TABCORP HOLDINGS LIMITED INVESTOR PRESENTATION P O S T - FY 1 8 R E S U L T S
TABLE OF CONTENTS About Tabcorp 3 - 6 FY18 Overview 8 - 9 Group Results 11 - 12 Integration Update 14 - 15 Group Results - Pro-forma 17 - 18 Divisional Results 20 - 27 Capital Expenditure 29 Capital Management 31 Regulatory Update 33 Strategic Priorities 35 Appendices 37 - 42 2
ABOUT TABCORP Tabcorp is one of the largest publicly listed diversified gambling entertainment businesses in the world Tabcorp — key metrics (A$m) 1 Overview • Tabcorp is listed on the ASX with headquarters in Melbourne Market capitalization 9,743 Net debt 2 3,162 • Tabcorp completed its combination with Tatts Group in December Enterprise value 12,905 2017, creating a world-class diversified gambling entertainment group, with operations spanning nationwide across lotteries, wagering, media, Keno and gaming services businesses FY18PF (12 months to 30 June 2018) Revenue 5,109 • Tabcorp employs more than 5,000 people EBITDA 989 • Following the combination with Tatts, Tabcorp operates an EBIT 696 extensive network retail venues across Australia • S&P credit rating of BBB – (stable) − Tabcorp has maintained an investment grade credit rating since its IPO in 1994 COMBINED COMBINED FY18 PF FY18 PF EBITDA 3 REVENUE 3 WAGERING & MEDIA: 48% WAGERING & MEDIA: 45% LOTTERIES & KENO: 46% LOTTERIES & KENO: 40% WAGERING AND LOTTERIES AND GAMING SERVICES GAMING SERVICES: 6% GAMING SERVICES: 15% MEDIA KENO Source: Company filings Notes 1 As at 13 August 2018 2 Enterprise value based on net debt of A$3,162 million. Net debt (economic) includes USPP debt at the A$ principal repayment under cross currency swaps, and excludes lotteries prize fund cash of $242m Pro-forma results include adjustments to Tabcorp’s reported results 3 to permit users to examine the financial performance of the combined group as if the Tatts combination had been in place for 3 the full year
TABCORP HAS LOTTERIES, WAGERING AND KENO OPERATIONS ACROSS AUSTRALIA The Australian gambling market is mature and highly regulated with Tabcorp holding 11 of the 13 exclusive retail lotteries and wagering licences on issue NORTHERN TERRITORY Sale of lottery tickets online Lotteries: Tabcorp Operates online under a distribution agreement Wagering: Tabcorp Other with Tabcorp Keno: Pubs and Clubs + SkyCity and Lasseters WESTERN AUSTRALIA QUEENSLAND Lotteries: Government Key corporate bookmakers Lotteries: Tabcorp (wagering) Wagering: Government Wagering: Tabcorp Licenced in the Northern Keno: Crown (casino only) Keno: Tabcorp Territory, providing online wagering services nationwide SOUTH AUSTRALIA NEW SOUTH WALES Lotteries: Tabcorp Lotteries: Tabcorp Wagering: Tabcorp Wagering: Tabcorp Keno: Tabcorp Keno: Tabcorp ACT VICTORIA Betting exchange (wagering) TASMANIA Lotteries: Tabcorp Licensed in the Northern Lotteries: Tabcorp Lotteries: Tabcorp Territory, providing online Wagering: Tabcorp Wagering: Tabcorp wagering services nationwide Wagering: Tabcorp Keno: Tabcorp Keno: Tabcorp Keno: Federal Group Source: Company filings 4
TABCORP'S LICENCE PORTFOLIO Tabcorp operates a set of market-leading defensive businesses, spanning the entirety of Australia, across lotteries, wagering, media, Keno and gaming services, under a series of long-dated government-issued licences / authorizations Tabcorp licence / authorization portfolio Average length: 51 years Average length: 24 years Average length: 29 years 2100 2098 2097 2072 Indefinite 2 2064 Indefinite 2 2064 2062 2052 2052 2050 2050 2047 Licences expiry 1 2035 2032 2032 2028 2027 2024 2022 2021 2020 SA QLD NSW ACT TAS NT VIC QLD SA NSW NT VIC TAS ACT NSW QLD VIC SA NT QLD NSW Gaming Wagering Lotteries Keno Services Source: Company filings Notes: 1 Tatt's NT Wagering licence expires in 2035, Tabcorp's NT Wagering licence in 2020; some licences (e.g. Tabcorp's VIC Wagering, Tatts' TAS Wagering) have renewal options pre expiry 2 Indefinite rolling renewal capability 5
TABCORP INVESTMENT HIGHLIGHTS Attractive industry structure with favourable demand Long history of stable earnings and strong cash flow 1 2 dynamics generation ✓ Large and highly-regulated industry with demonstrated growth ✓ Long history of resilient revenue and earnings performance in the Tabcorp and Tatts businesses ✓ Logical path to market expansion through population growth and ✓ Businesses have historically generated significant cash flow rising disposable income (particularly in Lotteries) Diversified portfolio of long-dated gambling licences / A large publicly listed gambling business, which operates a 3 4 authorizations diverse portfolio of defensive businesses ✓ Average duration of 35 years ✓ Operations spanning nationwide across lotteries, wagering, media, ✓ Diversified across a number of jurisdictions and gambling products Keno and gaming services businesses ✓ Holds 11 of 13 exclusive retail lotteries and wagering licences in ✓ Market capitalization of A$9.7bn with pro forma EBITDA of A$989m Australia ✓ Paid approximately A$1.35bn of gambling taxes to States and ✓ Strong track record of operating businesses and renewing / Territories in FY17 extending its licences as they come up for renewal Significant synergies and business improvements expected 6 Investment grade credit rating with S&P 5 from the combination with Tatts ✓ S&P affirmed Tabcorp's BBB – (stable) rating following the ✓ At least A$130m per annum of EBITDA expected combination with Tatts ✓ Additional A$10m per annum of expected capex synergies ✓ Tabcorp intends to maintain its investment grade credit rating ✓ Tabcorp has maintained an investment grade credit rating since its IPO in 1994 Highly experienced Board and management team with a 7 Well placed to compete in an evolving regulatory landscape 8 proven track record ✓ Tabcorp should be well placed to compete in the evolving wagering ✓ Highly experienced Board, with many long-serving members regulatory landscape ✓ Tabcorp's CEO and CFO have been in their roles since 2011 ✓ Executive leadership team has representatives from both Tabcorp ✓ Synthetic lottery products in relation to Australian lotteries have and Tatts also been banned 6
TABLE OF CONTENTS About Tabcorp 3 - 6 FY18 Overview 8 - 9 Group Results 11 - 12 Integration Update 14 - 15 Group Results - Pro-forma 17 - 18 Divisional Results 20 - 27 Capital Expenditure 29 Capital Management 31 Regulatory Update 33 Strategic Priorities 35 Appendices 37 - 42 7
FY18 OVERVIEW – A COMPANY-DEFINING YEAR Highlights Key points • EBITDA synergies and business improvements are on track Combination with Tatts Group o Delivered $8m in FY18 completed and integration on o Decisions taken underpin $50m in FY19 track o Target remains at least $130m in FY21 • Sun Bets exit announced July 2018 Exited loss-making businesses • Luxbet closure December 2017 • Federal legislation passed banning synthetic lottery products A more sustainable regulatory • Wagering point of consumption tax regimes announced environment • New advertising restrictions and stronger consumer protections • Refinanced $1.8bn bridge loan into long-dated maturities in US market Capital management • Full year dividend of 21.0 cps, including final dividend of 10.0 cps • Positive 2H18 performance, driven by Wagering & Media and Lotteries & Keno • Accelerated digitalisation across the company Well positioned for growth • New products launched • Licences renewed 8
FY18 RESULTS • Statutory results 1 o Revenues $3,828.7m, up 71.4% o EBITDA $529.4m, up 69.5% o NPAT $28.7m, up from $20.8m loss in pcp EPS 2 1.9 cents per share, up from 2.5 cents loss per share in pcp o o Results impacted by significant items expense after tax of $217.5m from Tatts combination, Sun Bets exit and Luxbet closure • Results before significant items 1,3 o Revenues $3,828.7m, up 71.7% o EBITDA $736.4m, up 46.1% o NPAT $246.2m, up 37.6% EPS 2 16.6 cents per share, down 22.4% o • Final dividend 10.0 cents per share, fully franked, taking the full year ordinary dividend to 21.0 cents per share, fully franked Group pro-forma 4 results before significant items • o Revenues $5,109.3m, up 2.5% o EBITDA $989.2m, up 2.8% o EBIT $695.6m, up 2.0% Notes: 1. Results include Tatts Group from 14 December 2017 2. EPS calculated using weighted average shares for the period 3. Tabcorp results before significant items include the Sun Bets operating result in FY18 (treated as a significant item in FY17) Pro-forma results include various adjustments to Tabcorp’s reported results to permit investors to examine the financial performance of the combined 4. 9 group for the year, including 12 months of Tatts results in FY18 and FY17, and excluding Sun Bets in FY18; refer to slide 12 for further details
TABLE OF CONTENTS About Tabcorp 3 - 6 FY18 Overview 8 - 9 Group Results 11 - 12 Integration Update 14 - 15 Group Results - Pro-forma 17 - 18 Divisional Results 20 - 27 Capital Expenditure 29 Capital Management 31 Regulatory Update 33 Strategic Priorities 35 Appendices 37 - 42 10
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