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PlayAGSAnnual Report 2023
WE’RE RAISING
THE GAME
CONTENTS
Operating and financial review
About Tabcorp
Chairman’s and Managing Director’s message
TAB25 strategy
Our Values
Level the playing field
Win the Australian market
FY23 overview
Review of FY23 results
Wagering and Media
Gaming Services
Sustainability
Governance
Board of Directors
Executive Leadership Team
Risk management and material business risks
TCFD disclosures
Directors’ Report
Remuneration Report
Financial Report
Independent auditor’s report
At the back
Five year review
Shareholder information
Glossary
Company directory
Indicative key dates
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133
Acknowledgement of Country
Tabcorp recognises Aboriginal and Torres Strait Islander peoples
as the First Australians and the Traditional Custodians of the
lands on which we live, learn and work. We pay our respects
to their Elders past, present and emerging.
Tabcorp Holdings Limited ABN 66 063 780 709
ABOUT TABCORP
We’re the big Australian player. We operate a portfolio of leading Australian brands across
wagering, media and integrity services, with national scale and reach. We also operate
complementary international wagering and broadcasting businesses.
Our purpose is to create the most engaging betting and entertainment experiences in Australia,
and share it with the world. We’re here to deliver excitement – through our incredible people,
market leading products and exceptional experiences that our customers love.
®
®
TAB is Australia’s biggest
multi-channel wagering
brand, offering a broad
range of betting experiences
across digital channels
and in retail throughout
Victoria, New South Wales,
Queensland, South
Australia, Tasmania,
Northern Territory and
the ACT.
Sky is a leader in multi-
venue, multi-channel racing
and sports broadcasting
throughout Australia and
internationally.
Premier Gateway
International is one of
the largest global wagering
and tote pooling hubs,
based in the Isle of Man,
and Sky Racing World is
a US-based distributor of
international racing content
and facilitator of associated
tote pools.
MAX, Australia’s leading
gaming services provider,
offers electronic gaming
machine monitoring and
related integrity services,
as well as other gaming-
related services to venues.
Tabcorp Annual Report 2023
1
®DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY CHAIRMAN’S AND MANAGING DIRECTOR’S MESSAGE
The 2022/2023 financial year
(FY23) represents the first
full year of operation of our
businesses following the
demerger of the Lotteries
and Keno business in June
2022 (Demerger).
We’re pleased to report that
in our first full year following the
Demerger we achieved what we
pledged to investors we would do
and have laid the foundations for
growth. TAB launched a new App
on time as promised to the market
with a record 805,000 active
customers in FY23, a level playing
field was legislated in Queensland
and our Gaming Services business
continued its transition to an
integrity services model.
We also launched our TAB25
vision to reshape our Company
into a simpler, growing, more
valuable business, providing
investors with clarity around
our strategic goals for the
next three years.
FY23 results
The Group reported a net profit
after tax (NPAT) of $66.5m in
FY23, after incurring a non-cash
impairment charge of $49.0m
(before tax) relating to the Gaming
Services business and other
significant items benefit totalling
$16.4m (before tax)(i).
where we created the products,
the policy settings and attracted
the right people to position the
business for growth and achieve
our TAB25 aspirations.
We have put in place a clear plan
to execute on our strategy and
achieve our TAB25 goals of 30%
Digital Revenue Market Share,
10% Return on Invested Capital
(ROIC) and operating expenditure
(Opex) of between $600m–$620m
in FY25(iii)(iv).
Levelling the Playing Field
As part of our TAB25 strategy
we want to ‘Shape the Game’ by
levelling the playing field in every
Australian state and territory
so that foreign owned online
bookmakers licenced in the
Northern Territory pay the same
taxes and fees as Tabcorp. This
will ensure greater investment
in the racing industry and its
participants.
Revenues were $2,434.4m, up
2.6% on the previous year.
Group EBITDA before significant
items(i) was $391.0m(ii), up from
$381.6m for the previous year.
Dividend
Delivering sustainable returns for
our shareholders is a core focus
of Tabcorp. We announced a final
dividend of 1.0 cents per share
fully franked, with dividends
payable for the full year totaling
2.3 cents per share fully franked.
This represents a payout ratio of
60% of NPAT before significant
items and equity accounted loss.
TAB25
In February 2023 we announced
our TAB25 vision. TAB25 is the key
strategic driver of our business.
It’s a three year journey – a light
on the hill – that everyone at
Tabcorp is working towards.
Year one was a foundation year
We now have a level playing field
in Queensland, with legislative
changes implemented in
December 2022, as well as in the
ACT and Tasmania. Victoria plans
to be a level playing field from
next year under the proposed new
wagering licence, while in NSW
a process has commenced
and we’re participating
in the current review.
Pleasingly, we’ve seen an
immediate improvement in
the performance and growth of
the Queensland TAB following
reforms in that state – highlighting
the opportunities for our Company
when we are able to compete
on a level playing field.
Genesis and financial
discipline
Cost discipline and commercial
rigour continues to be a key
priority. We’re accelerating our
Genesis program to create a
simpler and leaner organisation
and provide capacity to reinvest
in our growth initiatives, deliver
faster outcomes for our customers
and be more effective in the way
we work.
(i) For details of significant items, refer to page 13.
(ii) Earnings before interest, taxation, depreciation, amortisation and impairment (EBITDA) before significant items is non-IFRS financial information, and unaudited
(iii) Based on current licence structures and business model.
(iv) These forward-looking statements are not guarantees of future performance and actual results may differ.
Bruce Akhurst
Chairman and independent
Non-Executive Director
Adam Rytenskild
Managing Director and
Chief Executive Officer
2
Tabcorp Annual Report 2023 We remain on track to deliver
our TAB25 Opex target – this
is a significant achievement given
inflationary pressures and the
investments we’re making.
investment in a 20% equity
interest in social digital wagering
platform, Dabble, providing
exposure to a fast growing,
innovative business.
customers first and being an
industry leader in responsible
gambling. That means not only
complying with the law, but also
advocating for a well-regulated
and responsible industry.
analytics capability and keep
our customers even safer. These
upgrades are an important part
of both our digital transformation
and our commitment to caring
for our customers.
We’re making good progress
on establishing a new operating
model to enable more agile and
contemporary ways of working.
We’re also investing in transforming
our TAB venues to create a
differentiated and more engaging
in-venue customer experience and
leverage our unique betting
ecosystem.
New App and products
In FY23 we successfully launched
the new TAB App in time for
the Spring Racing Carnival,
as promised to the market. We
followed this with new products
and feature releases, including
a new social betting feature with
Bets Friends, Same Race Multi,
and upgrades of our Same Game
Multi. We’ve now closed product
gaps to our competitors and are
focussed on becoming market
leaders.
To complement our new digital
strategy, we also made a strategic
Pivot to integrity services
In Gaming Services, we’re
simplifying our business and
transitioning to an integrity
services model. The successful
bid for a new 20-year exclusive
Tasmanian monitoring licence
highlights the opportunities for
this business as governments
increase regulatory focus in
the sector.
In February 2023 we completed
the sale of eBet, and we have
also entered into an agreement
to sell the MAX Performance
Solutions business, targeted
for completion prior to
December 2023(i).
Customer care and
the community
Caring for our customers
and the community are of
critical importance to us as an
organisation as we execute
on our transformation strategy.
We’re committed to putting our
(i) Subject to purchaser receiving regulatory approvals.
We’re proud to have taken a
leadership position to advocate
for tougher restrictions on betting
advertising to protect young
children, teenagers and vulnerable
Australians. We support banning
advertising during prime-time
viewing on free-to-air television
and establishing a framework
for regulating online gambling
advertising. We also advocated
for a national regulator and
are pleased the federal
parliamentary inquiry has
recommended a single regulator
to ensure all bookmakers are
governed by the same standards.
We believe reform in this space
is the right thing to do – both for
the community and to ensure the
sustainability of our industry.
We also announced that Tabcorp
has partnered with industry leader
Mindway AI, providing access to
cutting-edge artificial intelligence
technology to allow us to uplift
our responsible gambling data
Our people and Values
We would like to acknowledge
our people who have been
instrumental in a successful
foundation year of our TAB25
transformation strategy, while
remaining steadfastly committed
to delivering exceptional
experiences for our customers.
We’re building a new culture at
Tabcorp and during the year we
launched our new Values: Spark
Change; Play Fair; and Raise the
Roof. These Values underpin the
way we work and the delivery of
our TAB25 strategy.
Chief Financial Officer (CFO),
Daniel Renshaw, will be stepping
down as CFO at the end of
August 2023, and Damien
Johnston will be appointed as
Interim Acting CFO while the
Company undertakes a targeted
recruitment process for a new
CFO. Daniel has played a key role
in the successful Demerger and
transformation of our Company
and we’d like to thank him for his
contribution to Tabcorp over a
long period of time.
Conclusion
We want to thank shareholders
for their continuing support.
We’re one year into our TAB25
transformation journey and have
created a strong foundation to
transform Tabcorp into a stronger,
more competitive and growing
business by FY25.
We look forward to updating
shareholders on our progress
on TAB25 at our Annual General
Meeting in October, being held
in Melbourne and online this year.
Bruce Akhurst
Chairman
Adam Rytenskild
Managing Director and
Chief Executive Officer
3
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY TAB25 STRATEGY
Our TAB25 targets are designed to create a simpler and more valuable business for shareholders in FY25…
WIN
THE GAME
Grow core customer metrics
with a key metric of
30% DIGITAL REVENUE
MARKET SHARE
A new operating model and
optimised cost base to
REDUCE OPEX
TO $600M–$620M(i)
SHAPE
THE GAME
LEVEL PLAYING FIELD
IN EVERY STATE
Corporate bookmakers pay same
taxes and fees as Tabcorp
PIVOT GAMING SERVICES
TO INTEGRITY SERVICES
Market leader in
CUSTOMER AND
COMMUNITY CARE
CHANGE
THE GAME
TARGETED
INVESTMENTS
that position Tabcorp for accelerated
and diversified growth
DOUBLE OUR ROIC(ii) TO 10% IN FY25
Note: These forward-looking statements are not guarantees of future performance and actual results may differ.
(i) Based on current licence structures and business model.
(ii) Return on invested capital (ROIC) is earnings before interest and tax (EBIT) divided by average invested capital for the financial year. The baseline for the target is 1H23 ROIC of 4.7%.
4
Tabcorp Annual Report 2023
...and we have a clear execution framework to reshape our business for growth and delivery of market leading
offers, products and experiences for customers.
OUR
STRATEGY
BIG BETS &
FIELDS OF PLAY
Areas of focus for
the whole Company
WIN
THE GAME
SHAPE
THE GAME
CHANGE
THE GAME
WIN THE AUSTRALIAN
MARKET
LEVEL THE PLAYING
FIELD
WORLD CLASS BUSINESS
PERFORMANCE
Dominate Racing
Licence Reform
Double Down on the Right Sport
Harmonise Regulations
Best Social Entertainment Experience
Lead Customer Care and Community
Cost Transformation
Future Operating Model
Execution Excellence
STRATEGY
ENABLERS
ADVANCED DATA
& ANALYTICS
GREAT PEOPLE &
PARTNERSHIPS
A CULTURE OF HIGH
PERFORMANCE
OUR
VALUES
SPARK
Change
We disrupt and
spark change to
make it better
PLAY
Fair
We do what's right
for our customers,
partners, and each
other, always
RAISE
THE
Roof
We bring our
passion and
have fun doing
what we love
5
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY OUR VALUES
We’re building a new culture at Tabcorp, underpinned by the launch of our new Values. They’re uniquely
‘us’ – clear and actionable, with a sense of excitement and energy, and a renewed purpose to succeed.
Change
SPARK
We disrupt and spark change
to make it better.
We’re curious, hungry for success and we back each
other with confidence. We’re smart and use our
initiative to make decisions and act in ways that have
impact, fast. We are problem-solvers, not problem
admirers. If we see an issue, we bring a solution
mindset and fix it quickly. This means we put
improvements in the hands of our customers
as quickly as possible.
Fair
PLAY
We do what’s right for our customers,
partners, and each other, always.
RAISE THE
We bring our passion and have
fun doing what we love.
Roof
We’re accountable and own our actions and decisions.
We’re ethical, respectful, and inclusive, and we create
a level playing field for all. We know that doing the
right thing delivers value for us in the long run, so we
responsibly grow our business and people in ways that
make us proud. Honest and reliable, underpinned by
a culture of warmth, respect and belonging, where
everyone is welcome and supported to be their best.
We loudly celebrate our wins and effort, both big
and small. We draw energy and optimism from the
excitement of our industry. Passion fuels us and having
pride in who we are and what we do turns a daily job
into a daily joy. Our enthusiasm is contagious, and our
‘can do’ attitude fosters a positive environment for
ourselves and our customers to thrive.
6
Tabcorp Annual Report 2023
LEVEL THE PLAYING FIELD
Tabcorp is one of the largest financial contributors to the Australian racing and wagering industry. Our taxes, licence fees and arrangements
support a vibrant local racing industry, Australian jobs, and retail venues, such as pubs and clubs. We support reforms that level the playing field
for all wagering operators and ensure a sustainable industry into the future. In FY23, substantial progress was made, with several key markets
moving to a level playing field. We also continued to advocate for a fairer and nationally consistent regulatory environment, including further
regulation of gambling advertising.
LEVEL PLAYING FIELD SCORECARD
QLD
Level playing field
legislation introduced
1 December 2022 –
Tabcorp now pays the
same fees and taxes as
other wagering operators
VIC
Victoria will have a level
playing field when the
new Victorian Wagering
Licence commences in
August 2024
ACT
Level playing field
in operation
TAS
Level playing field
in operation
NSW
Revised POCT
implemented 1 July 2022,
with an offset for Tabcorp.
Process commenced
towards a level
playing field
IN PROGRESS
SA
Commenced discussion
with SA Government
and industry for a level
playing field
DISCUSSIONS
COMMENCED
7
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY WIN THE AUSTRALIAN MARKET
NEW APP
NEW PRODUCTS AND FEATURES
Our new TAB App successfully launched
in time for the 2022 Spring Racing
Carnival
Since the launch of our new App, we’re leading the market
in volume of new products and features released for our
customers
Refreshed, easier to use interface
Faster, more efficient technology platform
(Google Flutter technology)
Improved development speed – speed to
market reduced from ~4 months to 4 weeks
®
APP FEATURES
Key
First to market
TAB following competitor
Features
Featured Racing Replays (Play Central)
Share and Copy Bets
Positive customer response and improved
FIFA 2022 World Cup Hub
Race Reminders
digital competitiveness
NBA/NRL/AFL Integrated Stats
Payment Authentication (3Ds2)
NBA/AFL/NRL Stats Centre
Same Race Multi
Popular Same Game Multis (SGM)
Quaddie Tracker
Blackbook Notifications
Popular Same Race Multi
SGM Upsell
Bet Slip Deposit
Enhanced ‘My Bets’ Experience
Activity Statements
Bets Friends
SGM Market Expansion
8
Tabcorp Annual Report 2023
SOCIAL BETTING:
BET, TIP + BANTER
POPULAR SAME
GAME MULTI (SGM)
SAME RACE
MULTI
Connecting punters and driving
digital engagement supported
by TAB talent and content
Trending bets products has
improved SGM product metrics
Closes a product gap in the
multi-betting experience
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Tabcorp Annual Report 2023
9
OPERATING & FINANCIAL REVIEW
FY23 OVERVIEW
HIGHER REVENUE
AND PROFIT
Revenues of $2,434.4m, up 2.6%
NPAT of $66.5m after incurring a non-cash
impairment charge of $49.0m (before tax) and
other significant items benefit totalling $16.4m
(before tax)(i), compared to net loss after tax
of $118.4m
Earnings per share of 2.9 cps, up from loss
of 5.3 cps
Full year dividends totalled 2.3 cps fully franked,
includes final dividend of 1.0 cps fully franked
STRONG COST PERFORMANCE
AND BALANCE SHEET
IMPROVED DIGITAL
COMPETITIVENESS
Well controlled operating costs before significant
items(i) of $617.5m
Successful new TAB App launched ahead
of the 2022 Spring Racing Carnival
Genesis cost and efficiency program on-track
Increased and diversified available funding with
new A$425m equivalent US Private Placement
note issuance
Key product gaps closed, 10 product releases
since launch of new TAB App
Record 805,000 active digital TAB account
customers, up 3%
AUSTRALIAN WAGERING
STRUCTURAL REFORM
PIVOT TO INTEGRITY
SERVICES
Level playing field in QLD, ACT, TAS and in VIC
(post August 2024)
Awarded new Tasmanian Monitoring Licence
which commenced 1 July 2023
QLD best performing market with 5% higher
turnover growth than other TAB markets since
1 December 2022
Leadership on advertising restrictions and
nationally consistent regulation
Sale of eBet completed 1 February 2023
Sale of MAX Performance Solutions announced
with completion targeted prior to December 2023(ii)
NEW VALUES
AND CAPABILITY
Launched new Company Values
Injected new talent
Significantly expanded data and digital capabilities
Note: Results are for FY23, or as at 30 June 2023, as applicable, unless otherwise stated, with comparisons to FY22. Results are from continuing operations, excluding the former Lotteries and Keno business which was demerged in FY22.
(i) For details of significant items refer to page 13.
(ii) Subject to purchaser receiving regulatory approvals.
10
Tabcorp Annual Report 2023
Revenues
$2,434.4m
up 2.6%
Net profit after tax (NPAT)
$66.5m
up from a net loss after tax of $118.4m
Full year dividend payout ratio
60%
of NPAT before significant items(i)
and equity accounted loss
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Tabcorp Annual Report 2023
11
WE HAVE DELIVERED ON
OUR KEY PRIORITIES AND
BUILT THE FOUNDATIONS TO
SUPPORT DELIVERY OF OUR
TAB25 AMBITIONS
(i) For details of significant items refer to page 13.
OPERATING & FINANCIAL REVIEW
REVIEW OF FY23 RESULTS
Group results
The Group’s results for the
financial year ended 30 June
2023 (FY23) represent the first
full financial year of operation
following the Demerger, which
was implemented on 1 June 2022.
The financial results for FY23
relate to the Tabcorp Group’s
two businesses:
• Wagering and Media
• Gaming Services
Comparisons to the prior period
are in respect of the continuing
businesses for the full year to
30 June 2022 (FY22).
The Group reported revenues
for FY23 of $2,434.4m, up 2.6%
on the prior year.
Statutory net profit after tax
(NPAT) was $66.5m after
incurring a non-cash impairment
charge of $49.0m (before tax)
relating to the Gaming Services
business and other significant
items benefit totalling $16.4m
(before tax)(i).
This compared to a statutory net
loss after income tax of $118.4m
in the prior year.
The Group reported a statutory
net profit before income tax,
net finance costs and equity
accounted investment of $117.9m,
compared to a statutory net loss
of $75.1m in the previous year.
Group EBITDA before significant
items(i) was $391.0m, up from
$381.6m for the previous year.
Statutory earnings per share
(EPS) for FY23 was 2.9 cents per
share, compared to a loss of 5.3
cents per share for the prior year.
In FY23, Tabcorp set the
foundations to transform the
Company into a stronger, more
competitive and growing business
by FY25 in line with the TAB25
strategy.
The new TAB App was launched,
followed by 10 new product
releases, increasing TAB’s digital
competitiveness and closing
product gaps.
Further progress was made on
levelling the playing field, with
reforms introduced in Queensland
resulting in Tabcorp paying the
same wagering taxes and fees
as online wagering operators.
A level playing field has also
been implemented in ACT and
Tasmania, and TAB is seeking
a level playing field in every
Australian state and territory.
Gaming Services made strong
progress on the transition to
an integrity services model, with
the award of the new exclusive
20-year licence to monitor all
electronic gaming machines
(EGMs) in Tasmania (which
commenced 1 July 2023) and
completion of the sale of the
eBET business. Following
Group results(v)
For the year ended 30 June
Revenues
the end of the year, the Group
announced the sale of MAX
Performance Solutions (MPS)(iii).
Refer to pages 14 to 19 for further
details about the performance of
each operating business.
Good progress was made on
the Genesis program to improve
organisational efficiency and
support cost management.
Net operating expenses in FY23
were largely consistent with FY22.
FY23 benefited from gains on
disposal of assets, an insurance
recovery and the Genesis
program, offset by dis-synergies
from the Demerger, inflation and
cycling savings due to COVID
restrictions in 1H22.
Strong performance on costs
will provide flexibility to invest
in the business in FY24, with
the Group expecting to invest
in repositioning the TAB brand
in 1H24 along with continued
investment in data and analytics
capability.
The Group recorded capital
expenditure of $155.4m(iv) in FY23.
Statutory
Statutory before significant items
FY23
$m
FY22
Change
$m
FY23
$m
FY22
Change
$m
2,434.4
2,373.3
Taxes, levies, commissions and fees
(1,411.6)
(1,538.2)
Net operating expenses(vi)
EBITDA(ii)
Depreciation and amortisation
Impairment – other
Profit/(loss) before income tax, net finance costs
and equity accounted investment (EBIT)
Profit/(loss) before tax
Profit/(loss) after income tax
EPS – cents per share
(615.4)
407.4
(618.8)
216.3
(240.5)
(286.4)
(49.0)
(5.0)
117.9
82.7
66.5
2.9
(75.1)
(136.2)
(118.4)
(5.3)
%
2.6
(8.2)
(0.5)
88.3
(16.0)
NM(vii)
NM
NM
NM
NM
2,434.4
2,373.3
(1,425.9)
(1,392.1)
(617.5)
(599.6)
391.0
(240.5)
-
150.5
115.3
84.3
381.6
(286.4)
-
95.2
(30.2)
(18.1)
3.8
(0.8)
%
2.6
2.4
3.0
2.5
(16.0)
-
58.1
NM
NM
NM
(i) Significant items are disclosed on the following page and in note A1 of the Financial Report.
(ii) Non-IFRS financial information, and unaudited.
(iii) Targeted for completion prior to December 2023, subject to purchaser receiving regulatory approvals.
(iv) Excludes $8.0m of Demerger related capital expenditure.
(v) Results from continuing operations, excluding the former Lotteries and Keno business which was demerged in FY22.
(vi) Includes other income.
(vii) Percent change is not meaningful.
12
Tabcorp Annual Report 2023 The table below provides a
reconciliation of the statutory
results to the statutory results
before significant items.
The statutory results before
significant items is more
meaningful for understanding
the underlying financial
performance of the Group.
• An agreement has been entered
into for the sale of MPS. The
carrying value of the disposal
group exceeded its recoverable
amount resulting in a write
down.
• Genesis transformation
program establishment and
implementation costs.
• Costs incurred to separate
Tabcorp and The Lottery
Corporation (TLC) into two
standalone companies. These
costs exclude technology
related separation costs which
are recharged from TLC.
The FY23 statutory results
include the following one-off
significant items:
• Net gain on the sale of eBet
to Venue Digital Technology Pty
Ltd which completed on
1 February 2023.
• Net gain on the disposal
of MPS EGMs.
• On 29 January 2016, Tabcorp
entered into an agreement for
the development and
implementation of the Pari-
Mutuel Odds Calculation
System. In FY20 an onerous
contract provision was
recognised. During FY23, both
parties mutually agreed to end
the contract early and as such
the onerous contract provision
has been reversed.
Consolidated ($m)
Year ended
30 June 2023
Revenue
Taxes, levies,
commissions and fees
Net operating expenses(i)
EBITDA(ii)
Depreciation,
amortisation and
impairment
EBIT
Equity accounted loss
Net finance costs
Profit from continuing
operations before
income tax
Income tax
Net profit after tax
Gain
on sale
of eBet
-
Gain
on sale
of MPS
EGMs
-
Statutory
2,434.4
Onerous
contract
-
MPS
write-
down
-
Tranformation
costs
-
Demerger
costs Other
-
-
Statutory
before
significant
items
2,434.4
(1,411.6)
(615.4)
407.4
-
(34.2)
(34.2)
(289.5)
117.9
(2.7)
(32.5)
-
(34.2)
-
-
82.7
(16.2)
66.5
(34.2)
-
(34.2)
-
(6.5)
(6.5)
-
(6.5)
-
-
(6.5)
2.0
(4.5)
(6.5)
-
(6.5)
-
(6.5)
-
-
(6.5)
2.0
(4.5)
-
1.6
1.6
49.0
50.6
-
-
50.6
(9.1)
41.5
-
20.3
20.3
-
20.3
-
-
20.3
(6.1)
14.2
-
8.9
8.9
-
8.9
-
-
8.9
(3.6)
5.3
(7.8)
7.8
-
(1,425.9)
(617.5)
391.0
-
-
-
-
-
-
-
(240.5)
150.5
(2.7)
(32.5)
115.3
(31.0)
84.3
Capital management
The Group’s balance sheet
remains in a strong position,
with $344.7m in net debt(iii)
and undrawn debt facilities
of $950m as at 30 June 2023.
Gearing(iv) was 0.9 times as
at 30 June 2023.
During FY23 the Group increased
and diversified its sources of
available funding and lengthened
its debt maturity profile with
a new A$425m equivalent
US Private Placement (USPP)
note issuance.
The Group’s average debt
maturity is 4.7 years.
Dividends
A final dividend for FY23 of 1.0 cents
per share fully franked has been
announced. The final dividend will
be payable on 18 September 2023
to shareholders registered at
1 September 2023. The ex-
dividend date is 31 August 2023.
The interim and final dividends
payable in respect of FY23 totalled
2.3 cents per share fully franked.
This equates to a FY23 dividend
payout ratio of 60% of NPAT
before significant items and equity
accounted loss, which is in line
with the Group’s previously
announced target dividend payout
ratio of 50% to 70% of NPAT
before significant items.
The Dividend Reinvestment Plan
will operate in respect of the FY23
final dividend, with no discount
applicable.
The table below shows the
dividends paid, declared or
recommended 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.
Description
Amount(v)
Record date
Payment date
Total
FY23 final
1.0 cents
1 Sep 2023
18 Sep 2023
$22.8m
FY23 interim
1.3 cents
27 Feb 2023
21 Mar 2023
$29.6m
FY22 final
6.5 cents(vi)
1 Sep 2022
23 Sep 2022
$144.7m
(i) Includes other income.
(ii) Non-IFRS financial information, and unaudited.
(iii) Net debt is gross debt (including lease liabilities) less cash (excluding restricted cash), and
is unaudited.
(iv) Gearing is net debt divided by EBITDA. EBITDA is non-IFRS financial information and
unaudited.
(v) Amount per share fully franked.
(vi) The FY22 final dividend included five months of earnings from the now discontinued Lotteries
and Keno business prior to the Demerger being implemented.
13
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY
WAGERING
AND MEDIA
14
Tabcorp Annual Report 2023
OUR BETTING ECOSYSTEM
We’re leveraging our unique and highly desirable betting ecosystem to deliver engaging and exciting
experiences for our customers.
Unparalleled brand reach
Modernised TAB brand (FY24)
Significant Australian footprint with
a TAB retail network of ~4,000 venues
consisting of agencies, hotels, pubs,
clubs and on-course
Exclusive customer engagement and
acquisition channel
Upgraded venue fit outs commencing
in FY24 to increase foot traffic and
conversion to TAB digital customers
in-venue
Record 805,000 active digital TAB customers
New TAB App and product parity with
competitors
Faster speed to market
Uplifted data and analytics capability
DIGITAL
ON D E V
I C E AT H
O
M
E
OUR
CUSTOMERS
®
A
T A DEST I N A
TION
DESTINATIONS
VISION &
CONTENT
Sky is Australia’s leading racing channel
More than 150,000 races broadcast live
around the world every year
Uplifted form, analytics and content delivering
improved digital customer experience
15
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY WAGERING AND MEDIA BUSINESS CONTINUED
®
TAB is a leading omni-channel
provider of wagering experiences
in Australia, with a unique
combination of digital, retail
destination and media assets.
TAB’s unrivalled retail network
consists of TAB agencies, hotels,
pubs and clubs as well as
on-course operations, and is
complemented by TAB’s nationally
available App, online and call-
centre platforms.
The wagering licences held by
Tabcorp across each State and
Territory (excluding Western
Australia) enable it to exclusively
offer totalisator and cash betting
on racing and sporting events
through retail. TAB operates
throughout NSW, Victoria,
Queensland, South Australia,
Tasmania, ACT and Northern
Territory. The Victorian wagering
business currently operates as
a 50:50 joint venture with the
Victorian racing industry until the
licence ceases in August 2024.
Premier Gateway International
(PGI) operates an international
wagering and tote pooling hub,
licensed and operating out of the
Isle of Man. PGI is one of the
largest global tote hubs and is
also the only tote pooling hub
that operates 24 hours a day,
all year round.
®
Sky Racing World (SRW),
based in the US, manages the
international marketing and
distribution of international racing
content. SRW also assists with
importing racing content from
around the world into Australia
and facilitates associated tote
pools. SRW holds a Totalisator
Licence in North Dakota, which
enables the co-mingling of US
wagering operators with TAB’s
domestic pools.
Review of FY23
performance
In FY23, Wagering and Media
revenues were $2,230.8m, up
2.2%, and EBIT before significant
items(i) was $116.2m, up 27.7%
on the prior year.
The performance of the Wagering
business improved in FY23,
cycling a COVID-19 impacted
prior year, partially offset by a
decline in the digital wagering
market, increased generosity
costs in a highly competitive
environment and investments
in the new TAB App and digital
products.
Our Sky media business is a
leader in multi-venue, multi-
channel racing and sports
broadcasting. Sky operates a
combination of racing and
sports channels which are
extensively distributed directly
to TAB’s venue network,
in-home to pay TV subscribers
and over various digital
platforms, including the
Sky Racing Active App.
Refer to pages 45 and 46 for
further information.
Wagering revenues were
$1,761.1m, up 1.9% on the
prior year.
TAB cash wagering revenues
were $818.4m, up 25.1%, as
customers returned to venues
post COVID-19 lockdowns and
retail closures.
TAB digital wagering revenues
were $942.7m, down 12.2%,
impacted by a softening digital
wagering market in FY23 cycling
COVID-19 tailwinds in the
prior year.
The new TAB App was successfully
launched ahead of the 2022
Spring Racing Carnival and this
was followed up with 10 new
product releases. During the year
TAB increased speed to market
and closed product gaps, improving
its digital competitiveness.
Active TAB digital customers
increased 3% to a record 805,000
(measured on a rolling 12-month
basis).
TAB market share stabilised
in FY23 with(ii):
• total revenue market share
of 34.6%, up from 33.6%;
• digital turnover market share
of 20.0%, up from 19.7%; and
• digital revenue market share
of 24.5%, down from 24.9%,
negatively impacted by
lower sports yields relative
to competitors in the final
quarter of the year.
Legislative reforms were
implemented in Queensland
on 1 December 2022, resulting
in Tabcorp paying the same
wagering taxes and fees as online
wagering operators in that state.
Since then, TAB has experienced
higher turnover growth in
Queensland relative to other
TAB states and territories.
16
(i) Non-IFRS financial information, unaudited.
(ii) Digital includes digital and call centre channels in which a customer transacts using their
account. Based on data supplied by industry partners which accounts for approximately
one-third of the wagering market. All data is before generosities.
Tabcorp Annual Report 2023
A level playing field has now also
been implemented in Tasmania
and the ACT, with Tabcorp
seeking a level playing field
in every jurisdiction.
Upgrades of TAB’s retail network
have commenced, with innovative
retail fit outs being rolled out at
key TAB venues to enhance and
unlock the full potential of TAB’s
unique integrated wagering
ecosystem.
Revenues from the Media
and International businesses
were $469.7m, up 3.4%
on the prior year.
The performance of the Media
and International businesses
were driven by:
• an end to subscription fee relief
for COVID-19 impacted venues
in the prior period;
• increased vision export
revenues;
• benefits from new digital vision
distribution agreements; and
• PGI growth from betting into
non-Australian markets.
Following the end of the year,
Sky entered into an extension of
a digital vision supply agreement
with Sportsbet for a further 10
years, extending a significant
digital rights revenue stream
for the business to 2036.
Operating expenses for Wagering
and Media grew 2.8% to $507.1m,
reflecting Demerger dis-synergies,
cost inflation and a COVID-19
impacted prior period that saw
reduced retail and other expenses,
partly offset by insurance
proceeds and Genesis savings.
Active TAB
digital wagering
customers(i)
Sky broadcasts
live races around
the world
805,000
+150,000
up 3%
per annum
Wagering and Media results
for the year ended 30 June
Revenues
Taxes, levies, commission and fees
Operating expenses
EBITDA before significant items(ii)
Depreciation and amortisation
EBIT before significant items(ii)
FY23
$m
2,230.8
(1,415.7)
(507.1)
308.0
(191.8)
116.2
FY22
$m
2,181.9
(1,382.6)
(493.3)
306.0
(215.0)
91.0
Change
%
2.2
2.4
2.8
0.7
(10.8)
27.7
TAB total revenue
market share
TAB digital revenue
market share
34.6%
24.5%
up from 33.6%
down from 24.9%(iii)
Note: Results are for FY23, or as at 30 June 2023, as applicable, unless otherwise stated, with comparisons to FY22.
(i) Wagering active customers measured on a rolling 12 month basis.
(ii) Non-IFRS financial information, unaudited.
(iii) Digital includes digital and call centre channels in which a customer transacts using their account. Based on data supplied by industry partners which accounts for approximately one-third of the wagering market. All data is before generosities.
17
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY GAMING
SERVICES
18
Tabcorp Annual Report 2023
MAX is Australia’s leading gaming
services operator.
We are trusted by governments
and regulators to provide
electronic gaming machine (EGM)
monitoring and related services.
Our integrity services business,
MAX Regulatory Services (MRS),
monitors EGMs across NSW,
Queensland, Northern Territory
and, from 1 July 2023, Tasmania.
Our venue services business,
comprising MAX Performance
Solutions (MPS), MAX Integrated
Systems and MAX Technical
Services, provides a mix of
products, technology, financing,
support, maintenance and other
gaming services to venues
nationwide.
Refer to pages 46 and 47
for further information.
Review of FY23
performance
In FY23, Gaming Services
revenues were $203.6m,
up 5.5%, and EBIT before
significant items(i) was $34.4m,
up from $3.8m in the prior year.
The performance of the Gaming
Services business benefited from:
• contracted CPI-linked price
increases in the MRS business;
and
• cycling COVID-19 related retail
closures in the prior year,
partly offset by the negative
impacts of the non-renewal
of some EGM contacts from
mid-August 2022.
During the year the business
successfully progressed its
transition to an integrity services
model as a provider of monitoring
and integrity services capability
to government.
We were awarded a new 20-year
exclusive Tasmanian Monitoring
Operator Licence to monitor all
EGMs in hotels and clubs in
Tasmania, which commenced
on 1 July 2023.
The sale of the eBet business
completed in February 2023 for
$59.0m after customary working
capital and other adjustments,
and on 24 August 2023,
the Group announced it had
entered into an agreement to sell
MPS, with completion targeted
prior to December 2023(ii). An
impairment of $49.0m was
recognised as at 30 June 2023
in respect of the MPS business,
which is currently held for sale.
Operating expenses grew
2.8% to $110.1m, due to Demerger
dis-synergies, cost inflation
and cycling COVID-19 related
cost reduction opportunities
in the prior period.
Gaming Services results for the year ended 30 June
Revenues
Taxes, levies, commission and fees
Operating expenses
EBITDA before significant items(i)
Depreciation and amortisation
EBIT before significant items(i)
FY23
$m
203.6
(10.4)
(110.1)
83.1
(48.7)
34.4
FY22
$m
192.9
(10.6)
(107.1)
75.2
(71.4)
3.8
Change
%
5.5
(1.9)
2.8
10.5
(31.8)
>100
MAX monitored EGMs
NSW
QLD
NT
91,970
28,710
1,530
Total
122,210
up 1.8%
up 0.2%
up 11.7%
up 1.5%
Note: Results are for FY23, or as at 30 June 2023, as applicable, unless otherwise stated, with comparisons to FY22.
(i) Non-IFRS financial information, unaudited.
(ii) Subject to purchaser receiving regulatory approvals.
19
®Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY SUSTAINABILITY
20
Tabcorp Annual Report 2023
As part of our vision of Raising the Game, we’re committed to being here for the long term by taking care of our customers and people, being part of the community and operating
our business with integrity.
Our Sustainability Framework (Framework) helps to demonstrate how we’re creating long term value in the management of our environmental, social and governance (ESG) risks
and opportunities. It’s aligned with our business strategy, expectations of our team members and stakeholders, and with a strong focus on customer care.
The Framework is a result of a robust materiality assessment and consultation process completed in FY22. During FY23, we refreshed our materiality assessment and concluded that
our material ESG issues remain consistent with those identified in previous years. This work confirms we have a clear understanding of what is most important to our business and
stakeholders, and that we are focusing our work in the right areas.
A summary of our Framework and our progress during FY23 is outlined below, including alignment with the United Nations Sustainable Development Goals.
Our Sustainability Framework
Pillars
Goals
Targets
FY23 progress
CUSTOMER
CARE
• Deliver customer-centric responsible
• Customer Care Strategy design and
• Customer Care Strategy developed and
wagering and gaming initiatives designed
to prevent and minimise harm
• Build and maintain cybersecurity controls
that protect our customers’ privacy and
security and drive competitive advantage
through customer and stakeholder trust
implementation
being implemented
• No. 1 trusted wagering brand for
• Customer perception surveys introduced
customer care
• Protect our customer’s data and
personal information
• Developed our Responsible Marketing and
Advertising Position Statement which was
launched in July 2023
• Maintain cybersecurity defences that
• No priority 1 or 2 cyber incidents
build competitive advantage
• No reportable data and privacy breaches
CONTRIBUTE TO
OUR COMMUNITY
• Contribute to the strength of our
• Contribute to a stronger local economy
stakeholders through shared economic
benefits and industry support
• Deliver strategic community partnerships
and investment to support the
communities we operate in
• Engage on key industry issues such as
animal welfare and sports integrity
• Invest in strategic programs and
causes that deliver benefit to our local
community
• Build strategic partnerships to help
address key industry issues by 2025
• Generated $1.1b for the racing industry, $0.5b
in State and Federal Government taxes, $0.2b
for our retail partners, $0.3b of employee costs
and $0.1b to shareholders
• Continued our support of grass roots charities
and community organisations with $1.4m of
voluntary contributions
21
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY SUSTAINABILITY CONTINUED
Pillars
Goals
Targets
FY23 progress
SUPPORT OUR
PEOPLE TO
SUCCEED
• Foster a diverse, equitable and inclusive
• Inclusion and Diversity strategy design
• Delivered Inclusion and Diversity plan centred
workplace
and implementation
• Invest in the health, safety and wellbeing
• Balanced and diverse leadership team:
of our team
40:40:20 by 2030
• Attract the best talent and support our
• Provide a safe workplace to our people,
team to shape their careers
contractors and customers
• 70% engagement score by 2025
on 4 strategic pillars: Balanced teams;
Belonging; Inclusive Practices; and
Inclusive Brand
• Female representation at 30 June 2023:
43% Non-Executive Directors; 25% Executive
Leadership Team; 37% Leadership Cohort;
and 39% whole workforce
• Named an Employer of Choice for Gender
Equality by the Workplace Gender Equality
Agency for the eighth consecutive year
• Lost Time Injury Frequency Rate was 2.6
lost time injuries per million hours worked
(compared to 1.3 for FY22)
• Engagement score increased from 57% to 59%
compared to previous period (August 2022)
BUILD A
SUSTAINABLE
FUTURE
• Deliver a robust, transparent and effective
approach to ESG
• Develop a Net Zero roadmap to support
• Maintain membership and inclusion in
the DJSI (World and Australia) and the
FTSE4Good Index
• Maintained membership and inclusion in
the DJSI (World and Australia) and in the
FTSE4Good Index
our emission reduction targets
• 45% reduction in Scope 1 and 2
• Continued progress to achieve 2030 and
• Source products and services responsibly
and sustainably
emissions by 2030 from 2019 levels.
Net zero by 2050
2050 targets. Development of Net Zero Plan
underway, targeted for completion in early FY24
• Responsible Procurement Action Plan
delivery and implementation (Human
Rights/Modern Slavery focus)
• Developed our Responsible Procurement Action
Plan for Modern Slavery and Human Rights
Our detailed sustainability approach and performance will be disclosed in our 2023 Sustainability Report, which will be available at www.tabcorp.com.au.
22
Tabcorp Annual Report 2023 CUSTOMER CARE
Customers are, and always will
be, at the heart of our business.
We’re committed to putting our
customers first and being a leader
in responsible gambling (RG).
That means not only complying
with the law, but also advocating
for a well-regulated and
responsible industry. We engage
regularly with governments,
regulators, industry groups
and community groups dedicated
to RG to enhance their
understanding and relevant
research in this area.
Our approach to customer care
and the responsible provision of
our products is underpinned by
our Customer Care Strategy and
Customer Care Principles.
Our Customer Care Strategy
is focused on key areas of RG,
grouped in the five pillars of:
responsible advertising;
awareness and training;
monitoring and intervention;
financial; and social impact.
Well defined targets are in place
for each of these key areas to
help hold ourselves accountable.
Our Customer Care Principles
empower team members to
support RG use, raise awareness
about RG, and encourage wider
use of RG tools.
A summary of our Customer
Care Strategy and progress
during FY23 is outlined on
the following page.
23
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY SUSTAINABILITY CONTINUED
Our Customer Care Strategy
Pillars
Targets
FY23 progress
RESPONSIBLE
ADVERTISING
AWARENESS
AND TRAINING
MONITORING
AND
INTERVENTION
• Leadership position in government/regulatory
• Advocated for tougher restrictions on betting advertising:
engagement to advocate for tougher restrictions
on betting advertising, including during prime-
time viewing to protect young children,
teenagers and vulnerable Australians
• Deliver targeted responsible gambling training
modules for customer facing team members
to help identify potential harmful gambling
indicators
• 100% of team members to complete annual
Responsible Gambling training
• In FY23, deliver a dedicated marketing strategy
for responsible gambling awareness through
all available channels
– Submission made to the federal parliamentary inquiry recommending further restrictions
on free-to-air gambling advertising (blackout between 6:30am–8:30pm)
– Pushed for consistent framework to regulate social media advertising
– Committed to phasing out free-to-air TV advertising, even if government does not legislate
– Our position on customer care was reaffirmed during the 2023 federal government inquiry into
online gambling and its impacts on those experiencing gambling harm
– Formalised our commitment to responsible gambling advertising in our Responsible Marketing
and Advertising Position Statement
• Delivered RG training to all team members, with a 98% completion rate(i)
• Partnered with Epic Risk Management and delivered additional targeted RG training modules
to our Executive Leadership Team (ELT), and customer facing employees across the organisation
• Dedicated RG marketing strategy in development. A range of programs were implemented
during FY23, including inclusion of banners in apps, Sky radio and TV messages and oncourse
communications
• Implement data driven tools to monitor and
• Entered into a partnership with Mindway AI to uplift our RG data analytics capability and keep
intervene at the first signs of harmful gambling
across FY23 and FY24
• Enhance reporting to internal stakeholders
on key intervention metrics
our customers safer
• Prepared an Enhanced Player Tracking Tool which is expected to be delivered in FY24
• Improved data analytics to identify and intervene with customers who exhibit changing deposit
behaviours
• Improved internal operational excellence (tools, technology) to support teams identifying and
contacting customers who may exhibit changing gambling behaviours
• Monitoring of key business metrics has commenced, with reporting delivered via our internal
Voice of Customer meetings and Customer Care Advisory Committee
FINANCIAL
SOCIAL
IMPACT
• Year on year reduction in % wagering revenue
generated from accounts closed for potential
harmful gambling(ii)
• Continued to improve our controls to identify potential harmful gambling in TAB accounts. Our
performance against this target is going through external assurance, and will be disclosed in our
Sustainability Report
• Invest in community programs to support the
prevention and treatment of harmful gambling
• No. 1 trusted wagering brand for customer care
• Provided in principle support to participate in and contribute to a new voluntary industry funding
model for financial counselling
• No. 2 trusted wagering brand for customer care(iii)
(i) The outstanding 2% refers to team members that were unable to complete the training due to long term leave and cessation of employment/engagement.
(ii) The original target has been reworded to better articulate our approach to this metric.
(iii) Question presented to customers via TAB Brand Insights Report: If you had to choose just one provider, which would you say you trust the most for responsible gambling promotion and support?
24
Tabcorp Annual Report 2023 Responsible Marketing
and Advertising
We are committed to protecting
young children, teenagers and
vulnerable Australians, and have
taken a leadership position in
government and regulatory
engagement to advocate for
tougher restrictions on betting
advertising.
We support banning advertising
during prime-time viewing on
free-to-air television and
establishing a framework for
regulating online gambling
advertising.
We believe reform in this space
is the right thing to do – both
for the community and for the
sustainability of our industry.
Responsible marketing and
advertising practices play a crucial
role in our operations. Our
Responsible Marketing and
Advertising Position Statement,
summarised opposite, supports
our mission to deliver our
products and experiences safely
and responsibly and sets the
benchmark for sustainability
in our industry.
Our Responsible Marketing and Advertising Principles
We comply with applicable laws,
regulations, and industry
standards
We provide honest, accurate and
balanced information about our
products and services
We depict marketing and
advertising material in line with
prevailing community standards,
and respect human dignity
and integrity
Our marketing and advertising
activities are consistent with
the aims of providing informed
choice and avoiding gambling
harm
Content that could appeal
to minors, depict minors,
or someone who appears
to be under 18 years of age
in advertising or marketing
material is strictly prohibited
We promote the socially
responsible use of our betting
services as a recreational
and entertainment activity
Customer data in our marketing
and advertising campaigns
are used in accordance with
our Privacy Policy
We have systems and processes
in place to help manage our
compliance with applicable
laws, regulations, standards,
and codes
We hold ourselves accountable.
Where breaches of our principles
and applicable laws, regulations,
standards, and codes occur, we
take steps to rectify them
Further information about our customer care commitments, principles and practices, and our Responsible Marketing and Advertising Position
Statement, are available from our website at www.tabcorp.com.au/sustainability/customer-care
25
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY
SUSTAINABILITY CONTINUED
ENVIRONMENT AND
CLIMATE CHANGE
While Tabcorp’s environmental
footprint is relatively small when
compared with other Australian
companies and industries,
we’re committed to adopting
sustainable practices and
reducing our environmental
impact.
We recognise climate change
is a significant global challenge
and we’re focussed on addressing
our climate-related risks and
exploring opportunities to support
the sustainability of our business
and our industry.
Our Environment and Climate
Change Position Statement
sets out our commitments to
minimising our environmental
impacts through risk management
practices, effective governance,
enhancing transparency, and
strengthening our resilience.
These commitments are
summarised opposite.
Our key Environment and
Climate Change Position
Statement commitments
Risk
assessment
Assessing environmental
risks and opportunities,
including those linked
to climate change, and
mitigating these impacts
to minimise risk and
leverage opportunity
Governance
Effective governance and
oversight of environmental
and climate-related risks
and opportunites that may
impact Tabcorp
Reporting
Publicly report on our
environmental and climate
performance and related
risk management
We have set medium and long
term greenhouse gas (GHG)
emissions reduction targets
aligned with the Paris Agreement,
which are shown opposite.
During the year, we continued our
progress in this area, including by:
• commencing development of
our Net Zero Plan, targeted for
completion in early FY24;
• re-baselining our 2019 GHG
emissions post-Demerger;
• undertaking a climate-related
risk assessment for the post-
Demerger organisation, which
confirmed that while climate-
related risks exist, they currently
do not have the potential to
materially impact our business;
• partnering with a fleet
management company to
reduce the environmental
footprint when retiring used
vehicles;
• upgrading our facilities to
be more energy efficient;
• further investigating and
planning to transition our
fleet to hybrid vehicles; and
• exploring renewable energy
options, such as solar electricity.
45%
reduction of 2019
level operating
(Scopes 1 and 2) GHG
emissions by 2023
NET ZERO
GHG emissions
by 2050
Tabcorp’s Environment and Climate Change Position Statement is available from our website at www.tabcorp.com.au/sustainability/sustainable-future
26
Tabcorp Annual Report 2023 Task Force On Climate-Related Financial Disclosures (TCFD)
We support the recommendations of the TCFD. While Tabcorp has a relatively small environmental footprint, we acknowledge that our business may be susceptible to future changes in
climate and are committed to enhancing transparency, improving risk management, and strengthening our resilience in the face of climate-related challenges.
We have been disclosing climate-related information through the CDP since 2017 and adopted the TCFD framework in our Sustainability Report for the first time last year to align with
global best practices. This is our second year of reporting using this framework and we’ll continue to elevate the maturity of our climate-related disclosures each year.
TCFD alignment summary
TCFD recommendation
Our progress
Governance
• The Board with the support of the Board Risk, Compliance and Sustainability Committee (BRCSC) oversees
Disclose the organisation’s governance around
climate-related risks and opportunities
sustainability issues (including climate change)
• Accountability for overseeing our response to current and emerging environmental and social obligations,
including in relation to risks and opportunities associated with climate change, sits with the Chief Legal and
Risk Officer (CLRO) and the ELT. The CLRO is a member of the ELT, reporting directly to the MD & CEO and
to the BRCSC
Strategy
• Climate-related risks and opportunities applicable to Tabcorp have been identified over the short, medium, and
Disclose the actual and potential impacts of
climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial
planning where such information is material
long term through climate-related risk assessments
• These assessments informed our approach to climate change, which is captured under the Sustainable Future
pillar of our Sustainability Framework. We are currently developing a Net Zero Plan to better articulate how we’re
addressing our risks and opportunities, targeted for completion in early FY24
• We expect to use climate-related scenario analysis in the near future to better inform our strategy taking into
consideration different climate-related scenarios, including a 2°C or lower scenario
Risk management
• Risk Management Framework (RMF) in place to enable the effective identification, monitoring, management and
Disclose how the organisation identifies,
assesses, and manages climate-related risks
reporting of risks, including climate-related risks and opportunities
• Climate change is not currently considered a material risk for Tabcorp at a whole-of-Group level
Metrics and targets(i)
• Medium and long term targets for Scope 1 and 2 greenhouse gas (GHG) emissions are in place
Disclose the metrics and targets used to assess
and manage relevant climate-related risks and
opportunities where such information is material
(refer to page 26)
• We disclose Scopes 1, 2 and 3 GHG emissions in our annual Sustainability Report
• A Scope 3 target is currently under consideration
(i) Data and performance against targets will be available in our 2023 Sustainability Report.
Refer to pages 40 to 44 for more information about how we’re addressing the TCFD recommendations.
27
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY SUSTAINABILITY CONTINUED
COMMUNITY
We have a long history of
supporting the Australian
economy and the community.
In FY23, almost 65% of our
revenue was returned to
governments, racing industry and
retail partners, totalling $1.8b(i).
These contributions support
essential government-funded
community services and are a
significant source of funding
for our industry partners.
We also contributed to the
economic development and
resilience of the Australian
community through job creation,
buying from local businesses and
supporting grass roots charities
and community organisations.
We have key partnerships with a
range of charitable organisations
that are aligned with our strategic
direction. We engage with our
strategic partners to provide
financial support and share our
resources, networks, skills,
expertise and people.
During the year we partnered
with industry-linked charities
and supported a number of
programs, including:
• National Jockeys Trust
• Crowdsourcing for jockeys’
families
• Harness racing’s Team Teal
supporting women’s health
• Thoroughbreds Are Go
• Transitioning Thoroughbreds
Foundation
• Harness Racing Victoria
Total FY23 economic contributions
HERO program
• Riding for Disabled Association
of Australia
We also supported:
• Prostate Cancer Foundation
Australia
• OzHarvest
• GIVIT’s relief for flood impacted
communities
• Other charities through our
employee community
engagement program
• Red Cross blood donations
These initiatives and partnerships
demonstrate our commitment to
shape our industry and impact
our communities for the better.
$0.1b
$0.3b
$0.5b
$0.2b
$2.2b(i)
of total benefits for our
stakeholders generated
by Tabcorp businesses
in FY23
$1.1b
State and Federal
Government taxes(ii)
(Wagering taxes, GST
and income taxes
paid and payable)
Racing industry(iii)
(Payments to state
and territory racing
industry bodies)
Retail partners
(Commissions to
hotels, clubs and
TAB agents)
Employee costs
(Salaries, training
and development)
Shareholders
(Dividends paid
and payable)
(i) Total includes 100% of Victorian Racing Industry joint venture interest.
(ii) State and Federal Government taxes includes $50m payment made under the Racing Queensland settlement and industry reforms.
(iii) Racing industry includes $100m payment made under the Racing Queensland settlement and industry reforms and $37.5m paid to Racing Queensland as the final licence exclusivity payment.
ESG RATINGS
68 (out of 100)
Ranked second globally in the
Casinos and Gambling sector
4.4 (out of 5)
Ranked at the 100th percentile
in the global Travel and Leisure sector
C+, Prime
61 (out of 100)
C, Awareness
28
Tabcorp Annual Report 2023 GOVERNANCE
We’re committed to maintaining leading corporate governance arrangements and practices.
Our corporate governance framework enables us to maintain high standards of corporate behaviour, culture, accountability and transparency.
Board of Directors
Audit
Committee
Risk,
Compliance and
Sustainability
Committee
People and
Remuneration
Committee
Technology
Committee
Nomination
Committee
Standing Board Committees
Other independent
assurance
• External Auditor
•
Internal Audit
Legal and other
professional advisers
(as necessary)
MD & CEO
Executive Leadership Team
Management Committees including:
•
Disclosure Committee
• Executive Risk, Compliance
and Sustainability Committee
•
•
Inclusion and Diversity Committee
Information Security Portfolio Steering
Committee
• Modern Slavery Steering Committee
• Whistleblower Committee
Frameworks, policies, procedures and practices as approved by
the Board and the Executive Leadership Team
Five standing Board Committees
All Committee members, including Chairmen, are
independent NEDs
43% of NEDs are female – surpassing our target of 40%
female NEDs by the end of FY23
Balanced mix of short, medium and longer tenured NEDs
with average tenure of 3.8 years
Diverse set of skills and experience amongst the Directors
to support a high functioning Board and aligned to
Tabcorp’s strategic objectives
Our Directors and senior executives undergo
comprehensive probity checks prior to receiving all
required regulatory and ministerial approvals – due to its
scale and national reach, Tabcorp is subject to the most
extensive probity requirements of any wagering operator
in Australia
Further information can be found in our Corporate Governance Statement 2023, Appendix 4G, Board and Committee Charters, key policies and governance documents which are
available from the Corporate Governance section of our website at www.tabcorp.com.au/company/corporate-governance
29
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY BOARD OF DIRECTORS
Bruce Akhurst
Chairman from June 2022
Independent NED from July 2017
Adam Rytenskild
Managing Director and Chief Executive Officer
from June 2022
Raelene Murphy
Independent NED from August 2022
Brett Chenoweth
Independent NED from August 2022
Bruce Akhurst is a Director of McMillan Shakespeare
Limited (from April 2021). He is also Chairman of the
Peter MacCallum Cancer Foundation and a Council
Member of RMIT University.
Bruce was the Executive Chairman of Adstream
Holdings Pty Ltd and was a Director of Vocus Group
Limited (from September 2018 to July 2021) and
private investment company Paul Ramsay Holdings
Pty Ltd. In his executive career, Bruce was Chief
Executive Officer of Sensis Pty Ltd from 2005 to
2012 and a Director and Chairman of Foxtel. He
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.
Bruce brings to the Board leadership and extensive
experience in legal and regulatory compliance,
governance and risk management, marketing and
customer experience, media, digital innovation,
information technology, strategy, finance and capital
management.
Tabcorp Committees:
• Chairman of Nomination Committee
• Member of Audit Committee
• Member of People and Remuneration Committee
• Member of Risk, Compliance and Sustainability
Committee
• Member of Technology Committee
Qualifications:
• Bachelor of Economics (Honours)
• Bachelor of Laws
• Fellow of Australian Institute of Company
Directors (AICD)
30
Tabcorp Annual Report 2023
Adam Rytenskild 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.
He became Managing Director and Chief Executive
Officer when Tabcorp’s demerger of its former
Lotteries and Keno business was completed in
June 2022.
Adam is also a Director of the Australasian Gaming
Council.
Adam has over 20 years of experience in gambling
entertainment and leading complex, customer
focused businesses that are heavily regulated, have
multiple stakeholders, and operate in dynamic and
highly competitive digital markets.
Adam brings to the Board extensive gambling
industry experience, strategic and commercial
acumen, retailing and customer experience.
In addition to the qualifications below, Adam
has attended the Senior Executive Program at
the London Business School, and the Executive
Breakthrough Program with Egon Zehnder.
Qualifications:
• Master of Business Administration
• Member of AICD
Raelene Murphy is a Director of Elders Limited (from
January 2021), Bega Cheese Limited (from June 2015)
and Integral Diagnostics Limited (from October 2017).
Raelene was previously a Director of Clean Seas
Seafood Limited (from July 2018 to October 2020)
and Altium Limited (from September 2016 to
November 2022).
Raelene had an executive career in finance and
business turnaround, and has previously been the
CEO of The Delta Group and a Managing Director
of KordaMentha’s 333 Management practice.
Raelene brings to the Board extensive experience in
finance, accounting, capital management, strategy,
risk and compliance, organisational effectiveness
and technology.
Tabcorp Committees:
• Chairman of Audit Committee
• Member of Risk, Compliance and Sustainability
Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Business (Accounting)
• Fellow of the Institute of Chartered Accountants
Australia and New Zealand
• Graduate Member of AICD
• Member of Chief Executive Women
Brett Chenoweth is Chairman of Adairs Limited
(from November 2020), a Director of EVT Limited
(from December 2022), and holds various unlisted
company directorships including Canberra Data
Centres, One New Zealand Group Limited
(previously Vodafone New Zealand Limited),
Madman Entertainment and Surfing Australia
Limited. He was previously a Director of Janison
Education Group Limited (from July 2014 to
November 2022).
Brett was previously the CEO and Managing
Director of APN News and Media Limited, and has
held senior executive roles at The Silverfern Group,
Telecom New Zealand Limited, Ecorp Limited and
Village Roadshow Limited.
Brett brings to the Board extensive experience in
retailing, marketing and consumer experience, digital
innovation, technology and telecommunications,
entertainment, strategy, legal, risk and compliance.
Tabcorp Committees:
• Chairman of Risk, Compliance and Sustainability
Committee
• Member of Audit Committee
• Member of Technology Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Economics
• Bachelor of Laws
• Graduate Diploma in Applied Finance
and Investment
David Gallop AM
Independent NED from July 2020
Janette Kendall
Independent NED from August 2021
Justin Milne
Independent NED from August 2011
Karen Stocks
Independent NED from March 2023
David Gallop AM is Chairman of Step One
Clothing Limited (from October 2021), Venues
NSW and Alacria Pty Ltd. He is also on the Board
of Cricket NSW.
David was previously 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 with the
National Rugby League, News Corporation and law
firm Holman Webb.
David has served on numerous sports governing
bodies including the Australian Sports Commission,
Rugby League International Federation and the
Asian Football Confederation’s 2015 AFC Asian Cup
Local Organising Committee.
David 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:
• Chairman of People and Remuneration
Committee
Janette Kendall is a Director of Vicinity Centres
(from December 2017), Costa Group Holdings
Limited (from October 2016) and KM Property Funds
Limited, and is on the Board of the Melbourne
Football Club and Visit Victoria.
Janette previously served as a Director of Nine
Entertainment Co. Holdings Limited, Wellcom
Worldwide Pty Ltd, Australian VenueCo and the
Melbourne Theatre Company.
During her executive career, Janette served
in various senior management roles including
as Senior Vice President of Marketing at Galaxy
Entertainment Group in China, Executive General
Manager of Marketing at Crown Resorts, General
Manager and Divisional Manager roles at Pacific
Brands, Managing Director of emitch Limited,
and Executive Director of Clemenger BBDO.
Janette brings to the Board extensive experience
in marketing, operations and digital transformation.
She also has a depth of experience in the gambling,
retail and hospitality industries both in Australia and
overseas.
Tabcorp Committees:
• Member of Audit Committee
• Member of Risk, Compliance and Sustainability
• Member of People and Remuneration Committee
Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Laws
• Bachelor of Arts
• Graduate Member of AICD
• Member of Technology Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Business (Marketing)
• Fellow of AICD
• Member of Chief Executive Women
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.
Justin 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.
Justin 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:
• Chairman of Technology Committee
• Member of Audit Committee
• Member of Risk, Compliance and Sustainability
Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Arts
• Fellow of AICD
Karen Stocks is currently Vice President, Global
Measurement Solutions at Google Inc.
Karen was previously the founding Managing
Director of Twitter Australia, and held several
leadership roles at Google Australia, including as
Managing Director, New Products and Solutions
APAC, and at Vodafone Australia.
Karen was previously a Director of Netball Australia.
Karen is a senior technology and media executive,
with extensive experience in the technology sector,
media, data, and customer experience.
Karen brings to the Board extensive experience in
information technology, digital innovation, media and
communications, marketing and customer experience.
Tabcorp Committees:
• Member of Technology Committee
• Member of Nomination Committee
Qualifications:
• Bachelor of Financial Administration
• CPA Certificate
• Master of Business Administration
• Fellow of CPA Australia
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GOVERNANCE
EXECUTIVE LEADERSHIP TEAM
Jenni Barnett
Chief Customer Officer
Sharon Broadley
Chief People Officer
Paul Carew
Chief Operating Officer
John Fitzgerald
Chief Legal and Risk Officer
Jenni Barnett commenced as Chief Customer Officer
with Tabcorp in June 2022 following the completion
of Tabcorp’s demerger of its former Lotteries and
Keno business.
Jenni is a senior executive with over 20 years of
experience working with large organisations and in
the not-for-profit sector. Her broad experience and
expertise includes digital transformation, marketing,
and product management.
Prior to joining Tabcorp, Jenni held the role of
Executive Director, Telstra Digital, where she led the
digital transformation to meet customer needs and
deliver on Telstra’s T22 strategy. Prior to this, Jenni
worked at the Commonwealth Bank of Australia
in a range of senior product and marketing roles,
where she was one of the executives responsible for
establishing the digital team at the Commonwealth
Bank of Australia.
Sharon Broadley joined Tabcorp in October 2010
as General Manager Talent and Organisational
Development and was Tabcorp’s General Manager
Employee Experience. She commenced as Chief
People Officer of Tabcorp in June 2022 following
the completion of Tabcorp’s demerger of its former
Lotteries and Keno business.
Sharon has led the people workstreams of major
organisational change programs at Tabcorp
including for the combination with Tatts and
the Demerger of The Lottery Corporation.
Sharon has more than 20 years of experience in
organisational development, talent and performance
management, culture programs, change management,
employee engagement, leadership and executive
development. Prior to joining Tabcorp she held
senior people leadership roles including with
Fosters Group Limited and Oracle Corporation.
Jenni holds a Bachelor of Social Science, and a
Master of Business (Marketing), and is a Graduate
Member of AICD.
Sharon holds a Bachelor of Education and Training
and an Associate Diploma of Training and
Development.
Paul Carew commenced as Chief Operating Officer
in August 2022 and was previously Chief Operating
Officer – Gaming Services from February 2020.
Since joining Tabcorp in 2006, he has held various
senior management positions across the Retail
Wagering, Gaming and former Keno businesses.
In his current role, Paul leads a diverse portfolio of
operational functions covering the Wagering and
Media business and Gaming Services business.
Paul has over 25 years of experience in the gaming
and hospitality sector and has worked across all
Australian jurisdictions. He has held senior roles
in the beverage industry with Carlton and United
Breweries and was previously a licenced venue
owner and operator.
Paul holds a Bachelor of Commerce, Marketing and
Management, and has attended the University of
Nevada Executive Development Program in the USA.
John Fitzgerald commenced as Chief Legal and Risk
Officer of Tabcorp in July 2022 after the completion
of Tabcorp’s demerger of its former Lotteries
and Keno business.
John has extensive experience working as a
senior executive in roles spanning legal, risk, audit,
regulatory compliance and corporate governance.
His expertise includes leading commercial advisory
and governance functions, and managing large-
scale transactions, projects and litigation.
Prior to commencing at Tabcorp, John was General
Counsel and Company Secretary at AGL Energy
Limited where he led the legal, risk, compliance
and advisory function, most recently during that
organisation’s demerger. John also has experience
working in both government and private legal
practice and is an experienced Company Secretary.
John holds a Bachelor of Arts, a Bachelor of Laws
and a Master of Arts.
32
Tabcorp Annual Report 2023
Daniel Renshaw
Chief Financial Officer
Alan Sharvin
Chief Information Officer
Angus Tiet
Chief Strategy and Ventures Officer
Daniel Renshaw commenced as Chief Financial
Officer of Tabcorp in June 2022 following the
completion of Tabcorp’s demerger of its former
Lotteries and Keno business.
Alan Sharvin commenced as Chief Information
Officer with Tabcorp in June 2022 following the
completion of Tabcorp’s demerger of its former
Lotteries and Keno business.
Daniel previously held the roles of Executive General
Manager Finance and Commercial for the Wagering
and Media business, General Manager Finance and
Commercial for Keno and Gaming Services, and
General Manager Investor Relations at Tabcorp.
Alan is a senior technology executive with deep
experience across multi-national organisations.
His expertise includes digital strategy, omni-channel,
transformation and modern technology practices,
with extensive experience in wagering.
Daniel has over 20 years of experience in finance,
strategy, commercial, investor relations, investment
banking and equity markets. Prior to joining Tabcorp,
Daniel was Senior Director at Merrill Lynch, leading
Gaming Equity Research across Australia, New
Zealand and Asia. He was also an Equity Analyst
at Citigroup and was Group General Manager
Corporate Strategy at Tote Tasmania for three years.
Daniel holds a Bachelor of Commerce (Economics
and Finance) and is qualified as a Chartered
Accountant.
Daniel will be stepping down as Chief Financial
Officer at the end of August 2023.
Prior to joining Tabcorp, Alan worked as Head of
Digital at Reece Group, where he led the digital
customer product and technology functions. Alan
previously worked at Tabcorp from 2018 to 2019
where he led the Technology function for the
Wagering and Media business. He has also held
senior roles at Amazon and Sportsbet.
Alan holds a Bachelor of Science, Computer Science
and Mathematics.
Angus Tiet commenced as Chief Strategy and
Ventures Officer with Tabcorp in June 2022 following
the completion of Tabcorp’s demerger of its former
Lotteries and Keno business.
Angus has extensive experience working as a
senior executive in digital and growth organisations,
including within the gaming sector. His expertise
spans strategy, mergers and acquisitions, finance
and business operations. He has held numerous
leadership roles in businesses across the USA,
Europe and Asia Pacific.
Prior to joining Tabcorp, Angus held the role
of Senior Vice President Strategy and Business
Development at Aristocrat Digital (now Pixel United).
Angus has also previously held the role of Chief
Financial Officer at Aristocrat Digital, and Chief of
Staff for the broader Aristocrat Group, both based
in the USA.
Angus holds a Bachelor of Laws and Bachelor
of Business, and an Executive Master of Business
Administration. He is also a member of Chartered
Accountants Australia and New Zealand.
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33
GOVERNANCE
RISK MANAGEMENT AND MATERIAL BUSINESS RISKS
Tabcorp adopts a structured and proactive approach to understanding, identifying and managing risk aligned to
the Group’s strategies and operations. The Group’s Risk Management Framework (summarised opposite) enables
the effective identification, monitoring, management, reporting and oversight of risks throughout the Group and
is based on concepts and principles identified in the International Standard ISO 31000:2018 Risk Management
Guidelines. This framework supports a strong culture of proactive risk management, helps protect our reputation
and supports long term value creation for our stakeholders.
The Chief Legal and Risk Officer and Executive Leadership Team, together with the business units, actively manage
the Risk Management Framework, with oversight from the Board and Risk, Compliance and Sustainability Committee.
The Risk Management Framework is regularly reviewed having regard to the Group’s evolving needs and changes
in the internal and external environment, and enhanced where necessary to further mature the Group’s approach
to risk management.
For further information regarding the Group’s approach to risk and compliance management and governance,
refer to Tabcorp’s 2023 Corporate Governance Statement.
Outlined below are risks that could potentially have a material impact at a whole-of-Group level on the future
operating or financial performance or prospects of the Group, together with existing mitigations.
Risk Management Framework
Business Strategy
Risk
Governance
Material Risks
Key Risk Policies
Risk Management Lifecycle and Tools
Enterprise Risk Management (ERM) System
Risk
Compliance
with legal and
regulatory
requirements
and conduct risk
Risk description and potential consequences
The Group’s businesses are subject to complex legislative, regulatory,
licence and other requirements (including, for example, relevant
responsible gambling, marketing and advertising obligations and
Anti-Money Laundering and Counter-Terrorism Financing and other
financial crime laws).
Oversight:
Risk, Compliance
and Sustainability
Committee
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.
Such an adverse impact could arise as a result of the suspension or loss
of applicable material licences, renewal of licences on less favourable
terms (including any exclusivity arrangements), 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 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 risks of litigation or disputes.
34
How we manage and mitigate the risk
• The Group has risk management and compliance frameworks, risk appetite positions
on material matters, and supporting policies, procedures, tools, training and other
controls.
• Team members are provided with training and support to enable them to effectively
manage their risk and compliance obligations.
• The Group regularly engages with regulators and has a robust environment for
testing and approving products and systems before deployment.
• Systems, processes and equipment are regularly monitored and tested, including
testing of key controls, by a controls assurance team within the Legal and Risk Office.
• Internal Audit periodically reviews and provides independent assurance regarding the
adequacy of controls and processes for managing risk and compliance obligations.
• The Group has processes in place to ensure relevant third parties are appropriately
trained on requirements, and that compliance with such requirements are monitored.
Tabcorp Annual Report 2023 Risk
Changes in laws
and the regulatory
environment
Risk 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.
How we manage and mitigate the risk
• The Group has dedicated Legal, Risk, Regulatory, Government and Industry Affairs
teams with responsibility for monitoring and advising on legislative and regulatory
developments, to allow the Group to adapt and take appropriate action.
Oversight:
Board and Risk,
Compliance and
Sustainability
Committee
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.
• The Group proactively engages with relevant 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.
Changes in fees
and taxes
Oversight:
Board
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.
• 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 endeavours to maintain 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.
In addition, a material increase in the taxes and levies payable by
the Group in respect of its businesses may reduce margins.
• Where possible, the Group seeks to enter into contracts with racing and sports
controlling bodies that provide long term certainty of commercial arrangements.
Increases or changes to fees and taxes which the Group is subject to
may have an adverse impact on the financial performance of the Group.
35
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY RISK MANAGEMENT AND MATERIAL BUSINESS RISKS CONTINUED
Risk
Strategic
Oversight:
Board
Risk description and potential consequences
The Group is subject to a range of risks that could impact Tabcorp’s
growth strategy, including:
• Competition and disruption from other suppliers of gambling and
media products and services.
• Changes in consumer discretionary spending and preferences.
• Failure to renew, or renewal on less favourable terms (including any
exclusivity arrangements), any material licence.
• Reliance on racing industries, sporting bodies and other stakeholders
across Australia and internationally to provide a program of racing
and sporting events.
• Failure to renew, or renewal on less favourable terms, rights to
broadcast or distribute content for racing and sporting events.
• Disruption or decline of licensed venues, agencies and retail network.
• Ineffective strategy execution.
These risks may impact the execution of Tabcorp’s growth strategy, or
result in a loss of market share or revenue, or missed opportunities for
growth, and have an adverse impact on the Group’s operational and
financial performance.
How we manage and mitigate the risk
• The Board and Executive Leadership Team has a broad set of skills and experience
across customer, technology, innovation, media and stakeholder engagement aligned
with the Group’s strategy.
• The Group operates a portfolio of businesses with operations spanning multiple
jurisdictions and market segments, which reduces the reliance on any single revenue
stream 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 maintains long term licences and, where the terms are appropriate, seeks
new licences and to extend existing licences where possible.
• The Group engages closely with holders of broadcast rights and distribution partners
and actively seeks to extend those arrangements in advance of their expiry.
• The Group strives for continual improvement in its product and service offering to
attract and retain customers, including customer service and relationship management,
and product and digital innovation across a multi-channel network.
• The Group’s strategic marketing and consumer insights teams support the businesses
to understand and respond to changing consumer trends.
• 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.
36
Tabcorp Annual Report 2023 Risk
Financial and
balance sheet
risks
Risk description and potential consequences
The Group is exposed to various financial and trading risks arising from
its operations, including risks associated with a failure to appropriately
set odds in respect of wagering so as to maintain sufficient capital.
How we manage and mitigate the risk
• The Group’s finance facilities and interest rate, credit, liquidity and currency risks
are managed by the Group’s Treasury department in line with policies approved
by the Board.
Oversight:
Audit Committee
The Group is also 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,
each of which could impact its financing activities. In addition, changes
in investor, financier and other stakeholder expectations in relation to
ESG practices and disclosures may adversely impact the Group’s ability
to access capital or other financing in future, or to do so on reasonable
financial terms, which could in turn adversely affect the financial position
and performance of the Group.
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.
• The Group maintains an active capital management program with a range of funding
sources with short and long dated maturities.
• Policies and processes are in place to manage financial and trading risks arising
from the Group’s operations.
• The Group has adopted a Sustainability Framework, with various activities and
programs in place aligned with the Group’s material ESG topics.
• Refer to the sections titled “Capital management” on page 13 and “Capital and risk
management” on pages 89 to 96.
Cybersecurity,
Data Protection
and Privacy
Oversight:
Risk, Compliance
and Sustainability
Committee and
Technology
Committee
The Group’s businesses could be subject to malicious or criminal
attacks on technology systems, system faults or human error resulting
in the potential loss or unauthorised access to or use or disclosure of
confidential customer, employee, regulated and/or commercially
sensitive data.
A significant cybersecurity incident, system failure or data breach could:
• The Group has policies, procedures, practices, frameworks, systems and resources
in place to manage cybersecurity and data privacy.
• Dedicated Information Security and Security Operations teams are tasked with
protecting key information assets, detecting any attempted attacks, and responding
appropriately. Regular testing, simulations, reviews and assessments with follow up
actions assist ongoing defensive strategies and response readiness.
• Impact upon the Group’s technology systems and equipment.
• Prevent operation of revenue generating functions.
• Result in the loss or exposure of information assets.
• The Group’s Information Security Management System is compliant and certified to
ISO/IEC 27001:2013. The Group has also adopted the National Institute of Standards
and Technology (NIST) Cybersecurity Framework (CSF) as an international best practice
cybersecurity maturity, benchmarking and uplift prioritisation framework.
• Result in the loss or misappropriation of customer, employee
• The Group maintains third party support arrangements for cybersecurity and cyber
or regulatory data.
incident response and recovery and holds a cyber insurance policy.
Such an incident may potentially adversely impact the reputation,
operations or financial performance of the Group and expose the Group
to significant regulatory enforcement actions, penalties, litigation and
other disputes.
• The Group has policies and procedures in place to ensure good privacy and information
management practices, including a Privacy Policy. Tabcorp has a privacy team including
a Privacy Officer.
• The Group has a Data Breach Response Plan that sets out procedures for employees
to follow in the event of an actual or suspected data breach.
37
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY RISK MANAGEMENT AND MATERIAL BUSINESS RISKS CONTINUED
Risk
Technology
– Resilience of
systems and
obsolescence
Oversight:
Technology
Committee and
Risk, Compliance
and Sustainability
Committee
Reliance on
infrastructure
and third party
commercial
arrangements
Oversight:
Risk, Compliance
and Sustainability
Committee
Responsible
Gambling and
Customer Care
Oversight:
Risk, Compliance
and Sustainability
Committee
Risk description and potential consequences
The Group’s businesses rely on the successful operation of technology
infrastructure, which could be adversely affected by various factors
including obsolescence, complexity of core environments, ability to
recover from a significant hardware, software, digital or data centre
failure, and managing risks associated with outsourcing key processes
and activities to third parties.
The Group’s businesses also rely 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 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.
How we manage and mitigate the risk
• The Group has Business Continuity Management Policies and Frameworks in place.
• Business Impact Assessments have been completed for all core operational business
units to identify their critical business processes.
• The Group has disaster recovery (DR) plans and business continuity plans in place
to manage major technology failures.
• The Group undertakes regular DR testing of core systems.
• Tabcorp has in place a multi-year enterprise resilience program, focused on the uplift
of technology resilience.
• Tabcorp has in place a multi-year Technology Plan focused on modernising legacy
systems.
• The Group’s procurement function maintains commercial relationships across a diverse
supplier base with clear contracts, terms of engagement, agreed service levels, regular
reporting and monitoring.
• 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.
Tabcorp is committed to putting its customers first and delivering
gambling experiences safely and responsibly.
A failure by Tabcorp to adequately protect customers and deliver
experiences safely and responsibly and in accordance with relevant
responsible gambling regulations and codes, 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 gambling licences, renewal of licences on less favourable
terms (including any exclusivity arrangements), increased supervision
and oversight by regulators, civil or criminal penalties, brand or
reputational damage, and the inability to offer products or obtain
future licences or business opportunities.
• The Group operates under regulator prescribed Codes of Practice or company-initiated
Codes of Conduct with respect to responsible gambling. Further, the Group’s Customer
Care Principles sets out our approach to customer care and the responsible provision
of our products.
• All team members, including staff working at agencies and retail venues, are trained
annually on Responsible Gambling with additional training provided to all customer
facing teams. This training includes identifying signs of potential gambling harm.
• A range of responsible gambling tools are offered to customers to support them to
gamble safely including deposit limits, take a break, activity statements, opt out of
marketing and self-exclusion. Information about these tools can be found on the Group’s
dedicated responsible gambling website: https://responsiblegambling.tab.com.au/help.
• The Group actively monitors customer deposit and betting behaviours using a variety
of data analytics tools, including AI, to identify customers displaying potential indicators
of gambling harm. A range of responsible gambling interventions are then provided
to support customers.
• The Group has a dedicated Responsible Gambling team accountable for reviewing
potential at-risk customer accounts and proactively communicating with them.
38
Tabcorp Annual Report 2023 Risk
Environmental,
Social and
Governance (ESG)
Oversight:
Risk, Compliance
and Sustainability
Committee
Risk description and potential consequences
The Group is subject not only to regulatory licences but also a social
licence to operate. This social licence to operate is impacted by:
• How our customers and the broader community perceive Tabcorp on
a range of relevant ESG issues including gambling, racing and sport,
delivering our products responsibly, modern slavery, animal welfare
and environmental matters.
• Societal attitudes and community expectations.
Changes in societal attitudes and/or adverse media attention in relation
to gambling or other ESG issues relevant to Tabcorp, or a failure by
Tabcorp to deliver its products responsibly or otherwise act in
accordance with regulator and/or community expectations, could lead
to negative legal, regulatory and/or government policy changes, which
could have an adverse effect on the performance of the Group, the
delivery of its strategies, its ability to attract and retain talent and/or
reputational damage for the Group.
How we manage and mitigate the risk
• The Group has adopted a Sustainability Framework. A key focus of this Framework
is our commitment to delivering customer-centric responsible gambling initiatives
designed to minimise harm and set the benchmark for sustainability in our industry.
• The Group has adopted an Environment and Climate Change Position Statement
outlining our commitment to minimising our impacts on the environment. The Group
has adopted greenhouse gas emission reduction targets and is developing a Net Zero
Plan to support the delivery of these targets over time.
• Remuneration outcomes for the MD & CEO, executives and senior managers are linked
to the achievement of specific sustainability measures such as risk and compliance
management, responsible gambling, community impacts and reputation management.
• Refer to our website www.tabcorp.com.au/sustainability for further information about
how we manage our ESG risks.
People and
Culture
Oversight:
People and
Remuneration
Committee
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 Board, People and Remuneration Committee, Chief People Officer and various
management committees have responsibility for overseeing strategies and programs
related to people, health, safety and wellbeing.
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.
A failure by the Group to appropriately manage team members’ or
contractors’ physical and/or psychological health and wellbeing, or
failure to comply with relevant workplace health and safety laws and
regulations and other relevant workplace laws, could expose the Group
(and individual employees and Directors) to civil, criminal and/or
regulatory action with associated financial and reputational
consequences.
• 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.
• Tabcorp is committed to providing a safe working environment and actively prioritises
the health, safety and wellbeing of team members and contractors. The Group has
implemented a health, safety and wellbeing framework which includes policies,
procedures, reporting, training and education.
• 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.
39
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY TCFD DISCLOSURES
Governance
The Board Risk, Compliance and
Sustainability Committee
(BRCSC) is responsible for
overseeing the delivery of our
Sustainability Framework, which
includes climate-related goals
and targets for climate resilience,
mitigation and adaptation,
together with our RMF. Our
sustainability performance
is reported quarterly to this
Committee, and annually in our
Annual Report and Sustainability
Report.
The BRCSC reviews, reports to,
and where appropriate, makes
recommendations to the Board
in relation to:
• our risk appetite;
• the adequacy and effectiveness
of our RMF and supporting
policies and processes to
identify and manage our risks;
• the adequacy and effectiveness
of our compliance management
framework and supporting
policies and processes to
comply with our legal and
regulatory obligations; and
• the adequacy and effectiveness
of our Sustainability Framework
and supporting policies,
processes and programs to
address ESG issues that have
the potential to materially affect
our business, strategies and
reputation.
Our CLRO and ELT, together
with the business units, actively
manage the Sustainability
Framework and the RMF, with
oversight from the BRCSC. Our
CLRO leads the Group’s risk,
legal, regulatory and governance
(including sustainability) functions,
providing synergies and
collaboration across each
of these functions.
Our Governance and Sustainability
team is responsible for developing
the Sustainability Framework,
supporting and overseeing the
preparation of climate resilience,
mitigation and adaptation plans,
tracking progress, and coordinating
the preparation of climate-related
disclosures.
The assessment confirmed that
while climate-related risks exist,
they are unlikely to be considered
material at a whole-of-Group
level. This means that none of the
risks identified in this assessment
currently have the potential to
materially impact our business
from a strategic and financial
perspective.
Climate change risks and
mitigating actions identified
are summarised in the table
on the following page.
Our Group Procurement team
leads environmental initiatives
working with business and
functional units to achieve our
climate-related goals and targets.
Our Board and our People
and Remuneration Committee
oversee executive performance in
relation to specific sustainability
measures, such as risk and
compliance management,
and achievement of goals and
targets under our Sustainability
Framework.
The Board has collective oversight
and responsibility for both our
RMF and Sustainability
Framework.
Strategy
Our approach to climate change
is captured under the Sustainable
Future pillar of our Sustainability
Framework. Climate-related risks
are reviewed and identified in
accordance with our RMF and are
embedded into our Group-wide
risk management process.
This year, we continued to work
on improving our understanding
of how the effects of climate
change may impact our business.
We undertook a specific climate-
related risk assessment which
involved:
• discussion with management
to identify direct and indirect
climate risk exposures,
vulnerabilities, impacts and
mitigation actions in place;
• obtaining and analysing
available historical internal and
external data points to support
assessment of risk impacts; and
• evaluation of the size of
climate-related risks.
Refer to page 27 for our alignment and progress against the TCFD recommendations.
40
Tabcorp Annual Report 2023 Transition Risks – risks that arise as a result of the transition to a low carbon economy
Risks
Mitigating actions
• Inability to meet our ESG commitments resulting in reputation risk
• Sustainability Framework in place, with climate change addressed in our Sustainable
• Introduction of carbon tax schemes and other climate regulations resulting
Future pillar
in financial impacts
• Increase in insurance premiums due to reassessment of Tabcorp’s climate change
risks resulting in financial impacts
• Changes in consumer preferences resulting in financial impacts
• Inability to attract talent due to climate related matters
• Changes in shareholder preferences on climate related matters
• Inability to obtain required external funding due to climate related matters
(e.g. increased focus from lenders on ESG)
• Remuneration outcomes for the MD & CEO, executives and senior managers are linked
to the achievement of specific sustainability measures such as risk and compliance
management, reputation management, and achievement of targets under our
Sustainability Framework
• The Board Risk, Compliance and Sustainability Committee has responsibility for
overseeing the Sustainability Framework and ESG issues relevant to the Group, including
climate change risks and opportunities
• We have adopted an Environment and Climate Change Position Statement outlining our
commitment to minimising our impacts on the environment, reducing our GHG emissions
profile and identifying and managing climate-related risks and opportunities across our
business
• We regularly review our omni-channel strategies and seek to optimise our investment
in the retail network to align with changing market and consumer trends
Physical Risks – risks that arise due to changes in climate patterns
Risks
Mitigating actions
• Damage to Tabcorp assets due to weather events (e.g. properties, equipment,
• Business continuity plans and disaster recovery plans in place to recover business
and retail agencies)
operations in the event of a major climate-related disruption
• Financial loss due to weather events disrupting Tabcorp operations (e.g. delivery
• Insurance program in place to limit impact of damage due to weather events
of racing vision on Sky, call centres, betting machines, etc.)
• Financial modelling and sensitivity analysis undertaken to monitor and respond to the
• Loss of turnover due to weather events disrupting third parties (e.g. racing industry
impacts of racing and sport product supply disruptions
and sports)
• Diverse portfolio of businesses through a multi-channel strategy across retail and digital
• Impact on Tabcorp team members’ health, safety and wellbeing as a result
networks, which reduces the reliance on any single channel or locations
of a weather event
• Races being abandoned due to hot weather policies. This is an emerging risk and
could apply to other sports
• Health and Safety Management System in place
41
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY TCFD DISCLOSURES CONTINUED
Climate risks also present a number of opportunities and associated benefits including:
Opportunities
Benefits
• Adhere to high standards of corporate governance
• Continuously improve climate-related disclosures
• Reduced operating costs through efficiency gains and cost reductions
• Reduced exposure to future fossil fuel price increases
• Use more efficient modes of transport (e.g. hybrid, EV in our vehicle fleet)
• Reduced exposure to GHG emissions and therefore less sensitivity to changes in cost
• Reduce resource usage/consumption (e.g. electricity, water, paper, etc.)
of carbon
• Reuse and recycle
• Improve energy-efficiency in our buildings
• Reduce business travel
• Use lower emission sources of energy (e.g. renewables)
• Switch to suppliers that offer low carbon alternatives
• Diversify portfolio, business activities and distribution channels
• Returns on investment in low emission technology
• Benefits to workforce management and planning (e.g. improved health and safety, team
member satisfaction) resulting in lower costs
• Improved ESG ratings and brand perception
• Increased market valuation through resilience planning (e.g. infrastructure, buildings)
We recognise that there is
significant global data to conclude
that current climate trends and
event volatility will increase over
time. It is also anticipated that
there will be further focus and
scrutiny on companies’ response
to climate change, in particular
investors, underwriters, and
customers. We’ll continue to refine
the assessment of our medium
and long term exposure to
climate-related risks and
opportunities, in line with
the TCFD recommendations,
each year.
Despite having a relatively small
environmental footprint when
compared with other Australian
companies and industries, we
recognise we have an impact on
the environment, directly through
our operations, and indirectly
through our value chain. Most of
our direct GHG emissions come
from energy use in our premises
and fuel use in our vehicle fleet.
During FY23, we continued
to reduce our GHG emissions
by using less electricity in our
properties, using energy-efficient
technologies, recycling or
donating office equipment,
transitioning to hybrid vehicles in
our fleet, reducing the volume of
paper we use, and encouraging
team members to minimise their
impacts on the environment.
We also worked with an external
advisory consultancy to help
us develop our Net Zero Plan
(targeted for completion in early
FY24). During this process,
we listed and prioritised the
opportunities we should focus on
to accelerate decarbonization and
achieve our targets. As energy-
efficiency presents the biggest
opportunity for us, we started
working with a third-party
company to perform energy-
efficiency audits in selected sites.
The audits will help us identify key
opportunities and quantify the
investment required for budgeting
purposes. Details of our Net Zero
Plan will be made available in FY24.
We’ll continue to assess climate-
related risks and opportunities
and elevate the scope of future
assessments to improve our
business resilience. We anticipate
the use of climate-related
scenarios, including a
2°C or lower scenario, as part
of this process.
42
Tabcorp Annual Report 2023 Risk management
Climate-related risks are reviewed
and identified in accordance with
our RMF and our Group-wide risk
management process.
The RMF enables the effective
identification, evaluation,
management, monitoring,
reporting and oversight of risks
throughout the Group and is
based on concepts and principles
identified in the International
Standard ISO 31000:2018 Risk
Management Guidelines. This
framework supports a strong
culture of proactive risk
management, fosters a risk
aware culture, helps protect our
reputation and supports long term
value creation for our stakeholders.
The CLRO and ELT, together
with the business units, actively
manage the RMF, with oversight
from the Board and the BRCSC.
The RMF is reviewed at least
annually having regard to our
evolving needs and changes
in the external landscape. Where
necessary, it’s enhanced to further
mature our approach to risk
management.
For further information regarding
our approach to risk and
compliance management, refer to
our 2023 Corporate Governance
Statement. Material business risks
for the Group and key mitigations
are disclosed on pages 34 to 39.
Following the Demerger last year,
we have worked with an external
consultancy to re-establish our
2019 GHG emissions baseline, to
remove those emissions related to
our discontinued businesses. This
work will enable us to report our
progress towards achieving our
GHG emissions reduction targets
post-Demerger. While undertaking
this process, we have improved
our data gathering processes,
expanded our data coverage,
adapted our operational control
methodology, and enhanced
our disclosures.
Emissions data and progress
against our targets will
be available in our 2023
Sustainability Report.
We have an environmental
reporting framework for
measuring and managing our
environmental footprint and
impacts. This framework was
developed with reference to
the Greenhouse Gas Protocol
Corporate Accounting and
Reporting Standards, the
Greenhouse Gas Protocol Scope
3 Standards, the Australian
Government National Carbon
Offset Standard and the
International Organisation for
Standardisation (ISO) 14001 –
Environmental Management
Systems.
We have adopted the “operational
control” approach which assigns
environmental reporting
accountability to the organisation
that has the greatest authority
to introduce and implement
operational and environmental
processes and policies.
Metrics and targets
We’ve set medium and long term
emission reduction targets aligned
with the Paris Agreement goals to
keep global average temperatures
to well below 2°C above pre-
industrial levels. We will also
pursue efforts to limit the
temperature increase to 1.5°C
above pre-industrial levels.
Our targets are:
45%
reduction of 2019
level operating
(Scopes 1 and 2) GHG
emissions by 2030
NET ZERO
GHG emissions
by 2050
43
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY
TCFD DISCLOSURES CONTINUED
Scope 1 emissions
Scope 2 emissions
Scope 3 emissions
Our main sources of Scope 1
(direct) emissions include
emissions from transport and
stationary fuel. We operate a fleet
of vehicles used by our venue
support and field services teams
when visiting sites across
Australia, including those located
in regional areas. We also use fuel
in some of our offices and media
transmitter sites to power diesel
generators.
During FY23, we partnered with
a fleet company that adopts an
improved sustainable model that
reduces the vehicle disposal
process footprint. By using an
online model, our partners can
remove any trucking of vehicles
to auction houses, leading to
reduced disposal costs and
GHG emissions.
We also continued our transition
to hybrid vehicles, with planning
underway to completely transition
to hybrid, electric or hydrogen
powered vehicles in the coming
years, in line with projected
improvements in technology and
supporting infrastructure.
Scope 2 (indirect) emissions
are those associated with our
electricity use and make up
the bulk of our combined
Scope 1 and 2 emissions.
We use electricity sourced from
the grid to power our offices,
warehouses, and other premises
across Australia, such as TAB
agencies, electronic gaming
machines (EGMs) owned and
broadcasting transmission towers.
In FY23, we continued to increase
our resource efficiency and reduce
GHG emissions in areas over
which we have control and
influence. We completed energy-
efficiency upgrades (lighting and
equipment) and optimised air
conditioning usage in selected
sites across Australia. We also
commenced planning for
renewable energy options
(i.e. solar PV) for a number
of key locations. We expect to
have at least one site powered
by solar by the end of FY24.
Scope 3 emissions (indirect) associated with our value chain account for most of our total GHG emissions
(approximately 86%). Our sources of Scope 3 emissions are categorised in accordance with the GHG Protocol
and are listed below:
Category
Sources
1.
3.
4.
Purchased goods
and services
Fuel and energy-related
activities (not included
in Scope 1 or Scope 2)
Data centre services, paper, other goods and services
related to procurement spend (i.e. communications/
media and consulting services)
Upstream transport/losses of fuel and electricity
Upstream transportation
and distribution
Transportation and distribution of Tabcorp-purchased
products from their tier 1 suppliers
5. Waste generated in operations Waste generated across offices, warehouses, etc
6.
Business travel
Flights, taxis and hotel stays
7.
Employee commuting
8.
Upstream leased assets
Team members commute to and from our offices,
warehouses
Base building services. Includes HVAC, lifts, lobby
lighting – electricity and natural gas
13. Downstream leased assets
Leased EGMs
14.
Franchises
Emissions associated with the operation of retail
agencies that Tabcorp can influence
Note: Categories 2, 9-12 and 15 are not relevant to Tabcorp.
Reducing Scope 3 emissions is challenging, as we rely on our suppliers for relevant information. There may
be gaps in data, issues with data quality and our ability to influence suppliers’ operational and commercial
practices. These are not challenges we can solve alone, and we recognise we will need to work together with
our partners to reduce Scope 3 emissions.
We’re currently working with an external consultancy to help us develop options for Scope 3 emissions targets,
to align with a science-based target. We’re also working on a Climate Supplier Carbon Framework to enhance
our procurement process for goods and services – our major source of Scope 3 emissions.
44
Tabcorp Annual Report 2023
DIRECTORS’ REPORT
The Directors of Tabcorp Holdings Limited (Tabcorp or 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 2023 (FY23).
1. PRINCIPAL ACTIVITIES
The principal activities of the Group during FY23 comprised the provision of gambling, entertainment and integrity services.
The demerger of Tabcorp’s Lotteries and Keno business was implemented on 1 June 2022 and resulted in Tabcorp retaining its Wagering and Media business and Gaming Services
business (Demerger).
Other than in respect of the Demerger, the Group’s principal activities during FY23 remained unchanged from the previous financial year.
2. OPERATING AND FINANCIAL REVIEW
The FY23 results of the Group comprise the continuing operations from the Wagering and Media business and the Gaming Services business. The activities and financial performance
of the Group and each of the continuing operating segments for FY23 are set out on pages 1 to 19 and below.
2.1 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, ACT and Northern
Territory.
• Wagering channels include retail, internet, mobile devices and phone.
• Trackside, a computer simulated racing product, operates in NSW, Victoria and ACT, and is licensed in other Australian and overseas jurisdictions.
• The Victorian wagering business operates as a 50:50 unincorporated joint venture with the Victorian racing industry.
• International wagering and pooling is conducted through Premier Gateway International (PGI) on the Isle of Man, and Sky Racing World, based in the USA, also facilitates associated
tote pools.
Media operations:
• 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.
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Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY DIRECTORS’ REPORT CONTINUED
• 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 ACT, the RadioTAB network operates in Queensland, South Australia, Tasmania and Northern Territory, 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 through
the Sky Racing World vision distribution hub in the USA.
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.
• 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.
• Isle of Man Totalisator Licence held by PGI expires in October 2023, with renewal capability every five years.
• North Dakota (US) Totalisator Licence held by Sky Racing World expires in December 2023, with annual renewal capability.
(i) Ordered by population of states/territories.
2.2 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 EGM monitoring and related integrity services across NSW, Queensland, Northern Territory and Tasmania.
• MAX Venue Services comprises MAX Performance Solutions, MAX Integrated Systems and MAX Technical Services, and provides a mix of products, technology, financing, support,
maintenance and other gaming services to venues nationwide.
46
Tabcorp Annual Report 2023 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.
• Tasmanian Monitoring Operator Licence commenced 1 July 2023 and expires in June 2043.
• Northern Territory Monitoring Provider’s Licence expires in June 2026, 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 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.
3. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
3.1 Dabble Investment
In October 2022, the Group acquired a 20% equity interest in socialised digital wagering platform Dabble Sports Pty Ltd (Dabble).
3.2 USPP Note Placement
During FY23, the Group successfully completed a US$289.0m issuance of long term debt to investors in the US Private Placement market (Notes). The Notes totalled A$425m after
swapping into Australian dollars and the proceeds from the Notes are to be used for general corporate purposes, the repayment of existing indebtedness and to fund growth options
consistent with the Group’s strategy since Demerger.
3.3 Settlement of Racing Queensland Litigation
In December 2022, Tabcorp and Racing Queensland settled legal proceedings brought by Racing Queensland against Tabcorp in relation to disputes concerning the calculation of
fees payable by Tabcorp following the introduction of point of consumption tax in Queensland in 2018. The settlement became effective upon the passing of legislation in Queensland
implementing reforms to the wagering taxation and racing industry funding model in Queensland. As part of the settlement, Tabcorp paid $100m (plus GST) to Racing Queensland
and $50m (no GST) to the Queensland Government.
3.4 Sale of eBet
On 1 February 2023, the Group completed the sale of the eBet business to Venue Digital Technology Pty Ltd for a gain on sale of $34.2m.
Other than the matters 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 2022.
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FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY DIRECTORS’ REPORT CONTINUED
4. SIGNIFICANT EVENTS AFTER THE END OF THE FINANCIAL YEAR
On 24 August 2023, the Group announced the sale of the Tabcorp Gaming Solutions business (trading as MAX Performance Solutions) for $21.3m in cash, subject to working capital, net
debt and other minor adjustments. The sale is targeted for completion prior to December 2023, subject to necessary regulatory approvals being obtained.
On 11 August 2023, the Group announced it had extended a digital vision supply agreement with Sportsbet by a further 10 years until 31 July 2036.
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 Group’s operations, 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 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 strategies and priorities, which are discussed on pages 4 to 9. The priorities
of the Group’s continuing businesses are set out on pages 14 to 19.
6. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Board participates in formal strategic review and planning processes 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 for the Group’s businesses
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 on pages 34 to 39.
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.
7. 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 30 and 31.
8. 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.
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Tabcorp Annual Report 2023 9. BOARD AND COMMITTEE MEETING ATTENDANCE
The Board meets as often as is required and during FY23 there was a total of 24 Board meetings, comprising 11 scheduled meetings and 13 additional out-of-cycle meetings convened for
special purposes to consider a broad range of matters. The attendance of the Directors at scheduled meetings of the Board and standing Board Committees during the year in review were:
Board
Scheduled
meetings
Name
Bruce Akhurst(i)
Adam Rytenskild(ii)
Brett Chenoweth(iii)
David Gallop
Janette Kendall
Justin Milne
Raelene Murphy(iii)
Karen Stocks(iv)
Additional out-of-cycle Board meetings
Total Board meetings
A
11
11
11
11
11
11
11
9
B
11
11
11
11
11
11
11
11
13
24
Audit
Risk, Compliance and
Sustainability
People and Remuneration
Technology
Nomination
Committees
A
6
4
1
-
6
6
6
-
B
6
6
1
-
6
6
6
-
A
4
3
4
4
-
4
3
-
B
4
4
4
4
-
4
4
-
A
4
4
-
4
4
-
-
-
B
4
4
-
4
4
-
-
-
A
4
4
3
-
4
4
-
3
B
4
4
4
-
4
4
-
4
A
2
1
2
2
2
2
2
1
B
2
2
2
2
2
2
2
2
A – Number of meetings attended
B – Maximum number of possible meetings available for attendance
(i) Also attended meetings of the Victorian Joint Venture Management Committee as Chairman of this Committee.
(ii) The MD & CEO attends Committee meetings, but he is not a member of any Committee. Only Non-Executive Directors are members of Board Committees.
(iii) Commenced as a Non-Executive Director on 4 August 2022 following the receipt of all necessary regulatory and ministerial approvals (previously was a Board Observer from 1 June 2022).
(iv) Commenced as a Non-Executive Director on 22 March 2023 following the receipt of all necessary regulatory and ministerial approvals (previously was a Board Observer from 1 June 2022).
In addition to the meetings above, Directors also participated in Board Sub-Committee meetings established for special purposes and management briefings on developments and topics
of special interest. 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.
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.
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FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY DIRECTORS’ REPORT CONTINUED
11. COMPANY SECRETARY
Chris Murphy commenced as Acting Company Secretary on 23 March 2018 and following receipt of the necessary regulatory and ministerial approvals was formally appointed as
Company Secretary on 6 February 2019. 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.
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 FY23, no environmental breaches have been notified to the Group by any government agency.
13. POLITICAL CONTRIBUTIONS 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.
From time to time Tabcorp holds memberships with 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 contribution and is sometimes required to be publicly disclosed.
Tabcorp takes a strict principles-based approach when making contributions to political parties in accordance with our Political Contributions Policy. In particular, Tabcorp does not make
any ‘cash only donations’ to any political party or affiliate. The Board has oversight of this policy and approves Tabcorp’s political expenditure program and budget each year.
In the interest of transparency, Tabcorp discloses all political contributions made under our political expenditure program to the Australian Electoral Commission (AEC) and other
bodies, irrespective of whether such contributions are classified by law as a ‘political donation’ or are required to be disclosed. In FY23, Tabcorp’s political contributions totalled $161,150
(FY22: $216,160). These contributions were to meet the cost of memberships of 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 Tabcorp’s Political Contributions
Policy and a link to Tabcorp’s most recent Annual Return to the AEC.
14. ROUNDING OF AMOUNTS
Dollar amounts in the Financial Report, Directors’ Report and Remuneration Report have been rounded to the 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 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.
During the year, a tender process for the provision of external audit services for the Company and Group was conducted, overseen by the Audit Committee Chairman. Following a balanced
assessment of various evaluation criteria, the Board determined to retain Ernst & Young as the external auditor to the Company and Group.
50
Tabcorp Annual Report 2023 16. NON-AUDIT SERVICES
Ernst & Young, the external auditor to the Company and the Group, provided non-statutory
audit services to the Company during FY23. 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
$304,900 in relation to the provision of non-statutory audit services and $363,000
in relation to the provision of non-audit services to the Company in respect of FY23.
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 FY23. This auditor’s
independence declaration forms part of this Directors’ Report.
18. REMUNERATION REPORT
The Remuneration Report for FY23 forms part of this Directors’ Report, and can be found
on pages 52 to 75.
This Directors’ Report has been signed in accordance with a resolution of Directors.
Bruce Akhurst
Chairman
Melbourne
24 August 2023
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FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY REMUNERATION REPORT (AUDITED)
Contents
1.
LETTER FROM THE PEOPLE AND REMUNERATION COMMITTEE CHAIRMAN
2. KEY MANAGEMENT PERSONNEL
3. REMUNERATION GOVERNANCE
4. REMUNERATION FRAMEWORK
(a) Remuneration Strategy
(b) Remuneration Timeline
(c) Remuneration Mix
5. CHANGES TO REMUNERATION FRAMEWORK
6. EXECUTIVE REMUNERATION OUTCOMES IN FY23
(a) Business Performance for FY23
(b) Five-year Group financial performance and remuneration outcomes
(c) FY23 STI outcomes
(d) FY23 LTI outcomes
(e) Remuneration received in FY23
7. REMUNERATION FRAMEWORK
(a) Fixed remuneration (TEC)
(b) Short term incentive (STI)
(c) Long term incentive (LTI)
(d) 2021 Retention Plan
8. MINIMUM SHAREHOLDING POLICIES
9. EXECUTIVE KMP EMPLOYMENT CONTRACTS
10. NON-EXECUTIVE DIRECTOR FEES
11. STATUTORY REMUNERATION DISCLOSURES
(a) Policy prohibiting hedging
(b) Executive KMP remuneration
(c) Shares held by executive KMP as at 30 June 2023
(d) Options granted in FY23
(e) Summary of executive KMP allocated, vested and lapsed equity
(f) Remuneration paid to Non-Executive Directors
(g) Shares held by Non-Executive Directors as at 30 June 2023
(h) Transactions and loans with KMP
52
Tabcorp Annual Report 2023
53
55
56
57
57
58
58
59
60
60
60
60
62
62
63
63
63
65
68
69
69
70
71
71
71
72
72
73
74
75
75
1. LETTER FROM THE PEOPLE AND REMUNERATION COMMITTEE CHAIRMAN
Dear Shareholder,
On behalf of the Tabcorp Board of Directors, I’m pleased to present Tabcorp’s Remuneration Report for the year ended 30 June 2023 (FY23). This report covers Tabcorp’s approach
to remuneration for its Key Management Personnel (KMP), the link between performance and reward and the remuneration outcomes for KMP for FY23.
Business performance
FY23 has been a foundational year for Tabcorp following the Demerger of the Lotteries and Keno businesses the prior year.
Tabcorp released its TAB25 vision, a three-year transformation strategy with clear targets and an execution plan to create a simpler, more valuable business for shareholders by FY25.
During the year the Company made significant progress against this strategy.
The new TAB App was launched ahead of the Spring Racing Carnival as promised to the market and this has been followed with ten new product and feature launches, closing product
gaps and improving TAB’s digital competitiveness. This led to a record 805,000 active users on the App in FY23. The Gaming Services business continued its transition to an integrity
services model and was awarded a new 20-year licence to monitor all electronic gaming machines in Tasmanian pubs and clubs. Substantial progress towards a Level Playing Field
for all wagering operators was made, with reforms implemented in Queensland, the ACT and Tasmania.
Market share was challenged by new entrants against a backdrop of a diminishing wagering market coming off peaks experienced during COVID-19.
Revenues for the Group were $2,434.4m, up 2.6%, and EBITDA before significant items(i) was $391.0m, up from $381.6m on the previous year. The Group reported a net profit after tax
(NPAT) of $66.5m in FY23, after incurring a non-cash impairment charge of $49.0m (before tax) relating to the Gaming Services business and other significant items benefit totalling
$16.4m (before tax)(i).
Executive KMP remuneration
In determining the remuneration outcomes for the executive KMP, the Board considered business progress and achievements against FY23 strategic priorities, business and individual
performance, market conditions and shareholder experience. The FY23 remuneration outcomes are summarised below and in the Board’s opinion, fairly reflect individual and Company
performance.
Fixed remuneration
There were no changes to the remuneration packages of executive KMP during FY23. Further detail on KMP remuneration packages is provided on pages 58 and 59.
Short Term Incentive (STI) outcomes
Tabcorp’s EBIT target under the STI Plan (refer to section 6(c)) was met, with an EBIT before significant items(i) result of $150.5m compared to a target of $150.3m. While the EBIT hurdle
was met and management delivered key milestones as part of Tabcorp’s strategic transformation, performance against a number of targets fell short against a backdrop of a challenging
market and general economic conditions. Taking a balanced view of financial and non-financial performance, including strong returns generated for shareholders, the Board determined
that an STI pool of 75.0% of target be made available to eligible employees.
Noting the above factors and considering the performance of Mr Rytenskild, MD & CEO, against his individual weighted scorecard, the Board determined to provide Mr Rytenskild with
an STI award equivalent to 75.8% of his target STI opportunity (50.5% of his maximum opportunity).
The Board also determined to provide Mr Renshaw, Chief Financial Officer, with an STI award equivalent to 56.3% of his target STI opportunity (28.1% of his maximum opportunity).
(i) Non-IFRS financial information, unaudited. For details of impairment and significant items, refer to page 13.
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Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
Long Term Incentive (LTI) outcomes
Prior to the Demerger on 1 June 2022, all unvested LTI awards vested on a pro rata basis considering the required service periods that had elapsed under the LTI offers at the date
of the Demerger.
As such, there is only one LTI offer on foot (with a three-year performance period of 1 July 2022 to 30 June 2025) which is due to vest in August 2025 subject to the satisfaction
of performance and service conditions. Refer to section 7(c) for more details.
Key remuneration framework changes
During FY23 the Board reviewed Tabcorp’s LTI Plan, with a market priced option plan introduced, effective from FY23. The Options are performance based against average Return
on Invested Capital (ROIC) targets over a three-year performance period with a one-year exercise period. Any Options not vested or exercised will lapse. Shareholders approved
Mr Rytenskild’s participation in the FY23 LTI Plan at the 2022 Annual General Meeting. Refer to section 7(c) for more details.
The Board also reviewed Tabcorp’s STI Plan, and effective from FY24, the STI hurdle of EBIT will be expanded to include staggered targets (75%, 100%, 125%) rather than the one hurdle
(90%) currently in operation. This will provide a more formulaic approach to the Board’s determination of a STI pool and the size of the pool if one is awarded. Further details will be
provided in Tabcorp’s FY24 Remuneration Report.
In addition, the Board reviewed Tabcorp’s remuneration benchmarking peer group. Prior to the Demerger, the peer group consisted of the ASX 25-75 companies which is no longer
relevant. The Board considered several factors when determining an appropriate peer group, such as Tabcorp’s market capitalisation, annual revenue, ASX industry classification, the
quality of directors required for a gambling company (operating in a complex environment, with heavy regulation and a higher degree of personal risk and exposure for individual directors)
and the substantial time commitment required by directors to support management in the delivery of Tabcorp’s strategic transformation.
Balancing the above factors, the Board determined that a peer group consisting of ASX 51-200 companies with annual revenue of between $1 billion and $4 billion is appropriate.
The Board also determined that setting Board and Committee fees above the median of this peer group is appropriate given the unique considerations applicable to the gambling industry
and the heavy time commitment currently placed on Tabcorp’s Non-Executive Directors (with a total of 44 Board and Committee meetings held during FY23).
An annual review of Non-Executive Board and Committee fees was undertaken in March 2023. The Board determined to retain the current level of fees and to also absorb the increase
in the Superannuation Guarantee Contribution rate, effective 1 July 2023 (from 10.5% to 11.0%).
Conclusion
Having laid strong foundations in the first full year post the Demerger, Tabcorp will now pivot to the growth years of the TAB25 strategy with a clear aim to deliver further increased value
to shareholders. This will include new products, a new retail experience and continued innovation for our customers.
On behalf of the People and Remuneration Committee and the Board, I thank you for your ongoing support of Tabcorp.
David Gallop
People and Remuneration Committee Chairman
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.
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Tabcorp Annual Report 2023
2. KEY MANAGEMENT PERSONNEL
This report covers the KMP of Tabcorp who have the authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. This includes
both the executive KMP as well as Non-Executive Directors.
The following table lists Tabcorp’s KMP during FY23. All KMP held their positions for the duration of FY23 unless otherwise stated.
Non-Executive Directors(i)
Bruce Akhurst, Chair
Brett Chenoweth (from 4 August 2022)(ii)
David Gallop
Janette Kendall
Justin Milne
Raelene Murphy (from 4 August 2022)(ii)
Karen Stocks (from 22 March 2023)(iii)
Executive KMP
Managing Director and Chief Executive Officer (MD & CEO)
Adam Rytenskild
Chief Financial Officer (CFO)
Daniel Renshaw
(i)
Prior to being appointed as a director, candidates are required to undergo various probity assessments and obtain approvals by applicable gambling regulators and certain ministers. While these are being obtained, candidates act as observers
to the Board, during which time, they are paid fees for their time. However, observers do not participate in any decision-making by the Board and are not considered KMP.
(ii) Brett Chenoweth and Raelene Murphy were observers from 1 July 2022 until 3 August 2022. They received regulatory approvals and were appointed as Non-Executive Directors effective 4 August 2022.
(iii) Karen Stocks was an observer from 1 July 2022 until 21 March 2023. She received regulatory approval and was appointed as a Non-Executive Director effective 22 March 2023.
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FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
3. REMUNERATION GOVERNANCE
Tabcorp’s approach to remuneration governance and decision-making applicable during the period is summarised in the diagram below.
Board
The Board, with advice from the People and Remuneration Committee, approves and overseas the implementation of the Company’s remuneration framework and policies, approves
the remuneration of Non-Executive Directors and the Chairman, and approves the remuneration of the MD & CEO and the executive team, including performance incentive targets
and outcomes.
People and Remuneration Committee (PRC)
Assists the Board to fulfil its duties and responsibilities relating to:
• the remuneration of Non-Executive Directors and the Chairman;
• the performance and remuneration of, and incentives for, the MD & CEO and the executive team;
• the remuneration framework and policies, superannuation arrangements, employee share ownership schemes and performance incentive schemes;
• people strategies and policies, including talent retention, diversity and inclusion, culture and engagement; and
• the health, safety and wellbeing strategy and performance.
The Committee must consist of at least three Non-Executive Directors. Non-committee members, including management, may attend all or part of a meeting of the Committee
at the invitation of the Committee Chair.
The Committee uses a range of inputs when assessing performance and outcomes of executives. Detailed performance assessments as well as audited financial results, external
remuneration benchmarking and feedback from the Board Risk, Compliance and Sustainability Committee are also considered. The Committee and the Board review relevant
information and may exercise discretion to adjust proposed remuneration outcomes.
The Committee is governed by its Charter, which is available on Tabcorp’s website (www.tabcorp.com.au) under the Corporate Governance section.
Management
External Advisors
Risk, Compliance and Sustainability Committee
Receive information from, and provide information to,
management which may impact remuneration.
The MD & CEO and the Chief People Officer attend
Committee meetings, however they do not participate
in formal decision-making or in discussions involving
their own remuneration.
The PRC may seek the advice or services of Tabcorp’s
auditors, solicitors or such other independent advisers,
consultants or specialists as the Committee may require.
No remuneration-related advice was sought, and
no remuneration recommendations were received
in respect of KMP during FY23.
Supports the PRC by providing feedback, which assists
decision-making regarding incentive outcomes.
56
Tabcorp Annual Report 2023 4. REMUNERATION FRAMEWORK
(a) Remuneration Strategy
Tabcorp’s remuneration policy and strategy are designed to support and reinforce the Company’s business strategy. The STI and LTI performance measures are directly linked to
shareholder value creation. Executive KMP are assessed on performance and behaviours annually, which aims to ensure reward for results which have been delivered in a sustainable
and ethical manner.
Attract, motivate and retain the best talent by rewarding for delivering the business strategy and for creating long term value for shareholders through a market-competitive,
performance-linked and shareholder aligned remuneration framework.
Remuneration philosophy
Remuneration
principles
Competitive
remuneration which is
benchmarked against
the external market
ensuring equity between
comparable roles
Balances financial
and non-financial
performance which
aligns to our purpose
and values
Pays fairly and
appropriately for
performance and
value creation
Remuneration structure
Fixed remuneration
Set and
adjusted,
considering:
Role
responsibilities
Qualifications and
experience
Market movements
and economic data
Individual
performance
Market
benchmarks
Cash
+
Short Term Incentive (STI)
Individual weighted scorecards
Dependent on:
Group Earnings before
Interest and Tax (EBIT)
performance hurdle
Sustainability
Assessment
40% – Financial
10% – Operational
excellence (including
compliance)
40% – Strategic
and Customer
10% – People
and culture
+
Long Term Incentive (LTI)
Behaviours
in line with
Tabcorp’s
values and
approach to
risk and
compliance
Aligns the interests
of our people with
shareholders to
create sustained
shareholder value
LTI Options
(no dividends)
Financial performance: Return on Invested Capital (ROIC)
Exercise Price: determined as at the grant date
Exercise window: 12 months commencing from the vesting date
Performance and
service condition
tested at the end
of 3 years
(no retesting)
Cash (50% for the MD &
CEO and 75% for the CFO)
+
Restricted Shares (50%
for the MD & CEO and 25%
for the CFO). Restricted
for 2 years and subject
to forfeiture, malus
and clawback
Shares
(only granted if
performance and service
conditions are met and
are subject to forfeiture,
malus and clawback.
A net settlement
approach applies.
Refer section 7(c)
57
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY
REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
(b) Remuneration Timeline
Year 1
Year 2
Year 3
Year 4
d
e
x
i
F
l
e
b
a
i
r
a
V
TEC
STI
LTI
Cash 100%
Base salary and superannuation
Cash
MD & CEO 50%
CFO 75%
Shares restricted for two years subject to a two year service
requirement, forfeiture, malus and clawback and Board discretion
MD & CEO 50%
CFO 25%
LTI Options vest at the end of year three subject to performance against ROIC targets and service requirements.
Subject to forfeiture, malus and clawback and Board discretion
100%
12 month exercise period
for vested Options
(c) Remuneration Mix
The remuneration mix is designed to achieve a balanced reward for achievement of short term objectives and the creation of long term sustainable value. The amount of remuneration
received by executive KMP depends on the achievement of business and individual performance.
The following diagrams show the minimum, target and maximum total remuneration opportunity for the MD & CEO and the CFO.
Minimum: consists of fixed remuneration (TEC): Total Employment Costs (which includes salary and statutory superannuation).
Target: consists of TEC, target STI and 50% of the LTI awards (granted in that year) are assumed to vest. The potential impact of future share price movements is not included within
the equity components.
Maximum: consists of TEC, maximum STI and 100% of the LTI awards (granted in that year) are assumed to vest. The potential impact of future share price movements is not included
within the equity components.
58
Tabcorp Annual Report 2023 The maximum opportunities represented below represent the most that could be awarded to executive KMP, it does not reflect any intention to award that amount, unless exceptional
performance has been achieved.
MD & CEO(i)
100%
Minimum
$1.5m
$1.5m
Chief Financial Officer(i)
Minimum
100%
$675k
$675k
33%
17%
17%
33%
45%
17% 5%
34%
Target
$1.5m
$750k
$750k
$1.5m
$4.5m
Target
$675k
$253k
$84k
$506k
$1.5m
22%
17%
17%
Maximum
$1.5m
$1.125m $1.125m
44%
$3.0m
$6.8m
Maximum
29%
$675k
21%
7%
43%
$506k
$169k
$1.013m
$2.4m
Fixed remuneration
Short term incentive – Cash
Short term incentive – Restricted Shares
Long term incentive
0
500000
1000000
1500000
2000000
2500000
(i) The above amounts and percentages are rounded for presentational purposes.
5. CHANGES TO REMUNERATION FRAMEWORK
During FY23 the Board reviewed Tabcorp’s LTI Plan, with a market priced option plan introduced, effective from FY23. The Options are performance based against average ROIC targets
over a three-year performance period with a one-year exercise period. Any Options not vested or exercised will lapse. Shareholders approved Mr Rytenskild’s participation in the FY23 LTI
Plan at the 2022 Annual General Meeting. Refer to section 7(c) for more details.
The Board also reviewed Tabcorp’s STI Plan, and effective from FY24, the STI hurdle of EBIT will be expanded to include staggered targets (75%, 100%, 125%) rather than the one hurdle
(90%) currently in operation. This will provide a more formulaic approach to the Board’s determination of a STI pool and the size of the pool if one is awarded. Further details will be
provided in Tabcorp’s FY24 Remuneration Report.
In addition, the Board reviewed Tabcorp’s remuneration benchmarking peer group. Prior to the Demerger, the peer group consisted of the ASX 25-75 companies which is no longer
relevant. The Board considered several factors when determining an appropriate peer group, such as Tabcorp’s market capitalisation, annual revenue, ASX industry classification, the
quality of directors required for a gambling company (operating in a complex environment, with heavy regulation and a higher degree of personal risk and exposure for individual directors)
and the substantial time commitment required by directors to support management in the delivery of Tabcorp’s strategic transformation.
Balancing the above factors, the Board determined that a peer group consisting of ASX 51-200 companies with annual revenue of between $1 billion and $4 billion is appropriate.
The Board also determined that setting Board and Committee fees above the median of this peer group is appropriate given the unique considerations applicable to the gambling
industry and the heavy time commitment currently placed on Tabcorp’s Non-Executive Directors (with a total of 44 Board and Committee meetings held during FY23).
59
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY
REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
6. EXECUTIVE REMUNERATION OUTCOMES IN FY23
(a) Business performance for FY23
FY23 has been a foundational year for Tabcorp, following the Demerger of the Lotteries and Keno businesses the prior year. Tabcorp released its TAB25 vision, a three-year transformation
strategy with clear targets and an execution plan to create a simpler, more valuable business for shareholders by FY25. During the year the Company made significant progress against
this strategy. The new TAB App was launched ahead of the Spring Racing Carnival as promised to the market and this has been followed with ten new product and feature launches,
closing product gaps and improving TAB’s digital competitiveness. This led to a record 805,000 active users on the App in FY23. The Gaming Services business continued its transition to
an integrity services model and was awarded a new 20-year licence to monitor all electronic gaming machines in Tasmanian pubs and clubs. Substantial progress towards a Level Playing
Field for all wagering operators was made, with reforms implemented in Queensland, the ACT and Tasmania.
(b) Five-year Group financial performance and remuneration outcomes
Net profit/(loss) after tax (NPAT)
Basic earnings per share (EPS)
Closing share price at 30 June(i)
Dividends(ii)
STI Group Funding Multiplier (STI pool)
MD & CEO STI awards
STI award CFO(iii)
All executive KMP LTI vesting
Measurement unit
$m
Cents
$
Cents per share
% of target pool
% of target opportunity
% of maximum opportunity
% of target opportunity
% of maximum opportunity
% of maximum opportunity
FY19
361.1
17.9
4.45
22.0
100%
85%
43%
89%
44%
0%
FY20
(870.4)(iv)
(42.9)(iv)
3.38
11.0
0%
0%
0%
0%
0%
0%
FY21
269.4(v)
12.3(v)
5.18
14.5
100%
100%
67%
105%
52%
54%
FY22
6,775.9(vi)
304.6(vi)
1.07
13.0
100%
65%(vii)
43%(vii)
107%
54%
37.5%
FY23
66.5
2.9
1.11
2.3
75%
75.8%
50.5%
56.3%
28.1%
n/a(viii)
(i) Opening share price as at 1 July 2018 was $4.46.
(ii) Includes interim and final dividends. For FY20, a final dividend was not paid.
(iii) Prior to FY23, represents the average award for all executive KMP excluding the MD & CEO.
(iv) NPAT includes impairment of goodwill of $1,090m. FY20 EPS before impairment of goodwill was 10.9c.
(v) NPAT includes impairment of goodwill of $122m. FY21 EPS before impairment of goodwill was 17.9c.
(vi) FY22 includes 11 months results for Lotteries and Keno prior to the Demerger which occurred in June 2022.
(vii) Represents FY22 STI award for prior MD & CEO, David Attenborough for the period 1 July 2021 to 31 May 2022.
(viii) The next scheduled vesting date for LTI is at the end of the three-year performance period of 1 July 2022 to 30 June 2025.
(c) FY23 STI outcomes
Under Tabcorp’s STI plan, the FY23 STI pool is primarily based on the EBIT result with consideration given to the sustainability modifier measure, which considers Tabcorp’s management
of risk and compliance, responsible gambling, community, and reputation.
Tabcorp’s EBIT target was met, with an EBIT before significant items(i) result of $150.5m compared to a target of $150.3m. While the EBIT hurdle was met and management delivered key
milestones as part of Tabcorp’s strategic transformation, performance against a number of targets fell short against a backdrop of a challenging market and general economic conditions.
Taking a balanced view of financial and non-financial performance, including strong returns generated for shareholders, the Board determined that an STI pool of 75% of target be made
available to eligible employees.
(i) Non-IFRS financial information, unaudited.
60
Tabcorp Annual Report 2023 STI Scorecard
Tabcorp’s FY23 priorities were cascaded via the MD & CEO’s KPIs to other executives in combination with other functional measures. The CFO’s scorecard is similar to the MD & CEO’s
scorecard but includes: a focus on balance sheet capacity and diversity and the ability to unlock funding to support innovation and growth. The Board assessed the executive performance
and the MD & CEO’s KPIs as follows.
Category
Financial
(40%)
Strategic and
Customer
(40%)
Measures
• EBITDA: $420m
• NPAT (before significant items):
$90m
• Operating expenses: $650m
• ROIC: 6.2%
• Progress digital market share
• New products released
to customers
• Structural reform successfully
progressed
• Integrity services expanded
to new jurisdictions
• New technology road map
in place (including separation
due to Demerger)
Operational
Excellence
(10%)
• Define and progress delivery
against agreed sustainability
targets
People and
Culture
(10%)
• No material compliance
breaches or reputational
matters
• Employee engagement
• Employee voluntary turnover
• Lost Time Injury Frequency
Rate of < 2.0
• Achieve 40% women within
the senior leadership cohort
Performance
Partially Achieved
• Financial result ahead of consensus and total shareholder return of 12.5%.
• FY23 EBITDA before significant items(i) of $391.0m, NPAT before significant items(i) of $84.3m and ROIC of 5.5%, impacted
by softening consumer environment leading to a decline in wagering market revenue.
• Operating expenses(i) of $617.5m, ahead of target and market guidance.
• Invested Capital well managed, balance sheet in a strong position with new debt facility (USPP) and longer average debt maturity.
• Capital discipline maintained on WA and NZ TAB processes.
Exceeded
• Market share below target for growth, stable with prior year. Other digital customer metrics including Actives and Turnover share
showing improved performance.
• Structural reform delivered in QLD with uplift in QLD TAB performance. VIC level playing field post August 2024 and progress
made in NSW.
• Major products released including Popular SGM, Bets Friends, AFL/NRL Stats. Several other major releases have also been
delivered, including major tournament, and activity statements.
• Speed to market improved significantly – core releases 24 weeks down from 50 weeks and mobile, Customer Account
Management and Raceday releases 4 weeks down from 26 weeks.
• Pivot to Integrity Services with sale of eBet and new monitoring arrangements in Tasmania and Star Sydney.
• Technology separation project on track and within budget. All transitional services arrangements delivered and closed or agreed
to continue by exception.
Achieved
• Sustainability targets focussed on Customer Care, Contributions to the Community and building a Sustainable Future.
• Key achievements include implementation of Customer Care strategy, the introduction of customer perception surveys, delivered
Community Investment strategy and progressed towards reduction in emissions targets. Further information will be disclosed in
Tabcorp’s 2023 Sustainability Report.
• No compliance breaches that have a material adverse impact on Tabcorp’s reputation or its financial performance.
Partially Achieved
• Employee Operating Model change and scaled reduction in headcount.
• Significant uplift in leadership capability through new hires and a focus on female talent.
• Females within the senior leadership cohort slightly under target at 37%.
• Culture pivot with new Values.
• Employee engagement improved from 57% in FY22 to 59%.
• Employee turnover reduced from 19.1% in FY22 to 13.3%.
• LTIFR of 2.6, all of which were non-traumatic injuries or aggravations of pre-existing conditions.
(i) Non-IFRS financial information, unaudited.
61
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
The STI performance outcomes and awards for the MD & CEO and executive KMP are detailed in the following table:
Target
$
1,500,000
337,500
Total
$
1,136,250
189,850
Total STI awarded
Cash portion
$
568,125
142,388
Actual STI achieved
Restricted portion
$
568,125
47,462
as a % of maximum
opportunity
50.5
28.1
as a % of target
opportunity
75.8
56.3
STI foregone as a % of
maximum opportunity
49.5
71.9
Adam Rytenskild
Daniel Renshaw
(d) FY23 LTI outcomes
On 1 June 2022, Tabcorp successfully implemented the Demerger of its Lotteries and Keno businesses and created the separate ASX listed company, The Lottery Corporation Limited.
As disclosed in the Demerger Booklet, the Board determined that the performance conditions associated with the LTI offers on foot as at the date of the Demerger would be waived and
the Performance Rights would vest on a pro-rata basis, considering the required service periods that had elapsed under the LTI offers at the date of the Demerger. As a result, there were
no LTI offers which vested during FY23.
Following approval by shareholders at the 2022 Annual General Meeting, a grant of Options was made to the MD & CEO, other executives, and certain other eligible employees on
2 November 2022 under the 2022 LTI Plan. The Options will be tested at the end of the three-year performance period (1 July 2022 to 30 June 2025). Details of the 2022 LTI Plan grant
are set out in section 7(c) of this report.
(e) Remuneration received in FY23
The table below provides a non-statutory voluntary disclosure of the actual remuneration received by executive KMP during FY23. 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 11(b) of this report. We believe this information will help shareholders understand the cash and other benefits received by executive
KMP from the various components of their remuneration during FY23.
Adam Rytenskild
Daniel Renshaw
Total
TEC (salary plus
superannuation)
$
1,500,000
675,000
2,175,000
Cash STI(i)
$
377,605
224,813
602,418
Total Cash
$
1,877,605
899,813
2,777,418
Value of restricted
shares that vested
during the year(ii)
$
-
-
-
Value of LTI that
vested during
the year(ii)(iii)
$
-
-
-
Total remuneration
received during
the year
$
1,877,605
899,813
2,777,418
(i) STI cash bonus reflects the portion of the FY22 STI which was paid in cash in August 2022.
(ii) Based on the market value of Tabcorp shares at the date of vesting, multiplied by the number of shares.
(iii) As noted in section 6(d), no LTI vested during FY23.
62
Tabcorp Annual Report 2023 7. REMUNERATION FRAMEWORK
(a) Fixed remuneration (TEC)
What constitutes fixed remuneration?
Salary and statutory superannuation contributions (includes 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 51-200 group of companies with a revenue overlay of $1.0 billion to $4.0 billion per annum. The Board considers the peer group
appropriate for Tabcorp to attract and retain suitably skilled Directors in the gambling industry, which is a challenging and complex sector,
it’s heavily regulated and carries a higher degree of personal risk and exposure.
(b) Short term incentive (STI)
The operation of the executive KMP FY23 STI Plan is summarised below.
Target STI
opportunity
X
Group Financial
Hurdle
X
Sustainability
Assessment
X
Individual Weighted Performance Scorecard
STI award
Cash
(50% for the MD & CEO and
75% for the CFO)
Restricted Shares
(50% for the MD & CEO and
25% for the CFO)
Outcomes are assessed against a range of financial and non-financial
performance measures within the balanced scorecard
Performance Measure
Weighting
Financial
Strategic and Customer
Operational Excellence
People and Culture
40%
40%
10%
10%
Range
0 or 1
l
e
d
r
u
H
EBIT Hurdle –
If the Financial
hurdle is not met
no STI awards
are payable
Board has discretion
to set a smaller pool
if the target is
not met
The Board considers
sustainability measures
such as risk and
compliance,
responsible gambling,
community and
reputation and may
exercise discretion to
adjust the pool (up or
down). Assessment
includes reports on risk
and compliance from
the Risk, Compliance
and Sustainability
Committee
Range
MD & CEO
CFO
0% to 150% of TEC
0% to 100% of TEC
Restricted Shares are restricted
for two years and subject to forfeiture,
malus and clawback.
63
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY
REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
Eligibility
Eligible permanent employees, including the MD & CEO and other executives, participate in the annual STI plan, which puts a proportion
of remuneration ‘at risk’ subject to meeting specific pre-determined performance measures.
Performance period
The performance period is the financial year preceding the payment date.
STI opportunity
For ‘at target’ performance, the MD & CEO has the opportunity to receive 100% of TEC and the CFO has the opportunity to receive 50% of TEC.
The minimum STI outcome is 0% (if targets are not met) and the maximum is capped at 150% of the STI opportunity for the MD & CEO and at 200%
for the CFO, which is awarded for exceptional performance.
Payment and restricted shares
STI awards for the MD & CEO are delivered 50% in cash and 50% is deferred into restricted Tabcorp shares. STI awards for the CFO are delivered
75% in cash and 25% is deferred into restricted Tabcorp shares. Deferred shares are restricted for two years following the grant date. The restricted
shares are subject to service conditions and have the same dividend and voting rights as other shareholders during the restricted period. The
restricted shares are subject to a holding lock during the restriction period. The restricted shares are subject to a service condition only as
performance conditions applied during the STI performance year.
EBIT hurdle and annual pool
The EBIT hurdle is based on the Group’s EBIT budget for the financial year, as approved by the Board. If the hurdle is not met, no STI awards are
payable for that year. The Board has discretion to set a smaller pool if the hurdle is not met, considering other factors such as non-financial
performance, key strategic achievements, and critical skill retention.
Performance measures
Individual measures (KPIs) are unique to the individual’s area of accountability. Individuals have a clear line of sight to KPIs and are able to directly
affect outcomes through their own actions. KPIs consider role-related accountabilities and responsibilities in the context of business strategic priorities.
An EBIT hurdle is used to determine whether a STI pool is available for distribution amongst eligible employees. EBIT provides a better reflection
of performance and operating profitability.
Sustainability assessment
The Board also considers sustainability measures such as risk and compliance, responsible gambling, community and reputation and may exercise
discretion to adjust the pool (up or down). These measures are assessed by the Board utilising reports on risk and compliance from the Risk,
Compliance and Sustainability Committee.
Individual performance scorecard If the EBIT hurdle has been met, executive KMP awards are dependent on a weighted balanced scorecard of measures across financial, strategic and
customer, operational excellence, and people and culture dimensions. Weightings are agreed with the Board at the beginning of the financial year,
reflecting key priorities.
40% of the STI scorecard is dependent on financial results, the remaining 60% is dependent on individual scorecard measures.
Each scorecard category is assessed and is provided with a percentage from 0% to up to 200% (150% for the MD & CEO), weighted by each category.
Cessation of employment
If employment ceases due to resignation or termination for cause, restricted shares are forfeited (unless the Board determines otherwise).
If employment ceases due to any other circumstances (including 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).
Clawback
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.
Change in control
The Board is required to determine, in its absolute discretion, the appropriate treatment regarding any restricted shares.
64
Tabcorp Annual Report 2023 (c) Long term incentive (LTI)
The operation of the executive KMP 2022 LTI Plan is summarised below.
Options Plan
Return on Invested Capital (ROIC)
Options vest and exercise
period commences
Exercise period ends
Three year performance
period commences
1 July 2022
Formula for allocating Options
Maximum LTI opportunity
Fair value based on the 10 day volume weighted
average price of Tabcorp shares traded on the ASX
up to but not including the grant date
Three year
performance
period ends
30 June 2025
Performance
tested against
ROIC targets
(July 2025 –
no retesting)
Vesting
and 12 month
exercise period
commences
(August 2025)
Exercise period ends.
Vested unexercised Options
“in the money” are automatically
exercised and vested Options
“out of the money” lapse
(August 2026)
Eligibility
Participation in the 2022 LTI Plan was offered to the MD & CEO, the executive team and a limited number of senior employees.
Instrument
For the 2022 LTI Plan, grants were made in the form of Options at no cost to the recipient. Each Option is an entitlement to acquire one Tabcorp share at the
exercise price, or at the Board’s discretion, an equivalent cash payment, on terms and conditions determined by the Board, subject to achieving vesting
conditions. Options do not attract dividends or voting rights.
Participants are allocated a maximum number of Options (based on their maximum LTI opportunities) using a fair value allocation methodology determined by
an independent third party using a Black-Scholes methodology.
Opportunity
The MD & CEO’s maximum opportunity (award value) is 200% of TEC and the maximum opportunity (award value) for the CFO is 150% of TEC. The minimum
vesting outcome an individual can receive is 0% of the award (if the ROIC targets are not achieved) and the maximum vesting outcome an individual can
receive is capped at 100% of the award (if the ROIC targets are achieved).
The number of Options allocated to the MD & CEO and the CFO is set out in section 11(d), noting the actual value that executives may derive from the Options
is subject to the satisfaction of the applicable performance measure, vesting criteria and the Tabcorp share price at the time of vesting (which will also impact
on whether the Options are “in the money”).
65
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
Performance,
exercise period and
expiry
The performance period is three financial years commencing 1 July in the year the grant is made. The 2022 LTI Plan grant has a performance period
commencing 1 July 2022 and ending 30 June 2025. The 12-month exercise period will commence at the vesting date (expected to be within 30 days of Tabcorp
releasing its FY25 financial results) allowing participants 12 months to choose whether to exercise any vested Options. The end of the exercise period is the
expiry date for the Options.
Performance
measures
Options are subject to performance against predetermined ROIC targets, continuous employment and an exercise price which is set at the grant date. The
value derived from the Options is subject to achievement of the ROIC performance measure, as well as the share price following vesting. Over the exercise
period, if the share price does not exceed the exercise price (set at the grant date), then the Options are “underwater” and no value is delivered to participants.
Exercise price
Equivalent to the market share price as at grant date using a daily Volume Average Weighted Price (VWAP) of Tabcorp shares traded on the ASX during
the previous 10 trading days.
ROIC focuses management on achieving
targeted returns on Tabcorp’s invested
capital (equity and debt). ROIC is an
absolute measure, defined as earnings
before interest, tax and significant items
(EBIT before significant items), divided by
the average invested capital base (being
shareholders’ equity plus net economic
debt). Average invested capital is
calculated as the average of opening
and closing balances.
A stretch three-year average ROIC target
was set by the Board with the view that the
target is of a sufficiently high value, such
that its achievement would require
significant growth in Tabcorp’s earnings
over the three-year performance period,
which would ultimately deliver healthy
shareholder returns.
Average three-year ROIC
(between 1 July 2022 and 30 June 2025)
% of Options that will vest
Less than 7.7%
At 7.7%
0%
35%
Above 7.7% and below 8.1%
Straight line vesting between 35% and 50%
At 8.1%
50%
Above 8.1% and below 8.9%
Straight line vesting between 50% and 100%
At or above 8.9%
100%
ROIC
66
Tabcorp Annual Report 2023 The commercial effect of a net settlement is that only the value above the Option exercise price will be provided in the form of Tabcorp shares.
On exercise of the vested Options the number of shares to be provided to participants will be based on the net settlement amount (the difference between
the Option exercise price and market price of shares on the date of exercise, multiplied by the number of exercised Options and divided by the market price).
The market price will be the daily VWAP of Tabcorp’s shares traded on the ASX during the 10 days prior to the exercise date of the Options.
Net settlement
(cashless
approach)
If the Options are not exercised by the end of the exercise period, they will automatically lapse (if the exercise price is equal to or exceeds the market price
at that time) or they will be automatically exercised using the net settlement method (if the exercise price remains below the market price at that time).
Any Options which do not vest will lapse.
For example:
Options granted
Options vested
Exercise price
Market price (VWAP) at exercise
Net settlement amount
Shares granted
1,000,000
800,000
$0.95
$1.30
800,000 X $0.35 = $280,000
$280,000 / $1.30 = 215,384
Cessation of
employment
Unvested Options:
If employment ceases due to resignation or is terminated for cause, Options are forfeited (unless the Board determines otherwise).
If employment ceases due to any other circumstances (including redundancy, retirement or ill health), then Options will remain on foot until the end
of the original restriction period (unless the Board determines otherwise).
Vested Options:
If employment is terminated for cause, all vested but unexercised Options will lapse, unless the Board determines otherwise.
If employment ceases for any other reason then, unless the Board determines otherwise, vested but unexercised Options will remain on foot and will
be exercisable up until the end of the exercise period.
Change in control
The Board can determine, in its absolute discretion, the appropriate treatment regarding any unvested Options and vested but unexercised Options.
Clawback
Options may lapse at the Board’s discretion based on adverse events that have occurred or where adverse material information becomes available after the
Options have vested. If this adverse event occurred or adverse information becomes available after the Options have vested and shares or cash have been
awarded, the Board may require participants to repay all or part of the value of the award.
67
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
(d) 2021 Retention Plan
In July 2021, the Board considered and approved the introduction of a Retention Plan in the form of restricted shares for key critical employees. The 2021 Retention Plan was established
to mitigate the risk identified because of the pending Demerger (of the Lotteries and Keno businesses). At that time there was significant uncertainty of the impact of the Demerger on
employee roles, and there was a need to retain critical skills and knowledge to ensure the Demerger was successful and to set the new organisations up for future success.
The operation of the Retention Plan is summarised below.
Eligibility
A once-off offer made to employees deemed critical to deliver the Demerger.
Instrument
Restricted Tabcorp shares.
Service condition
For vesting to occur, participants must remain employed until the vesting date.
Vesting date
The plan vested on 31 July 2023.
Cessation of employment
If employment ceases due to resignation or termination for cause, restricted shares are forfeited (unless the Board determines otherwise).
If employment ceases due to redundancy, then restricted shares will vest following cessation of employment and all trading restrictions will be lifted
(unless the Board determines otherwise).
If employment ceases due to any other circumstances, then restricted shares will remain on foot until the end of the original restriction period
(unless the Board determines otherwise).
Change in control
The Board is required to determine, in its absolute discretion, the appropriate treatment regarding any restricted shares.
Dividend and voting rights
The same dividend and voting rights as other shares issued by Tabcorp.
Employees who remained
with Tabcorp
For participants who remained employed by Tabcorp post-Demerger, restricted shares held under the Retention Plan continued to be subject to
their original terms and conditions (including trading restrictions) until the end of July 2023. On Demerger, these participants received one share
in The Lottery Corporation for every one share held in the Retention Plan (the same treatment for all shares held in Tabcorp by all shareholders),
with a holding lock applied to the Lottery Corporation shares until the end of July 2023.
Employees who moved
to The Lottery Corporation
For those participants who moved to The Lottery Corporation, their retention shares under the Retention Plan were forfeited prior to the Demerger
and an alternative offer was made by The Lottery Corporation post-Demerger.
68
Tabcorp Annual Report 2023 8. MINIMUM SHAREHOLDING POLICIES
Under the Executive Shareholding Policy, the MD & CEO is required to hold the equivalent of 200% of the value of his annual fixed remuneration (TEC) in Tabcorp shares. The CFO is
required to hold the equivalent of 100% of the value of his TEC in Tabcorp shares. The minimum shareholding must be achieved within five years from the executive KMP’s appointment
or within five years from 1 June 2022 (whichever is later).
Under the Non-Executive Director Shareholder Policy, Non-Executive Directors are required to hold a minimum shareholding in Tabcorp equivalent to the annual Board Member fee,
and the Board Chairman is to hold a minimum shareholding equivalent to two times the annual Board Member fee. The minimum shareholding must be achieved within three years
of appointment or from 1 June 2022 (whichever is later).
Copies of these policies are available on Tabcorp’s website (www.tabcorp.com.au) under the Corporate Governance section. At the date of this report, all Non-Executive Directors
and executive KMP have complied with these policies as they have either achieved their minimum shareholding or are within the accumulation periods.
9. EXECUTIVE KMP EMPLOYMENT CONTRACTS
Remuneration and other terms of employment for the MD & CEO and the CFO are formalised in contracts that have no specified term. Under these contracts, the MD & CEO and the CFO
are eligible to participate in STI and LTI plans. The notice periods in place are outlined below:
MD & CEO
CFO
Period of notice to terminate
by the executive KMP
Period of notice to terminate
by Tabcorp
6
6
12
9
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 not worked. Tabcorp may also terminate at any time without notice for serious misconduct. On cessation of employment, STI and LTI awards may vest, lapse or be forfeited
in accordance with the relevant plan rules.
69
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
10. NON-EXECUTIVE DIRECTOR FEES
The current maximum aggregate amount of fees that can be paid to Non-Executive Directors per year for their services (including superannuation contributions) is $3.0m, as approved
by shareholders at the Annual General Meeting held on 17 October 2018. The total fees paid (including superannuation) to Non-Executive Directors in FY23 was $1,873,393.
Non-Executive Director fees are set based on workload, responsibilities, qualifications, experience, market benchmarks while considering the complex and highly regulated gambling
industry which carries a higher degree of personal risk and exposure. Board and Board Committee fees are benchmarked with reference to a peer group, comprising the ASX 51-200 group
of companies with a revenue overlay of $1.0 billion to $4.0 billion per annum. 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 Tabcorp or any subsidiaries.
Non-Executive Directors receive a Board fee and a fee for each Board Committee that they chair or are a member of. 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.
The mandated Superannuation Guarantee increase of 0.5% (from 10.0% to 10.5%) in July 2022 was absorbed into existing fees at that time resulting in no increase in overall fees (inclusive
of superannuation). Certain Non-Executive Directors may, from time to time, receive additional fees for membership of other Board Sub-Committees, however during FY23 no such fees
were paid. Non-Executive Directors are entitled to be reimbursed for all business-related expenses, including travel, which may be incurred as part of their duties.
Current Director and Committee fees inclusive of superannuation (per annum) are set out below:
Board
Audit Committee
Risk, Compliance and Sustainability Committee
People and Remuneration Committee
Technology Committee
Nomination Committee
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Member
Current fees
$
493,300
160,000
49,280
21,680
44,350
19,700
44,350
19,700
44,350
19,700
7,500
70
Tabcorp Annual Report 2023 11. STATUTORY REMUNERATION DISCLOSURES
(a) Policy prohibiting hedging
Participants in incentive plans are restricted from hedging against those equity awards and must not enter 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.
(b) Executive KMP remuneration
Short term
Current
executive
KMP
Adam
Rytenskild
Financial
year
Salary
and fees
$
Cash
bonus(iii)
$
FY23
FY22
1,474,708
942,932
568,125
377,605
Daniel
Renshaw(i)
FY23
FY22
Former executive KMP (ii)
David
Attenborough
FY23
FY22
Adam
Newman
Patrick
McGlinchey
Sue van der
Merwe
Total
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
649,708
54,286
142,388
22,268
-
1,811,729
-
975,000
-
729,729
-
283,250
-
679,959
-
264,258
-
-
748,429
279,878
710,513
2,124,416
4,967,064 2,202,259
Non-
monetary
bonus
$
Long term
Accrued
leave
benefits
$
Post-
employment Charge for share-based allocations(iv)
Accelerated and
modification charge for
share-based payments(v)
Super-
annuation
$
Restricted
Shares
$
Performance
Rights
$
Options
$
Restricted
Shares
$
Performance
Rights
$
Performance
related(vi)
%
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
85
350,227
(8,009)
2,406
-
34,096
-
27,256
-
26,622
-
143,160
(7,924)
583,767
25,292
23,568
25,292
1,964
-
21,604
-
21,604
-
21,604
-
95,425
50,584
185,769
281,000
425,857
255,557
19,146
-
391,247
473,684
-
-
38,690
- 2,822,894
3,394,305
844,179
-
-
159,868
-
-
-
-
-
1,224,804
100,070
-
240,120
-
1,202,146
-
-
-
-
-
-
-
283,678
-
1,684,954
-
6,253,327
-
41,606
-
32,392
-
41,606
-
437,972
-
780,112
-
2,278,365
-
671,294
-
2,010,107
-
823,849
-
2,496,078
- 4,047,698
4,804,388 16,532,252
-
337,117
-
287,947
-
328,202
-
2,546,659
-
-
633,552
-
-
57,691
-
26,031
-
35,529
536,557
804,374
45%
61%
28%
41%
-
72%
-
66%
-
64%
-
60%
(i) Commenced as an executive KMP on 1 June 2022. Remuneration disclosure for FY22 is from that date.
(ii) Ceased as an executive KMP on 31 May 2022 due to the Demerger in June 2022.
(iii) Cash bonus reflects the cash portion of the STI achieved in the relevant financial year, being 50% for the MD & CEO and 75% for the CFO. The remaining portion of the STI is deferred into restricted shares and is reflected in the restricted shares column
in accordance with Australian Accounting Standards.
(iv) Represents the fair value of share-based payments expensed by Tabcorp. In FY22, performance conditions were waived for outstanding Performance Rights and a pro-rata portion of the Performance Rights vested on the date of Demerger and the
remainder lapsed. The FY23 expense for Options relates to the instruments granted during the year as described in note 11(d).
(v) As a result of the Demerger in June 2022, the remaining fair value of share-based payments not already recognised was expensed when vesting was accelerated for the FY20 and FY21 STI restricted shares; and the 2019, 2020 and 2021 LTI Performance
Rights. Also includes expensing the remaining portion of Retention Shares relating to The Lottery Corporation shares allocated as part of the Demerger.
(vi) Represents the sum of the cash bonus (from STI awards), Restricted Shares (from STI) and LTI Performance Rights and Options as a percentage of total remuneration.
71
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY
REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
(c) Shares held by executive KMP as at 30 June 2023 (number)
Adam Rytenskild
Daniel Renshaw
(d) Options granted in FY23
Balance at
start of year
2,421,874
162,732
Granted as remuneration
during the year
166,134
502,412
Received on exercise of
Options during the year
-
-
Other changes
during the year
506,550
-
Balance at end
of year
3,094,558
665,144
Eligible executive KMP received Options under the 2022 LTI Plan with a grant date of 26 October 2022 and an allocation date of 2 November 2022. Shareholder approval to grant the MD &
CEO Options under the 2022 LTI Plan was received at the Tabcorp Annual General Meeting held on 26 October 2022 and obtained under ASX Listing Rule 10.14. The Options are subject to
a performance measure of ROIC, as well as Tabcorp’s share price following vesting (which is built into the exercise price).
The relevant values of the grant are as follows:
Grant date
26 October 2022
Exercise price(i)
$0.9568
Fair value at
grant date(ii)
$0.20
Share price at
grant date
$0.9850
Scheduled
vesting date(iii)
August 2025
(i) Tabcorp VWAP over the period 12 October 2022 to 25 October 2022 as traded on the ASX.
(ii) Calculated using a Black-Scholes pricing model. This value was used to determine the number of Options allocated to each participant.
(iii) Vesting is subject to assessment of the applicable performance and vesting conditions.
The following table shows the number of Options granted to executive KMP during FY23.
Adam Rytenskild
Daniel Renshaw
Number of
Options granted
15,000,000
5,062,500
Fair value at
grant date
3,000,000
1,012,500
72
Tabcorp Annual Report 2023 (e) Summary of executive KMP allocated, vested and lapsed equity
Allocation
date
Grant
date
Vesting
date(ii)
Balance
at start
of year
Granted
during year as
remuneration
Vested
in FY23
% of
total
vested
Lapsed/
forfeited
during year
Balance
at end
of year
Fair value
of equity(iii)
Options
exercised
during
the year
Adam Rytenskild
FY23 LTI Options
Total LTI Options
2 Nov 2022
26 Oct 2022
Aug 2025
FY22 STI restricted shares
2021 Retention restricted shares
Total restricted shares
30 Aug 2022
26 Aug 2021
26 Jul 2022
16 Jul 2021
30 Aug 2024
31 Jul 2023
Daniel Renshaw(i)
FY23 LTI Options
Total LTI Options
FY22 STI restricted shares
2021 Retention restricted shares
2021 Retention restricted shares
Additional restricted shares
Total restricted shares
2 Nov 2022
26 Oct 2022
Aug 2025
30 Aug 2022
26 Aug 2021
30 Aug 2022
30 Aug 2022
26 Jul 2022
16 Jul 2021
24 Aug 2021
24 Aug 2021
30 Aug 2024
31 Jul 2023
31 Jul 2023
1 Jun 2024
-
-
15,000,000
15,000,000
-
94,433
94,433
166,134
-
166,134
-
-
5,062,500
5,062,500
-
60,180
-
-
60,180
74,564
-
179,092
248,756
502,412
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,000,000 $3,000,000
15,000,000 $3,000,000
166,134
94,433
260,567
$166,965
$459,000
$625,965
5,062,500
5,062,500
$1,012,500
$1,012,500
74,564
60,180
179,092
248,756
562,592
$74,938
$292,512
$179,988
$250,000
$797,438
-
-
n/a
n/a
n/a
-
-
n/a
n/a
n/a
n/a
n/a
(i)
On 30 August 2022, Daniel Renshaw was allocated additional Tabcorp shares under the 2021 Retention Plan upon the Demerger, which will vest in accordance with the terms of the original plan offer made in July 2021. He holds a total of 239,272 shares within
this plan as at 30 June 2023. Daniel was also granted 248,756 Tabcorp shares upon Demerger in recognition of his role as CFO. This grant is restricted for two years and is subject to forfeiture, malus, and clawback conditions in accordance with the offer
terms and conditions. A holding lock applies during the restriction period.
(ii) Vesting is subject to the applicable performance and/or vesting conditions.
(iii) Fair value at grant date for Options and the dollar value used to determine the number of restricted shares to be granted. Represents the maximum value of the grants to each executive KMP for accounting purposes.
73
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY
REMUNERATION REPORT (AUDITED) FOR THE YEAR ENDED 30 JUNE 2023
(f) Remuneration paid to Non-Executive Directors(i)
Current Non-Executive Directors
Bruce Akhurst(ii)
Brett Chenoweth(iii)
David Gallop
Janette Kendall
Justin Milne
Raelene Murphy(iii)
Karen Stocks(iv)
Former Non-Executive Directors(v)
Steven Gregg
Anne Brennan
Harry Boon
Total
Year
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
Short term
fees
$
468,145
276,653
198,238
17,420
209,548
235,757
206,860
230,945
231,249
238,079
211,928
17,586
169,412
15,761
-
483,625
-
219,000
-
211,700
1,695,380
1,946,526
Non-monetary
benefits
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Post-employment
superannuation(vi)
$
49,155
27,665
20,815
1,742
22,002
23,576
21,720
23,094
24,281
23,808
22,252
1,759
17,788
1,576
-
-
-
-
-
-
-
-
-
48,362
-
21,900
-
21,170
178,013
194,652
Total
$
517,300
304,318
219,053
19,162
231,550
259,333
228,580
254,039
255,530
261,887
234,180
19,345
187,200
17,337
-
531,987
-
240,900
-
232,870
1,873,393
2,141,178
(i) The fees in the table above include fees paid while Directors were acting as observers.
(ii) Appointed as Chairman on 1 June 2022 and receives a per annum fee of $24,000 (including superannuation) for the role of Chairman of the Victorian Joint Venture Management Committee. The fee is borne by the Joint Venture, which is jointly controlled
by Tabcorp.
(iii) Appointed as Observers on 1 June 2022, pending regulatory approvals and formally appointed as Non-Executive Directors on 4 August 2022 following receipt of regulatory approvals.
(iv) Appointed as an Observer on 1 June 2022, pending regulatory approvals and formally appointed as a Non-Executive Director on 22 March 2023 following receipt of regulatory approvals.
(v) Retired from the Board as either a Non-Executive Director or an Observer on 31 May 2022 due to the Demerger in June 2022.
(vi) Contributions made to satisfy Tabcorp’s obligation under applicable superannuation guarantee legislation. Excludes Australian Taxation Office approved exemptions.
74
Tabcorp Annual Report 2023
(g) Shares held by Non-Executive Directors as at 30 June 2023
Bruce Akhurst
Brett Chenoweth
David Gallop
Janette Kendall
Justin Milne
Raelene Murphy
Karen Stocks
Balance at
start of year
750,000
86,538
17,637
29,254
300,846
-
20,000
Changes during
the year
450,000
-
71,171
62,989
-
70,000
39,026
Balance at
end of year
1,200,000
86,538
88,808
92,243
300,846
70,000
59,026
(h) Transactions and loans with KMP
No KMP (including their related parties) have entered a material commercial relationship or transaction with the Company or a subsidiary during FY23 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) have entered a loan (guaranteed or secured), directly or indirectly,
by the Company or a subsidiary during the reporting period.
75
FINANCIAL REPORTTabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY 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
77
78
79
80
81
81
83
89
97
107
115
123
124
76
Tabcorp Annual Report 2023
INCOME STATEMENT For the year ended 30 June 2023
Continuing operations
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 – other
Profit/(loss) before income tax, net finance costs and equity accounted investment
Loss from equity accounted investment
Finance income
Finance costs
Profit/(loss) from continuing operations before income tax
Income tax (expense)/benefit
Profit/(loss) from continuing operations after income tax
Discontinued operations
Profit from discontinued operations after tax
Net profit 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 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/(loss) per share:
From continuing operations
Basic earnings/(loss) per share
Diluted earnings/(loss) 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.
Note
A4
A4
A4
D4
A4
A5
D5
E2
A2
A2
A2
A2
A3
A3
2023
$m
2,434.4
91.0
(1,078.3)
(333.3)
(314.5)
(125.2)
(98.3)
(168.4)
(240.5)
(49.0)
117.9
(2.7)
4.6
(37.1)
82.7
(16.2)
66.5
-
66.5
(6.9)
7.9
2.1
-
-
3.1
69.6
2023
cents
2.9
2.9
2.9
2.9
7.8
2.3
2022
$m
2,373.3
7.0
(1,180.4)
(359.9)
(292.7)
(99.3)
(106.0)
(125.7)
(286.4)
(5.0)
(75.1)
-
0.4
(61.5)
(136.2)
17.8
(118.4)
6,894.3
6,775.9
65.9
(1.7)
(19.8)
0.5
(0.1)
44.8
6,820.7
2022
cents
(5.3)
(5.3)
304.6
304.6
483.9
13.0
77
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY BALANCE SHEET As at 30 June 2023
Current assets
Cash and cash equivalents
Receivables
Prepayments
Current tax assets
Derivative financial instruments
Assets held for sale
Other
Total current assets
Non current assets
Receivables
Investment in an associate
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
Lease liabilities
Current tax liabilities
Provisions
Derivative financial instruments
Liabilities directly associated with assets held for sale
Other
Total current liabilities
Non current liabilities
Payables
Interest bearing liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Other
Total non current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Retained earnings
Reserves
TOTAL EQUITY
The accompanying notes form an integral part of this balance sheet.
78
Note
C6
C7
B3
E7
C7
D4
C1
C2
C4
C5
B3
C8
C5
C9
B3
E7
C8
B2
C5
A5
C9
2023
$m
290.7
165.8
51.0
10.8
0.8
22.9
9.8
551.8
6.8
30.6
640.6
2,503.6
172.0
99.7
33.6
4.2
9.5
3,500.6
4,052.4
571.0
37.2
-
40.0
16.4
1.9
0.8
667.3
-
431.9
103.3
180.1
10.1
0.6
726.0
1,393.3
2,659.1
1,687.1
966.4
5.6
2,659.1
2022
$m
199.4
129.9
52.4
-
0.4
34.2
15.1
431.4
10.8
-
693.4
2,515.0
222.9
126.5
31.2
1.8
15.7
3,617.3
4,048.7
598.5
42.6
8.5
200.0
12.5
-
2.2
864.3
1.3
135.3
139.1
179.5
18.1
-
473.3
1,337.6
2,711.1
1,635.9
1,074.2
1.0
2,711.1
Tabcorp Annual Report 2023 CASH FLOW STATEMENT For the year ended 30 June 2023
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
Cash reduction through demerger of entities
Proceeds from sale of property, plant and equipment and intangibles
Net proceeds from business divestment
Payment for acquisition of shares in an associate
Proceeds from sale of other non current assets
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 transaction costs for capital reduction
Payment of demerger transaction costs
Payment of lease liabilities
Dividends paid
Payments for on-market share purchase
Net cash flows from/(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 prior year cash flow statement includes the cash flows of The Lottery Corporation for the period up to the demerger date.
Note
C6
C6
2023
$m
2,526.4
(2,092.9)
(260.5)
4.6
(28.1)
(30.2)
119.3
(196.9)
-
41.2
59.0
(33.3)
-
(130.0)
(140.0)
424.9
-
-
(12.5)
(45.0)
(122.9)
(2.5)
102.0
91.3
199.4
290.7
2022
$m
5,608.8
(2,569.9)
(1,980.3)
-
(133.4)
(188.2)
737.0
(202.5)
(261.7)
6.3
-
-
2.2
(455.7)
75.1
-
(127.0)
(19.7)
(75.3)
(48.0)
(279.8)
(31.6)
(506.3)
(225.0)
424.4
199.4
79
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2023
2023
Balance at beginning of year
Profit for the year
Other comprehensive income
Total comprehensive income
Dividends paid
Dividend reinvestment plan
Share based payments expense
Net outlay to purchase shares
Balance at end of year
2022
Balance at beginning of year
Profit for the year
Other comprehensive income
Total comprehensive income
Dividends paid
Demerger distribution(i)
Transaction costs for capital reduction
Dividend reinvestment plan
Discontinued cash flow hedges(ii)
Transfers
Share based payments expense
Net outlay to purchase shares
Balance at end of year
Issued capital
Number of
ordinary shares
m
Ordinary
shares
$m
Treasury
shares
$m
Retained
earnings/
(Accumulated
losses)
$m
Reserves
Hedging
$m
Demerger
$m
Other
$m
Total equity
$m
2,225.7
-
-
-
-
55.8
-
-
2,281.5
2,221.6
-
-
-
-
-
-
4.1
-
-
-
-
2,225.7
1,636.5
-
-
-
-
51.4
-
-
1,687.9
(0.6)
-
-
-
-
-
2.3
(2.5)
(0.8)
Total issued capital $1,687.1m
9,230.6
-
-
-
-
(7,601.5)
(14.3)
20.4
-
21.7
-
(20.4)
1,636.5
(0.6)
-
-
-
-
-
-
-
-
(0.4)
11.6
(11.2)
(0.6)
1,074.2
66.5
-
66.5
(174.3)
-
-
-
966.4
(1,863.5)
6,775.9
0.4
6,776.3
(300.2)
-
-
-
-
(3,538.4)
-
-
1,074.2
1.6
-
(4.8)
(4.8)
-
-
-
-
(3.2)
-
-
-
-
-
-
-
-
-
Total reserves $5.6m
(10.0)
-
46.1
46.1
-
-
-
-
(34.5)
-
-
-
1.6
(669.9)
-
-
-
-
(2,868.5)
-
-
-
3,538.4
-
-
-
(0.6)
-
7.9
7.9
-
-
1.5
-
8.8
9.5
-
(1.7)
(1.7)
-
-
-
-
-
(21.3)
12.9
-
(0.6)
2,711.1
66.5
3.1
69.6
(174.3)
51.4
3.8
(2.5)
2,659.1
6,696.1
6,775.9
44.8
6,820.7
(300.2)
(10,470.0)
(14.3)
20.4
(34.5)
0.0
24.5
(31.6)
2,711.1
(i) Demerger distribution on the demerger of The Lottery Corporation. Refer to note A3.
(ii) Represents the recycling of the hedging reserve to the income statement on discontinuation of hedge accounting.
Total issued capital $1,635.9m
Total reserves $1.0m
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.
Opening demerger reserve at comparative period 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. The reserve was brought to nil during the prior year, following the gain on demerger of The Lottery Corporation.
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.
80
Tabcorp Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS: ABOUT THIS REPORT For the year ended 30 June 2023
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 2023 comprises the Company and its subsidiaries (the Group) and the Group’s interest in joint
arrangements and associates.
The Financial Report was authorised for issue by the Board of Directors on 24 August 2023.
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 hundred thousand 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 assets held for sale that have been measured at fair value.
The Group’s balance sheet reflects a net current asset deficiency. This largely arises due to customer account balances being classified as current liabilities under Australian Accounting
Standards as the Group does not have an unconditional right to defer payment beyond 12 months, notwithstanding these are recurring in nature and are not expected to be fully settled
within the next 12 months. The Group maintains sufficient undrawn facilities to meet working capital requirements, including settlement of customer account balances as required. In order
to minimise finance costs, excess cash is used to reduce non current interest bearing liabilities until the current liabilities become due.
The accounting policies have been applied consistently throughout the Group for the purposes of this Financial Report.
Changes in comparative presentation
During the current year, the Group made certain classification adjustments as a result of refining cost allocation principles applied by the Group. The primary impact of the revision is that
expenses previously recognised as employee costs and communication and technology costs are now recognised as other expenses. The prior year presentation was reclassified to align
with the current year. The net impact of these reclassification adjustments on the Group’s net profit after tax is nil for both continuing and discontinued operations.
Impact on income statement
Income – (decrease)
Other income
Expenses – (increase)/decrease
Employment costs
Communications and technology costs
Advertising and promotions
Other expenses
Net impact on profit for the year
2022
$m
(0.2)
51.3
32.2
0.5
(83.8)
-
81
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: ABOUT THIS REPORT For the year ended 30 June 2023
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
A1 Segment information
A2 Earnings per share
A3 Dividends
A4 Revenue and expenses
A5
A6 Subsequent events
Income tax
D Group structure
D1 Subsidiaries
D2 Deed of cross guarantee
D3 Parent entity disclosures
D4
D5 Discontinued operations
Investment in an associate
83
85
85
86
87
88
107
109
111
112
113
B Capital and risk management
B1 Capital management
Interest bearing liabilities
B2
B3 Derivative financial instruments
B4 Fair value measurement
B5 Financial instruments – risk management
E Other disclosures
E1 Employee share plans
E2
Pensions and other
post employment benefit plans
E3 Commitments
E4 Contingencies
E5 Related party disclosures
E6 Auditor’s remuneration
E7 Assets held for sale
E8 Other accounting policies
89
89
91
93
94
115
117
118
119
119
120
120
121
C Operating assets and liabilities
C1 Licences
C2 Other intangible assets
C3
Impairment testing
C4 Property, plant and equipment
C5 Leases
C6 Notes to the cash flow statement
C7 Receivables
C8 Payables
C9 Provisions
97
98
99
101
102
104
105
105
106
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:
Note
A5 – Income tax
B3 – Derivative financial instruments
C1 – Licences
C2 – Other intangible assets
C4 – Property, plant and equipment
C3 – Impairment testing
C5 – Leases
C9 – Provisions
E4 – Contingencies
Underlying estimates and assumptions
Calculation of provision for income tax.
Fair value measurement.
Asset useful lives.
Recoverable amount of cash generating units (CGUs).
Lease term, make good and incremental borrowing rate.
Future obligations and probability of outflow.
Assessment of possible obligation and probability of outflow.
82
Tabcorp Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS: GROUP PERFORMANCE For the year ended 30 June 2023
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 two operating segments at year end.
Tabcorp
Group
Wagering and Media
Provision of totalisator and fixed odds betting and retail wagering
networks, and global racing media business
Gaming Services
Gaming machine monitoring operations in New South Wales, Queensland
and the Northern Territory and venue services nationwide
Segment revenue
$m
Segment profit before interest and tax
$m
2023
2022
2023
2022
2,230.8
2,181.9
203.6
192.9
34.4
116.2
91.0
3.8
Wagering and Media
Gaming Services
83
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: GROUP PERFORMANCE For the year ended 30 June 2023
2023
Revenue – external
Revenue – intersegment
Segment revenue
Segment profit before interest and tax
Depreciation and amortisation
Capital expenditure(i)
2022
Revenue – external
Revenue – intersegment
Segment revenue
Segment profit before interest and tax
Depreciation and amortisation
Capital expenditure(i)
(i) 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:
– net gain on disposal of assets(ii)
– onerous contract remeasurement
– net gain on sale of eBET business(ii)
– asset write-off
– demerger costs
– transformation costs(iii)
– impairment – other(iv)
– costs relating to Racing Queensland dispute(v)
– loss from equity accounted investment
– finance income
– finance costs(vi)
– other
Total per income statement
Revenue(i)
2023
$m
2,434.4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,434.4
2022
$m
2,374.8
(1.5)
-
-
-
-
-
-
-
-
-
-
-
-
-
2,373.3
Profit/(loss) from
continuing operations
before income tax
2022
2023
$m
$m
150.6
94.8
-
-
6.5
6.5
34.2
(1.6)
(8.9)
(20.3)
(49.0)
-
(32.6)
(2.7)
4.6
(37.1)
(0.1)
82.7
-
(6.8)
-
(7.3)
-
-
(5.0)
(151.3)
(170.4)
-
0.4
(61.5)
0.5
(136.2)
Wagering
and Media
$m
Gaming
Services
$m
2,230.8
-
2,230.8
116.2
191.8
116.5
2,180.4
1.5
2,181.9
91.0
215.0
100.4
203.6
-
203.6
34.4
48.7
38.9
192.9
-
192.9
3.8
71.4
33.6
Total
$m
2,434.4
-
2,434.4
150.6
240.5
155.4
2,373.3
1.5
2,374.8
94.8
286.4
134.0
Depreciation
and amortisation
2023
$m
240.5
-
2022
$m
286.4
-
Impairment
2023
$m
-
-
2022
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
240.5
-
-
-
-
-
-
-
-
-
-
-
-
-
286.4
-
-
-
-
-
-
49.0
-
49.0
-
-
-
-
49.0
-
-
-
-
-
-
5.0
-
5.0
-
-
-
-
5.0
(i) Total revenue includes revenue from foreign operations of $278.6m (2022: $261.7m).
(ii) Refer to note E7.
(iii) Includes establishment and implementation costs of the transformation program.
(iv) Current year comprises write down of other intangible assets, property plant and equipment and other assets (refer to note C3). Prior year comprises write down of other intangible assets, property plant and equipment and right-of-use assets.
(v) Refer to note C9.
(vi) Prior year includes the gain on cashflow hedges on demerger. Refer to note A4(d).
84
Tabcorp Annual Report 2023 A2 Earnings per share
Profit/(loss) used in calculation of earnings/(loss) per share (EPS) from continuing operations
Profit from discontinued operations and net gain on demerger of The Lottery Corporation, net of tax
Earnings used in calculation of EPS attributable to shareholders
Weighted average number of ordinary shares used in calculating basic EPS
Effect of dilution from share options
Weighted average number of ordinary shares used in calculating diluted EPS
2023
$m
66.5
-
66.5
2022
$m
(118.4)
6,894.3
6,775.9
2023
Number (m)
2,267.7
-
2,267.7
2022
Number (m)
2,224.9
-
2,224.9
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 or Options. There are no dilutive Performance Rights or Options at 30 June 2023 (2022: Nil).
A3 Dividends
Fully franked dividends declared and paid during the year:
Prior year final dividend
Interim dividend
Demerger distribution
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 refundable
Franking credits available at the 30% company tax rate after allowing for tax payable or receivable
2023
cents per share
2022
cents per share
6.5
1.3
-
7.8
1.3
1.0
2.3
7.0
6.5
470.4
483.9
6.5
6.5
13.0
2023
$m
144.7
29.6
-
174.3
29.6
22.8
52.4
145.5
(25.9)
119.6
2022
$m
155.5
144.7
10,470.0
10,770.2
144.7
144.7
289.4
191.2
(6.8)
184.4
85
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: GROUP PERFORMANCE For the year ended 30 June 2023
A4 Revenue and expenses
(a) Disaggregated revenue information:
Set out below is the disaggregation of the Group’s revenue from contract with customers:
2023
Revenue from contracts with customers
Other revenue(i)
2022
Revenue from contracts with customers
Other revenue(i)
Timing of revenue recognition
Goods and services transferred at a point in time
Goods and services transferred over time
(b) Other income
Net gain on sale of eBET business(ii)
Net gain/(loss) on disposal of assets(iii)
Transitional Services Agreement (TSA) income(iv)
Other(v)
(c) Employment costs include:
Defined contribution plan expense
(d) Finance costs(vi)
Interest costs on interest bearing liabilities
Interest costs on lease liabilities
Net gain on fair value of cash flow hedges(vii)
Other
(e) Impairment – other(viii)
Other intangible assets – software
Property, plant and equipment
Right-of-use assets
Other assets
Includes fixed odds betting revenue. Refer accounting policy opposite.
(i)
(ii) Refer to note E7.
(iii) Includes net gain on disposal of electronic gaming machines. Refer to note E7.
(iv) TSA income relates to the provision of services to The Lottery Corporation in the transition period following its demerger and is accounted for on a gross basis.
(v) Current year includes insurance recoveries of $11.0m (2022: $5.0m).
(vi) Prior year includes all finance costs incurred by the Tabcorp Group under the financing arrangements in place prior to the demerger.
(vii) Prior year includes recycling of discontinued cash flow hedges to the income statement; and hedge ineffectiveness.
(viii) Refer to note C3 for current year impairment.
86
Wagering
$m
984.8
1,025.6
2,010.4
1,022.2
941.3
1,963.5
Media
$m
220.4
-
220.4
216.9
-
216.9
Gaming
Services
$m
203.6
-
203.6
192.9
-
192.9
2023
$m
2,298.5
135.9
2,434.4
34.2
10.3
30.6
15.9
91.0
25.5
23.0
5.4
0.2
8.5
37.1
13.1
26.9
-
9.0
49.0
Total
$m
1,408.8
1,025.6
2,434.4
1,432.0
941.3
2,373.3
2022
$m
2,226.6
146.7
2,373.3
-
(5.3)
3.3
9.0
7.0
26.5
108.1
8.2
(64.3)
9.5
61.5
0.5
2.0
2.5
-
5.0
Tabcorp Annual Report 2023 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:
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.
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 using the effective interest rate method.
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
Income tax (payable)/receivable at the 30% company tax rate
Tax effect of adjustments in calculating taxable income:
– net gain on fair value of cash flow hedges
– divestment of disposal group
– Racing Queensland settlement
– amortisation of licences
– research and development claims
– amounts under provided in prior years
– other
Income tax (expense)/benefit
2023
$m
(20.8)
7.3
(2.7)
(16.2)
82.7
(24.8)
-
12.2
-
(10.5)
3.4
3.2
0.3
(16.2)
2022
$m
7.3
2.7
7.8
17.8
(136.2)
40.9
19.3
-
(45.0)
(10.5)
2.6
2.7
7.8
17.8
87
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: GROUP PERFORMANCE For the year ended 30 June 2023
(b) Deferred tax assets/(liabilities)
Licences
Right-of-use assets
Other intangible assets
Research and development
Unclaimed dividends
Lease liabilities
Provisions
Property, plant and equipment
Other
Accrued expenses
Fair value of cash flow hedges
Net deferred tax assets/(liabilities)
Licences
Right-of-use assets
Other intangible assets
Research and development
Unclaimed dividends
Lease liabilities
Provisions
Property, plant and equipment
Other
Accrued expenses
Fair value of cash flow hedges
Net deferred tax assets/(liabilities)
Balance at
30 June 2022
$m
(225.4)
(43.8)
5.7
(8.7)
(5.0)
50.9
27.0
7.2
(1.2)
14.5
(0.7)
(179.5)
Balance at
1 July 2021
$m
(562.8)
(78.2)
(29.9)
(8.4)
(7.5)
92.6
25.6
11.8
11.3
15.6
4.3
(525.6)
Recognised in
income statement
$m
6.6
10.1
(4.4)
(0.3)
(2.0)
(11.5)
(5.3)
6.6
3.6
(6.1)
-
(2.7)
Recognised in
income statement(i)
$m
219.7
34.2
23.8
(0.5)
2.5
(43.7)
(2.4)
(0.7)
1.7
3.2
-
237.8
Recognised
directly in equity
$m
-
-
-
-
-
-
-
-
0.4
-
2.2
2.6
Recognised
directly in equity
$m
-
-
-
-
-
-
-
-
(0.2)
-
(3.7)
(3.9)
Recognised through disposal
groups sold and held for sale
$m
1.0
-
(0.1)
-
-
-
-
(1.2)
(0.2)
-
-
(0.5)
Reduction through
demerger of entities
$m
117.7
0.2
11.8
0.2
-
2.0
3.8
(3.9)
(14.0)
(4.3)
(1.3)
112.2
Balance at
30 June 2023
$m
(217.8)
(33.7)
1.2
(9.0)
(7.0)
39.4
21.7
12.6
2.6
8.4
1.5
(180.1)
Balance at
30 June 2022
$m
(225.4)
(43.8)
5.7
(8.7)
(5.0)
50.9
27.0
7.2
(1.2)
14.5
(0.7)
(179.5)
(i) Includes amounts for both continuing and discontinued operations.
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
On 24 August 2023, the Group announced the sale of the Tabcorp Gaming Solutions business (trading as MAX Performance Solutions) for $21.3 million in cash, subject to working capital,
net debt and other minor adjustments. The sale is targeted for completion prior to December 2023, subject to necessary regulatory approvals being obtained.
Other than the events disclosed elsewhere in this report, no additional matters or circumstances have arisen since the end of the financial year, that may significantly affect the Group’s
operations, the results of those operations or the state of affairs of the Group.
88
Tabcorp Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS: CAPITAL AND RISK MANAGEMENT For the year ended 30 June 2023
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.
Gearing is managed primarily through the ratio of net debt to earnings before interest, tax, depreciation, amortisation and impairment (EBITDA). Net debt is gross debt (including lease
liabilities) less cash (excluding restricted cash).
At 30 June the Group’s gearing ratio was:
Net debt(i)
EBITDA (before significant items)(ii)
Gearing ratio
2023
$m
344.7
391.0
0.9
2022
$m
201.9
381.6
0.5
(i) Net debt for the current year includes US private placement debt at the Australian dollar principal repayable under cross currency swaps.
(ii) EBITDA represents continuing operations.
B2 Interest bearing liabilities
The Group borrows money from financial institutions and debt investors in the form of bank loans and foreign currency denominated notes. At 30 June 2023, the Group has undrawn
facilities of $950.0m (2022: $810.0m).
The following table details the debt position of the Group at 30 June:
Facility
Bank loans – unsecured
Details
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 2023 aggregate US dollar principal
of $289.0m. Cross currency swaps are in place for all US dollar debt. Under these swaps
the aggregate Australian dollar amount payable at maturity is $424.9m. Subject to
financial undertakings as to gearing and interest cover.
Facility limit
$m
400.0
550.0
USD 169.0
USD 120.0
Maturity
Jul-25
Jul-27
Mar-30
Mar-33
Current
Non current
(i) The value comprises the drawn down value of $435.9m (2022: $140.0m) less borrowing costs of $4.0m (2022: $4.7m).
2023
$m
-
-
-
252.6
179.3
431.9(i)
431.9
-
431.9
431.9
2022
$m
135.3(i)
-
135.3
-
-
-
135.3
-
135.3
135.3
89
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: CAPITAL AND RISK MANAGEMENT For the year ended 30 June 2023
B2.1 Changes in liabilities arising from financing activities:
Interest bearing liabilities
Current
Non current
Cross currency swaps
Non current assets
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 2022
$m
Cash flows
$m
Foreign
exchange
movement
$m
Changes in
fair values
$m
Lease additions
$m
Other(i)
$m
Balance at
30 June 2023
$m
-
135.3
-
42.6
139.1
317.0
-
280.9
-
(45.0)
-
235.9
-
11.0
-
-
-
11.0
-
-
(2.4)
-
-
(2.4)
Balance at
30 June 2021
$m
Cash flows
$m
Foreign
exchange
movement
$m
Changes in
fair values
$m
Lease additions
$m
176.8
2,298.7
(69.6)
(88.0)
7.0
46.6
262.3
2,633.8
(127.0)
75.1
-
-
-
(48.0)
-
(99.9)
(49.8)
68.7
-
-
-
-
-
18.9
-
-
69.6
(99.0)
4.0
-
-
(25.4)
-
-
-
-
-
0.8
10.4
11.2
-
-
-
0.6
2.3
2.9
Reduction
through
demerger
of entities
$m
-
(2,312.0)
-
187.0
(11.0)
-
(70.6)
(2,206.6)
-
4.7
-
39.0
(38.1)
5.6
-
431.9
(2.4)
37.2
103.3
570.0
Other(i)
$m
Balance at
30 June 2022
$m
-
4.8
-
-
-
43.2
(63.0)
(15.0)
-
135.3
-
-
-
42.6
139.1
317.0
(i) Includes transfers between current and non current classification of lease liabilities.
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 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. These fees are capitalised as a prepayment for liquidity services and amortised over
the period of the facility to which they relate.
90
Tabcorp Annual Report 2023 B3 Derivative financial instruments
The Group holds the following derivative financial instruments, all at fair value based on level 2 observable inputs, other than fixed odds open betting positions which are within level 3
in fair value hierarchy (refer to note B4):
Current assets
Foreign exchange forward contracts
Non current assets
Foreign exchange forward contracts
Cross currency swaps
Current liabilities
Fixed odds open betting positions
2023
$m
0.8
1.8
2.4
4.2
5.0
16.4
2022
$m
0.4
1.8
-
1.8
2.2
12.5
Derivative financial instruments are recognised initially and subsequently at fair value (refer to note B4). 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 were 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.
91
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: CAPITAL AND RISK MANAGEMENT For the year ended 30 June 2023
B3.1 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 were:
Less than one year
One to five years
More than five years
Notional principal
Fixed interest rate range p.a.
2023
2022
Pay principal
AUD m
Receive principal
USD m
-
-
424.9
424.9
-
-
289.0
289.0
Pay principal
AUD m
-
-
-
-
Receive principal
USD m
-
-
-
-
6.9%–8.0%
6.9%–8.0%
-
-
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 B5.2.
B3.2 Foreign exchange forward contract
These foreign exchange forward contracts are used to reduce the exposure to the volatility of movements in the forward USD exchange rate in relation to the USD exposure.
Less than one year
One to five years
More than five years
Notional principal
Notional principal
2023
$m
6.6
15.4
-
22.0
2022
$m
6.1
22.0
-
28.1
Further information about the Group’s foreign currency risk management is disclosed in note B5.2.
B3.3 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.
Cross currency swaps
The ineffectiveness recognised in the income statement was immaterial in both the current and prior financial year.
2023
$m
(0.2)
(0.2)
2022
$m
-
-
92
Tabcorp Annual Report 2023 B3.4 Impact of hedging on equity
Set out below is a reconciliation of the movement in the hedging reserve:
As at 1 July 2022
Effective portion of changes in fair value arising from:
– Cross currency swaps
Loss on revaluation of USD debt
Other
Tax effect
As at 30 June 2023
As at 1 July 2021
Effective portion of changes in fair value arising from:
– Interest rate swaps
– Cross currency swaps
Loss on revaluation of USD debt
Recycling of cash flow hedges to income statement
Other
Tax effect
As at 30 June 2022
B4 Fair value measurement
Hedging reserve
$m
1.6
3.8
(11.0)
0.3
2.1
(3.2)
(10.0)
35.5
37.9
(10.1)
(34.5)
2.6
(19.8)
1.6
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 liabilities
US private placement
Carrying amount
Fair value
2023
$m
435.9
435.9
2022
$m
-
-
2023
$m
502.8
502.8
2022
$m
-
-
93
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: CAPITAL AND RISK MANAGEMENT For the year ended 30 June 2023
The fair value of the Group’s financial instruments is estimated as follows:
US private placement
Fair value was 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).
Foreign exchange forward contracts
Fair value is calculated using widely accepted valuation techniques including discounted cash flow analysis of the expected cash flows of each derivative. This analysis reflects the
contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, such as yield curves, spot and forward FX rates.
The Group incorporates credit valuation adjustments to appropriately reflect the applicable counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value
of its derivative contracts for the effect of non-performance risk, the Group has considered the impact of netting and any applicable credit enhancements, such as collateral postings,
thresholds, mutual puts and guarantees (level 2 in fair value hierarchy).
Cross currency swaps
Fair value is calculated using market data including both the Australian and the United States interest rate curves which include the base rates and forward curves, incorporating swap
rates and foreign exchange rates. A discounted cash flow approach is used to derive the fair value of cross currency swaps at balance date (level 2 in fair value hierarchy).
Fixed odds open betting positions
Fair value is calculated based upon the latest open market prices on the relevant underlying sporting or other events available at the close of business at the balance date (level 3 in fair
value hierarchy). Changes in the fair value of the open positions are recorded in revenue in the consolidated income statement. There are no reasonably probable changes to assumptions
and inputs that would lead to material changes in the fair value methodology although final value will be determined by future sporting or other events results.
There have been no significant transfers between level 1 and level 2 during the financial year ended 30 June 2023.
B5 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 risks arising from operational, financing and investment activities, principally 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 B5.1 to B5.4.
B5.1 Interest rate risk
In general, the Group has a policy of controlling exposure to interest rate fluctuations by the use of fixed and variable rate debt, interest rate swaps, capped or collar options and forward
rate agreements.
At 30 June 2023 100% (2022: nil) of the Group’s borrowings are at a fixed rate of interest.
94
Tabcorp Annual Report 2023 The following assets and liabilities are exposed to floating interest rate risk:
Cash assets
Short term deposits
Bank loans – unsecured
Sensitivity analysis – interest rates – AUD
2023
$m
91.6
199.1
290.7
-
2022
$m
102.9
96.5
199.4
(135.3)
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
+ 1.0% (100 basis points)
- 1.0% (100 basis points)
Post tax profit
higher/(lower)
2023
$m
0.2
(0.2)
2022
$m
0.2
(0.2)
Other comprehensive income
higher/(lower)
2023
$m
2022
$m
-
-
-
-
The movements in profit are due to higher/lower interest costs from variable rate debt and investments.
Significant assumptions used in the analysis include:
› reasonably possible movements were determined based on the Group’s current credit rating and mix of debt, 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; 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.
B5.2 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. Based on this, the Group is not materially
exposed to foreign currency risk.
The translation of the results of the Group’s foreign subsidiaries into the Group presentation currency has not been considered as it represents translation risk rather than transaction risk.
B5.3 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;
› conducting all investment and financial instrument activity with approved counterparties with investment grade credit ratings and setting exposure limits based on these ratings; and
› reviewing compliance with counterparty exposure limits on a continuous basis, and spreading the aggregate value of transactions amongst the approved counterparties; ensuring no
more than 60% of investments are held with any one counterparty.
95
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: CAPITAL AND RISK MANAGEMENT For the year ended 30 June 2023
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 B5.4.
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 (2022: 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 $20.4m (2022: $20.4m).
B5.4 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.
Due to the measures in place for managing liquidity and access to capital markets, this risk is not considered significant.
At 30 June 2023 no debt facilities will mature in less than one year.
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
Lease liabilities
Net outflow
Derivative financial instruments
Financial assets
Cross currency swaps – receive USD fixed
Foreign exchange forward contracts
Financial liabilities
Fixed Odds open betting positions
Net inflow/(outflow)
< 1 year
$m
(571.0)
-
(33.0)
(41.4)
(645.4)
-
0.8
0.8
(16.4)
(16.4)
(15.6)
2023
1 – 5 years
$m
> 5 years
$m
< 1 year
$m
2022
1 – 5 years
$m
> 5 years
$m
-
-
(132.2)
(111.6)
(243.8)
-
1.8
1.8
-
-
1.8
-
-
(544.5)
(33.7)
(578.2)
2.4
-
2.4
-
-
2.4
(598.5)
(4.8)
-
(48.0)
(651.3)
-
0.4
0.4
(12.5)
(12.5)
(12.1)
(1.3)
(150.0)
-
(127.2)
(278.5)
-
1.8
1.8
-
-
1.8
-
-
-
(29.2)
(29.2)
-
-
-
-
-
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 AUD/USD rate at balance date.
96
Tabcorp Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2023
SECTION C – OPERATING ASSETS AND LIABILITIES
C1 Licences
2023
Carrying amount at beginning of year
Additions
Amortisation
Carrying amount at end of year
Cost
Accumulated amortisation and impairment
2022
Carrying amount at beginning of year
Amortisation
Carrying amount at end of year
Cost
Accumulated amortisation and impairment
Wagering
licences
$m
Gaming
machine
monitoring
licence
$m
554.0
-
(41.4)
512.6
978.5
(465.9)
512.6
595.4
(41.4)
554.0
978.5
(424.5)
554.0
139.4
2.0
(13.4)
128.0
201.7
(73.7)
128.0
152.8
(13.4)
139.4
199.7
(60.3)
139.4
Total
$m
693.4
2.0
(54.8)
640.6
1,180.2
(539.6)
640.6
748.2
(54.8)
693.4
1,178.2
(484.8)
693.4
Amortisation policy – straight line basis over useful life (years):
12 – 93
10 – 20
Licence expiration date:
– Victoria
– Queensland
– New South Wales
– Australian Capital Territory
– South Australia
– Tasmania
2024
2098
2097
2064(i)
2100
2027
2032
2043(ii)
(i) ACT sports bookmaking licence granted in 2014 for an initial term of 15 years with further rolling extensions to a total term of 50 years.
(ii) Tasmanian monitoring operator licence commencing 1 July 2023.
Licences that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses. The comparative period financial information for the Lotteries and
Keno discontinued operations has been excluded to assist comparability with the current period.
97
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2023
C2 Other intangible assets
2023
Carrying amount at beginning of year
Additions:
– acquired
– internally developed
Amortisation
Impairment
Transfers
Disposals
Transferred to assets held for sale
Other
Carrying amount at end of year
Cost
Accumulated amortisation and impairment
Includes capital works in progress of:
2022
Carrying amount at beginning of year
Additions:
– acquired
– internally developed
Disposals through demerger of entities
Amortisation
Impairment
Transfers
Disposals
Transferred to assets held for sale
Other
Carrying amount at end of year
Cost
Accumulated amortisation and impairment
Includes capital works in progress of:
Amortisation policy – straight line basis over useful life (years):
Expiration date:
(i) In line with New South Wales Wagering Licence retail exclusivity period.
NSW
Trackside
concessions
$m
Customer
related assets
$m
Brand
names
$m
Media content
and broadcast
rights
$m
Goodwill
$m
Other
$m
Software
$m
Total
$m
1,734.0
130.0
126.0
113.4
30.6
30.5
350.5
2,515.0
-
-
-
-
-
-
-
-
1,734.0
3,576.0
(1,842.0)
1,734.0
7,038.1
-
-
(5,304.1)
-
-
-
-
-
-
1,734.0
3,651.1
(1,917.1)
1,734.0
-
-
(1.7)
-
-
-
-
-
128.3
150.0
(21.7)
128.3
131.7
-
-
-
(1.7)
-
-
-
-
-
130.0
150.0
(20.0)
130.0
87
2097
-
-
(13.1)
-
-
(3.3)
-
2.8
112.4
165.6
(53.2)
112.4
161.0
-
-
(18.4)
(14.8)
-
-
-
-
(1.8)
126.0
168.0
(42.0)
126.0
-
-
(0.9)
-
-
-
-
0.2
112.7
114.9
(2.2)
112.7
222.6
-
-
(107.8)
(1.0)
-
-
-
-
(0.4)
113.4
114.5
(1.1)
113.4
-
-
-
-
-
-
-
-
30.6
30.6
-
30.6
30.6
-
-
-
-
-
-
-
-
-
30.6
30.6
-
30.6
-
-
(2.6)
-
-
(2.2)
-
-
25.7
51.4
(25.7)
25.7
33.2
-
-
-
(2.7)
-
-
-
-
-
30.5
54.5
(24.0)
30.5
34.9
96.5
(84.7)
(13.1)
(0.2)
(19.3)
(4.7)
-
359.9
947.2
(587.3)
359.9
100.9
34.9
96.5
(103.0)
(13.1)
(0.2)
(24.8)
(4.7)
3.0
2,503.6
5,035.6
(2,532.1)
2,503.6
100.9
439.3
8,056.5
47.1
87.5
(88.4)
(126.9)
(0.5)
3.6
(3.0)
(8.2)
-
350.5
950.5
(600.0)
350.5
108.4
47.1
87.5
(5,518.7)
(147.1)
(0.5)
3.6
(3.0)
(8.2)
(2.2)
2,515.0
5,119.2
(2,604.2)
2,515.0
108.4
8 – 20 5 – Indefinite
Indefinite
20
3 – 15
2033(i)
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, including NSW Trackside concessions and customer related 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.
98
Tabcorp Annual Report 2023 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
Wagering and Media
Other intangible assets with indefinite useful lives
NSW Wagering
Sky Racing
Sky Sports Radio
ACTTAB
2023
$m
2022
$m
1,734.0
1,734.0
98.8
30.6
6.7
4.5
140.6
98.8
30.6
6.7
4.5
140.6
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 0% to 2.5% (2022: 0% to 2.5%). These cash flows are then discounted using a relevant long term post tax
discount rate 8.90% (2022: 8.88%). This is considered to be level 3 in the fair value hierarchy (refer to note B4 for explanation of the valuation hierarchy).
Key assumptions on which management has based its recoverable amount estimates:
› Unless otherwise disclosed, the Group’s 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.
› The Group’s existing exclusive Wagering Licence in Victoria will expire in 2024. In determining recoverable amount estimates at 30 June 2023, probability-weighted scenarios have been
modelled, reflecting the potential outcomes of the current licence renewal process. These probability weighted scenarios reflect the Group’s assessment of the probability of possible
exclusive, non-exclusive retail wagering licence or no licence outcomes.
› State tax regimes and the regulatory environment in which the Group currently operates remain largely unchanged, other than those publicly announced.
› 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 rates used are either in line with or do not exceed the forecast long term underlying growth rate in the 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.
99
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY
NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2023
Sensitivities
Wagering and Media
› Probability-weighted scenarios were developed for a number of possible exclusive, non-exclusive Victorian retail wagering licence or no licence outcomes. Under the probability-weighted
scenario the estimates of recoverable amount exceed the carrying amount at 30 June 2023. The Group consider the probability-weighted outcomes modelled at 30 June 2023 to be
reasonable. Should the actual outcome of the Victorian retail wagering Licence renewal process significantly vary from the Group’s probability assessment, or in the event a Victorian
retail wagering licence is not awarded to the Group, the carrying amount of the Wagering & Media group of CGU’s may exceed its recoverable amount.
› An increase in the long term, post tax discount rate of 1.2% would result in the estimated recoverable amount being equal to carrying amounts.
› A decrease in the cashflows of the business of 11.2% would result in the estimated recoverable value of the segments to equal to the carrying amount.
Typically, changes in any one of the aforementioned assumptions (including operating performance) would be accompanied by a change in another assumption which may have an
offsetting impact. Action is usually taken to respond to adverse changes in assumptions to mitigate the impact of any such change. However, adverse movements in key assumptions may
lead to impairment.
Impairment Charges
Wagering and Media
No impairment charges were identified in the year ended 30 June 2023.
Gaming Services
The impairment assessment for the Tabcorp Gaming Solutions (TGS) business has determined the carrying value of the disposal group exceeded its recoverable amount at the time
of classification as a disposal group held for sale. As a result, a reduction in the carrying value of assets for the disposal group totaling $49.0m has been recognised in the income
statement. No impairment charges were identified for the other Gaming Services CGUs.
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.
100
Tabcorp Annual Report 2023
C4 Property, plant and equipment
2023
Carrying amount at beginning of year
Additions
Disposals
Depreciation
Transfer to assets held for sale
Impairment
Carrying amount at end of year
Cost
Accumulated depreciation and impairment
Includes capital works in progress of:
2022
Carrying amount at beginning of year
Additions
Disposals
Disposals through demerger of entities
Depreciation
Transfers
Transfer to assets held for sale
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
17.5
-
-
-
-
-
17.5
17.5
-
17.5
17.6
-
(0.1)
-
-
-
-
-
17.5
17.5
-
17.5
10.8
0.1
-
(0.8)
-
-
10.1
34.3
(24.2)
10.1
-
14.0
-
-
(0.1)
(2.1)
-
-
(1.0)
10.8
35.1
(24.3)
10.8
-
35.5
4.1
-
(9.8)
-
-
29.8
137.2
(107.4)
29.8
3.8
66.0
0.7
(0.1)
(17.5)
(13.0)
-
-
(0.6)
35.5
133.3
(97.8)
35.5
0.1
7 – 10
159.1
40.7
(8.8)
(39.8)
(9.7)
(26.9)
114.6
466.2
(351.6)
114.6
24.2
277.9
41.2
(7.6)
(51.9)
(73.0)
(1.1)
(26.0)
(0.4)
159.1
619.8
(460.7)
159.1
33.5
4 – 10
Total
$m
222.9
44.9
(8.8)
(50.4)
(9.7)
(26.9)
172.0
655.2
(483.2)
172.0
28.0
375.5
41.9
(7.8)
(69.5)
(88.1)
(1.1)
(26.0)
(2.0)
222.9
805.7
(582.8)
222.9
33.6
Depreciation policy – straight line basis over useful life (years):
20 – 40
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.
101
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2023
C5 Leases
(a) Group as a lessee
The Group has lease contracts for various properties, motor vehicles and other equipment with remaining lease terms expiring from 1 to 21 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.
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year:
2023
Carrying amount at beginning of year
Additions
Lease remeasurements
Terminations
Depreciation
Carrying amount at end of year
2022
Carrying amount at beginning of year
Additions
Lease remeasurements
Terminations(i)
Derecognition(ii)
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
Terminations(i)
Payments (cash outflow)
Carrying amount at end of year
Current
Non current
(i) Prior year includes the termination of certain leases, as the leases were novated or sub-leased to The Lottery Corporation on demerger.
(ii) Prior year includes the derecognition of right-of-use assets as a result of entering into finance sub-leases with The Lottery Corporation on demerger.
102
Property
$m
Other
$m
120.9
0.4
2.8
(0.9)
(29.7)
93.5
225.8
9.4
(9.1)
(59.4)
(4.9)
(38.4)
(2.5)
120.9
5.6
2.5
0.7
(0.1)
(2.5)
6.2
7.3
1.8
0.1
-
-
(3.6)
-
5.6
2023
$m
181.7
2.9
2.3
5.4
(1.4)
(50.4)
140.5
37.2
103.3
140.5
Total
$m
126.5
2.9
3.5
(1.0)
(32.2)
99.7
233.1
11.2
(9.0)
(59.4)
(4.9)
(42.0)
(2.5)
126.5
2022
$m
308.9
11.2
(15.5)
9.8
(74.9)
(57.8)
181.7
42.6
139.1
181.7
Tabcorp Annual Report 2023 (b) Group as a lessor
The Group has sub-leased properties that have previously been presented as part of right-of-use assets. The sub-leases have remaining terms of 2 and 4 years and the Group has classified
the leases as finance sub-leases.
The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the reporting date.
Less than one year
Between one to two years
Between two to three years
Between three to four years
Between four to five years
Total undiscounted lease receivable
Unearned finance income
2023
$m
3.3
2.7
1.9
1.9
-
9.8
(0.6)
9.2
2022
$m
3.1
3.3
2.7
1.9
1.9
12.9
(0.8)
12.1
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, any make good costs, 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.
The Group enters into lease arrangements as lessor in respect of some property leases. When the Group is an intermediate lessor it accounts for its interests in the head lease
and the sub-lease separately.
The sub-lease is a finance lease where it transfers substantially all the risks and rewards of ownership to the lessee. All other sub-leases are operating leases. The determination of
whether a sub-lease is classified as a finance lease or operating lease is made by reference to the right-of-use asset arising from the head lease. If a head lease is a short-term lease
to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease. Rental income from operating leases is recognised on a straight-line
basis over the term of the relevant lease.
The Group recognises on the Balance Sheet a net investment in a lease as the sum of the lease payments receivable plus any unguaranteed residual value, discounted at the interest
rate implicit in the lease.
103
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2023
C6 Notes to the cash flow statement
(a) Cash and cash equivalents comprise:
Cash on hand and in banks
Short term deposits
2023
$m
91.6
199.1
290.7
2022
$m
102.9
96.5
199.4
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.
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 $63.0m (2022: $84.3m).
(b) Reconciliation of net profit after tax to net cash flows from operating activities
Net profit after tax
Add items classified as investing/financing activities:
– gain on demerger of The Lottery Corporation (net of transaction costs)
– gain on sale of eBET business
– net loss on disposal of property, plant and equipment and intangibles
– net gain on disposal of non current assets
– other
Add non cash income and expense items:
– depreciation and amortisation
– impairment – other
– costs relating to Racing Queensland settlement
– share based payments expense
– unwinding of prepaid borrowing costs
– loss from equity accounted investment
– onerous contract provision release
– other(i)
Net cash provided by operating activities before changes in assets and liabilities
Changes in assets and liabilities:
(Increase)/decrease in:
– debtors
– prepayments
– net current tax assets
– other assets
(Decrease)/increase in:
– payables
– provisions
– deferred tax liabilities
– other liabilities
Net cash flows from operating activities
(i) Prior year includes recycling of discontinued cash flow hedges to the income statement, refer to A4.
104
2023
$m
66.5
12.5
(34.2)
(10.3)
-
(5.4)
240.5
49.0
-
3.8
1.2
2.7
(6.5)
9.9
329.7
(39.5)
(1.1)
(16.4)
0.9
4.2
(160.3)
2.5
(0.7)
119.3
2022
$m
6,775.9
(6,513.8)
-
5.0
(1.2)
-
382.3
5.0
150.0
24.5
4.8
-
-
(65.7)
766.8
10.1
(18.9)
(43.5)
(77.4)
117.0
(9.6)
(19.2)
11.7
737.0
Tabcorp Annual Report 2023 C7 Receivables
Current
Trade debtors
Allowance for expected credit losses
Finance lease receivable(i)
Other
Non current
Trade debtors
Finance lease receivable(i)
2023
$m
103.1
(0.8)
102.3
3.0
60.5
165.8
0.6
6.2
6.8
2022
$m
89.2
(3.5)
85.7
2.8
41.4
129.9
1.6
9.2
10.8
(i) Further information about the Group’s leases is disclosed in note C5.
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
Non current
Payables
Current payables consist of trade payables, accruals, customer account balances and other payables.
2023
$m
571.0
2022
$m
598.5
-
1.3
105
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: OPERATING ASSETS AND LIABILITIES For the year ended 30 June 2023
C9 Provisions
Current
Employee benefits
Premises
Other(i)
Non current
Employee benefits
Premises
Other
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 reversed during year
Provisions used during year
Carrying amount at end of year
2023
$m
37.1
1.0
1.9
40.0
4.5
5.6
-
10.1
Premises
$m
10.3
1.0
(1.5)
(3.2)
6.6
2022
$m
39.9
4.3
155.8
200.0
4.1
6.0
8.0
18.1
Other
$m
163.8
3.7
(6.5)
(159.1)
1.9
(i) Prior year includes provision of $150m relating to Racing Queensland dispute. On 5 June 2022 Tabcorp and Racing Queensland entered into an agreement to settle the legal proceedings in relation to disputes concerning the calculation of fees payable by
Tabcorp following the introduction of point of consumption tax in Queensland. The settlement to Racing Queensland occurred in December 2022.
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.
106
Tabcorp Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS: GROUP STRUCTURE For the year ended 30 June 2023
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
Aussie Fair Play Coalition Pty Ltd
Luxbet Pty Ltd
Tabcorp Wagering Holdings Pty Ltd
Tabcorp ACT Pty Ltd
Tabcorp Gaming Holdings Pty Ltd
Tabcorp Gaming Solutions (NSW) Pty Ltd
Tabcorp Gaming Solutions Pty Ltd
Tabcorp Wagering (Vic) Pty Ltd
Tabcorp Wagering Assets (Vic) Pty Ltd
Tabcorp Investments No.6 Pty Ltd
Tabcorp Wagering Participant (Vic) Pty Ltd Ubet Radio 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
Ubet Qld Limited
Ubet NT 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
Tabcorp Maxgaming Holdings Limited (formerly Tatts Group Limited)
100% previously owned Australian subsidiaries sold during the period(i):
eBET Systems Pty Limited
Intecq Limited
Industry Data Online Pty Ltd
eBET Gaming Systems Pty Limited
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
Maxgaming Investments Pty Ltd
Tabcorp Ventures Pty Ltd (formerly Tabcorp
Investments No.11 Pty Ltd)
Tabcorp Wagering Manager (Vic) Pty Ltd
OneTab Australia Pty Ltd
OneTab Holdings Pty Ltd
Sky Australia International Racing Pty Ltd
COPL Pty Ltd
Tabcorp Employee Share Administration Pty Ltd
Sky Channel Marketing Pty Ltd
Ubet Enterprises Pty Ltd
Maxgaming TAS Pty Ltd
Tabcorp Ventures Australia 1 Pty Ltd
Tabcorp VIC Pty Ltd
107
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: GROUP STRUCTURE For the year ended 30 June 2023
International subsidiaries
Name
Premier Gateway International Limited
Premier Gateway Services Limited
Tabcorp Europe Holdings Limited
Tabcorp Europe Limited
Bytecraft Systems (NZ) Limited
Sky Racing World Holdco, LLC
Sky Racing World, LLC
Tabusa, LLC
Country of incorporation
Isle of Man
Isle of Man
Isle of Man
Isle of Man
New Zealand
United States of America
United States of America
United States of America
100% previously owned International subsidiaries deregistered during the period(ii):
Tabcorp UK Limited
(i) Control of these entities was lost on 1 February 2023 on the sale of the eBET business.
(ii) Company was dissolved on 19 March 2023.
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
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.
108
Tabcorp Annual Report 2023 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) before income tax
Income tax (expense)/benefit
Loss for the period
Gain on demerger after tax
Net (loss)/profit 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
Income tax on 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
Retained earnings/(accumulated losses) at beginning of year
Adjustment for companies exiting the Closed Group
Net (loss)/profit after tax
Other comprehensive income
Transfer to demerger reserve
Dividends paid
Retained earnings at end of year
2023
$m
2,264.7
(2,227.1)
37.6
3.7
(37.1)
4.2
(14.1)
(9.9)
-
(9.9)
(6.9)
2.1
-
-
(4.8)
(14.7)
991.8
79.3
(9.9)
-
-
(174.3)
886.9
2022
$m
2,216.2
(2,299.4)
(83.2)
0.6
(61.5)
(144.1)
18.9
(125.2)
7,021.2
6,896.0
65.9
(19.8)
0.5
(0.1)
46.5
6,942.5
(2,044.0)
(22.0)
6,896.0
0.4
(3,538.4)
(300.2)
991.8
109
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: GROUP STRUCTURE For the year ended 30 June 2023
Balance sheet
Cash and cash equivalents
Receivables
Prepayments
Current tax assets
Derivative financial instruments
Assets held for sale
Other
Total current assets
Receivables
Investment in controlled entities
Licences
Other intangible assets
Property, plant and equipment
Right-of-use assets
Prepayments
Derivative financial instruments
Other
Total non current assets
TOTAL ASSETS
Payables
Lease liabilities
Current tax liabilities
Provisions
Derivative financial instruments
Liabilities directly associated with assets held for sale
Other
Total current liabilities
Payables
Interest bearing liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Total non current liabilities
TOTAL LIABILITIES
NET ASSETS
Issued capital
Retained earnings
Reserves
TOTAL EQUITY
110
2023
$m
218.5
105.2
50.5
11.2
0.8
22.9
13.2
422.3
6.8
7.2
638.6
2,460.7
165.7
99.7
33.6
4.2
4.0
3,420.5
3,842.8
449.0
37.2
-
39.9
16.4
1.9
0.5
544.9
-
431.9
103.3
180.2
10.0
725.4
1,270.3
2,572.5
1,687.1
886.9
(1.5)
2,572.5
2022
$m
107.8
93.3
52.0
-
0.4
34.2
14.5
302.2
10.8
7.6
693.4
2,474.0
216.6
126.5
31.2
1.8
13.9
3,575.8
3,878.0
510.4
42.6
8.1
200.0
12.5
-
1.3
774.9
1.3
135.3
139.1
179.7
18.1
473.5
1,248.4
2,629.6
1,635.9
991.8
1.9
2,629.6
Tabcorp Annual Report 2023 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
Other reserves
Total equity
Contingent liabilities
Refer to note E4.
Capital expenditure
Tabcorp Holdings
2023
$m
231.2
-
231.2
188.9
4,431.8
38.1
41.4
1,687.1
2,701.9
1.4
4,390.4
2022
$m
4,462.7
0.5
4,463.2
41.7
4,337.7
54.7
56.6
1,635.9
2,645.2
-
4,281.1
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 2023 or 30 June 2022.
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. Tabcorp adopts the stand-alone taxpayer’ approach as defined in AASB Interpretation 1052 Tax Consolidation Accounting, which
requires each subsidiary member to record income taxes as though they each continued to be a taxable entity in their own right.
111
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: GROUP STRUCTURE For the year ended 30 June 2023
D4 Investment in an associate
In October 2022, the Group acquired 4,106,756 shares equivalent to a 20% interest in Dabble Sports Pty Ltd (Dabble) for a purchase price of $32.8m paid in cash. Dabble is a popular
online racing and sports bookmaker in Australia that holds a betting licence in the Northern Territory.
Dabble is a private entity that is incorporated in Australia. The Group has representation on Dabble’s Board of Directors and participates in the significant financial and operating decisions.
The Group has therefore determined that it has significant influence over the investee.
The following table illustrates the summarised financial information of the Group’s investment in Dabble.
Revenue
Expenses
Loss before income tax
Income tax expense
Loss for the year
Group’s share of loss for the year
Current assets
Non current assets
Current liabilities
Non current liabilities
Equity
Group’s share of the associate’s equity – 20%
Group’s carrying amount of the investment
There were no dividends received from the investee during the year.
(i) Loss for the year from date of acquisition to 30 June 2023.
2023(i)
$m
48.3
(62.0)
(13.7)
-
(13.7)
(2.7)
16.6
9.5
(10.0)
(0.6)
15.5
3.1
30.6
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.
112
Tabcorp Annual Report 2023 D5 Discontinued operations
Demerger of The Lottery Corporation Limited in the comparative period
The Lottery Corporation was demerged on 1 June 2022 and is reported as a discontinued operation. The Lottery Corporation operates Lotteries and Keno pursuant to licences and
approvals in certain Australian states and territories.
The demerger distribution of The Lottery Corporation was recognised at the fair value of The Lottery Corporation shares of $10,470m. The fair value was determined using the volume
weighted average price (VWAP) of The Lottery Corporation’s shares as traded on the ASX over the first five trading days starting from the date of commencement of trading (including
on a deferred settlement basis).
The demerger distribution is accounted for as a reduction in equity, split between a share capital reduction and a demerger reserve; and was settled through the transaction of The Lottery
Corporation shares under the scheme of arrangement. The difference between the book value of the net assets of The Lottery Corporation transferred and the demerger distribution value
is recognised as a gain on demerger.
(a) Financial performance of discontinued operations
Revenue
Expenses
Profit before income tax
Income tax expense
Gain on demerger after tax(i)
Profit from discontinued operations after tax
(i) Net of pre-tax transaction costs of $89.2m, including non cash items of $7.0m.
(b) Assets and liabilities at date of demerger
The major classes of assets and liabilities demerged were:
Assets
Cash and cash equivalents
Other current assets
Debt instruments
Licences
Other intangible assets and goodwill
Property, plant and equipment
Right-of-use assets
Derivative financial instruments
Other
TOTAL ASSETS
Liabilities
Payables
Interest bearing liabilities
Lease liabilities
Provisions
Derivative financial instruments
Deferred tax liabilities
Other
TOTAL LIABILITIES
NET ASSETS
2022
$m
3,232.2
(2,684.9)
547.3
(166.8)
6,513.8
6,894.3
1 June 2022
$m
261.7
105.6
285.8
1,271.2
5,518.7
69.5
60.4
187.0
64.3
7,824.2
1,023.4
2,312.0
70.6
19.6
11.0
383.3
120.7
3,940.6
3,883.6
113
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: GROUP STRUCTURE For the year ended 30 June 2023
(c) Cash flow from discontinued operations (contained in the Group cash flow statement)
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
Net cash inflow
(d) Earnings per share from discontinued operations
Basic earnings per share
Diluted earnings per share
(e) Gain on demerger
Consideration – demerger distribution
Book value of net assets disposed
Transaction costs
Gain on demerger before income tax
Income tax benefit
Gain on demerger after tax
2022
$m
586.8
(112.0)
(437.3)
37.5
2022
cents
309.9
309.9
June 2022
$m
10,470.0
(3,883.6)
(89.2)
6,497.2
16.6
6,513.8
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.
114
Tabcorp Annual Report 2023 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 Incentive Plan (LTI)
Effective 1 July 2022 the Company granted Options as part of its 2022 Long Term Incentive Plan to senior level employees.
The exercise price of the share options is equal to the market share price as at grant date using a daily Volume Average Weighted Price (VWAP) of Tabcorp shares traded on the ASX
during the previous 10 trading days.
The share options vest if and when the Company’s predetermined ROIC targets are met over a three year period and the participant remains employed on such date. The share options
granted will not vest if the ROIC performance condition is not met.
The fair value of the share options is estimated at the grant date, participants are allocated a maximum number of Options (based on their maximum LTI opportunities) using a fair value
allocation methodology determined by an independent third party using a Black-Scholes methodology. The fair value is recognised as an employee expense (with a corresponding increase
in equity) over the vesting period.
The performance period is three financial years commencing 1 July in the year the grant is made. The 2022 LTI Plan grant has a performance period commencing 1 July 2022 and ending
30 June 2025. The 12-month exercise period will commence at the vesting date allowing participants 12 months to choose whether to exercise any vested Options. The end of the exercise
period is the expiry date for the Options. There are no cash settlement alternatives, the Company does not have a past practice of cash settlement for these share options. The Company
accounts for the options as an equity-settled plan.
The dilutive effect, if any, of outstanding Options is reflected in the computation of diluted earnings per share.
Short Term Incentive Plan (STI)
For senior management it is mandatory to defer 25% (50% for the Managing Director and Chief Executive Officer) of their STI into Restricted Shares, which are subject to a two year
service condition. The cost of the Restricted Shares 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.
In addition, the Company has granted Restricted Shares to key critical employees including executives as part of a one-off retention plan as a result of the demerger. At the time of the
demerger, Restricted Shares issued under this plan were cancelled for employees ceasing employment and a reversal of the expense was recognised. For continuing employees, the cost
of the Tabcorp Restricted Shares are recognised over the vesting period until July 2023, and the cost of The Lottery Corporation shares allocated as part of the demerger were placed
under a holding lock and the remaining cost was expensed prior to the demerger.
Further explanation of the share plans is disclosed in the Remuneration Report.
115
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: OTHER DISCLOSURES For the year ended 30 June 2023
Performance Rights and Options (number)
Details of and movements in Performance Rights and Options granted under the LTI that existed during the current or prior year are:
Grant date
2023
Options
26 October 2022
2022
Performance rights
17 October 2018
17 October 2018
24 October 2019
20 October 2020
19 October 2021
Expiry date
31 August 2026
19 September 2021
30 June 2021
25 September 2022
24 September 2023
29 September 2024
Balance at
start of year
Movement during the year
Granted
Forfeited
Expired(i)
Vested
Balance at
end of year(ii)
-
-
47,993,858
47,993,858
(2,625,000)
(2,625,000)
-
-
-
-
45,368,858
45,368,858
1,341,030
446,999
1,756,423
3,145,859
-
6,690,311
-
-
-
-
2,309,593
2,309,593
(670,845)
(446,999)
(455,596)
(107,765)
-
(1,681,205)
-
-
(127,026)
(1,332,469)
(1,826,217)
(3,285,712)
(670,185)
-
(1,173,801)
(1,705,625)
(483,376)
(4,032,987)
-
-
-
-
-
-
(i) As a result of the demerger of The Lottery Corporation, Performance Rights vested on a pro rata basis, considering the service period that had elapsed at the date of the demerger. Any Performance Rights that did not vest lapsed. These are shown as expired
during the 2022 year.
(ii) 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. Options have been independently valued
at the date of grant using a Black-Scholes methodology.
The weighted average fair value of Performance Rights granted during the year was $nil (2022: $2.94).
The weighted average fair value of Options granted during the year was $0.20 (2022: $nil).
The assumptions underlying the Performance Rights and Options valuations are:
Grant date
2023
Options
26 October 2022
2022
Performance rights
27 October 2017
17 October 2018
17 October 2018
24 October 2019
24 October 2019
20 October 2020
20 October 2020
19 October 2021
19 October 2021
Expiry date
31 August 2026
15 September 2020
19 September 2021
30 June 2021
25 September 2022
25 September 2022
24 September 2023
24 September 2023
29 September 2024
29 September 2024
Share price at
date of grant
$
Expected
volatility in
share price(i)
%
Expected
dividend yield(ii)
%
Risk free
interest rate(iii)
%
Value per Option/
Performance Right
$
0.99
4.45
4.76
4.76
4.85
4.85
3.44
3.44
5.09
5.09
30.00
22.00
21.00
21.00
20.00
20.00
30.00
30.00
27.50
27.50
2.84
5.50
5.06
5.06
4.62
4.62
3.40
3.40
3.00
3.00
3.49
2.04
2.05
2.05
0.73
0.73
0.27
0.27
0.00
0.00
0.20
2.37
2.59
4.16
2.42
4.24
1.71
3.11
2.94
4.66
(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.
116
Tabcorp Annual Report 2023 E2 Pensions and other post employment benefit plans
The Group has one defined benefit superannuation plan which is closed to new entrants.
This plan is governed by the employment laws of Australia and the Group contributes to the plan at rates based on actuarial advice.
Reconciliation of the net defined benefit asset/(liability) recognised in the balance sheet(i)
Tabcorp plan
Balance at 30 June 2021
Actuarial gains
Actual return on plan assets excluding interest income
Benefits paid
Other
Balance at 30 June 2022
Actuarial gains
Actual return on plan assets excluding interest income
Benefits paid
Other
Balance at 30 June 2023
(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
Tabcorp plan
Fair value of
plan assets
$m
Present value of
defined benefit
obligation
$m
Net defined
benefit plan
assets/
(liabilities)
$m
13.1
-
(0.5)
(1.5)
0.3
11.4
-
0.3
(1.7)
(0.8)
9.2
(9.3)
1.0
-
1.5
(0.2)
(7.0)
(0.3)
-
1.7
(0.4)
(6.0)
2023
$m
-
3.8
1.0
(0.5)
-
0.1
4.4
(0.3)
0.3
-
(1.2)
3.2
2022
$m
0.5
117
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: OTHER DISCLOSURES For the year ended 30 June 2023
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
Tabcorp plan
2023
%
4.0
19.0
25.0
24.0
8.0
20.0
100.0
2022
%
7.0
19.0
25.0
28.0
6.0
15.0
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.
The comparative period financial information for the Lotteries and Keno discontinued operations has been excluded to assist comparability with the current period.
E3 Commitments
Capital expenditure commitments
Property, plant and equipment
Software
118
2023
$m
2.3
7.5
9.8
2022
$m
6.1
8.2
14.3
Tabcorp Annual Report 2023 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 assets
(a) Australian Taxation Office Audit
In November 2020, the Australian Taxation Office (ATO) issued Tabcorp Maxgaming Holdings Limited (TMHL, formerly know as Tatts Group Limited) (a wholly owned subsidiary of Tabcorp)
with an amended assessment for the tax year ended 30 June 2016. The amended assessment relates to the deductibility of the licence fee incurred by TMHL in relation to monitoring
gaming machines in New South Wales. The primary amount in dispute of $62.0m and interest charges of $8.8m were paid in December 2020. An objection was lodged with the ATO
in January 2021 in relation to the amended assessment and a Notice of Decision was issued in June 2021 disallowing the objection. TMHL has appealed this decision in the Federal Court
of Australia. If TMHL is ultimately successful in its claim, the Company expects that the amended assessment amounts will be refunded.
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) Regulatory matters and legal challenges
There are outstanding regulatory matters and legal actions on foot and other potential legal exposures between controlled entities and third parties at 30 June 2023. It is expected that any
liabilities arising from such regulatory matters, legal actions or other potential exposures would not have a material adverse effect on the Group’s financial position.
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 $87,813,746 were received by the Group in 2023 (2022: $81,420,029).
(b) Compensation of Key Management Personnel (KMP)
Short term
Other long term
Post employment
Share based payments
Termination benefits
2023
$
4,530,309
(7,924)
228,597
1,170,109
-
5,921,091
2022
$
9,115,849
583,767
380,421
8,615,616
1,327,417
20,023,070
119
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: OTHER DISCLOSURES For the year ended 30 June 2023
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(i)
– other services(ii)
2023
$
2,927,155
304,900
363,000
3,595,055
2022
$
2,671,947
1,558,000
1,913,000
6,142,947
(i) In 2022, other assurance and agreed upon procedures include $1,290,000 in relation to assurance services with respect to The Lottery Corporation Group demerger, and $268,000 other assurance procedures.
(ii) The Group engages Ernst and Young to provide permitted non-audit services where there is a compelling reason to do so provided stringent independence requirements are satisfied. In the prior year other services include $1,662,751 in relation to the
demerger of The Lottery Corporation and $250,064 in relation to other services.
E7 Assets held for sale
(a) Assets held for sale
Property, plant and equipment
Software
2023
$m
-
-
-
2022
$m
26.0
8.2
34.2
During the prior year, the Group entered into sale agreements in relation to electronic gaming machines. The sale was completed in August 2022. This resulted in a net gain of $6.5m
recognised in Other Income (refer to note A4 (b)).
(b) Disposal group sold during the year
In February 2023, the Group completed the sale of its eBET business to Venue Digital Technology Pty Ltd for $59.0m in cash, including customary working capital and other minor
adjustments, as part of the Group’s pivot toward integrity services. eBET is a supplier of loyalty and tracking systems to gaming venues in Victoria and NSW, and was part of the Group’s
Gaming Services operating segment. The net gain on sale of $34.2m is recognised in Other Income (refer to note A4(b)).
120
Tabcorp Annual Report 2023 (c) Disposal group held for sale
On 1 April 2023, Tabcorp commenced the sale of the Tabcorp Gaming Solutions (TGS) business as part of the Group’s pivot toward integrity services. TGS is a supplier of electronic gaming
machines and specialised services to licensed gaming venues, and is part of the Group’s Gaming Services operating segment. The sale is targeted for completion by the end of
31 March 2024 subject to no material adverse change occurring.
At 30 June 2023, TGS is classified as a disposal group held for sale, with the major classes of assets and liabilities set out below.
Assets
Receivables
Other intangible assets
Property, plant and equipment
Deferred tax assets
Assets held for sale
Liabilities
Payables
Liabilities directly associated with assets held for sale
Net assets directly associated with disposal group
2023
$m
6.3
4.7
9.7
2.2
22.9
1.9
1.9
21.0
A net write down of assets of $41.5m (post tax) was recognised immediately prior to classification as held for sale. No further impairment loss was recognised as at 30 June 2023 as the
carrying amount of the disposal group did not exceed its fair value less cost to sell.
Assets classified as held for sale (and all assets and any liabilities in a disposal group) are recognised at the lower of carrying amount and fair value less costs to sell. Impairment
losses on initial classification as held for sale and any gains and/or losses on subsequent 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
A number of 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.
121
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS: OTHER DISCLOSURES For the year ended 30 June 2023
(ii) New Australian Accounting Standards or International Financial Reporting Standards issued but not yet effective
A number of new or amended accounting standards and interpretations have been recently issued by the Australian Accounting Standards Board (AASB) but not yet effective.
In June 2023, the AASB issued AASB 2023-2 Amendments to Australian Accounting Standards – International Tax Reform – Pillar Two Model Rules and makes amendments to AASB 112
Income Taxes. The amendments will introduce a mandatory temporary exception from the requirement to recognise and disclose deferred taxes arising from enacted or substantively
enacted tax law that implements the Pillar Two model rules. This exception has been applied by the Group in the current period.
The Group is currently in the process of assessing the exposure to this amendment.
Except for the amendments to AASB 112, other 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.
(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 B3 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.
122
Tabcorp Annual Report 2023 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 2023 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 2023.
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.
Bruce Akhurst
Chairman
Adam Rytenskild
Managing Director and Chief Executive Officer
Sydney
24 August 2023
123
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY
INDEPENDENT AUDITOR’S REPORT
124
Tabcorp Annual Report 2023 125
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY INDEPENDENT AUDITOR’S REPORT
126
Tabcorp Annual Report 2023 127
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY INDEPENDENT AUDITOR’S REPORT
128
Tabcorp Annual Report 2023 FIVE YEAR REVIEW
Financial performance
Revenue from continuing operations
Revenue from discontinued operations
EBITDA(iii)
Profit/(loss) from continuing operations before interest and tax
Profit/(loss) after income tax attributable to members
Dividend(iv)
FY23
Unit
$m 2,434.4
-
$m
358.4
$m
82.7
$m
66.5
$m
52.4
$m
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
$m 4,052.4
$m 1,393.3
2,659.1
$m
119.3
$m
196.9
$m
290.7
$m
cents
cents
cents
$
%
%
$
2.9
2.3
(3.5)
1.20
1.6
12.5
1.11
$m 2,532.5
FY22(i)
2,373.3
3,232.2
211.3
(75.1)
6,775.9
289.4
4,048.7
1,337.6
2,711.1
737.0
202.5
199.4
304.6
13.0
24.0
1.22
(2.2)
15.1
1.07
2,370.4
FY21
5,685.7
-
1,031.4
651.2
269.4
321.8
11,867.8
5,171.7
6,696.1
719.5
181.8
424.4
12.3
14.5
24.6
3.07
4.1
55.8
5.18
11,508.0
FY20
5,223.9
-
(195.6)
(573.7)
(870.4)
222.9
FY19(ii)
5,488.0
-
1,081.7
729.9
361.1
443.8
12,415.6
6,389.0
6,026.6
670.9
290.0
348.5
13,623.0
6,443.1
7,179.9
769.6
278.4
463.0
(42.9)
11.0
18.8
2.97
(12.8)
(19.9)
3.38
6,869.2
17.9
22.0
24.4
3.56
5.0
4.2
4.45
8,977.9
Segment revenue from continuing operations(vii)
Wagering and Media
Gaming Services
Employee
Safety(viii)
Females in senior management roles
$m 2,230.8
203.6
$m
2,181.9
192.9
2,298.0
183.2
2,084.1
220.9
2,122.1
304.0
LTIFR
%
2.6
37
1.3
42
2.3
43
4.1
39
3.6
36
(i) The Tabcorp-The Lottery Corporation demerger was
implemented on 1 June 2022, therefore FY22 includes
11 months results from the Lotteries and Keno business
as a discontinued operation. Periods prior to FY22 have
not been re-presented.
(ii) FY19 has been restated to reflect the impact of the
application of AASB 16 Leases which was adopted in FY20.
(iii) Includes impairment of:
FY23: Other assets – $49.0m.
FY22: Other assets – $5.0m.
FY21: Goodwill – $122m and other assets – $10m.
FY20: Goodwill – $1,090m and other assets – $43m.
FY19: Other assets – ($4)m.
(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. For FY22, includes the value of The Lottery
Corporation Limited shares at 31 May 2022 of $4.74, prior
to implementation of the Demerger.
(vii) Revenue includes both external and internal revenue.
(viii) The lost time injury frequency rate (LTIFR) is the number
of lost time injuries per million hours worked.
129
Tabcorp Annual Report 2023DIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL REPORTOPERATING & FINANCIAL REVIEWGOVERNANCESUSTAINABILITY SHAREHOLDER INFORMATION
Securities on issue (as at the date of this report)
Tabcorp has on issue 2,281,575,076 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 2022 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 45,368,858 Options issued to executives pursuant to Tabcorp’s long term incentive arrangements which are not quoted on the ASX.
During FY23, a total of 2,680,788 shares were acquired on market at an average price of $0.99 per share pursuant to Tabcorp’s employee incentive plans.
Shareholding restrictions
There are a number of restrictions applying to shareholdings in Tabcorp, which arise under legislation, requirements of various regulatory authorities and in the Company’s Constitution.
Some of these restrictions limit the number of shares and/or voting power in the Company that can be held by a shareholder. In particular, the Company’s Constitution (to be read
in conjunction with applicable legislation) contains restrictions prohibiting a person from having voting power in the Company in excess of 10% without obtaining the written consent
of relevant Government Ministers in NSW and Queensland. In addition, legislative change to the Totalizator Act 1997 (NSW) (and related legislation) would also be required in order
for a person to hold in excess of 10% of the shares in the Company (or the NSW Wagering Licence holder, TAB Limited). The Company may refuse to register any transfer of shares
which would contravene relevant 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. 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
Vanguard Group
Date of interest
13 July 2022
17 August 2023
Number of ordinary shares(i)
% of issued capital(ii)
213,701,339
114,610,313
9.60
5.02
(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.
130
Tabcorp Annual Report 2023 Twenty largest registered holders of ordinary shares (as at 31 July 2023)
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
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