n pcp Services n pcp n pcp n pcp Revenues 1, % % % 2, % Variable cntributin (1.2%) % % 1, % Operating expenses (400.8) 6.0% (51.5) 43.1% (49.9) 4.4% (502.2) 7.1% EBITDA (8.4%) % % (2.3%) D&A (122.0) (6.1%) (34.2) 17.5% (22.5) 14.8% (178.7) 0.1% EBIT (9.6%) % 49.5 (2.4%) (3.5%) Opex / Revenue (%) 21.4% 1.2% 35.8% 2.2% 23.5% 0.5% 22.5% 1.1% EBIT / Revenue (%) 12.2% (1.3%) 33.3% (5.0%) 23.3% (1.0%) 14.6% (0.8%) Capex % % 18.0 (5.8%) % 1. Wagering & Media results exclude Sun Bets which has been treated as a significant item in FY17, refer t slide 9 fr further details n Sun Bets 2. Results include 7 mnths cntributin frm Intecq frm December 2016, refer t slide 10 fr further details 3. Grup perating expense grwth was 4.6% excluding the impact f Intecq acquisitin, refer t slide 12 fr further details 4. Grup capex includes lease capitalisatin fr the fit ut f new Melburne and Sydney ffices $32m and capex fr Sun Bets $20m (which has been impaired) 4 3 5

6 WAGERING & MEDIA: KPIs $m FY17 FY16 Change Wagering revenue 1, ,697.4 (0.2%) Media revenue % Revenues 1, , % Variable cntributin (1.2%) Operating expenses (400.8) (378.2) 6.0% EBITDA (8.4%) EBIT (9.6%) Returns t the Racing Industry % Key KPIs fr the TAB business remain strng, refer slide 7 Hwever results impacted by underperfrmance f Luxbet and Trackside, wet weather during the Autumn Carnival and lwer than expected yields in 2H17 Revenue grwth ex Luxbet and Trackside f 1.1% Luxbet EBIT lss f $13m, strategic review cmmenced Review f Trackside prduct and marketing activity cmpleted, new initiatives planned fr FY18 Fixed Odds yields maintained vs the pcp, albeit lwer than expected in 2H17 particularly in TAB Sprts Increase in perating expenses driven by investment in technlgy, marketing, risk and cmpliance. Thrugh review f cst base underway SA Pint f Cnsumptin tax cmmenced n 1 July Nte: Wagering & Media KPIs have been prepared n a statutry basis and exclude the impact f the UK start-up, Sun Bets, which has been treated as a significant item in FY17

7 TAB: KPIs Turnver by distributin ($m) 1H17 Change n pcp 2H17 Change n pcp FY17 Change n pcp Retail 3,302.5 (2.5%) 2,937.3 (6.4%) 6,239.8 (4.4%) Digital 2, % 2, % 4, % Call Centre (7.0%) (10.3%) (8.6%) Other (3.4%) % 1,051.1 (1.6%) Revenue by prduct ($m) TAB Racing - Ttalisatr (6.9%) (8.1%) 1,094.6 (7.4%) - Fixed Odds % % % Ttal TAB Racing % % 1, % Key KPIs fr the TAB business remain strng Digital turnver grwth f 13.9% Ttal TAB Fixed Odds revenue grwth f 15.0%, including 20.8% grwth in racing Active TAB accunt custmers up 9.7% driven by 13.3% grwth in new custmer acquisitin and gd retentin rates Retail results impacted by general cnsumer sftness in 2H17 TAB Sprts % (6.3%) % Trackside 44.2 (13.0%) 37.4 (16.3%) 81.6 (14.6%) Other KPIs FO Racing yield 15.9% (0.2%) 15.2% 0.4% 15.5% 0.1% FO Sprts yield 13.9% 0.3% 12.6% (0.4%) 13.2% (0.1%) TAB Active Custmers ('000) % % % % Digital frm mbile 67.2% 2.4% 68.6% 2.7% 67.9% 2.5% 7 Ntes: - Other turnver includes Oncurse, Premium Custmers and PGI - Turnver and revenue includes Victrian Racing Industry interest - TAB Active Custmers are measured n a rlling 12 mnth basis

8 WAGERING & MEDIA INITIATIVES Cntinued investment in digital transfrmatin Successful rll-ut f digital cmmissin mdel t retail venue partners with effect frm Octber 2016 Check & Cllect allwing custmers t scan winning tickets via the TAB app int their TAB accunt New additins t TAB s stable f innvative prducts Quaddie Cash Out t drive pari-mutuel extic activity Bundle Bet t drive custmer take-up f multi-bets Majr prduct launch planned ahead f the Spring Racing Carnival Key media rights extended during FY17 RWWA (all cdes) until 2021 Perth Racing until 2022 Tasmania (all cdes) until 2026 SA Thrughbreds secured n nn-exclusive basis until 2024 We re particularly excited with the directin Tabcrp is heading with digital wagering in PubTABs and we re lking frward t the rll-ut f new htel prducts and technlgy ver the next five years. Jhn Whelan, AHA NSW 8

9 SUN BETS UK start up, Sun Bets, established and launched in August 2016 Strategic intent f Sun Bets t gain a psitin in the attractive UK nline wagering and gaming market, while building a platfrm we can replicate in new grwth markets in the future Fllwing peratinal review, several initiatives have been implemented including changes t leadership, team size and cmmercial arrangements t imprve the psitining f the business fr FY18 Strng alignment with News UK; marketing and prduct plan agreed fr FY18 $m FY17 Turnver Revenue 4.6 Variable cntributin (14.6) EBITDA (46.2) Nte: Sun Bets results are included as a significant item as the business was in the establishment phase in FY17 FY18 fcus Imprved integratin with The Sun s Dream Team ahead f ftball seasn Cntinued enhancement f the sprtsbk and casin ffering Implementatin f revised marketing and CRM strategies t imprve retentin and share f wallet utcmes Fixed revenue payment bligatins t News UK in FY18 f 11.1m and in FY19 f 16.5m 1 Nte: 1 If the Sun Bets business des nt achieve revenue equivalent t the minimum fees payable t News UK in FY19, then in certain circumstances Tabcrp may terminate the agreement with effect frm 31 December See Sectin 7.8 f the Annual Reprt fr further details 9

10 GAMING SERVICES: KPIs $m FY17 FY16 Change Revenues % EBITDA % EBIT % Further gegraphic expansin f Gaming Services with the signing f Panthers Grup and acquisitin f Intecq TGS Apprximately 10,650 EGMs under cntract (Vic 8,700; NSW 1,950), with 89% f Victrian EGMs cntracted thrugh t 2022 TGS venues cntinued t utperfrm the market Intecq Results fr 7 mnths trading: Revenues $28.3m, EBITDA $9.2m and EBIT $6.6m Apprximately 49,000 EGMs cvered by lyalty and value added systems acrss Victria and NSW Over 21,600 EGMs cvered by mnitring and value added systems acrss Qld and Tasmania Realisatin f synergies n track FY18 fcus Cmplete Intecq integratin and synergy realisatin Drive venue perfrmance and expand custmer base 10

11 KENO: KPIs $m FY17 FY16 Change Revenues % EBITDA % EBIT (2.4%) Venues 3,616 3, % Ticket Cunt (m) % Avg ticket size ($) % Digital Accunts 13, >100% Onging transfrmatin driving turnver grwth f 3.6% cmpared with the pcp Revenue perfrmance Vic up 9.4% NSW up 4.7% Qld dwn 2.4% Further prgress n key strategic initiatives Jackpt pling nw in place acrss NSW, Queensland, Victria and ACT Ken Mega Millins launched in NSW and ACT Digital play in-venue in NSW cmmenced FY18 fcus Drive grwth frm recent investments in prduct, digital and retail custmer experience 11

12 OPERATING EXPENSES AND CAPITAL INVESTMENT OPEX / REVENUE RATIO 1 CAPEX ($m) 21.2% 21.3% 21.4% 22.5% FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Wagering & Media Sun Bets Gaming Services Ken Prperty Nte: 12 Increased pex t revenue rati in FY17 driven by acquisitin f Intecq, investment in technlgy, capability, marketing and risk & cmpliance Target pex t revenue rati fr FY18 f apprximately 22.5% 1 Opex t revenue rati and cmmentary excludes Sun Bets FY17 capex f $179m, excluding lease capitalisatin fr the fit ut f new Melburne and Sydney ffices $32m FY18 capex expected t be apprximately $150m, excluding capex in respect f TGS venue expansin FY18 D&A expected t be apprximately $190m, reflecting full year f Intecq, Panthers Grup and ffice fit ut

13 CAPITAL MANAGEMENT DEBT STRUCTURE ($m) DIVIDENDS ( ) Term debt 575 Bridge finance US Private Placement FY18 FY19 FY20 FY21 FY22 Undrawn bank facilities f $400m at 30 June 2017, including a new $250m shrt term facility Bridge financing f $575m facilitated redemptin f Tabcrp Subrdinated Ntes ($250m) and funded the Tatts cash-settled equity swap ($325m) Term debt and bridge finance facilities are intended t be refinanced by a new bank facility in respect f the cmbinatin with Tatts (legally binding cmmitment letter in place) r restructured in the rdinary curse f business (including the unwinding f the equity swap) Nte: 1 FY14 FY15 FY16 FY17 FY18 dividend target is 90% f NPAT befre significant items, amrtisatin f the Victrian Wagering and Betting Licence and Sun Bets The Dividend Reinvestment Plan is currently suspended under the terms f the Merger Implementatin Deed with Tatts 1 In additin t the rdinary dividend, a special dividend f 30.0 cents per share was paid in FY15

14 COMBINATION WITH TATTS The cmbinatin is expected t deliver at least $130 millin per annum f EBITDA frm synergies and business imprvements The cmbined grup will have greater financial scale and a strng balance sheet psitin The cmbinatin will als ffer significant benefits t stakehlders, including the Australian racing industry, business partners and custmers On 20 June 2017, the Australian Cmpetitin Tribunal (Tribunal) granted authrisatin fr the cmbinatin t prceed, cnditinal n Tabcrp divesting Odyssey Gaming Services (Odyssey) On 18 April 2017, Tabcrp annunced it had agreed t divest Odyssey as part f the cmpetitin apprvals prcess The full Federal Curt will hear a judicial review f the Tribunal s decisin in late August 2017, fllwing applicatins ldged separately by the ACCC and CrwnBet in mid July 2017 Shuld the matter be referred back t the Tribunal, it will review its determinatin having regard t the Federal Curt s decisin, rather than restarting prceedings and reassessing the facts The ACCC has withdrawn its applicatin fr a stay r injunctin t prevent the merger cmpleting until the decisin f the Full Federal Curt is handed dwn Scheme dcumentatin expected t be released in September 2017, with a meeting f Tatts sharehlders t vte n the cmbinatin expected t be held in Octber 2017 Tabcrp and Tatts expect implementatin t take place in the last quarter f

15 CONCLUSION FY17 was a strategically imprtant year Annunced and significantly prgressed the cmbinatin with Tatts Grup, which is expected t cmplete by the end f 2017 Acquired Intecq, a cmplementary gaming systems and mnitring business Launched ur UK start-up, Sun Bets Cntinued t invest in and embed scalable risk management and regulatry cmpliance capability; settled the AUSTRAC civil prceedings Onging digital expansin; strengthened retail partnerships thrugh digital cmmissins mdel and launch f Ken digital play FY18 fcus Cmplete prpsed cmbinatin with Tatts Grup in the last quarter f 2017, integratin planning well advanced Cntinue t drive perfrmance in ur cre businesses Wagering & Media build n mmentum in Digital and Fixed Odds by delivering differentiated prducts and custmer experiences acrss all channels, Luxbet strategic review and Trackside initiatives Gaming Services fcus n cntinued perfrmance fr venue partners, expansin pprtunities, and the delivery f remaining Intecq synergies Ken drive grwth frm recent investments in prduct, digital and retail custmer experience UK start-up, Sun Bets drive imprved perfrmance Disciplined management f perating expenses and capital expenditure 15

16 16 APPENDICES

17 APPENDICES 1. Wagering & Media: Financial data 2. Wagering & Media: Revenues by state and prduct 3. Wagering & Media: TAB Fixed Odds turnver and yields 4. Balance sheet 5. Cashflw 17

18 1. WAGERING & MEDIA: FINANCIAL DATA $m FY17 FY16 Change Revenues 1, , % Taxes, levies, cmmissins and fees (1,122.2) (1,112.7) 0.9% Variable cntributin (1.2%) Operating expenses (400.8) (378.2) 6.0% EBITDA (8.4%) D&A (122.0) (129.9) (6.1%) EBIT (9.6%) Ratis FY17 FY16 Change Variable cntributin / Revenue 40.1% 40.6% (0.5%) Opex / Revenue 21.4% 20.2% 1.2% EBIT / Revenue 12.2% 13.5% (1.3%) Returns t the Racing Industry FY17 FY16 Change Victria (1.9%) New Suth Wales % Race Field Fees % Media & Internatinal % Ttal Returns t the Racing Industry % 18 Nte: Wagering & Media results have been prepared n a statutry basis and exclude the impact f the UK start-up, Sun Bets, which has been treated as a significant item in FY17

19 2. WAGERING & MEDIA: REVENUES BY STATE AND PRODUCT NSW Change Vic Change ACT Change Ttal Change $m FY17 n pcp FY17 n pcp FY17 n pcp FY17 n pcp Racing % % % 1, % Sprts % % % % Trackside 36.1 (15.7%) 22.2 (14.3%) % 59.4 (14.5%) Media % Luxbet 38.7 (20.7%) Other % Revenues 1,072.7 (0.5%) % % 1, % Ntes: 19 - NSW and ACT represents 100% f revenue - Vic includes Tabcrp s 50% prprtinal share f the JV

20 3. WAGERING & MEDIA: TAB FIXED ODDS T/O AND YIELDS Turnver - Racing ($m) Yield - Racing 2,000 FY15 YY grwth: 22.1% FY16 YY grwth: 21.7% FY17 YY grwth: 20.6% 20% 16.1% 15.4% 15.5% 1,600 15% 1,200 10% % 0 1H15 2H15 1H16 2H16 1H17 2H17 0% 1H15 2H15 1H16 2H16 1H17 2H17 Turnver - Sprts ($m) Yield - Sprts 1, FY15 YY grwth: 13.5% FY16 YY grwth: 7.4% FY17 YY grwth: 2.3% 20% 14.8% 13.3% 13.2% % % % H15 2H15 1H16 2H16 1H17 2H17 0% 1H15 2H15 1H16 2H16 1H17 2H17 Nte: TAB Fixed Odds Sprts excludes FtyTAB 20

21 4. BALANCE SHEET $m Jun 17 Jun 16 Change Ttal current assets >100% Licences (6.6%) Other intangible assets 2, , % Prperty, plant and equipment % Other nn current assets (10.2%) Ttal assets 3, , % Ttal liabilities 2, , % Sharehlders funds 1, ,688.1 (12.1%) Net debt (reprted) 1, % Net debt (ecnmic) 1 1, % Shares n issue (m) % Ratis 1 Grss debt / EBITDA (x) 3.1* 1.9 EBIT / Net interest (x) Return n Invested Capital (%) 12.5% 13.3% *Grss debt / EBITDA is 2.5x including the mark-t-market value f the cash-settled equity swap 3 21 Ntes: 1 Debt includes USPP debt at the A$ principal repayable under crss currency swaps 2 EBIT excludes amrtisatin f the Victrian Wagering and Betting Licence 3 The cash-settled equity swap is reflected in the Balance Sheet as a current asset ($293.6m) and the related funding ($325.0m) is included in debt, the mark-t-market lss is recgnised in Significant Items

22 5. CASHFLOW $m FY17 FY16 Change Net perating cash flws (21.6%) Net interest paid (75.1) (68.4) 9.8% Incme tax (paid) / refunded (61.5) 11.4 (>100%) Payments fr PP&E and intangibles (197.4) (183.1) 7.8% Sub-ttal (88.5%) Ordinary dividends paid (194.5) (173.3) 12.2% Payment fr cash-settled equity swap (317.5) - (100.0%) Intecq acquisitin (113.2) - (100.0%) Other >100% Net cash flw (596.4) 46.0 (>100%) Net debt at beginning f perid (3.4%) Nn cash mvements (6.8) 12.7 (>100%) Net debt at end f perid 1, % FY17 net perating flws includes cash utflws f $159.8m relating t significant items (FY16 cash utflws f $36.2m relating t significant items) 22

23 DISCLAIMER This Presentatin cntains summary infrmatin abut the current activities f Tabcrp Hldings Limited (Tabcrp) and its subsidiaries (Tabcrp Grup). It shuld be read in cnjunctin with the Tabcrp Grup s ther peridic and cntinuus disclsure annuncements ldged with the Australian Securities Exchange (ASX), which are available at N member f the Tabcrp Grup gives any warranties in relatin t the statements r infrmatin cntained in this Presentatin. The infrmatin cntained in this Presentatin is f a general nature and has been prepared by Tabcrp in gd faith and with due care but n representatin r warranty, express r implied, is prvided in relatin t the accuracy r cmpleteness f the infrmatin. This Presentatin is fr infrmatin purpses nly and is nt a prspectus, prduct disclsure statement r ther disclsure r ffering dcument under Australian r any ther law. This Presentatin des nt cnstitute an ffer, invitatin r recmmendatin t subscribe fr r purchase any security and neither this Presentatin nr anything cntained in it shall frm the basis f any cntract r cmmitment. This Presentatin is nt a recmmendatin t acquire Tabcrp shares. The infrmatin prvided in this Presentatin is nt financial prduct advice and has been prepared withut taking int accunt any recipient's investment bjectives, financial circumstances r particular needs, and shuld nt be cnsidered t be cmprehensive r t cmprise all the infrmatin which recipients may require in rder t make an investment decisin regarding Tabcrp shares. All dllar values are in Australian dllars (A$) unless therwise stated. Neither Tabcrp nr any ther persn warrants r guarantees the future perfrmance f Tabcrp shares r any return n any investment made in Tabcrp shares. This Presentatin may cntain certain 'frward-lking statements'. The wrds 'anticipate', 'believe', 'expect', 'prject', 'frecast', 'estimate', 'likely', 'intend', 'shuld', 'culd', 'may', 'target', 'plan' and ther similar expressins are intended t identify frward-lking statements. Indicatins f, and guidance n, financial psitin and perfrmance are als frward-lking statements. Any frecasts r ther frward lking statements cntained in this Presentatin are subject t knwn and unknwn risks and uncertainties and may invlve significant elements f subjective judgement and assumptins as t future events which may r may nt be crrect. Such frward-lking statements are nt guarantees f future perfrmance and invlve knwn and unknwn risks, uncertainties and ther factrs, many f which are beynd the cntrl f Tabcrp, that may cause actual results t differ materially frm thse expressed r implied in such statements. There can be n assurance that actual utcmes will nt differ materially frm these statements. Yu are cautined nt t place undue reliance n frward lking statements. Except as required by law r regulatin (including the ASX Listing Rules), Tabcrp undertakes n bligatin t update these frward-lking statements. Past perfrmance infrmatin given in this Presentatin is given fr illustrative purpses nly and shuld nt be relied upn as (and is nt) an indicatin f future perfrmance. 23

24 TO ADVANCE THE WAY WE PLAY