Tabcorp Holdings Limited ACN Investor Day. 12 October 2011

Transcription

1 Tabcorp Holdings Limited ACN Investor Day 12 October 2011

2 Disclaimer > This Presentation contains summary information about the current activities of Tabcorp Holdings Limited and its subsidiaries (Tabcorp Group). It should be read in conjunction with Tabcorp Group s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at > No member of the Tabcorp Group gives any warranties in relation to the statements or information contained in this Presentation. The information contained in this Presentation is of a general nature and has been prepared by Tabcorp in good faith and with due care but no representation or warranty, express or implied, is provided in relation to the accuracy or completeness of the information. > This Presentation is for information purposes only and is not a prospectus, product disclosure statement or other disclosure or offering document under Australian or any other law. This Presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither this presentation nor anything contained in it shall form the basis of any contract or commitment. > This Presentation is not a recommendation to acquire Tabcorp shares. The information provided in this Presentation is not financial product advice and has been prepared without taking into account any recipient's investment objectives, financial circumstances or particular needs, and should not be considered to be comprehensive or to comprise all the information which recipient may require in order to make an investment decision regarding Tabcorp shares. > All dollar values are in Australian dollars (A$) unless otherwise stated. > Neither Tabcorp nor any other person warrants or guarantees the future performance of Tabcorp shares or any return on any investment made in Tabcorp Shares. This Presentation may contain certain 'forward-looking statements'. The words 'anticipate', 'believe', 'expect', 'project', 'forecast', 'estimate', 'likely', 'intend', 'should', 'could', 'may', 'target', 'plan' and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, financial position and performance are also forward-looking statements. Any forecasts or other forward looking statements contained in this Presentation are subject to known and unknown risks and uncertainties and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Tabcorp, that may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. You are cautioned not to place undue reliance on forward looking statements. Except as required by law or regulation (including the ASX Listing Rules), Tabcorp undertakes no obligation to update these forward-looking statements. > Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. 2

3 Tabcorp investor day: Agenda 1 Overview of Tabcorp David Attenborough 2 Wagering Doug Freeman, Craig Nugent and Adam Rytenskild Media & International Keno Gaming Capital structure Brendan Parnell Mohan Jesudason Mohan Jesudason Damien Johnston 7 Key messages David Attenborough 3

4 Market leading businesses Wagering Media & International Gaming Keno Profile 43.3% share of turnover (estimated) 1.2m regular customers New 12 year Victorian Wagering & Betting licence 2.35m homes have access to Sky Racing Export racing vision to 29 countries 82,000 races pa 1.2m EGM customers 53.9% share of revenue 7,500 EGMs signed to TGS TGS is expected to commence August m customers New 10 year Victorian Keno licence Outlets 2,627 (Sept 2011) 5,100 (outlets) 263 (venues) 2,876 (venues) Accounts 315,000 (Sept 2011) FY11 Revenue $1,569m $179m $1,077m $170m EBITDA $288m $60m $280m $61m Licence expiry NSW 2097 NT 2015 VIC 2024 (new) VIC 2012 NSW 2022 QLD 2022 VIC

5 Investment highlights Tabcorp has an attractive investment case defensive earnings, strong cashflow and growth from new investments > Quality portfolio of businesses with market leading positions Geographic diversification Operational diversification Long dated licences Loyal customer base > Attractive industry structure Sole licensee for off-course wagering in the key Australian states of New South Wales and Victoria Successfully executed Keno model in NSW and Queensland can now be replicated in Victoria following award of new Victorian Keno Licence > Strong cash generating businesses and defensive earnings profile > Growth from new investments > Experienced management team with a proven track record 5

6 Financial performance Tabcorp delivered earnings growth across all four businesses in FY11 $m FY11 FY10 Revenues 2, % 2, % Variable 1, % 1, % contribution Operating (393) 2.0% (385) 1.4% expenses EBITDA % % D&A (124) 8.5% (115) 6.2% EBIT % % EBITDA by business Wagering % % Media % 56 (1.6%) Gaming % 262 (2.0%) Keno % % > Each business delivered growth in revenues and earnings > Wagering growth underpinned by 31.7% increase in fixed odds revenues and strong Trackside performance > Media and International growth driven by the launch of Sky2 and Sky World and continued international expansion > Gaming growth reflected the ongoing strategy of actively competing for market share whilst managing down costs in preparation for transitioning to TGS in August 2012 > Keno growth was a result of a targeted distribution expansion in NSW and Queensland and the roll out of Keno self service in NSW 6

7 1Q12 trading update Positive revenue trends continued into the first quarter with all businesses growing >Wagering Revenue ($m) 1Q12 1Q11 Change Wagering % Media & International % Gaming % Keno % Total % Allowing for Soccer World Cup in 1Q11, growth was 4% Strong growth in fixed odds revenue Growth in NSW retail continued turnaround from 2H11 Continued strong growth in internet channel >Media Increased subscription revenue >Gaming Steady growth > Keno Expanded distribution Note: Revenues do not aggregate to Group total due to intercompany eliminations 7

8 Executing on our growth opportunities Tabcorp has completed a year of significant transformation and is executing a number of valuable growth opportunities > Fixed Odds betting on racing in retail NSW (launched January 2011) > Trackside product in NSW (launched January 2011) > International pooling in NSW (launched July 2011) > New Victorian Wagering and Betting Licence (commences August 2012) > New Victorian Keno Licence (commences April 2012) > Tabcorp Gaming Solutions (commences August 2012) 8

9 Key strategies Strategies to continue leadership in retail and online gaming and wagering are in place Keno Gaming Media Wagering Build on strength in retail Drive fixed odds expansion Drive online Seek to improve regulatory conditions Promote loyalty program Enhance Australian racing exposure and expand internationally Develop TGS Grow Keno > Expand footprint with new formats e.g. kiosks > Deliver full suite of products > Lead with world-class self-service technology > Expand Trackside product in NSW > Expand fixed odds offer > Develop leading online presence across full suite of products > Pursue levelling of the competitive playing field (e.g. in products, taxes, fees) > Grow No 1 Club leading customer loyalty program in Australian Wagering > Enhance Australian racing exposure to customers > Expand international pooling > Drive export of Australian racing through Sky, import international product > Enhance gaming earnings in Victoria to August 2012 > Expand TGS in Victoria and establish interstate > Expand distribution > Expand self-service 9

10 Tabcorp investor day: Agenda 1 Overview of Tabcorp David Attenborough 2 Wagering Doug Freeman, Craig Nugent and Adam Rytenskild Media & International Keno Gaming Capital structure Brendan Parnell Mohan Jesudason Mohan Jesudason Damien Johnston 7 Key messages David Attenborough 10

11 Wagering: Agenda i ii iii iv v vi Business overview Investment highlights Financial performance and trading update New Victorian Wagering and Betting Licence Fixed odds Distribution 11

12 Business overview > Operates exclusive tote wagering in Victoria and New South Wales > Operates fixed odds betting on sports and racing under the TAB Sportsbet and Luxbet brands > Conducts betting at 267 race courses, 2,627 TAB retail outlets and via internet and telephone > 1.2m regular customers > Operates Trackside, a computer simulated racing product which complements Tabcorp s product offering 12

13 Australian wagering market National FY10 TAB turnover 1 $16.0b Market turnover 2 $22.6b Retail outlets 4,125 Northern Territory TAB $180m Market $5,380m % national 24% Queensland TAB $2,364m Western Australia Market $2,542m TAB $1,677m % national 11% Market $1,755m % national 8% New South Wales South Australia TAB $819m Market $873m % national 4% Victoria Note: 1. Total TAB turnover includes fixed odds 2. Excludes betting exchanges and offshore providers % national = state wagering market turnover / national wagering market turnover Source: ARB Fact Book FY10 TAB $4,454m Market $4,804m % national 21% ACT Tasmania TAB $5,548m Market $6,188m % national 28% TAB $179m Market $267m % national 1% TAB $765m Market $769m % national 3% 13

14 Forms of betting in Australia Betting Type Pari-mutuel (the Tote) Fixed Odds Tote Odds Betting Exchange Description Operators Comments Pool betting bets are accumulated in a pool with dividends paid based on a set % of that pool, with each winning ticket getting a proportional share The punter is guaranteed a set dividend if their bet wins A relatively new product where winning bets receive a dividend based on the dividend paid by any of the TABs A facility which effectively allows punters to bet against each other. The facility provides a means for punters to back or lay their selection against someone wanting to bet on the opposite outcome NSW/Vic Tabcorp Qld/SA/NT Tatts ACT ACTTAB Tas Tote Tas WA RWWA Bookmakers TAB Sportsbet Other TABs Bookmakers Betfair Tabcorp s new Victorian licence allows operation of a betting exchange from August 2012 > Key funding source for racing industry > The dividends paid vary from product to product they have different takeout rates > Each state TAB was formerly a member of TAB Sportsbet. Now they run their own sports betting businesses > Effectively copies the tote product > Bookmakers can bet back into the tote pools > Assisted by lower tax and product fees payable in the Northern Territory > Betfair retains a commission when bets are matched > Betfair is only licensed in Tasmania and competes nationally 14

15 Participants in the Australian wagering market for racing Tabcorp is an integral part of the Australian wagering market, accounting for approximately 38% of funding to the racing industry and approximately 66% to NSW and Victorian racing Broadcasting rights Vision Media broadcasters Rights fees Wagering product Racing product Owners fees Punters Wagering operators Racing industry Owners Wagers > Product fees > Race fields > Earnings contribution > Prize money > Incentives > Other Tabcorp plays a vital role in the wagering market value chain Other > Admission > Membership > Sponsorship > Food & beverages 15

16 Wagering: Agenda i ii iii iv v vi Business overview Investment highlights Financial performance and trading update New Victorian Wagering and Betting Licence Fixed odds Distribution 16

17 Investment highlights Tabcorp is the leader in an expanding wagering market and is successfully executing on a multi-channel distribution strategy across retail and online > Consistent wagering market growth Racing turnover is growing steadily Sports turnover is growing strongly > Leading wagering product offering Leader in pari-mutuel racing Leader in fixed odds racing Leader in sports betting Trackside virtual racing product continues to grow in Victoria and NSW > Wagering continues to deliver growth across channels Strong online wagering turnover growth Retail initiatives are driving growth 17

18 Consistent wagering market growth The wagering market has demonstrated consistent growth, driven by steady growth in racing and strong growth in sports betting Australian wagering market Annual Turnover ($b) CAGR FY01 - FY06 FY06 - FY11 Total 6.0% 5.4% FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 Racing turnover Sports turnover Parimutuel Racing Total Racing Sports Annual Turnover ($b) CAGR FY01 - FY06 FY06 - FY11 Parimutuel Racing 3.6% 1.3% Total Racing 6.4% 4.0% FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 Annual Turnover ($b) CAGR FY01 - FY06 FY06 - FY11 Sports 19.2% 14.1% FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 Source: ARB Fact Books, internal Tabcorp data, includes some estimates. All turnover shown on a 52 week rolling basis 18

19 Product offering a leader in fixed odds racing TAB Sportsbet has a competitive fixed odds racing offer 800 TAB Sportsbet fixed odds racing turnover CAGR = 24% Wagering Fixed Odds Racing Turnover share Turnover ($m) FY11 FY10 TAB Sportsbet 10.4% 5.4% Luxbet 7.3% 6.4% Tatts 8.3% 3.9% 200 Other TAB s 1.8% 1.3% 100 NT bookmakers 16.7% 18.6% - Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 NT Tote Odds 38.9% 43.4% Other bookmakers 16.6% 21.0% TAB Sportsbet has rapidly grown its share of fixed odds racing turnover while achieving yields and returns similar to the pari-mutuel product. Note: 1. Turnover shown on a 52 week rolling basis Source Tabcorp data 19

20 Product offering TAB Sportsbet clear leader in sports betting Sports betting is growing strongly 1.3 TAB Sportsbet fixed odds sport turnover CAGR = 22% Wagering Sports Turnover share Turnover ($b) Increase due to Soccer World Cup Decrease due to Soccer World Cup FY11 FY10 TAB Sportsbet 37.4% 36.8% Luxbet 2.6% 3.7% Tatts 7.3% 7.1% Other TAB s 5.2% 5.1% 0.7 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Bookmakers 47.5% 47.3% TAB Sportsbet has maintained leadership despite a significant marketing push by key competitors Note: 1. Turnover shown on a 52 week rolling basis Source Tabcorp data 20

21 Product offering Trackside turnover continues to grow Trackside is growing consistently in Victoria and is on track to meet our targets in NSW Victoria 1 NSW Turnover ($m) CAGR = 14% Weekly Turnover ($m) Business case target in FY13 Actual Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Target Tabcorp s initiatives Introduced Trackside to NSW from January 2011 Increased frequency of Trackside races Expanded Victorian coverage > Over 1,400 Trackside installations to date, representing approximately 90% of target > NSW is on track to deliver an expected $30m EBITDA from Trackside in FY13 Note: 1. Victorian turnover shown on a 52 week rolling basis 2. NSW turnover is weekly from 1 Jan 11 Source: Tabcorp data 21

22 Wagering channels strong online wagering turnover growth Wagering is shifting online and Tabcorp is capturing its share, with online growing rapidly Turnover ($m) 1,930 1,830 1,730 1,630 1,530 1,430 1,330 1,230 Tabcorp s online turnover 1 CAGR = 19% Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 > Phone turnover has declined, but more than offset by growth in online > Competitor businesses are built around online > Mobile devices a small part of the market, but growing rapidly Tabcorp s initiatives > Introduced market leading loyalty program > New world s best practice internet facility to be launched this year > Launched wagering apps for all new mobile devices > National expansion & branding TAB Sportsbet > Launched Luxbet > Re-focused phone channel cost base & service strategies > Fixed odds expansion Note: 1. Turnover shown on a 52 week rolling basis Source: Tabcorp data. 22

23 Wagering channels retail initiatives are driving growth Tabcorp s retail turnover is growing, driven by initiatives Turnover ($m) Jan-09 Mar-09 CAGR = 1.3% May-09 Jul-09 Sep-09 Nov-09 Retail turnover 1,2 > Retail represents 64% of our wagering turnover 1 Jan-10 Mar-10 > Cash is the key advantage of retail May-10 Jul-10 New retail strategy launched including fixed odds racing & Trackside in NSW Note: 1. Quarter ended 30 September Turnover shown on a 52 week rolling basis but excludes Soccer World Cup Source: Internal Tabcorp data Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Tabcorp s initiatives > More self-service terminals > Consolidated distribution across all Tabcorp products > Regulatory approvals fixed odds racing & Trackside in NSW > Trialling retail loyalty program > Negotiated new long term agreements with key partners > Expanded reach using low cost kiosks more outlets > Outlet refurbishments > Sky distribution expansion 23

24 Wagering: Agenda i ii iii iv v vi Business overview Investment highlights Financial performance and trading update New Victorian Wagering and Betting Licence Fixed odds Distribution 24

25 Wagering: Financial performance $m FY11 FY10 Change Totalisator - Vic (3.0%) Totalisator-NSW (5.0%) Fixed Odds % Trackside % Other % Revenues 1,569 1, % Variable contribution % Operating expenses (264) (264) 0.0% EBITDA % D&A (67) (63) 5.9% EBIT % EBIT/Revenue 14.0% 13.6% 0.5% > Strong growth in Fixed Odds offsetting decline in pari-mutuel revenues > Soccer World Cup revenues (Fixed Odds) FY11 $7.5m FY10 $15m > Fixed Odds racing in NSW retail from January 2011 > Trackside in NSW retail from January 2011 > Margins improved through strong focus on operating expenses Note: Victorian revenue and expenses are net of 25% allocation to JV partner NSW figures are 100% of revenue and expenses with an incentive fee equivalent to 25% of profits included in variable contribution > Race fields fees FY11 $35m (FY10 $35m) FY12 estimate $38m, increasing to $55m from August

26 1Q12 trading update Wagering KPIs Solid performance showing benefits from investments and improved regulatory conditions $m 1Q12 1Q11 Change Revenue by product Totalisator Vic (3.4%) Totalisator NSW (4.9%) Fixed Odds % Luxbet % Trackside % Turnover by distribution Retail Vic % Retail NSW % Internet % Phone (5.4%) Oncourse (2.0%) Luxbet (30.6%) > 1Q11 included $7.5m Fixed Odds revenues from Soccer World Cup. Allowing for this, growth was 4% > Strong growth in fixed odds revenue of 18.2% Allowing for Soccer World Cup in prior period, growth was 35% Growth in Fixed Odds racing more than offset reduction in totalisator revenues > Improved results from Luxbet with increased focus on managing yield > Growth in NSW retail continued turnaround from 2H11, reflecting Benefits from rollout of Trackside Benefits from rollout of Fixed Odds racing > Continued strong growth in internet channel Note: Victoria includes Joint Venture partner s 25% interest 26

27 Wagering: Agenda i ii iii iv v vi Business overview Investment highlights Financial performance and trading update New Victorian Wagering and Betting Licence Fixed odds Distribution 27

28 New Victorian Wagering and Betting Licence Overview > Sole retail licence > 50/50 joint venture with Victorian Racing Industry (previously 75/25) > Minimum performance obligation: FY13 $337m and FY14 $342m $1bn in aggregate for FY13 through FY15 > Discussions in respect of the new joint venture are well advanced, documentation being finalised Licence period > 12 years, commencing August 2012 > At the discretion of the minister, the licence period may be extended for a further two years EBITDA estimate > $120m in FY14 Licence payment > $410m expected to be paid shortly 28

29 Wagering: Agenda 1i ii iii iv 2v vi Business overview Investment highlights Financial performance and trading update New Victorian Wagering and Betting Licence Fixed odds Distribution 29

30 Fixed Odds is a growing segment Fixed Odds is the fastest growing segment of the wagering market, and Tabcorp has increased its share of Fixed Odds turnover significantly > Fixed Odds products now comprise 43% of wagering turnover, up from 33% in 2007 FY07 Wagering Turnover (Total Sales $19.4bn) FY11 Wagering Turnover (Total Sales $23.9bn) Fixed Odds Sport 23% 10% 14% 29% Tote Win/Place Tote Exotics 42% 35% Fixed Odds Racing 25% 22% > Tabcorp participates in Fixed Odds across racing and sport through TAB Sportsbet and Luxbet > In FY11, Tabcorp captured 25% of the Fixed Odds/Tote Odds turnover. In FY07 this was 10% 30

31 TAB Sportsbet: Fixed Odds overview TAB Sportsbet has doubled its revenue in the last two years and maintained attractive yields FY11 FY10 FY09 Total Turnover $1.91b $1.38b $886m Total Revenue $221m $169m $109m > In FY12, TAB Sportsbet will offer more than 260,000 different betting books across 50 different sports and non-sporting events (FY11: 204,000, FY10: 136,000) > Employs approximately 50 specialised bookmakers to price markets and manage risk TAB Sportsbet bookmakers expertise is recognised by competitors > A significant focus for TAB Sportsbet is the management of smarter customers > The TAB Sportsbet risk management system has the most robust controls in place to effectively manage multi betting > Despite increasing competition TAB Sportsbet has continued its strong growth and maintained overall yields exceeding 11.5% in each of the last 5 years Note: Turnover and revenue includes Victorian Joint Venture partner s 25% interest 31

32 TAB Sportsbet: Fixed Odds key metrics 71% of fixed odds revenue was generated in retail, 66% of fixed odds revenue was derived from bets <$100 and multi bets drove 63% of sports revenue Revenue by Distribution Channel Retail 71% Internet 22% Telephone 7% Revenue by Bet Value $1-$100 66% $101-$1,000 29% $1,001-10,000 3% >$10,000 2% Sports Turnover Single Bets 68% Multi Bets 32% Sports Revenue Single Bets 37% Multi Bets 63% Note: Data for full year 30 June

33 TAB Sportsbet: Fixed Odds racing growth Fixed Odds racing is the primary driver of growth in Fixed Odds revenue FY12 Projected Sources of Fixed Odds Revenue Growth 17% 8% 6% 2% 67% Fixed Odds Racing Sports Growth Live Betting Super Multi Customer Management > The progressive removal of regulatory restrictions over the past two years has seen TAB Sportsbet Fixed Odds turnover grow rapidly > In FY12 it is expected that 45% of total TAB Sportsbet fixed odds turnover will come from racing. This will be driven by A full 12 months benefit from Fixed Odds racing in NSW retail Increased customer take up of the Fixed Odds product Increased product in all three racing codes > TAB Sportsbet targets a yield of ~12% from Fixed Odds racing over this time 33

34 TAB Sportsbet: Fixed Odds sport Fixed odds sports betting continues to grow, with catalysts from live betting and multis > The key areas for growth in sport are Increased product Increased live betting Expansion of the multi product, where the maximum number of legs was recently increased to 20 > Live betting turnover grew 50% in FY11 60% of live betting turnover is generated in retail outlets > The growth in betting on US sports is being driven by expanded live coverage on pay television and greater general awareness of these sports > Betting on sports is well diversified and leaves TAB Sportsbet less susceptible to a series of abnormal results in any one sport 34

35 TAB Sportsbet: Comparison of margins Fixed Odds returns to Tabcorp are attractive due to lower tax rates and fees NSW Parimutuel Fixed Odds Racing Fixed Odds Sport Turnover Revenue Variable Contribution New licence VIC Parimutuel Fixed Odds Racing Fixed Odds Sport Turnover Revenue Variable Contribution Note: Parimutuel revenue is based on win, place and doubles which are the bet types offered in fixed odds Calculated on an incremental basis, includes product fees, taxes, venue commissions, profit share arrangements Race fields fees calculated under new arrangements currently expected to be in place from August

36 Luxbet financials In FY11, Luxbet improved its yield and achieved positive EBITDA FY11 FY10 FY09 Turnover $559m $477m $194m Revenue $20.7m $11.6m $3.8m EBITDA $40k ($6.3m) ($10.6m) > The majority of revenue is Racing Tote Odds, with the balance evenly split over Racing Fixed Odds and Sport > Luxbet has two key objectives Compete directly with NT bookmakers on product, price and services = sales focus Increase Tabcorp s profitability = profit focus 36

37 Luxbet overview Tabcorp s objective for Luxbet is to move the business to sustained profitability > Customer experience and retention Active customers 21k in FY11 Frequent customers 14k in FY11 > Customer acquisition New depositing customers 13k in FY11 High focus on natural acquisition top complement more expensive affiliate acquisition > Risk management Customer management and categorisation Product limitations for certain customers 37

38 Wagering: Agenda i Business overview ii 2 Investment highlights iii iv v vi Financial performance and trading update New Victorian Wagering and Betting Licence Fixed odds Distribution 38

39 Distribution: Broadest range of channels and products Tabcorp s distribution capability delivers key competitive advantages Retail 64% of wagering Online/Mobile 19% of wagering > 2,627 wagering venues: Vic 627, NSW 2,000 > 2,012 venues now have Trackside > 3,570 self service Easy Betting Terminals (EBTs) > Online traffic +30% for FY11: 1.5b page views, 37m unique visits > 315k mobile app downloads > 315k active account customers On-course 2% of wagering > Wagering at 267 tracks and 5 sports stadiums in 3 states > Support over 5,000 live racing and sports events each year > Large team with over 1,300 people Phone 7% of wagering > 600 seat customer call centre > 11m operator calls last year > 10m Touch Tone / Speech Express calls last year > Opened 74,000 new customer accounts last year Note: Figures quoted at 30 September 2011 unless otherwise noted Luxbet and Premium customers are not included in the table above. They represent 8% of Wagering 39

40 Distribution: Strong retail partnerships Tabcorp is proud of its strong partnerships with retail industry groups; with the aim of delivering sustainable benefits for licensed venues and for Tabcorp National > Australian Hotels Association (AHA) National > Hotel groups including ALH Group hotels New South Wales > AHA NSW 90% of 1,658 hotels 5 year exclusive agreement to FY16 > Clubs NSW 90% of 1,450 clubs 5 year exclusive agreement to FY16 > NSW Agents Association 100% of 213 agencies Victoria > AHA VIC 59% of 1,600 hotels Current agreement expires Dec 11 > Community Clubs Assoc of Victoria (CCAV) 30% of 650 clubs > Clubs Victoria 54% of 650 clubs > RSL 100% of 69 RSL clubs > Victorian Agents Association 100% of 93 agencies 40

41 Distribution Strategy: Driving growth for Retail & Online 1. Create an integrated shopfront, providing a seamless and consistent experience: everywhere, every time 2. Penetrate new customer markets through technology, innovative design and targeted product expansion 3. Attract, retain and reward customers for loyalty Delivered through 5 key platforms 41

42 Distribution: Customers responding to investment > Targeted investment drove our Retail & Mobile business in 2H11 Retail site expansion: an additional (net) 60 wagering venues NSW Trackside expansion: over 1,400 sites installed to 30 September 2011 Targeted Agency upgrades: 65 sites refurbished NSW Retail self-service expansion: +720 EBTs to 2,320 terminals Live betting on sport: Retail Bet Live theatres, 95 theatres installed New website and Mobile App development: iphone, ipad, Android, IPTV > Performance has been encouraging Retail rebound: NSW retail sales decreased 2.8% in 1H11 vs pcp, however grew 1.7% in 2H11 vs pcp. In FY12, NSW retail is up 6.7% YTD NSW self-service utilisation has more than doubled to 25% of NSW retail wagering transactions Mobile sales in August represented 6% of total account sales with over 21,500 (11%) unique account customers betting via a mobile device during the month New wagering account customer acquisition up 23% YTD vs pcp. 20,600 new account customers acquired so far in FY12 42

43 Retail: Investment in the network Tabcorp is targeting investment in initiatives that improve customer experience > Hotels & Clubs - a focus on self-service and enhancing the entertainment experience in a social environment > Pubs are an important channel to connect to our younger customers. 65% of yr old customers bet at Pub/Club 1 Note: 1. Millward Brown Brand Health Monitor Nov

44 Retail: Customers have responded positively to self-service Self-service terminals have driven revenue growth and incremental margin improvement NSW EBT share of tickets and turnover Victoria EBT share of tickets and turnover 22% 51% 49% Sales Tickets 47% 45% 43% 41% 39% 37% 35% Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 % of Total Sales & Tickets 20% Sales Tickets 18% 16% 14% 12% 10% 8% % of Total Sales & Tickets 6% 4% Note: All graphs are 52 week rolling 44

45 Live Betting Live betting is a key growth area > Live betting on sport complements the entertainment experience in pubs, clubs and agencies > In the game in sport Live betting turnover grew 50% in FY11 Is only available in retail and phone > An entry point for sport lovers Average spend doubles when customers add racing to their repertoire Only 5% bet exclusively on sport 60% bet exclusively on racing 35% bet on racing & sport 45

46 Sky interactive form The new interactive form is part of Tabcorp s strategy to improve the customer experience through innovation and reduce operating costs > Individual interactive racing displays are being trialed to enhance customer information, improve consistency and are possible future wall sheet replacements > Better information for customers and reduces costs 46

47 Online: New wagering website The new website will improve customer experience and help maintain TAB Sportbet s strong competitive position > To be delivered in FY12 A leading online offer, meeting our future growth requirements Substantial customer engagement through development; delivers on core customer needs > Key Features Best practice design and usability Simple & fast to use Multi bets are built automatically Industry standard, high performance API Promotional offer management Improved customer account functionality Platform to add additional capability in the future 47

48 Mobile: Innovative betting technologies Applications have been developed to maximise the mobile wagering experience on mass-market devices, which is driving revenue growth > Applications TAB Sportsbet iphone application launched in April 2010 first wagering app in the Apple itunes Store Android app launched February 2011 ipad app launched May 2011 Total of 315,000 app downloads to date > Performance Rapid growth. Average 6% of total account sales > Strategy Lead mobile betting on mass-market devices with continued enhancement > Coming soon Live Sky1 and Sky2 streaming video on all applications from October

49 Online: Convergence Tabcorp is positioning its wagering offering for future changes in media and technology > Internet over your TV In FY12 the TAB Sportsbet IPTV application is planned to be launched offering customers our full suite of wagering products > Mobile wallet A focus on reducing customer barriers to transacting with us In-Application payment systems Simple account opening processes 49

50 On-course: Investment at the track > Refurbishment of on-course tote facilities > Dedicated lounges for No.1 Club members at Rosehill racecourse > Sponsorship of racing clubs & codes > Sponsorship of Tabcorp Park Melton and Tabcorp Park Menangle > VRC - Strongest membership base and home of a socially & internationally recognised carnival > Cranbourne building an alliance with one of Victoria s high growth regions > Using ipad technology for personal betting terminals in lounge facilities 50

51 Distribution summary > Tabcorp has a number of key competitive advantages in the distribution of wagering services to customers The broadest range of customer channels and products Strong retail industry partnerships Our retail network Cash Differentiated product offering -Trackside, Keno and live sports betting > Our Distribution strategy utilises these advantages > Investment in customer experience and expanding reach is delivering growth for retail and online, and positions Tabcorp for continued growth in a competitive environment 51

52 Tabcorp investor day: Agenda Overview of Tabcorp Wagering Media & International Keno Gaming Capital structure David Attenborough Doug Freeman, Craig Nugent and Adam Rytenskild Brendan Parnell Mohan Jesudason Mohan Jesudason Damien Johnston 7 Key messages David Attenborough 52

53 Business overview > Sky Racing broadcasts thoroughbred, harness and greyhound racing on three channels plus digital media Pay TV subscribers in 2.35m homes 5,100 hotels, clubs and TAB outlets, across Australia Coverage of more than 82,000 races per year > Sky Sports Radio broadcasts racing and sports (NSW) > International manages the export of Australian racing to 29 countries including vision, form, wagering including co-mingling and imported racing content 2011 operational highlights > Acquisition of international wagering gateway on Isle of Man (50% equity) > QLD thoroughbred media rights secured > Interactive Sky Form launched and on-line vision expanded > International pooling into NSW launched; Co-mingling with Singapore initiated > Significant UK distribution arrangements secured 53

54 Investment highlights Media and International investments underpin Wagering growth strategies > Media is a core part of the Wagering business > Distribution expands reach and audience demographics > Sky Racing s extensions typically enhance wagering profitability > Programming initiatives are likely to increase the customer pool and grow wagering > Sky Racing has retained all broadcast rights as they have become due > Tabcorp is a key player in international wagering 54

55 Media is a core part of the Wagering business Sky Racing s Synergies with Wagering > Co-ordinated vision and commentary drives wagering > Sky Racing promotes wagering by integrating wagering data and prompts into its vision > The import of international races allows 24/7 wagering and comingling opportunities > Export of races contributes material wagering revenue, providing a platform for global opportunities. It is also fundamentally interlinked with imports (Biggest export markets are New Zealand, Singapore, United Kingdom, the United States and Sri Lanka) > Sky Racing s services establish relationships with the Racing Industry > Sky Racing provides other non-vision services to wagering such as delivery of wagering data and other gaming product > Wagering operators are the logical and effective owners of racing media 55

56 Sky Racing value chain: cost base delivers operational scale Broadcast rights fees expense $40m Communications and technology costs $21m Production and employee costs $35m 88% of costs are fixed or output critical Subscription and international revenues $179m Race Tracks Up Link/ Communications Channels and Services Distribution Customers > 230 Australian tracks > 270+ international tracks > DVN Fibre Link from 170 tracks > SNG Link from 60 tracks > International feed via satellite/ circuits to and from NZ, USA, UK, South Africa and Asia Main Channels > Sky Racing1 > Sky Racing2 > Sky Racing World > Sky Sports Radio Additional Services > Trackside > Sky Text (form & data) > Oracle Tipping Service > Optus Satellites (x2) > Internet > Cable > Mobile TV > Global (various) > Racetracks > Licensed venues > TABs > Homes > Internet > Airborne (Virgin) > Mobile > Global > Sky PayPerView Sports > Interactive TV betting > TAB Raceday Control 1 Note: 1. Audio and vision to meet regulatory requirements i.e. close of betting, final results Source: Tabcorp internal data 56

57 Multi-channel distribution network expands reach Sky is expected to increase audiences and improve customer demographics RETAIL Pay TV RADIO EXPORT DIGITAL > 5,100+ venues > 2.35m homes > Virgin live2air > Tab.active > 104 NSW Transmitters > Internet, Apps > 7 feeds exported daily across 29 countries > Streaming > > Sky Form > Sky Archive > Mobile TV 1 > Apps Sky Racing viewership > Sky is the most watched PayTV channel weekends 12-3pm for males 25+ > Continued investment in talent and programs will see improvement in the under 40 demographic > Sky continues to grow its female audience > Upcoming innovations such as smart phone streaming are expected to further drive viewership Note: 1. Optus, Vodafone and Three, covering 60% of the mobile handset market 57

58 Sky Racing s extensions typically enhance wagering profitability Retail presentation > Dual screen displays in TABs Sky Racing1 and Sky Racing2 > Synchronised single audio service > Coordinated race start times > Simulcast of carnival meetings to bring showcase to retail customers Sky Racing media centre > Single or Dual screen options > User elects experience, channel and audio > Seamless connectivity to TAB betting > Sky Form (interactive video) > Sky Archive 170k races and growing Bet now icons Wagering data 58

59 Programming initiatives are likely to increase the customer pool and grow wagering Sky Racing programming strategy Sky Racing programming initiatives > Target the younger generation (predominately Generation Y) as well as the female demographic > Introduce racing to a whole new audience via higher quality production > Further integrate wagering products promotion and data Racing Retro > Number 1 racing show review/ panel format > Female anchor Off the Rails > Irreverent panel show taking a light hearted view on racing GG Girls > Unique female-only perspective on racing Social Media & Fantasy sports > Sky Racing Star Stable > Social Media engagement Big Sports Breakfast (Radio) > Entertaining and interactive, racing and sports betting 59

60 Broadcasting rights Thoroughbred Greyhound & Harness Domestic Type Race Meets New Media NSW (non Metro) 468 QLD/NT 487 WA 241 SA 178 ACT 31 TAS 66 AUS 4,648 SYD Metro and VIC Metro & Provincial X 2 > Sky provides Tabcorp with direct relationships with all thoroughbred, harness and greyhound racing > Rights to UK, NZ, South Africa and Singapore races are held long term Note: 1. TVN content is 9% of Australian race meetings FY11 (excludes International races) 2. Telstra holds TVN s New Media rights 60

61 Sky Racing has effective strategies in place Broadcast rights recently secured > Greyhound Racing Victoria 2011 > NSW harness 2011 > Western Australia thoroughbreds extension 2011 > Queensland thoroughbreds 2010 > Northern Territory thoroughbreds 2010 > ACT thoroughbreds 2009 > South Australia thoroughbreds 2008 Key pillars of premium rights > Transparency Alignment to Sky revenue performance > Presentation controls Programme Management Committee for Racing World > Alignment Increased export revenues > Maximum exposure Broad multi-platform distribution > Event support Major event sponsorship 61

62 Media & International: Financial performance $m FY11 FY10 Change Revenues % Variable contribution % Operating expenses (108) (99) 9.1% EBITDA % D&A % EBIT % EBIT/Revenue 29.6% 31.1% (1.5%) > Steady growth in subscribers > Revenue growth from international export and new channels > Growth in expenses attributable to new channels and international expansion > Focus on securing broadcast rights No. of Retail venues 5,015 4, % Racing Industry contributions from International business % Broadcast rights expense % Trading Update Revenues ($m) 1Q12 1Q11 Change Media & International % > Revenue growth mostly attributable to growth in subscriptions from commercial venues and TABs 62

63 Sky Racing is a leader in race broadcasting internationally Top International Racing Media Broadcasters 1, 2011 Race Broadcaster Country Australia Australia UK UK UK USA USA USA France South Africa Races/ Tracks (pa) 2 65,000 10,000 3,800 2,500 11,000 (60 tracks) (53 tracks) (124 tracks) 18,000 3,800 Imported Races Export Channels Vision Partner Countries 15,499 <2,000 <2,000 <100 ~4,800 <1,000 <200 <200 <500 ~25, GBI racing combined (GBI) Export of Sky Racing s vision to its 29 partner countries helps establish trading relationships for import of vision and co-mingling opportunities Notes: 1. Excluding NZ 2. Domestic only 3. ATR, RUK joint venture for export 63

64 Tabcorp is well positioned on the international stage International Objectives > To be an international leader in gambling entertainment > Increase wagering opportunities through global betting pools (incl PGI Isle of Man) > Retain/grow international revenue (for Australia and New Zealand racing) > Expand other international products and services (Gaming) Country Share of Export Revenue, FY11 Share of Import Revenue, FY11 Reciprocal Rights New Zealand 51% 59% Singapore 14% 9% USA/ Canada 9% <1% Features only UK 9% 7% Sri Lanka 4% n/a X South Africa 3% 11% Hong Kong 3% 11% > $23m in export revenue (FY11) for Tabcorp and the Australasian racing industry > Import (Wagering revenue $105m FY11) is a critical enabler for export (Import CAGR 40% FY07-11) 64

65 Summary Media is a core part of the Wagering business > Multi-channel distribution strategy delivering important exposure for Tabcorp and racing > Extensive racing industry relationships and effective strategies to grow the business > Well positioned for potential international expansion Tabcorp is a world leader in racing broadcasting and wagering 65

66 Tabcorp investor day: Agenda 1 Overview of Tabcorp David Attenborough 2 Wagering Doug Freeman, Craig Nugent and Adam Rytenskild Media & International Keno Gaming Capital structure Brendan Parnell Mohan Jesudason Mohan Jesudason Damien Johnston 7 Key messages David Attenborough 66

67 Business overview Tabcorp is Australia s leading Keno operator with Keno licences in NSW, QLD and Victoria (commencing April 2012) > Tabcorp has recently expanded the game in NSW and Queensland and successfully operates across 2,876 venues (including Victoria) > Keno is a numbers game Players buy a ticket and select numbers from 1 to 80 In each game a random selection of 20 numbers from 1 to 80 is drawn every few minutes and displayed electronically Combinations of matching selected numbers win a prize Most prizes are paid out immediately with larger prizes paid later by cheque 67

68 Investment highlights Keno is a fast growing business that is scalable Keno is a fun, easy to play numbers game where customers play to win every three minutes 1. Attractive licences 2. Strong customer base and distribution network 3. Keno terminal rollout track record 4. Strategic growth platform Low cost to secure core Flexibility Value-adding joint licensee in NSW Long duration Capability Eastern seaboard Device availability Venue engagement Frequency of wins Same venue productivity growth Core capability in rollout New venues New product pipeline Self service terminals Alternative animations Brand investment New Victorian Keno Licence is structurally more attractive than current licence Product roadmap Duplicate of NSW host Experience in rollout Uses all growth levers 68

69 Attractive licences Keno has attractive licences and the terms and structure of the new Victorian Keno licence is better than the current licence QLD NSW NEW VIC OLD VIC Long term licences (expiry) 2022 (25 year licence) 2022 (15 year licence) 2022 (10 year licence) 2012 Flexibility/innovation Scope to extend Scope to extend Product roadmap included in licence No approvals since Keno Bonus Attractive structure Sole Licensee and operator Joint Licence with ClubsNSW, sole operator Sole licensee and operator Joint Venture operated by Tatts Channel Pubs, Clubs, TAB, Casino Pubs, Clubs, Casino Pubs, Clubs, TAB, Casino Gaming venues only Venues FY11 1,059 1, (current install) 137 (Tabcorp) Venue change (prior 12 months) (target additional) -5 Ticket count FY11 44m 52m 35m FY14 (estimated) 69

70 Strong customer base and distribution network Keno has a large, loyal customer base that is accessed by its distribution network across the Eastern seaboard Customer base > Over 1.3m customers > 96.5m tickets sold per annum 13,252 tickets per hour sold Average bet of $9.64 Replay rate 49% > FY11 turnover: $941m Distribution network > 2,876 Venues (inc Victoria) > 4,411 Terminals (operator & self service) > Over 10,000 screens Frequency of wins > $710m paid out in wins last year > Ten Spot 10 Jackpots paid out in FY11 70

71 Keno terminal rollout track record Keno has successfully been rolled out and driven turnover growth of 7.3% CAGR (FY07 FY11) Rollout is a core capability. In the last 12 months: > 600 Keno Touch (self service) units successfully deployed into NSW Clubs and Pubs > 102 new Hotels trading with Keno in NSW (730 signed) Keno - Key Metrics FY07 FY08 FY09 FY10 FY11 CAGR Turnover ($ millions) % Clubs NSW Clubs QLD Hotels NSW Hotels QLD Casinos TAB's VIC Total Number Venues 2,232 2,357 2,734 2,775 2,876 Average Bet $ 8.3 $ 8.3 $ 9.0 $ 9.4 $

72 Strategic growth platform Keno is well positioned for further growth Brand Investment Self Service Terminals Updates Retail Standards Product pipeline and customer knowledge Plus NEW KENO VENUES OVER THE NEXT 12 MONTHS 72

73 Keno: Financial performance Keno has grown earnings as a result of expansion in distribution and self service terminals $m FY11 FY10 Change Revenues % Variable contribution Operating expenses 95 (34) 89 (33) 7.1% 4.9% EBITDA % D&A % EBIT % EBIT/Revenue Venues (Qld, NSW) 28.8% 2, % 2,633 (1.1%) 4.0% Ticket Count (m) (Qld, NSW) % Avg ticket size ($) (Qld, NSW) % > Reliable earnings stream in NSW and Qld where game is entrenched > Expansion initiatives summary: NSW hotel rollout commenced FY08 to deploy into 800 hotels Self service terminals rolling out Sole Keno Victorian Licence secured from April

74 1Q12 trading update Keno continues to perform strongly as both the number of customers and the average spend are increasing $m 1Q12 1Q11 Change Revenue Keno % KPIs Venues 2,899 2, % Ticket count (m) % Avg ticket size ($) % > Strong growth in NSW reflecting benefits from: Further expansion in hotels Self service terminals > Strong growth in Qld 74

75 New Victorian Keno licence is on track to deliver earnings The Victorian Keno licence is expected to generate EBITDA of approximately $20m in FY15 Key Metrics VIC QLD NSW (Target FY15) (Actual FY11) (Actual FY11) Average weekly turnover per venue $5,000 $7,700 $6,000 Venues Up to 1,000 1,059 1,680 Using existing host software Venue capital to be recovered through daily fees Terminals ready to deploy on existing networks Sign-up process commenced with industry support Experienced leadership and execution team Informed revenue assumptions Utilise existing resources Confidence in earnings 75

76 Keno Touch on display 76

77 Tabcorp investor day: Agenda Overview of Tabcorp Wagering Media & International Keno Gaming Capital structure David Attenborough Doug Freeman, Craig Nugent and Adam Rytenskild Brendan Parnell Mohan Jesudason Mohan Jesudason Damien Johnston 7 Key messages David Attenborough 77

78 Business overview The Victorian Gaming business is expected to generate strong cashflows until August Following the expiry of the licence, TGS will commence operations and has already signed up over 7,500 EGMs Victorian Gaming > Owns and operates electronic gaming machines (EGMs) under the Tabaret brand in Victoria One of two licensed EGM operators (excluding casino) 13,350 EGMs across 130 licensed hotels and 133 licensed clubs > Upon expiry of Tabcorp s Victorian Gaming Licence in August 2012, gaming operator licences will no longer be held by the two current operators Tabcorp Gaming Solutions > Supply of EGMs for duration of contract > Average of 23% rotation of EGM product annually > Full EGM service and maintenance support > Loyalty systems and promotions facilitation > Optional funding assistance for Gaming Machine Entitlement deposits > Critical mass achieved with over 7,500 EGMs, average tenure 9 years 78

79 Gaming: Financial performance Gaming is highly cash generative and continues to deliver earnings growth $m FY11 FY10 Change Revenues 1,077 1, % Variable contribution Operating expenses 317 (37) 301 (39) 5.0% (6.3%) EBITDA % > Market share up to 53.9% > Opex savings as the business is managed for transition in August 2012 D&A (39) (37) 4.1% EBIT % EBIT / Revenue 22.3% 21.7% 0.6% Venues (period end) % EGMs (average) 13,303 13,349 (0.3%) NMR/EGM/Day ($) % Market Share (2H average) 53.9% 52.9% 1.0% 79

80 1Q12 trading update Gaming s trend of revenue growth continued into the first quarter of FY12 $m 1Q12 1Q11 Growth Revenue Gaming % Gaming KPIs Venues % EGMs (avg) 13,294 13, % NMR/EGM/day ($) % Market share (avg) % > Solid performance taking into account strong prior period and tough retail conditions 80

81 Investment highlights TGS is an attractive business which utilises Tabcorp s core capabilities. Tabcorp is confident in relation to future earnings as most of the revenues are contracted > Competitor differentiation > Substantial contracted revenues based on a fixed fee per day, with escalation > Compelling full service offering > Market leading capabilities 81

82 Competitor differentiation Tabcorp is the leading gaming operator in Victoria, which is a key advantage for the services TGS can offer its customers Proven ability > Tabaret has outperformed the Victorian market > Strong relationships exist with both Tabaret venues, and Wagering / Keno customers > This provides a unique competitive advantage 55.0% 54.0% 53.0% Tabcorp v Tatts Group Vic Gaming Revenue Share Jun 2006 to Jun 2011 Ease of transition > For existing Tabaret venues, there will be limited change impacting the venue primarily gaming floor optimisation > Demonstrates Day 1 readiness and ability to positively influence venues prior to regulatory change 52.0% 51.0% 50.0% 49.0% 48.0% 47.0% 46.0% 45.0% Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Tabcorp Tatts Group Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Scale > TGS is the largest service provider > This creates efficiencies and economies of scale > It also allows investment in innovation like the world class IGT loyalty system 82

83 TGS key metrics Tabcorp is confident in TGS earnings expectations as approximately 75% of sign ups are contracted for a 10 year term Sign ups Contract term Estimated earnings > Over 7,500 EGMs currently contracted to TGS > Approx 75% of signed EGMs are contracted for a 10 year term, with no termination option > Approx 25% of signed EGMs have a 10 year term, with a 30 day termination option at year 5, requiring 12 months notice (effectively 6 year contract) > Daily fee (from Aug 12) is subject to annual CPI Indexing (from Aug 13) 7,500 EGMs + 1,000 EGMs EBITDA $45m $54m EBIT $24m $31m The above numbers include interest revenue on loans detailed below The + 1,000 EGM projection assumes similar sign up terms to existing contracts Loan funding > $15m has been loaned to TGS clients to assist their payment of Gaming Machine Entitlements to the Victorian Government. This is repaid via daily fees > $37m has been loaned to key TGS clients to facilitate business expansion > Interest is payable, the majority of debt will be repaid within 5 years, and appropriate risk mitigation strategies are in place 83

84 Substantial contracted revenues TGS has signed up more than 7,500 EGMs, which are already performing strongly Sign Up Profile TGS EGM Contracts TGS vs Non TGS relative performance comparison 1,2 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Key Partners - RSL, Melbourne Racing Club, Dominion Hotel Group Additional 10 year contracts Additional 10 year contracts with 5th year termination clause Future Victorian Gaming Structure July/Aug 2011 July/Aug 2010 Hotels $m $m % change TGS Tabaret Venues % Non TGS Tabaret Venues (0.3%) Total Hotels % Clubs TGS Tabaret Venues % Non TGS Tabaret Venues % Total Clubs % Overall Total % Note: Current estimate of Victorian Gaming Operation post August 2012 Note: 1. Gaming Revenue includes 25% of Joint Venture partner 2. Gaming Revenue excludes venues not operating in Tabaret network for both current and comparative period 84

85 Compelling full service offering TGS value proposition is underpinning substantial sign-ups Market Leading Knowledge & Systems > Promoting Tabaret s leading performance, knowledge, systems and facilities > TGS offer re-defined by regulatory requirement and customer need > Experience managing complexity of sector & reg. environment Industry Leading Break/Fix > 75 staff with significant industry [ ] experience > [ ] Established & effective metro and regional service centre footprint [ ] > Day one access to all required spare [ ] parts/service tools Unique & Compelling Full Service Offer Provision of Machines & Upgrades > Currently own 14,000 Victorian regulator approved EGM s > Exclusive Vic. distribution rights with IGT & AGT EGM s market leading manufacturers > Tabcorp capital backing distinct competitive advantage World Class Loyalty > Exclusive Victorian distributor of IGT loyalty system - world class whole of venue package 85

86 Market leading capabilities Tabcorp s leading position in the Victorian gaming market gives it an advantage in understanding the requirements of EGM operators (post August 2012) Loyalty Gateway Marketing Toolkit Venue Design Field Services Responding to Regulatory Change Responsible Gaming Business Consultants Client Umbrella Brand POS Integration + Membership management functionality for clubs Customer extranet providing a range of online resources 24/7 including product training videos, Business Intelligence reporting, compliance toolkits (including Responsible Gaming), and marketing resources Partnership with high impact design and print service providing a wide range of industry relevant marketing collateral templates that can be easily customised by venues, and produced at low cost. In-house design team with considerable experience in delivering gaming room renovations leading to revenue growth TGS have 75 staff with significant experience in providing field services to the Vic gaming market. An established service network across metro and regional areas exists, together with a comprehensive spare parts inventory Tabcorp has significant experience in dealing with regulatory change. This knowledge and experience will be part of the core TGS service offer Tabcorp is externally recognised for leadership in responsible service of gambling products. This knowledge and experience will be part of the core TGS service offer Team of experienced customer relationship managers in the field helping venues develop their business As part of the loyalty system there will be an umbrella brand Diamond Rewards available to TGS customers to heighten consumer awareness 86

87 Growth opportunities TGS has identified achievable opportunities to expand its business Interstate expansion > Use Victorian capability to facilitate geographic expansion Diversify existing business > Additional value added service opportunities Sustain and grow established Victorian Business > CPI indexed fee base > New signups > Service upgrade opportunities > Additional revenue if contracts with termination option run full 10 year term 87

88 Tabcorp investor day: Agenda Overview of Tabcorp Wagering Media & International Keno Gaming Capital structure David Attenborough Doug Freeman, Craig Nugent and Adam Rytenskild Brendan Parnell Mohan Jesudason Mohan Jesudason Damien Johnston 7 Key messages David Attenborough 88

89 Balance sheet Tabcorp has a strong balance sheet As at As at Change $m 30 Jun Jun 10 on pcp Total current assets (34.1%) Licences (34.1%) Other intangible assets 1,806 3,627 (50.2%) Property, plant and equipment 281 1,763 (84.1%) Other non current assets % Total assets 2,839 6,458 (56.0%) Total liabilities 1,628 3,003 (45.8%) Shareholders funds 1,211 3,455 (64.9%) Net debt 818 1,730 (52.7%) Shares on issue (m) % Ratios FY11 Gross debt / EBITDA 1 (x) 1.4 Interest cover 6.5 Net debt / Equity (%) 67.6 Note: 1. For the purposes of this ratio EBITDA of $687m relating to Tabcorp s continuing business is used. 89

90 Capital structure Tabcorp has diversified sources of funding and an attractive maturity profile Debt structure and maturity profile 1, $m FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Bank Debt Medium term notes Tabcorp Bonds 1 year debt facility > $450m Medium Term Notes due October 2011 with $450m bridge loan facility in place > Victorian Wagering & Betting licence $410m payable shortly > FY11 Gross Debt/EBITDA 1.4x > Gross borrowings of $1,080m at 30 September 2011 > DRP underwriting agreement for 50% of next dividend > FY12 interest rate range expected to be 8.25% to 8.5% on borrowings 90

91 Capex Tabcorp s businesses are low in capital intensity Capex D&A Outlook > FY12 D&A expense ~ $130 $140m Includes current Vic Wagering and Gaming licence amortisation of $27m > FY13 D&A expense ~ $150 $160m Vic Wagering licence $34m p.a. FY08 FY09 FY10 FY11 Wagering Media & Int'l Gaming Keno Corporate Vic Keno licence $6m p.a. > Major investments Vic Wagering Licence (FY12) NSW Trackside (FY12, FY13) Vic Keno Rollout (FY12) $m

92 Entitlement to refund in relation to the Victorian Gaming Licence and the Victorian Wagering Licence > The Gaming and Betting Act 1994 (Vic) provided for payment by the State of Victoria to Tabcorp on the grant of new licences of an amount equal to the licence value of Tabcorp s initial licences, or the premium payment paid by the new licensee, whichever is the lesser > This payment was originally provided for in section 21 of the Gaming and Betting Act 1994 (Vic), and is now provided for in section of the Gambling Regulation Act 2003 (Vic) > The licence value of the initial licences is to be calculated in accordance with a formula. Tabcorp estimates that the licence value will be $ million > Tabcorp intends to pursue all of its rights and take all appropriate action in respect of the payment > See Section 6.10 of Tabcorp s Demerger Scheme Booklet for further details 92

93 Federal Court decision on internet betting terminals Victoria > A single judge in the Federal Court of Australia recently handed down a judgement affecting the deployment of a Sportsbet Betbox internet terminal in a Victorian hotel > The judge found that the Victorian legislation that made such internet terminals illegal was not valid > The State of Victoria, as well as Tabcorp, have appealed the decision to the full bench of the Federal Court. The appeal will not be heard until 2012 > It is understood the Victorian hotel will not operate the internet terminal before the appeal has been determined NSW > The Unlawful Gambling Act in NSW makes the installation of a Betbox internet terminal in NSW illegal 93

94 Tabcorp investor day: Agenda Overview of Tabcorp Wagering Media & International Keno Gaming Capital structure David Attenborough Doug Freeman, Craig Nugent and Adam Rytenskild Brendan Parnell Mohan Jesudason Mohan Jesudason Damien Johnston 7 Key messages David Attenborough 94

95 Key messages Wagering > Tabcorp is aiming to continue to lead the Australian wagering market > Developments in the overall wagering market are such that it is expected to continue to grow strongly > Fixed odds is attractive for Tabcorp, delivering strong yields in racing & sports betting > Tabcorp is successfully executing on a multi-channel distribution strategy across retail and online > Retail growth will continue through new products / Trackside / live betting / expanded retail footprint > Tabcorp s online strategy strongly positioned to capture expected higher margin product growth Media & International > Sky Racing is core to Tabcorp and is important for sustaining wagering and the racing funding model > All broadcast rights have been secured to date as they fall due > Wagering operators are the logical and effective owners of racing media Keno > Keno has attractive licences > Keno is ideally placed to replicate NSW success in Victoria from 2012 under new licence > Currently has a strong pipeline of product development to underpin growth Gaming > Gaming division has strong momentum leading into 2012 licence expiry > Outperformed the Victorian gaming market, consistently winning EGM market share > TGS is the clear leader > Unique and compelling full service offer is underpinning substantial sign-ups 95

96 Glossary Agencies: Agencies are stand-alone TAB retail outlets, not attached to a pub or club. Betbox: A touch-screen self-serve Internet kiosk that allows customers to connect to the website of Sportsbet Pty Ltd (owned by Irish betting company Paddy Power). Bookmakers: Bookmakers set the prices for fixed odds markets. Co-mingling: Co-mingling (or pooling) of totalisator pools is the process where one or more totalisator organisations, combines its wagering pool with another. This has been occurring in Victoria for many years, as Western Australia, the Australian Capital Territory and Tasmania pool most of their totalisator pools with our Victorian totalisator to form SuperTAB. International co-mingling extends this process of combining wagering pools to include international totalisator organisations. Hosting and guesting describes which totalisator organisation is hosting and which totalisators guest their pools into the host. EBT: Easy Bet Terminals are electronic self-service machines found in TAB outlets and on-course. Customers can place tote, fixed odds and Trackside bets with cash, vouchers or TAB account cards. EBTs also allow the customer to check odds and form. Exotics: Totalisator bet types other than a Win or Place. These include Quinella, Trifecta, Exacta, Duet, Quaddie, First 4 and BIG6 and are higher margin products. Fixed Odds: A type of betting where the price a customer receives for their wager at the time the bet is placed is fixed and will not change. Fixed odds betting is available on sport, racing and selected special events. Multi: A bet type which enables a customer to effectively all-up their investment across sports, racing and betting options. The dividend is calculated by multiplying the prices of each selection. Northern Territory (Corporate) Bookmakers: Bookmakers licensed in the Northern Territory, who offer wagering services, primarily online. Off-Course: All betting that takes place away from racetracks, such as online, telephone and in retail outlets. Pari-mutuel: See Totalisator Betting Pooling (see co-mingling) Retail Outlets: Tabcorp operates physical retail outlets operate across Victoria and NSW. The network includes stand-alone TAB agencies, hotels and clubs. TGS: Tabcorp Gaming Solutions, Tabcorp s new gaming machine services provider that will help clubs and pubs manage their gaming offer from mid-2012, including the provision of gaming machines. Totalisator Betting: Also referred to as pari-mutuel betting or the tote. Customers bet into a pool with all others who are betting on the same race and bet type. The odds fluctuate depending on the amounts wagered on each possible outcome. Tote Odds: A relatively new product where winning bets receive a dividend based on the dividend paid by any of the TABs. TVN: ThoroughVisioN, which manages the thoroughbred horse racing rights for racing in Victoria and metropolitan Sydney. Variable Contribution: Revenue, minus government taxes and levies. Wagering Accounts: Tabcorp has more than 300,000 active wagering account customers. Account holders can top up their accounts online, over the phone and in retail outlets. Bets can be placed through the Internet, Pay TV, retail outlets and phone. Wagering account customers can also withdraw funds in TAB outlets and Australia Post outlets who offer Bank@Post services. Yield: The percentage of turnover that is not returned to customers. 96

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