Tabcorp Holdings Limited · ASX:TAH
Tabcorp — FY2006 Earnings Presentation
50 slides from Tabcorp's earnings presentation, Aug 24, 2006
Slide 1: Tabcorp Full Year Results Presentation ASX cover letter
Tabcorp Holdings Limited ue, T; I _ - r ACN 083 780 709 a co D 5 Bowen Crescent a Melbourne Australia 3004 GPO Box 1943R, Melbourne Australia 3004 Telephone 61 3 9868 2100 Facsimile 61 3 9868 2300 Website www.tabcorp.com.au 24 August 2006 To: Australian Stock Exchange Companies Announcements Platfor
Slide 2: 2005/06 Full Year Results Presentation
2005/06 Full Year Results Presentation . . . . _ &% Tabcorp the bigger beter carne
Slide 3: Agenda
>» Matthew Slatter # 2005/06 key resuits >» Matt Bekier # 2005/06 financial performance review > Matthew Slatter # Focus for 2006/07 &< Tabcorp. 4 : : : : . + 2006 Full Year Results
Slide 4: Full Year 2005/06 results – key numbers
Full Year 2005/06 results _ key numbers > NPAT pre non-recurring items up 7.0% to $547.3m » Normalised NPAT growth pre non-recurring items up 4.0% to $535.8m >» EPS pre non-recurring items growth of 5.3% to 104.3 cents. Up 2.4% on a normalised basis to 102.1 cents » Final DPS up 9.8% to 45 cents per
Slide 5: DPS & EPS growth
DPS & EPS growth idend pershialc, | ima 5 yr CAGR — 11.8% 5 yr CAGR — 13.5% 990 89 | 99.0 84 80 5 67 71 704 63 = 607 S 2 2 = 504 : a a 2 404 8 2 304 a 204 194 o4 ; T ; ; T T 01/02 02/03 03/04 04/05 05/06 02/03 03/04 04105 05/06 Payout Ratio: Financial years Financial years 84% 94% 77h 82% 86% Notes:
Slide 6: Operating revenue summary by division
- Operating revenue! summary by division x 4 x * x $ milion, percent growth 36.0 (4.2) (13.8) ——— (0.6) 0.3 3,778.6 om _— = 55.3 (10.8%) (6.1%) 0.9% Actual growth 4.3% @— Normalised growth 2.3% 2004/05 Casinos Gaming Wagering Media international = Eliminations 2005/06 Notes: 1. Pre non-recurring ite
Slide 7: EBIT underlying growth by division
EBIT' underlying growth by division . $ million, percent growth prc 1 EBIT growth of 5.1% without Total Gaming growth of $16.3m (6.3%) increase in EGM levy i H 1 1 | 1 without incroase in EGM levy a 1 1 1 1 1 1 (2100%} ¢— Actual growth 9.9% 3.4% Normalised growth 4.3% 909.0 2004/05 Casinos Gaming Wa
Slide 8: FY06 key features
FY06 key features » Split racing picture » Gaming » Casinos ~ table games MGF/PGR » Casinos ~ IRB » Smoking bans update >» Football World Cup performance >» Tab integration Ss Tabcorp . : A : : . + 2006 Full YearResults |
Slide 9: occ AAT
occ AAT NSW g Total 4.1% Jul-04 Sep-04 Dec-04 Mar-05 Jun-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06 &< Tabcorp. : : : : : ; 4 2006 Full Year Results
Slide 10: Split picture agreement earnings impact
>» Expect the agreement to be earnings positive to the Tabcorp group (before non- recurring items): Wagering Savings in racing vision fees a Broadcast rights to TVN wo) Additional free to air racing costs {1.5) | Removal of cormmercial subscriber discounts 17.0 Estimated increased revenue - EBIT imp
Slide 11: Gaming operating revenue up 3.6%
> Operating revenue up 3.6% = Victorian gaming up 3.4%, up 2.2% in 2H =» Keno up 4.8% | Victorian Market Share steady at 50.3% (2005/06) Improving customer service resulted in Tabaret membership increasing 12% from 343,000 to 383,000 63.2% of EGMs in network are now jackpot machines Three new venues
Slide 12: Casinos – table games
Casinos — table games x 4 x * » Strong performance in table games across all casinos with non rebate table revenue up 4.5% Star City Ue 1.8% | Up 45% | Up 2.7% Gold Coast | Down 1.0% | Up 26.2% | Up 64% » Main Gaming Floors were up 2.7%. Some play Treasury Uo 85% | Up 84% | Up 8.1% at Conrad Jupiter
Slide 13: International rebate business at Star City
>» Successful re-commencement of international Casinos IRB Turnover 2005/06 ($M) rebate business at Star City on 1 January 2006 Total $6.0 bila vo helping to generate an additional $19m in net 1.999 revenue 794 a2 >» Total IRB revenue of $57.1m vs $12.7 in 2005, including $18.6m above theoretical 05
Slide 14: Smoking ban update
Smoking ban update me Index 100 = EGM annual revenue as at July 2004 a oes wenn GOld Coast == Brisbane 449 }----------------- nn poet npseacccoae 405 +------------, LO et ae Refurbishment : commences 100 + #80 -------------------2-- 205-2 25505-- 33% Smoke free Smoke free 1 January 2005 ty 2006 95 J
Slide 15: Football World Cup
Football World Cup » Highly successful 2006 World Cup sportsbetting program > Total sales of $97.4m, producing $16.7m in revenue =» $11.6m of revenue in FY06 = $5.1m of revenue in FY07 » 77% increase in sales over 2002 World Cup despite negative time zone impact Total sales ($M) Retail & licensed ve
Slide 16: TAB integration synergy update
Tab integration synergy update » System integration remains on track for completion in September 2006 » Additional systems development cost of $18m substantially due to pooling decision » Close to $9m in additional synergies targeted in FY07 resulting from: » Consolidation of call centres « Completi
Slide 17: : : : ;
&< Tabcorp. : : : : : ; 4 2006 Full Year Results
Slide 18: Financial performance
Financial performance x x x x Actual Normalised $m 42monthsto Change 12monthsto Change 30 June 06" on pop 30 June 06"? on pep Net operating revenue 3,778.6 2.4% 3,760.0 14% Other revenue*® 38.8 G.H% 38.8 (B,.9)% Taxes on gambling (1,018.7) 3.1% (1,016.6) 2.8% Operating commissions (426.8) 2.6% (426.
Slide 19: Financial performance key ratios
Financial performance key ratios x 4 x * x Actual Normalised 1Z2monthsto Change 12 months to Change 30June06' onpep (30 June06"? on pep Earnings per share (cents) - Before non-recurring items 104.3 5.3% 102.1 24% - After non-recurring items 103.6 23.5% 101.4 21.8% Dividends per share (cents)? 89.0 9
Slide 20: Balance sheet
Balance sheet x 4 a As at As at Change $m 30 June 06 «30 June 05 = on pep Current assets 278.6 329.8 (15.5)% Licences / management agreements 1,230.1 1,239.3 (O.7)% Goodwill / other intangibles 3,611.4 3,645.0 (0.9)% Property, plant & equipment 1,507.4 1,442.9 45% Other non current assets 127.7 116.
Slide 21: Casinos – financial data
Casinos — financial data x 4 x * Actual Normalised $m 1Zmonthsto Change | 12 months to Change 30 June 06’ onpep | 30June06'? = on pep Revenue from ordinary activities 4,387.3 4.4% 1,318.8 241% Taxes & operator commissions (246.5) 24% (244.5) 12% Other operating expenses (595.2) 16%. (595.2) 14% Depr
Slide 22: Casinos – revenue by product
Casinos — revenue by product * x x x x Actual $m 12 months to 12 manths to Change 30 June 06' = 30 June 05° on pep Net operating revenue Rebate tables 57.1 12.7 >F00% Non rebate tables 549.7 526.0 4.5% Total tables 606.7 538.8 12.6% EGMs & other 501.0 5147 2.7)% Total gaming 1,107.8 4,053.5 5.2% Acc
Slide 23: Gaming & Network Games – financial data
Gaming & Network Games _ financial data * Actual $m 1Z2monthsto 12 months to Change 30 June 06' =. 30 June 05" on pep Revenue from ordinary activities 1,066.5 1,028.0 3.7% Taxes & operator commissions (715.0) (675.4) 8.9% Other operating expenses (68.8) (69.9) (1.5)% Depreciation & amortisation (22.
Slide 24: Gaming & Network Games – revenue by product
Gaming & Network Games — revenue by product Actual $m 12 months to 12 months to Change 30 June 06' 30 June 05* on pep Net operating revenue Victorian network - Hotels 604.1 591.8 2.1% - Clubs 329.0 310.5 6.0% Total Victorian gaming 933.2 902.3 BAG Keno 113.0 4107.8 4.8% Total net operating revenue 1
Slide 25: Wagering – financial data
Wagering — financial data Actual $m 12monthsto 12 months to Change 30 June 06'? 30 June 05'* on pep Operating revenue - Victoria 486.4 4PS4 2% Operating revenue - NSW 832.2 644.3 (1.4)% Other revenue 10.7 10.4 3.8% Revenue from ordinary activities 1,329.4 1,430.4 (0.19% R.L, faxes & op. commissions
Slide 26: Wagering revenue by NSW and Victoria
NSW Change Vic Change Total Change $m FY06' onpep FYI6' onpep FYO6 onpep Net operating revenue / / Racing i : Thoroughbred 529.2 (2.7)% 303.9 0.0% 833.0 C.P)% Harness 103.0 (3.9)% 67.0 (0.5)% 170.0 (26% Greyhound 131.6 (3.6)% 70.8 34% 2024 C.2y% Total racing 763.8 (3.0)% 441.7 0.5% 1,205.4 (1.8)% Sp
Slide 27: Media – financial data
Media — financial data x 4 x x x Actual $m iZ2monthsto i2monthsto Change 30 June 06' 30 June 05' on pep Revenue from ordinary activities Sky Channel 89.5 102.9 (13.0)% Sky International Racing 14.1 13.4 4.7% 2KY & Others 10.2 14.2 9.2) % Total 113.7 127.5 (10.8)% R.L, taxes & operating commissions (
Slide 28: International – financial data
International — financial data x 4 x * x Actual $m 12monthsto 12 months to Change 30 June 06" 30 June 05° on pep Net Operating Revenue Product & Technical Sales 9.4 10.0 (6.4)% Taxes & operator commissions - ~ - Other operating expenses (15.0) (10.9) (87.7) % Depreciation & amortisation (0.6) (0.0)
Slide 29: ; +
&< Tabcorp. 4 : : : : ; + 2006 Full Year Results
Slide 30: Focus for FY2007
Focus for FY2007 Customer development - Gold Coast refurbishment Victorian license renewal China Keno update Project Align — benefits Tabcorp’s journey VW WV VY WY WwW Revenue update &< Tabcorp. 4 : : : : . + 2006 Full Year Results
Slide 31: Customer development – Gold Coast refurbishment
Customer development — Gold Coast refurbishment » The $53.5m refurbishment of Conrad Jupiters is on budget and slightly ahead of schedule, with completion due for October 2006 >» The refurbished casino will contain tailored products and areas designed to appeal to specific customer segments, introdu
Slide 32: Government issues papers and licence consultation
Government released issues papers and calls for submissions >100 submissions received from industry players, local councils, and community groups: = Majority commenting on the Gaming industry structure, significant support for the status quo a Aminor amount on the Wagering & Keno structure also supp
Slide 33: China Keno update
> TIHK signed technical co-production agreement “s, » Complete commercial pilot with CLO in July 2005 » Rollout program in 07: - likely several thousand terminals » Keno host system installed in Beijing on 8 January 06 » Roilout of pilot terminals concluded » Develop integrated ~ 218 terminals insta
Slide 34: Project Align – benefits
Project Align - benefits Objective: Outcomes: » Drive central purchasing capability » Create Shared Services Centre - Leverage introduction of group-wide ERP - Covers transactional processes for Finance/ HR - Estimated annual benefit: $11m - Estimated one-off costs: $25m - Implemented by the end of
Slide 35: The Tabcorp journey
The Tabcorp journey Integration 200 2505 Remove duplication _ Cy Identify and extract ‘ synergies — - &« Tabcorp : : 2006 Full Year Results
Slide 36: Revenue update
Revenue update x 4 x » Overall mixed start to 2006/07, with performance to date significantly bolstered by strong World Cup revenue and additional Saturday in the period to 19 August =Normalising for these two impacts underlying revenue growth would be 3.2% instead of 5.6% » Casinos growth driven by
Slide 37: : : : ;
&< Tabcorp. : : : : : ; 4 2006 Full Year Results
Slide 38: Appendix contents page
Appendix contents page eae Non recurring items Balance sheet Cash flow Casino theoretical win rate 1.35% adoption vs 1.265% Casinos revenue by state Reconciliation of 2004/05 normalised earnings per share (EPS) Capital expenditure AIFRS re-stated financial performance gS ea ND a &F WOON AIFRS re-sta
Slide 39: Non recurring items
$m Wagering G&NG Casinos Media int'nal Unalloc Total 12 months to 30 June 2006 Restructure/integration costs' (14.3) (1.0) (1.3) {0.1) (0.9) - (17.5) Asset sales and valuations’ - - 5.5 - - - 5.5 India claim release and provisioning’ - - - - 3.7 - 3.7 Singapore integrated resort bid costs" - ~ ~ - (
Slide 40: Cashflow
Cashflow Actual $m 12 months to 1a months to Change 30 June 06 30 June 05 on pcp Net operating flows excl interest/tax 1,076.8 1, 059. ’ 1.6% Net interest payments (153.2) ; (11.8)% Income tax paid (218.4) (224. 7) (2.8)% Payments for PP&E (236.1) (119.5 97 6% Net operating cash flows 469.1 41 @ (13
Slide 41: Casino theoretical win rate adoption of 1.35%
»Tabcorp has adopted 1.35% win-rate for IRB, rationale being: # Previous win-rate of 1.265% did not include outcomes as a result of “tied” bets # Long-term experience at Tabcorp is that win-rate is greater than 1.35% » Consistency of reporting with the market o : ' H HI ——e eae EPS growth 2.4% EPS g
Slide 42: Casinos revenue by state
Casinos revenue by state x 4 x * $m 42 months to 12 months to Change 30 June 06" 30 June 05" on pep NSW Net Rebate play at theoretical 21.3 ra Above/below theoretical (2.3) wa 19.6 nia Table games PGR 128.6 123.0 4% MGF 252.2 2484 1.8% EGMs & other gaming 210.4 242.5 (41.00% Non-gaming 915 80.8 0.8%
Slide 43: Reconciliation of 2004/05 normalised EPS
160 99.8 (0.4) 99.7 160 2 a cH a 99 @ = 6 oO is] 88 ~ EPS pre goodwill previausly AIFRS adjustments pre Adoption of 1.35% win rate 2004/05 EPS comparative reported (4) goodwill Notes 1. Fre norvrecurring items and adjusted for abovelbetow theoretical win-rates in the international rebate business &<
Slide 44: Capital expenditure
Capital expenditure Actual $m 42 months to i2 months to Change 30 June 06 30 June OS on PGP Wagering 74.4 2nb > 100% Gaming & Network Games 33.8 30.8 9.9% Casinos 85.4 38,7 > 100% Media 2.8 2.2 26.7% international 0.6 ~ > 100% Corporate 27.2 412.0 100% Total 223.8 114.2 > 100% Major 2005/06 projects
Slide 45: AIFRS re-stated financial performance
AIFRS re-stated financial performance AGAAP AIFS AIFRS adj $m 1Z2monthsto Adjustments Other 42 months to 30 Jun 05 30 Jun 05+ rechass? 30 Jum 05" Net operating revenue 3,702.4. - - 3,702.4 Other revenue” 43.7 15 (3.5) O17 Other operating expenses (2,686.75 (3.2) 6.2 (2,683.1) Depreciation & amortisa
Slide 46: AIFRS re-stated financial position
AIFRS re-stated financial position AGAAP AIFRS AIFRS as at adjustments ae at $m 30 Jun 05 30 Jun 05 30 Jun 05 Current assets 328.4 1.4 329.8 Licenses’ 4,201.3 38.0 4,239.3 Goodwill & other intangibles’ 3,306.8 338.2 3,645, Property, plant & equipment’ 4,505.6 (827) 1 4d29 Other non current assets 14
Slide 47: Deferred tax liability on prior business combinations
Deferred tax liability on prior business combinations x x x x x x x x : Balance Sheet P&L $m Retained Tals Incorne Earnings Goodwill (Tax Benetit Intangible assets Acquired prior to 1 July 2004 Star City casino licence 69.4 0.8 Queensland keno licence 12.5 OF Brisbane casino licence 44.6 G.2 Acquire
Slide 48: Tabcorp Group – debt key features
Tabcorp Group — debt key features x Es a m x Debt structure & maturity profile Wats 2007 2008 2009 2010 2011 2012 2013 2614 2015 2016 2017 2078 2019 2020 tg Bank Debt m@ Medium Term Notes @ US Private Placement 700 600 4 500 400 300 $ millions 200 400 » Average debt maturity is 5.4 years at 30 June
Slide 49: Tabcorp Group – debt key features
Tabcorp Group — debt key features x Es a m x Fixed rate swaps & fixed interest medium term notes 2,500 2,000 1,500 1,000 500 2006 2007 2008 2009 $ million 2010 Amounts at period end » 85.6% gross debt at fixed interest rates at 30 June 2006 » Average cost of fixed rate swaps and fixed interest mediu
Slide 50: tab sp@rtsbet
a tab sp@rtsbet TAB x convention and exhibition centre SKY | RY . Qty Tabcorp the bigger beter carne