Tabcorp Holdings Limited · ASX:TAH
Tabcorp — Investor Presentation (October 2008)
35 slides from Tabcorp's investor presentation, Oct 10, 2008
Slide 1: Project STAR - Market Briefing
Project STAR - Market Briefing For personal use only Walter Bugno – Chief Executive Casino Division Tabcorp Holdings Ltd 10 October 2008 1
Slide 2: Agenda
Agenda For personal use only I. Star City Today II. Star City Transformation Journey III. Project STAR 2
Slide 3: I. Star City Today - 2008
I. Star City Today - 2008 For personal use only Western view from Pirrama Road of Spanish Steps and existing Hotel tower. Inset – Main Gaming Floor. 3
Slide 4: Star City in context
Star City in context For personal use only Tabcorp Group – Divisional EBIT FY08 (Casino – normalised) Gaming 29% Casinos 41% Wagering 30% Casino Division – Property EBIT FY08 (Normalised) Star City SEQ Total Net revenue $705m $612m $1,316m % 54% 47% 100% EBIT $195m $174m $369m % 53% 47% 100% 4
Slide 5: Star City is a significant business
Star City is a significant business For personal use only Star City Today: Food Food&&beverage beverage 11 restaurants 11 restaurants 10 10bars bars Gaming Gaming Accommodation Accommodation 210 210tables tables 351 351hotel hotelrooms rooms Ballroom/Conf 1,441 Ballroom/Conf 1,441EGMs EGMs 129 129ap
Slide 6: Strong position in the Sydney market
Strong position in the Sydney market For personal use only Star City - EGM Market Share past 8 quarters (%) Visitation destination 6.20% Most visited destination in Sydney… 6.15% Star City 8,800 Royal Randw ick & Warw ick Farm 408 6.10% Racecourses Sydney Olympic Park 7,700 6.05% Australian National
Slide 7: No customer growth in recent times
No customer growth in recent times For personal use only Gambled at Star City – 12mmt Star City – Annual Visitation Gambled at Star City - 12mmt (000's) Star City - Annual visitation (m) Source: RMR Gam bling m onitor 350 14 12.5 330 12 310 10.1 290 10 9.1 8.8 8.5 8.7 8.8 8.5 8.8 270 8.0 7.6 250 8 2
Slide 8: FY08 impacted by smoking bans
FY08 impacted by smoking bans For personal use only Star City - Net operating revenue ($m) Solid revenue growth FY04 – FY07 740 720 - Increased spend/customer 700 680 - Re-entry into IRB 660 640 2008 slowdown driven by: 620 600 580 1. Smoking ban impacts 560 FY03 FY04 FY05 FY06 FY07 FY08 Slots -
Slide 9: Competition investing heavily
Competition investing heavily For personal use only Local Domestic International Canterbury Leagues Club Crown Melbourne Macau Pubs and clubs have invested over $750m in the past 18 months Crown Ltd continues to invest in improving domestic properties New openings in Macau and Singapore in 200
Slide 10: Time to make a choice
Time to make a choice For personal use only Source: Masterbrands Study 2005 10
Slide 11: II. Star City Transformation Journey
II. Star City Transformation Journey For personal use only 11
Slide 12: Transformation has three components
Transformation has three components For personal use only 1. Secure licence and product offering - Licence exclusivity extension - Tax regime clarity - Product expansion and differentiation 2. Create a destination for our customers - World class main gaming floor - Sydney’s best food & beverage choi
Slide 13: Licence negotiations completed successfully
Step 1 - Licence negotiations completed successfully For personal use only 1. Exclusivity and taxes 12 year exclusivity 12 year whole of gaming Casino Duty schedule 2. Products* Unlimited table games, multiple terminal gaming machines, remote tables Uncapped bet limit on PGR EGMs US standa
Slide 14: Early implementation of product concessions
Early implementation of product concessions For personal use only Poker tables - Increased from 20 to 30 by Aug 2008 Multi Terminal Gaming Machines - Increased from 59 to 143 by Sep 2008 Golden Dollar Jackpots - 50 EGMs introduced Jul 2008 Increased Bet Limits EGMs - 50 EGMs introduced in PG
Slide 15: New product introductions ahead of project completion
New product introductions ahead of project completion For personal use only Vegas “Room” * - EGMs direct from USA (currently not available in Australian market) - 150 to 200 EGMs (replace bottom 5% quartile) - Target end Q3 FY09, subject to regulatory approval of games Additional electronic tabl
Slide 16: Create a destination for our customers
Step 2 – Create a destination for our customers For personal use only Tabcorp has committed $475m capex to Project STAR: Submission* 1. Re-orient the Casino to Sydney Harbour Iconic entrance 2. Build a new 5-star hotel on the Switching Station site 309 rooms 3. Increase the Casino floor space + 50%
Slide 17: STAR will expand significantly
STAR will expand significantly For personal use only Pre Project Planned % Measure STAR FY11 Changes change Gaming Tables Number 210 310 +100 +48% Slots Number 1,441 1,500 +59 +4% MTGMs Number 59 150 +91 +154% Accommodation* No rooms/aparts 480 789 +309 +64% Car parking* No of spaces 2,500 3,0
Slide 18: Customer service program
Step 3 - Customer service program For personal use only Enhanced recruitment program “get the best” Customer service performance to target New training programs for all front line staff Function -15% Target 15% A Enhanced grooming and uniform standards B C Dedicated resource as “coach” for f
Slide 19: Customer service improvements
Customer service improvements For personal use only Investment Outcomes Build capability Single customer view - New marketing team - Manage the customer life cycle across properties - CRM capability - Drive divisional loyalty program Major systems investment Customer insights drive our busin
Slide 20: III. Project STAR
III. Project STAR For personal use only Western view of Star City complex post Project STAR completion from Sydney Harbour. 20
Slide 21: Diamond Bar - interior
Diamond Bar - interior For personal use only 21
Slide 22: Main Gaming Floor
For personal use only Main Gaming Floor 22
Slide 23: Poker
For personal use only Poker 23
Slide 24: Noodle Bar
For personal use only Noodle Bar 24
Slide 25: Baccarat
For personal use only Baccarat 25
Slide 26: New Hotel - external facade
New Hotel - external facade For personal use only 26
Slide 27: New Hotel room
For personal use only New Hotel room 27
Slide 28: Project STAR investment case
Project STAR investment case For personal use only Investment outcomes - IRR in excess of 11% - NPV in excess of $200m Key investment assumptions - Investment includes Project STAR cost of $475m, cost of concessions and capitalised interest - WACC 9.1% (after tax) - Gaming revenue impact of 5 -
Slide 29: Disruption
Disruption For personal use only Disruption will impact gaming revenues during construction Recent Gold Coast refurbishment disruption: EGMs: 5 - 6% and Tables: 8% - 12% Regional and international comparisons EGMs: 4 - 7% and MGF: 8 - 11% Project STAR disruption has been forecast at 5 - 10%
Slide 30: Mitigating strategies
Mitigating strategies For personal use only Star City has been managing disruption for the past 12 months - Hotel suites, private gaming, Endeavour Room, Fortunes (Sean’s Kitchen), Pyrmonts (Gold Suite) Key learnings to be translated into Project STAR: ¾ Project sequencing - New hotel on separat
Slide 31: Internationally experienced team to deliver project
Internationally experienced team to deliver project For personal use only Recent milestone projects include: Jupiters Gold Coast expansion Master Architect: The Buchan Group The Palm, Dubai Park Hyatt, Melbourne Hotel Architect: Cox Architects Star City Casino, Sydney King Street Wharf, Sy
Slide 32: Funding
Funding For personal use only Replacement capex largely funded from Tabcorp’s earnings Project STAR will require incremental funding: FY08/ FY09 FY10 FY11 FY12 Needs: Project STAR 85 265 125 - Concessions/exclusivity 50 50 - - Total 135 315 125 - Sources: Equity/DRP 135 115 65 - Net debt require
Slide 33: Project STAR – A complete business transformation program
Project STAR – A complete business transformation program For personal use only $475m redevelopment to create Sydney’s best entertainment venue Significant expansion in accommodation, retail, F&B and gaming Investment case secured through long term exclusivity, product concessions and tax arra
Slide 34: STAR
For personal use only STAR 34
Slide 35: For personal use only
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