Tabcorp Holdings Limited · ASX:TAH
Tabcorp — Investor Presentation (March 2007)
41 slides from Tabcorp's investor presentation, Mar 21, 2007
Slide 1: Wagering Update
Bringing the Excitement of Racing and Sport to You Wagering Update 21 March 2007 BIY can sporesici 1OT7 AM . . . . . &« Tabcorp the bigger better game
Slide 2: Wagering Performance and Strategy
Wagering Performance and Strategy ROBERT NASON, Managing Director — Racing and Media Questions and Answers ELMER FUNKE KUPPER, Acting Chief Executive Officer &*& Tabcorp -
Slide 3: Unique position in Gambling Entertainment industry
Unique position in Gambling Entertainment industry * * * > Tabcorp today » Operating in largest and growing markets of Victoria, NSW and Queensland » Strong assets and leading Gambling Entertainment brands * Positive growth and market share performance in key businesses > Renewed focus on organic gr
Slide 4: Tabcorp businesses
Tabcorp businesses’ Almost 7 in 10 Australians have gambled in last 3 months? * aKY SIS CHANNEL aa. tab sp°rtsber ‘Fr TABARET 107 $550m $137m TREASURY 4 Ail financial information is 1H07. Casinos is normalised to exclude the impact of above/below theoretical win rates in the International Rebate Bus
Slide 5: Smoking bans and expenses hit 1H07 results
Smoking bans and expenses hit 1H07 results! * 1H07 Change 1H07 Change 1HO7 Change Operating revenues 776.5 6.9% 549.9 1.6% 666.5 1.7% Other revenues 6.3 (4.3%) 10.9 7 B% 2.8 (26.4%) Revenues 782.8 6.8% 560.8 1.7% 669.3 1.5% Taxes & commissions (467.7) 5.4% (377.0) 2.3% (123.0) 0.1% Operating expense
Slide 6: Interim Executive Committee
Interim Executive Committee * * * * * >» Interim Executive Committee structure to shorten communication lines » Overhead reduction program continues 1 Interim additions fo Executive Cornmittee 2 includes responsibility for China Keno &*& Tabcorp -
Slide 7: We have built a strong wagering platform for growth
We have built a strong wagering platform for growth Racing Create partnership Create leading Tote Leverage core assets . and turn around NSW Grow local business Deliver synergies » Drive productivity Improve distribution Improve products and channels = Build global product Sports- + Focus on Racing
Slide 8: 2007 is a transition year
2007 is * * transition year * * > Finalise integration between NSW and VIC « System integration Sept. 2006; retail implementation in NSW by July 2007 « Took longer and cost more to deliver; adverse P&L and customer impact « Improved platform to deliver product (Flexi, First 4) and channels (self ser
Slide 9: Racing and Media management team
Robert Nason Managing Director, Racing and Media Joined August 2006 Background CEO of Racing Victoria Ltd; previously EDS and AT Kearney Craig Nugent Managing Director, Sportsbetting Joined November 1999 Background 18 years with Australian Jockey Club, including Betting Ops John Ballenger General Ma
Slide 10: Introduction
Introduction ELMER FUNKE KUPPER, Acting Chief Executive Officer Questions and Answers ELMER FUNKE KUPPER, Acting Chief Executive Officer &*& Tabcorp -
Slide 11: Attractive market, great assets, clear priorities
Attractive mar ket, great assets, clear priorities * * * * * * * * > Wagering market Strong and growing racing product is attractive and Tabcorp has leading position in Racing and growing Sportsbetting » Strong assets — but NSW underperforming > Market, competition are changing Changing customer bas
Slide 12: Tabcorp's wagering business
eadi . 1 Includes Trackside &*& Tabcorp - NSW and VIC « 2,700 outlets « 261 race tracks « 400k accounts « Call centre » Internet $693.8m (+5.1%)' Tabcorp’s wagering business National book manager » 2,700 outlets « 400k accounts « Call centre « Internet $39.7m (+60.1%) SIG NINN MA BIKY SKY 1O17 aM CH
Slide 13: Australia is an attractive wagering market
Australia is an attractive wagering market * * * * * * * Tot AUST 197 $11.7b $564 $37.9b $297 $25.1b $415 $13.2b $223 $0.4b $159 $1.7b $48 HK | 9 $10.6b $1,521 Source: Australian Racing Fact Book, 2005/06 &*& Tabcorp -
Slide 14: Tabcorp is largest of State-based TAB operators
Tabcorp is largest of State-based TAB operators Turnover: $8.0b TAB share: 64% | National share: 51% &*& Tabcorp -
Slide 15: The three Australian wagering pools
The three Australian wagering pools * * * * * * Super TAB share: 42% Signy Sky Channel covers 55,000 races per annum CRANNEL &*& Tabcorp -
Slide 16: TAB revenue is Racing's primary funding source
TAB revenue is Racing’s primary funding source * * * * * * ema 5 = NSW 400 350 308 250 200 220 180 140 100 ‘97 ‘98 ‘89 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘97 "98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 41 Wagering only. Further contributions are provided from Gaming profits under the Joint Venture arrangement &*&
Slide 17: Competition within racing and gambling market
hin Rac a TTA ATTA ATA Ah WM nment ie 3,500 2,500 . Gambling Market 1,500 $15.5 billion (27%) 500 ‘O1 02 03 ‘04 05 ‘06 Source: Australian Racing Fact Book 2005/06 > New bookmakers, betting exchange >» Casinos; other forms of gambling > Online access to off-course market > Other and home entertainmen
Slide 18: An overview of Tabcorp's market position
An overview of Tabcorp’s market position * * * * * &*& Tabcorp -
Slide 19: Positive wagering revenue growth
Positive wagering revenue growth * * * * Racing VIC | 77) 10.0% Racing NSW Sportsbetting Lo 60.1% Trackside VIC [aaa 8.6% Media Le 3.6% Total [a 6.9% Total 1H07 operating revenue $776.5m &*& Tabcorp - Racing Victoria performance ¢ TVN resolution ¢ Strong racing product ° New products * Improved mark
Slide 20: Particularly in Sportsbetting
..-_particularly in Sportsbetting Other TABs Bookmakers 02 ‘03 ‘04 05 06 20% 16 12 internet Retail Telephone Rugby AFL Soccer Tennis Multi Other B’bali Racing Cricket league 41 Exciides 2006 World Cup sales of $107m &*& Tabcorp -
Slide 21: Offset by serious cost challenge
...offset by serious cost challenge * * * * * uly gall 0 yl 3.9 147 10.6 9.8 iil o $118m iin 1HO6 Revenue TVN_ Tech. Core 1HO07 Equalis. Services/ Exp. integration &*& Tabcorp - * Revenue Equalisation ¢ Reverses by 30/6 TVN settiement ¢ Higher fixed costs to 2012 ¢ No further adverse EBIT impact exp
Slide 22: &*& Tabcorp -
&*& Tabcorp -
Slide 23: Tabcorp's customers — 'frequents'
Tabcorp’s customers — ‘frequents’ * F * * * x Customers: 500,000 Gambling $: $6.2b L&E $: $9.9b * 190,000 people in VIC and NSW are ‘frequent’ betting customers, betting up to 24 times per quarter « Frequent events « Convenience « Service = Familiarity - Full Tote product offer « Skills based - Fixe
Slide 24: Winning the frequent customer
Wanna the Feduent GUEtOmne! * * ; red sizes co ép >» NSW performance : i 9 » International growth » Integrity * Products » Product innovation * Pool size » 24/7 coverage > Information « P » Pricing » Price i » NSW retail network >» Convenience > Reliability q) a > Self service » Web/phone service »
Slide 25: NSW racing product is largest opportunity
NSW racing product is largest opportunity Operating revenue by racing product Thoroughbred 288.7 2.9% 178.8 9.6% 467.5 5.4% Harness 53.2 1.8% 37.1 10.4% 90.3 5.1% Greyhound 695 0.7% 40.9 11.6% 110.5 4.5% Racing 411.5 256.8 € 10.0% 668.3 5.2% Sportsbetting 28.5 61.1% 11.2 57.7% 39.7 60.1% Trackside 1
Slide 26: Growth in betting by NSW punters on races
Growth in betting by NSW punters on races from each State (% YTD) 4 8% Victoria Other States/ International (5.0%) &*& Tabcorp - The situation » Wagering on NSW racing is in relative decline >» Current financial model does not support wagering growth Tabcorp’s actions > Invest $50m in NSW retail net
Slide 27: Tabcorp has leading wagering product suite
Tabcorp has leading wagering product suite novati r Sales of $175m . a4 contributing to Quaddie First 4 growth of 6.9% Trifecta First 4& t $59.9m Trifecta 22.1% $8.8m Doubles 40.3% Exacta Quinella Win Place &*& Tabcorp -
Slide 28: VIC is growing well. NSW is an opportunity
VIC is growing well. NSW is an opportunity Wagering sales by channel! Retail agencies and licenced venues 1,788.1 1,364.3 Telephone 209.5 (3.7%) 298.1 (4.6%) Internet 245.5 13.5% 164.7 63.3% Account Sales 455.1 4.8% 462.8 12.0% On-Course 175.6 4.5% 138.1 13.5% Total 2,418.8 1.4% 1,965.2 6.6% NSW FOC
Slide 29: We will target a turnaround in NSW retail
* * * * We will target a turnaround in NSW retail * Agencies Licensed Venues Number] AWT $k) Number) AWT $k Victoria) 100 182 496 72 NSW 299 116 1,805 20 AWT - Average Weekly Turnover &*& Tabcorp - * >» NSW retail network today » Large number of outlets » Turnover too low to invest " No self service
Slide 30: Luna Park North Sydney area strategy
Luna Park North Sydney Area Strategy Outcome Open new Platinum ClubTAB - Kirribilli Club > New Nth Sydney Agency +20% Open new TABKiosk — Rag & Famish Hotel > Total Area: +8% Relocate North Sydney Agency Upgrade North Sydney and Blues Point Hotel Upgrade Platinum Pub TAB Milsons Point (A Existing Li
Slide 31: We have set higher customer standards
We have set higher customer standards * * * * * * Standard Venue Silver Venue Platinum Venue (1.075%) ($210 pw Fixed Fee + 1.925%) i ($455 pw Fixed Fee + 2.000%) » Minimum trading hours » Open all trading hours >» Open all trading hours >» Minimum 20sqm dedicated » Minimum 70sqm dedicated » Minimum
Slide 32: Tabcorp's customers — 'infrequents'
Tabcorp’s customers — ‘infrequents’ ‘i * * * * * 1.2 million people in VIC and NSW are ‘infrequent’ betting Customers: 2.9m customers Gambling $: $3.7b 2.4 million people in VIC and L&E $: $25.2b NSW bet at least once a year « Affiliation » Integrated into the events « Social interaction « Attractiv
Slide 33: Targeting 'infrequent' customers
Targeting ‘infrequent’ customers * * * * * Opportunity: 2.9 million customers in NSW and VIC Leisure and Entertainment spending of $25 billion roduct: > Easy-to-use products and selections > Entertainment content; integrated with sport > Larger, jackpot prizes FLEX| Convenience > Sold at the event »
Slide 34: Creating a 24/7 racing product
Creating a 24/7 racing product UK Saturday from 10pm JAPAN poe S Major races a a ia | — USA zi Majrra faces i | HONG KONG Ma sad sad SOUTH AFRICA | — NEW ZEALAND Wed night eoeneen ye Wed, Thu, Sat PHASE 1: import and export vision PHASE 2: Co-mingle pools— starting with New Zealand &*& Tabcorp -
Slide 35: Case study — Australia and New Zealand
Case study — * * nn AT Why it works for Australia &*& Tabcorp - Australia and New Zealand * * * * >» Australian racing complements existing NZ product » High quality of Australian racing product >» Available 7 days a week >» Quality of broadcasting and form information » Time zone works well (NZ pro
Slide 36: Focus on obtaining ACCC approval for TVN agreement
Focus on obtaining ACCC approval for TVN agreement Expenses focked in to 2012 Modest cost recovery as TAB contracts expire 44 46 Self corrects as margin comes back to 16% 24.7 3.6 7.0 3.6 Short term: overhead reduction Medium term: s Re-engineer and simplify platforms « Review potential for outsourc
Slide 37: Creating a customer-driven culture
Creating a customer-driven culture Clear pertorma > 5.6 million telephone betting calls > 7,800 races broadcast by Sky Channel AJC Derby Doncaster Handicap 1 > 550,000 web visits Betting ~ all channels | 90% E Melbourne | aakw@ul leg page views Service (<10 sec.) / CupDay | > e muon betting : | rans
Slide 38: Wagering licences and level playing field
Wagering licences and level playing field * * ng | » Wagering and Gaming licences linked » Lack of level playing field * Racing Industry funding from both « Interstate operators contribute less to wagering and gaming Racing and pay lower taxes » Tabcorp is well placed to secure licences > Internet i
Slide 39: &*& Tabcorp -
&*& Tabcorp -
Slide 40: Unique position in Gambling Entertainment industry
Unique position in Gambling Entertainment industry * * * > Tabcorp today » Operating in largest and growing markets of Victoria, NSW and Queensland » Strong assets and leading Gambling Entertainment brands * Positive growth and market share performance in key businesses > Renewed focus on organic gr
Slide 41: Questions and Answers
Questions and Answers * * * * introduction ELMER FUNKE KUPPER, Acting Chief Executive Officer Wagering Performance and Strategy ROBERT NASON, Managing Director — Racing and Media &*& Tabcorp -
Tabcorp Holdings — Investor Presentation (March 2007) on 6ix