Slide 1: Tabcorp Full Year Results Presentation (ASX announcement cover letter)
Tabcorp Holdings Limited ACN 063 780 709 5 Bowen Crescent Melbourne Australia 3004 GPO Box 1943 Melbourne Australia 3001 Telephone 61 3 9868 2100 Facsimile 61 3 9868 2300 For personal use only Website www.tabcorp.com.au 7 August 2008 To: Australian Securities Exchange Companies Announcements Platfor
Slide 2: Tabcorp Holdings Ltd Full Year Results Presentation
For personal use only 2008 Tabcorp Holdings Ltd Full Year Results Presentation 7 August 2008 1
Slide 3: 2008 Financial Results
2008 Financial Results For personal use only ¾ Normalised NPAT of $516.9m, up 0.3% Normalised EPS 98.5 cents In line with original guidance Equine Influenza mitigated ¾ Reported NPAT of ($164.6m) addresses three non-cash balance sheet adjustments Victorian Government announcement – charge ag
Slide 4: 2008 Operational Performance
2008 Operational Performance For personal use only ¾ Normalised NPAT of $516.9m, up 0.3% ¾ Mixed revenue performance Casinos down 1.5%: slow down in 2H; smoking impacts at Star City; positive IRB win rate Wagering up 0.3%: EI recovery; continued sportsbetting growth; increase in competition Ga
Slide 5: Group Priorities
Group Priorities For personal use only ¾ 2008 priorities largely executed against Improve operations – exited China, improved technology performance, controlled expenses Drive organic growth and share – strong in Gaming, EI in Wagering, soft in Casinos Invest in core franchise – increased cape
Slide 6: Group Results
Group Results For personal use only Actual Change Normalised Change $m FY08 on pcp FY08 on pcp Operating revenue 3,957.0 3.1% 3,915.6 0.9% Net operating expenses (1,014.0) 0.5% (1,014.0) 0.5% EBITDA 1,075.1 7.5% 1,037.9 (0.2%) EBIT 933.8 9.2% 896.6 0.1% NPAT 542.9 11.4% 516.9 0.3% Victorian licence
Slide 7: Key Drivers of 2008 Full Year Result
Key Drivers of 2008 Full Year Result For personal use only 4.9 (5.1) 4.4 (3.8) 14.2 516.9 515.6 (13.2) External factors : EBIT $m Casinos: NSW smoking bans 16 Wagering: Equine Influenza 17 Gaming: EGM levy increase 13 Total 46 2007 NPAT Casinos Wagering Gaming Net Operating Net Interest Income Tax 2
Slide 8: Government Licence Announcement April 2008
Government Licence Announcement April 2008 For personal use only Industry Structure post 2012 Licence Refund ¾ Vic Wagering – 8.5% Group EBIT ¾ Victorian Government formed view that Single licence consistent with Tabcorp is not entitled to compensation Tabcorp recommendation ¾ Tabcorp position A
Slide 9: Wagering Goodwill Impairment
Wagering Goodwill Impairment For personal use only ¾ Wagering Goodwill impairment $194m ¾ Asset base of $2.6b, including $1.7b of goodwill, reflecting acquisition of Tab Ltd Fully priced acquisition Number one totalisator Key strategic assets, including NSW TAB, Sky Channel, and 2KY ¾ Goodwill
Slide 10: Divisional Results
Divisional Results For personal use only Casinos % Wagering % Gaming % $m Normalised Operating revenue 1,316.1 (1.5%) 1,469.9 0.3% 1,133.6 4.8% Variable contribution 1,080.6 (1.2%) 607.5 2.4% 364.6 1.4% Net operating expenses (647.9) 1.7% (293.3) 1.1% (75.8) 2.8% EBITDA 432.6 (5.2%) 314.2 3.6% 288.8
Slide 11: Casinos: KPIs
Casinos: KPIs For personal use only ¾ 2008 performance NSW Qld Total Smoking ban recovery in Qld; new bans Operating Revenue FY08 % FY08 % FY08 % in NSW July 07 2H slow-down visible EGMs 190.0 (10.0%) 283.3 3.4% 473.3 (2.4%) Positive IRB win rate Main Gaming Floor 254.4 (2.7%) 120.1 2.0% 374.5
Slide 12: Casinos: $475m Star City Expansion
Casinos: $475m Star City Expansion For personal use only Objectives ¾ Transform Star City into a world class casino and entertainment destination ¾ Leverage new licence agreement with NSW Government Scope ¾ Build new 5 star Hotel, with approx 300 rooms and 500 car spaces ¾ Re-orient the casino to Sy
Slide 13: Wagering: KPIs
Wagering: KPIs For personal use only Revenue product ($m) FY08 FY07 % ¾ EI impact Racing Vic 627 623 0.6% Turnover $344m, Revenue $57m, Racing NSW 742 774 (4.1%) EBIT $17m Sportsbetting 102 88 15.9% Recovery in 2H08 Trackside 32 29 10.3% ¾ Positive operational performance Media 104 90 15.6% Go
Slide 14: Wagering: NT Operation and Competition
Wagering: NT Operation and Competition For personal use only NT State of Play Responses reflect unique Racing Industry ¾ Market size FY07 $3.6b1; ¾ Regulatory Tabcorp estimates $5b in Enforce existing legislation 2008 Implement Racefields legislation – NSW now on the right path ¾ Tote odds betti
Slide 15: Gaming: KPIs
Gaming: KPIs For personal use only Vic Gaming FY08 FY07 % Gaming Revenue ($m) 1,013.9 972.0 4.3% ¾ Revenue up 4.3% despite smoking bans ¾ EGM levy increase $13.4m pa Venues (period end) 264 265 (0.4%) ¾ Higher D&A due to EGM purchases EGMs (average) 13,513 13,647 (1.0%) ¾ Continued growth in market
Slide 16: Gaming: Market Share
Gaming: Market Share For personal use only Tabaret vs Tattersall's 52.50% Gaming Revenue Market Share June 2003 to June 2008 TABCRP Tabcorp 51.50% Market Share % 50.50% 49.50% 48.50% Tatts Group 47.50% Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06
Slide 17: Group: Improved Expense and Operational Controls
Group: Improved Expense and Operational Controls For personal use only Expense growth % Comments ¾ Underlying expenses contained within CPI 9.2% ¾ Significant improvement in operational and IT performance ¾ Outsourcing contract signed with EDS and Telstra Includes core infrastructure (data centres
Slide 18: Group: Capital Expenditure
Group: Capital Expenditure For personal use only Capex Trend Capital programs 243.2 ¾ Replacement capex $175-200m pa 223.8 ¾ FY08 capex includes ‘catch up’ investments, higher in second half 182.7 ¾ Expect similar capex in FY09, excluding Star City 111.2 ¾ Star City Expansion $100m upfront payment
Slide 19: Group: Debt Key Features
Group: Debt Key Features For personal use only Fixed rate swaps and Debt structure and maturity profile ($m) fixed interest medium term notes ($m) 2,000 700 1,800 600 1,600 1,400 500 1,200 $ million $ millions 400 1,000 300 800 600 200 400 100 200 0 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 20: Outlook
Outlook For personal use only ¾ Tabcorp well placed to weather economic downturn Expect softening in consumer demand to continue in the next 12-18 months Tabcorp well placed following operational improvements in 2008 Gradually recovering from smoking bans, Equine Influenza. Gaming taxes absorb
Slide 21: Summary
Summary For personal use only ¾ Solid operational performance, normalised NPAT $516.9m, EI mitigated ¾ Addressed significant balance sheet issues ¾ Attractive dividend maintained ¾ Immediate priorities unchanged ¾ Increased investment for medium term revenue growth ¾ Star City expansion underway - c
Slide 22: Appendices
Appendices For personal use only 1. Group results 2. Victorian Licence Accounting Impact 3. Reconciliation to FY08 reported segment results 4. Reconciliation of FY09 comparative results 5. Earnings per share and dividends per share 6. Casinos: Financial data 7. Casinos: Revenue by state and product
Slide 23: 1. Group Results
1. Group Results For personal use only Actual Change Normalised Change $m FY08 on pcp FY08 on pcp Total operating revenues 3,957.0 3.1% 3,915.6 0.9% Other revenue1 35.5 35.3 (11.9%) 35.5 35.3 (11.9%) Revenue 3,992.4 3,992.5 3.0% 3,951.0 3,951.1 0.7% Government taxes & levies (1,075.2) 3.0% (1,070.9)
Slide 24: 2. Victorian Licence Accounting Impact
2. Victorian Licence Accounting Impact For personal use only Victorian Licence Accounting Profit & Loss Impact ¾ Historical treatment recognised single asset $597.2m ¾ Impact on FY08 of $487.7m No amortisation due to refund entitlement Impairment of receivable $474.6m Refund supports residual
Slide 25: 3. Reconciliation to FY08 reported segment results
3. Reconciliation to FY08 reported segment results For personal use only Casinos Wagering Gaming FY08 Normalised EBIT (see slide 9) 368.8 264.4 261.4 Normalisation 1 37.2 Victorian Licences - FY08 Amortisation 2 (8.5) (18.1) Victorian Licences - Prior Periods 2 (8.8) (18.3) Victorian Licences - Refu
Slide 26: 4. Reconciliation of FY09 comparative results
4. Reconciliation of FY09 comparative results For personal use only Casinos Wagering Gaming Other Group FY08 Normalised EBIT 368.8 264.4 261.4 2.0 896.6 1 FY08 Licence Amortisation (8.5) (18.1) (26.6) FY09 Normalised EBIT Comparative 368.8 255.9 243.3 2.0 870.0 FY09 FY09 Actual Amortisation Normalis
Slide 27: 5. Earnings per share and Dividends per share
5. Earnings per share and Dividends per share For personal use only Normalised earnings per share Dividends per share 94 94 102.1 99.7 98.2 98.5 89 92.5 81 71 14.1% 9.9% 5.6% -% 7.8% 2.4% (3.8% ) 0.3% 6.0% 21.1% Growth Growth on pcp on pcp FY04 FY05 FY06 FY07 FY08 FY04 FY05 FY06 FY07 FY08 Payout Rat
Slide 28: 6. Casinos: Financial Data
6. Casinos: Financial Data For personal use only Actual Change Normalised Change $m FY08 FY07 on pcp FY08 FY07 on pcp Revenue 1,364.6 1,298.5 5.1% 1,323.2 1,343.1 (1.5%) Taxes, levies, commissions and fees (247.0) (244.9) 0.9% (242.8) (249.4) (2.7%) Net operating expenses (647.9) (637.3) 1.7% (647.9
Slide 29: 7. Casinos: Revenue by State and Product
7. Casinos: Revenue by State and Product For personal use only NSW Change Qld Change Total Change $m FY08 on pcp FY08 on pcp FY08 on pcp EGMs 190.0 (10.0%) 283.3 3.4% 473.3 (2.4%) Main Gaming Floor 254.4 (2.7%) 120.1 2.0% 374.5 (1.2%) Private Gaming Rooms 121.8 11.8% 62.1 3.2% 183.9 8.7% Non-gaming
Slide 30: 8. Wagering: Financial Data
8. Wagering: Financial Data For personal use only Change $m FY08 FY07 on pcp Operating revenues 1 Wagering - Victoria 542.7 525.5 3.3% 2 Wagering - NSW 821.2 848.5 (3.2%) Media 103.9 90.2 15.1% Trackside International 2.1 2.0 6.5% Total operating revenues 1,469.9 1,466.2 0.3% Other revenue 7.7 13.0
Slide 31: 9. Wagering: Revenue by State and Product
9. Wagering: Revenue by State and Product For personal use only NSW1 Change Vic1 Change Total Change $m FY08 on pcp FY08 on pcp FY08 on pcp Operating revenues Thoroughbred 504.4 (6.2%) 318.8 (1.1%) 823.2 (4.3%) Harness 91.3 (12.2%) 69.0 (5.8%) 160.3 (9.5%) Greyhound 146.6 11.0% 88.9 13.8% 235.4 12.0
Slide 32: 10. Gaming: Financial Data
10. Gaming: Financial Data For personal use only Change $m FY08 FY07 on pcp Operating revenues Victorian network - Hotel 653.9 628.0 4.1% - Clubs 360.0 344.0 4.7% Total Victorian gaming 1,013.9 972.0 4.3% Keno 114.1 107.7 6.0% Other 5.6 2.2 >100% Total operating revenues 1,133.6 1,081.8 4.8% Other r
Slide 33: 11. Balance Sheet
11. Balance Sheet As at As at Change For personal use only $m 30 Jun 08 30 Jun 07 on pcp Total current assets 278.2 282.7 (1.6%) Licences 723.9 1,220.8 (40.7%) Other intangible assets 3,506.8 3,680.7 (4.7%) Property, plant and equipment 1,499.3 1,461.8 2.6% Other non current assets 113.5 80.5 41.0%
Slide 34: 12. Cashflow
12. Cashflow For personal use only Actual Change $m FY08 FY07 on pcp Net operating flows 994.4 959.6 3.6% Net interest payments (162.7) (152.7) 6.5% Income tax paid (179.4) (198.2) (9.5%) Payments for PP&E (222.0) (166.8) 33.1% Net operating cash flows 430.3 441.9 (2.6%) Proceeds from sale of assets
Slide 35: For personal use only
For personal use only Front cover: Images from Tabcorp's Casino, Wagering and Gaming businesses.The Phantom of the Opera photograph is courtesy of Jeff Busby. 34