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ANNUAL REPORT
2020
CONTENTS
Operating and financial review
About Tabcorp
Our purpose and vision
Strategic pillars and foundations
Chairman’s message
Managing Director’s message
FY20 overview
Future priorities
FY20 financial performance
Benefits for our stakeholders
Lotteries and Keno business
Wagering and Media business
Gaming Services business
Corporate responsibility
Governance
Board of Directors
Corporate governance
Executive Leadership Team
Directors’ Report
Remuneration Report
Financial Report
Independent auditor’s report
At the back
Five year review
Shareholder information
Company directory
Indicative key dates
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Tabcorp Holdings Limited ABN 66 063 780 709
About the Annual Report
Tabcorp Holdings Limited (Company
or Tabcorp) publishes its Annual Report
as a single document and on the day
it releases its full year results, which
provides information to stakeholders
in a timely and efficient manner. This
Annual Report relates to the operations
of Tabcorp and the consolidated entity
comprising Tabcorp and its subsidiaries
(Group or Tabcorp Group) and the
Group’s interests in joint arrangements
and associates in respect of the
financial year ended 30 June 2020
(FY20). A copy of the Annual Report
is available, free of charge, on request.
Current and past Annual Reports are
available from the Company’s website
at www.tabcorp.com.au.
Elect not to receive a hard copy
Shareholders can elect not to receive
a hard copy Annual Report by
updating their communications
preferences with the share
registry – go online at
linkmarketservices.com.au
or call 1300 665 661.
Notice of meeting
The Annual General Meeting
of Tabcorp Holdings Limited
will commence at 10.00am (AEDT)
on Tuesday, 20 October 2020.
Corporate Governance Statement
Tabcorp’s 2020 Corporate
Governance Statement is available
from the Company’s website at
www.tabcorp.com.au.
ABOUT TABCORP
› The Tabcorp Group is a world-class diversified gambling
entertainment group.
› We operate three market leading businesses:
– Lotteries and Keno
– Wagering and Media
– Gaming Services
› We manage iconic Australian brands which ignite passion
and excitement in millions of Australians.
› Our goal is to build a sustainable future for gambling
entertainment while making a positive impact for our
stakeholders and community.
› Each year our operations return billions of dollars to the
Australian community, the racing industry and venue partners
including newsagents, hotels, clubs and TAB agents.
› We are an Australian based company with supporting operations
in the Isle of Man (a wagering pooling hub) and in Las Vegas, USA
(a vision distribution hub).
®
®
®
$5.2 billion
$6.0 billion
$4.5 billion
3.7 million+
9,000+
Revenues
Net assets
Benefits to
stakeholders
Active registered
customers
Venues, the largest
Australian retail footprint
5,000+
Employees
(i) For FY20 or as at 30 June 2020, as applicable.
01
OPERATING & FINANCIAL REVIEWTabcorp Annual Report 2020
Tabcorp’s brands are trusted by millions of Australians to provide moments of excitement every day. We act with integrity
and are committed to creating value for our stakeholders in a responsible and sustainable manner. We do this by delivering
on our strategic pillars, modelling our values in our behaviours, and leveraging our strong foundations.
02
Tabcorp Annual Report 2020
F
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Delivering our
vision and purpose
in a sustainable
manner
We support our people to model our values and deliver
Excitement with Integrity to our customers.
We work collaboratively with all our stakeholders to
achieve success in a responsible and enjoyable manner.
We also face challenges together, and through this year’s
bushfires and COVID-19 pandemic we stood side-by-side
with our stakeholders to share the burden and navigate
the way forward.
Through the strength of our business model and our
enduring stakeholder partnerships we aim to emerge
from COVID-19 stronger, together.
Tabcorp Annual Report 2020
03
CHAIRMAN’S MESSAGE
“Tabcorp is well on the way to setting the standard for responsibility in the gambling
sector and today, our Company is the trusted choice for customers, industry partners
and government.”
Paula Dwyer
Chairman
The 2020 financial year is defined by the
worldwide onset of COVID-19, the pandemic
that upended our way of life and had a
significant impact on all enterprises,
including Tabcorp.
From the outset, Tabcorp’s priority has been
ensuring the safety and wellbeing of our
people and supporting our business
partners and the community generally.
Performance in review
Tabcorp delivered a net profit after tax and
before significant items of $271m in FY20.
After significant items, which included
$1.09 billion in non-cash goodwill impairment
charges relating to the Wagering and Media
and Gaming Services businesses, Tabcorp
recorded a statutory net loss after tax
of $870m.
Our teams adapted to new ways of working
quickly and professionally and I would like
to acknowledge their efforts to maintain
operations so that Australians could
continue to play the lottery games they
love or watch and bet on racing or their
favourite sport.
Our business partners, including the racing
industry bodies and major sporting codes
across Australia, also deserve credit for
proving their ability to operate in a
COVIDSafe way.
Our Lotteries and Keno business, which
accounts for more than half the Group’s
revenues and almost 75% of EBIT, largely
traded unaffected and delivered another
strong result in FY20. However, our Gaming
Services, Wagering and Media, and Keno
operations were substantially impacted by
mandated COVID-19 related retail closures
between March and June 2020.
The Group sought to mitigate the financial
and earnings impacts of COVID-19 on our
businesses through a range of actions
including securing our financial liquidity
facilities, reductions in operating and
capital expenditure, and amending various
commercial arrangements.
In May and June, we secured agreement
from bank lenders under our Syndicated
Facility Agreement and US Private
Placement noteholders for waivers and
adjustments of leverage and interest cover
covenants in relation to the next two testing
dates (being 30 June 2020 and 31 December
2020). We acknowledge our syndicate banks
and US noteholders for their support of
Tabcorp during this challenging period.
As part of securing this relief from our
covenants, the Board resolved not to pay a
final dividend for FY20 in order to preserve
the Group’s liquidity in this challenging and
uncertain period. An interim dividend of 11
cents per share, fully franked, was paid to
shareholders in March 2020.
Notwithstanding the significant disruption
from COVID-19, our businesses generated
more than $2 billion in taxes and levies
to state and territory governments.
This, together with our employment
of approximately 5,000 team members
and the strength of approximately our
relationships with our industry partners,
once again underscores the important
role Tabcorp plays in our community well
beyond delivering gambling entertainment
experiences to millions of Australians.
Board changes
During the year Tabcorp announced the
appointment of two new Directors, Anne
Brennan and David Gallop as part of the
planned Board succession process. After
initially serving as observers, Ms Brennan
and Mr Gallop were formally appointed to
the Board in July 2020 following the receipt
of regulatory and ministerial approvals.
04
Tabcorp Annual Report 2020
Ms Brennan and Mr Gallop bring
complementary skills to the Tabcorp Board
and we welcome their contribution.
In February, Ziggy Switkowski retired as a
Director. Dr Switkowski has been a valued
contributor to Tabcorp, and we wish him well
in retirement.
Vickki McFadden has also advised of her
intention to retire from the Tabcorp Board
at the 2020 Annual General Meeting. Since
joining the Board in 2017, Ms McFadden has
served as Chairman of the Audit Committee.
She will be succeeded in that role by Ms
Brennan. We thank Ms McFadden for her
contribution.
Chairman and Managing
Director succession
With the integration of Tabcorp and Tatts
now largely complete, and as flagged last
year, I will retire from the Board at the end
of 2020. Last month we announced that
Steven Gregg will succeed me as Chairman.
Mr Gregg has served as a Director of
Tabcorp since 2012. He has deep
commercial experience across a range
of industries and knows Tabcorp well.
He is currently Chairman of the People
and Remuneration Committee and his
appointment ensures continuity of
leadership and an orderly transition.
The Company also announced that David
Attenborough has advised of his intention
to retire as our Managing Director and
Chief Executive Officer in the first half of
calendar year 2021. A global search for
Mr Attenborough’s successor is underway.
Mr Attenborough has been an inspiring
CEO of Tabcorp and he has courageously
navigated through enormous complexity
and multiple Company defining events
which have arisen throughout his tenure.
I would like to personally thank him for his
hard work, professionalism and support
over many years.
In closing
It has been a privilege to serve as Chairman
of Tabcorp following the demerger of
Tabcorp’s casino assets in 2011. In the nine
years since, Tabcorp has delivered a total
shareholder return of 149% versus the
S&P/ASX200 Accumulation Index of 127%.
The recent actions by the Company have
further strengthened the operations and
enhanced our ability to tackle future
opportunities and challenges with
confidence.
While there have been many highlights,
I would like to call out two. The combination
of Tabcorp and Tatts has redefined our
Company. This was a highly complex
transaction but we persevered through the
twists and turns over a 12-month period to
deliver an excellent outcome for Tabcorp
shareholders at the end of 2017. The
integration of the two businesses is
substantially complete and pleasingly,
the Company now has a resilient, diversified
portfolio of assets that positions the
Group well for the future.
The second highlight is Tabcorp’s ongoing
commitment to responsible gambling,
culminating in the decision in 2018 to
define its vision as ‘The Trusted Gambling
Entertainment Company’ which comes
alive in our purpose ‘Excitement with
Integrity’. In this sector it is not enough to
be commercially successful; to sustain the
Company and the industry there must be
a broader commitment to responsibly
address the social impact of gambling.
At Tabcorp our vision has informed
decision making and investment across the
enterprise – we have invested in enhanced
risk and compliance systems, capability and
training for our people and partners; we
continue to invest in and further develop our
responsible gambling initiatives; and we are
committed to playing a leadership role in
working with our racing partners to ensure
the welfare of animals is prioritised. I believe
these capabilities are essential for gambling
companies moving forward, as community
standards strengthen and expectations
increase. Pleasingly, because of the
significant capital investment we have
incurred, Tabcorp is well on the way to
setting the standard for responsibility in the
gambling sector and today, our Company is
the trusted choice for customers, industry
partners and government.
partners, customers and the broader
community will continue to be at the core
of our response. We remain focused on
delivering the best possible gambling
entertainment experiences while continuing
to carefully manage the financial and
earnings impact of the pandemic.
We have announced a 1 for 11 underwritten
pro-rata accelerated renounceable
entitlement offer at a price of $3.25 per
new share to raise gross proceeds of
approximately $600m. These funds will be
used to pay down existing debt facilities and
strengthen the balance sheet to provide
flexibility in these uncertain times.
On behalf of the Board, I would like to thank
the Tabcorp team for their significant efforts
over the course of FY20 and especially in
navigating the Group through these very
challenging times.
Finally, I would like to thank our shareholders
for your support of Tabcorp. I look forward
to updating you next at our Annual General
Meeting on 20 October 2020.
At the time of writing, COVID-19 continues
to present major health and economic
challenges to the community, particularly
in Victoria. The wellbeing of our people,
Paula Dwyer
Chairman
Tabcorp Annual Report 2020
05
OPERATING & FINANCIAL REVIEW MANAGING DIRECTOR’S MESSAGE
“There continues to be uncertainty associated with COVID-19 in terms of both the severity
and duration of impact. However, the Group performance is underpinned by diversified
earnings streams, strong cash flow conversion and a strong capital base which position
it well to deliver in a post COVID-19 environment.”
David Attenborough
Managing Director and Chief Executive Officer
FY20 was a year in which we continued to
invest in the digital transformation of our
businesses and substantially completed the
Tabcorp-Tatts integration. However, the
second half of FY20 was severely disrupted
by the COVID-19 pandemic. Like many
businesses around the world, COVID-19 was
very challenging for our people, partners
and customers, and materially impacted our
financial results.
I am proud of the way our Group responded
to these challenges by ensuring the safety
and wellbeing of our people, supporting our
partners and maintaining the customer
experience. We also managed the financial
impact on the Group by taking action to
reduce costs, preserve cash and ensure we
have strength and flexibility in our balance
sheet. We have also commenced a three-
year, enterprise-wide optimisation program.
Group revenue in FY20 was $5,224m, down
4.8% and EBITDA before significant items
was $995m, down 11.5%. After incurring
non-cash impairment charges of $1,090m
relating to the Gaming Services and
Wagering and Media businesses and other
significant items totalling $51m, the Group
recorded a statutory net loss after tax
of $870m.
Lotteries and Keno
Lotteries and Keno is the biggest contributor
to Group earnings. Revenues were $2,917m,
up 1.8%, and EBITDA was $542m, up 5.7%.
The strong performance was achieved
despite cycling 49 OzLotto and Powerball
jackpots of $15m or more in FY19 versus
39 in FY20.
better customer experiences and deeper
alignment with our retail partners.
An extra 400,000 Australians became
active registered Lotteries players during
FY20, taking the total to 3.7 million, and
the majority of the lotteries retail outlets
continued trading throughout the COVID-19
restrictions.
Despite strong digital performance, Keno
revenues declined 14.3%, largely due to the
shutdown of clubs and hotels in its markets.
Wagering and Media
Wagering and Media revenues were
$2,084m, down 10.1%, and EBITDA
was $371m, down 19.5%.
This Lotteries result reflected investments
in our game portfolio and our digital and
retail channels, which together delivered
The Wagering and Media business
continued to invest in its digital
transformation and substantially
completed the integration of the UBET
business. The migration of UBET customers
to the TAB digital platform now gives them
access to a more attractive portfolio of
products and services.
However, Wagering and Media was heavily
impacted by COVID-19, with enforced
closures of retail operations across all
states and territories at different times from
23 March 2020. The pandemic is possibly
accelerating the structural shift that we
have been seeing for some time from retail
to digital wagering.
The business made progress in lifting its
competitiveness and differentiating the
customer experience. The TAB brand was
modernised, centred around the theme of
‘Long May We Play’, while data investments
delivered more personalised experiences
for customers.
06
Tabcorp Annual Report 2020
The signing of exclusive Australian wagering
and content partnerships with the major US
sports such as the NFL, MLB and NBA was
an important element of our strategy to
grow in sport, especially in the fast growing
US category.
Continued investment in Sky Racing Active
and securing Queensland racing’s media
rights for ten years in July 2020 cements
Sky Racing’s role as the pre-eminent racing
media platform into the future.
Gaming Services
Gaming Services revenues were $221m,
down 27.3%, and EBITDA was $84m,
down 42.5%.
An operational review is being implemented
to deliver a simplified operating structure
and reduce costs. The strategic review,
which was announced in February 2020,
was paused because of COVID-19.
Supporting our venue
partners
The COVID-19 restrictions heavily impacted
our licensed venue and TAB agency
partners. In response, we have waived more
than $100m in fees. We are continuing to
work with all our partners to ensure we
can emerge strongly post COVID-19.
Integration and shifting
to optimisation
It was also heavily impacted by the
temporary closure of venues from March
2020, which re-opened in June 2020 in all
states except Victoria under strict social
distancing protocols. Gaming Services
revenues were also impacted in the first half
by contract expirations, contract extensions
at lower daily rates, reduced project work
and the non-renewal of a Telstra service
contract.
The integration delivered $86m in EBITDA
from cost synergies in FY20 and is on track
to deliver $95m in FY21. Due to the
significant COVID-19 impacts on Tabcorp’s
revenue base, revenue synergies
measurement is now not meaningful.
However, delivering the final business
improvement initiatives, such as the retail
uplift in the ex-UBET states, remains a
key priority.
Gaming Services holds a unique position
as the services partner of choice for the
gaming industry. It has a technology
platform that connects suppliers, regulators
and venues and which will generate value
into the future.
The Group has also commenced a three-
year, enterprise-wide optimisation program
aiming to deliver significant cost savings
and enhanced operational capability.
Our people
I would like to publicly acknowledge the
extraordinary job done by the Tabcorp team
to maintain COVIDSafe continuity of service,
working side-by-side with our venues, the
racing industry and other business partners.
commitment to our vision of making
Tabcorp ‘The Trusted Gambling
Entertainment Company’. I would also like
to acknowledge the Chairman and Board’s
unrelenting focus on putting integrity at the
heart of how we deal with our people, our
partners and our customers.
During FY20 we welcomed Paul Carew
(Chief Operating Officer – Gaming Services),
Adam Newman (Chief Financial Officer),
Françoise Russo (Chief Information Officer)
and Michelle Williams (Chief People Officer)
to the Executive Leadership Team. I would
also like to thank executives who departed
during FY20 – Merryl Dooley, Damien
Johnston, Frank Makryllos and Mandy Ross
– for their extensive contribution to Tabcorp.
Conclusion
There continues to be uncertainty
associated with COVID-19 in terms of
both the severity and duration of impact.
However, the Group performance is
underpinned by diversified earnings
streams, strong cash flow conversion and
a strong capital base which position it well
to deliver in a post COVID-19 environment.
Managing Director and
CEO succession
With Tabcorp and Tatts integration
substantially complete and the Chairman
retiring at the end of 2020, it is also the right
time to appoint a new Managing Director
and CEO. A global search has commenced
and I plan to retire once the new CEO is on
board which is expected in the first half of
the 2021 calendar year. Until then I am
totally committed to steering Tabcorp
through the pandemic and ensuring our
businesses are in the best possible position
for the future.
It has been a privilege to serve as Tabcorp’s
CEO and I would like to thank the Chairman,
Paula Dwyer, for her strength and
We are focused in FY21 on continuing
to expand the digital opportunity across
Lotteries, Keno and Wagering and on
unlocking the value of a more competitive
TAB.
Our priority is to navigate the pandemic
by executing strategies that support our
people, partners and customers, while
maximising value for our shareholders.
David R H Attenborough
Managing Director and
Chief Executive Officer
(i) Earnings before interest, taxation, depreciation and amortisation (EBITDA) is non-IFRS financial information.
Tabcorp Annual Report 2020
07
OPERATING & FINANCIAL REVIEW FY20 OVERVIEW
› Group revenue of $5,224m (down 4.8%), statutory net loss after tax of $870m includes a non-cash goodwill impairment
charge of $1,090m relating to the Wagering and Media and Gaming Services businesses, NPAT before significant items(i)
of $271m (down 31.6%):
– Strong Lotteries performance – like-for-like sales up approximately 15–30% during COVID-19 restrictions
– Wagering and Media, Keno and Gaming Services heavily impacted by COVID-19 retail closures in 2H20
– Competitive intensity and structural change also impacted Wagering and Media
› No FY20 final dividend; interim dividend of 11.0 cents per share fully franked paid in March 2020
› Tabcorp proactively responded to the COVID-19 pandemic with a clear set of actions to:
– Prioritise the safety and wellbeing of our people, partners and customers
– Maintain continuity of operations
– Control costs, preserve cash and maximise financial flexibility
› Tabcorp-Tatts integration substantially complete:
– Migration of UBET account customers to TAB digital platform was completed post 30 June 2020
– On track to deliver $95m in EBITDA(ii) from cost synergies in FY21 (FY20: $86m)
– Measurement of revenue synergies not meaningful due to the effects of COVID-19 on Tabcorp’s revenue base
– One-off costs to 30 June 2020 of $103m pre tax
(i) Excludes discontinued operations and significant items. Significant items after tax in FY20 of $1,141m comprise impairments of goodwill relating to Wagering and Media $905m and Gaming Services $185m, asset impairments and onerous
contract $19m, Tatts Group combination implementation costs $18m and Racing Queensland arrangements $19m, partly offset by the benefit from ACTTAB point of consumption tax refund $5m.
(ii) Earnings before interest, taxation, depreciation and amortisation (EBITDA) is non-IFRS financial information.
08
Tabcorp Annual Report 2020
FUTURE PRIORITIES
› There is continued significant uncertainty regarding the severity and duration of COVID-19 impacts.
› Continuing to support our people, partners and customers through COVID-19 remains our top priority.
› We have a clear focus on navigating COVID-19 while executing strategies that are expected
to create value for our shareholders:
– Expand the digital opportunity across Lotteries and Keno, and Wagering and Media
– Complete retail integration and drive performance improvement with a unified TAB offer
– Implement operational review of Gaming Services
– Enterprise-wide optimisation program designed to deliver significant cost savings and enhanced
operational capability
› We have announced a 1 for 11 underwritten pro-rata accelerated renounceable entitlement offer
with retail entitlements trading at a price of $3.25 per new share to raise gross proceeds of approximately
$600m to strengthen the balance sheet in uncertain times.
Refer to pages 14 to 18 for further details about the future priorities for each business unit.
Tabcorp Annual Report 2020
09
OPERATING & FINANCIAL REVIEW
FY20 FINANCIAL PERFORMANCE
Revenues
$m
5,488
5,224
EBIT before goodwill
impairment
$m
740
NPAT
$m
361
Earnings per share before
goodwill impairment(iv)
Cents per share
Dividends per share
Cents per share (fully franked)
18.4
22.0
516
10.9
11.0
FY19
FY20
FY19
FY20
Segment
revenues
$m
2,917
2,084
Segment profit before
interest and tax(ii)
$m
442
(870)
FY19
FY20
Group results
For the year ended 30 June
Revenues
Taxes, levies, commission and fees
Operating expenses
Depreciation and amortisation
Impairment – other
EBIT before goodwill impairment
Impairment – goodwill
EBIT
NPAT before discontinued operations
Statutory NPAT
NPAT before significant items(i)(ii)
FY19
FY20
FY19
FY20
FY20
$m
5,224
(3,447)
(840)
(378)
(43)
516
(1,090)
(574)
(870)
(870)
271
(42.9)
10.9
11.0
FY19(iii)
$m
5,488
(3,507)
(893)
(352)
4
740
-
740
371
361
396
18.4
18.4
22.0
Change
%
(4.8)
(1.7)
(5.9)
7.4
>100
(30.3)
>100
(>100)
(>100)
(>100)
(31.6)
(>100)
(40.8)
(50.0)
221
175
EPS – cents per share
EPS before goodwill impairment(i) – cents per share
DPS – cents per share (fully franked)
(14)
(i) Results from continuing operations.
Lotteries
and Keno
Wagering
and Media
Gaming
Services
10
(ii) Excludes discontinued operations and significant items. Significant items after tax in FY20 of $1,141m comprise impairments of goodwill
relating to Wagering and Media $905m and Gaming Services $185m, asset impairments and onerous contract $19m, Tatts Group combination
implementation costs $18m and Racing Queensland arrangements $19m, partly offset by the benefit from ACTTAB point of consumption tax
refund $5m.
(iii) FY19 comparative information has been restated as a result of the Group adopting AASB 16 Leases.
(iv) Refer to note A2 of the Financial Report.
Tabcorp Annual Report 2020
Review of FY20 results
The financial results of the Tabcorp
Group for the financial year ended
30 June 2020 (FY20) relate to the
Tabcorp Group’s operations, which
comprise its three businesses of:
extraordinary job to maintain
COVID-safe continuity of service.
This has given Australians the
chance to enjoy, watch and bet on
racing and the games they love,
from their home or, as restrictions
allow, their local venue.
half by COVID-19 enforced closures
of hotels and clubs.
Refer to pages 14 to 18 for further
details about the performance
of each business.
Capital management
The Group undertook numerous
actions to preserve liquidity and
ensure strength and flexibility
in our balance sheet.
The Tabcorp-Tatts integration is
substantially complete, with the
migration of UBET customers
to the TAB digital platform
completed in July 2020. The
integration is on track to deliver
$95m in EBITDA from cost
synergies in FY21 (FY20: $86m).
The COVID-19 impacts on Tabcorp’s
revenue base means that
measurement of revenue synergies
is now not meaningful. Total one-off
integration costs incurred to
30 June 2020 are $103m (pre-tax)
and total implementation costs
are still expected to be $135m
(pre-tax).
With the integration program
substantially complete, the Group
has commenced a three-year
enterprise-wide optimisation
program to deliver significant cost
savings and enhanced operational
capability. Key focus areas include:
operating model changes; process
simplification and re-design; data
and digitisation improvements; and
maximising value from our vendor
spend and property footprint.
In May and June 2020, Tabcorp
secured agreement from its bank
lenders under its Syndicated
Facility Agreement (representing
facilities of A$2.2 billion at that
time) and from its US Private
Placement holders (representing
fully hedged debt equivalent to
A$2.1 billion at that time) for relief
from certain covenants. Among
other things, the relief took the
form of waivers and adjustments
to leverage and interest cover
covenants in relation to the
30 June 2020 and 31 December
2020 testing dates.
As part of securing covenant relief,
the Tabcorp Board resolved in May
2020 not to pay a final dividend
in relation to FY20. While we
acknowledge the importance of
dividends to shareholders, it was
important we took action to
preserve the Group’s liquidity in a
challenging and uncertain period.
An FY20 interim dividend of
11 cents per share fully franked
was paid to shareholders in
March 2020.
• Lotteries and Keno
• Wagering and Media
• Gaming Services
FY20 Group revenues were
$5,224m, down 4.8%. The Group
recorded a statutory net loss after
tax of $870m after incurring a
non-cash impairment charge of
$1,090m(i) relating to the Wagering
and Media and Gaming Services
businesses and other significant
items totalling $51m(i). NPAT from
continuing operations before
significant items(i) was $271m,
down 31.6%.
The COVID-19 pandemic has been
very challenging for Tabcorp’s
people, partners and customers,
and materially impacted our FY20
results.
COVID-19 restrictions meant that
hotels, clubs and TAB agencies
were closed for significant periods
of time during FY20 which has
heavily impacted our Wagering and
Media, Gaming Services and
Keno operations. We continue to
support our venue partners having
waived more than $100m in fees to
date, and are focused on ensuring
that together we emerge strongly in
the post COVID-19 environment.
Our people and partners, including
the racing industry and major
sports leagues, have done an
The Group sought to mitigate the
financial and earnings impacts of
COVID-19 on our business through
a range of actions including
reducing operating and capital
expenditure, securing government
support for the deferral of certain
state taxes, standing down some
groups of employees, reducing
working hours, accessing
the Federal Government’s
JobKeeper scheme, freezing
remuneration increases and not
awarding any bonuses in respect
of FY20.
Lotteries and Keno delivered strong
FY20 performance, driven by its
investment in digital and retail
channels, enhancements to the
game portfolio and growth in
registered players.
Wagering and Media continued to
invest in its digital transformation
while substantially completing the
integration of the UBET business.
However it was heavily impacted by
COVID-19 in the second half,
as well as ongoing increased digital
competition and decline in the retail
channel.
Gaming Services was impacted in
the first half by contract expiries,
the non-renewal of a Telstra service
contract and contract extensions at
lower daily rates, and in the second
The Group has also revised its
capital management policies,
including a reduction in its target
leverage policy to 2.5-3.0x Gross
Debt/EBITDA(ii) (from 3.0-3.5x
previously), as well as a reduction
in its target dividend payout ratio to
70%–80% of NPAT (before
significant items)(iv) on the
resumption of dividends.
On 19 August 2020, the Group
announced a 1 for 11 underwritten
pro-rata accelerated renounceable
entitlement offer with retail
entitlements trading at a price of
$3.25 per new share to raise gross
proceeds of approximately $600m.
The table below shows the
dividends paid by the Company
since the end of the previous
financial year. Further information
regarding dividends may be found
in note A3 to the Financial Report.
2020 interim dividend of 11
cents(iii) paid on 18 March 2020
and totalled $223m.
2019 final dividend of 11 cents(iii)
paid on 20 September 2019
and totalled $222m.
(i) Significant items after tax in FY20 of $1,141m comprise impairments of goodwill relating to Wagering and Media $905m and Gaming Services
$185m, asset impairments and onerous contract $19m, Tatts Group combination implementation costs $18m and Racing Queensland
arrangements $19m, partly offset by the benefit from ACTTAB point of consumption tax refund $5m.
(ii) EBITDA is non-IFRS financial information.
(iii) Amount per share fully franked.
(iv) NPAT under Tabcorp's revised target dividend payout ratio will no longer be adjusted for the Victorian wagering and betting licence and
Purchase Price Accounting, as it was historically.
11
OPERATING & FINANCIAL REVIEWTabcorp Annual Report 2020
BENEFITS FOR OUR STAKEHOLDERS
Tabcorp’s iconic Australian brands provide entertainment enjoyed by millions of Australians, and our business model
generates significant economic benefits for our stakeholders.
Almost 70% of Tabcorp’s FY20 revenue(ii) was returned to governments, racing industry and retail partners. These
contributions support essential government-funded community services and is a significant source of funding for our
industry partners.
We have also stood by our stakeholders and supported them through the COVID-19 pandemic and bushfire crisis.
We provided fee relief for venues, implemented health and safety measures, delivered campaigns to engage with
customers, and contributed $12.6m in voluntary community funding through donations, unclaimed prize money,
in-kind giving and other support(i).
$1.0b
State and Federal
Government taxes
(Lottery, wagering and
Keno taxes, GST, and
income taxes paid
and payable)
$2.2b
$4.5b(ii)
of total benefits
for our stakeholders
generated by Tabcorp’s
businesses in FY20
$0.7b
$0.4b
$0.2b
(i) Refer to Community section on page 23 for further details.
(ii) Total includes 100% of Victorian Racing Industry joint venture interest and 100% of Keno NSW interest.
Racing industry
(Payments to state and
territory racing industry
bodies)
Retail partners
(Commissions to hotels,
clubs, TAB agents,
newsagents and lottery
retailers)
Employee costs
(Salaries, training and
development)
Shareholders
(Dividends paid
and payable)
12
Tabcorp Annual Report 2020
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Supporting
Australian
medical
research
Tabcorp’s businesses have a long track
record of supporting stakeholders and
contributing funding to support medical
research, health infrastructure, and many
other community services.
Our Lotteries business accessed
unclaimed prize money to donate $1m to
the University of Queensland’s School of
Chemistry and Molecular Biosciences
(pictured) to help accelerate research into
a COVID-19 vaccine, $600,000 to the Zero
Childhood Cancer Program to support a
national clinical trial, and $500,000 to
Brisbane’s Mater Hospital to investigate
the impact of COVID-19 on expectant
parents and unborn babies.
Tabcorp Annual Report 2020
13
LOTTERIES AND KENO BUSINESS
Licensee Brands
Game Brands
®
®
®
®
®
®
®
®
®
®
®
®
®
®
®
®
®
®
Review of FY20 results
Lotteries and Keno revenues were
$2,917m, up 1.8%, and EBIT was
$442m, up 3.8%.
The strong performance was
achieved despite cycling 49 OzLotto
and Powerball jackpots of $15m or
more in FY19 compared to 39 in FY20.
The Lotteries result reflects
investments in digital and retail
channels and the ongoing evolution
of Tabcorp’s game portfolio to
appeal to a diverse customer base.
An extra 400,000 Australians
became active registered Lotteries
players during FY20, taking the total
to 3.7 million.
In FY20, Powerball turnover grew
16%, highlighting its increasing
appeal since its 2018 game change,
while Set For Life turnover grew
21% – evidence of the benefit of
game modifications, including the
new Division 2 prize, introduced
in March 2020.
PayPal was launched as a
payment option for players and
the reseller arrangements with
Jumbo Interactive were extended
on more sustainable commercial
terms.(i)
Lotteries’ retail distribution
partners, such as newsagents
and convenience stores, largely
continued trading during the
COVID-19 lockdown period. In FY20,
retail turnover declined 4%, while
digital turnover grew and accounted
for 28% of total Lotteries turnover.
Keno full year revenues declined
14.3%, largely due to the government
mandated shutdown of clubs and
hotels in NSW, Queensland and
Victoria during 2H20. Growth in
active digital account holders helped
partially offset the decline in retail.
The strong Lotteries performance
helped the Group deliver $2.005b in
state taxes and levies to state and
territory governments.
FY21 priorities
Game portfolio:
• Saturday Lotto game changes
to launch in October 2020, with
bigger Division 1 prize and more
weekly winners supported
by entry price increase
Lotteries and Keno results for the year ended 30 June
Revenues
Taxes, levies, commission and fees
Operating expenses
EBITDA
Depreciation and amortisation
EBIT
14
• Initiatives across the Instant
Scratch-Its category to build
on the strong FY20 momentum
• Continued strength of jackpot
games supportive of accelerated
jackpot offers
Customer experience:
• Enhance personalisation and
continue investment in registered
player infrastructure and
marketing technology to
better service players
• Continue the retail roll out
of the Lott brand refresh
Distribution:
• Continued focus to drive Omni-
channel program performance in
concert with retail stakeholder
groups (including planned
extension to South Australia)
• Continued improvement in
payment options for players
• Ongoing support of retail
partners through the challenge
of COVID-19 and maintaining
COVID-safe operations
FY20
$m
2,917
(2,156)
(219)
542
(100)
442
FY19(ii)
$m
2,865
(2,123)
(229)
513
(87)
426
Change
%
1.8
1.6
(4.4)
5.7
14.9
3.8
Lotteries licences/approvals(iii)
NSW
VIC
QLD
SA
TAS
ACT(iv)
NT
2028
2025
2032
2050
2052
2072
Keno licences/approvals(iii)
NSW
VIC
2022
QLD
SA
2050
2047
2052
ACT
2020
2064
(i) Subject to execution of long-form agreements and satisfaction of conditions precedent.
(ii) FY19 comparative information has been restated as a result of the Group adopting
AASB 16 Leases.
(iii) Ordered by population. Refer to page 33 to 34 for further details.
(iv) Indefinitely unless revoked.
Tabcorp Annual Report 2020
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The Lott is the
official home of
Australia’s
lotteries
Our games are enjoyed by millions of
Australians and provide exciting moments
and life-changing jackpot wins.
Our games inspire dreams and deliver wins
that can be enjoyed by customers, their
families, friends and communities.
Tabcorp Annual Report 2020
15
WAGERING AND MEDIA BUSINESS
Review of FY20 results
Wagering and Media revenues were
$2,084m, down 10.1%, and EBIT
was $175m, down 37.7%.
The Wagering and Media business
continued to invest in its digital
transformation and substantially
completed the integration of the
UBET business.
However, the Wagering business
was heavily impacted by the
government mandated closures
and restrictions on retail operations
across all states and territories at
different times from March 2020.
COVID-19 has accelerated the
channel shift to digital. The
business was also impacted
by the temporary suspension of
various domestic and international
sport.
Prior to this time, the business
was already navigating a large
and complex integration and
transforming its offer in a softer
consumer market with increased
digital competition.
Tabcorp’s digital wagering turnover
grew 3.8% in FY20 to $7.1b, partially
offsetting a decline in retail turnover
of 27.9% to $5.4b. This is the first
time digital turnover has exceeded
retail turnover in Tabcorp’s
Wagering business across a full year.
The migration of UBET customers
to a single TAB digital platform was
completed post year-end, finalising
a significant milestone for the
Tabcorp and Tatts integration.
Ex-UBET customers now have
access to a more attractive portfolio
of products and services including
Venue Mode (digital in-venue
betting) and extra tote and fixed
odds options. This paves the
way for the required lift in
competitiveness. Wagering call
centres and other infrastructure
were also consolidated.
The business also made progress
in lifting its competitiveness and
differentiating the customer
experience. The TAB brand was
modernised, centred around the
Wagering and Media results for the year ended 30 June
Revenues
Taxes, levies, commission and fees
Operating expenses
EBITDA
Depreciation and amortisation
Impairment
EBIT
16
theme of ‘Long May We Play’, while
data investments delivered more
personalised experiences for
customers.
In Media, Tabcorp recently
completed a vision and content deal
with Major League Baseball. This
complements existing NBA and NFL
partnerships and helps position
TAB and Sky as Australia’s ‘home
of US sport’. In July 2020, Tabcorp
secured Queensland racing’s media
rights for ten years, cementing Sky
Racing’s role as the pre-eminent
racing media platform into the future.
• Appeal to a younger and broader
customer base by integrating
sports content, and enhancing
racing content digitally and
in-venue with a reinvigorated
brand
• Further enhance digital in-venue
offering and expand digital
distribution
• Complete the data and
personalisation build and
combine with unique offering
• Continued focus to structurally
stabilise pari-mutuel, including
pooling, product and brand
FY21 priorities
• Complete retail integration and
drive performance improvement
with a unified TAB offer across
a single improved platform
• Focus on driving the business
with digitally integrated
distribution and a leaner
cost base
FY20
$m
2,084
(1,259)
(454)
371
(192)
(4)
175
FY19(i)
$m
2,318
(1,367)
(490)
461
(180)
-
281
Change
%
(10.1)
(7.9)
(7.3)
(19.5)
6.7
>100
(37.7)
Wagering licences/approvals(ii)
NSW
VIC
2024
QLD
SA
TAS
ACT
NT
2062
2064
2035
2097
2098
2100
(i) FY19 comparative information has been restated as a result of the Group adopting
AASB 16 Leases.
(ii) Ordered by population. Refer to page 34 for further details.
Tabcorp Annual Report 2020
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The TAB and
Sky Racing help
showcase the role
racing and sport play
in Australian life
Our business works closely with diverse industry
stakeholders to bring together Australians who share a
passion for racing and sport, and help create excitement
and thrills at the country’s biggest sporting events.
On the 2019 Melbourne Cup Day, more than three
million customers placed a bet with the TAB, and our
TAB systems processed over 15 million bets at a peak
of 108,000 bets per minute.
Tabcorp Annual Report 2020
17
GAMING SERVICES BUSINESS
Review of FY20 results
Gaming Services revenues were
$221m, down 27.3%, and the
business reported a loss before
interest and tax of $14m.
The business was heavily
impacted by the temporary
closure of venues from March
2020, which re-opened in June
in all states except Victoria under
strict social distancing protocols.
Prior to that, Gaming Services
revenues were impacted by
contract expirations, contract
extensions at lower daily rates,
reduced project work and the
non-renewal of a Telstra service
contract. In April 2020, the NSW
Inter-Club Linked Gaming Systems
Licence and Inter-Hotel Linked
Gaming Systems Licence expired.
In response to COVID-19, Tabcorp
suspended all material fees for
venues during the period in which
they were not trading and took
other measures in response
to venue closures such as the
temporary standing down of
most of its workforce, reducing
operating and capital expenses,
and accessing the Federal
Government’s JobKeeper scheme.
An operational review of the
Gaming Services business is being
implemented to deliver a simplified
operating structure, an improved
offer and reduce costs.
The strategic review, which was
announced in February 2020, has
been paused because of COVID-19.
Gaming Services results for the year ended 30 June
Revenues
Taxes, levies, commission and fees
Operating expenses
EBITDA
Depreciation and amortisation
Impairment
EBIT
18
FY21 priorities
Monitoring licences (ii)
NSW
QLD
2032
2027
NT
2021
(i) FY19 comparative information has been restated as a result of the Group adopting
AASB 16 Leases.
(ii) Ordered by population. Refer to page 35 for further details.
Implement operational review:
• Leaner management and
simplified operating structure
• Develop and implement new
products for core MAX Venue
Services offer, targeting capital
expenditure reductions
• Review and modify operating
structure of field services
activities
• Streamline the product portfolio
of the systems business
• Focus on core monitoring
activity within MAX Regulatory
Services
FY20
$m
221
(11)
(126)
84
(86)
(12)
(14)
FY19(i)
$m
304
(14)
(144)
146
(79)
-
67
Change
%
(27.3)
(21.4)
(12.5)
(42.5)
8.9
>100
(>100)
Tabcorp Annual Report 2020
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We enable our
venue partners to
achieve success
effectively,
efficiently and
sustainably
MAX is Australia’s leading Gaming services provider.
MAX is committed to fostering and supporting a
healthy and responsible gaming industry for the
benefit of every venue, every community, every day.
Tabcorp Annual Report 2020
19
CORPORATE RESPONSIBILITY
Excitement with integrity
underpins everything we do
at Tabcorp. We aim to deliver
superb entertainment experiences
ethically, responsibly and
sustainably. Tabcorp’s corporate
responsibility program supports
our business strategy and vision
to be The Trusted Gambling
Entertainment Company.
CUSTOMER CARE
Tabcorp is strongly committed to
responsible gambling, gaming and
play as it is integral to our long
term success. We are committed
to complying with, or exceeding,
the requirements of relevant
legislation in all areas in which
we operate.
In FY20, Tabcorp was once again
recognised for its sustainability
performance and disclosure,
ranking second globally in the
Casinos and Gambling sector in
the Dow Jones Sustainability Index
(DJSI) World and DJSI Australia
Indices. Tabcorp has been
independently assessed according
to the FTSE4Good criteria, and
continued to be a member of
the FTSE4Good Index in 2020.
More detail about Tabcorp’s
corporate responsibility activities
can be found on our website
and in our annual Corporate
Responsibility Report, available
at www.tabcorp.com.au.
In FY20, the Board endorsed
Tabcorp’s Customer Care Mission
and Principles for responsible
gambling. These are designed
to strengthen our commitment
to the responsible provision and
use of our products. Customer
Care empowers Tabcorp team
members to support responsible
gambling use, raise awareness
about responsible gambling
through sharing information
and encourage wider use of
responsible gambling tools.
We also equip customers with
information and resources to help
them make informed decisions
about how they gamble to
minimise potential harm.
In FY20 we continued to enhance
customer care technology and
human-led tools that work
hand-in-hand to better understand
gambling behaviour and empower
customer choice. All three
businesses delivered continuous
improvement initiatives to minimise
gambling harm, including:
• enhanced tools to identify and
eliminate minors using our
products including introducing
age verification software to
assist retail staff, improvements
in electronic betting terminal
monitoring and the prohibition
of school uniforms in agencies;
• online responsible gambling
training to team members;
• launching the Keno Assist
responsible gambling microsite;
• redesigning the Lott Apps,
website and Help Centre to
improve user experience
and refresh responsible
play content; and
• reviewing the MAX business
loyalty systems to ensure
they adhere to responsible
gambling principles.
• reviewing marketing campaigns
to ensure appropriate
messaging; and
• delivering additional
communications to customers
about Customer Care and
responsible gambling tools.
Tabcorp recognises the impact
of COVID-19 on the community
and some customers’ individual
circumstances. In response,
Tabcorp has enhanced its
customer care initiatives,
including:
• increasing customer reviews
and contact;
• providing COVID-specific
training to call centre team
members;
• excluding customers identified
as higher risk from promotions;
20
Tabcorp Annual Report 2020 Tabcorp’s Customer Care Principles
CUSTOMER
CARE
PRINCIPLES
RESPECT THE
CUSTOMER DECISION
ENABLE INFORMED
CHOICE
CUSTOMER CARE
BY DESIGN
Our customers are adults and we respect
their freedom to make their own choices,
except in specific situations where individual
safety is compromised. Meaning, when a
customer informs us they need help directly,
or when Tabcorp analysis indicates the
customer is displaying signs of problem
gambling behaviour that present
an unacceptable risk.
We distribute ‘helpful yet human’ educational
messages along with legally required
messages, to give our customers the right
information, at the right time, to make their
own individual decisions.
We always put our customers first, especially
when designing new products. From a fresh
idea to product design and implementation;
customer needs are central to everything
we do. That’s why our products support
our customers, and our business.
CREATE TOOLS THAT CARE
ANALYSE CUSTOMER
BEHAVIOUR
INTERACT RESPONSIBLY
PROVIDE A SAFETY NET
We develop gambling management tools to
minimise harm and enable our customers to
make informed choices. From implementing
self-service tools, to AI that helps us better
understand our customers and our business
– our commitment goes both ways.
We unlock insights that help us understand
the impact our products, services and
experiences have on our customers. We use
technology and human sourced data, and
we use it with integrity to further benefit
our customers – and our business.
We equip our people with the training to
know when and how they should interact
with customers; from providing customers
with helpful self-service tools online, to
knowing when to step in and address high-
risk behaviour in a retail location.
We endeavour to protect our customers
and minimise harm. We do this by placing
restrictions and exclusions on our products
and services when either; a customer informs
us they wish to self-exclude or when Tabcorp
analysis indicates the customer is displaying
signs of problem gambling behaviour that
present an unacceptable risk.
21
CORPORATE RESPONSIBILITYTabcorp Annual Report 2020 CORPORATE RESPONSIBILITY
PEOPLE
When it comes to our people, our
mission is to make Tabcorp the
most exciting place to succeed.
We are committed to fostering
an inclusive culture that reflects
a diverse workplace, where team
members can share their unique
perspectives and contribute their
experience to achieve the best
possible business outcomes.
We recently launched the new
Tabcorp Code of Conduct. The
Code puts Tabcorp’s values and
integrity into practice and outlines
the principles that set our
standards for ethical business
conduct for our people and
organisation. The Code is available
from the Tabcorp website at
www.tabcorp.com.au/who-we-
are/corporate-governance.
Inclusion and Diversity
Tabcorp aims to become a visible
inclusion and diversity leader in
our industry and an employer of
choice. The Board has set a target
for the Tabcorp Board to comprise
at least 40% female Non Executive
Directors by the end of FY23 and
to have at least 40% female
representation in the Senior
Leadership Cohort by the end
of FY21.
The proportion of female Non
Executive Directors on the Board
increased to 38% with the
appointment of Anne Brennan
22
who formally commenced as a
Director in July 2020.
We also increased our
representation of women
in the Senior Leadership Cohort
to 39%, moving towards our target
of 40% by the end of FY21.
Tabcorp was named an Employer
of Choice for Gender Equality by
the Workplace Gender Equality
Agency in FY20 for the fifth
consecutive year.
In FY20, Tabcorp progressed
its delivery of its Inclusion and
Diversity Strategy, with key
initiatives focusing on the priority
diversity dimensions of gender,
LGBTIQ inclusion, domestic and
family violence support, and
Aboriginal and Torres Strait
Islander inclusion. These included:
• the recognition and celebration
of Inclusion Month, including the
launch of Tabcorp Pride and
Allies, our employee LGBTIQ
network;
• advancing our leading position
on parental leave through the
introduction of leave
entitlements for team members
who experience pregnancy loss;
and
• the development of a broad
talent brand campaign focused
on attracting diverse talent at
both a Group and individual
business unit level.
Employee health and safety
Tabcorp is committed to providing
a safe environment for employees
and visitors, and actively promotes
health, safety and wellbeing in the
workplace.
In FY20, the Group reported an
increase in lost time injuries
resulting in a lost time injury
frequency rate of 4.1 (per million
hours worked), up from 3.6 in
FY19. This rate is still well below
the industry average of 7.7 based
on Safe Work Australia
benchmarks. The number of lost
time injuries this year is the same
as for the previous year, however,
there was a reduction in employee
hours worked in FY20 due to
business stand downs and
government restrictions to work
remotely from home in response
to the COVID-19 pandemic,
resulting in an increase in the lost
time injury frequency rate.
We continue to review, monitor
and report on health and safety
risk profiles throughout the
business. We have increased our
focus on early reporting and
proactive injury management
which has resulted in a decrease
in our WorkCover Premiums
this year.
COVID-19 response
The wellbeing of our people has
been a key focus of Tabcorp’s
response to the COVID-19
pandemic.
Tabcorp has followed the advice
of the Australian Government
Department of Health, Safe Work
Australia and State health and
safety regulators to implement
an organisation wide COVID Safe
Plan to protect our employees,
contractors and customers.
These are continually reviewed to
ensure compliance with changes
in health orders. Tabcorp has
actively promoted the use of the
COVIDSafe app, including through
our broadcasting platforms such
as Sky Racing.
Tabcorp has supported flexible
work practices for a number of
years through its Flexible Work
Policy and technology tools to
enable employees to work
remotely. This enabled a smooth
transition to remote working for
the majority of our people in
response to the COVID-19
pandemic.
Tabcorp’s cost management
response to COVID-19 and the
effects of government restrictions
had, and continue to have, an
impact on our people through
reduced hours, roster changes,
redeployments, and stand downs.
Where possible we internally
redeployed some stood down
employees to alternate,
temporary roles during the
response period, primarily within
our contact centres.
We have supported our people’s
wellbeing through this period
through our Employee Assistance
Program for employees and their
families, a dedicated phone and
email help line, outbound support
calls to assist stood down
employees, an employee wellbeing
hub on our Intranet, and a regular
“check-in” pulse survey to
understand employee sentiment
and gather feedback on Tabcorp’s
response to COVID-19.
The check-in survey has been
conducted every three weeks
since late April to gather employee
feedback which directly informs
our COVID-19 response.
Participation rates have averaged
over 65%, with over 75%
responding favourably to
Tabcorp’s response to COVID-19.
Diversity targets
40%
female NEDs on the Board
by the end of FY23
40%
of females in the Senior
Leadership Cohort by
the end of FY21
Tabcorp Annual Report 2020
• Dollar matching donations
made to bushfire relief charities
by our employees, totalling
$150,000, as well as waiving
our existing volunteering policy
to provide open-ended paid
leave for volunteer firefighters
and reservists;
• Donating $100,000 through
Keno to assist Team Rubicon
in their efforts to rebuild bushfire
affected communities in
northern New South Wales; and
• Providing financial relief to
venue partners that were
directly impacted by bushfires
and relief operations.
COVID-19 support
The Lott, via Golden Casket,
contributed $1.5 million from
unclaimed prize money to
COVID-19 research projects,
including:
• $1 million to The University
of Queensland to accelerate
Australian research into a
COVID-19 vaccine; and
• $500,000 to Brisbane’s Mater
Hospital to undertake a trial to
assess the impacts of COVID-19
on expectant parents and their
unborn babies.
COMMUNITY
Tabcorp has a long history
of supporting the community,
particularly in times of hardship.
We believe that contributing to
the wellbeing of the communities
in which we operate is critical to
our long term success.
In FY20, Tabcorp contributed
$12.6m(i) to charities and
community organisations,
which was up 31% from FY19.
This community funding was
provided through direct donations,
unclaimed prize money donations,
in-kind giving and foregone revenue
(predominantly Sky advertising
costs and margin), management
costs and employee time.
In addition to supporting our long
term community partners, this
year we provided assistance to
communities affected by bushfires
and the COVID-19 pandemic.
Bushfire relief
Tabcorp was proud to support
those communities affected by
devastating bushfires in late 2019
and early 2020 by:
• Donating proceeds totalling
$1.94 million from the Lotto
Bushfire Benefit Draw held
on 25th January 2020 to nine
charitable organisations
providing support to
communities, volunteer
firefighters and wildlife
affected by bushfires;
(i) Independently verified by LBG.
Rebecca Ball, Service Delivery Lead within Tabcorp's Technology Team,
is also a NSW Rural Fire Service volunteer at her local Kariong fire station.
23
CORPORATE RESPONSIBILITYTabcorp Annual Report 2020
CORPORATE RESPONSIBILITY
24
ANIMAL WELFARE
As part of our commitment to
building a sustainable future for
our business and industry,
Tabcorp expects the highest
standards of animal welfare and
integrity. We have a zero tolerance
to animal cruelty, in racing and in
society in general.
Tabcorp recognises the efforts
the racing industry has made in
terms of animal welfare and will
continue to work in partnership
with the thoroughbred, harness
and greyhound racing industries
to ensure the welfare of animals
is prioritised.
This year Tabcorp supported the
racing industry’s animal welfare
efforts through financial support
of the five-part thoroughbred
re-homing series on Sky
Thoroughbred Central,
Thoroughbreds Are Go. TAB also
launched the Sock Stable
initiative, donating 100% of profits
of sock sales to Racing Victoria’s
Off The Track program and Team
Thoroughbred NSW. Tabcorp is
also supporting the national
Thoroughbred Welfare initiative.
Tabcorp is making a financial
contribution to support the
initiative’s activities to improve
thoroughbred welfare outcomes,
as well as working closely with
industry bodies on this issue.
Tabcorp Annual Report 2020 In the coming year Tabcorp
will expand its climate risk and
opportunity analysis in line with
the Task Force on Climate-Related
Financial Disclosures
recommendations.
Details of Tabcorp’s environmental
footprint and greenhouse gas
emission reduction initiatives are
available in Tabcorp’s Corporate
Responsibility Report available at
www.tabcorp.com.au/corporate-
responsibility.
SUSTAINABLE
PROCUREMENT
Tabcorp aspires to uphold our
values across all the partners we
work with, including our suppliers.
We are committed to ethical,
sustainable and socially
responsible procurement.
In FY20, Tabcorp published a
Supplier Code of Conduct which
outlines the environmental, social
and governance principles we
expect our suppliers to align to
when working with us. Tabcorp’s
Supplier Code of Conduct is
available on the Tabcorp website
at www.tabcorp.com.au/
who-we-are/corporate-
governance.
Tabcorp is required to lodge a
Modern Slavery Statement under
the Modern Slavery Act 2018 (Cth)
in respect of the 2020 financial
year. In FY20, Tabcorp undertook
an independent review to identify
and manage key modern slavery
and human rights risks most
relevant to our operations and
supply chain. Details of this review
will be included in Tabcorp’s
Modern Slavery Statement which
will be published on the Tabcorp
website by March 2021.
ENVIRONMENT
Tabcorp aims to understand
and minimise our environmental
impact to reduce the cost of
doing business and protect the
environment. We are committed
to complying with, or exceeding,
the requirements of relevant
environmental legislation,
regulation and codes in all
areas in which we operate.
Tabcorp recognises that climate
change is a significant global
challenge and is committed to
reducing our environmental
impact and identifying and
managing climate related risks
and opportunities across our
business.
In FY20, Tabcorp undertook a
climate risk analysis to evaluate
our current and short term climate
related risks and opportunities.
While Tabcorp has in recent years
experienced physical climate-
related events such as bushfires
and other extreme weather
events, these have had a limited
impact on the Group, primarily
to the operations of the Wagering
and Media business due to the
disruption or cancellation of
some racing and sporting
events, and temporary closure
of a small number of retail venues
and agencies.
25
CORPORATE RESPONSIBILITYTabcorp Annual Report 2020 BOARD OF DIRECTORS
Paula Dwyer
Independent Chairman and Non Executive
Director from June 2011(i)
David Attenborough
Managing Director and Chief
Executive Officer from June 2011
Bruce Akhurst
Independent Non Executive Director
from July 2017
Harry Boon
Independent Non Executive Director
from December 2017
Paula Dwyer is Chairman of Allianz Australia Limited
and a Director of Australia and New Zealand Banking
Group Limited and Lion Pty Ltd. She is also a Member
of the Kirin Holdings International Advisory Board
and a Member of the Takeovers Panel.
Ms Dwyer was formerly the Chairman of Healthscope
Limited and a Director of Leighton Holdings Limited,
Suncorp Group Limited and Foster’s Group Limited.
She was formerly a member of the ASIC External
Advisory Panel, the Victorian Casino and Gaming
Authority and of the Victorian Gaming Commission.
Ms Dwyer held senior executive positions with Ord
Minnett (now JP Morgan) and PricewaterhouseCoopers.
Ms Dwyer brings to the Board her commercial
experience in strategy, corporate finance and capital
management, gambling industry experience, and
operating businesses in complex regulated industries.
Tabcorp Committees:
• Chairman of Nomination Committee
• Member of Audit Committee
• Member of Risk and Compliance Committee
• Member of People and Remuneration Committee
• Chairman of the Victorian Joint Venture
Management Committee.
Qualifications:
• Bachelor of Commerce
• Fellow of the Chartered Accountants Australia
and New Zealand
• Senior Fellow of the Financial Services Institute
of Australasia
• Fellow of the Australian Institute of Company
Directors (AICD)
Other ASX company directorships in past 3 years:
• Healthscope Limited from June 2014 to June 2019
• Australia and New Zealand Banking Group Limited
since April 2012
26
David Attenborough joined Tabcorp in April 2010 as
Managing Director – Wagering. He became Managing
Director and Chief Executive Officer when Tabcorp’s
demerger of its former casinos business was completed
in June 2011. He was appointed as the Managing
Director and Chief Executive Officer following the
Tabcorp-Tatts combination.
Mr Attenborough is also a Director of the Australasian
Gaming Council.
Mr Attenborough was previously the Chief Executive
Officer (South Africa) of Phumelela Gaming and Leisure
Limited, the leading wagering operator in South Africa.
His previous experience also includes the development
of casino, bookmaking and gaming opportunities for
British bookmaking company Ladbrokes (formerly part
of the Hilton Group Plc).
Mr Attenborough brings to the Board extensive
gambling industry experience, strategic and
commercial acumen, international experience, retailing
and customer experience, and corporate responsibility.
Qualifications:
• Bachelor of Science (Honours)
• Master of Business Administration
• Graduate Member of AICD
Other ASX company directorships in past 3 years:
• Nil
Bruce Akhurst is the Executive Chairman of Adstream
Holdings Pty Ltd and is a Director of Vocus Group
Limited and private investment company Paul Ramsay
Holdings Pty Ltd. He is also Chairman of the Peter
MacCallum Cancer Foundation and a Council Member
of RMIT University.
Mr Akhurst was the Chief Executive Officer of Sensis
Pty Ltd from 2005 to 2012 and a Director and Chairman
of FOXTEL. Mr Akhurst also spent seven years as Group
Managing Director and Group General Counsel at
Telstra Corporation Limited, and prior to that he was
a Partner at Mallesons Stephen Jaques.
Mr Akhurst brings to the Board extensive experience
in legal and regulatory compliance, governance and risk
management, marketing and customer experience,
digital innovation, information technology, strategy,
finance and capital management.
Tabcorp Committees:
• Chairman of Risk and Compliance Committee
• Member of People and Remuneration Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Economics (Honours)
• Bachelor of Laws
• Fellow of AICD
Other ASX company directorships in past 3 years:
• Vocus Group Limited since September 2018
Harry Boon joined the Tabcorp Board in December
2017 following the implementation of the combination
between Tabcorp and Tatts Group Limited (Tatts).
He was previously the Chairman of Tatts, and served
as a Non Executive Director of Tatts from May 2005.
Mr Boon is currently the Chairman of Asaleo Care
Limited and is a former Director of Toll Holdings Limited.
Mr Boon was previously Chief Executive Officer and
Managing Director of ASX listed company Ansell
Limited until he retired in 2004, a position which
capped a career spanning some 28 years with the
Ansell Group. Mr Boon has held senior positions in
Australia, Europe, the US and Canada.
Mr Boon brings to the Board extensive experience
in global marketing and sales, retailing and customer
experience, gambling industry experience, leadership,
remuneration, people and organisational culture.
Tabcorp Committees:
• Member of Audit Committee
• Member of Risk and Compliance Committee
• Member of People and Remuneration Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Laws (Honours)
• Bachelor of Commerce
Other ASX company directorships in past 3 years:
• Asaleo Care Limited since May 2014
• Tatts from May 2005 to December 2017
(i) Ms Dwyer was appointed Chairman in June 2011 upon the demerger of the Group’s former casinos
business. Prior to the demerger, Ms Dwyer was a Non Executive Director from August 2005.
Tabcorp Annual Report 2020
Anne Brennan
David Gallop AM
Steven Gregg
Vickki McFadden
Justin Milne
Independent Non Executive Director
from July 2020
Independent Non Executive Director
from July 2020
Independent Non Executive Director
from July 2012
Independent Non Executive Director
from July 2017
Independent Non Executive Director
from August 2011
Anne Brennan is a Non-Executive Director of
Spark Infrastructure Group, Argo Investments
Limited, Charter Hall Group and Nufarm
Limited. She is also on the boards of NSW
Treasury Corporation, Rabobank Australia
Limited and Rabobank New Zealand Limited.
Ms Brennan previously served as Deputy Chair
of Echo Entertainment Group Limited, and as
a Non-Executive Director of Metcash Limited
and Myer Holdings Limited.
Ms Brennan was formerly the Executive
Finance Director of Coates Group and Chief
Financial Officer at CSR Limited. She was
previously a partner at KPMG, then Arthur
Andersen and Ernst & Young.
Ms Brennan brings to the Board extensive
experience in finance, capital management,
risk and compliance, gambling industry
experience and experience in retail and
highly regulated industries.
Tabcorp Committees:
• Member of Audit Committee
• Member of Risk and Compliance Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Commerce (Honours)
• Fellow of the Chartered Accountants
Australia and New Zealand
• Fellow of AICD
Other ASX company directorships
in past 3 years:
• Argo Investments Limited since
September 2011
David Gallop AM was the Chief Executive
Officer and General Secretary of Football
Federation Australia from 2012 to 2019
and Chief Executive Officer of the National
Rugby League from 2002 to 2012. He also
held senior legal roles (including as
Company Secretary) with the National
Rugby League, News Corporation and
law firm Holman Webb.
Mr Gallop has served on numerous sports
governing bodies including the Australian
Sports Commission (as Deputy Chairman),
Rugby League International Federation and
the Asian Football Confederation’s 2015
AFC Asian Cup Local Organising Committee.
Mr Gallop brings to the Board extensive
experience and background in sports
administration, media rights and
broadcasting, digital content delivery,
customer experience, legal and
regulatory frameworks and stakeholder
relationship management.
Tabcorp Committees:
• Member of Audit Committee
• Member of Risk and Compliance
Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Laws
• Bachelor of Arts
• Graduate Member of AICD
• Charter Hall Group since October 2010
• Metcash Limited from March 2018 to
Other ASX company directorships
in past 3 years:
August 2019
• Myer Holdings Limited from September
2009 to November 2017
• Nufarm Limited since February 2011
• Spark Infrastructure Group from June 2020
• Nil
Steven Gregg is Chairman of Ampol Limited
and a Director of Challenger Limited and
thoroughbred bloodstock company William
Inglis & Son Limited. He is also a Trustee of
the Australian Museum Trust and Chairman
of Unisson Disability Limited.
He is the former Chairman of Goodman
Fielder Limited and former Chairman
of Austock Group Limited, and he
was a Member of the Grant Samuel
non-executive Advisory Board.
Mr Gregg had an executive career in
investment banking and management
consulting, including as Global Head of
Investment Banking and CEO at ABN
Amro Bank, and Partner and Senior
Adviser to McKinsey & Company.
Mr Gregg brings to the Board extensive
experience in corporate finance and capital
management, strategic and commercial
acumen, retailing and racing industry
experience.
Tabcorp Committees:
Vickki McFadden is Chairman of GPT Group
and a Director of Newcrest Mining Limited,
Allianz Australia Ltd and Myer Family
Investments Pty Ltd. She is also a Member
of Chief Executive Women.
Ms McFadden was Chairman of Eftpos
Payments Australia Limited and Skilled
Group Limited, President of the Takeovers
Panel, and was previously a Non Executive
Director of Leighton Holdings Limited.
Prior to this, she was Managing Director,
Investment Banking at Merrill Lynch
(Australia) Pty Ltd.
Ms McFadden brings to the Board
extensive experience in finance and
capital management, governance, risk
management and compliance, people
and organisational culture, strategy
and corporate responsibility.
Tabcorp Committees:
• Chairman of Audit Committee
• Member of Risk and Compliance
Committee
• Chairman of People and Remuneration
• Member of Nomination Committee
Committee
• Member of Audit Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Commerce
Other ASX company directorships
in past 3 years:
• Ampol Limited since October 2015
Qualifications:
• Bachelor of Commerce
• Bachelor of Laws
• Member of AICD
Other ASX company directorships
in past 3 years:
• GPT Group since March 2018
Justin Milne is a former Chairman of
NetComm Wireless Limited, MYOB
Group Limited, Australian Broadcasting
Corporation and pieNETWORKS Limited,
and was a Director of NBN Co Limited,
SMS Management and Technology Limited,
Members Equity Bank Limited and
Basketball Australia Limited.
Mr Milne had an executive career in
telecommunications, marketing and
media. From 2002 to 2010 he was Group
Managing Director of Telstra’s broadband
and media businesses, and headed up
Telstra’s BigPond New Media businesses
in China. He was also the Chief Executive
Officer of OzEmail and the Microsoft
Network.
Mr Milne brings to the Board extensive
experience in information technology,
media, digital innovation, marketing
and customer experience, public policy,
strategic and commercial acumen
and governance.
Tabcorp Committees:
• Member of Risk and Compliance
Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Arts
• Fellow of AICD
Other ASX company directorships
in past 3 years:
• Newcrest Mining Limited since
• MYOB Group Limited from March 2015
• Challenger Limited since October 2012
October 2016
to May 2019
• NetComm Wireless Limited from March
2012 to July 2019
• SMS Management and Technology
Limited from August 2014 to
September 2017
27
GOVERNANCETabcorp Annual Report 2020 CORPORATE GOVERNANCE
Tabcorp’s Board recognises the importance of having proper and effective corporate
governance arrangements and maintaining high standards of corporate behaviour and
accountability. The governance arrangements adopted by the Group enable the Board and
management to make well informed decisions, provide appropriate accountability and
transparency, and instil and reinforce a culture and behaviours that support Tabcorp’s
vision to be The Trusted Gambling Entertainment Company.
Board Committees
• The Board has four standing
Committees:
– Audit Committee
– Risk and Compliance
Committee
– People and Remuneration
Committee
– Nomination Committee
• All committee members,
including Chairmen, are
independent Directors.
Balanced Board
• The Board comprises a mix of
longer serving NEDs and more
recent appointments, with five
new Directors appointed in the
past three years.
• The Board has a target of having
at least 40% female NEDs
by the end of FY23.
• All Tabcorp’s NEDs are
considered by the Board
to be independent.
• The Board is comprised of
Directors who bring a diverse
range of skills, experience,
qualifications and backgrounds
to provide effective leadership
and add value.
• The Board is undertaking
a process for orderly and
coordinated Board renewal,
which is being overseen by
the Nomination Committee.
Achievements
• Announced succession plans for
the Chairman and MD & CEO.
Steven Gregg will succeed the
Chairman Paula Dwyer who
will retire from the Board on
31 December 2020. David
Attenborough announced his
intention to retire as MD
& CEO in the first half of calendar
year 2021, and a global search
is underway for a successor.
• Anne Brennan and David Gallop
were appointed as new Non
Executive Directors, and
Zygmunt Switkowski retired
from the Board.
• Vickki McFadden has advised
of her intention to retire from
the Board at the 2020 Annual
General Meeting. Anne Brennan
will succeed Ms McFadden
as Chairman of the Audit
Committee.
• A self-assessment was
undertaken of the effectiveness
and performance of the Board,
its Committees and individual
Directors.
• Tabcorp reviewed and updated
a number of policies, including
its Securities Trading Policy,
Anti-Bribery and Corruption
Policy, Conflicts of Interest
Policy, Code of Conduct and
Whistleblower Policy.
28
Board skills matrix
A. Leadership
Q
9
A
9
P
8
B
9
C
9
B. Strategic and commercial acumen
C. Financial acumen/capital management
D. Governance
E. Legal and regulatory
F. Risk management and compliance
O
8
N
8
M
9
Experience
Technical
Skills
8
L
7
K
9
J
9
I
9
H
D
9
9
E
G. People
H. Organisational culture
I. Remuneration
J. Government/stakeholder relations
and public policy
K. Gambling industry experience
L. Experience in other relevant industries
9
F
M. International experience
N. Information technology
9
G
O. Digital innovation
P. Retailing, marketing and
customer experience
Q. Corporate responsibility
Number of Directors with developed capability
Diversity
Male
Female
Tenure
>9
years
1
<2 years
2
3
Target of
40% female
NEDs by end
of FY23
5
2
4 to 9
years
Average of
5.2 years
Non Executive Directors (NEDs)
3
2
NED tenure
2 to <4
years(i)
(i) Includes Harry Boon, who served as a Director and Chairman of Tatts from 2005 to 2017.
Tabcorp’s Corporate Governance Statement 2020, Appendix
4G, Board and Committee charters, key policies and
governance documents are available from the Who We Are >
Corporate Governance section of Tabcorp’s website at
www.tabcorp.com.au
Tabcorp Annual Report 2020
Board and Committee meeting attendance
The attendance of the Directors at meetings of the Board and standing Board Committees during the year
in review were:
Name
Current Directors
Paula Dwyer(i)
David Attenborough(ii)
Bruce Akhurst
Harry Boon
Anne Brennan(iii)
David Gallop(iii)
Steven Gregg
Vickki McFadden
Justin Milne
Former Director
Zygmunt Switkowski(iv)
Board
meetings
A
B
Audit
Committee
A
B
Risk and
Compliance
Committee
A
B
People and
Remuneration
Committee
A
B
Nomination
Committee
A
B
14
14
14
14
7
10
14
14
14
9
14
14
14
14
7
11
14
14
14
9
6
6
4
6
3
3
6
6
-
-
6
6
4
6
3
3
6
6
-
-
4
4
4
4
2
2
-
4
4
-
4
4
4
4
2
2
-
4
4
-
5
5
1
5
-
-
5
-
-
3
5
5
2
5
-
-
5
-
-
3
4
4
4
4
2
2
4
4
4
4
4
4
4
4
2
2
4
4
4
4
A – Number of meetings attended
B – Maximum number of possible meetings available for attendance
(i) Paula Dwyer also attended meetings of the Victorian Joint Venture Management Committee as Chairman of this Committee.
(ii) David Attenborough attends Committee meetings, but he is not a member of any Committee. Only Non Executive Directors are members
of Board Committees.
(iii) Anne Brennan and David Gallop commenced as Non Executive Directors on 17 July 2020 and 3 July 2020 respectively following the receipt
of all necessary regulatory and ministerial approvals. For the meetings disclosed above, Ms Brennan and Mr Gallop attended as observers
whilst awaiting regulatory approval, for which they were not required to attend and could not vote on any matter.
(iv) Zygmunt Switkowski retired from the Board on 28 February 2020.
In addition to the meetings above, Directors also participated in 10 additional meetings of the Board or Board
Sub-Committees established for special purposes during the year to consider a broad range of matters,
including the impacts of COVID-19 on the Group. Management also provided regular briefings to Directors
on developments in relation to COVID-19 during this period.
The functions and memberships of the Board Committees are set out in the Company’s Corporate Governance
Statement available on Tabcorp’s website. The Board and Committee Charters are also available on Tabcorp’s
website.
Directors’ interests in Tabcorp securities
At the date of this report, the Directors had the following relevant
interests in the securities of the Company, as notified to the ASX in
accordance with section 205G(1) of the Corporations Act 2001:
Name
Current Directors
Paula Dwyer
David Attenborough(i)
Bruce Akhurst
Harry Boon
Anne Brennan(ii)
David Gallop(ii)
Steven Gregg
Vickki McFadden
Justin Milne
Former Director
Zygmunt Switkowski(iii)
Number of
Ordinary shares
125,000
1,209,097
100,000
70,000
7,500
7,000
42,000
50,000
46,608
91,949
(i) David Attenborough also has an interest in 1,837,228 Performance Rights.
(ii) Anne Brennan and David Gallop commenced as Non Executive Directors on 17 July 2020
and 3 July 2020 respectively following the receipt of all necessary regulatory and
ministerial approvals.
(iii) Zygmunt Switkowski retired as a Director of Tabcorp on 28 February 2020 and the
interests disclosed above were applicable at that time.
(iv) The MD & CEO’s shareholding is within the Executive Shareholding Policy. All NED
shareholdings are within the Non Executive Director Shareholding Policy, noting that NEDs
are required to reach the applicable threshold within three years from appointment, or by
14 December 2020 (the third anniversary of the Combination), whichever is the later.
29
GOVERNANCETabcorp Annual Report 2020
EXECUTIVE LEADERSHIP TEAM
David Attenborough
Managing Director and
Chief Executive Officer
Adam Newman
Chief Financial Officer
Paul Carew
Chief Operating Officer
– Gaming Services
Clinton Lollback
Chief Risk Officer
Adam joined Tabcorp in October
2019 as Chief Financial Officer.
He was previously the Chief
Financial Officer of ASX-listed energy
company AusNet Services Limited.
He also held senior leadership roles
at BlueScope Steel in Australia and
the USA, and worked at BHP and
in Coopers & Lybrand’s Perth and
London Corporate Advisory groups.
Adam holds a Bachelor of Business,
Post Graduate Diploma of Business,
and Graduate Diploma in Applied
Finance. He has also attended the
Advanced Management Program
at INSEAD (France). Adam is a
Member of Chartered Accountants
Australia and New Zealand and
FINSIA.
Paul commenced as Chief Operating
Officer – Gaming Services in
February 2020. Since joining
Tabcorp in 2006, he has held various
senior management positions across
the Gaming, Retail Wagering and
Keno businesses.
Prior to joining Tabcorp, Paul was
Sales Manager at Fosters Group and
was a licensed venue operator.
Paul holds a Bachelor of Commerce,
Marketing and Management, and
has attended the University of
Nevada Executive Development
Program in the USA.
Clinton joined Tabcorp in January
2016 in this newly created role to
lead Tabcorp’s risk and compliance
functions.
Prior to joining Tabcorp, he was
the Head of Operational Risk
at Macquarie Group, a role he
established and led for 10 years.
Clinton has extensive risk
management experience in the
banking and finance industry,
including roles with Westpac, JP
Morgan, and Coopers & Lybrand.
Clinton holds a Bachelor of Business
and is a Member of Chartered
Accountants Australia and
New Zealand.
David joined Tabcorp in April 2010
as Managing Director – Wagering.
He became Managing Director
and Chief Executive Officer when
Tabcorp’s demerger of its former
casinos business was completed
in June 2011.
He has an extensive background in
totalisator and fixed odds betting,
racing and broadcasting. He was
previously the Chief Executive
Officer (South Africa) of Phumelela
Gaming and Leisure Limited, the
leading wagering operator in South
Africa. His previous experience
also includes the development of
casino, bookmaking and gaming
opportunities for British bookmaking
company Ladbrokes (formerly part
of the Hilton Group Plc).
David is a Director of the
Australasian Gaming Council.
David holds a Bachelor of Science
(Honours) and a Master of Business
Administration, and he is a Graduate
Member of AICD.
30
Patrick McGlinchey
Group General Counsel and
Co-Company Secretary
Patrick commenced with Tabcorp
in March 2019 as Group General
Counsel, leading Tabcorp’s Legal,
Regulatory and Governance functions
with functional responsibility for
Company Secretariat.
Prior to joining Tabcorp, he was
Regional General Counsel Asia
Pacific at LafargeHolcim Group
leading the legal, corporate
governance and compliance teams
across the region. Patrick also has
experience in the gambling
entertainment industry, having
served previously as Chief Legal
Officer and Company Secretary
at Aristocrat Leisure Limited.
Patrick holds a Bachelor of Laws
(Honours) and a Bachelor of
Economics (Soc Sc). He has
attended various executive
development courses including
the International Institute for
Management Development
in Switzerland and the Wharton
School in the USA.
Tabcorp Annual Report 2020 Françoise Russo
Chief Information Officer
Adam Rytenskild
Managing Director
– Wagering and Media
Ben Simons
Chief Strategy Officer
Sue van der Merwe
Managing Director
– Lotteries and Keno
Michelle Williams
Chief People Officer
Françoise commenced as Tabcorp’s
Chief Information Officer in
May 2020.
Prior to joining Tabcorp, Françoise
was Global Chief Information
Officer at Toll Group, where she led a
multi-year business transformation
underpinned by a program of global
technology modernisation. She
has also worked overseas with
organisations such as Procter
& Gamble, Diageo and British
American Tobacco, where she was
the Regional Chief Information
Officer for Europe, Middle East
and Africa.
Françoise holds a Masters of
Business Administration, a Masters
in Information Systems and a
Bachelor in Psychology. She has
attended the University of Oxford’s
Said Business School and Warwick
Business School at the University
of Warwick, UK.
Adam joined Tabcorp in 2000 and
has been a member of Tabcorp’s
Executive Leadership Team since
2010. During this time he has led
Wagering’s Digital and Retail
Operations, Gaming Services
business, Keno business and has
been Managing Director – Wagering
and Media since the Tabcorp-Tatts
combination in December 2017.
Adam has over 20 years’ experience
in gambling entertainment and
leading complex businesses that
are highly regulated, have multiple
stakeholders, are underpinned
by a strong customer focus, and
operate in highly competitive digital
environments. His career also
includes nine years with Mobil Oil
prior to joining Tabcorp.
He is an Alternate Director of the
Australasian Gaming Council.
He holds a Masters of Business
Administration, has attended the
Senior Executive Program at the
London Business School and
the Executive Breakthrough
Program with Egon Zehnder.
He is a Member of AICD.
Ben commenced with Tabcorp in
July 2017 in the position of Chief
Strategy Officer. He has oversight
of corporate strategy and branding,
business development, and the
Office of the CEO, which includes
corporate communications and
government, investor and
stakeholder relations.
He was previously with Telstra
where he was most recently Director
of Telstra Air, Australia’s largest
wifi hotspot network, and Director
of Retail Product Strategy. Prior
to Telstra, he was Principal of
management consulting firm
Bain and Company.
Ben holds a Masters in Business
Administration, a Bachelor of
Economics, a Bachelor of Laws,
and a Graduate Diploma in Applied
Finance from the Securities Institute
of Australia.
Sue became Tabcorp’s Managing
Director – Lotteries and Keno
following the combination of
Tabcorp and Tatts in December 2017.
Previously she held the role of
Chief Operating Officer – Lotteries
at Tatts Group.
Sue has extensive experience in
lotteries spanning 30 years. She has
played a central role in the successful
development of the Australian lottery
industry, and was instrumental in the
acquisition of multiple lottery licences
and the successful integration of
these businesses. Today she is
responsible for one of the most
complex multi-jurisdictional lottery
businesses in the world.
She is Chairman of the Asia Pacific
Lottery Association, sits on the
World Lottery Association Executive
Committee and was inducted into
PGRI’s Lottery Industry Hall of
Fame in 2016, recognising her
contribution to world lottery
excellence and integrity.
Sue holds a Bachelor of Social
Science, Marketing and Economics.
Michelle commenced with Tabcorp
in February 2020 as Chief People
Officer.
Prior to joining Tabcorp, she was
Group Director Human Resources
at Fairfax Media Limited and was
responsible for setting and
implementing human resources
strategy across Fairfax’s portfolio
of newspapers, websites, radio
stations, events and digital ventures
in Australia and New Zealand. Prior
to Fairfax, she held human resources
roles with AXA and Colonial Limited.
Michelle holds a Bachelor of
Commerce and a Bachelor of Science
and is a member of the Australian
Human Resources Institute.
31
GOVERNANCETabcorp Annual Report 2020 DIRECTORS’ REPORT
Contents
1. Principal activities
2. Operating and financial review
3. Significant changes in the state of affairs
4. Significant events after the end of the financial year
5. Business strategies
6. Likely developments and expected results
7. Material business risks
8. Directors
9. Directors’ interests in contracts
10. Indemnification and insurance of Directors and Officers
11. Company Secretaries
12. Environmental regulation and performance
13. Political expenditure and engagement
14. Rounding of amounts
15. Auditors
16. Non-audit services
17. Auditor’s independence declaration
18. Remuneration Report
33
33
36
36
36
36
37
43
43
43
43
44
44
44
44
45
45
45
32
Tabcorp Annual Report 2020
The Directors of Tabcorp Holdings Limited (the Company) present their report for the consolidated entity comprising the Company and its subsidiaries (the Group) and the Group’s interests
in joint arrangements and associates in respect of the financial year ended 30 June 2020.
1. PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial year comprised the provision of gambling and entertainment services. The Group’s principal activities remain unchanged from
the previous financial year, except as disclosed elsewhere in this Directors’ Report.
2. OPERATING AND FINANCIAL REVIEW
The financial results of the Group for the financial year ended 30 June 2020 comprise its three operating segments of Lotteries and Keno, Wagering and Media, and Gaming Services.
The activities and financial performance of the Group and each of its operating segments for the financial year are set out on pages 1 to 19 and below.
Lotteries and Keno
The Lotteries and Keno business has the following operations and licences/approvals.
Lotteries operations:
• The Lott is the brand that unites Tabcorp’s licensed lottery operations under one banner. Tabcorp conducts lotteries in all states and territories of Australia, except Western Australia, under
licence arrangements.
• Our leading game brands include Set for Life, Powerball, Oz Lotto, TattsLotto, Saturday Lotto, Gold Lotto, X Lotto, Monday and Wednesday Lotto, Lucky Lotteries, Lotto Strike, Super 66,
Keno and Instant Scratch-Its.
• Our lotteries products can be purchased in newsagencies, convenience stores and other retail outlets, online at theLott.com and via our mobile app.
Keno operations:
• Keno is a random number game that is played every 3 to 3.5 minutes with the chance for customers to win instant prizes and multi-million dollar lifechanging jackpots.
• Keno is played in clubs, hotels and TABs in Victoria, Queensland, South Australia and the ACT, and in clubs and hotels in NSW, and is available online in the ACT.
• Keno jackpot pooling across Victoria, NSW, Queensland and ACT.
Lotteries licences/approvals(i):
• NSW Operator Licence and various product licences expire in April 2050.
• Victorian Public Lottery Licence expires in June 2028.
• Queensland Licensed Lottery Operator’s Licence expires in July 2072.
• Lotteries operates under an agency agreement with the Lotteries Commission of South Australia which runs until December 2052.
• Tasmanian lotteries operate under renewable five year permits linked to Victorian (June 2025) and Queensland (June 2023) licences.
• ACT Approval to conduct a lottery indefinitely unless revoked.
• Northern Territory Lottery Agreement expires in June 2032.
(i) Ordered by population of states/territories.
33
DIRECTORS’ REPORTTabcorp Annual Report 2020
DIRECTORS’ REPORT
Keno licences/approvals(i):
• NSW Keno Licence expires in April 2050. Tabcorp operates Keno in NSW under a management agreement with ClubKENO Holdings Pty Ltd.
• Victorian Keno Licence expires in April 2022.
• Queensland Keno Licence expires in June 2047.
• Keno operates under an agency agreement with the Lotteries Commission of South Australia which runs until December 2052.
• ACT Approval to Conduct Keno expires in October 2064.
Wagering and Media
The Wagering and Media business has the following operations and licences/approvals.
Wagering operations:
• The business offers totalisator (or pari-mutuel) and fixed odds betting on racing, sports and other events.
• The business operates through a network of TAB agencies, hotels and clubs, and on-course operations in Victoria, NSW, Queensland, South Australia, Tasmania, Northern Territory and the ACT.
• Wagering channels include retail, internet, mobile devices and phone.
• Trackside, a computer simulated racing product, operates in Victoria, NSW and the ACT, and licensed in other Australian and overseas jurisdictions.
• International wagering and pooling is conducted through the Premier Gateway International (PGI) joint venture on the Isle of Man (50% interest).
Media operations:
• Three Sky Racing television channels broadcast thoroughbred, harness and greyhound racing to audiences in TAB outlets, hotels, clubs, other licensed venues, in-home to pay TV
subscribers and over various digital platforms.
• Sky Racing Active is a digital app providing an ‘access all areas’ pass to Sky Racing’s live and on-demand racing content across thoroughbred (excluding Victoria and South Australia),
harness and greyhound racing. Sky Racing Active allows users to create their own racing playlists and showcases.
• Three Sky Sports television channels broadcast various sports to audiences in TAB outlets, hotels, clubs and other licensed venues.
• The Sky Sports Radio network operates in NSW and the ACT, the RadioTAB network operates in Queensland, South Australia, Northern Territory and Tasmania, and the business has
advertising and sponsorship arrangements with Radio Sport National.
• The business broadcasts Australian racing throughout Australia and distributes Australian and international racing to other countries, and imports overseas racing to Australia.
Wagering licences/approvals(i):
• NSW Wagering Licence expires in March 2097, with retail exclusivity period to expire in June 2033.
• Victorian Wagering and Betting Licence expires in August 2024, and may be extended by the State of Victoria for a further two year period.
• Queensland Race Wagering Licence and Sports Wagering Licence expire in June 2098.
• South Australian Major Betting Operations Licence expires in June 2100, with retail exclusivity period to expire in December 2032.
• Tasmanian Gaming Licence expires in March 2062.
• ACT Totalisator Licence expires in October 2064.
• ACT Sports Bookmaking Licence expires in October 2029, with further rolling extensions to October 2064.
• ACT Approval to Conduct Trackside expires in October 2064.
• Northern Territory Totalisator Licence and Sports Bookmaker Licence expire in October 2035.
(i) Ordered by population of states/territories.
34
Tabcorp Annual Report 2020 Gaming Services
The Gaming Services business has the following operations and licences/approvals.
Gaming Services operations:
• The Gaming Services business operates two units under the MAX brand: MAX Regulatory Services and MAX Venue Services.
• MAX Regulatory Services provides electronic gaming machine (EGM) monitoring and related services across NSW, Queensland, and the Northern Territory.
• MAX Venue Services provides a mix of services including: gaming machine and systems supply and expertise, specialised services and strategic advice to licensed gaming venues in
Victoria and NSW; value-add services to venues in NSW, Victoria, Queensland, Tasmania, the ACT and the Northern Territory such as gaming and loyalty systems, business intelligence
tools, and cashless and ticket in ticket out (TITO) services; and logistics, installation, relocation, repair and maintenance of EGMs, lottery and wagering terminals and other transaction
devices across Australia.
Monitoring licences(i):
• NSW Centralised Monitoring System Licence expires in November 2032.
• Queensland Monitoring Operator’s Licence expires in August 2027, with indefinite rolling renewal capability.
• Northern Territory Monitoring Provider’s Licence expires in July 2021 with indefinite rolling renewal capability.
Other licences/approvals(i):
• NSW Gaming Machine Dealer’s and Seller’s Licences.
• Listings on the Victorian Roll of Manufacturers, Suppliers and Testers.
• Queensland Service Contractor Licence and Approved Financier status.
• South Australian Gaming Machine Dealer’s Licence (voluntarily suspended) and Gaming Machine Service Licence.
• Listings on the Tasmanian Roll of Recognised Manufacturers, Suppliers and Testers of Gaming Equipment.
• ACT Supplier Certificates.
• Northern Territory listing on the Roll of Approved Gaming Equipment Suppliers, Gaming Machine Service Contractors Licence and other approvals.
(i) Ordered by population of states/territories.
(ii) The Group’s NSW Inter-Club Linked Gaming Systems Licence and Inter-Hotel Linked Gaming Systems Licence expired in April 2020.
35
DIRECTORS’ REPORTTabcorp Annual Report 2020 DIRECTORS’ REPORT
3. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than matters arising from the impacts of the COVID-19 pandemic discussed in the Operating and Financial Review and elsewhere in the Directors' Report, no other significant changes
in the state of affairs of the Group have occurred since the commencement of the financial year on 1 July 2019.
4. SIGNIFICANT EVENTS AFTER THE END OF THE FINANCIAL YEAR
On 21 July 2020, the Federal Government announced that the JobKeeper scheme will be extended until 28 March 2021 for employers who continue to be significantly impacted by COVID-19.
Further changes to the business eligibility criteria were announced in August 2020. The Group may be eligible to receive further subsidy under the extended scheme.
The Group notes the recent developments in Victoria, including the declaration of a ‘state of disaster’ with effect from 2 August 2020. The relevant restrictions resulted in the temporary
closure of Victorian licensed venues (hotels and clubs) and TAB agencies which offer Tabcorp’s Wagering and Media, Keno and Gaming Services products. At the reporting date a definitive
assessment of the future effects of these restrictions, and COVID-19 more generally, on the Group cannot be made.
On 19 August 2020, the Group announced a 1 for 11 underwritten pro-rata accelerated renounceable entitlement offer with retail entitlements trading at a price of $3.25 per new share to
raise gross proceeds of approximately $600m.
No other matters or circumstances have arisen since the end of the financial year, which are not otherwise dealt with in this Directors’ Report or in the Financial Report, that have significantly
affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years.
5. BUSINESS STRATEGIES
The Group is one of Australia’s leading gambling entertainment companies and seeks to deliver sustainable superior returns to its shareholders through the delivery of financial, operational
and leadership excellence. To achieve these outcomes, the Group continues to focus on a number of key priorities, which are discussed on pages 4 to 9. The priorities of the Group’s operating
businesses are set out on pages 14 to 18.
6. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Each year the Board participates in a formal strategic review and planning process to provide guidance to management about the Group’s strategic direction. The Group plans to continue
with its business strategies, as set out in this report and referenced above. The execution of these strategies is expected to result in improved financial performance over the coming financial years.
The achievement of the expected results in future financial years is dependent on a range of factors, and may be adversely affected by any number of events, and are subject to, among other
things, the material business risks described in section 7.
The Directors have excluded from this report any further information on the likely developments in the operations of the Group and the expected results of those operations in future
financial years, as the Directors have reasonable grounds to believe that to include such information will be likely to result in unreasonable prejudice to the Group.
36
Tabcorp Annual Report 2020 7. MATERIAL BUSINESS RISKS
The Group has a structured and proactive approach to understanding, identifying and managing risk which is aligned
to the Group’s strategies and operations. The Group operates within an established Risk Management Framework
(summarised opposite) which enables the effective identification, monitoring, management, reporting and oversight of
risks throughout the Group. This framework is overseen by the Chief Risk Officer and the Risk and Compliance Committee,
and supports a strong culture of proactive risk management, helps protect our reputation and supports long term value
creation for our stakeholders.
For further information regarding the Group’s approach to risk management and risk governance, refer to Tabcorp’s
Corporate Governance Statement.
There are various risks that could have a material impact at a whole-of-Group level on the achievement of the Group’s
strategies and future prospects which are presented below, in no particular order, together with existing mitigations
employed by the Group. Many of the risks may arise due to events occurring that are outside the control of the Group.
Risk Management Framework
Business Strategy
Risk
Governance
Risk Categories
Key Risk Policies
Risk Management Lifecycle and Tools
Enterprise Risk Management (ERM) System
Risk
Breach of laws
and licences,
and compliance
and conduct
risks
Description and potential consequences
The Group’s businesses are regulated by laws, licences, regulations, rules, permits
and other approvals. Any material breach of the relevant obligations or failure to meet
compliance and conduct requirements may have an adverse impact on the financial
performance and operating position of the Group. Any such adverse impact may arise as
a result of the suspension or loss of applicable material gambling licences, renewal of
licences on less favourable terms, increased supervision and oversight by regulators and
other stakeholders, civil or criminal penalties, brand or reputational damage, and the
inability to obtain future licences or business opportunities. In addition, a breakdown in
material operational processes, system errors or failure to comply with the requirements
for the calculation of jackpots, tote and fixed odds dividends, gambling taxes or other
stakeholder returns, may require the Group to repay winnings or other financial impacts,
or seek reimbursement of any overpayments, while also exposing the Group to litigation,
including class actions, or other forms of disputes.
Licences and
other approvals
The conduct of wagering, lotteries, Keno and the provision of gaming services are
regulated by laws, licences, permits and other approvals from relevant state and territory
governments. The loss of or failure to renew any material licence, permit, authorisation or
other approval (or renewal on less favourable terms) may have an adverse impact on the
financial position, performance and operations of the Group.
Mitigations employed
• The Group has risk management, compliance and accountability
frameworks, considered risk appetite positions on material matters,
and supporting policies, procedures, tools, training and other controls.
• Employees and managers are provided with training and support to enable
them to effectively manage their risk and compliance obligations in
accordance with the Group’s frameworks.
• The Group regularly engages with regulators and has a robust environment
for testing and approving systems, with many key systems requiring
independent third party testing and approval by regulators before
deployment.
• Systems, processes and equipment are regularly monitored and tested.
Internal Audit periodically reviews the effectiveness of, and provides
independent and objective assurance regarding the adequacy of, controls
and processes for managing risk and compliance obligations.
• The Group operates a diverse portfolio of businesses across a number of
jurisdictions, business segments and customer categories which reduces
the reliance on any one specific business or jurisdiction.
• The Group maintains long term gambling licences and, where the terms
are appropriate, seeks new licences and to extend existing licences
where possible.
37
DIRECTORS’ REPORTTabcorp Annual Report 2020 DIRECTORS’ REPORT
Risk
Changes in
laws and the
regulatory
environment
Description and potential consequences
The Group’s businesses operate in a highly regulated environment and are significantly
affected by government policy and the manner in which governments and regulators
exercise their powers. From time to time, government policy and decisions shift and are
influenced by societal attitudes and political and/or media attention.
Changes in legislation, regulation, taxation or government policy (and related judicial
decisions and enforcement policy) by government agencies, tribunals and departments,
including as a result of changes in societal attitudes towards gambling products, may
have an adverse impact, to varying degrees, on the Group’s operational and financial
performance as a result of significant changes in the nature of operations, increased
compliance or other costs, resourcing demands, and potential changes in the level of
competition in relevant markets.
Litigation,
disputes and
investigations
From time to time, members of the Group become involved, or could become involved,
in litigation and disputes, including class actions, including with regulatory or law
enforcement bodies (such as ACCC, ASIC, AUSTRAC and State-based gambling
regulators), joint ventures and other business partners, stakeholders and third parties.
In addition, members of the Group (as well as their current and former officers and
executives) may be subject to various investigations carried out by the Australian
Taxation Office or investigations carried out by other Federal or State regulatory or
law enforcement bodies (including the ACCC, the Australian Federal Police, ASIC,
AUSTRAC and State-based gambling regulators). Probity-related implications may
also arise for Tabcorp.
This could potentially lead to the suspension or loss of applicable gambling licences,
other financial or criminal penalties, disciplinary action, brand damage and/or loss of
future business opportunities, each of which may, if they were to occur, have a material
adverse effect on the financial position, performance and/or operations of the Group.
There is also the risk that Tabcorp's reputation may further suffer due to public scrutiny
surrounding any such litigation, dispute or investigations regardless of their outcome
and this may also adversely affect the Group’s ability to generate revenue or conduct
its operations
Gambling activities compete with other consumer products for consumers’ discretionary
spending and in particular with other forms of leisure and entertainment. If the Group
does not adequately respond to competition for consumers’ discretionary expenditure,
there may be an adverse effect on the operational and financial performance of the Group.
Consumer discretionary spending may also be affected by adverse changes to general
economic or industry conditions, changes in consumers’ attitudes towards gambling
products and the availability of payment channels, which may in turn adversely affect
the financial performance of the Group.
Consumer
discretionary
spending and
preferences
38
Mitigations employed
• The Group proactively engages with regulators and governments, and from
time to time makes submissions relating to proposed changes in laws,
and regulatory and licensing environments, which may impact the Group.
• The Group regularly reviews its operating business model and strategies
to take account of changes to the regulatory and licensing environments
to mitigate adverse consequences of these changes.
• The Group proactively engages with industry bodies to align the Group’s
business strategies with potential industry changes and ensure the
sustainability of the Group’s businesses and those industries more broadly.
• The Group continues to invest in and embed customer care initiatives and
responsible gambling practices.
• The Group is supported by legal, regulatory and risk teams and implements
robust risk, compliance, contract management processes and systems and
controls to help mitigate risks of any potential litigation, disputes and
investigations where possible. Any litigation, disputes or investigations that
arise from time to time are managed in an effective and efficient manner with
a view to protecting not only Tabcorp’s financial position, but also its
reputation and ongoing operations.
• As noted, the Group also endeavours to maintain strong working
relationships through regular proactive engagement with regulatory and law
enforcement bodies, industry controlling bodies, other industry partners and
governments. This can help prevent actual and potential issues arising and/
or from escalating.
• As noted above, the Group operates a diverse portfolio of businesses with
operations spanning multiple jurisdictions and market segments, which
reduces the reliance on any single business and customer category.
• The Group adopts a range of strategies to further mitigate this risk, including
using its exclusive retail network, enhancing its customer service and
relationship management, introducing new products, adopting alternative
payment channels, and driving digital innovation and excellence across
its multi-channel network.
• The Group’s strategic marketing and consumer insights teams support
the businesses to understand and respond to changing consumer trends.
Tabcorp Annual Report 2020 Risk
Competition
Description and potential consequences
The Group’s businesses are affected, to varying degrees, by competing suppliers of
gambling and media products and services, based both in Australia and overseas. New
competitors and disruptors may also enter the Group’s traditional markets and be subject
to less regulation compared to the Group. As a result, there is a risk that the Group may
not be able to compete on the same terms as other operators, or may face increased
levels of competition from suppliers of gambling products and services, which could
adversely affect the operational and financial performance of the Group. A sustained
increase in competition from existing competitors or new entrants may result in a
material failure to grow, or a loss of market share or revenue in some markets.
Mitigations employed
• As noted above, the Group operates a diverse portfolio of businesses with
operations spanning multiple jurisdictions and market segments, which
reduces the reliance on any single business and/or customer category.
• The Group strives for continual improvement in its product and service
offering to attract and retain customers, including enhancing its customer
service and relationship management, introducing new products, and driving
digital innovation and excellence across its multi-channel network.
• The Group supports an industry where all gambling operators can compete
effectively and are required to adhere to, and are held to, the same laws,
regulations, industry codes and standards.
Funding risks
The Group is exposed to risks relating to the cost and availability of funds to support its
operations, including changes in interest rates and foreign currency exchange rates,
counterparty credit and liquidity risks which could impact its financing activities.
• The Group’s Treasury department is responsible for managing the Group’s
finance facilities and interest rate, credit, liquidity and currency risks in line
with policies approved by the Board.
In addition, as part of its arrangements with its external financiers, the Group is subject to
a number of customary conditions and financial covenants. A failure to comply with such
conditions and covenants may require the Group to repay borrowings earlier than
anticipated, or result in increased financing costs for the Group, which could in turn
adversely affect the financial performance of the Group.
Technology,
cybersecurity
and privacy
risks
The Group’s business relies on the successful operation of technology infrastructure,
which could be adversely affected by various factors including obsolescence of
equipment, complexity of core environments, extended digital outages which prevent
account customers from transacting on the Group's products, malicious attacks on
technology systems and customer and company data and regulatory information, ability
to recover from a significant hardware or data centre failure, and managing risks
associated with outsourcing key processes and activities to third-parties.
The Group’s business also relies on technology infrastructure to support ongoing
business growth. Where such infrastructure cannot efficiently support the changing
needs of the business, this may potentially adversely impact the reputation, operations
or financial performance of the Group.
The COVID-19 working environment has seen an enhanced threat level across all
industries and organisations as opportunistic criminals seek to exploit organisations’
cyber defences. A significant cyber incident or prolonged failure of the computer systems
and/or related infrastructure or technology security failure could impact upon the Group’s
technology systems and equipment, prevent operation of revenue generating functions,
result in the loss or exposure of information assets, or personal customer or regulatory
data could be wrongfully appropriated, lost or disclosed, which may potentially adversely
impact the reputation, operations or financial performance of the Group and expose the
Group to significant regulatory enforcement actions, litigation and other disputes.
• The Group maintains an active capital management program with a diverse
range of funding sources and long dated maturities. During FY20, the Group
engaged with certain external financiers and secured agreement for certain
covenant waivers to preserve liquidity and mitigate the financial impacts of
the COVID-19 pandemic. Refer to page 11 of the Operating and Financial
Review for further information.
• Detailed disclosures are contained in the Financial Report in section B titled
“Capital and risk management” on pages 83 to 93.
• The Group’s Technology team dedicates resources, systems and expertise
to the identification, analysis, and mitigation of technology risks, and
leverages the expertise from key technology partners.
• This team designs new generation information technology platforms
and evolves existing core platforms to take advantage of advances in
technologies and practices to provide leading security technologies
to support the Group’s growth strategies.
• A dedicated information and cyber-security team within the Technology
function is tasked with protecting key information assets, detecting any
attempted attacks, and responding appropriately. Regular reviews and
assessments with follow up actions assist ongoing defensive strategies
and response readiness.
• The Group maintains support arrangements for cyber incident response
and recovery, and holds a cyber breach insurance policy.
• The Group has a Privacy Policy, Privacy Officer, and a number of internal
working groups, and adopts practices, procedures and systems to provide
oversight and support the appropriate management of data and its privacy.
• The Group has disaster recovery plans and business continuity plans in place
to manage major technology failures, cyber-security attacks and privacy
breaches should they occur.
39
DIRECTORS’ REPORTTabcorp Annual Report 2020 DIRECTORS’ REPORT
Risk
Reliance on
infrastructure
and third party
commercial
arrangements
Description and potential consequences
The Group is reliant on key infrastructure and third party commercial arrangements
for the operation of its business. A significant malfunction or interruption to key
infrastructure, or a failure of, significant interruption to, or reduction in the quality of
third party products and services that the Group relies upon for a sustained period
of time, may have an adverse impact on the reputation and the operating and/or
financial performance of the Group.
Racing and
sports products
The Group’s Wagering and Media business is reliant on racing industries, stakeholders
and sporting bodies across Australia, and internationally, providing a program of events
for the purposes of wagering, and obtaining and maintaining the necessary broadcast
rights and content for race meetings and sporting events. A significant decline in the
quality or number of events that comprise this program (for example due to adverse
weather conditions, climate change, natural disasters, epidemic/pandemic outbreaks
(such as the COVID-19 pandemic), an outbreak of equine influenza or other animal
sickness pandemics, or changes in societal attitudes associated with animal welfare or
other sustainability issues) would have a significant adverse effect on Wagering and Media
revenue and may potentially have a material adverse effect on the operational and
financial performance of the Group.
Mitigations employed
• The Group’s procurement function seeks commercial relationships across a
diverse supplier base with clear terms of engagement, agreed service levels,
regular reporting and monitoring, and where necessary risk mitigation and
remediation action plans.
• The Group has in place business continuity and disaster recovery plans.
• The Group maintains an insurance program which includes limited recourse
in the event of major failures of infrastructure or third party supply
arrangements.
• As noted above, the Group operates a diverse portfolio of businesses with
operations spanning multiple jurisdictions and market segments, which
reduces the reliance on any single business and customer category.
• In addition, the Group’s Wagering and Media business offers betting products
on, and broadcasts, a wide variety of racing, sports and other events,
domestically and internationally.
• The Group works closely with racing bodies and industry stakeholders to
optimise racing schedules and broadcasts to provide the best racing product
available to customers and mitigate the potential for adverse impacts which
may result from a decline in racing product.
• The Group has in place business continuity plans to help manage and
respond to significant events which may impact upon the supply of racing
and sports product.
• The Group performs financial modelling, sensitivity analysis and stress
testing to monitor and respond to the impacts of racing and sport product
supply disruptions.
• The Group also maintains an insurance program which provides limited
cover for major disruptions.
40
Tabcorp Annual Report 2020 Risk
Changes in race
fields and sports
product fees
and taxes
Description and potential consequences
Each state and territory of Australia has implemented race fields arrangements,
under which wagering operators pay product fees for use of that industry’s race fields
information. Similar arrangements exist in relation to various sports. There is the potential
that fees will increase, new fees will be introduced, or the method for determining fees
will change, and such changes may have an adverse effect on the operational and
financial performance of the Group.
In addition, a material increase in the taxes and levies payable by the Group in respect
of its wagering, lotteries or gaming businesses may reduce margins and have an
adverse impact on the financial performance of the Group.
There is also a risk that racing, sport or industry bodies may disagree with the Group
regarding the application of certain aspects of the race fields regimes, contracts that
govern product fees or relevant commercial arrangements generally, or the manner in
which taxes, levies and fees are determined. Such disagreements may lead to litigation or
other dispute resolution processes being involved, including negotiated settlement of
relevant commercial disputes.
The operating and financial performance of the Group’s business is materially dependent
on the operation of a network of licensed venues (hotels and clubs), TAB agencies,
newsagencies, convenience stores and other retail outlets which offer the Group’s
products. Significant disruption or closures of, or a decline in, these channels,
whether as a result of a particular event (for example, due to adverse weather events
or climate change, epidemic/pandemic outbreak (such as the COVID-19 pandemic),
or natural disaster), economic conditions, changes in consumer behaviour or any other
factors, may have a direct adverse effect on the operating and financial performance
of the Group.
Disruption or
decline of
licensed venues,
agencies and
retail network
Mitigations employed
• The Group currently has contracts in place that the Group considers will
allow it to offset or share some of the race field fees or offer additional
protections under the respective arrangements.
• The Group maintains strong relationships with industry controlling bodies,
other industry partners and governments and engages with them in respect
of proposed changes to industry funding arrangements, fees and other taxes
and levies.
• Where possible, the Group seeks to enter into contracts with racing and
sports controlling bodies that provide long term certainty of commercial
arrangements.
• The Group operates a diverse portfolio of businesses through a multi-channel
strategy across retail and digital networks, which reduces the reliance on any
single channel.
• The Group regularly reviews its omni-channel strategies and seeks to
optimise its investment in the retail network to align with changing market
and consumer trends.
• The Group works with industry peak bodies and its retail network partners to
optimise its product and service offering in retail venues, and implements a
number of initiatives to improve the in-venue customer experience, including
for example introducing digital commissions to TAB venues and introducing
TAB Venue Mode to enhance the customer experience when using the TAB
app while in a TAB venue.
• The Group has in place business continuity and disaster recovery plans.
41
DIRECTORS’ REPORTTabcorp Annual Report 2020 DIRECTORS’ REPORT
Risk
COVID-19
pandemic
Description and potential consequences
The COVID-19 pandemic and government restrictions have impacted the Group’s
operating businesses to varying degrees, and in turn the Group’s financial and operational
performance. To date, the main impacts have been to the Group’s Wagering and Media
business (due primarily to the temporary closure of licensed venues (hotels and clubs)
and TAB agencies and disruption to sporting events and international racing), and in the
Gaming Services business (due to the temporary closure of licensed venues).
Mitigations employed
• The Group is committed to prioritising the health, safety and wellbeing of its
people, partners, customers and the community. The Group has business
continuity plans, processes and resources in place to mitigate health and
safety risks, maintain continuity of service (albeit at reduced levels for
some of its businesses and channels), and ameliorate the financial and
operational impacts.
The COVID-19 pandemic and related actions taken in response by the Australian and
other governments, including national lockdowns, border controls/travel restrictions and
the effects of the pandemic on the global and domestic economy have had, and are likely
to continue to have, a material adverse effect on Tabcorp, its financial performance and
position. There is no certainty as to the length of Australian and other government
restrictions and whether they will increase or be eased in the future.
The long term impacts from COVID-19 on general economic or industry conditions and
consumer discretionary spending are uncertain and may adversely impact the financial
and operational performance of the Group and the delivery of its growth strategies in
the future.
Refer also to the risk topics “Racing and sports products”, “Disruption or decline of
licensed venues, agencies and retail network” and “People” for further information about
other risks which could be impacted by COVID-19 and other potential pandemics.
The Group’s performance and the execution of its strategies depends on its ability to
attract and retain key senior management and operating personnel and foster a high
performance culture. The loss of any key personnel, or the Group’s inability to attract
the requisite personnel with suitable experience, could have an adverse effect on the
performance of the Group and the delivery of its strategies and/or operations.
There is a heightened risk that the people related initiatives that were implemented
to mitigate the impacts of the COVID-19 pandemic (refer above) may have an adverse
impact on the Group’s ability to attract and retain certain key senior management and
personnel, as well as employee engagement and productivity.
• The Group regularly engages with governments, regulators, customers,
venue and racing industry partners, and employees to help manage the
impact on our stakeholders.
• The diversification of the Group’s businesses across multiple channels,
products and jurisdictions provides greater resilience when such
pandemics occur.
• During the COVID-19 pandemic, the Group identified and implemented
initiatives to mitigate the financial and earnings impacts, including reducing
operating and capital expenditure, securing debt covenant waivers and
preserving liquidity, suspending the FY20 final dividend, securing
government support for the deferral of lottery and Keno taxes and payroll tax,
encouraging retail customers to use digital channels, and actively promoting
remaining available products. A range of people related initiatives were also
implemented, including standing down some groups of employees, reducing
working hours and annual leave balances, working remotely, accessing the
Federal Government’s JobKeeper scheme, and freezing remuneration
increases and no FY20 incentive outcomes.
• A COVID-19 Response Advisory Group (CRAG) was established to coordinate
and oversee the Group’s response to the COVID-19 pandemic. Further details
about the CRAG are contained in Tabcorp’s Corporate Governance
Statement.
• The Board, People and Remuneration Committee, Chief People Officer and
various management committees have responsibility for overseeing people
related strategies and programs.
• The Group has adopted strategies, policies and processes for the
recruitment, development and retention of talent, and for fostering an
inclusive, diverse and engaged workforce.
• The Group’s remuneration framework aims to attract, motivate and retain
high calibre individuals through performance-linked remuneration based
on the achievement of Group and individual performance (financial and
non-financial) outcomes.
• The Group has in place business continuity plans and workplace
preparedness plans to assist our people and businesses to respond to,
and recover from, COVID-19 and other potential workplace disruptions.
People
42
Tabcorp Annual Report 2020 8. DIRECTORS
The names and details of the Company’s Directors in office during the financial year and up to the date of this report (unless otherwise stated) are set out on pages 26 to 27 and below.
Dr Zygmunt Switkowski AO retired as an independent Non Executive Director of the Company on 28 February 2020, having served as a Director of the Company from October 2006.
At the time of his retirement, he was Chairman of NBN Co Limited and Chancellor of RMIT University. Dr Switkowski is the former Chairman of Suncorp Group Limited, a former Director
of Healthscope Limited and Oil Search Limited, and former Chairman of the Australian Nuclear Science and Technology Organisation. Dr Switkowski was the Chief Executive Officer and
Managing Director of Telstra Corporation Limited from 1999 to 2005, and is a former Chief Executive Officer of Optus Communications. He is a Fellow of AICD, Australian Academy of
Technological Sciences and Engineering, and Australian Academy of Science. In the past three years, he was a director of other ASX listed companies as follows: Healthscope Limited from
April 2016 to June 2019; Oil Search Limited from November 2010 to December 2016; and Suncorp Group Limited from September 2005 to September 2018.
9. DIRECTORS’ INTERESTS IN CONTRACTS
Some Directors of the Company, or related entities of the Directors, conduct transactions with entities within the Group that occur within a normal employee, customer or supplier
relationship on terms and conditions no more favourable than those with which it is reasonable to expect the entity would have adopted if dealing with the Director or Director-related entity
on normal commercial terms and conditions.
The Board assesses the independence of Directors and, among other things, takes into account any related party dealings referable to a Director which are material and require disclosure
under accounting standards, and whether any Director is, or is associated with, a supplier, professional adviser, consultant to or customer of the Group which is material. No such
circumstances arose during the financial year. For more information refer to the Corporate Governance Statement available on Tabcorp’s website.
10. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Directors and Officers of the Group are indemnified against liabilities pursuant to agreements with the Group. Members of the Group have entered into insurance contracts with third
party insurance providers, and in accordance with normal commercial practices, under the terms of the insurance contracts, the nature of the liabilities insured against and the amount
of premiums paid are confidential.
11. COMPANY SECRETARIES
Chris Murphy commenced as Acting Company Secretary on 23 March 2018 and was formally appointed as Company Secretary on 6 February 2019 following receipt of the necessary
regulatory and ministerial approvals. Prior to joining Tabcorp, he was Assistant Company Secretary of Transurban Group and previously held company secretariat and/or legal roles
at Cleanaway Limited, Alstom Limited and Melbourne Stadiums Limited. Chris holds a Bachelor of Laws (Honours), Bachelor of Commerce, a Graduate Diploma of Applied Corporate
Governance and a Graduate Certificate in Applied Finance and Investment, and he is an Associate Member of the Governance Institute of Australia.
Patrick McGlinchey was appointed as Company Secretary on 26 June 2020. Patrick is Tabcorp’s Group General Counsel with responsibility for the Group’s Legal, Regulatory and Governance
functions. Prior to joining Tabcorp in March 2019, he held senior legal, governance and compliance roles at LafargeHolcim Group and Aristocrat Leisure Limited. Patrick holds
a Bachelor of Laws (Honours) and a Bachelor of Economics (Soc Sc). He has also attended various executive development courses including the International Institute for Management
Development in Switzerland and the Wharton School in the USA.
43
DIRECTORS’ REPORTTabcorp Annual Report 2020 12. ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group’s environmental obligations are regulated under both state and federal laws. The Group complies with, or in many cases exceeds, its environmental performance obligations.
During the financial year ended 30 June 2020, no environmental breaches have been notified to the Group by any government agency.
13. POLITICAL EXPENDITURE AND ENGAGEMENT
As a listed entity operating in a highly regulated environment, Tabcorp has an obligation to its shareholders and stakeholders to participate in the process of public policy development.
Tabcorp is a member of various networking forums organised by political parties and Tabcorp personnel attend networking events that support political parties as they participate in the
democratic system of parliamentary government in Australia – at both a Commonwealth and state/territory level. Under various Australian laws the cost of these networking forums and
events is classified as a political donation.
Tabcorp takes a strict principles-based approach when making contributions to political parties in accordance with our Political Donations Policy. The Board has oversight of this policy and
approves Tabcorp’s political expenditure program and budget each year.
Tabcorp discloses its political contributions to the Australian Electoral Commission (AEC) and other bodies, as required by law and our Political Donations Policy. In FY20, Tabcorp’s political
contributions totalled $190,445 (FY19: $179,423). These contributions were to meet the cost of memberships of political party business forums and attendance at events and party
conference corporate days.
Further details are available in Tabcorp’s Corporate Governance Statement and under the Corporate Governance section of Tabcorp’s website, including Political Donations Policy and a link
to Tabcorp’s Annual Returns to the AEC.
14. ROUNDING OF AMOUNTS
Dollar amounts in the Financial Report and the Directors’ Report have been rounded to the nearest million and in the Remuneration Report to the nearest hundred thousand unless
specifically stated to be otherwise, in accordance with the Australian Securities and Investments Commission Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191.
15. AUDITORS
The Group’s external auditor is Ernst & Young. The Group’s internal audit function is fully resourced by Tabcorp, with specialist independent external support where necessary. More information
relating to the audit functions can be found in the Company’s Corporate Governance Statement.
44
Tabcorp Annual Report 2020 16. NON-AUDIT SERVICES
Ernst & Young, the external auditor to the Company and the Group, provided non-statutory audit
services to the Company during the financial year ended 30 June 2020. The Directors are satisfied
that the provision of non-statutory audit services during this period was compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001. The nature
and scope of each type of non-statutory audit service provided means that auditor independence
was not compromised.
The Audit Committee regularly reviews the activities of the independent external auditor and
reviews the auditor’s performance on an annual basis. The Chairman of the Audit Committee must
approve all non-statutory audit and other work to be undertaken by the auditor (if any). Further
details relating to the Audit Committee and the engagement of auditors are available
in the Company’s Corporate Governance Statement available on the Tabcorp website.
Ernst & Young, acting as the Company’s external auditor, received or are due to receive $1,142,000
in relation to the provision of non-statutory audit services to the Company in respect of the
financial year ended 30 June 2020. These services relate to other assurance and agreed upon
procedures services under other legislation or contractual arrangements and other services.
Amounts paid or payable by the Company for audit and non-statutory audit services are disclosed
in note E6 to the Financial Report.
17. AUDITOR’S INDEPENDENCE DECLARATION
Shown opposite is a copy of the auditor’s independence declaration provided under section 307C
of the Corporations Act 2001 in relation to the audit for the financial year ended 30 June 2020.
This auditor’s independence declaration forms part of this Directors’ Report.
18. REMUNERATION REPORT
The Remuneration Report for the financial year ended 30 June 2020 forms part of this Directors’
Report, and can be found on pages 46 to 70.
This Directors’ Report has been signed in accordance with a resolution of Directors.
Paula J Dwyer
Chairman
Melbourne
19 August 2020
45
DIRECTORS’ REPORTTabcorp Annual Report 2020 REMUNERATION REPORT (AUDITED)
Contents
1. Letter from the People and Remuneration Committee Chairman
2. Purpose
3. Key messages
4. Key Management Personnel
(a) Non Executive Director changes during FY20
(b) Executive KMP changes during FY20
(c) KMP changes for FY21
5. Remuneration governance
6. Executive KMP remuneration
(a) Strategy
(b) Structure
(c) Remuneration packages
(d) Remuneration structure and operation
(i) Fixed remuneration
(ii) Short term incentive (STI)
(iii) FY20 long term incentive (LTI)
(e) Remuneration and accountability
(f) Policy prohibiting hedging
(g) Executive Shareholding Policy
(h) Executive KMP employment contracts
7. Executive KMP remuneration outcomes in FY20
(a) 5-year business performance
(b) FY20 STI outcomes
(c) LTI awards granted in FY20
(d) LTI awards tested in FY20
(e) Actual remuneration received in FY20
(f) Variable remuneration outcomes over the preceding five financial years
(g) Other remuneration
8. Executive KMP remuneration arrangements for FY21
9. Non Executive Director fees
(a) Strategy and framework
(b) FY20 fee structure
(c) Fees paid during FY20
(d) Non Executive Director Shareholding Policy
10. Statutory remuneration disclosures
(a) KMP statutory remuneration tables
(b) Transactions and loans with KMP
47
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46
Tabcorp Annual Report 2020
1. LETTER FROM THE PEOPLE AND REMUNERATION COMMITTEE CHAIRMAN
Dear Shareholder,
On behalf of the Tabcorp Board of Directors, I am pleased to present Tabcorp’s 2020 Remuneration Report for which we will seek your approval at the Annual General Meeting (AGM)
to be held on 20 October 2020.
Tabcorp delivered a net profit after tax and before significant items of $271m in FY20. After significant items, which included $1,090m in non-cash goodwill impairment charges relating
to the Wagering and Media, and Gaming Services businesses, Tabcorp recorded a statutory net loss after tax of $870m.
Like many organisations, the Group’s performance for the financial year ended 30 June 2020 (FY20) was impacted by COVID-19. Tabcorp’s first priority was to ensure the safety and
wellbeing of our people and to support our partners. Lockdown measures imposed throughout the country because of COVID-19 resulted in the standing down of many of our staff,
predominantly in the on-site and on-track parts of the business and the closure of many of our agencies and venue partner retail outlets.
We have sought to manage the financial impacts on our business by reducing operating and capital expenditure where possible, encouraging retail customers to use digital alternatives and
actively promoting remaining available products and services.
With recent changes in lockdown restrictions across most Australian states, our agencies and venue partner retail outlets have begun to re-open, and many local and international sporting
and racing events have resumed. This has enabled us to reinstate and redeploy many of our employees, in all states and territories except Victoria.
In terms of our three business units:
• The Lotteries and Keno business performed very strongly driven by its investment in digital channels, game development and growth in registered players. The Lotteries business also
successfully commercially reset and extended the Jumbo Interactive reseller agreement for a further ten years.
• The Wagering and Media business continued to invest in its digital transformation and substantially completed the integration of the UBET business. However, it was heavily impacted by
COVID-19, with enforced closure of retail operations across all states and territories at different times from March to June 2020. The business was also impacted by the temporary
suspension of domestic and international sport.
• Gaming Services was heavily impacted by the suspension of the majority of its revenues following the closure of hotels and clubs from March 2020. The business has taken the opportunity
to complete an operational review and its venues outside Victoria have now re-opened under strict social distancing protocols.
Tabcorp aims to reward its executives competitively and appropriately for:
• Strong Group financial and non-financial performance.
• Creating long term shareholder value.
• Behaving in line with Tabcorp’s values.
• Acting in line with Tabcorp’s risk management and compliance framework.
Although the executive and management team made good progress across a number of key business areas and managed an effective response program to the COVID-19 pandemic, the
Board determined the Short Term Incentive Group Funding Multiplier to be zero, and therefore no Short Term Incentive awards to be paid to the executive KMP (including the MD & CEO)
for FY20.
In making this determination the Board particularly noted:
• the below target Group financial performance;
• the increased cost and delayed integration of the Tabcorp and Tatts businesses – although now substantially complete; and
• areas for improvement in operational performance including adherence to Tabcorp’s rigorous risk and compliance framework.
47
REMUNERATION REPORTTabcorp Annual Report 2020 REMUNERATION REPORT For the year ended 30 June 2020
MD & CEO remuneration
In considering the impact of COVID-19 on the Group, the MD & CEO’s fixed remuneration was temporarily reduced by 20% from 1 April 2020 to 30 June 2020, and reinstated to the previous
level on 1 July 2020. Apart from this, there were no adjustments to Mr Attenborough’s fixed remuneration in FY20 and it is intended that there will be no adjustments in FY21 (his fixed
remuneration has not been increased since 2017).
In terms of variable pay, Mr Attenborough’s maximum Short Term Incentive opportunity was reduced from 150% to 112.5% of fixed remuneration in FY20. No other changes were made
in FY20 and it is intended that no changes will be made to Short Term Incentive opportunities in FY21.
As previously mentioned, in line with the financial results being below targeted levels, the MD & CEO did not receive a Short Term Incentive award for FY20.
The 2016 Long Term Incentive grant also lapsed (in its entirety) during FY20, and the MD & CEO did not benefit from this grant.
Executive KMP remuneration
The total increase to executive KMP remuneration at the start of FY20 was 2.7%, largely due to the increase provided to the Managing Director Lotteries and Keno in recognition of her
remuneration being below market peers. It is intended that there will be no adjustment to executive KMP remuneration in FY21.
In line with the financial results being below targeted levels, executive KMP did not receive a Short Term Incentive award for FY20.
Also, the 2016 Long Term Incentive grant lapsed (in its entirety), and executive KMP received no benefit from this grant.
Long Term Incentive Plan
The Board has agreed that, from the 2020 Long Term Incentive offer, the Combination Synergy measure (introduced as an interim measure) will be replaced by a return on invested capital
(ROIC) measure (weighted 25%). 75% of the 2020 Long Term Incentive offer will continue to be based on a relative total shareholder return (TSR) measure. Further details will be outlined in
the Notice of Meeting for the 2020 AGM in relation to the MD & CEO’s grant and in Tabcorp’s FY21 Remuneration Report.
Non Executive Director fees
The Board Chairman and Board base fees were reset against the new remuneration benchmark peer group (ASX 25 to 75), resulting in a reduction of approximately 10% effective from
1 September 2019. In response to the impact of COVID-19 on the business, Board Chairman, Board base and Committee fees were temporarily reduced by 10% between 1 April 2020 and
30 June 2020, and reinstated to previous (pre-April 2020/pre-COVID) levels on 1 July 2020.
It is intended that Board and Board Committee fees will not be increased in FY21.
The Board continues to remain confident that Tabcorp is well positioned to execute strategies that can generate the most value for shareholders in a post COVID-19 environment.
Steven Gregg
People and Remuneration Committee Chairman
48
Tabcorp Annual Report 2020 2. PURPOSE
This Remuneration Report details the remuneration policies and arrangements for the Key Management Personnel (KMP) of the Group, comprising Tabcorp and its subsidiaries, for the year
ended 30 June 2020 (FY20). KMP are those persons having the authority and responsibility for planning, directing and controlling the activities of Tabcorp and the Group, and comprises the
Directors of Tabcorp and certain members of the Executive Leadership Team. This Remuneration Report is presented in accordance with the requirements of the Corporations Act 2001 (Cth)
(Act) and its regulations and has been audited as required by section 308(3C) of the Act.
3. KEY MESSAGES
Board Chairman and
Base Board fees
FY20
Reduced by approximately 10%, effective 1 September 2019.
Further reduced by 10% between 1 April 2020 and 30 June 2020, in response to the impact of COVID-19 on the Group.
Board Committee fees Reduced by 10% between 1 April 2020 and 30 June 2020, in response to the impact of COVID-19 on the Group.
Non Executive
Director fees
FY21
All fees
Restored to pre-April 2020 (pre-COVID) levels from 1 July 2020.
It is intended that no other adjustments will be made in FY21.
Fixed remuneration
Reduced by 20% between 1 April 2020 and 30 June 2020, in response to the impact of COVID-19 on the Group.
No other adjustments to fixed remuneration were made in FY20 (fixed remuneration has not been increased since December 2017).
Short term incentive
(STI) opportunity
and award
FY20
Target opportunity: 75% of fixed remuneration (unchanged).
Maximum opportunity: 112.5% of fixed remuneration (reduced from 150% in FY19).
Actual FY20 STI award: 0% ($0). No award was provided.
MD & CEO
remuneration
Long term incentive
(LTI) opportunity
and vesting
Fixed remuneration
FY21
STI and LTI
opportunities
Target opportunity: 75% of fixed remuneration (unchanged).
Maximum opportunity: 150% of fixed remuneration (unchanged).
Vesting of the 2016 LTI grant: 0% ($0). The 2016 LTI grant lapsed and the MD & CEO did not receive any benefit from this grant.
Restored to the pre-April 2020 (pre-COVID) level from 1 July 2020.
It is intended that no other adjustments will be made in FY21 to Mr Attenborough's fixed remuneration.
It is intended that no adjustments will be made in FY21 to Mr Attenborough's STI and LTI opportunities.
49
REMUNERATION REPORTTabcorp Annual Report 2020 REMUNERATION REPORT For the year ended 30 June 2020
FY20
Executive KMP
remuneration
FY21
Fixed remuneration
Short term
opportunities
and awards
Long term incentive
(LTI) opportunity
and vesting
Fixed remuneration
STI and LTI
opportunities
The MD & CEO's fixed remuneration reduced by 20% from 1 April 2020 to 30 June 2020. His fixed remuneration returned to the pre-COVID
(pre-April 2020) level on 1 July 2020. As such, there was no net adjustments to the MD & CEO's fixed remuneration in FY20.
The Managing Director Gaming Services and the previous Chief Financial Officer’s fixed remuneration levels remained unchanged.
The Managing Director Wagering and Media received a 2% fixed remuneration increase (in line with market movements).
The Managing Director Lotteries and Keno received a 14% fixed remuneration increase, recognising that her remuneration levels were
below market (compared to business unit heads running similar sized businesses) and in recognition of her strong performance since
Combination.
The total increase to executive KMP fixed remuneration in FY20 was 2.7% (excluding any reductions made as a result of COVID-19).
The total remuneration package provided to the newly appointed Chief Financial Officer is lower in value than that of his predecessor.
Target opportunity: 50% of fixed remuneration (unchanged).
Maximum opportunity: 100% of fixed remuneration (unchanged).
Actual FY20 STI award (all executive KMP): 0% ($0). No STI awards were provided for FY20.
Target opportunity: 50% of fixed remuneration (unchanged in FY20).
Maximum opportunity: 100% of fixed remuneration (unchanged in FY20).
Vesting of the 2016 LTI grant: 0% ($0). The 2016 LTI grant lapsed and the executive KMP did not receive any benefit from this grant.
It is intended that no adjustments will be made in FY21.
It is intended that no adjustments will be made in FY21.
Remuneration framework changes for FY21
The next long term incentive grant (intended to be made in October 2020), will continue to include relative TSR as one of the
performance measures (75% of the grant). The second performance measure, Combination Synergy, which was included in the 2019
grant (as an interim measure) will be replaced with a return on invested capital (ROIC) measure and vesting of 25% of the grant will be
subject to this measure. More details will be provided in the FY21 Remuneration Report and the Notice of Meeting for the 2020 AGM.
4. KEY MANAGEMENT PERSONNEL
(a) Non Executive Director changes during FY20
Mr David Gallop joined the Tabcorp Board on 14 October 2019 initially as an observer and formally commenced as a Non Executive Director on 3 July 2020 following the receipt of all
necessary regulatory and ministerial approvals.
Ms Anne Brennan joined the Tabcorp Board on 3 February 2020 initially as an observer and formally commenced as a Non Executive Director on 17 July 2020 following the receipt of all
necessary regulatory and ministerial approvals.
Dr Zygmunt Switkowski retired from the Board, effective 28 February 2020.
50
Tabcorp Annual Report 2020
(b) Executive KMP changes during FY20
Mr Adam Newman joined the Group and replaced Mr Damien Johnston as Chief Financial Officer and KMP on 7 October 2019. Mr Frank Makryllos (Managing Director Gaming Services)
ceased to be KMP from 18 February 2020. His role was not replaced in FY20.
Table 1: KMP for FY20
Name
Current Non Executive Directors
Paula Dwyer
Bruce Akhurst
Harry Boon
Anne Brennan
David Gallop
Steven Gregg
Vickki McFadden
Justin Milne
Former Non Executive Directors
Zygmunt Switkowski
Executive Director
David Attenborough
Current executive KMP
Adam Newman
Adam Rytenskild
Sue van der Merwe
Former executive KMP
Damien Johnston
Frank Makryllos
Position held
Period in position if less than full year
Chairman and Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Observer from 3 February 2020, Non Executive Director from 17 July 2020.
Observer from 14 October 2019, Non Executive Director from 3 July 2020.
Non Executive Director
Until and including 28 February 2020
Managing Director and Chief Executive Officer (MD & CEO)
Chief Financial Officer
Managing Director (MD) Wagering and Media
Managing Director (MD) Lotteries and Keno
From 7 October 2019
Chief Financial Officer
Managing Director (MD) Gaming Services
Until and including 6 October 2019
Until and including 17 February 2020
Any references made to “executive KMP” in this Remuneration Report includes the MD & CEO unless otherwise stated.
(c) KMP changes for FY21
As previously announced to the ASX, Ms Dwyer will retire from the Board on 31 December 2020 as part of the Board's succession plan. Mr Gregg will succeed Ms Dwyer as Board
Chairman from 1 January 2021. Tabcorp also announced that Mr Attenborough will retire as the Group's MD & CEO in the first half of the 2021 calendar year. A global search for his
successor is underway.
51
REMUNERATION REPORTTabcorp Annual Report 2020 REMUNERATION REPORT For the year ended 30 June 2020
5. REMUNERATION GOVERNANCE
The People and Remuneration Committee comprises four independent Non Executive Directors and assists the Board in fulfilling its responsibilities with respect to people-related and
remuneration matters as outlined below.
People and remuneration policies, frameworks and structures
Establishing and maintaining people (including talent and retention, diversity and inclusion and culture and
engagement) and remuneration policies, frameworks and structures. Ensuring that these are strategically aligned
and market competitive, encourage strong employee performance, engagement and shareholder value creation while
mitigating risks and ensure all employees are treated fairly and equitably (across all demographics).
Non Executive Director fee structure and levels
Establishing and determining market-competitive and appropriate fee structures and levels that remunerate Non
Executive Directors effectively for their responsibilities in a highly complex and regulated business.
Executive remuneration levels
Incentive outcomes
People strategy and projects
Setting remuneration levels that are market-competitive and appropriate, encouraging and recognising strong
performance and retaining key skills.
Determining performance and incentive outcomes that align with Tabcorp’s risk and compliance framework and
correlate with business performance and shareholder value creation.
Oversee the Group’s people strategies and projects, including talent and retention, diversity and inclusion, culture
and engagement; as well as the Group’s health, safety and wellbeing strategy and performance.
The People and Remuneration Committee regularly reviews remuneration arrangements to ensure they continue to be fair, competitive, encourage strong business performance and
shareholder value creation, and align with the Group’s values and approach to risk management and compliance. To inform its decisions, the Committee sources a range of data and may
receive independent advice, as appropriate. No remuneration-related advice was sought and no remuneration recommendations were received in respect of KMP during FY20 and to the
date of this report. The Committee is governed by its Charter, which is available on Tabcorp’s website (www.tabcorp.com.au) under the Corporate Governance section.
6. EXECUTIVE KMP REMUNERATION
(a) Strategy
Tabcorp aims to reward its executive KMP competitively and appropriately for:
Strong Group financial and
non-financial performance
Creating long term
shareholer value
Behaving in line with
Tabcorp’s values
Acting in line with Tabcorp’s risk
management and compliance framework
Tabcorp’s short term incentive pool
and 60% of short term incentive awards
are based on Group performance
(financial and non-financial).
Tabcorp’s short and long term incentive
performance measures are directly linked
to shareholder value creation.
All executive KMP are assessed equally
on performance and behaviours annually.
This determines fixed and variable
remuneration outcomes.
Key scorecard measures and a documented
accountability framework (which feeds into
the performance management framework)
ensures that executive KMP are rewarded
for results that are achieved in a sustainable
and ethical manner.
52
Tabcorp Annual Report 2020 (b) Structure
Diagram 1: Executive KMP remuneration structure
Attract, motivate and retain high calibre individuals across the organisation through a market-competitive, performance-linked and shareholder aligned remuneration framework.
Remuneration philosophy
Remuneration
principles
Remuneration
structure
Fixed remuneration
Ensure remuneration structures
and levels are market competitive.
Set and
adjusted,
considering:
Role
responsibilities
Qualifications and
experience
Market movements
and economic data
Individual
performance
ASX 25 to
75 median
Cash
Appropriately recognise and reward
superior Group and individual
performance.
Reward behaviours in line with the
Group’s values.
Dependent on:
Group financial
and non-financial
performance
Reward for the creation of
sustained shareholder value.
Performance
Rights
(no dividends)
Vesting of
the 2019
LTPP Offer,
dependent on:
+
Short Term Incentive (STI)
Individual balanced scorecards
Financial
Strategic (including
integration)
Customer
Operational
excellence (including
risk and compliance)
People and culture
Behaviours
in line with
Tabcorp’s values
and approach
to risk and compliance.
+
Long Term Incentive (LTI)
Relative TSR performance and service periods
Combination Synergy performance period
Combination Synergy service period
30 June 2021
(Combination Synergy
performance condition
test date)
3 Years
September 2022
(relative TSR performance
condition and Combination
Synergy service condition
test date)
Cash (50% for the
MD & CEO and 75% for
other executive KMP).
+
Restricted Shares
(50% for the MD
& CEO and 25% for
other executive KMP).
Restricted for 2 years
and subject to
forfeiture.
Shares
(only issued if
performance and
service conditions
are met in
September 2022)
53
REMUNERATION REPORTTabcorp Annual Report 2020 REMUNERATION REPORT For the year ended 30 June 2020
(c) Remuneration packages
The following diagram details executive KMP FY20 annual remuneration packages assuming minimum, target and stretch levels of performance (Group and business unit). Executive KMP
remuneration packages are set in line with their responsibilities in a complex and highly regulated business and are reviewed annually against market peers (being the ASX 25 to 75 group
of companies) to ensure they remain competitive and that their skills are retained.
Diagram 2: Annual executive KMP remuneration packages
MD & CEO
Minimum(i)
$2.0m
Chief Financial Officer
Minimum
$800k
Target(ii)
$2.0m
$750k $750k
$1.5m
$5.0m
Target
$800k
$300k $100k $400k
$1.6m
Maximum(iii)
$2.0m
$1.125m
$1.125m
$3.0m
$7.25m(iv)
Maximum
$800k
$600k
$200k
$800k
$2.4m
MD Lotteries and Keno(v)
Minimum
$800k
MD Wagering and Media
Minimum
$918k
Target
$800k
$300k $100k $400k
$1.6m
Target
$918k
$344k $115k $459k
$1.8m
Maximum
$800k
$600k
$200k
$800k
$2.4m
Maximum
$918k
$689k
$229k
$918k
$2.8m
Fixed remuneration
Short term incentive – Cash
Short term incentive – Restricted Shares
Long term incentive
(i)
The “minimum” value represents the value of annual remuneration where short and long-term performance (Group and individual) is below target and no STI awards are made and LTI Performance Rights (granted in that year) are assumed
not to vest.
(ii) The “target” value represents the value of annual remuneration where target levels of performance (Group and individual) have been achieved and the target STI opportunity is awarded and 50% of the LTI Performance Rights (granted in that
year) are assumed to vest. This LTI value is calculated using Tabcorp’s share price as at the LTI grant date.
(iii) The “maximum” value represents the value of annual remuneration where stretch levels of performance (Group and individual) have been achieved and the maximum STI opportunity is awarded and 100% of the LTI Performance Rights
(granted in that year) are assumed to vest. This LTI value is calculated using Tabcorp’s share price as at the LTI grant date.
(iv) The MD & CEO’s maximum short term incentive opportunity was reduced from 150% to 112.5% of fixed remuneration from FY20.
(v) As disclosed in Tabcorp’s 2019 Remuneration Report, Ms van der Merwe received an uplift to her fixed remuneration (effective 1 September 2019). This uplift was provided, considering that her remuneration levels were below market
(when compared to business unit heads running similar sized businesses) and in recognition of her strong performance since Combination.
60% of the MD & CEO’s target remuneration package is variable and at risk (72% at maximum). 50% of the executive KMP (excluding the MD & CEO) target remuneration packages
is variable and at risk (67% at maximum).
The MD & CEO’s fixed remuneration was reduced by 20%, from 1 April 2020 to 30 June 2020. This was in response to the impacts of COVID-19 on the Group’s business and financial results.
The MD & CEO’s fixed remuneration returned to pre-April 2020 levels (as detailed in Diagram 2) from 1 July 2020.
54
Tabcorp Annual Report 2020
(d) Remuneration structure and operation
(i) Fixed remuneration
What constitutes fixed remuneration?
Cash salary, statutory superannuation contributions and employee-elected salary sacrificed benefits.
How is it set?
With reference to the responsibilities and complexities of the role, the executive’s knowledge, experience and skills
and market benchmarks.
What is Tabcorp’s remuneration benchmarking peer group?
The ASX 25 to 75 group of companies.
(ii) Short term incentive (STI)
Diagram 3: Executive KMP STI operation
Target STI
opportunity
X
Group Funding
Multiplier
(GFM)
Group
component
(60%)
Individual
component
(40%)
X
Individual
Performance
Multiplier
(IPM)
Range
0 to 1.25
FY20 actual
0
l
e If the GFM is set at
zero, no STI awards
d
r
are provided to any
u
H
participant.
Range
0 to 2.50
l
e
d
r
u
H
If the IPM is zero,
no STI awards are
provided to the
participant (including
no Group component).
STI award
Cash
(50% for the MD &
CEO and 75% for
other executive KMP)
Restricted Shares
(50% for the MD &
CEO and 25% for
other executive KMP.)
Range
FY20
actual
MD & CEO
0% to 112.5%
of fixed
remuneration
Other
executive
KMP
0% to 100%
of fixed
remuneration
MD & CEO
0%
Other
executive
KMP
0%
55
REMUNERATION REPORTTabcorp Annual Report 2020 REMUNERATION REPORT For the year ended 30 June 2020
What is the target STI opportunity?
The value of the STI award if target performance levels are achieved and behaviours are in accordance with the Group’s values.
It is set at the end of the financial year by the People and Remuneration Committee.
It is based on the Group’s NPAT before significant items result but also considers operational, risk and compliance and customer performance.
How does the GFM operate?
It can range from between 0 and 1.25.
No STI awards are provided to any participant if the GFM is set at 0 (first gateway).
It was set at 0 for FY20.
What are the “Group” and “Individual”
components?
60% of the STI opportunity is dependent on Group results and rewards participants for their contribution to it.
40% of the STI opportunity is dependent on individual performance (financial and non-financial).
For executive KMP, other than the MD & CEO, individual performance is reflective of business unit and individual performance.
How does the IPM operate?
Executive KMP are assigned IPMs depending on their business unit performance (against a scorecard of measures) and their behaviours
as assessed against the Group’s values.
If the IPM is set at 0, the full STI award is forfeited (second gateway).
In what form are STI awards made
to executive KMP?
What happens to Restricted Shares
if an STI participant leaves the Group
during the 2-year restriction period?
Can Restricted Shares be forfeited
or clawed back?
How does the STI framework align
with Tabcorp’s risk and compliance
objectives?
What happens in the event of a
change in control of the Group?
Cash (50% for the MD & CEO and 75% for other executive KMP) and Restricted Shares (50% for the MD & CEO and 25% for other executive KMP).
The Restricted Shares are restricted for two years and subject to forfeiture and claw back conditions.
If the participant resigns or is terminated for cause, Restricted Shares are forfeited (unless the Board determines otherwise).
If the participant leaves the Group under any other circumstances (including as a result of redundancy, retirement or ill health), then Restricted
Shares will remain on foot until the end of the original restriction period (unless the Board determines otherwise).
Restricted Shares may be forfeited at the Board’s discretion, based on certain adverse events or information that may come to light.
If these adverse events occur or adverse information becomes available after the Restricted Shares have become unrestricted, the Board
may require the participants to (amongst other things) repay all or part of the value of the Restricted Shares.
The STI scorecard contains non-financial measures which include adherence with risk management and compliance objectives, appropriate
customer outcomes and cultural measures.
The STI award is also dependent on participants displaying the appropriate behaviours in line with the Group’s values.
The STI award is delivered partly as Restricted Shares (restricted for two years) and subject to malus and claw back provisions.
The Board is required to determine, in its absolute discretion, the appropriate treatment regarding any Restricted Shares.
56
Tabcorp Annual Report 2020 (iii) FY20 long term incentive (LTI)
Diagram 4: FY20 executive KMP LTI operation
Performance Rights granted
(at face value)
Grant date
24 October 2019
Formula for allocating Performance Rights
Maximum LTI opportunity
5-day volume weighted average price of Tabcorp shares traded
on the ASX up to but not including the grant date
To be replaced with
“return on invested
capital” in FY21.
Relative TSR (75%)
Combination Synergy (25%)
Performance Rights lapse/
Shares allocated
Performance Rights lapse/
Shares allocated
30 June 2021
Combination Synergy
Performance test date
(no retesting)
25 September 2022
Relative TSR
performance and
Combination Synergy
service test dates
(no retesting)
On what basis are
Performance Rights
allocated?
Participants are allocated a maximum number of Performance Rights (based on their maximum LTI opportunities) using a face value allocation methodology.
Each Performance Right provides the right to receive one Tabcorp ordinary share, at no cost to the participant, subject to the satisfaction of specified
performance and service conditions.
Performance Rights do not attract dividends or voting rights.
What are the performance
measures?
For the 2019 LTI Offer, 75% of the Performance Rights are subject to relative TSR performance and 25% to Combination Synergy performance.
If performance conditions are not met, Performance Rights will lapse.
What is “relative TSR”?
The return to shareholders (comprising capital returns, dividends and share price movements over the performance period relative to a peer group of companies).
It was chosen as an LTI measure as it directly aligns to rewarding executive KMP for sustained shareholder value creation.
What is “Combination
Synergy”?
What is the service
condition?
The contribution of synergies created through the integration of Tabcorp and Tatts Group, to EBITDA savings.
It was chosen as an LTI measure as it directly aligns to Tabcorp’s key strategic priority of integrating the Tabcorp and Tatts Group businesses and delivering
expected synergies.
For the 2019 LTI Offer, Performance Rights are also subject to a service condition from the grant date to 25 September 2022.
When will the performance
and service conditions
be tested?
Relative TSR performance will be tested on 25 September 2022.
Combination Synergy performance will be tested as of 30 June 2021 and the service condition will be tested on 25 September 2022.
Any potential vesting of Performance Rights and issuing of shares will only occur after the September 2022 test date (being 25 September 2022).
57
REMUNERATION REPORTTabcorp Annual Report 2020
REMUNERATION REPORT For the year ended 30 June 2020
What are the performance
conditions?
What if performance and
service conditions are met?
What happens when an
LTI participant leaves
the Group?
What happens in the event
of a change in control of
the Group?
Can Performance Rights be
cancelled or clawed back?
Accounting treatment
Percentile ranking(i)
Relative TSR(i)
% of the Performance
Rights that will vest
Peer Group
Combination Synergy(iv)
Contribution of synergies
to EBITDA savings in FY21
% of the Performance
Rights that will vest
Threshold
Below 50th percentile
0%
Target(ii)
50th percentile
Maximum(ii) 75th percentile
37.5%
75%
S&P/ASX 100 companies
excluding organisations
operating in the Metals &
Mining and Oil and Gas sectors.
Below $130m
$130m
Stretch(iii)
0%
12.5%
25%
Relative TSR will be calculated by an independent organisation at the end of the performance and service periods.
Combination Synergy performance will be calculated and verified by an independent advisor following 30 June 2021. The Combination Synergy service
condition will be tested and agreed with the Board in September 2022.
If the service and performance conditions have been met, Tabcorp will issue or transfer ordinary shares to the participant, which will rank equally with other
fully paid shares (full voting and dividend rights).
If a participant resigns or is dismissed for cause, Performance Rights will lapse (unless the Board determines otherwise).
In all other circumstances a pro rata number of Performance Rights (based on the portion of the performance period that the participant was employed)
remain on foot and are subject to the original terms and conditions (including performance conditions), unless the Board determines otherwise.
The Board can determine, in its absolute discretion, the appropriate treatment regarding any unvested Performance Rights.
Performance Rights may lapse at the Board’s discretion based on adverse events that have occurred or where adverse material information becomes
available after the Performance Rights have been granted to participants.
If this adverse event occurred or adverse information becomes available after the Performance Rights have vested and shares or cash have been awarded,
the Board may require participants to repay all or part of the value of the Shares or cash.
Performance Rights are expensed on a straight line basis over the vesting period. Under Accounting Standards, for the relative TSR measure Tabcorp is
required to recognise an expense irrespective of whether Performance Rights ultimately vest to the participant. A reversal of the expense is only recognised
in the event the Performance Rights lapse due to cessation of employment within the vesting period (for relative TSR and Combination Synergy measures)
or the Performance Rights do not vest (for the Combination Synergy measure).
(i) The vesting schedule aligns to predominant ASX 100 practice.
(ii) Straight line (pro rata) vesting occurs between threshold and target, and target and maximum performance levels.
(iii) The stretch performance target has not been disclosed due to its sensitive nature. This target will be disclosed retrospectively once tested.
(iv) When considering the outcomes of the Combination Synergy performance test, the Board will take into account the overall Group performance as well as financial and non-financial performance within each business unit (including the costs
to deliver integration).
(e) Remuneration and accountability
In FY20 no STI or LTI awards were clawed back.
Tabcorp has embedded a set of organisational values of which “Doing the Right Thing” is a core component. Tabcorp is committed to ensuring that our employees operate with the utmost
integrity and that our customers and the communities that we operate in can benefit from our products in a responsible manner. Tabcorp has a Board approved Code of Conduct which
outlines expectations of our employees and which is cascaded to employees at various points in time including through training programs. During FY20, Tabcorp implemented an accountability
framework which provides a link between risk management and compliance breaches and implications for both employee remuneration outcomes and employment. Tabcorp also reviewed
its sales incentive plans during FY20 to ensure that they continue to incentivise our sales employees for generating sales in an ethical manner (including protecting our customers).
58
Tabcorp Annual Report 2020 To assist the People and Remuneration Committee determine appropriate remuneration outcomes for the organisation, including executive KMP, several sources of information are
presented. These include risk culture reports which are presented to the Board Risk and Compliance Committee and then shared and discussed with the People and Remuneration
Committee. It also includes culture surveys and workforce snapshot reports to ensure they are taken into consideration when making decisions relating to incentives. The Chairman
of the Risk and Compliance Committee is also a member of the People and Remuneration Committee and, from FY21 has a standing agenda item to present risk and compliance
performance outcomes when incentive outcomes are discussed.
As mentioned in sections 6(d)(ii) and 6(d)(iii), if an adverse material event has occurred or adverse material information has become available, the Board has the ability to (amongst other things):
• reduce, or not make, STI awards and/or reduce LTI offers (partially or fully) prior to awarding them;
• forfeit STI Restricted Shares and/or lapse Performance Rights (partially or fully) while they are restricted/still on foot; and/or
• request part or full repayment of the value of the Restricted Shares/Performance Rights that have already become unrestricted/vested.
Material events or information may include (but not limited to) where the participant has:
• acted dishonestly (including, but not limited to, misappropriation of funds, or deliberately concealing material events that would have influenced business outcomes);
• contributed to materially breaching Tabcorp’s compliance obligations (regulatory or legal);
• been accountable for significant reputational harm to the Group; and/or
• acted in such a way that the Group has made a financial misstatement.
In addition to STI and LTI impacts, Tabcorp can terminate staff where such events have occurred. If this was to occur, by default, all STI and LTI awards on foot would be forfeited/lapsed.
(f) Policy prohibiting hedging
Participants in the Group’s incentive plans are restricted from hedging the value of Restricted Shares and unvested Performance Rights, and must not enter into a derivative arrangement
in respect of the equity instruments granted under these plans. Breaches of the restriction will result in equity instruments being forfeited. These prohibitions are included in the terms
and conditions of the incentive plans and Tabcorp’s Securities Trading Policy, available on Tabcorp’s website (www.tabcorp.com.au) under the Corporate Governance section.
Equity instruments granted under the incentive plans can only be registered in the name of the participant, are identified as non-tradable on the share register, and cannot be traded or
transferred to another party until vested or until any trading restriction period has expired (where applicable).
(g) Executive Shareholding Policy
The Executive Shareholding Policy (applicable to all executive KMP) ensures that the interests of executives, the Group and shareholders are aligned. Under the Policy, the MD & CEO is
required to hold the equivalent of 200% of the value of his fixed remuneration in Tabcorp shares. Other executive KMP are required to hold the equivalent of 100% of the value of their fixed
remuneration in Tabcorp shares. The minimum shareholding must be achieved within five years from the executive KMP’s appointment, or by 14 December 2022 (whichever is later). At the
date of this report, all executive KMP complied with this Policy (noting that they have until 14 December 2022 to achieve the minimum shareholding required).
A copy of this Policy is available on Tabcorp’s website (www.tabcorp.com.au) under the Corporate Governance section.
59
REMUNERATION REPORTTabcorp Annual Report 2020 REMUNERATION REPORT For the year ended 30 June 2020
(h) Executive KMP employment contracts
Table 2: Current executive KMP contracts and notice periods
Executive KMP
David Attenborough
Adam Newman
Adam Rytenskild
Sue van der Merwe
Position
MD & CEO
Chief Financial Officer
MD Wagering and Media
MD Lotteries and Keno
Contract duration
Open ended
Open ended
Open ended
Open ended
Minimum notice period (months)
Tabcorp
12
9
9
9
Executive
6
6
6
6
Where Tabcorp terminates the executive KMP's employment, Tabcorp may, at its discretion, elect to pay the executive KMP an amount in lieu of notice for any portion of the relevant notice
period worked. On cessation of employment, STI or LTI awards may vest, lapse or be forfeited in accordance with the relevant plan rules.
7. EXECUTIVE KMP REMUNERATION OUTCOMES IN FY20
(a) 5-year business performance
Table 3: 5-year Group financial performance and remuneration outcomes
Net profit/(loss) after tax (NPAT)
Basic earnings per share (EPS)
Closing share price(i)
Dividends(ii)
STI Group funding Multiplier (STI pool)
STI awards
MD & CEO
Other executive KMP
LTI vesting
All executive KMP
Measurement unit
$m
c
$
CPS
% of target pool
% of target opportunity
% of maximum opportunity
% of target opportunity
% of maximum opportunity
% of target opportunity
% of maximum opportunity
FY16
170
20.4
4.57
24.0
90%
90%
36%
99%
40%
200%
100%
FY17
(21)
(2.5)
4.37
25.0
30%
0%
0%
17%
8%
200%
100%
FY18
29
1.9
4.46
21.0
33%
33%
17%
33%
17%
160%
80%
FY19
361
17.9
4.45
22.0
100%
85%
43%
89%
44%
0%
0%
FY20
(870)(iv)
(42.9)(v)
3.38
11.0
0%
0%
0%
0%
0%
0%(iii)
0%(iii)
(i) Closing share price is as at 30 June of the respective financial year. Opening share price as at 1 July 2015 was $4.55.
(ii) Includes interim and final dividends. For FY20, a final dividend was not paid.
(iii) The 2016 LTI grant of Performance Rights was tested on 14 September 2019 and the entire grant lapsed for all participants (including the executive KMP). No participant benefited from the 2016 LTI grant.
(iv) Includes impairment of goodwill of $1,090m.
(v) FY20 EPS before impairment of goodwill was 10.9c.
As detailed in Table 3, both the overall Group STI pool and executive KMP incentive outcomes (long and short term) have varied over the preceding five years in line with business results
(financial and non-financial), demonstrating a strong link between variable pay and Group performance.
60
Tabcorp Annual Report 2020 (b) FY20 STI outcomes
Diagram 5: FY20 Group STI scorecard and performance outcomes
No STI awards were paid to executive KMP (including the MD & CEO) for FY20. More detail regarding this outcome is presented on the following page.
FY20 performance outcome
Comments
Scorecard category Key priority
Achieve profit targets
Prudent capital
management
Financial
Measures
NPAT (statutory)
NPAT (before significant items)
Gross debt/EBITDA ratio
Disciplined cost
management
Operating expenses to revenue ratio
Close to core expansion
Deliver to domestic and international
strategy
Strategic
(including
integration)
Integration of the
Tabcorp and Tatts Group
businesses
Achieve synergy targets
Target
Stretch
Operational
excellence
(including risk and
compliance)
Effective risk management
Social responsibility
and sustainability
Optimal systems,
process and operational
performance
Customer growth
and retention
Compliance and reputation
External stakeholder relations
Dow Jones Sustainability Indices
Collaborate with and support
stakeholders on animal welfare initiatives
Achieve technology service levels across
key business periods and events
Grow the customer base
Customer loyalty
Responsible gambling
Customer first
Customer care and
satisfaction
Customer experience
Improve employee
experience
Engagement
Diversity
People and Culture
Strong health and safety
performance
LTIFR (Lost Time Injury Frequency Rate)
Target
Stretch
Target
Stretch
Target
Stretch
• NPAT (statutory) loss of $870m, largely contributed to by non-cash goodwill impairment charges.
• NPAT (before significant items) of $271m, below the Group’s FY20 target.
• Gross debt to EBITDA ratio has increased due to lower revenues, placing pressure on debt covenant
agreements. However an agreement was reached with bank lenders under the Syndicated Facility
Agreement for waivers of leverage and interest cover covenants in relation to the next two testing
dates. An agreement was also reached with the Group's US Private Placement note holders, for,
among other things, a waiver of interest cover covenants and adjustments to leverage covenant
ratios in relation to the next two testing dates.
• Actions were taken during the year to reduce capital and operating expenses on the back of the impact
of COVID-19 which resulted in an operating expense to revenue ratio that is favourable to target.
• Most of the key elements of the Group's strategic roadmap were delivered successfully.
• Successful extension of Jumbo Interactive Limited reseller agreement for the next 10 years (to July 2030).
• International Wagering sports media strategy progressed with major rights deals with US Sports
bodies (including National Basketball Association (NBA), National Football League (NFL) and Major
League Baseball (MLB)). World first wagering partnership with NFL.
• Key products in Wagering and game reviews in Lotteries implemented, driving increases in customer
acquisition.
• Delivered targeted cost synergies in FY20.
• Although strategic performance was considered to be successful in FY20, lowlights include the
delay to integration of the TAB and UBET businesses and the higher cost of integration incurred.
• No material compliance issues in FY20.
• Targeted performance in Dow Jones Sustainability Indices (domestic and international) achieved,
retaining existing placing.
• Active participation in Thoroughbred Welfare Initiative and financial sponsorship of racing
industry-led animal welfare programs.
• Strong operational and project performance through the COVID-19 pandemic.
• 99.9% uptime (on average) systems performance during the year and through key events/periods.
However, opportunities have been identified to further enhance systems and processes following
some disruptions (e.g. Quaddie Cashout).
• Achieved target customer acquisition and retention numbers within the Lotteries and Keno
business with an increase in active registered customers. PayPal implemented to improve the
customer experience.
• Strong customer acquisition and retention (specifically through digital channel) within Wagering,
however impacted by COVID-19.
• Tabcorp’s responsible gambling program continues to advance with the development tools and
technology to better understand customer behaviours and encourage them to make responsible
decisions. Key products launched and advanced include “Tab Assist” and “Take a Break”.
Responsible gambling continues to be a significant focus for the Board and the Group.
• High level of employee advocacy during COVID-19, ascertained through regular COVID-19 employee
pulse surveys. Strong focus on supporting the remote workforce during COVID-19 including mental
wellness support. Strategies for “return to work” defined with appropriate controls.
• Female representation of 39% in the senior leadership group, on track to achieve Tabcorp’s stated
target of 40% in FY21.
• Retained citation from the Workplace Gender Equality Agency for the fifth year for being an
employer of choice for female employees.
• LTIFR of 4.1, largely contributed to by non-controllable events. Results benchmark well against the market.
61
Target
Stretch
• Positive Net Promoter scores across Wagering and Media and Lotteries and Keno with market
leading results for “top of mind awareness” and ”first choice for betting” in Wagering.
REMUNERATION REPORTTabcorp Annual Report 2020 REMUNERATION REPORT For the year ended 30 June 2020
The Group STI pool is principally based on the NPAT (before significant items) result for the year. As the FY20 NPAT (before significant items) result was below target, the People and Remuneration
Committee considered whether it was appropriate for an STI pool to be unlocked for FY20.
At the end of FY20, the People and Remuneration Committee carefully considered:
• the Group’s FY20 financial results.
• the impact of COVID-19 on the Group and the impact of the pandemic on and feedback from investors.
• FY20 non-financial performance at the Group level and across each business unit, considering the impact of COVID-19 on business operations, employees, partners and communities.
The Committee also received feedback from the Chairman of the Risk and Compliance Committee regarding risk and compliance performance in FY20.
Although the group performed well strategically and maintained operational performance and supported its employees effectively through the pandemic (as evidenced through positive employee pulse
survey results), full-year operational and customer performance results were below target.
Given performance outcomes and, in consideration of the impact of COVID-19 on the Group’s stakeholders, the People and Remuneration Committee exercised its discretion and reduced the STI pool
to zero. As a result, no STI awards were made to executive KMP (including the MD & CEO).
Table 4: Executive KMP FY20 STI awards
Group component
(60%)
Individual component
(40%)
Total STI awarded
Actual STI
achieved
STI foregone
Actual STI
achieved
Financial
year
Target
$’000
Awarded
$’000
Target
$’000
Awarded
$’000
Total(i)
$’000
Cash portion
$’000
Deferred
portion
$
As a % of
target
As a % of
target
As a % of
maximum
FY20
FY19
FY20
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
900
900
240
275
270
240
210
270
270
210
210
-
900
-
-
270
-
210
-
270
-
210
600
600
160
184
180
160
140
180
180
140
140
-
375
-
-
90
-
210
-
112
-
35
-
1,275
-
-
360
-
420
-
382
-
245
-
638
-
-
270
-
315
-
382
-
184
-
637
-
-
90
-
105
-
-
-
61
-
85%
-
-
80%
-
120%
-
85%
-
70%
100%
15%
100%
100%
20%
100%
0%
100%
15%
100%
30%
-
43%
-
-
40%
-
60%
-
43%
-
35%
Current executive KMP
David Attenborough
Adam Newman(ii)
Adam Rytenskild
Sue van der Merwe
Former executive KMP
Damien Johnston(iii)
Frank Makryllos
(i) This reflects the total value of the STI granted as at 30 June 2020. The minimum STI value possible is zero.
(ii) Mr Newman was appointed, effective 7 October 2019. As such, he was not eligible to receive an STI award in FY19.
(iii) Mr Johnston ceased employment with the Group, effective 29 February 2020. Due to him ceasing employment, his FY19 STI award was paid fully in cash.
62
Tabcorp Annual Report 2020 (c) LTI awards granted in FY20
In FY20, LTI grants were provided to executive KMP following shareholder approval of the MD & CEO’s 2019 LTI grant received on 24 October 2019 at the Tabcorp Annual General Meeting.
These LTI grants are subject to two performance conditions and a service condition as detailed in section 6(d)(iii).
Table 5: Performance Rights granted during FY20
Current executive KMP
David Attenborough
Adam Newman
Adam Rytenskild
Sue van der Merwe
Former executive KMP
Damien Johnston
Frank Makryllos
Total
Grant date(i)
24 October 2019
24 October 2019
24 October 2019
24 October 2019
n/a
24 October 2019
Number granted
(at face value)(ii)
617,283
164,609
188,888
164,609
-
144,032
1,279,421
Fair value per Performance Right(iii)
Relative TSR
$
2.42
2.42
2.42
2.42
-
2.42
Combination Synergy
$
4.24
4.24
4.24
4.24
-
4.24
Total fair value
at grant date(iv)
$
1,774,687
473,251
543,053
473,251
-
414,092
3,678,334
Vesting date
25 September 2022
25 September 2022
25 September 2022
25 September 2022
25 September 2022
(i) Vesting of the 2019 LTI allocation of Performance Rights is subject to three year relative TSR and Combination Synergy performance and service conditions. Accordingly, no testing or vesting of the 2019 LTI grant occurred during FY20.
The value of the Performance Rights is amortised over the next three years.
(ii) The number of Performance Rights granted was based on a face value allocation methodology, being the 5-day volume weighted average price of Tabcorp Shares traded on the ASX up to but not including the grant date (calculated as $4.86).
(iii) The LTI allocation is weighted 75% – relative TSR and 25% – Combination Synergy.
(iv) Represents the maximum value of the grants to each executive KMP for accounting purposes. The minimum possible total value of the grant is nil. For details of the valuation of the Performance Rights, including models and assumptions used,
refer to note E1 of the Tabcorp Financial Report.
(d) LTI awards tested in FY20
The 2016 LTI grant (which had one performance measure – relative TSR) was tested on 14 September 2019. The three year TSR result placed Tabcorp at the 34th percentile of the peer
group, and accordingly no Performance Rights vested (100% of the Performance Rights lapsed) and participants did not derive any value from this grant.
Table 6: Performance Rights vested and lapsed and shares issued during FY20
Current executive KMP
David Attenborough
Adam Newman
Adam Rytenskild
Sue van der Merwe
Former executive KMP
Damien Johnston
Frank Makryllos
Total
Number of Performance
Rights vested
-
-
-
-
Value of Performance
Rights exercised(i)
$
-
-
-
-
Number of Performance
Rights lapsed(ii)
501,002
-
123,607
-
Number of shares issued
-
-
-
-
Amount paid per share
$
-
-
-
-
-
-
-
-
-
-
137,241
-
761,850
-
-
-
(i) No Performance Rights were exercised during the year as the entire 2016 LTI grant lapsed.
(ii) Performance Rights that lapsed were granted on 25 October 2016 under the 2016 LTI offer.
-
-
-
63
REMUNERATION REPORTTabcorp Annual Report 2020
REMUNERATION REPORT For the year ended 30 June 2020
Table 7: Executive KMP interests in Performance Rights (number)
Balance at
start of year
1,720,947
n/a
523,994
150,862
Balance at executive
KMP commencement(i)
n/a
-
n/a
n/a
Current executive KMP
David Attenborough
Adam Newman
Adam Rytenskild
Sue van der Merwe
Former executive KMP
Damien Johnston
Frank Makryllos
Total
(i) Reflects Performance Rights held at 7 October 2019 for Mr Newman.
(ii) Reflects the number of 2016 LTI Performance Rights that were tested and lapsed during FY20.
(iii) Reflects Performance Rights held at 6 October 2019 for Mr Johnston and at 17 February 2020 for Mr Makryllos.
(iv) The number of Performance Rights vested and exercisable or vested and not exercisable at year end was nil.
491,419
150,862
3,038,084
n/a
n/a
Granted as
remuneration
617,283
164,609
188,888
164,609
-
144,032
1,279,421
Vested
-
-
-
-
-
-
-
Lapsed(ii)
(501,002)
-
(123,607)
-
(137,241)
-
(761,850)
Balance at executive KMP
cessation date(iii)
n/a
n/a
n/a
n/a
354,178
294,894
649,072
Balance at end
of year(iv)
1,837,228
164,609
589,275
315,471
-
-
2,906,583
Table 8: LTI Performance Rights allocations to current executive KMP on foot
Grant year
2017
2018
2019
Grant date
27 October 2017
17 October 2018
24 October 2019
Number of Performance
Rights on foot
779,816
743,535
247,843
851,543
283,846
MD & CEO, senior management
MD & CEO, senior management
Allocation to Performance measures
Relative TSR
Relative TSR
Combination Synergy
Relative TSR
Combination Synergy
MD & CEO, senior management
Performance test date
15 September 2020
19 September 2021
30 June 2021
25 September 2022
30 June 2021
Service test date and
expiry date
15 September 2020
19 September 2021
19 September 2021
25 September 2022
25 September 2022
The full terms and conditions that applied to prior year LTI Performance Rights grants were described in detail in the relevant Remuneration Reports which are available on Tabcorp's website.
(e) Actual remuneration received in FY20
Table 9 provides a non-statutory voluntary disclosure of the total remuneration received by current executive KMP during FY20. Some of the figures in the table have not been prepared in
accordance with the Australian Accounting Standards. This information is supplementary to the remuneration disclosure prepared in accordance with the statutory requirements and Australian
Accounting Standards as detailed in section 10 of this report. We believe this information will help shareholders understand the cash and other benefits actually received by executive KMP from
the various components of their remuneration during FY20.
Table 9: Actual value of remuneration received by executive KMP during FY20
Current executive KMP
David Attenborough
Adam Newman
Adam Rytenskild
Sue van der Merwe
Total
(i) Comprises salary and sacrificed benefits (including salary sacrificed superannuation and motor vehicle novated leases including FBT where applicable).
(ii) STI cash bonus reflects the portion of the FY19 STI which was paid in cash in August 2019.
(iii) Value of the deferred component of the FY17 STI (provided in the form of Restricted Shares) which was released during FY20 and calculated based on the market value of Tabcorp shares at the date the restrictions ceased to apply (being 10 August 2019).
(iv) The 2016 LTI grant of Performance Rights lapsed in full. As such, executive KMP did not receive any benefit from this grant.
Salary and fees(i)
$’000
1,879
560
894
709
4,042
STI cash bonus(ii)
$’000
638
-
270
315
1,223
Value of LTI vested(iv)
$’000
-
-
-
-
-
Superannuation
$’000
21
16
21
80
138
Total
$’000
2,538
576
1,226
1,104
5,444
Value of STI Restricted
Shares that became
unrestricted(iii)
$’000
-
-
41
-
41
64
Tabcorp Annual Report 2020 (f) Variable remuneration outcomes over the preceding five financial years
MD & CEO – historical STI outcomes
Executive KMP (excl. MD & CEO) – historical STI outcomes
d
r
a
w
a
I
T
S
)
y
t
i
n
u
t
r
o
p
p
o
t
e
g
r
a
t
f
o
%
(
250%
200%
150%
100%
50%
0%
i
s
t
h
g
R
e
c
n
a
m
o
f
r
e
P
f
o
%
d
e
t
s
e
v
t
a
h
t
250%
200%
150%
100%
50%
0%
45%
45%
FY16
0%
FY17(i)
17%
17%
FY18
Financial year
42%
42%
FY19
0%
FY20(ii)
400.0
300.0
200.0
100.0
0.0
e
c
n
a
m
r
o
f
r
e
p
T
A
P
N
)
m
$
(
d
r
a
w
a
I
T
S
)
y
t
i
n
u
t
r
o
p
p
o
t
e
g
r
a
t
f
o
%
(
250%
200%
150%
100%
50%
0%
400.0
300.0
200.0
100.0
0.0
e
c
n
a
m
r
o
f
r
e
p
T
A
P
N
)
m
$
(
25%
74%
FY16
22%
67%
FY19
0%
FY20
4%
13%
FY17(i)
8%
25%
FY18
Financial year
STI award as a % of target opportunity (cash)
Maximum STI opportunity
Actual NPAT result ($m)
STI award as a % of target
opportunity (Restricted Shares)
Target opportunity
STI award as a % of target opportunity (cash)
Maximum STI opportunity
Actual NPAT result ($m)
STI award as a % of target
opportunity (Restricted Shares)
Target opportunity
Executive KMP LTI vesting outcomes
(g) Other remuneration
100%
100%
80%
2012 LTI Offer
(tested in 2015)
2013 LTI Offer
(tested in 2016)
2014 LTI Offer
(tested in 2017)
2015 LTI Offer
(tested in 2018)
2016 LTI Offer
(tested in 2019)
0%
0%
% of Perfomance Rights that vested
3-year Absolute TSR performance
Perfomance Rights allocated
3-year relative TSR percentile ranking
120%
100%
80%
60%
40%
20%
0%
l
R
S
T
e
t
u
o
s
b
a
r
a
e
y
-
3
e
c
n
a
m
r
o
f
r
e
p
Mr Newman joined the Group as CFO on 7 October 2019. To compensate him for forgone
entitlements, Mr Newman was granted 40,985 Restricted Shares on 7 October 2019.
The Restricted Shares are subject to dealing restrictions and a service condition until
7 October 2021. All 40,985 Restricted Shares were granted during FY20 and none were
forfeited. The value of the Restricted Shares is $200,000, calculated based on the Tabcorp
share price at the grant date. The Restricted Shares are subject to forfeiture conditions,
so the minimum possible value of the Restricted Shares is nil.
The Restricted Shares are subject to an ongoing service condition. This condition has
been imposed to ensure alignment with shareholders and so that Mr Newman does not
get the full benefit of the shares if he leaves the Group before 7 October 2021. Satisfaction
of the condition will be assessed by the MD & CEO and the People and Remuneration
Committee following 7 October 2021.
(i) The executive KMP’s maximum STI opportunities were reduced from 250% of the target opportunity to 200% in FY17.
(ii) The MD & CEO’s maximum STI opportunity was further reduced to 150% of the target opportunity in FY20.
65
REMUNERATION REPORTTabcorp Annual Report 2020
REMUNERATION REPORT For the year ended 30 June 2020
8. EXECUTIVE KMP REMUNERATION ARRANGEMENTS FOR FY21
It is intended that no adjustments will be made to Mr Attenborough's or other executive KMP remuneration in FY21.
The 2020 LTI grant (intended to be made in October 2020) will continue to include two performance measures. Vesting of 75% of the grant will be subject to relative TSR performance
over a three-year period. Vesting of 25% of the grant will be based on ROIC performance over three financial years (commencing with FY21). ROIC will replace the interim Combination
Synergy measure.
More details will be provided in Tabcorp’s FY21 Remuneration Report and 2020 Notice of Meeting.
9. NON EXECUTIVE DIRECTOR FEES
(a) Strategy and framework
Non Executive Director fees are set based on workload and responsibilities, qualifications and experience and market benchmarks. Following the reset of the remuneration benchmarking
peer group in FY20 (to the ASX 25 to 75 group of companies), the Board Chairman and base Board fees were reduced by approximately 10% each, effective 1 September 2019.
The COVID-19 pandemic had a significant impact on the Group’s operations and financial results in FY20. In response to this (and considering the impacts of COVID-19 on shareholders,
employees and communities), the Board elected to reduce the Board Chairman and base Board fees by a further 10%, from 1 April 2020 to 30 June 2020. Board Committee fees were also
reduced by 10%, from 1 April 2020 to 30 June 2020. All fees were restored to pre-April 2020 (pre-COVID) levels from 1 July 2020.
Non Executive Directors do not receive any performance or incentive-related payments. Board fees are not paid to the MD & CEO or to executives for directorships of any subsidiaries.
(b) FY20 fee structure
Non Executive Directors receive a base Board fee and a fee for each Board Committee that they chair or are a member of (except for the Nomination Committee, where no additional fees are
paid). The Board Chairman receives a single fixed fee which is inclusive of services on all standing Board Committees. Superannuation contributions form part of the fees and Non Executive
Directors are not eligible to receive any other retirement benefits.
66
Tabcorp Annual Report 2020 Table 10: FY20 Non Executive Director fee structure
Board
Audit Committee
Risk and Compliance Committee
People and Remuneration Committee
Chairman
Member(i)
Chairman
Member
Chairman
Member
Chairman
Member
Non Executive Director fees ($’000 per annum, including superannuation)
As at
30 June 2019
$’000
646
208
55
24
49
22
49
22
As at
1 September 2019
$’000
580
186
55
24
49
22
49
22
Change
%
-10.2
-10.5
-
-
-
-
-
-
As at
1 April 2020
$’000
522
168
49
22
44
20
44
20
Change
%
-10.0
-10.0
-10.0
-10.0
-10.0
-10.0
-10.0
-10.0
Overall change
in FY20
%
-19.2
-19.5
-10.0
-10.0
-10.0
-10.0
-10.0
-10.0
As at
1 July 2020
$’000
580
186
55
24
49
22
49
22
(i) The fee paid to Board members is inclusive of services on the Nomination Committee.
(c) Fees paid during FY20
Non Executive Directors are entitled to be reimbursed for all business-related expenses, including travel, which may be incurred as part of their duties. Certain Non Executive Directors
received additional fees for membership of other Board Sub-Committees. During FY20, a Sub-Committee of the Board was in operation with responsibility for overseeing and managing
special business and legal matters. Also during FY20, a number of additional Board and Sub-Committee meetings and briefing sessions were held in response to the COVID-19 pandemic.
No additional fees were paid to Non Executive Directors in respect of these meetings. Table 11 details all fees paid to Non Executive Directors including additional fees paid to members
of these Sub-Committees.
67
REMUNERATION REPORTTabcorp Annual Report 2020
REMUNERATION REPORT For the year ended 30 June 2020
Table 11: Non Executive Director fees paid during FY20
Current Non Executive Directors
Paula Dwyer(i)
Bruce Akhurst(iii)
Harry Boon
Anne Brennan (iv)
David Gallop(v)
Steven Gregg(vi)
Vickki McFadden
Justin Milne(iii)
Former Non Executive Directors
Zygmunt Switkowski(vii)
Total
Short term
Fees
$’000
Post employment
Superannuation(ii)
$’000
551
590
236
266
229
252
83
133
239
249
237
260
191
219
130
235
2,029
2,071
26
56
22
25
22
24
8
13
23
24
23
25
18
21
12
22
167
197
Year
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY20
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
Total
$’000
577
646
258
291
251
276
91
146
262
273
260
285
209
240
142
257
2,196
2,268
(i) Ms Dwyer also received a fee of $35,000 (plus superannuation at 9.5%) for the role of Chairman of the Victorian Joint Venture Management Committee in FY20. The fee was borne by the Joint Venture, which is jointly controlled by Tabcorp.
(ii) Recent legislation changes now allow persons with multiple employers to instruct one or more (but not all) of those employers to stop superannuation deductions and receive these fees in cash. Certain Non Executive Directors directed
Tabcorp to stop superannuation deductions in FY20 and receive the equivalent superannuation contributions in cash.
(iii) Includes additional fees of $2,188 (plus superannuation at 9.5%) received for membership of other Board Sub-Committees.
(iv) Appointed as an observer on 3 February 2020 and commenced as a Director and KMP on 17 July 2020, following the receipt of all necessary approvals. Total remuneration for the period reflects observer fees.
(v) Appointed as an observer on 14 October 2019 and commenced as a Director and KMP on 3 July 2020 following the receipt of all necessary approvals. Total remuneration for the period reflects observer fees.
(vi) Includes additional fees of $4,375 (plus superannuation at 9.5%) received for membership of other Board Sub-Committees.
(vii) Retired from the Board on 28 February 2020.
The current maximum aggregate amount of fees that can be paid to Non Executive Directors per year for their services (including superannuation contributions) is set at $3.0 million,
as approved by shareholders at the Annual General Meeting held on 17 October 2018. No adjustment to this limit is proposed for 2020. The total actual fees paid (including superannuation)
to Non Executive Directors in FY20 was $2,196,000 (which includes observer fees paid to Mr Gallop and Ms Brennan).
(d) Non Executive Director Shareholding Policy
This policy requires Non Executive Directors to hold a minimum shareholding in Tabcorp equivalent to the annual Board Member base fee (currently $170,000, excluding superannuation),
and the Board Chairman to hold a minimum shareholding equivalent to double this annual Board Member base fee. At the date of this report, all Non Executive Directors (including the Board
Chairman) complied with this policy, noting that Non Executive Directors are required to reach the applicable threshold within three years of appointment, or by 14 December 2020,
whichever is the later. A copy of this policy is available on Tabcorp’s website (www.tabcorp.com.au) under the Corporate Governance section.
68
Tabcorp Annual Report 2020
10. STATUTORY REMUNERATION DISCLOSURES
(a) KMP statutory remuneration tables
The following table provides a breakdown of the executive KMP remuneration in accordance with statutory requirements and the Australian Accounting Standards.
Table 12: Executive KMP remuneration for FY20
Short term
Long term Post employment
Current executive KMP
David Attenborough
Adam Newman(vi)
Adam Rytenskild
Sue van der Merwe
Former executive KMP
Damien Johnston(vii)
Frank Makryllos(viii)
Total
Financial
year
FY20
FY19
FY20
FY20
FY19
FY20
FY19
Salary and
fees(i)
$’000
1,879
1,979
560
894
880
709
621
Cash bonus(ii)
$’000
-
638
-
-
270
-
315
FY20
FY19
FY20
FY19
FY20
FY19
233
880
427
679
4,702
5,039
-
382
-
184
-
1,789
Accrued
leave
benefits
$’000
(109)
11
11
(33)
23
95
-
(6)
54
8
(8)
(34)
80
Charge for share based allocations(iii)
Merger
Completion
Award
(Restricted
Shares)(iv)
$’000
63
126
-
11
23
-
-
Performance
Rights
$’000
1,565
1,452
132
507
457
262
129
Restricted
Shares
$’000
287
300
75
42
56
39
39
Superannuation
$’000
21
21
16
21
21
80
79
5
21
13
21
156
163
3
14
16
25
462
434
5
17
-
-
79
166
106
438
154
129
2,726
2,605
Total
$’000
3,706
4,527
794
1,442
1,730
1,185
1,183
346
1,806
618
1,030
8,091
10,276
Performance
related(v)
52%
56%
26%
39%
47%
25%
41%
Termination
benefits
$’000
-
-
-
-
-
-
-
33%
47%
27%
33%
450
-
175
-
625
-
(i) Comprises salary and sacrificed benefits (including salary sacrificed superannuation and motor vehicle novated leases including FBT where applicable).
(ii) Cash bonus reflects the cash portion of the STI achieved in the relevant financial year, being 50% for the MD & CEO and 75% for other executive KMP. The remaining portion of the STI is deferred into Restricted Shares and is reflected
in the Restricted Shares column in accordance with Accounting Standards.
(iii) Represents the fair value of share based payments expensed by Tabcorp. Includes the restricted portion of the Merger Completion Award that was expensed by Tabcorp during the year.
(iv) Merger Completion Awards were granted to select employees (employed by Tabcorp prior to the Combination) in recognition of their contribution to the successful completion of the combination between Tabcorp and Tatts Group (“Combination”).
This included only the following executive KMP – Mr Attenborough (MD & CEO), Mr Rytenskild (MD Wagering and Media) and Mr Johnston (the previous Chief Financial Officer). For executive KMP who participated, vesting of the Awards
is subject to Combination Synergy performance conditions, measured over a 3.5 year (approximately) period (and will be tested on 30 June 2021). For more information, please refer to Tabcorp’s 2018 and 2019 Remuneration Reports.
(v) Represents the sum of the cash bonus (from STI awards), Restricted Shares (from STI and Merger Completion Awards) and LTI Performance Rights as a percentage of total remuneration, excluding termination payments.
(vi) Commenced employment and as executive KMP from 7 October 2019. Mr Newman was allocated 40,985 Restricted Shares on commencement of employment. These Restricted Shares, which replaced forgone entitlements, are subject
R
E
P
O
R
T
R
E
M
U
N
E
R
A
T
I
O
N
to a 2-year service condition.
(vii) Mr Johnston ceased as an executive KMP on 6 October 2019. Termination benefits reflect payment in lieu of partial notice.
(viii) Mr Makryllos ceased as an executive KMP on 17 February 2020. Termination benefits reflect payment in lieu of partial notice.
69
Tabcorp Annual Report 2020
REMUNERATION REPORT For the year ended 30 June 2020
Table 13: KMP interests in Tabcorp shares for FY20 (number)
KMP
Current Non Executive Directors
Paula Dwyer
Bruce Akhurst
Harry Boon
Anne Brennan(v)
David Gallop(vi)
Steven Gregg
Vickki McFadden
Justin Milne
Former Non Executive Directors
Zygmunt Switkowski
Current Executive Director
David Attenborough
Current executive
Adam Newman
Adam Rytenskild
Sue van der Merwe
Former executive
Damien Johnston
Frank Makryllos
Total
Balance at
start of year(i)
Granted as
remuneration(ii)
On vesting of
Performance Rights Net change other(iii)
Balance at
end of year(iv)
150,000
80,000
70,000
-
-
42,000
50,000
41,808
91,949
-
-
-
-
-
-
-
-
-
1,064,677
144,420
-
192,239
79,410
376,063
42,550
2,280,696
40,985
20,388
23,786
-
13,875
243,454
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(25,000)
20,000
-
7,500
7,000
-
-
4,800
-
-
12,955
45,315
-
-
-
72,570
125,000
100,000
70,000
7,500
7,000
42,000
50,000
46,608
91,949
1,209,097
53,940
257,942
103,196
376,063
56,425
2,596,720
(i) Reflects shareholdings as at 7 October 2019 for Mr Newman.
(ii) Includes Restricted Shares issued during FY20 as the deferred component of the FY19 STI. For Mr Newman they represent restricted shares issued as sign on incentives.
(iii) Includes voluntary on-market transactions.
(iv) Reflects shareholding as at 28 February 2020 for Dr Switkowski, 6 October 2019 for Mr Johnston and 17 February 2020 for Mr Makryllos. No shares are nominally held by KMP at the end of the reporting period.
(v) Commenced as observer on 3 February 2020. Appointed as a Non Executive Director and KMP on 17 July 2020, following receipt of all necessary regulatory approvals.
(vi) Commenced as observer on 14 October 2019. Appointed as a Non Executive Director and KMP on 3 July 2020, following receipt of all necessary regulatory approvals.
(b) Transactions and loans with KMP
No KMP (including their related parties) have entered into material commercial relationships or transactions with the Company or a subsidiary during FY20 other than as disclosed in this
Remuneration Report. All KMP related party relationships are at arm’s length and on normal commercial terms and none of the KMP were, or are, involved in any procurement or other
decision-making regarding organisations with which they have an association. No KMP (including their related parties) has entered into a loan made, guaranteed or secured, directly
or indirectly, by the Company or a subsidiary during the reporting period.
70
Tabcorp Annual Report 2020 FINANCIAL REPORT
Contents
Income statement
Balance sheet
Cash flow statement
Statement of changes in equity
Notes to the financial statements
About this report
Section A – Group performance
Section B – Capital and risk management
Section C – Operating assets and liabilities
Section D – Group structure
Section E – Other disclosures
Directors’ declaration
Independent auditor’s report
72
73
74
75
76
76
77
83
94
104
111
120
121
Tabcorp Annual Report 2020
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
71
INCOME STATEMENT For the year ended 30 June 2020
Revenue
Other income
Commissions and fees
Government taxes and levies
Employment costs
Communications and technology costs
Advertising and promotions
Other expenses
Depreciation and amortisation
Impairment – goodwill
Impairment – other
Profit/(loss) before income tax and net finance costs
Finance income
Finance costs
Profit/(loss) from continuing operations before income tax
Income tax expense
Profit/(loss) from continuing operations after income tax
Discontinued operations
Loss from discontinued operations net of tax
Net profit/(loss) after tax
Other comprehensive income
Items that may be reclassified to profit or loss
Change in fair value of cash flow hedges taken to equity
Exchange differences on translation of foreign operations
Income tax relating to these items
Items that will not be reclassified to profit or loss
Actuarial gains/(losses) on retirement benefit obligation
Income tax relating to these items
Other comprehensive income for the year, net of income tax
Total comprehensive income for the year
Earnings per share:
From continuing operations
Basic earnings per share
Diluted earnings per share
From continuing operations before goodwill impairment
Basic earnings per share
Diluted earnings per share
Total attributable to shareholders of Tabcorp
Basic earnings per share
Diluted earnings per share
Dividends per share:
Declared and paid during the year
Determined in respect of the year
The accompanying notes form an integral part of this income statement.
72
Note
A4
A4
C2
A4
A4
A5
D4
A2
A2
A2
A2
A2
A2
A3
A3
2020
$m
5,224
1
(1,442)
(2,005)
(378)
(111)
(155)
(197)
(378)
(1,090)
(43)
(574)
2
(195)
(767)
(103)
(870)
-
(870)
146
2
(44)
1
-
105
(765)
2020
cents
(42.9)
(42.9)
10.9
10.8
(42.9)
(42.9)
22.0
11.0
2019
$m
5,488
17
(1,498)
(2,009)
(421)
(126)
(162)
(201)
(352)
-
4
740
1
(209)
532
(161)
371
(10)
361
(5)
1
1
(3)
1
(5)
356
2019
cents
18.4
18.4
18.4
18.4
17.9
17.9
21.0
22.0
Tabcorp Annual Report 2020 BALANCE SHEET As at 30 June 2020
Current assets
Cash and cash equivalents
Receivables
Prepayments
Current tax assets
Derivative financial instruments
Other financial assets
Assets held for sale
Other
Total current assets
Non current assets
Receivables
Investment in an associate
Other financial assets
Licences
Other intangible assets
Property, plant and equipment
Right-of-use assets
Prepayments
Derivative financial instruments
Other
Total non current assets
TOTAL ASSETS
Current liabilities
Payables
Interest bearing liabilities
Lease liabilities
Provisions
Derivative financial instruments
Other
Total current liabilities
Non current liabilities
Payables
Interest bearing liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Derivative financial instruments
Other
Total non current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Accumulated losses
Reserves
TOTAL EQUITY
The accompanying notes form an integral part of this balance sheet.
Note
C6
C7
B4
B2
E7
C7
D5
B2
C1
C2
C4
C5
B4
C8
B3
C5
C9
B4
C8
B3
C5
A5
C9
B4
2020
$m
349
72
33
-
103
26
39
105
727
3
29
159
2,148
8,134
456
275
20
426
39
11,689
12,416
1,178
249
47
47
44
81
1,646
238
3,471
306
583
29
104
9
4,740
6,386
6,030
8,617
(1,967)
(620)
6,030
2019
$m
463
113
35
26
19
13
-
97
766
6
29
156
2,254
9,184
555
328
23
289
33
12,857
13,623
1,206
192
51
59
46
81
1,635
234
3,527
358
565
26
82
13
4,805
6,440
7,183
8,562
(653)
(726)
7,183
73
FINANCIAL REPORTTabcorp Annual Report 2020 CASH FLOW STATEMENT For the year ended 30 June 2020
Cash flows from operating activities
Net cash receipts in the course of operations
Payments to suppliers, service providers and employees
Payment of government levies, betting taxes and GST
Finance income received
Finance costs paid
Income tax paid
Net cash flows from operating activities
Cash flows from investing activities
Payment for property, plant and equipment and intangibles
Proceeds from sale of property, plant and equipment and intangibles
Payment for other financial assets
Loan repayments received from customers
Payment for exercise of call option
Proceeds from sale of shares in an associate
Net cash flows used in investing activities
Cash flows from financing activities
Net cash flows from revolving bank facilities
Proceeds from borrowings
Repayment of borrowings
Payment of lease liabilities
Dividends paid
Payments for on-market share purchase
Net cash flows used in financing activities
Net increase/(decrease) in cash held
Cash at beginning of year
Cash at end of year
The accompanying notes form an integral part of this cash flow statement.
The cash flow statement includes the cash flows of the discontinued Sun Bets business in the prior year, refer note D4.
Note
C6
C6
2020
$m
5,243
(2,523)
(1,754)
2
(197)
(100)
671
(290)
12
(15)
1
-
-
(292)
(80)
226
(192)
(52)
(392)
(3)
(493)
(114)
463
349
2019
$m
5,729
(2,762)
(1,801)
2
(215)
(183)
770
(278)
2
(93)
2
(8)
12
(363)
236
-
(83)
(55)
(393)
(1)
(296)
111
352
463
74
Tabcorp Annual Report 2020 STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2020
Issued capital
Reserves
Number of
ordinary shares
m
Ordinary
shares
$m
Treasury
shares
$m
Accumulated
losses
$m
Hedging
$m
Demerger
$m
Other
$m
2020
Balance at beginning of year
Loss for the year
Other comprehensive income
Total comprehensive income
Dividends paid
Dividend reinvestment plan
Transfers
Restricted shares issued
Share based payments expense
Balance at end of year
2019
Balance at beginning of year
Effect of adoption of AASB 16
Balance at beginning of year (restated)
Profit for the year
Other comprehensive income
Total comprehensive income
Dividends paid
Dividend reinvestment plan
Transfers
Restricted shares issued
Share based payments expense
Balance at end of year
2,019
-
-
-
-
13
-
-
-
2,032
2,013
-
2,013
-
-
-
-
6
-
-
-
2,019
8,562
-
-
-
-
53
3
-
-
8,618
Total issued capital $8,617m
8,529
-
8,529
-
-
-
-
30
3
-
-
8,562
-
-
-
-
-
-
-
(3)
2
(1)
-
-
-
-
-
-
-
-
-
(1)
1
-
(653)
(870)
1
(869)
(445)
-
-
-
-
(1,967)
(566)
(22)
(588)
361
(3)
358
(423)
-
-
-
-
(653)
(60)
-
102
102
-
-
-
-
-
42
Total reserves ($620m)
(670)
-
-
-
-
-
-
-
-
(670)
(57)
-
(57)
-
(3)
(3)
-
-
-
-
-
(60)
(670)
-
(670)
-
-
-
-
-
-
-
-
(670)
4
-
2
2
-
-
(3)
-
5
8
2
-
2
-
1
1
-
-
(3)
-
4
4
Total issued capital $8,562m
Total reserves ($726m)
Total
equity
$m
7,183
(870)
105
(765)
(445)
53
-
(3)
7
6,030
7,238
(22)
7,216
361
(5)
356
(423)
30
-
(1)
5
7,183
Issued capital
Ordinary shares are issued and fully paid. They carry one vote per share and hold rights to dividends. Issued capital is recognised at the fair value of the consideration received. When issued capital is repurchased, the amount
of the consideration paid, including directly attributable costs, is recognised as a deduction from total issued capital. Any transaction costs directly attributable to the issue of ordinary shares are recognised directly in equity,
net of tax, as a reduction of the share proceeds received.
Treasury shares represent the unvested portion of Restricted Shares issued to executives as an incentive, on appointment or for retention, which is recognised as a reduction in issued capital. The amount which has been credited
to the employee equity benefit reserve is transferred to issued capital to the extent the relevant Performance Rights vest or have been treated as vested.
Nature of reserves
Hedging reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges.
Demerger reserve arose on the demerger of The Star Entertainment Group (previously the Echo Entertainment Group) in 2011. It represents the difference between the fair value of The Star Entertainment Group shares (being
the distribution liability arising on demerger), the amount allocated as a capital reduction and any transfers to retained earnings.
Other reserves contain the employee equity benefit reserve and the foreign currency translation reserve.
The accompanying notes form an integral part of this statement of changes in equity.
75
FINANCIAL REPORTTabcorp Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2020
ABOUT THIS REPORT
Tabcorp Holdings Limited (the Company) is a company limited by shares which are traded
on the Australian Securities Exchange. The Company is incorporated and domiciled in
Australia, and is a for-profit entity. The Financial Report of the Company for the year ended
30 June 2020 comprises the Company and its subsidiaries (the Group) and the Group’s
interest in joint arrangements and associates.
The measures taken by the governments in response to the COVID-19 pandemic in March
2020 resulted in temporary closure of Australian licensed venues (hotels and clubs) and
TAB agencies, and the cancellation and/or postponement of major sports events around
the world. The current period financial statements reflect the adverse impacts of these
measures on the results and the cash flows. Refer to the Operating and Financial Review
section of the Annual Report for further information. An assessment of the impact of
COVID-19 on the Group’s 30 June 2020 balance sheet is set out below:
Balance sheet item COVID-19 assessment
Interest bearing
liabilities
The Group engaged with the respective lending groups and secured covenant
relief for 30 June 2020 and 31 December 2020 testing dates. In addition,
a new bank facility was drawn down in March.
The Group has considered the impact of government and other measures
taken to address the COVID-19 pandemic on the assumptions used in its
annual impairment test. An impairment charge against goodwill has been
recognised for the Wagering and Media and Gaming Services segments.
Trade debtors include the impact of the temporary closure of venues
resulting in suspension of invoicing and increase in allowance for expected
credit losses.
Current payables include lottery and Keno taxes and payroll tax deferred
as a result of government support received during the COVID-19 pandemic
and reflects employee bonus accruals of nil.
Employee benefits provisions reflect the utilisation of leave entitlements
as part of COVID-19 response measures.
Note
B1 and
B3
C2 and
C3
C7
C8
C9
Goodwill
Receivables
Payables
Provisions
Further details on the impact of COVID-19 on the Group’s results can be found in the
Directors’ report for the year ended 30 June 2020.
The Financial Report was authorised for issue by the Board of Directors on 19 August 2020.
The Financial Report is a general purpose financial report which:
• has been prepared in accordance with the Corporations Act 2001 (Cth), Australian
Accounting Standards as issued by the Australian Accounting Standards Board and
other mandatory financial reporting requirements in Australia;
• complies with International Financial Reporting Standards as issued by the International
Accounting Standards Board;
• is presented in Australian dollars with dollar amounts rounded to the nearest million
unless specifically stated to be otherwise, in accordance with ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191; and
• is prepared on the historical cost basis, except for derivative financial instruments and
equity instruments that have been measured at fair value and assets held for sale that
have been measured at the lower of cost and fair value.
The accounting policies have been applied consistently throughout the Group for the purposes
of this Financial Report.
The Group applies, for the first time, AASB 16 Leases which requires a lessee to recognise
assets and liabilities for all leases with exemption available for low value leases and leases
less than 12 months. Refer note E8.
Note disclosures have been grouped into five sections. The notes within each section detail
the accounting policies applied, together with any key judgements and estimates used.
The purpose of this format is to provide users with a clear understanding of the key drivers
of the Group’s financial performance and financial position.
A Group performance
B Capital and risk management
C Operating assets and liabilities
D Group structure
E Other disclosures
A1 Segment information 77
79
A2 Earnings per share
A3 Dividends
79
A4 Revenue and expenses 80
81
A5 Income tax
82
A6 Subsequent events
83
B1 Capital management
B2 Other financial assets
83
B3 Interest bearing liabilities 84
B4 Derivative financial
instruments
B5 Fair value measurement
B6 Financial instruments
– risk management
86
89
90
C1 Licences
94
C2 Other intangible assets
95
C3 Impairment testing
96
C4 Property, plant and equipment
98
99
C5 Leases
C6 Notes to the cash flow statement 101
102
C7 Receivables
102
C8 Payables
103
C9 Provisions
104
D1 Subsidiaries
106
D2 Deed of cross guarantee
108
D3 Parent entity disclosures
D4 Discontinued operations
109
D5 Investment in an associate 110
E1 Employee share plans
111
E2 Pensions and other post
employment benefit plans 113
E3 Commitments
114
115
E4 Contingencies
E5 Related party disclosures 116
116
E6 Auditor’s remuneration
E7 Assets held for sale
117
E8 Other accounting policies 117
Significant accounting estimates and assumptions
The carrying amount of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of these assets and liabilities recognised in the financial statements are described in the following notes:
A5 – Income tax
B2 – Other financial assets
B4 – Derivative financial
instruments
C1 – Licences
C2 – Other intangible assets
C3 – Impairment testing
C5 – Leases
C9 – Provisions
E4 – Contingencies
76
Tabcorp Annual Report 2020
SECTION A – GROUP PERFORMANCE
A1 Segment information
Operating segments reflect the business level at which financial information is provided to the Managing Director and Chief Executive Officer (Chief Operating Decision Maker), for decision
making regarding resource allocation and performance assessment. The measure of segment profit used excludes significant items not considered integral to the ongoing performance
of the segment. Intersegment pricing is determined on commercial terms and conditions.
The Group has three operating segments at year end.
Tabcorp
Group
Lotteries and Keno
Wagering and Media
Gaming Services
Operation of lotteries and Keno pursuant
to licences and approvals in certain
Australian states and territories
Provision of totalisator and fixed odds
betting and retail wagering networks,
and global racing media business
Gaming machine monitoring operations
in New South Wales, Queensland and
the Northern Territory and venue
services nationwide
Segment revenue
$m
2,917
2020
2,084
2,865
2019
2,318
221
304
Segment profit/(loss) before interest and tax
$m
2020
2019
442
426
175
(14)
281
67
Lotteries and Keno
Wagering and Media
Gaming Services
77
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: GROUP PERFORMANCE For the year ended 30 June 2020
A1 Segment information (continued)
2020
Revenue – external
Revenue – intersegment
Segment revenue
Segment profit/(loss) before interest and tax
Depreciation and amortisation
Impairment – other (i)
Capital expenditure (ii)
2019
Revenue – external
Revenue – intersegment
Segment revenue
Segment profit before interest and tax
Depreciation and amortisation
Impairment – other
Capital expenditure (ii)
Lotteries and Keno
$m
Wagering and Media
$m
Gaming Services
$m
2,917
-
2,917
442
100
-
55
2,865
-
2,865
426
87
-
65
2,083
1
2,084
175
192
4
144
2,316
2
2,318
281
180
-
152
221
-
221
(14)
86
12
63
304
-
304
67
79
-
91
Total
$m
5,221
1
5,222
603
378
16
262
5,485
2
5,487
774
346
-
308
(i) Includes write down of certain operating assets.
(ii) Capital expenditure excludes the acquisition of licences, unallocated items, make good provisions raised during the year and additions to right-of-use assets.
A reconciliation of segment result to the Group’s income statement is as follows:
Segment total (per above)
Intersegment revenue elimination
Unallocated items:
– significant items:
– implementation costs relating to combination with Tatts Group
– Racing Queensland arrangements (i)
– impairment – goodwill(ii)
– impairment – other(iii)
– onerous contract
– ACT point of consumption tax compensation
– finance income
– finance costs
– other (iv)
Total per income statement (continuing operations)
Revenue
Profit/(loss)
before tax
Depreciation
& amortisation
Impairment(v)
2020
$m
5,222
(1)
-
-
-
-
-
-
-
-
-
3
5,224
2019
$m
5,487
(2)
-
-
-
-
-
-
-
-
-
3
5,488
2020
$m
603
-
(26)
(27)
(1,090)
(22)
(5)
-
(1,170)
2
(195)
(7)
(767)
2019
$m
774
-
(34)
(17)
-
-
-
15
(36)
1
(209)
2
532
2020
$m
378
-
-
-
-
-
-
-
-
-
-
-
378
2019
$m
346
-
-
-
-
-
-
-
-
-
-
6
352
2020
$m
16
-
-
-
1,090
22
-
-
1,112
-
-
5
1,133
2019
$m
-
-
-
-
-
-
-
-
-
-
-
(4)
(4)
(i) Additional fees related to the minimum performance obligations for three years to December 2020 under Racing Queensland arrangements.
(ii) Write down of goodwill following the annual impairment review relating to Wagering and Media ($905m) and Gaming Services ($185m). Refer to notes C2 and C3.
(iii) Write down of certain operating assets relating to Wagering and Media ($15m) and Gaming Services ($7m).
(iv) Current year includes impairment of surplus corporate properties ($5m).
(v) Reconciliation includes impairment of goodwill and impairment of other assets.
78
Tabcorp Annual Report 2020
A2 Earnings per share
Profit/(loss) from continuing operations after income tax
Loss from discontinued operations net of tax
Earnings used in calculation of earnings per share (EPS) attributable to shareholders
Profit/(loss) from continuing operations after income tax
Adjustment for impairment – goodwill
Earnings used in calculation of EPS from continuing operations before goodwill impairment
Weighted average number of ordinary shares used in calculating basic EPS
Effect of dilution from Performance Rights
Weighted average number of ordinary shares used in calculating diluted EPS
2020
$m
(870)
-
(870)
(870)
1,090
220
2019
$m
371
(10)
361
371
-
371
2020
Number (m)
2,026
4
2,030
2019
Number (m)
2,016
4
2,020
Basic EPS is calculated as net profit after tax divided by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated on the same basis as basic EPS except that it reflects the impact of any potential commitments the Group has to issue shares in the future, for example shares
to be issued upon vesting of Performance Rights.
A3 Dividends
Fully franked dividends declared and paid during the year:
Prior year final dividend
Interim dividend
Fully franked dividends determined in respect of the year:
Interim dividend
Final dividend (declared and recognised after balance date)
Franking credits balance
Franking credits available at balance date
Impact of estimated current tax refunds
Franking credits/(deficit) available at the 30% company tax rate after allowing for tax payable or receivable
2020
cents per share
2019
cents per share
2020
$m
11.0
11.0
22.0
11.0
-
11.0
10.0
11.0
21.0
11.0
11.0
22.0
222
223
445
223
-
223
12
(16)
(4)
2019
$m
201
222
423
222
222
444
102
(41)
61
79
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: GROUP PERFORMANCE For the year ended 30 June 2020
A4 Revenue and expenses
(a) Revenue comprises:
Revenue from contracts with customers
Other revenue (i)
(b) Other income
Net loss on disposal of non current assets
ACT point of consumption tax compensation
Other(ii)
(c) Employment costs include:
Defined contribution plan expense
(d) Finance costs
Interest costs on interest bearing liabilities
Interest costs on lease liabilities
Other
(e) Impairment – other
Buildings(iii)
Leasehold improvements
Plant and equipment (iii)
Other intangible assets – software(iii)
Right-of-use assets
2020
$m
4,239
985
5,224
(5)
-
6
1
32
163
16
16
195
5
-
10
27
1
43
2019
$m
4,431
1,057
5,488
(1)
15
3
17
31
176
17
16
209
-
1
1
-
(6)
(4)
(i) Includes fixed odds betting revenue, refer accounting policy below.
(ii) Current year includes subsidy received under the Federal Government’s JobKeeper scheme of $4m.
(iii) Current year includes the write down of certain operating assets and surplus corporate properties. Refer Note A1.
Revenue from contracts with customers is recognised when control of the goods or services is transferred to customers at an amount that reflects the consideration the Group expects to be entitled to in exchange for those
goods or services. Incremental costs of obtaining contracts with a duration of one year or less are expensed as incurred. The following specific criteria must also be met before revenue is recognised:
Lotteries revenue is recognised as the gross subscriptions received for lotteries less prizes payable when the official draw for each game is completed. Subscriptions received during the year for games which will be drawn
in the next financial period are deferred and recognised as revenue in the next financial period. Revenue from lottery card subscriptions is recognised over the life of the subscription. Management fees recognised in relation
to the Master Agent Agreement associated with the operation of SA Lotteries are recognised in revenue.
Keno revenue is recognised as the residual value after deducting the return to customers from Keno turnover.
80
Tabcorp Annual Report 2020
Wagering revenue is recognised as the residual value after deducting the return to customers from wagering turnover. Fixed odds betting revenue is classified as other revenue and recognised as the net win or loss on an event.
The amounts bet on an event are recognised as a liability until the outcome of the event is determined, at which time the revenue is brought to account. Open fixed odds betting positions are carried at fair value and gains and
losses arising on these positions are recognised in revenue.
The Group previously operated loyalty programmes enabling customers to accumulate award credits for wagering spend. A portion of the spend was allocated to the loyalty points awarded to customers on relative stand-alone
selling price and was recognised as a contract liability until the points were redeemed. Revenue from the award credits was recognised when the award was redeemed or expired.
Media revenue includes subscription income and advertising revenue, and is recognised once the service has been rendered. Subscriptions received relating to future periods are treated as deferred revenue.
Gaming services revenue is recognised once the service has been rendered or the goods have been delivered to the buyer.
Interest revenue earned from customers in the ordinary course of operations is disclosed within revenue.
Contributions to defined contribution plans are recognised in the income statement as they become payable.
Finance income is recognised using the effective interest rate method.
Finance costs are recognised as an expense when incurred.
A5 Income tax
(a) The major components of income tax expense are:
Current tax
Adjustments in respect of current income tax of previous years
Deferred tax
Income tax reconciliation:
Profit/(loss) from continuing operations before income tax
Loss from discontinued operations before income tax
Profit/(loss) before income tax
Income tax receivable/(payable) at the 30% company tax rate
Tax effect of adjustments in calculating taxable income:
– impairment of goodwill
– amortisation of licences
– unbooked deferred tax assets
– research and development claims
– other
Income tax expense
Income tax expense reported in the income statement
Income tax benefit attributable to discontinued operations
Income tax expense
2020
$m
(127)
(2)
26
(103)
(767)
-
(767)
230
(327)
(12)
-
3
3
(103)
(103)
-
(103)
2019
$m
(168)
(12)
19
(161)
532
(10)
522
(157)
-
(12)
(1)
2
7
(161)
(161)
-
(161)
81
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: GROUP PERFORMANCE For the year ended 30 June 2020
A5 Income tax (continued)
(b) Deferred tax assets/(liabilities)
Lease liabilities
Provisions
Property, plant and equipment
NSW Trackside concessions
Accrued expenses
Other
Fair value of cash flow hedges
Licences
Other intangible assets
Right-of-use assets
Unclaimed dividends
Research and development
Net deferred tax assets/(liabilities)
Balance at
1 July 2018
$m
128
34
17
8
8
11
25
(623)
(44)
(112)
(9)
(29)
(586)
Recognised
in income
statement
$m
(5)
(8)
-
(3)
2
(6)
-
20
2
3
1
13
19
Recognised
directly in
equity
$m
-
-
-
-
-
1
1
-
-
-
-
-
2
Balance at
30 June 2019
$m
123
26
17
5
10
6
26
(603)
(42)
(109)
(8)
(16)
(565)
Recognised
in income
statement
$m
(19)
(3)
-
(3)
(6)
2
-
20
8
19
1
7
26
Recognised
directly in
equity
$m
-
-
-
-
-
-
(44)
-
-
-
-
-
(44)
Balance at
30 June 2020
$m
104
23
17
2
4
8
(18)
(583)
(34)
(90)
(7)
(9)
(583)
Income tax comprises current and deferred income tax. Income tax is recognised in the income statement except when it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period and any adjustment to tax payable in respect of previous years.
Deferred tax is calculated using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for accounting purposes and the amounts used for tax purposes. The
temporary differences for goodwill and the initial recognition of an asset or liability in a transaction which is not a business combination and that affect neither accounting nor taxable profit at the time of the transaction are not
provided for. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets and deferred tax liabilities are offset only if a legally
enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
The income tax expense and deferred tax balances assume certain tax outcomes in relation to the application of tax legislation as it applies to the Group. An uncertain tax treatment occurs where there is uncertainty over
whether a tax authority will accept a tax treatment adopted by the Group under tax law. The Group revisits the accounting in relation to an uncertain tax treatment when there are changes in relevant facts and circumstances
(refer to note E4).
A6 Subsequent events
Subsequent events other than those disclosed elsewhere in this report are:
JobKeeper subsidy
On 21 July 2020, the Federal Government announced that the JobKeeper scheme will be extended until 28 March 2021 for employers who continue to be significantly impacted by COVID-19.
Further changes to the business eligibility criteria were announced in August 2020. Tabcorp may be eligible to receive further subsidy under the extended scheme.
Victorian restriction level
Tabcorp notes the recent developments in Victoria, including the declaration of a ‘state of disaster’ with effect from 2 August 2020. The relevant restrictions resulted in the temporary
closure of Victorian licensed venues (hotels and clubs) and TAB agencies, which offer Tabcorp’s Wagering and Media, Keno and Gaming Services products. At the reporting date a definitive
assessment of the future effects of these restrictions, and COVID-19 more generally, on the Group cannot be made.
Entitlement offer
We have announced a 1 for 11 underwritten pro-rata accelerated renounceable entitlement offer with retail entitlements trading at a price of $3.25 per new share to raise gross proceeds
of approximately $600m.
82
Tabcorp Annual Report 2020
SECTION B – CAPITAL AND RISK MANAGEMENT
B1 Capital management
The Group’s objectives when managing capital are to ensure the Group continues as a going concern while providing optimal returns to shareholders and benefits for other stakeholders, and
to maintain an appropriate capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders or issue new shares.
The Group has a target of an investment grade credit rating. Gearing is managed primarily through the ratio of gross debt to earnings before interest, tax, depreciation, amortisation and
impairment (EBITDA).
At 30 June the Group’s gearing ratio was:
Gross debt (US private placement debt at the Australian dollar principal repayable under cross currency swaps)(i)
EBITDA (before significant items) (ii)
Gearing ratio
(i) Includes lease liabilities following the implementation of AASB 16.
(ii) EBITDA for the prior year represents continuing operations.
B2 Other financial assets
Other financial assets are held to fund payments to winners of certain lottery games, where winnings are payable for up to 20 years.
Equity instruments at fair value through other comprehensive income
Unlisted investments – managed fund
Debt instruments at amortised cost
Investment – term deposits
Current
Non current
2020
$m
3,748
995
3.8
2020
$m
22
163
185
26
159
185
2019
$m
3,851
1,124
3.4
2019
$m
21
148
169
13
156
169
Equity instruments at fair value through other comprehensive income are equity instruments which the Group intends to hold for the foreseeable future, and for which an irrevocable
election to classify as such upon transition to AASB 9 has been made.
After initial measurement, they are subsequently carried at fair value (refer to note B5). Changes in the fair value are recognised in other comprehensive income and accumulated in a
reserve within equity. No subsequent recycling of gains or losses to profit or loss is permitted.
Debt instruments at amortised cost are financial assets held in order to collect contractual cash flows that solely represent payments of principal and interest. They are carried at
amortised cost.
83
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: CAPITAL AND RISK MANAGEMENT For the year ended 30 June 2020
B3 Interest bearing liabilities
The Group borrows money from financial institutions and debt investors in the form of bank loans, foreign currency denominated notes and bonds.
The following table details the debt position of the Group at 30 June:
Facility
Bank overdraft
Details
Floating interest rate revolving bilateral overdraft facility.
Bank loans – unsecured Floating interest rate revolving facility. Subject to financial undertakings as to gearing
and interest cover.
US private placement
Fixed interest rate US dollar debt. At 30 June 2020 aggregate US dollar principal
of $1,553 million (2019: $1,553 million). Cross currency swaps are in place for all
US dollar debt. Under these swaps the aggregate Australian dollar amount payable
at maturity is $1,925 million (2019: $1,925 million).
Facility limit
$m
100
Maturity
Feb-21
226
660
600
600
2,086
USD 170
USD 133
USD 105
USD 450
USD 520
USD 175
AUD 97
AUD 97
Jul-21
Jul-22
Jul-23
Jul-24
Dec-20
Apr-22
Jun-26
Jun-28
Jun-30
Jun-33
Jun-35
Jun-36
Tatts Bonds
Floating rate interest 90 day BBSW +3.1% paid quarterly in arrears. Redeemed in July 2019.
192
n/a
Current
Non current
84
2020
$m
-
226
299
148
598
1,271
249
193
152
653
754
254
97
97
2,449
-
3,720
249
3,471
3,720
2019
$m
-
-
631
495
-
1,126
246
189
149
638
737
248
97
97
2,401
192
3,719
192
3,527
3,719
Tabcorp Annual Report 2020
B3.1 Changes in liabilities arising from financing activities:
Interest bearing liabilities
Current
Non current
Cross currency interest rate swaps
Current assets
Non current assets
Current liabilities
Lease liabilities
Current
Non current
Interest bearing liabilities
Current
Non current
Cross currency interest rate swaps
Current assets
Non current assets
Current liabilities
Lease liabilities
Current
Non current
Balance at
30 June 2019
$m
Cash flows
$m
Foreign exchange
movement
$m
Changes in
fair values
$m
Lease
additions
$m
192
3,527
(19)
(289)
5
51
358
3,825
(192)
146
-
-
-
(52)
-
(98)
-
51
-
-
-
-
-
51
-
-
(84)
(137)
(1)
-
-
(222)
-
-
-
-
-
1
11
12
Balance at
30 June 2018
$m
Cash flows
$m
Foreign exchange
movement
$m
Changes in
fair values
$m
Lease
additions
$m
133
3,372
(41)
(122)
9
53
373
3,777
(99)
236
-
-
-
(55)
-
82
(34)
115
-
-
-
-
-
81
-
-
22
(167)
(4)
-
-
(149)
-
-
-
-
-
2
23
25
Other
$m
249
(253)
-
-
-
47
(63)
(20)
Other
$m
192
(196)
-
-
-
51
(38)
9
Balance at
30 June 2020
$m
249
3,471
(103)
(426)
4
47
306
3,548
Balance at
30 June 2019
$m
192
3,527
(19)
(289)
5
51
358
3,825
Interest bearing liabilities are recognised initially at fair value net of transaction costs, and subsequent to initial recognition are recognised at amortised cost which is calculated using the
effective interest rate method. Foreign currency liabilities are carried at amortised cost and are translated at the exchange rates ruling at reporting date. Gains and losses are recognised in
the income statement when the liabilities are derecognised in addition to the amortisation process.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw down occurs. To the extent there is evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period of the facility to which it relates.
85
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: CAPITAL AND RISK MANAGEMENT For the year ended 30 June 2020
B4 Derivative financial instruments
The Group holds the following derivative financial instruments, all at fair value based on level 2 observable inputs (refer to note B5):
Current assets
Cross currency swaps
Non current assets
Cross currency swaps
Current liabilities
Cross currency swaps
Interest rate swaps
Fixed Odds open betting positions
Non current liabilities
Interest rate swaps
2020
$m
103
426
529
4
31
9
44
104
148
2019
$m
19
289
308
5
30
11
46
82
128
Derivative financial instruments are recognised initially at cost, and subsequently are stated at fair value (refer to note B5). The method of recognising any remeasurement gain or loss
depends on the nature of the item being hedged. For the purposes of hedge accounting, the Group’s hedges are classified as cash flow hedges.
At inception, hedge relationships are designated as such and documented. This includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged,
and how the hedge effectiveness requirements are assessed.
A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
– there is an economic relationship between the hedged item and the hedging instrument;
– the effect of credit risk does not dominate the value changes that result from that economic relationship; and
– the hedge ratio is the same as that resulting from actual amounts of hedged items and hedging instruments for risk management.
Cash flow hedges are used to hedge the exposure to variability in cash flows attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecast
transaction. Hedge effectiveness is measured by comparing the change in the fair value of the hedged item and the hedging instrument respectively each quarter. Any difference
represents ineffectiveness. The effective portion of any gain or loss on the hedging instrument is recognised directly in equity, with any ineffective portion recognised in the income
statement. For hedged items relating to financial assets or liabilities, amounts recognised in equity are reclassified into the income statement when the hedged transaction affects the
income statement (i.e. when interest income or expense is recognised). When the hedged item is the cost of a non-financial asset or liability, the amounts recognised in equity are
transferred into the initial cost or other carrying amount of the non-financial asset or liability.
When a hedging instrument expires or is sold, terminated or exercised, or the designation of the hedge relationship is revoked but the hedged forecast transaction is still expected to occur,
the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above when the transaction occurs. If the hedged transaction is no longer expected to
take place, then the cumulative unrealised gain or loss recognised in equity is recognised immediately in the income statement.
Financial instruments that do not qualify for hedge accounting are stated at fair value with any resultant gain or loss being recognised in the income statement.
86
Tabcorp Annual Report 2020
B4.1 Interest rate swaps
These swaps are used to mitigate the risk of variability in cash flows due to movements in the reference interest rate of the designated debt.
The notional principal amounts and periods of expiry of these interest rate swap contracts are:
Less than one year
One to five years
More than five years
Notional principal
Fixed interest rate range p.a.
Variable interest rate range p.a.
Notional principal
2020
$m
-
427
722
1,149
2019
$m
240
427
722
1,389
1.9% – 4.9%
0.1% – 0.1%
1.9% – 7.3%
1.2% – 1.7%
Net settlement receipts and payments are recognised as an adjustment to interest expense on an accruals basis over the term of the swaps, such that the overall interest expense on
borrowings reflects the average cost of funds achieved by entering into the swap agreements.
There is an economic relationship between the hedged item and the hedged instrument as the key terms of the interest rate swap are similar to the key terms of the floating rate borrowings.
The Group has established a hedge ratio of 1:1 which has been determined by comparing the notional principal of the swap with the notional amount of the designated debt.
Further information about the Group’s interest rate risk management is disclosed in note B6.1.
B4.2 Cross currency swaps
These swaps are used to reduce the exposure to the variability of movements in the forward USD exchange rate in relation to the USD private placement debt.
The principal amounts and periods of expiry of the cross currency swap contracts are:
Less than one year
One to five years
More than five years
Notional principal
Fixed interest rate range p.a.
Variable interest rate range p.a.
2020
2019
Pay
principal
AUD m
171
127
1,627
1,925
Receive
principal
USD m
170
133
1,250
1,553
Pay
principal
AUD m
-
298
1,627
1,925
Receive
principal
USD m
-
303
1,250
1,553
5.3% –5.6%
2.2% – 4.0%
4.6% – 5.2%
5.3%–5.6%
3.3% – 5.4%
4.6% – 5.2%
There is an economic relationship between the hedged item and the hedged instrument as the terms and conditions in relation to the interest rate and maturity of the cross currency swaps
are similar to the terms and conditions of the underlying hedged US private placement debt. The Group has established a hedge ratio of 1:1 which has been determined by comparing the
notional principal of the swap with the notional amount of the designated debt.
Further information about the Group’s foreign currency risk management is disclosed in note B6.2.
87
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: CAPITAL AND RISK MANAGEMENT For the year ended 30 June 2020
B4 Derivative financial instruments (continued)
B4.3 Impact of hedging on balance sheet
The change in fair value used for measuring ineffectiveness is set out in the below table. All hedging instruments are presented within derivative financial instruments in the balance sheet.
Interest rate swaps
Cross currency swaps
The ineffectiveness recognised in the income statement was immaterial in both the current and prior financial year.
B4.4 Impact of hedging on equity
Set out below is a reconciliation of the movement in the hedging reserve:
As at 1 July 2019
Effective portion of changes in fair value arising from:
– Interest rate swaps
– Cross currency swaps
Loss on revaluation of USD debt
Other
Tax effect
As at 30 June 2020
As at 1 July 2018
Effective portion of changes in fair value arising from:
– Interest rate swaps
– Cross currency swaps
Loss on revaluation of USD debt
Other
Tax effect
As at 30 June 2019
88
2020
$m
(23)
222
199
2019
$m
(70)
188
118
Hedging
reserve
$m
(60)
(23)
222
(51)
(2)
(44)
42
(57)
(70)
188
(121)
(1)
1
(60)
Tabcorp Annual Report 2020
B5 Fair value measurement
The fair value of financial assets and financial liabilities is estimated for recognition, measurement and disclosure purposes at each balance date. Various methods are available to estimate
the fair value of a financial instrument, and comprise:
Level 1 – calculated using quoted prices in active markets.
Level 2 – estimated using inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – estimated using inputs for the asset or liability that are not based on observable market data.
The carrying amount of financial assets or liabilities recognised in the financial statements is deemed to be the fair value unless stated below:
Financial assets
Investment in an associate
Financial liabilities
US private placement
Tatts Bonds
The fair value of the Group’s financial instruments is estimated as follows:
Investment in an associate
Fair value is determined using quoted market price (level 1 in fair value hierarchy).
US private placement
Carrying amount
2019
$m
2020
$m
29
29
2,459
-
2,459
29
29
2,411
192
2,603
Fair value
2019
$m
146
146
2,749
194
2,943
2020
$m
69
69
3,037
-
3,037
Fair value is calculated using discounted future cash flow techniques, where estimated cash flows and estimated discount rates are based on market data at balance date, in combination
with restatement to foreign exchange rates at balance date (level 2 in fair value hierarchy).
Tatts Bonds
Fair value was determined using independent market quotations (level 1 in fair value hierarchy).
Cross currency and interest rate swaps
Fair value is calculated using discounted future cash flow techniques, where estimated cash flows and estimated discount rates are based on market data at balance date
(level 2 in fair value hierarchy).
Equity instruments at fair value through other comprehensive income
Fair value is reference to market prices prevailing at balance date (level 2 in fair value hierarchy).
There have been no significant transfers between level 1 and level 2 during the financial year ended 30 June 2020.
89
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: CAPITAL AND RISK MANAGEMENT For the year ended 30 June 2020
B6 Financial instruments – risk management
The Group’s principal financial instruments, other than derivatives, comprise cash, term deposits, unlisted investments and interest bearing liabilities. The main purpose of these financial
instruments is to raise finance for the Group’s operations. The Group also has various other financial assets and liabilities which arise directly from its operations.
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities, principally
interest rate swaps and cross currency swaps. The Group does not hold or issue derivative financial instruments for trading purposes.
The main risks arising from the Group’s financial instruments are discussed in section B6.1 to B6.4.
B6.1 Interest rate risk
The Group has a policy of controlling exposure to interest rate fluctuations by the use of fixed and variable rate debt, floating rate term deposits and interest rate swaps or caps. It has
entered into interest rate swap arrangements to hedge underlying debt obligations and allow floating rate borrowings to be swapped to fixed rate borrowings. Under these arrangements, the
Group pays fixed interest rates and receives the bank bill swap rate (BBSW) calculated on the notional principal amount of the contracts. The Group also has entered into floating rate term
deposits where it receives variable interest that is priced against the BBSW.
At 30 June 2020 after taking into account the effect of interest rate swaps and floating rate term deposits, approximately 71.0% (2019: 77.2%) of the Group’s borrowings are at a fixed rate of interest.
The following assets and liabilities are exposed to floating interest rate risk:
Cash assets
Short term deposits
Investment terms deposits – current
Investment terms deposits – non current
Bank loans – unsecured
Tatts Bonds
Interest rate swaps – notional principal amounts
Cross currency swaps – notional principal amounts
90
2020
$m
217
93
26
137
473
(1,271)
-
(1,149)
(1,021)
(3,441)
2019
$m
315
56
13
135
519
(1,126)
(192)
(1,389)
(1,021)
(3,728)
Tabcorp Annual Report 2020
Sensitivity analysis – interest rates – AUD and USD
The Group’s sensitivity to reasonably possible changes in interest rates on the affected financial assets and financial liabilities in existence at year end is shown below. With all other variables
held constant, post tax profit and other comprehensive income would have been affected as follows:
AUD
+ 0.5% (50 basis points)(2019: + 0.5%)
- 0.5% (50 basis points)(2019: - 0.5%)
USD
+ 0.2% (20 basis points)(2019: + 0.2%)
- 0.2% (20 basis points)(2019: - 0.2%)
Post tax profit
higher/(lower)
2020
$m
2019
$m
Other comprehensive
income higher/(lower)
2019
2020
$m
$m
(3)
1
-
-
(1)
2
-
-
63
(66)
(29)
29
67
(70)
(28)
28
The movements in profit are due to higher/lower interest costs from variable rate debt and investments. The movement in other comprehensive income is due to an increase/decrease in the
fair value of financial instruments designated as cash flow hedges.
Significant assumptions used in the analysis include:
• reasonably possible movements were determined based on the Group’s current credit rating and mix of debt, relationships with financial institutions and the level of debt that is expected
to be renewed, as well as a review of the last two years’ historical movements and economic forecasters’ expectations;
• price sensitivity of derivatives is based on a reasonably possible movement of spot rates at balance date; and
• net exposure at balance date is representative of what the Group was and is expecting to be exposed to in the next twelve months.
B6.2 Foreign currency risk
The Group’s primary currency exposure is to US dollars as a result of issuing US private placement debt. In order to hedge this exposure, the Group has entered into cross currency swaps
to fix the exchange rate on the USD debt until maturity. The Group agrees to pay a fixed USD amount in exchange for an agreed AUD amount with swap counterparties, and to re-exchange
this again at maturity. These swaps are designated to hedge the principal and interest obligations of the US private placement debt.
Sensitivity analysis foreign exchange
The following analysis is based on the Group’s foreign currency risk exposures in existence at balance date and demonstrates the Group’s sensitivity to reasonably possible changes in the
AUD/USD exchange rate. With all other variables held constant, post tax profit and other comprehensive income would have been affected as follows:
AUD/USD + 10 cents (2019: + 10 cents)
AUD/USD - 10 cents (2019: - 10 cents)
Post tax profit
higher/(lower)
2020
$m
-
-
2019
$m
-
-
Other comprehensive
income higher/(lower)
2019
2020
$m
$m
(43)
(65)
58
87
The movement in other comprehensive income is due to an increase/decrease in the fair value of financial instruments designated as cash flow hedges. Management believe the balance
date risk exposures are representative of the risk exposure inherent in the financial instruments.
91
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: CAPITAL AND RISK MANAGEMENT For the year ended 30 June 2020
B6 Financial instruments – risk management (continued)
B6.2 Foreign currency risk (continued)
Significant assumptions used in the foreign currency exposure sensitivity analysis include:
• reasonably possible movements were determined based on a review of the last two years’ historical movements and economic forecasters’ expectations;
• movement of 10 cents was calculated by taking the USD spot rate as at balance date, moving this spot rate by 10 cents and then re-converting the USD into AUD with the ‘new spot rate’.
This methodology reflects the translation methodology undertaken by the Group;
• price sensitivity of derivatives is based on a reasonably possible movement of spot rates at balance dates; and
• net exposure at balance date is representative of what the Group was and is expecting to be exposed to in the next twelve months.
The translation of the results of the Group’s foreign subsidiaries into the Group presentation currency has not been included in the above sensitivity analysis as it represents translation risk
rather than transaction risk.
B6.3 Credit risk
The Group’s credit risk arises in relation to cash and cash equivalents, receivables, term deposits, financial liabilities and liabilities under financial guarantees. Credit risk on financial assets
which have been recognised on the balance sheet, is the carrying amount less any allowance for non recovery.
Credit risk is managed by:
• adherence to a strict cash management policy;
• use of a risk assessment process for customers requesting credit using credit checks, bank opinions and trade references;
• conducting all investment and financial instrument activity with approved counterparties with investment grade credit ratings; and
• reviewing compliance with counterparty exposure limits on a continuous basis, and spreading the aggregate value of transactions amongst the approved counterparties.
Credit risk associated with financial liabilities arises from the potential failure of counterparties to meet their obligations under the contract or arrangement. The Group’s maximum credit
risk exposure in respect of derivative contracts is detailed in the liquidity risk table in note B6.4.
Credit risk includes liabilities under financial guarantees. For financial guarantee contract liabilities the fair value at initial recognition is determined using a probability weighted discounted
cash flow approach. The fair value of financial guarantee contract liabilities has been assessed as nil (2019: nil), as the possibility of an outflow occurring is considered remote.
Details of the financial guarantee contracts at balance date are outlined below:
• The Company has entered into a deed of cross guarantee as outlined in note D2.
• The maximum amount of bank guarantee contracts at balance date is $34 million (2019: $38 million).
92
Tabcorp Annual Report 2020
B6.4 Liquidity risk
Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet its obligations to repay its financial liabilities as and when they fall due.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and notes. To help reduce liquidity risk, the Group targets
a minimum level of cash and cash equivalents to be maintained, and has sufficient undrawn funds available.
The Group’s current policy is that not more than 33% of debt facilities should mature in any financial year. At 30 June 2020, 7% (2019: 7%) of debt facilities will mature in less than one year.
Due to the measures in place for managing liquidity and access to capital markets, this risk is not considered significant.
The contractual cash flows including principal and estimated interest payments of financial liabilities in existence at year end are as follows:
Non-derivative financial instruments
Financial liabilities
Payables
Bank loans – unsecured
US private placement
Tatts Bonds
Lease liabilities
Net inflow/(outflow)
Derivative financial instruments
Financial assets
Interest rate swaps – receive AUD floating
Cross currency swaps – receive USD fixed
Financial liabilities
Interest rate swaps – pay AUD fixed
Cross currency swaps – pay AUD floating
Fixed Odds open betting positions
Net inflow/(outflow)
< 1 year
$m
(1,178)
(25)
(286)
-
(60)
(1,549)
2
275
277
(32)
(247)
(9)
(288)
(11)
2020
1–5 years
$m
> 5 years
$m
(95)
(1,332)
(528)
-
(190)
(2,145)
16
484
500
(89)
(409)
-
(498)
2
(143)
-
(2,316)
-
(167)
(2,626)
24
2,006
2,030
(52)
(1,973)
-
(2,025)
5
< 1 year
$m
(1,206)
(42)
(119)
(194)
(66)
(1,627)
23
108
131
(44)
(94)
(11)
(149)
(18)
(121)
(1,229)
(711)
-
(214)
(2,275)
58
663
721
(101)
(623)
-
(724)
(3)
2019
1–5 years
$m
> 5 years
$m
For floating rate instruments, the amount disclosed is determined by reference to the interest rate at the last repricing date. For foreign currency receipts and payments, the amount
disclosed is determined by reference to the USD/AUD rate at balance date.
(113)
-
(2,408)
-
(217)
(2,738)
63
2,087
2,150
(73)
(2,080)
-
(2,153)
(3)
93
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2020
SECTION C – OPERATING ASSETS AND LIABILITIES
C1 Licences
2020
Carrying amount at beginning of year
Amortisation
Carrying amount at end of year
Cost
Accumulated amortisation and impairment
2019
Carrying amount at beginning of year
Amortisation
Carrying amount at end of year
Cost
Accumulated amortisation and impairment
Lotteries
licences
$m
Wagering
licences
$m
Gaming
machine
monitoring
licence
$m
Keno
licences
$m
1,328
(45)
1,283
1,391
(108)
1,283
1,374
(46)
1,328
1,391
(63)
1,328
678
(42)
636
978
(342)
636
719
(41)
678
978
(300)
678
179
(13)
166
200
(34)
166
193
(14)
179
200
(21)
179
69
(6)
63
128
(65)
63
75
(6)
69
128
(59)
69
Total
$m
2,254
(106)
2,148
2,697
(549)
2,148
2,361
(107)
2,254
2,697
(443)
2,254
Amortisation policy – straight line basis over useful life (years):
10–55
12–93
15
10–34
Licence expiration date:
– Victoria
– Queensland
– New South Wales
– Australian Capital Territory
– Northern Territory
– South Australia
2028
2072
2050
2032
2052
2024
2098
2097
2064(i)
2100
2022
2047
2050
2032
(i) ACT sports bookmaking licence was granted for an initial term of 15 years with further rolling extensions to a total term of 50 years
Licences that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
94
Tabcorp Annual Report 2020
C2 Other intangible assets
2020
Carrying amount at beginning of year
Additions:
– acquired
– internally developed
Amortisation
Impairment
Transfers
Disposals
Carrying amount at end of year
Cost
Accumulated amortisation and impairment
Includes capital works in progress of:
2019
Carrying amount at beginning of year
Additions:
– acquired
– internally developed
Amortisation
Transfers
Carrying amount at end of year
Cost
Accumulated amortisation and impairment
Includes capital works in progress of:
Goodwill(i)
$m
NSW Trackside
concessions
$m
Customer
related assets
$m
Brand
names
$m
Media content and
broadcast rights
$m
Other
$m
Software
$m
8,250
-
-
-
(1,090)
-
-
7,160
8,956
(1,796)
7,160
8,250
-
-
-
-
8,250
8,956
(706)
8,250
135
-
-
(2)
-
-
-
133
150
(17)
133
137
-
-
(2)
-
135
150
(15)
135
138
-
-
(15)
-
-
-
123
147
(24)
123
149
-
-
(11)
-
138
158
(20)
138
218
-
-
-
-
-
-
218
218
-
218
218
-
-
-
-
218
218
-
218
31
-
-
-
-
-
-
31
31
-
31
31
-
-
-
-
31
31
-
31
39
-
-
(3)
-
-
-
36
55
(19)
36
42
-
-
(3)
-
39
55
(16)
39
373
40
149
(99)
(27)
2
(5)
433
960
(527)
433
136
315
46
94
(80)
(2)
373
818
(445)
373
93
Total
$m
9,184
40
149
(119)
(1,117)
2
(5)
8,134
10,517
(2,383)
8,134
136
9,142
46
94
(96)
(2)
9,184
10,386
(1,202)
9,184
93
(i) The impairment of goodwill relates to the Wagering and Media and Gaming Services businesses reflecting the direct impact of the government and other measures to address the COVID-19 pandemic, the possible acceleration of retail
contraction, the level of competitive intensity and structural changes and the potential decline in consumer confidence and increased economic uncertainty. Refer to note C3.
Amortisation policy – straight line basis over useful life (years):
Expiration date:
87
2097
10–20
Indefinite
Indefinite
20
2033(ii)
3–10
(ii) New South Wales retail exclusivity
Goodwill arising in a business combination represents the excess of the consideration transferred over the fair value of the identifiable net assets acquired and liabilities assumed. All business combinations
are accounted for by applying the acquisition method. Any contingent consideration is recognised at fair value at the acquisition date. Negative goodwill arising on an acquisition is recognised directly in the
income statement. Goodwill is not amortised, and is stated at cost less any accumulated impairment losses. Any impairment losses recognised against goodwill cannot be reversed.
Brand names, media content and broadcast rights with indefinite useful lives are not amortised as the Board of Directors believe that the life of these intangibles to the Group will not materially diminish
over time, and the residual value at the end of that life would be such that the amortisation charge, if any, would not be material.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses. The cost of internally developed software includes the cost of materials,
direct labour and an appropriate proportion of overheads.
Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred.
95
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2020
C3 Impairment testing
Goodwill and indefinite life intangible assets are tested for impairment annually, or whenever there is an indicator of impairment.
Carrying amount of goodwill and other intangible assets with indefinite useful lives allocated to each cash generating unit (CGU) or segment:
Goodwill
Lotteries and Keno
Wagering and Media
Gaming Services
Other intangible assets with indefinite useful lives
Lotteries
NSW Wagering
Sky Racing
Sky Sports Radio
ACTTAB
2020
$m
5,304
1,734
122
7,160
108
99
31
6
5
249
2019
$m
5,304
2,639
307
8,250
108
99
31
6
5
249
In accordance with the Group’s accounting policies, the Group performs its impairment testing annually at 30 June.
The recoverable amount of each CGU is determined based on fair value less costs of disposal, calculated using discounted cash flows. The cash flow forecasts are principally based upon a
four year period and extrapolated using long term growth rates ranging from 1.0% to 3.5% (2019: 2.0% to 3.5%). These cash flows are then discounted using a relevant long term post tax
discount rate, ranging between 7.5% and 8.4% (2019: 7.5% and 8.4%). This is considered to be level 3 in the fair value hierarchy (refer to note B5 for explanation of the valuation hierarchy).
Key assumptions on which management has based its cash flow projections:
• Impact of the government and other measures on the business to address the COVID-19 pandemic.
• Fees paid to Racing Queensland (RQ) following the introduction of point of consumption tax have been calculated on the basis of the Group’s interpretation of the calculation. This is subject to
a dispute with RQ (refer note E4 Contingencies).
• State tax regimes and the regulatory environment in which the Group currently operates remain largely unchanged, other than announced.
• Exclusive retail wagering licences held are assumed to be retained. The wagering business competes with bookmakers and other interstate and international wagering operators who accept
bets over the phone and the internet. There is a possibility that competition from interstate and international operators may extend further to the Group’s retail wagering network in the future.
• Race fields arrangements implemented in each State and Territory of Australia remain largely unchanged.
• Growth rates used to extrapolate cash flows are either in line with or do not exceed the long term average growth rate for the industry in which the CGU operates.
• Discount rates applied are based on the post tax weighted average cost of capital applicable to the relevant CGU.
• Terminal growth rate used is in line with the forecast long term underlying growth rate in Consumer Price Index.
The key estimates and assumptions used to determine the fair value less costs of disposal of a CGU are based on management’s current expectations after considering past experience
and external information, and are considered to be achievable.
The impairment assessment has revealed the carrying value of the Wagering and Media and Gaming Services segments, including allocation of corporate assets, exceeded their recoverable
amount at 30 June 2020. Therefore, an impairment charge against goodwill of $905 million for the Wagering and Media segment and $185 million for the Gaming Services segment has been
recognised in the income statement.
Cash flow projections reflect the potential impact of the pandemic on these businesses, level of competitive intensity, structural changes and possible acceleration of retail contraction
particularly in a digital centric market.
96
Tabcorp Annual Report 2020
The COVID-19 pandemic and government restrictions have impacted these businesses to varying degrees, and in turn their financial and operational performance primarily due to the
temporary closure of licensed venues and agencies and disruption to sporting events and international racing. The outlook for FY21 and beyond continues to be uncertain due to the timing
of lifting of COVID-19 restrictions and any potential longer term changes to consumer behaviour as an indirect result of the pandemic and increased economic uncertainty.
Any adverse changes to the key assumptions that had a negative impact on the recoverable amount for these segments could indicate a requirement for additional impairments.
The following summarises the effect of a change in a key assumption on impairment assuming all other assumptions are held constant. These sensitivities assume the specific assumption
moves in isolation, whilst all other assumptions are held constant. In reality, a change in these assumptions may accompany a change in another assumption.
Assumption
+0.5 percentage point (pp) long term growth
-0.5pp long term growth
+0.5pp post-tax discount rate
-0.5pp post-tax discount rate
+3% EBITDA across all forecast years
-3% EBITDA across all forecast years
Impairment charge impact
Gaming
Wagering
Services
and Media
(higher)/lower
(higher)/lower
$m
$m
35
140
(30)
(130)
(50)
(210)
55
250
45
130
(45)
(130)
At each balance date, in addition to goodwill and intangible assets with indefinite useful lives, all non-current assets are reviewed for impairment if events or changes in circumstances
indicate they may be impaired. When an indicator of impairment exists, the Group makes a formal assessment of recoverable amount. An impairment loss is recognised in the income
statement for the amount by which the asset’s carrying amount exceeds its recoverable amount.
Recoverable amount is the greater of fair value less costs of disposal and value in use. It is determined for an individual asset, unless the asset’s recoverable value cannot be estimated as
it does not generate cash inflows that are largely independent of those from other assets or groups of assets. In this case, the recoverable amount is determined for the CGU, being assets
grouped at the lowest levels for which there are separately identifiable cash flows.
Goodwill and intangible assets with indefinite useful lives (brand names, broadcast rights and media content) acquired through business combinations have been allocated to each CGU
or group of CGUs expected to benefit from the business combination’s synergies for impairment testing.
97
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2020
C4 Property, plant and equipment
2020
Carrying amount at beginning of year
Additions
Disposals
Depreciation
Transfers
Transferred to assets held for sale
Impairment
Carrying amount at end of year
Cost
Accumulated depreciation and impairment
Includes capital works in progress of:
2019
Carrying amount at beginning of year
Additions
Disposals
Depreciation
Transfers
Impairment
Carrying amount at end of year
Cost
Accumulated depreciation and impairment
Includes capital works in progress of:
Freehold land
$m
Buildings
$m
Leasehold
improvements
$m
Plant and
equipment
$m
61
-
(6)
-
-
(37)
-
18
18
-
18
61
-
-
-
-
-
61
61
-
61
27
-
(3)
(2)
-
(2)
(5)
15
35
(20)
15
-
29
1
-
(3)
-
-
27
45
(18)
27
-
86
15
(1)
(14)
(6)
-
-
80
162
(82)
80
2
83
26
-
(17)
(5)
(1)
86
161
(75)
86
20
Total
$m
555
73
(12)
(104)
(2)
(39)
(15)
456
1,212
(756)
456
23
488
168
(2)
(99)
2
(2)
555
1,228
(673)
555
69
381
58
(2)
(88)
4
-
(10)
343
997
(654)
343
21
315
141
(2)
(79)
7
(1)
381
961
(580)
381
49
3–10
Depreciation policy – straight line basis over useful life (years):
7–40
5–14
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and equipment.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed annually and adjusted prospectively, if appropriate.
98
Tabcorp Annual Report 2020
C5 Leases
The Group has lease contracts for various properties, motor vehicles and other equipment with lease terms expiring from 1 to 13 years. Leases generally provide the Group with a right
of renewal at which time all terms are renegotiated. Lease payments comprise a base amount plus an incremental contingent rental. Contingent rentals are based on either movements
in the Consumer Price Index or are subject to market rate review.
The Group applies, for the first time, AASB 16 Leases in the current financial year using the ‘full retrospective’ approach (refer note E8 for the effect of adopting AASB 16).
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year:
2020
Carrying amount at beginning of year
Additions
Lease remeasurements
Depreciation
Gain on termination
Impairment
Carrying amount at end of year
2019
Carrying amount at beginning of year
Additions
Lease remeasurements
Depreciation
Impairment
Carrying amount at end of year
Set out below are the carrying amounts of lease liabilities and the movements during the year:
Carrying amount at beginning of year
Additions
Lease remeasurements
Interest expense
Payments (cash outflow)
Carrying amount at end of year
Current
Non current
Property
$m
Other
$m
317
8
(16)
(43)
1
(1)
266
322
20
13
(44)
6
317
11
4
-
(6)
-
-
9
12
5
-
(6)
-
11
2020
$m
409
12
(16)
16
(68)
353
47
306
353
Total
$m
328
12
(16)
(49)
1
(1)
275
334
25
13
(50)
6
328
2019
$m
426
25
13
17
(72)
409
51
358
409
99
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2020
C5 Leases (continued)
Future minimum rentals receivable under non-cancellable operating subleases as at 30 June:
Not later than one year
Later than one year but not later than five years
Later than five years
2020
$m
2
9
-
11
2019
$m
1
9
3
13
When a contract is entered into, the Group assesses whether the contract contains a lease. A lease arises when the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration. At commencement of the lease, the Group recognises a right-of-use asset representing its right to use the underlying leased asset and
a lease liability representing its obligation to make lease payments.
Right-of-use assets are recognised at the commencement date of the lease, which is when the underlying assets are available for use. Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on
a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. The right-of-use assets are also subject to impairment.
Lease liabilities are recognised at the commencement date of the lease, measured at the present value of lease payments to be made over the lease term using the Group’s incremental
borrowing rate if the rate implicit in the lease cannot be readily determined. Lease payments include fixed payments or variable lease payments that depend on an index or a rate,
incorporating the Group’s expectations of extension options which is a key area of judgement. Option periods are only included in determining the lease term at inception when they
are reasonably certain to be exercised.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for lease payments made. Lease liabilities are remeasured when
there is a modification, a change in the lease term, or changes in future lease payments arising from a change in rates or index used to determine the payments.
Short term leases (lease term of 12 months or less) and leases of low value assets are recognised as an expense as incurred.
100
Tabcorp Annual Report 2020
C6 Notes to the cash flow statement
(a) Cash and cash equivalents comprise:
Cash on hand and in banks
Short term deposits
2020
$m
256
93
349
2019
$m
407
56
463
For the purpose of the cash flow statement, cash comprises cash and short term deposits with an original maturity of three months or less, and bank overdrafts (refer note B3).
Significant restrictions
The Group operates under various state based licences which have regulatory requirements in place that restrict the Group’s use of certain cash balances. The carrying amount of these cash
balances included within the consolidated financial statements is $206 million (2019: $275 million).
(b) Reconciliation of net profit/(loss) after tax to net cash flows from operating activities
Net profit/(loss) after tax
Add items classified as investing/financing activities:
– net loss on disposal of non current assets
– other
Add non cash income and expense items:
– depreciation and amortisation
– impairment – goodwill
– impairment – other
– share based payments expense
– other
Net cash provided by operating activities before changes in assets and liabilities
Changes in assets and liabilities:
(Increase)/decrease in:
– debtors
– current tax assets
– other assets
(Decrease)/increase in:
– payables
– provisions
– deferred tax liabilities
– other liabilities
Net cash flows from operating activities
2020
$m
(870)
5
(2)
378
1,090
43
7
(6)
645
50
29
(6)
3
(9)
(26)
(15)
671
2019
$m
361
1
-
352
-
(4)
4
(1)
713
(11)
(4)
7
125
(31)
(19)
(10)
770
101
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2020
C7 Receivables
Current
Trade debtors(i)
Allowance for expected credit losses(ii)
Other
(i) Current year includes the impact of suspending Gaming Services fees for venues during the period they were not trading due to COVID-19.
(ii) The impact of COVID-19 on the recoverability of current year receivables has been considered and reflected in the allowance for expected credit losses.
Non current
Trade debtors
Other
2020
$m
43
(5)
38
34
72
1
2
3
2019
$m
65
(2)
63
50
113
2
4
6
Trade debtors are recognised and carried at original invoice amount less an allowance for any uncollectible amount.
Expected credit losses for the Group are calculated using a lifetime expected loss allowance under the simplified approach of AASB 9. The expected credit loss is based on historical credit
loss experience adjusted for forward-looking factors specific to the debtors and the economic environment.
C8 Payables
Current
Payables
2020
$m
1,178
2019
$m
1,206
Current year includes the deferral of lottery and Keno taxes of $114m and payroll tax of $4m as a result of government support received during the COVID-19 pandemic, and reflects
employee bonus accruals of nil.
Non current
Payables
238
234
Non current payables include prizes payable to the lottery major prize winners and instalments payable for the Queensland wagering licence.
Non current payables relating to the Queensland wagering licence are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
102
Tabcorp Annual Report 2020
C9 Provisions
Current
Employee benefits(i)
Premises
Other
Non current
Employee benefits
Premises
Other
(i) Employee benefits provisions in the current year reflect the utilisation of leave entitlements as part of COVID-19 response measures.
Movement in provisions other than employee benefits during the year are set out below:
Carrying amount at beginning of year
Provisions made during year
Provisions used during year
Carrying amount at end of year
2020
$m
2019
$m
41
1
5
47
7
16
6
29
56
1
2
59
10
16
-
26
Premises
$m
17
-
-
17
Other
$m
2
11
(2)
11
Premises provisions comprise make good provisions for leasehold properties requiring remedial work at the end of the lease arrangement.
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic
benefits will be required to settle the obligation and the amount can be reliably estimated. If the effect is material, provisions are determined by discounting the expected future cash flows
at a pre tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase
in the provision due to the passage of time is recorded as a finance cost.
Employee benefits (short term) are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive
obligation to pay this amount as a result of past service provided and the obligation can be estimated reliably.
Employee benefits (long term) – the Group’s net obligation is the amount of future benefit that employees have earned in return for their service in the current and prior periods.
The obligation is discounted to determine its present value. Remeasurements are recognised in the income statement in the period in which they arise. This excludes pension plans.
103
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: GROUP STRUCTURE For the year ended 30 June 2020
SECTION D – GROUP STRUCTURE
D1 Subsidiaries
The ultimate parent entity within the Group is Tabcorp Holdings Limited.
The consolidated financial statements incorporate the assets, liabilities and results of Tabcorp Holdings Limited and the following controlled entities, that were held in both current and prior
period unless otherwise stated:
100% owned Australian subsidiaries in a deed of cross guarantee with Tabcorp Holdings Limited (refer to note D2)
Tabcorp Assets Pty Ltd
Tabcorp Participant Pty Ltd
Luxbet Pty Ltd
Tabcorp Wagering Holdings Pty Ltd
Tabcorp ACT Pty Ltd
Tabcorp Gaming Holdings Pty Ltd
Keno (Qld) Pty Ltd
TAHAL Pty Ltd
Keno (NSW) Pty Ltd
Tabcorp Gaming Solutions (NSW) Pty Ltd
Tabcorp Gaming Solutions Pty Ltd
Intecq Limited
eBET Gaming Systems Pty Limited
Tabcorp Investments No.5 Pty Ltd
Tabcorp Investments No.6 Pty Ltd
Tabcorp Wagering (Vic) Pty Ltd
Tabcorp Wagering Assets (Vic) Pty Ltd
100% owned Australian subsidiaries
Tabcorp Gaming Solutions (ACT) Pty Ltd
Tabcorp Gaming Solutions (Qld) Pty Ltd
Tabcorp International No.5 Pty Ltd
Tabcorp International No.6 Pty Ltd
Tabcorp Investments No.9 Pty Ltd
Tabcorp Investments No.10 Pty Ltd
Tabcorp Investments No.11 Pty Ltd
Tabcorp Wagering Manager (Vic) Pty Ltd
OneTab Australia Pty Ltd
104
Tabcorp Wagering Participant (Vic) Pty Ltd
Tab Limited
Tabcorp Services Pty Ltd
Tabcorp Finance Pty Ltd
Sky Channel Pty Ltd
2KY Broadcasters Pty Ltd
Tabcorp Training Pty Ltd
Tabcorp International Pty Ltd
Tabcorp International No.4 Pty Ltd
Tatts Group Limited
Ubet Qld Limited
Ubet NT Pty Ltd
Ubet Radio Pty Ltd
Ubet SA Pty Ltd
Ubet Tas Pty Ltd
Tasradio Pty Ltd
Maxgaming Holdings Pty Ltd
Maxgaming NSW Pty Ltd
Maxgaming Qld Pty Ltd
Reaftin Pty Ltd
Bytecraft Systems Pty Ltd
Bytecraft Systems (NSW) Pty Ltd
Tattersall’s Holdings Pty Ltd
Tattersall’s Sweeps Pty Ltd
George Adams Pty Ltd
Tatts NT Lotteries Pty Ltd
New South Wales Lotteries Corporation Pty Limited
Golden Casket Lottery Corporation Limited
Tatts Lotteries SA Pty Ltd
TattsTech Pty Ltd
50-50 Software Pty Ltd
tatts.com Pty Ltd
OneTab Holdings Pty Ltd
Tattersall’s Gaming Pty Ltd
Tatts Employment Co (NSW) Pty Ltd
Tatts Employee Share Plan Pty Ltd
Tabcorp Employee Share Administration Pty Ltd
Sky Australia International Racing Pty Ltd
Club Gaming Systems (Holdings) Pty Ltd
COPL Pty Ltd
eBET Systems Pty Limited
Industry Data Online Pty Ltd
Sky Channel Marketing Pty Ltd
Tattersall’s Gaming Systems NSW Pty Ltd
Tatts Online Pty Ltd
Thelott Enterprises Pty Ltd
Ubet Enterprises Pty Ltd
Wintech Investments Pty Ltd
Tabcorp Investments Pty Ltd (i)
Tabcorp Annual Report 2020
International subsidiaries
Name
Luxbet Europe Limited (i)
Luxbet Europe Services Limited (i)
Premier Gateway International Limited
Premier Gateway Services Limited
Tabcorp Europe Holdings Limited
Tabcorp Europe Limited
Bytecraft Systems (NZ) Limited
Tattersall’s Investments (South Africa) (Pty) Limited
Tabcorp UK Limited (ii)
Sky Racing World Holdco, LLC
Sky Racing World, LLC
Tabusa, LLC
(i) Companies were deregistered by the Group during the current year.
(ii) Company was placed in members’ voluntary liquidation during the prior year.
Country of incorporation
Isle of Man
Isle of Man
Isle of Man
Isle of Man
Isle of Man
Isle of Man
New Zealand
South Africa
United Kingdom
United States of America
United States of America
United States of America
Subsidiaries are entities controlled by the Company. The Group controls an entity if and only if the Group has:
• power over the entity;
• exposure, or rights, to variable returns from its involvement with the entity; and
• the ability to use its power over the entity to affect its returns.
% equity interest
100
100
50
50
100
100
100
100
100
100
100
100
The financial statements of subsidiaries are included in the consolidated financial report from the date control commences until the date control ceases.
On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate of the exchange prevailing at balance date, and their income statements
are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in other comprehensive
income.
Elimination of intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are undertaken in preparing the consolidated
financial statements.
All investments are initially recognised at cost, being the fair value of the consideration given, and if acquired prior to 1 July 2009 included acquisition charges associated with the
investment. Subsequently investments are carried at cost less any impairment losses.
A joint arrangement is an arrangement over which the Group has joint control with other parties and is bound by a contractual arrangement. A joint arrangement is classified as either
a joint operation or a joint venture depending upon the rights and obligations of the parties to the arrangement.
• A joint operation is where the parties have rights to the assets and obligations for the liabilities, relating to the arrangement. The Group recognises in relation to its interest in a joint
operation its assets, including its share of assets held jointly; its liabilities, including its share of any liabilities incurred jointly; its revenue including its share of revenue from the sale
of the output by the joint operation; and its expenses, including its share of any expenses incurred jointly.
• A joint venture is where the parties have rights to the net assets of the arrangement. Investments in joint ventures are accounted for using the equity method. Under the equity method,
the investment in a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the joint
venture since acquisition date.
105
FINANCIAL REPORTTabcorp Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS: GROUP STRUCTURE For the year ended 30 June 2020
D2 Deed of cross guarantee
The parties to the deed of cross guarantee, as identified in note D1, each guarantee the debts of the others. By entering into the deed, the subsidiaries are relieved from the requirements
of preparation, audit and lodgement of a financial report and a Directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785. Together with Tabcorp Holdings
Limited, the entities represent a ‘Closed Group’ for the purposes of the ASIC Instrument.
The consolidated income statement and balance sheet of all entities included in the Closed Group are set out below.
Income statement
Revenue
Expenses
Profit/(loss) before income tax and net finance costs
Finance income
Finance costs
Profit/(loss) from continuing operations before income tax
Income tax expense
Profit/(loss) from continuing operations after income tax
Discontinued operations
Loss from discontinued operations net of tax
Net profit/(loss) after tax
Other comprehensive income
Change in fair value of cash flow hedges taken to equity that may be reclassified to profit or loss
Income tax on items that may be reclassified to profit or loss
Items that will not be reclassified to profit or loss
Other comprehensive income for the year, net of income tax
Total comprehensive income for the year
Net profit/(loss) after tax
Accumulated losses at beginning of year
Retained earnings of entities added to deed of cross guarantee
Other comprehensive income
Dividends paid
Accumulated losses at end of year
106
2020
$m
5,219
(5,853)
(634)
2
(195)
(827)
(104)
(931)
-
(931)
146
(44)
(1)
101
(830)
(931)
(705)
-
(1)
(445)
(2,082)
2019
$m
5,497
(4,820)
677
2
(209)
470
(162)
308
(82)
226
(5)
1
-
(4)
222
226
(528)
20
-
(423)
(705)
Tabcorp Annual Report 2020
Balance sheet
Cash and cash equivalents
Receivables
Prepayments
Current tax assets
Derivative financial instruments
Other financial assets
Assets held for sale
Other
Total current assets
Receivables
Investment in controlled entities
Other financial assets
Licences
Other intangible assets
Property, plant and equipment
Right-of-use assets
Prepayments
Derivative financial instruments
Other
Total non current assets
TOTAL ASSETS
Payables
Interest bearing liabilities
Lease liabilities
Provisions
Derivative financial instruments
Other
Total current liabilities
Payables
Interest bearing liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Derivative financial instruments
Other
Total non current liabilities
TOTAL LIABILITIES
NET ASSETS
Issued capital
Accumulated losses
Reserves
TOTAL EQUITY
2020
$m
338
71
33
-
103
26
39
105
715
3
36
159
2,148
8,039
456
275
20
426
24
11,586
12,301
1,184
249
47
47
44
81
1,652
238
3,471
306
585
29
104
1
4,734
6,386
5,915
8,617
(2,082)
(620)
5,915
2019
$m
450
112
35
27
19
13
-
97
753
6
14
157
2,254
9,089
555
328
23
289
20
12,735
13,488
1,129
192
51
59
46
82
1,559
234
3,527
359
568
26
81
1
4,796
6,355
7,133
8,562
(705)
(724)
7,133
107
FINANCIAL REPORTTabcorp Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS: GROUP STRUCTURE For the year ended 30 June 2020
D3 Parent entity disclosures
Result of the parent entity
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Financial position of the parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Issued capital
Retained earnings/(accumulated losses)
Demerger reserve
Other reserves
Total equity
Contingent liabilities
Refer to note E4.
Capital expenditure
Tabcorp Holdings
2020
$m
321
(1)
320
71
7,959
43
52
8,617
(48)
(670)
8
7,907
2019
$m
247
-
247
67
8,028
41
53
8,562
77
(670)
6
7,975
The parent entity did not have any capital expenditure commitments for the acquisition of property, plant and equipment contracted but not provided for at 30 June 2020 or 30 June 2019.
Parent entity guarantees in respect of debts of its subsidiaries
The parent entity has entered into a deed of cross guarantee with the effect that the Company guarantees debts in respect of its subsidiaries. Further details of the deed of cross guarantee
and the subsidiaries subject to the deed, are set out in note D2.
Tax consolidation
Tabcorp Holdings Limited (the Head Company) and its 100% owned Australian tax resident subsidiaries have formed an income tax consolidation group, and are therefore taxed as a single
entity. Members of the tax consolidation group entered into a tax sharing arrangement that provides for the allocation of income tax liabilities between the entities should the Head Company
default on its tax payment obligations. At balance date, the possibility of default is remote.
Members of the tax consolidation group have entered into a tax funding agreement which requires each member of the tax consolidation group to make a tax equivalent payment to or from
the Head Company, based on the current tax liability or current tax asset of the member. These amounts are recognised as either an increase or decrease in the subsidiaries’ intercompany
accounts with the Head Company. Deferred taxes are recognised separately by each member of the tax consolidation group.
108
Tabcorp Annual Report 2020
D4 Discontinued operations
In July 2018, Sun Bets ceased trading and is reported as a discontinued operation in the prior year. Sun Bets was a UK online wagering and gaming business that the Group had in partnership
with News UK since 2016.
The results of the discontinued operations for the prior year are presented below:
Revenue
Expenses
Loss before income tax benefit
Income tax benefit on operating activities of discontinued operations
Loss from discontinued operations, net of tax
Cash flow information – discontinued operations:
The cash flows from the discontinued operations contained in the Group cash flow statement for the prior year are:
Net cash outflow from operating activities
Net cash outflow
Earnings per share from discontinued operations:
Basic earnings per share (cents)
Diluted earnings per share (cents)
2019
$m
-
(10)
(10)
-
(10)
(92)
(92)
(0.5)
(0.5)
A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations, or is a controlled entity acquired
or held exclusively with a view to resale.
Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified
as a discontinued operation, the comparative income statement is re-presented as if the operation had been discontinued from the start of the comparative period.
109
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: GROUP STRUCTURE For the year ended 30 June 2020
D5 Investment in an associate
Investment in Jumbo Interactive Ltd (Jumbo)
2020
$m
29
2019
$m
29
The Group owns 7,234,178 fully paid ordinary shares in Jumbo (11.6% interest), which is a retailer of official government and charitable lotteries in Australia, and is listed on the ASX under the
ticker ‘JIN’.
The equity accounted profit recognised during the year was $3m (2019: $3m). Dividends received from Jumbo during the year were $3m (2019: $3m).
The above associate was incorporated in Australia. The Group does not have representation on the Board of Directors, although it does have the option to have representation. The Group
does not participate in the significant financial and operating decisions but has arrangements in place with the associate which are material to Jumbo’s operational financial performance.
The Group has therefore determined that it has significant influence over this entity. In the normal course of business, commission is paid to Jumbo for acting as an agent in regards to the
sale of lottery tickets. In the prior year, the Group exercised options over 3,474,492 ordinary shares at a strike price of $2.37 and disposed 2.85 million shares with a profit before tax impact
of $1 million.
An associate is an entity over which the Group has significant influence but not control or joint control. Significant influence is the power to participate in the financial and operating
decisions of the investee. Investments in associates are accounted for using the equity method.
110
Tabcorp Annual Report 2020
SECTION E – OTHER DISCLOSURES
E1 Employee share plans
The Company operates share plans which provide equity instruments to senior executives and management as a component of their remuneration.
Long Term Performance Plan (LTPP)
The LTPP is available at the most senior executive levels. Under the LTPP employees may become entitled to Performance Rights in the Company. Performance Rights are subject to a
relative total shareholder return (relative TSR) measure, a market vesting condition. A second performance measure (weighted 25%), being a non-market vesting condition, was introduced
in the 2019 and 2020 grants.
The fair value of Performance Rights under each performance measure is determined at grant date by an external valuer and takes into account the terms and conditions upon which they
were granted. The fair value is recognised as an employee expense (with a corresponding increase in equity) over the vesting period.
For the relative TSR measure the fair value is recognised as an expense irrespective of whether the Performance Rights vest to the holder, and a reversal of the expense is only recognised
in the event the instruments lapse due to cessation of employment within the vesting period. For the second performance measure the amount expensed is based on the expected number
of Performance Rights vesting, with the ultimate expense reflecting the actual Performance Rights that vest.
The dilutive effect, if any, of outstanding Performance Rights is reflected in the computation of diluted earnings per share.
Short Term Performance Plan (STPP)
For senior management it is mandatory to defer 25% (50% for the Managing Director and Chief Executive Officer) of their STPP into Restricted Shares, which are subject to a two year
service condition. The cost of the Restricted Shares is based on the market price at grant date and is recognised over the vesting period.
The maximum number of shares that can be outstanding at any time under these plans is limited to 5% of the Company’s issued capital.
The share based payments expense in respect of the equity instruments granted is recognised in the income statement for the period.
Further explanation of the share plans is disclosed in the Remuneration Report.
Performance Rights (number)
Details of and movements in Performance Rights granted under the LTPP that existed during the current or prior year are:
Grant date
2020
25 October 2016
27 October 2017
17 October 2018
17 October 2018
24 October 2019
24 October 2019
Expiry date
14 September 2019
15 September 2020
19 September 2021
30 June 2021
25 September 2022
25 September 2022
Balance at
start of year
Movement during the year
Granted
Forfeited
Vested
Balance at
end of year
1,110,418
1,333,108
1,727,310
575,758
-
-
4,746,594
-
-
-
-
1,615,270
538,415
2,153,685
(1,110,418)
(36,138)
(240,343)
(80,113)
(98,422)
(32,807)
(1,598,241)
-
-
-
-
-
-
-
-
1,296,970
1,486,967
495,645
1,516,848
505,608
5,302,038
111
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: OTHER DISCLOSURES For the year ended 30 June 2020
E1 Employee share plans (continued)
Grant date
2019
29 October 2015
25 October 2016
27 October 2017
17 October 2018
17 October 2018
Expiry date
22 September 2018
14 September 2019
15 September 2020
19 September 2021
30 June 2021
Balance at
start of year
Movement during the year
Granted
Forfeited
Vested
1,136,076
1,135,762
1,460,242
-
-
3,732,080
-
-
-
1,727,310
575,758
2,303,068
(1,136,076)
(25,344)
(127,134)
-
-
(1,288,554)
-
-
-
-
-
-
Balance at
end of year
-
1,110,418
1,333,108
1,727,310
575,758
4,746,594
No Performance Rights were exercisable at the end of the current or prior year.
Fair value of equity instruments
Performance Rights have been independently valued at the date of grant using a modified form of Monte-Carlo simulation-based model.
The weighted average fair value of Performance Rights granted during the year was $2.87 (2019: $2.98).
The assumptions underlying the Performance Rights valuations are:
Grant date
29 October 2015
25 October 2016
27 October 2017
17 October 2018
17 October 2018
24 October 2019
24 October 2019
Expiry date
22 September 2018
14 September 2019
15 September 2020
19 September 2021
30 June 2021
25 September 2022
25 September 2022
Share price at
date of grant
$
4.73
4.91
4.45
4.76
4.76
4.85
4.85
Expected
volatility in
(i)
share price
%
25.00
22.00
22.00
21.00
21.00
20.00
20.00
(ii)
Expected
dividend
yield
%
5.00
5.00
5.50
5.06
5.06
4.62
4.62
(iii)
Risk free
interest
rate
%
1.80
1.78
2.04
2.05
2.05
0.73
0.73
Value per
Performance
Right
$
2.47
2.51
2.37
2.59
4.16
2.42
4.24
(i) Reflects the assumption that the historical volatility is indicative of future trends.
(ii) Reflects the assumption that the current payout ratio will continue with no anticipated increases.
(iii) Represents the zero coupon interest rate derived from government bond market interest rates on the valuation date and vary according to each maturity date.
112
Tabcorp Annual Report 2020
E2 Pensions and other post employment benefit plans
The Group has two defined benefit superannuation plans (closed to new entrants), the New South Wales Lotteries Corporation Pty Limited defined benefit plan (‘NSW Lotteries plan’) and the
Tabcorp Superannuation Plan (‘Tabcorp plan’), which provide benefits based on salary and length of service. The plans are governed by the employment laws of Australia and the Group
contributes to the plans at rates based on actuarial advice.
Reconciliation of the net defined benefit asset/(liability) recognised in the balance sheet (i)
NSW Lotteries plan
– Balance at 30 June 2018
– Actuarial gains/(losses)
– Benefits paid
– Other
– Balance at 30 June 2019
– Actuarial gains/(losses)
– Benefits paid
– Other
– Balance at 30 June 2020
Tabcorp plan
– Balance at 30 June 2018
– Actuarial gains/(losses)
– Actual return on plan assets excluding interest income
– Benefits paid
– Balance at 30 June 2019
– Actuarial gains/(losses)
– Actual return on plan assets excluding interest income
– Benefits paid
– Other
– Balance at 30 June 2020
(i) Net defined benefit plan assets and net defined benefit plan liabilities are recognised on the balance sheet in other non current assets and other non current liabilities respectively.
Amounts recognised in other comprehensive income
NSW Lotteries plan
Tabcorp plan
Fair value of
plan assets
$m
Present value of
defined benefit
obligation
$m
Net defined
benefit plan
assets/
(liabilities)
$m
16
-
(1)
2
17
-
(1)
1
17
15
-
1
(1)
15
-
(1)
(1)
1
14
(25)
(3)
1
(1)
(28)
3
1
(1)
(25)
(12)
(1)
-
-
(13)
(1)
-
1
-
(13)
2020
$m
3
(2)
1
(9)
(3)
-
1
(11)
3
-
-
(8)
3
(1)
1
(1)
2
(1)
(1)
-
1
1
2019
$m
(3)
-
(3)
113
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: OTHER DISCLOSURES For the year ended 30 June 2020
E2 Pensions and other post employment benefit plans (continued)
Fair value of plan assets
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Cash
Fixed interest
Australian equities
International equities
Property
Alternatives
NSW Lotteries plan
2019
%
9.6
10.1
19.8
27.0
8.5
25.0
100.0
2020
%
10.2
7.5
18.1
29.7
8.3
26.2
100.0
Tabcorp plan
2020
%
5.0
17.0
28.0
25.0
6.0
19.0
100.0
2019
%
5.0
17.0
28.0
25.0
6.0
19.0
100.0
The Trustees are responsible for the governance and administration of the funds, the management and investment of the fund assets and compliance with other applicable regulations.
The defined benefit fund assets are invested with independent fund managers and have a diversified asset mix. The funds have no significant concentration of investment risk or liquidity risk.
The Group’s total defined benefit obligation is not materially sensitive to changes in assumptions.
Defined benefit plans are recognised in the balance sheet as the difference between the present value of the estimated future benefits that will be payable to plan members and the fair
value of the plan’s assets. An annual adjustment is made to recognise all movements in the carrying amount of the plan in the income statement, except for the portion of the movement
that is attributable to actuarial gains and losses, which are recognised directly in equity. Actuarial gains and losses represent the difference between previous actuarial assumptions of
future outcomes and the actual outcome, in addition to the effect of changes in actuarial assumptions.
E3 Commitments
Capital expenditure commitments
Property, plant and equipment
Software
114
2020
$m
6
6
12
2019
$m
14
15
29
Tabcorp Annual Report 2020
E4 Contingencies
Details of contingencies where the probability of future payments is not considered remote are set out below as well as details of contingencies, which although considered remote,
the Directors consider should be disclosed as they are not disclosed elsewhere in the notes to the financial statements.
Contingent liabilities
(a) Charge
A controlled entity, Tabcorp Wagering Participant (Vic) Pty Ltd, which is a participant in the joint venture outlined in note E5(a), has entered into a deed of cross charge with its joint venture
partner to cover the non payment of a called sum in the event of the joint venture incurring a loss. The charge is over undistributed and future earnings of the joint venture to the level of the
unpaid call.
(b) Legal challenges
There are outstanding legal actions between controlled entities and third parties at 30 June 2020. It is expected that any liabilities arising from such legal action would not have a material
adverse effect on the Group’s financial position, except as set out below.
(c) Australian Taxation Office Audit
During the year, the Australian Taxation Office (ATO) issued Tatts Group Limited (Tatts) with their position paper in relation to the tax year ended 30 June 2016. The position paper sets out
the ATO’s view on the income tax treatment of certain expenditure including licence fees incurred by Tatts in relation to monitoring gaming machines in New South Wales, which differs to
Tatts’ view. Tatts had previously claimed a deduction for this expenditure.
The Group is working with the ATO on this matter, and retains the view, supported by external professional advice, that on the balance of probability the deductions are allowable. The
financial statements continue to reflect this view, and no provision for a liability has been recognised. If the Group is ultimately unsuccessful in its claims and the income tax deductions are
disallowed, the estimated financial impact is an expense of $62 million post tax, excluding any penalties and interest charges the ATO may impose.
(d) Racing Queensland Dispute
On 28 June 2019 RQ commenced legal proceedings against the Company and UBET Qld Limited (UBET). RQ is seeking damages and other relief. The proceedings are in relation to two
interrelated disputes relating to the calculation of fees following the introduction of the point of consumption tax in Queensland on 1 October 2018. The Company and UBET currently
consider, on the balance of probability, that no provision for liability is required. The relevant variable fees are paid monthly. If the Company and UBET are ultimately unsuccessful in the
proceedings, the estimated financial impact covering the 21 month period to 30 June 2020 is an expense of up to $44 million post tax (30 June 2019: $20 million post tax). The impact of the
alleged underpayment on the relevant variable fees would extend until June 2044 when the relevant deed expires.
115
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: OTHER DISCLOSURES For the year ended 30 June 2020
E5 Related party disclosures
(a) Transactions with joint arrangements
The Group conducts an unincorporated joint venture with VicRacing Pty Ltd in Victoria (the joint venture). The principal activity of the joint venture is the organisation, conduct, promotion
and development of wagering and betting in Victoria. The Group receives 50% of the revenue and expenses of the joint venture, which is accounted for as a joint operation.
The Group charges the joint venture for the provision of employee, management and asset services. On consolidation, 50% of the charges eliminate (being the Group’s interest in the joint
venture). Charges for the remaining 50% of $80 million were received by the Group in 2020 (2019: $84 million).
(b) Compensation of Key Management Personnel (KMP)
Short term
Other long term
Post employment
Share based payments
Termination benefits
E6 Auditor’s remuneration
Amounts received or due and receivable by Ernst and Young for:
– audit and review of the statutory financial reports of the Group and subsidiaries
– other assurance and agreed upon procedures services under other legislation or contractual arrangements
– other services
2020
$000
6,731
(34)
323
3,267
625
10,912
2020
$000
1,868
280
862
3,010
2019
$000
8,899
80
358
3,207
-
12,544
2019
$000
1,896
476
354
2,726
116
Tabcorp Annual Report 2020
E7 Assets held for sale
Freehold land
Buildings
2020
$m
37
2
39
2019
$m
-
-
-
During the year, the Group entered into sale agreements in relation to surplus corporate properties. As the sales are highly probable, the related assets have been classified as held for sale
at 30 June 2020. The sales are expected to be completed within 12 months of balance date.
Assets classified as held for sale are recognised at the lower of carrying amount and fair value less costs to sell. Gains and losses on subsequent re-measurement are included in the
income statement. No depreciation or amortisation is charged on these assets while they are classified as held for sale.
E8 Other accounting policies
(a) Statement of compliance
(i) Changes in accounting policy and disclosures
The accounting policies used are consistent with those applied in the 30 June 2019 financial report, except for the adoption of new standards effective as of 1 July 2019. The Group applies,
for the first time, AASB 16 Leases which introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with exemptions available for low
value leases and leases less than 12 months. Previously, the Group classified its leases as operating leases under AASB 117 Leases.
The Group adopted AASB 16 using the ‘full retrospective’ approach whereby on a lease by lease basis the right-of-use asset and lease liability is calculated from commencement of the lease.
The cumulative effect has been recognised as an adjustment of $22m to the opening balance of retained earnings as at 1 July 2018. The comparative information in relation to the year ended
30 June 2019 and the balance sheet as at 30 June 2019 has been restated. The restatement is not considered to have a material impact on the balance sheet and therefore a restated third
balance sheet as at 1 July 2018 has not been presented.
The Group has elected to use the transition practical expedient to not reassess whether a contract is, or contains a lease. Instead, the Group applied AASB 16 to contracts that were
previously identified as leases applying AASB 117 and AASB Interpretation 4.
The effect of adopting AASB 16 is set out below. The Group’s revised accounting policies in relation to leases are set out in note C5.
Impact on the Balance Sheet (increase/(decrease)) as at:
Receivables
Property, plant and equipment
Right-of-use assets
Total assets impact
Payables
Lease liabilities
Deferred tax liabilities
Provisions
Total liabilities impact
Equity impact
30 June
2020
$m
2
(7)
275
270
-
353
(12)
(45)
296
(26)
30 June
2019
$m
3
(7)
328
324
(1)
409
(10)
(51)
347
(23)
117
FINANCIAL REPORTTabcorp Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS: OTHER DISCLOSURES For the year ended 30 June 2020
E8 Other accounting policies (continued)
(a) Statement of compliance (continued)
Impact on the Income Statement (favourable/(unfavourable)) for the year ended:
Revenue
Other expenses
Depreciation and amortisation
Impairment – other
Profit/(loss) before income tax and net finance costs impact
Net finance costs
Profit/(loss) from continuing operations before income tax impact
Income tax expense
Net profit/(loss) after tax impact
There is no impact on other comprehensive income.
Impact on Earnings per share from continuing operations (increase/(decrease)) for the year ended:
Basic earnings per share
Diluted earnings per share
Impact on the Cash Flow Statement (increase/(decrease) in cash) for the year ended:
Payments to suppliers, service providers and employees
Finance costs paid
Net cash flows from operating activities
Payment of lease liabilities
Net cash flows used in financing activities
Net increase/(decrease) in cash held
30 June
2020
$m
6
55
(49)
(1)
11
(16)
(5)
2
(3)
30 June
2020
cents
(0.1)
(0.2)
30 June
2020
$m
68
(16)
52
(52)
(52)
-
30 June
2019
$m
6
54
(50)
6
16
(17)
(1)
-
(1)
30 June
2019
cents
(0.1)
-
30 June
2019
$m
72
(17)
55
(55)
(55)
-
A number of other new and amended accounting standards became mandatorily applicable for the Group for the first time in the current financial year. The adoption of these new and
amended standards had no impact on the financial position or performance of the Group, or the disclosures included in this Financial Report.
(ii) New Australian Accounting Standards or International Financial Reporting Standards issued but not yet effective
A number of new and amended accounting standards and interpretations have been recently issued by the Australian Accounting Standards Board but not yet effective. These new or
amended accounting standards and interpretations have not been early adopted and are not expected to have a material impact on the financial position or performance of the Group.
118
Tabcorp Annual Report 2020
(b) Goods and services tax
Revenues, expenses, assets and liabilities are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset
or as part of the expense item as applicable;
• wagering and certain Keno revenues, due to the GST being offset against government taxes; and
• receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from,
or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(c) Foreign currency translation and balances
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at balance date are translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the income statement with the exception of differences on foreign currency borrowings that are in an effective hedge relationship.
These are taken directly to equity until the liability is extinguished at which time they are recognised in the income statement. Refer to note B4 for further detail.
Non monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
Non monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair
value was determined.
119
FINANCIAL REPORTTabcorp Annual Report 2020
DIRECTORS’ DECLARATION
In the opinion of the Directors of Tabcorp Holdings Limited:
(a) the financial statements and notes of the Group are in accordance with the Corporations Act 2001 (Cth), including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001 (Cth);
(b) the financial statements and notes also comply with International Financial Reporting Standards; and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made to the Directors by the Chief Executive Officer and Chief Financial Officer in accordance with section
295A of the Corporations Act 2001 for the financial year ended 30 June 2020.
In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in note D2 will be able to meet
any obligations or liabilities to which they are or may become subject, by virtue of the Deed of Cross Guarantee.
Signed in accordance with a resolution of Directors.
Paula J. Dwyer
Chairman
David R. H. Attenborough
Managing Director and Chief Executive Officer
Melbourne
19 August 2020
120
Tabcorp Annual Report 2020
INDEPENDENT AUDITOR’S REPORT
121
FINANCIAL REPORTTabcorp Annual Report 2020 INDEPENDENT AUDITOR’S REPORT
122
Tabcorp Annual Report 2020 123
FINANCIAL REPORTTabcorp Annual Report 2020 INDEPENDENT AUDITOR’S REPORT
124
Tabcorp Annual Report 2020 125
FINANCIAL REPORTTabcorp Annual Report 2020 FIVE YEAR REVIEW
Financial performance
Total revenue(ii)
EBITDA(iii)
Profit/(loss) before interest and tax
Profit/(loss) after income tax attributable
to members of parent entity
Dividend(iv)
Financial position and cash flow
Total assets
Total liabilities
Shareholders' funds/total equity
Net cash flows from operating activities
Capital expenditure - payments
Cash at end of year
Shareholder value
Earnings per share
Dividends per share(iv)
Operating cash flow per share(v)
Net assets per share
Return on shareholders' funds
Total shareholder return(vi)
Share price close
Market capitalisation
Segment revenue from continuing operations(vii)
Lotteries and Keno(viii)
Wagering and Media(ii)
Gaming Services
Employee
Safety(ix)
Females in senior management roles
Other stakeholder benefits
Returns to racing industry
State and territory gambling taxes and GST
Income tax expense
Unit
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
cents
cents
cents
$
%
%
$
$m
$m
$m
$m
LTIFR
%
$m
$m
$m
126
FY20
5,224
(196)
(574)
(870)
223
12,416
6,386
6,030
671
290
349
(42.9)
11.0
18.8
2.98
(12.8)
(19.9)
3.38
6,869
2,917
2,084
221
4.1
39
954
2,086
103
FY19 (i)
5,488
1,082
730
361
444
13,623
6,440
7,183
770
278
463
17.9
22.0
24.4
3.56
5.0
4.2
4.45
8,986
2,865
2,318
304
3.6
36
975
2,100
161
FY18
3,765
490
241
29
423
12,941
5,702
7,239
448
292
353
1.9
21.0
10.5
4.89
0.6
7.5
4.46
8,978
1,391
2,122
250
2.3
36
917
1,166
85
FY17
2,234
285
102
(21)
209
3,741
2,258
1,483
223
197
114
(2.5)
25.0
3.0
1.78
(1.3)
0.6
4.37
3,650
213
1,873
144
1.5
39
813
406
46
FY16
2,189
480
301
170
200
3,303
1,615
1,688
401
183
126
20.4
24.0
26.2
2.03
10.0
5.5
4.57
3,800
209
1,873
107
0.9
37
787
428
61
The Tabcorp-Tatts combination was implemented in December
2017, therefore FY18 includes approximately six months
contribution from the Tatts business, and FY19 represents
the first full financial year for the combined group.
(i) FY19 has been restated to reflect the impact of the
application of AASB 16 Leases which was adopted
in FY20. Periods prior to FY19 have not been restated.
(ii) Periods since FY18 (which was restated) reflect the impact
of the application of AASB 15 Revenue from Contracts
with Customers.
(iii) Includes impairment of:
FY20: Goodwill – $1,090 million and other assets – $43 million.
FY19: Other assets – ($4) million.
FY18: Other assets – $39 million.
FY17: Other assets – $28 million.
(iv) Dividends attributable to the year, but which may be payable
after the end of the period.
(v) Net operating cash flow per the cash flow statement does
not include payments for property plant and equipment and
intangibles, whereas these items are included in the
calculation for the operating cash flow per share ratio.
(vi) Total shareholder return (TSR) is calculated from 1 July
to 30 June. The share price used for calculating TSR is the
volume weighted average share price used in the Tabcorp
Dividend Reinvestment Plan (DRP). Where no DRP was in
operation, the closing share price on the dividend payment
date is used.
(vii) Revenue includes both external and internal revenue.
(viii) Prior to FY18, this was the Keno segment.
(ix) The lost time injury frequency rate (LTIFR) is the number
of lost time injuries per million hours worked.
Tabcorp Annual Report 2020
SHAREHOLDER INFORMATION As at 31 July 2020
Securities on issue
Tabcorp has on issue 2,032,311,646 fully paid ordinary shares (shares) which are quoted on the Australian Securities Exchange (ASX) under the code TAH. The issued capital has increased
since 30 June 2019 due to shares issued pursuant to Tabcorp’s Dividend Reinvestment Plan. These shares represent the only Company securities quoted on the ASX. There currently isn’t
a share buy-back in operation in respect of the Company’s shares.
Tabcorp also has 5,302,038 Performance Rights issued to executives pursuant to Tabcorp’s Long Term Incentive Plan which are not quoted on the ASX.
During FY20, a total of 679,155 shares were acquired on market at an average price of $4.43 per share pursuant to Tabcorp’s employee incentive plans.
Shareholding restrictions
The Company’s Constitution, together with an agreement entered into with the State of Queensland, contain restrictions prohibiting an individual from having a voting power of more than
10% in the Company without obtaining prior written consent from the relevant government regulator or minister. The Company may refuse to register any transfer of shares which would
contravene these shareholding restrictions or require divestiture of the shares that cause an individual to exceed the shareholding restrictions.
Voting rights
Shares issued by Tabcorp carry one vote per share. Performance Rights do not carry any rights to vote at general meetings of the Company’s shareholders. Failure to comply with certain
provisions of the Victorian Gambling Regulation Act 2003 or Tabcorp’s Constitution, including the shareholder restrictions discussed above, may result in suspension of voting rights.
Substantial shareholders
The following is a summary of the substantial shareholders pursuant to notices lodged with the ASX in accordance with section 671B of the Corporations Act 2001:
Name
AustralianSuper Pty Ltd
BlackRock Group
The Vanguard Group, Inc
Date of interest
16 March 2020
22 January 2020
29 December 2017
Number of ordinary shares(i)
174,180,122
121,798,304
106,462,742
% of issued capital(ii)
8.60
6.01
5.295
(i) As disclosed in the last notice lodged with the ASX by the substantial shareholder.
(ii) The percentage set out in the notice lodged with the ASX is based on the total issued share capital of Tabcorp at the date of interest.
127
Tabcorp Annual Report 2020 SHAREHOLDER INFORMATION As at 31 July 2020
Twenty largest registered holders of ordinary shares
Investor name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
BNP Paribas Noms Pty Ltd
Citicorp Nominees Pty Limited
Argo Investments Limited
HSBC Custody Nominees (Australia) Limited
Robin Edward Davey
Avanteos Investments Limited
Australian Executor Trustees Limited
Wentworth Investments Pty Ltd
Netwealth Investments Pty Ltd
Navigator Australia Ltd
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
UBS Nominees Pty Ltd
AMP Life Limited
Invia Custodian Pty Limited
Total of top 20 registered holders
Distribution of securities held
Number of ordinary shares
521,958,699
432,938,059
179,821,132
67,758,526
39,138,799
33,527,924
29,428,068
18,177,655
10,586,538
8,946,744
7,654,934
5,735,072
5,624,643
5,311,910
4,685,441
4,339,609
4,018,374
3,697,077
3,540,402
3,189,385
1,390,078,991
% of issued capital
25.68
21.30
8.85
3.33
1.93
1.65
1.45
0.89
0.52
0.44
0.38
0.28
0.28
0.26
0.23
0.21
0.20
0.18
0.17
0.16
68.40
Number of securities held
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Ordinary shares(i)
Number of
holders
79,712
68,360
12,483
9,061
381
169,997
Number of
securities
26,709,341
163,347,100
89,313,672
195,017,207
1,557,924,326
2,032,311,646
% of
securities
1.31
8.04
4.39
9.60
76.66
100%
Performance Rights(ii)
Number of
holders
-
-
1
13
12
26
Number of
securities
-
-
8,443
622,648
4,670,947
5,302,038
% of
securities
-
-
0.16
11.74
88.10
100%
(i) Ordinary shares includes Restricted Shares offered to employees under the Company’s incentive arrangements.
(ii) Performance Rights were issued pursuant to the Company’s long term incentive arrangements. Refer to the Remuneration Report on pages 46 to 70 for more information about the Company’s incentive arrangements.
Unmarketable parcels
There were 28,751 shareholders holding less than a marketable parcel of ordinary shares ($500 or more, equivalent to 141 ordinary shares) based on a market price of $3.56 per share at the
close of trading on 31 July 2020.
128
Tabcorp Annual Report 2020 COMPANY DIRECTORY
Registered office
Tabcorp Holdings Limited
Level 21, Tower 2, Collins Square
727 Collins Street
Melbourne VIC 3008
Australia
Telephone 03 9246 6010
03 9246 6684
Facsimile
enquiries@tabcorp.com.au
Email
Share registry
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Australia
Telephone
1300 665 661
Telephone 02 8280 7418
02 9287 0303
Facsimile
02 9287 0309 (proxy forms only)
Facsimile
tabcorp@linkmarketservices.com.au
Email
www.linkmarketservices.com.au
Website
Website
www.tabcorp.com.au
New South Wales office
Level 31
680 George Street
Sydney NSW 2000
Telephone 02 9218 1000
Queensland office
Level 8
180 Ann Street
Brisbane QLD 4000
Telephone 07 3877 1010
Sky Racing/Sky Sports Radio
79 Frenchs Forest Road
Frenchs Forest NSW 2086
Telephone
02 9451 0888
Follow us on social media
INDICATIVE KEY DATES
2020
Last date for receipt of AGM director nominations
AGM
2021*
Half year results announcement
Ex-dividend for interim dividend
Record date for interim dividend
Last date for receipt of DRP elections
Interim dividend payment
End of financial year
Full year results announcement
Ex-dividend for final dividend
Record date for final dividend
Last date for receipt of DRP elections
Last date for receipt of AGM director nominations
Final dividend payment
AGM
1 September
20 October
17 February
22 February
23 February
24 February
17 March
30 June
18 August
25 August
26 August
27 August
31 August
17 September
20 October
* Proposed dates set out above are subject to change. Payment of any dividend is subject
to Board approval and the key dates for each dividend will be confirmed to the ASX.
Refer to the Company’s website for any updates.
Corporate information
Stock exchange listing
Copyright
Investment warning
Privacy
Trade marks
The Company is a company
limited by shares that is
incorporated and domiciled
in Australia.
The Company’s ordinary
shares are quoted on the
Australian Securities
Exchange (ASX) under
the code ‘TAH’.
Information in this report
has been prepared by
Tabcorp, unless otherwise
indicated. Information may
be reproduced provided it is
reproduced accurately and
not in a misleading context.
Where the material is being
published or issued to
others, the sources and
copyright status should
be acknowledged.
Past performance of shares
is not necessarily a guide to
future performance. The
value of investments and
any income from them is
not guaranteed and can
fall as well as rise. Tabcorp
recommends investors seek
independent professional
advice before making
investment decisions.
Tabcorp respects the
privacy of its stakeholders.
Tabcorp’s Privacy Policy
is available on the
Company’s website at
www.tabcorp.com.au.
Currency
References to currency are
in Australian dollars unless
otherwise stated.
® These trade marks are
registered in Australia
(either across Australia or
limited to certain state/s
or territory/ies) and are
owned by or licensed
to a company in the
Tabcorp Group.
Tabcorp Annual Report 2020
129
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