Case study competition on the past M&A transaction between Tatts Group Ltd and Tabcorp Completing this case involved: - Advising Tatts on how to proceed against the Tabcorp offer - Creating a competitive bidding environment to force Tabcorp to raise their offers - Market analysis of the gambling sector - Valuation of Tatts through a DCF - Constructing a merger model between Tatts and Tabcorp - Devising various defence strategies against unfavourable takeover proposals - Write-up of an ASX notice to Tatts' shareholders - Creation of a decision tree to guide Tatts throughout this defence

1. Presentation to: Tatts Group Ltd
Defence of Tabcorp’s offer
15 October 2016
Confidential

2. 2
Contents page
Executive summary 3
Evaluation of Tabcorp’s offer 4
Rationale for offer rejection 5
Valuation of Tatts 6
Proposed course of action 7
Option 1: Enter into scheme of arrangement with Tabcorp at a higher premium 8-9
Option 2: Divest the Wagering division 10-11
Decision tree analysis 12
Transaction risks 13
Recommended next steps 14
Appendix 15-46

3. 1
2
3
4
5
6
3
Executive summary
Tabcorp’s offer of A$4.07 per share will generate substantial value through EPS accretion but at the
expense of Tatts’ shareholders
Evaluation of current offer
The offer should be declined as it grossly undervalues Tatts at the current low trading price and comprises of
a consideration structure which exposes Tatts shareholders to significant risk
Rationale for offer rejection
Tatts has an implied share price of ~A$4.21 per share which is ~16% higher than the recent closing priceValuation of TTS share
Tatts should seek to merge with Tabcorp at a higher premium to create an A$11.4b diversified gaming
powerhouse which can mitigate the increasing domestic and foreign competition
Primary course of action
If the Tabcorp merger fails, Tatts should sell the Wagering division to Tabcorp as it is not financially
sustainable and is a strategic fit with Tabcorp’s current offerings
Secondary course of action
The proposed course of action has inherent risks such as regulatory, consideration and hostile off market
bidding risk. However, these can be mitigated by implementing various defensive strategies
Transaction risks

4. 4
Evaluation of Tabcorp’s offer
The deal is expected to generate substantial EPS accretion at the expense of Tatts’ shareholders
$0.00
$0.10
$0.20
$0.30
$0.40
FY17E FY18E FY19E FY20E FY21E
Pre transaction Post transaction
EPS accretion / dilution Pro forma financials
Synergies and premium sensitivitySynergies split
 There is EPS dilution in FY17 and FY18 due to the synergy
implementation cost and 2 year integration time
 Synergies derived from the improvement in UBET’s fixed odds
yield through Tabcorp’s risk management strategies; EBITDA
margin improvements via technology integration, consolidation of
wagering functions and corporate cost cuts
 NPV of synergies post tax of ~ A$823m based on a A$110m one
off integration cost, full run rate within 2 years and 3% EBITDA
growth YoY
 At an 11.8% premium above Tatts’ recent closing price of $3.64
and A$138m EBITDA of synergies in FY21, the deal is 24.80%
EPS accretive
 If EBITDA synergies drop to A$98m in FY21, the deal is still
~20% EPS accretive
Source: Tabcorp and Tatts FY16 Annual Report
(3.10%) 1.39%
19.62% 22.27% 24.80%
 The merged entity will be an A$11.4b gaming powerhouse with
over A$5b and A$1b in revenue and EBITDA respectively
A$m Combined group
Market cap 4,143 5,331 9,474
Net debt 870 1,041 1,884
EV 5,013 6,372 11,384
Revenue 2,193 2,925 5,119
EBITDA 508 496 1,004
EBIT 329 421 750
FY16 Pro forma combined entity before synergies
FY16 FY17 FY18 FY19 FY20 FY21
Premium to closing price
$0.25 (20%) (10%) - 10% 20% 30%
98 44% 36% 28% 21% 15% 9%
EBITDA 118 47% 38% 31% 24% 17% 12%
Synergies 138 50% 41% 33% 26% 20% 14%
FY21E 158 53% 44% 36% 28% 22% 16%
178 56% 47% 38% 31% 24% 18%

5. 5
Rationale for offer rejection
Tabcorp’s offer should be rejected as it is significantly below Tatts’ implied value
Offer structure Insufficient premium
Directors’ interest and future of lotteries business
 Current arrangement: Each Tatts share receives 0.80 Tabcorp
shares (worth A$3.97) and A$0.10 cash per share
 The scrip consideration exposes Tatts shareholders to greater
risk from the wagering industry and is inherently prone to value
fluctuations
 Scrip could be worth ~6% lower than what was stated if 6m
VWAP is used
 Negotiate to lower scrip consideration to reduce exposure to the
wagering business which is facing intensifying competition
 Increase cash consideration to mitigate depreciating scrip risk
 Tabcorp shareholders are benefiting more from this transaction
because they get long term access to the lotteries business as
well as the synergies from the consolidation of the wagering
businesses. Therefore, Tatts shareholders need to be further
compensated for this asymmetric benefit
 The scheme implied value of A$4.07 per share is not attractive if
the 3-6m VWAP is considered
 Under the scheme, Tatts’ directors will not be on the board of the
merged entity
 Tabcorp’s directors do not have the proper expertise and
experience to strategically manage the lotteries division without
the help of Tatts’ directors
 Not in shareholders’ interests to have a board with only wagering
sector experience to run national lotteries; negatively impacting
financial return
 Will further affect synergy integration, possibly compromising
EPS accretion
 Aggregated, future growth and sustainability may be conceded
Source: UBS Research
4.07
3.64 3.68
3.84 3.85
Offer Closing 1 m VWAP 3m VWAP 6m VWAP
11.81%
10.60%
5.99% 5.71%
TAH price Scrip value Cash Implied value per share
Closing price 4.96 3.97 0.1 4.07
1m VWAP 5.01 4.01 0.1 4.11
3m VWAP 4.94 3.95 0.1 4.05
6m VWAP 4.64 3.71 0.1 3.81
TAH scheme of arrangement offer

6. LBO
DCF
Precedent transactions
EV / FY16 EBITDA
EV / FY17 EBITDA
52-week trading range
6
Valuation of Tatts
Tabcorp’s offer of A$4.07 is substantially below Tatts’ implied price of A$4.21
Methodology CommentsShare price (A$)
MarketvaluationFundamental
valuation
Capacity
topay
 Low: $3.64 on 15 March 2016
 High: $4.39 on 1 Jan 2016
 Sum of the parts approach (SOTP)
 Low: 7.33 x
 High: 18.00 x
 Included infrastructure comps
 SOTP approach
 Low: 6.85 x
 High: 17.15 x
 Included infrastructure comps
 SOTP approach (historical EBITDA)
 Low: 6.26 x
 High: 22.45 x
 Included infrastructure transactions
 Based on WACC of 8-10% and terminal
EBITDA multiple of 11.00-13.00 x
 Implied growth rate of 2.45-3.39%
 Assumes 5 year holding period, 20-25%
IRR, 58% total funding from debt and
14.00 x exit EBITDA multiple
3.64 4.39
5.441.75
1.77 5.39
1.41 6.90
3.73 4.77
3.64 4.26
Implied: $4.21Offer: $4.07

7. 7
Proposed course of action
Tatts should merge with Tabcorp. If this fails, divestment of the Wagering division should be considered
Merge with Tabcorp
 Tatts shareholders can get exposure to the
upside of the merged entity via scrip
 Consolidation of UBET with Tabcorp’s
Wagering businesses ensures it can compete
against well capitalised corporate
bookmakers
Intervention by regulators and the court
Tatts shareholders increase exposure to the
competitive wagering industry, resulting in “di-
worsification”
 Tatts’ shareholders own >50% of the merged
entity
 Tatts’ Board of Directors can have a position
in the new merged entity
 Can demand a higher premium through
competitive bidding process
Divest the Wagering division
Tatts shareholders lose all exposure to the
Wagering business
UBET may be unable to withstand increasing
competitive pressures without assistance
from Tabcorp
 Offload an underperforming division
 Unlikely to face intervention from regulators
and the court
 Tatts shareholders keep control of the
lucrative Lotteries division
 Tatts’ Board of Directors keep their position
 Divestment gives Tatts’ shareholders a
substantial cash dividend of A$0.75-1.02 per
share
1 2

8. 8
Option 1: Enter into scheme of arrangement with Tabcorp at a higher premium
Tatts should first seek a 20% premium from Tabcorp. If this fails, Tatts can induce an auctioning process
Rationale of merger
 Improvement of Tatts’ underperforming wagering and gaming
services divisions via superior risk management strategies and
technology
 Extension of geographic control of operations across Australia
and provides groundwork for international expansion
 Economies of scale through vertically integrating systems and
horizontally extending product lines
 Unparalleled opportunity to maximize shareholder value through
combined licences and functions, greater balance sheet strength
and profitability
 Change consideration structure to less scrip and more cash
 Change board and management clause in order to sustain Tatts’
board position in merged entity
 Inadequate expertise in the field of lotteries warrants Tatts
Directors’ management and leadership in merged entity
Disclose the
highest bid
Put pressure on
Tabcorp
Seek other
potential bids
Private equity
Infrastructure funds
Canadian pension funds
Corporate bookmakers
$0.00
$0.10
$0.20
$0.30
$0.40
FY17E FY18E FY19E FY20E FY21E
Pre transaction Post transaction
Amendment to merger implementation deed
Strategy to induce a competitive bidding environment
Financial impact of ideal transaction
 An offer price of $4.37 (20% premium) comprised of 0.70 TAH
shares and A$0.70 cash per TTS share, the deal is still EPS
accretive
 The arrangement involves 80% scrip and 20% debt. Leverage
ratio is 0.43 x in FY17 but falls to 0.26 x by FY21
(5.46%)
0.33%
21.34%
25.25%
28.91%

9. 9
Potential bidders that Tatts can approach
The infrastructure-like characteristics of Tatts’ Lotteries business will attract numerous investors
Strong LBO candidate Capacity to pay
 Tatts’ Lotteries business has consistent cash flows as it holds a
monopolised position in a mature industry and has strong support
from government regulators
 The Lottery business is profitable given its low economic
sensitivity and high regulatory barriers
 Maintenance of the Lott requires low capital expenditure given
the operating model of the business
 Private equity and infrastructure funds see opportunities to
improve Tatts’ underperforming wagering division
 PE firms can pay up to $4.26 (17% premium) in order to meet
their 20% minimum IRR hurdle
 The ability of PE firms to offer a high premium is likely to force
Tabcorp to increase their offer to around 20%
Source: Company websites
Potential bidders Rationale Company snapshot
Private equity firms
 Tatts requires low maintenance capital
expenditure and possesses improvement
opportunities in underperforming divisions
 Leading global investment firm that manages private equity,
energy, infrastructure, real estate and credit
 Approximately A$4.6t AUM
Canadian pension funds
 Tatts provides access to reliable cash flows
in a stable regulatory environment to match
payment of long term liabilities
 Canadian pension funds are large shareholders in listed and
unlisted Australian infrastructure assets
 OTPP has holdings in numerous National Lotteries and was
an under bidder to Tatts for the 2010 NSW Lotteries license
Strategic acquirers
 Tatts allows for the introduction of pari-
mutual and consolidation of fixed-odds
betting in order to increase market share
 British-based betting and gambling company
 Ladbrokes entered into the Australian fixed-odds market in
2013 through the acquisition of Bookmaker.com and now
possesses 10% market share within the domestic market
Premium
20% (20%) (10%) - 10% 20% 30%
6.50 x 4% 0% (3%) (7%) (10%) (14%)
Exit 11.50 x 24% 21% 18% 15% 13% 10%
Multiple 14.00 x 31% 28% 25% 22% 19% 17%
16.50 x 36% 33% 30% 27% 25% 23%
19.00 x 41% 38% 35% 32% 30% 27%

10. 10
Option 2: Divest the Wagering division
Tabcorp may want to only purchase the Wagering division as it can realise synergies at a lower cost
Valuation of the Wagering division Keeping the Lotteries business
Selling Wagering business
 The wagering division is worth between A$1.3-1.6b which implies
a 9.46-12.89 x multiple of FY16 EBITDA
 Defensive crown jewel asset that offers consistent returns and is
strong as a standalone entity
 Divestment allows Tatts to focus on their core competency, the
Lotteries division
 The Lotteries division is posed for substantial growth due to the
significant increase in digital turnover
 Long term interest in Lotteries business and corresponding
licenses provides earnings stability
 Lotteries is a defensive asset during economic downturns
 Reduces risk to the wagering industry which is extremely
competitive and prone to unpredictable regulatory change
 UBET’s underperformance (-8.6% CAGR) and smaller market
share is unsustainable, given competition and regulation
 Attractive to Tabcorp as majority of synergies are derived from
the consolidation of wagering functions
 Also appealing due to a national combination of totes and racing
industry benefits
 Divestment could result in a cash dividend of A$0.75-1.02 per
Tatts share
Source: Tatts Annual Report; UBS Research
908
1,284
1,659
859
1,173
1,681
-
500
1,000
1,500
2,000
Min Mean Max Min Mean Max
Enterprisevalue
(A$m)
465
1,296
1,745
590
1,167
1,619
-
500
1,000
1,500
2,000
Min Mean Max Min Mean Max
Enterprisevalue
(A$m)
Comparable companies based on EV / EBITDA multiples
Precedent transactions based on EV / EBITDA multiples
FY16 EBITDA FY17 EBITDA
FY16 EBITDA FY17 EBITDA

11. 11
Valuation of Lotteries and Gaming Services division
The enterprise value of Tatts will be ~A$5.6b post divestment of the underperforming Wagering division
Pro forma financial position post divestment Valuation of Lotteries division
Valuation of Gaming Services division
 The divestment of the Wagering division for A$1.3-1.6b would
result in a cash dividend to shareholders of A$0.75-1.02 per Tatts
share
 Total value of the divestment is ~A$4.13 which is 13.46% above
the current share price
 The cash dividend solidifies a strong return for shareholders
whilst offloading an underperforming asset
 The Lotteries division has an EV of ~A$4.0-5.0b which implies a
12.17-13.39 x FY16 EBITDA multiple
 The Gaming Services division has an EV of ~ A$500-600m which
implies a 4.30-5.16 x FY16 EBITDA multiple
2,294
3,775
6,669
2,234
4,380
8,870
Min Mean Max
Comparable companies Precedent transactions
Enterprise value based on FY16 EBITDA multiple
409
477
527
434
509
602
Min Mean Max
Comparable companies Precedent transactions
Enterprise value based on FY16 EBITDA multiple
Pre divestment Post divestment
EV EV
Lotteries 5,000 5,000
Wagering 1,600 -
Gaming Services 600 600
Total 7,200 5,600
Net debt (1,041) (1,041)
Implied share price $4.21 $3.11
Cash dividend - $1.02
Total value $4.21 $4.13
Lotteries Gaming Services

12. 12
Decision tree analysis
Tatts should renegotiate the offer with Tabcorp to increase the premium and adjust the consideration
 Reject proposed MID by
Tabcorp as the offer of A$4.07
(11.8% premium) heavily
undervalues Tatts and the
consideration structure is not in
the best interests of Tatts
shareholders
 Ask Tabcorp to increase
premium to at least 20% to
A$4.37
 Seek to renegotiate MID terms
to ensure Tatts’ directors have a
place in the merged entity; also
renegotiate consideration terms
to increase cash and reduce
scrip
 If the renegotiations are
successful, approve the
takeover
Trading Halt
 Lodge ASX release notice to
apply pressure to Tabcorp’s
proposal whilst garnering other
bidders’ attention
 Create a competitive bidding
environment by inviting private
equity, infrastructure funds and
strategic acquirers to place a
bid
 The capacity to pay by PE will
assist in raising bids, as they
can offer up to $4.26 (17%
premium)
 Announce to market the
bidders’ statement in order to
solicit the attention of Tabcorp
Continuation of trading
 Accept newly proposed MID by
Tabcorp to fully takeover Tatts
 Indicative offer price of A$4.37
 Consideration of 0.70 TAH
shares and $0.7 cash per TTS
share
 Tabcorp’s board raises offer
premium greater than 20%
 Divest the wagering division to
Tabcorp for ~A$1.3-$1.6b
 Issue cash dividend to Tatts
shareholders of A$0.75-1.02
per share
If 20% premium not attained,
seek to divest wagering division
1 2 3a
3b

13. 13
Risks
The suggested course of action faces transaction and industry risks
Source: Competition and Consumer Act 2010 (Cth); Tabcorp Annual Report; Tatts Annual Report
M&A transaction risks Description / mitigation
Failure to obtain
ACCC approval
 The transaction is likely to face ACCC pushback in regards to the consolidation of the
companies’ Wagering and Gaming Services divisions and synergies between Tatts’ retail and
Tabcorp’s broadcasting networks
 This can be mitigated through negotiation and cooperation with Tabcorp, regulators and other
affected 3rd parties
Volatility in scrip
value
 Fluctuations in share price after the agreed upon conversion ratio may adversely affect value to
Tatts or Tabcorp shareholders
 Collars can be used to lock the conversion ratio within a certain price range
Hostile takeover
attempt
 Upon rejection of Tabcorp’s offer, they may engage in a hostile takeover attempt to acquire Tatts
 Defensive strategies include persuading majority shareholders and stand-still agreements
Industry risks Description / mitigation
Regulatory
changes
 If the Lotteries division is retained as Tatts’ sole service, the company’s profitability becomes
highly contingent on regulatory and tax rate changes
 This risk is unlikely to eventuate as regulators have aligned interests with Tatts
 Tatts’ Lotteries business is also diversified through an extensive national network spanning
across numerous jurisdictions
Competition in
gaming
monitoring
 Tabcorp and Tatts currently enjoy an oligopoly in Queensland as the only two government-
mandated monitoring operations.
 This may be disrupted by the government’s provision of Licensed Gaming Monitor rights to
competitors; e.g. Utopia Gaming, who was recently granted the license earlier this year
1
2
3
1
2
Likelihood / impact
Likelihood / impact

14. 14
Recommended next steps
Tatts should begin my trying to renegotiate the scheme of arrangement terms with Tabcorp
 Seek to renegotiate scheme
terms to increase premium from
11.8% to at least 20%
 Seek to change the
consideration structure to
increase cash and reduce scrip.
Recommended structure
involveschange agreement
0.70 TAH shares and A$0.70
cash per TTS share
 Seek to terms to enable Tatts’
directors to be on the board of
merged entity
Negotiate initial offer
1
 Recommended approach if
Tabcorp accepts amendments
to initial offer
 Transaction worth A$4.37 per
share for Tatts shareholders
Merge with Tabcorp
3a
 If Tabcorp does not agree to
renegotiations, proceed to
create competitive auction
environment
 Lodge the ASX release to the
market once trading begins
again
 Begin talks with other interested
bidders such as PE and
disclose if any superior
proposals are offered
 The aim is to coerce Tabcorp to
improve their offer
Create a competitive bidding
environment
2
Divest Wagering division
3b
 Supplementary approach if
Tabcorp does not raise their
new offer premium >20%
 Transaction worth A$4.13 per
share for Tatts shareholders

15. 15
Appendix table of contents
Appendix I – Industry & company analysis
Gambling industry 17
Demand drivers of gambling industry 18
Executive team of TattsGroup 19
Tatts’ Lotteries business 20
Tatts’ Wagering business 21
Tatts’ Gaming Services business 22
Shareholder analysis 23
Full overview of the decision tree 24
In-depth bidding scenario analysis 25
ACCC regulatory concerns 26
Precedent ACCC Review results 27
Combined group - Geographical reach 28
Combined group – License expiry dates 29
Appendix II – Valuation
Basic assumptions and WACC 31
Tatts financial statement projection assumptions 32
Tatts income statement 33
Tatts balance sheet 34
Tatts cash flow statement 35
Discounted cash flow analysis 36
Comparable company analysis 37
Precedent transactions 38
Merger model assumptions 39
Merger model 42
Debt pay down schedule and key ratios 43
Leveraged buyout assumptions 44
Leverage buyout model 45

16. Industry & Company
Appendix I

17. 6.60%
8.20%
9.40%
11.10%
13.50%
0%
5%
10%
15%
FY12 FY13 FY14 FY15 FY16
Digitalturnover
17
Gambling industry
The Australian gambling industry is mature, highly regulated and has substantial barriers to entry
Wagering Lotteries
KenoGaming services
 Consistent growth has spurred the entry and consolidation of
international and domestic corporate bookmakers
 The main driver of this industry is the increased utilisation of
technology to facilitate online ticket purchases
 This segment has experienced substantial growth due to high
barriers to entry and heavy regulation thus accentuating the value
of licences
 Keno’s low growth due to small prize pools is being revitalised
through brand transformation programs and the interstate pooling
of jackpots
Source: IBISWorld
3,371 3,406
3,528
3,778
3,875
3,200
3,400
3,600
3,800
4,000
FY12 FY13 FY14 FY15 FY16
Revenue(A$m)
213
227
263
296
359
200
250
300
350
400
FY12 FY13 FY14 FY15 FY16
Revenue(A$m)
1,199
1,296
1,198
1,233
1,322
1,000
1,100
1,200
1,300
1,400
FY12 FY13 FY14 FY15 FY16
Revenue(A$m)

18. 18
Demand drivers of gambling industry
The key drivers of the gambling industry are population and income growth and digital integration
Australian population growth Australian household disposable income
Changing age demographicsAdvancement of digital platforms
Source: ABS
843
982 968 994 1029 1009
0
400
800
1200
2006 2008 2010 2012 2014 2016
Meanweeklydisposable
household
income(A$)
21 21 21 22 22 23 23 23 24 24 24
1.6
1.9
2.2
1.8
1.4
1.6
1.8 1.7
1.5 1.4
1.6
0.0
1.0
2.0
3.0
4.0
5.0
0
10
20
30
2006 2008 2010 2012 2014 2016
PopulationGrowth(%)
Population(m)
14
15 15
16 17
18 18
19 20 20 21
6.5
7.1
5.1 5.5
4.2
6.4
1
6.7
3.4
1.8
1.7
0
5
10
15
0
5
10
15
20
25
2006 2008 2010 2012 2014 2016
InternetUsageGrowth(%)
InternetUsage(m)
3.1%
11.2%
1.9%1.1%
7.3%
10.0%
17.2%
2.7%2.6%
5.2%5.3%
12.1%
7.7%
29.3%
25.4%
19.7%
5.4%
20.9%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
0
50,000
100,000
150,000
200,000
250,000
300,000
0 to
4
10
to
14
20
to
24
30
to
34
40
to
44
50
to
54
60
to
64
70
to
74
80
to
84
%Change
Changeinnumberofpeople

19. 19
Executive team of TattsGroup
The Executive team of Tatts possesses extensive operational expertise and should be retained
Source: Tatts FY16 Annual Report
Andrew Collins HEAD OF CORPORATE DEVELOPMENT
 Newly appointed head of domestic and
international corporate activities
 Responsible for leading the Group’s acquisition
and licensing, along with involvement in
subsequent integration actions
Brendan Parnell CHIEF OPERATING OFFICER - WAGERING
 Recently appointed COO of Wagering in 2016
 Previously led Tabcorp’s Media business Sky
Racing and MD of Tabcorp International
 Possesses almost three decades’ experience in
broadcast media, sports, betting and
international trade
Frank Makryllos CHIEF OPERATING OFFICER – GAMING
 Re-joined Tatts in 2013 as COO of Gaming
 Previously CEO of Intralot Australia, Chief
Executive of Tatts Pokies
 Frank has a Masters of Business Administration
and has completed several courses through
Harvard and London Business Schools
Sue Van Der Merwe CHIEF OPERATING OFFICER - LOTTERIES
 Has served as COO of Lotteries since 2014
 Possesses over 25 years’ experience in the
lottery industry
 Started her career in marketing lotto games in
1990 and progressed through various
management roles
Neale O’Connell CHIEF FINANCIAL OFFICER
 Served as Chief Financial Officer since 2012
 Previously lead the Group as the General
Manager of Finance throughout key events
including the UNiTAB merger, acquisition of Qld,
NSW and SA Lotteries and Tas Tote, and
acquisition and divestment of Tatts UK
Anne Tucker GENERAL COUNSEL & COMPANY SECRETARY
 Served as General Counsel and Company
Secretary since 2013
 Previously part of the UNiTAB team in 2005, and
lawyer at Clayton Utz
 Possesses experience and knowledge within the
gaming industry as well as merger, acquisition
and integration activities
Ashleigh Loughnan PEOPLE, PROPERTY & PROCUREMENT MANAGER
 Served as Executive General Manger of People,
Property & Procurement since 2013
 Has undertaken numerous projects including
implementation of technology and process
improvements, and rollout of new HR
information systems
Mandy Ross CHIEF INFORMATION OFFICER
 Served as Chief Information Officer since 2014
 Previously CTO of start-up Literary Planet and
CIO of Wotif Group and possesses 15 years
industry experience
 Awarded Boss Young Executive of the year, and
CEO Magazine runner-up CIO of the year

20. 20
Tatts’ Lotteries business
The lottery industry in Australia is highly dominated by Tatts’ lotto division
Overview Demand Drivers
Licenses
 Tatts is the only non-government owned Australian lottery
operator with licenses allowing it to conduct business in all states
& territories except for WA
 Operates the entirety of the lottery business under ”The Lott”
umbrella brand
 2 million registered card players
 2.5 million registered online players
 Distributes lottery products at 3,900 agencies
 Has distribution agreements with Jumbo Interactive to provide a
digital channel for consumers to purchase its lottery tickets online
 An increase in per capita gambling expenditure generally
translates to greater expenditure on lotteries
 Consumers that belong in the older age brackets tend to
represent a large market for the industry
 Customer base predominantly located on the 45+ age groups
 Increases for a household’s disposable income typically allows
them to spend more money on non-essential items or activities,
such as gambling and lottery tickets
 The average length of lottery licenses is 25 years
 Near-term expiry of the Victorian lotteries license
 Renewal of license is presently under discussion between Tatts
and the Victorian Government
Source: IBISWorld; Tatts Annual Report
2018
2020
2032
2050
2052
2072
VIC TAS NT NSW SA QLD
-5.0%
-3.0%
-1.0%
1.0%
3.0%
5.0%
10,000
10,500
11,000
11,500
2010 2011 2012 2013 2014 2015 2016
Change
Realpercapitatotalgambling
turnover($)
Real per capita total gambling turnover

21. 21
Tatts’ Wagering business
Wagering operates under Tatts’ UBET brand and it accounts for 21% of the company’s revenue
UBET Overview Competition and Operation Threats
Operation highlights
 UBET was launched in April 2015 to consolidate and streamline
its Tattsbet, Tatts.com, TAB and Tote divisions
 UBET possesses exclusive licenses to offer totalisator and fixed
odds wagering through its retail channels on-course, off-course,
and online in QLD, SA, TAS and NT.
 The opening of 162 new retail stores has generated a 8.4%
turnover growth compared to existing wagering retail stores in the
same geographic areas
 Strong growth in UBET’s online platform is evidenced by a 22.5%
uplift in digital sales from FY15
 UBET’s exclusive retail license renewal in the NT for 20 years
will offer strong local presence
 Fixed-price sales on racing and sports saw an increase of 24.1%
Source: Tatts FY16 Annual Report
Performance faces downward pressures from competition
174
161
153
133
0
20
40
60
80
100
120
140
160
180
200
EBITDAA$M
23.7 22.4 21.5
19.0
2.8
2.6
2.8
2.9
0
5
10
15
20
25
30
FY13FY14FY15FY16
EBITDA/EBITMargin(%)
EBIT EBITDA
 UBET’s pari-mutuel focused wagering service faces strong direct
and indirect competitions from other totalisators and corporate
bookmakers
 A trend of deregulation of the wagering industry has prompted a
significant influx of foreign corporate bookmakers
 The digitalisation of the gambling industry raises redundancy
risks for UBET’s heavy retail network
 The potential grant of retail licenses to other entities will direct
significant competitive pressures upon UBET’s exclusive retail
haven

22. 22
Tatts’ Gaming Services business
Tatts operates in this industry through Maxgaming and Bytecraft
Overview Demand Drivers
Licenses
 Maxgaming - intended to create additional valued-added
services in contracted venues as well as fulfilling the
government-mandated monitoring across NSW, QLD and
the NT to approximately 136,000 gaming machines.
Furthermore, it is able to provide workflow management
products
 Bytecraft – provider of a fully-managed gaming
maintenance, logistics and technology support service
business to a vast number of ASX top-50 companies, and
other brands as well. The relating services include,
warehousing, installation, relocation, repair and
maintenance
 Won the exclusive right to monitor all hotel- and club-based
gaming machines in NSW until 2032. Additionally, extended its
current monitoring arrangements for one-year until 2017
Source: IBISWorld
2021
2027
2032
NT QLD NSW
 A greater number of poker and gaming machines installed in
Australia influences operators to demand gaming services
 Casinos are the largest purchasers and operators of gaming
machines in most Australian states. The gambling demand initiated
from casinos will drive up the need of value-added gaming services
and monitoring
 There exists correlation between real household discretionary
income and gambling expenditure. Consumers are more likely to
increase gambling expenditure as discretionary income increases
Forecasted casino revenue
0.3
15.8
2.7
-8.8
3.3
2.7
-10.0
0.0
10.0
20.0
5000
5300
5600
5900
6200
6500
2014 2015 2016 2017 2018 2019
Change(%)
CasinoRevenue($m)

23. 23
Shareholder analysis
Tatts has a relatively high concentration of retail investors, owning ~40% of total shares outstanding
Source: DatAnalysis
Institutional shareholder analysis
Retail shareholder distributionTop 5 substantial shareholders hold 20.6% of Tatts
Shareholder % # shares (m)
Recent
transaction
Perpetual Ltd 6.7% 98.1.
Sold – March
2016
JCP Investment Partners 4.9% 72.2
Sold –
November
2014
Australian Super 4.7% 68.9 n.a.
The Vanguard Group 2.5% 36.6 n.a.
Blackrock 1.8% 26.0 n.a.
Perpetual 6.7%
JCP Investment Partners 4.9%
AustralianSuper 4.7%
BlackRock
1.8%
The Vanguard Group 2.5%
Others
79.4%
1 - 1,000 shares held
1,001 - 5,000 shares held
5,001 - 10,000 shares held
10,001 - 100,000 shares held
63%
10%
8%
19%
Shareholder distribution % # of shareholders # of shares
1 – 1,000 0.52% 13,515 7,680,884
1,001 – 5,000 8.51% 44,257 124,094,022
5,001 – 10,000 3.58% 7,061 52,267,219
10,001 - 100,000 8.81% 5,638 128,612,863
100,001 and over 78.58% 374 1,147,929,714
Distribution of all shareholders

24. 24
Full overview of the decision tree
Considering every possible outcome in order to reach a favorable conclusion for Tatts
Premium
>20%
Trading Halt Negotiations
Accept
Merge whole
business
Release ASX
statement +
seek other
bidders
Premium
<20%
Reject
Disclose
highest bid
Re-negotiate
with Tabcorp
Accept
Divest UBET Accept
Hostile off-
market
takeover
Standstill
agreement
Tabcorp (Hostile)
Persuade
shareholders
against
takeover
Others
Approach
Tabcorp
(White Knight)
Blocking Stake
Current Position

25. 25
In-depth bidding scenario analysis
Analysis of unfavorable bidding scenarios and what appropriate defense methods Tatts should consider
Hostile off-market takeovers by interlopers Hostile off-market takeover by Tabcorp
 Announcement of unsolicited takeover bids will prompt Tabcorp’s
board of directors to take action against these bidders
 Tabcorp will most likely pursue a pre-bid stake / blocking stake in
order to prevent these bidders from achieving compulsory
acquisition (90% shares attained)
 Most likely that Tabcorp will pursue a pre-bid stake before
conducting further acquisitions
 Announcement of pre-bid stake will undoubtedly pressure Tatts’
shareholders to give up their shareholdings due to ‘bandwagon
effect’ and tempting offer value
Crown Jewels Defense
 Persuading Tatts’
substantial shareholders
that the bids proposed by
companies other than
Tabcorp will not be in their
best interest
 Unable to justify a premium
offer as high as Tabcorps
due to low-no synergies
realized and inadequate
management expertise to
operate Tatts’ business lines
Logical attack on the bid
 Reach out to Tabcorp for
them to make a friendly
takeover offer
 Bid implementation
agreement will contain ‘deal
protection mechanisms’ that
will prevent interlopers from
continuing their off-market
takeover
White Knight
Crown Jewels Defense
• Enter into a standstill
agreement with Tabcorp to
stall or prevent the process
of a hostile takeover
• Favourable for Tabcorp as it
solidifies an enclosed
bidding environment with
Tatts
• Only enact takeover if Tatts’
board of directors and
management are included in
the process, or in other
words, re-negotiate into a
scheme of arrangement
Standstill Agreement
 Substantial remuneration
benefits given to board of
directors if Tatts is taken
over by Tabcorp and the
executives are terminated
as a result of the merger
 Implement golden parachute
clauses within the employee
contract which sets out a
generous severance pay
Golden Parachute
Defensive Strategies Defensive Strategies

26. 26
Sector Potential complication Our view
Likelihood of
ACCC intervention
Wagering  Tabcorp and Tatts are the only 2 non-
government totalisator operators in Australia
 The acquisition may remove Tatts as a
competing supplier of totalisator pooling
services
 The merger will be pro-competitive as it
creates strong competition against corporate
bookmakers
 The companies’ wagering services do not
geographically overlap and are separated by
government-issued operating licenses
Broadcasting
 Combination of Tabcorp’s Sky Racing
broadcasting service with Tatts’ retail network
may increase its license bidding power against
broadcasting competitors
 Tatts’ retail businesses do not distribute
visual racing broadcasts
 The bargaining power of other broadcasters
is not subdued as they hold exclusive
licenses in other jurisdictions and race types
Gaming
Services
 Tabcorps’ and Tatts’ subsidiaries operate the
only two government-mandated monitoring
operations in Qld
 The merger of the parent companies will likely
create a monopoly in the Qld monitoring sector
 The acquisition is likely to substantially
lessen competition in the monitoring sector
 A divestment of one of the subsidiaries may
be necessary to satisfy regulatory
requirements
The overlap of game monitoring services in Queensland is likely to raise concerns for the ACCC
Source: Competition and Consumer Act 2010 (Cth); Tabcorp & Tatts Annual Report
ACCC regulatory concerns
The acquisition may be authorised where the net public benefit outweighs the anti-competitive detriment
The acquisition will greatly strengthen the racing industry through its funding arrangements; and
The merged entity’s ability to compete with international bookmakers will enrich the Australian economy
1
2

27. 27
Precedent ACCC Review results
Review of past ACCC anti-competitive assessments reveal this acquisition is likely to be approved
Tabcorp/UNiTAB August 2006 Expedia/Wotif October 2014
Source: Australian Competition and Consumer Commission
Facts: Tabcorp proposed a takeover of UNiTAB
Tabcorp holds totalisator wagering licenses in VIC
and NSW; UNiTAB holds totalisator wagering
licenses in Qld, NT and SA
Decision: Rejected
Reasoning:  Competition for future wagering licenses would
be substantially lessened
 The potential for new entrants to the wagering
markets will significantly decrease
Facts: Expedia proposed to acquire Wotif.
Both companies are global online travel agencies
(OTA) that assist in booking accommodation, flights,
vacation packages
Decision: Accepted
Reasoning:  There has been an influx of new competitors and
business models, e.g. Trivago and TripAdvisor
 The ability of the merged body to increase
commission is restricted by strong direct and
indirect market substitutes
Federation Centres/Novion Property Group May 2015
Facts: Federation proposed a merger with Novion
Both organisations are Real Estate Investment
Trusts that invest in shopping centres across
Australia
Decision: Accepted pursuant to shopping centre divesture
Reasoning:  The two companies respectively own the only
two large multi-purpose shopping centres within
a 20km radius in Melbourne
 There are sufficient alternative shopping centre
managers in other regions where the two
organisations operate
GrainCorp/Cargill storage & handling facility March 2016
Facts: GrainCorp proposed to acquire one of Cargill’s bulk
grain storage and handing facility in NSW
GrainCorp is an integrated grain handling and
processing business; Cargill operates a bulk storage
and handling facility
Decision: Accepted
Reasoning:  Despite the removal of a close competitor at the
existing site, there will be effective competition
from other suppliers in the region
 Graincorp’s storage and handling fees is fixed
 Graincorp has an incentive to deliver efficient
services to growers to maximise facility usage

28. 28
Combined group - Geographical reach
An acquisition of Tatts would provide a unique diversification opportunity, both in product and geography
Geographical Reach
Business
Key brands:
TAB
Key brands:
Tatts
VIC
NS
W
ACT QLD SA TAS NT WA Intl.
Wagering
Lotteries
Keno
Gaming and
Gaming Services
Media
Source: UBS research; Tabcorp and Tatts Annual Reports

29. 29
Combined group – License expiry dates
An acquisition of Tatts would provide vital license holdings ensuring long-term sustainability and a
diversified portfolio in times of rapid change
Source: Tabcorp and Tatts Annual Reports
210020982097
20642062
2035
2024
Wagering
2052
2072
2050
2020
2032
2028
Lotteries
2047
2050
2064
2022
Keno
2027
2032
Gaming Services
Tabcorp Licenses Tatts Licenses

30. Valuation
Appendix II

31. 31
Basic assumptions and WACC
Tatts is larger than Tabcorp in terms of market capitalisation and has a WACC of ~9%
Basic acquisition assumptions
Buyer Seller
Name: Tabcorp Holdings Ltd Name: Tatts Group Ltd
Ticker: TAH Ticker: TTS
Tax rate: 30.00% Tax rate: 30.00%
Recent closing price $4.96 Closing price: $3.64
DSO (m): 835.30 DSO (m): 1,464.50
Market cap (m) $4,143.09 Market cap (m): $5,330.78
Enterprise value (m) $5,012.69 Enterprise value (m) $6,371.78
Seller valuation assumptions
Discount rate calculation
Cost of equity Cost of debt
Risk free rate: 4.00% Risk free rate: 4.00%
ERP: 6.00% Credit spread: 1.50%
Beta: 1 Cost of debt: 5.50%
Cost of equity: 10.0%
Total equity: 5,331 Total debt: 1,124
% equity: 82.59% % debt: 17.41%
WACC: 8.93%
Terminal value
Gordon growth method Terminal EBITDA method
Growth rate: 2.96% Terminal EBITDA x 12.00 x
Terminal value: 8,479 Terminal value: 8,476
Implied EBITDA x: 12.00 x Implied growth rate: 2.96%
Implied share price $4.17

32. 32
Tatts financial statement projection assumptions
Income statement, balance sheet and cash flow statement key driver assumptions
Seller financial projection assumptions
P&L drivers FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Revenue 3,896 2,944 2,864 2,916 2,925 3,127 3,359 3,612 3,874 4,127
Revenue - sensitivity - - - - -
Lotteries 1,767 2,009 1,923 1,977 2,139 2,332 2,553 2,796 3,047 3,291
% growth 13.64% (4.27%) 2.80% 8.22% 9.00% 9.50% 9.50% 9.00% 8.00%
Wagering 623 656 642 633 610 607 604 601 598 595
% growth 5.19% (2.05%) (1.46%) (3.63%) (0.49%) (0.49%) (0.49%) (0.49%) (0.49%)
Gaming services 250 280 299 307 176 189 202 215 228 241
% growth 11.71% 6.74% 2.76% (42.50%) 7.07% 7.00% 6.50% 6.00% 5.50%
Pokies 1,255
OpEx % revenue 82.97% 83.05% 82.71% 82.66% 83.04% 82.89% 82.89% 82.89% 82.89% 82.89%
Margin toggle - - - - -
D&A % revenue 2.58% 2.86% 2.93% 2.99% 2.57% 2.50% 2.50% 2.50% 2.50% 2.50%
Balance sheet drivers FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Receivables % revenue 4.29% 4.86% 4.00% 2.19% 2.10% 2.10% 2.10% 2.10% 2.00% 2.00%
Prepaid expenses % opex 0.48% 0.62% 0.76% 0.69% 0.85% 0.85% 0.85% 0.85% 1.00% 1.00%
Inventory % opex 0.50% 0.58% 0.34% 0.15% 0.10% 0.10% 0.10% 0.10% 0.05% 0.05%
Current payables % opex 17.88% 25.89% 24.95% 24.83% 24.45% 23.60% 23.60% 23.60% 23.60% 23.60%
NC payables % opex 2.26% 3.04% 3.87% 7.42% 7.71% 7.71% 7.71% 7.71% 8.00% 8.00%
NC provisions % revenue 6.13% 9.26% 7.67% 7.72% 9.84% 8.12% 8.12% 8.12% 8.12% 8.12%
Debt schedule
Average interest rate 5.65%
Beginning balance 1,124 1,289 985 670 475
Debt drawn 165 70 - - -
Debt repayment - 374 315 195 228
Ending balance 1,289 985 670 475 247
Interest expense 68 64 47 32 20
CFS drivers FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Cap Ex % revenue 1.69% 2.10% 1.55% 1.23% 2.75% 2.75% 2.75% 2.75% 2.75%
Intangibles % revenue 0.65% 0.53% 1.93% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90%
Investment % revenue 1.47% 1.19% 3.27% 5.18% 2.78% 2.78% 2.78% 2.78% 2.78%
Dividends pay out ratio 87.40% 95.90% 95.00% 109.60% - - - - -
FX effects % revenue 0.28% (0.04%) (0.04%) 0.27% 0.12% 0.12% 0.12% 0.12% 0.12%

33. 33
Tatts income statement
Revenue growth primarily driven by growth in the Lotteries division
Source: DatAnalysis Premium; Tatts Annual Reports
Income statement
A$m; Jun ye FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Revenue 3,896 2,944 2,864 2,916 2,925 3,127 3,359 3,612 3,874 4,127
Growth rate % (24%) (3%) 2% 0% 7% 7% 8% 7% 7%
Operating expenses (3,233) (2,445) (2,368) (2,411) (2,429) (2,592) (2,784) (2,994) (3,211) (3,421)
EBITDA 663 499 495 506 496 535 575 618 663 706
Margin % 17% 17% 17% 17% 17% 17% 17% 17% 17% 17%
D&A (100) (84) (84) (87) (75) (78) (84) (90) (97) (103)
EBIT 563 415 411 419 421 457 491 528 566 603
EBIT margin 14% 14% 14% 14% 14% 15% 15% 15% 15% 15%
Net interest expenses (94) (97) (83) (51) (38) (68) (64) (47) (32) (20)
PBT 469 318 328 368 383 389 427 481 534 583
Tax (131) (76) (100) (110) (115) (117) (128) (144) (160) (175)
Net abnormals (19) (15) (1) (2) (4) - - - - -
NPAT 319 227 227 256 263 272 299 337 374 408

34. 34
Tatts balance sheet
Intangibles such as licences form an important part of Tatts’ financial position
Source: DatAnalysis Premium; Tatts Annual Reports
Balance sheet
A$m; Jun ye FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Current assets
Cash 290 356 687 422 194 503 442 405 527 629
Receivables 167 143 114 64 61 66 71 76 77 83
Prepaid expenses 15 15 18 17 21 22 24 25 32 34
Inventories 16 14 8 4 2 2 3 3 2 2
Other 39 85 83 50 114 114 114 114 114 114
Total current assets: 528 613 911 556 393 707 653 623 753 862
Non-current assets
PP&E 187 186 206 210 157 165 173 182 192 202
Intangibles 4,098 4,553 4,540 4,653 4,462 4,490 4,520 4,553 4,588 4,625
Investments 75 43 34 95 152 87 93 100 108 115
Other 56 49 10 11 71 71 71 71 71 71
Total non-current assets 4,416 4,832 4,789 4,969 4,841 4,841 4,841 4,841 4,841 4,841
Total assets 4,944 5,445 5,700 5,525 5,233 5,548 5,494 5,464 5,593 5,703
Current liabilities
Payables 578 633 591 599 594 612 657 707 758 807
Short term debt 447 343 - 333 - - - - - -
Other 65 83 611 633 68 68 68 68 68 68
Total current liabilties 1,091 1,060 1,202 1,565 662 662 662 662 662 662
Non-current liabilities
Payables 73 74 92 179 187 200 215 231 257 274
Long term debt 860 1,278 1,351 585 1,124 1,289 985 670 475 247
Provisions 239 273 220 225 288 254 273 293 315 335
Other 18 - - - - - - - - -
Total non-current liabilities 1,189 1,625 1,662 989 1,599 1,743 1,473 1,194 1,047 856
Total liabilities 2,280 2,685 2,864 2,554 2,261 2,405 2,134 1,856 1,709 1,518
Equity
Share capital 2,543 2,655 2,748 2,841 2,854 2,854 2,854 2,854 2,854 2,854
Reserves (16) (8) (9) (10) (2) 1 5 10 14 19
Retained earnings 137 113 96 140 120 393 691 1,028 1,402 1,810
Total equity 2,664 2,760 2,836 2,971 2,973 3,249 3,551 3,892 4,270 4,683

35. 35
Tatts cash flow statement
Abnormal cash flows in FY15 and FY16 due repayment of damages from legal proceedings in prior years
Source: DatAnalysis Premium; Tatts Annual Reports
Cash flow statement
A$m; Jun ye FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Cash flow from operations
Net income 227 227 256 263 272 299 337 374 408
D&A 84 84 87 75 78 84 90 97 103
NWC 78 523 211 (623) (9) 72 79 91 80
Total cash flow from operations 389 834 553 (284) 341 455 506 562 591
Cash flow from investing
Capital expenditure (83) (103) (92) (22) (86) (92) (99) (107) (113)
Intangibles (455) 13 (113) 191 (28) (30) (33) (35) (37)
Investment 31 9 (61) (56) (87) (93) (100) (108) (115)
Total cash flow from investing (507) (81) (266) 113 (201) (216) (232) (249) (265)
Cash from financing
Debt issue / repayment 314 (270) (432) 205 165 (304) (315) (195) (228)
Dividends (251) (243) (212) (283) - - - - -
Share issue 112 94 93 13 - - - - -
Total cash flow from financing 175 (420) (552) (64) 165 (304) (315) (195) (228)
FX effects 8 (1) (1) 8 4 4 4 5 5
Total change in cash 66 331 (265) (228) 309 (61) (37) 122 102
Beginning cash 290 356 687 422 194 503 442 405 527
Ending cash 356 687 422 194 503 442 405 527 629

36. 36
Discounted cash flow analysis
Tatts has an implied share price of ~A$4.17 which is 15% above the most recent closing price
Discounted cash flow analysis
A$m 0 1 2 3 4 5
Unlevered FCF projection FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Revenue: 2,944 2,864 2,916 2,925 3,127 3,359 3,612 3,874 4,127
Growth rate: (2.73%) 1.84% 0.31% 6.91% 7.41% 7.52% 7.24% 6.54%
EBITDA: 499 495 506 496 535 575 618 663 706
EBITDA margin: 17.29% 17.34% 16.96% 17.11% 17.11% 17.11% 17.11% 17.11%
EBIT: 415 411 419 421 457 491 528 566 603
Operating margin: 14.36% 14.35% 14.39% 14.61% 14.61% 14.61% 14.61% 14.61%
Less: Taxes: (124) (123) (126) (126) (137) (147) (158) (170) (181)
NOPAT: 290 288 293 295 320 344 370 396 422
D&A: 84 84 87 75 78 84 90 97 103
Less: Change in WC: 78 523 211 (623) (9) 72 79 91 80
Less: Capital expenditures: (83) (103) (92) (22) (86) (92) (99) (107) (113)
Unlevered free cash flow: 369 792 499 (274) 303 408 439 478 492
Growth rate: 115% (37%) (155%) (210%) 34% 8% 9% 3%
Output
Terminal EBITDA method
NPV of FCF: 1,622
PV of TV: 5,527
Implied enterprise value: 7,148
% of EV from TV: 77.32%
Less: Net debt (1,041)
Implied equity value: 6,107
Implied share price: $4.17
Premium / (discount): 14.56%

37. 37
Comparable company analysis
A sum of the parts approach was employed. Infrastructure companies were also included
Source: UBS Research
Comparable company analysis
Revenue EBITDA EBIT NPAT
Company Market cap Enterprise value FY16A FY17F FY16A FY17F FY16A FY17F FY16A FY17E
Tabcorp 4,143 5,013 2,193 2,245 508 525 329 347 170 196
Tatts 5,331 6,372 2,925 3,127 496 535 421 457 263 272
International wagering
Paddy Power Betfair 12,497 12,335 3,127 3,281 865 921 718 808 629 656
William Hill 4,443 5,161 2,996 3,093 661 663 520 495 439 355
Ladbrokes Coral 3,798 5,524 4,452 807 583 413
International lotteries / Infrastructure
IGT 6,482 16,854 6,314 7,301 2,138 2,506
Scientific Games 1,336 11,733 4,160 3,990 1,680 1,567
Intralot 240 1,032 2,071 2,320 268 314
Transurban 21,789 34,142 1,371 1,581 764 938 320 406
Sydney Airport 14,224 21,557 1,062 1,147 746 820 256 293
Macquarie Atlas 2,163 5,693 527 575 459 508 161 147
Gaming
Ainsworth 745 786 282 344 82 122 55 97 48 70
Aristocrat 10,095 11,100 2,372 2,465 943 929 811 770 507 493
Konami 6,797 5,739 5,739 3,217 676 812 507 563 384 333
EBITDA Historical EBITDA multiple (x) Forecasted EBITDA mutliple (x)
FY16 FY17 Min Mean Max Min Mean Max
Lotteries 329 355 6.98 11.49 20.30 6.73 10.73 18.80
Wagering 116 126 7.81 11.03 14.26 6.85 9.34 13.39
Gaming 51 55 8.49 9.95 11.77 6.44 8.49 11.95
Implied EV lotteries 2,294 3,775 6,669 2,384 3,804 6,665
Implied EV wagering 908 1,284 1,659 859 1,173 1,681
Imlied EV gaming 434 509 602 355 468 659
Total implied EV 3,637 5,568 8,930 3,599 5,444 9,006
Less: Net debt (1,041) (1,041) (1,041) (1,041) (1,041) (1,041)
Implied share price $1.77 $3.09 $5.39 $1.75 $3.01 $5.44
Implied EV / EBITDA 7.33 x 11.22 x 18.00 x 6.85 x 10.37 x 17.15 x

38. 38
Precedent transactions
A sum of the parts approach was used. Infrastructure transactions were also included
Source: UBS Research
Precedent transactions
EBITDA multiple
Target Acquirer Date Region Consideration (m) Historical Forecast
Lotteries / Infrastructure
SA Lotteries Management rights Tatts Nov-12 Australia $427 12.50 x 10.50 x
NSW Lotteries Corporation Tatts Mar-10 Australia $850 14.10 x 14.00 x
Golden Casket Lottery Corporation Tatts Apr-07 Australia $530 10.50 x 9.70 x
OPAP Emma Delta May-13 Europe € 2,158 6.80 x 8.00 x
Hellenic State Lotteries Hellenic Lotteries S.A. Dec-12 Europe € 190 9.10 x 8.80 x
Botany & Newcastle Ports Hastings / China Merchants Apr-13 Australia $1,750 27.00 x
Min: 6.80 x 8.00 x
Mean: 13.33 x 10.20 x
Max: 27.00 x 14.00 x
Wagering
UNiTAB Tattersall's Mar-06 Australia $1,900 12.70 x 11.40 x
TAB Tabcorp Nov-03 Australia $2,150 12.30 x 10.30 x
Centrebet Sportingbet May-11 Australia $185 12.00 x 7.50 x
Sportsbet Paddy Power Dec-10 Australia $370 11.35 x 8.00 x
International All Sports Sportsbet Jun-09 Australia $40 4.00 x 4.70 x
Coral Group Ladbrokes Jul-15 Europe € 1,112 9.60 x 8.90 x
bwin GVC Sep-15 Europe € 1,497 13.20 x 12.50 x
Sky Bet CVC Capital Partners Dec-14 Europe € 800 15.00 x 12.90 x
Sportingbet GVC and William Hill Oct-12 Europe € 491 10.10 x 7.50 x
Min: 4.00 x 4.70 x
Mean: 11.14 x 9.30 x
Max: 15.00 x 12.90 x
Gaming services
Intecq Tabcorp Aug-16 Australia $128 9.70 x 8.30 x
International Game Technology GTECH Jul-14 USA $4,626 8.00 x 9.00 x
Oldford Group Amaya Jun-14 USA $4,900 10.30 x 8.30 x
Min: 8.00 x 8.30 x
Mean: 9.33 x 8.53 x
Max: 10.30 x 9.00 x
EBITDA Historical EBITDA multiple Forecasted EBITDA mutliple
FY16 FY17 Min Mean Max Min Mean Max
Lotteries 329 355 6.80 x 13.33 x 27.00 x 8.00 x 10.20 x 14.00 x
Wagering 116 126 4.00 x 11.14 x 15.00 x 4.70 x 9.30 x 12.90 x
Gaming 51 55 8.00 x 9.33 x 10.30 x 8.30 x 8.53 x 9.00 x
Implied EV lotteries 2,234 4,380 8,870 2,836 3,616 4,963
Implied EV wagering 465 1,296 1,745 590 1,167 1,619
Imlied EV gaming 409 477 527 458 471 497
Total implied EV 3,108 6,153 11,142 3,884 5,255 7,079
Less: Net debt (1,041) (1,041) (1,041) (1,041) (1,041) (1,041)
Implied share price $1.41 $3.49 $6.90 $1.94 $2.88 $4.12
6.26 x 12.40 x 22.45 x 7.26 x 9.82 x 13.23 x

39. 39
Merger model assumptions
Offer, funding and transaction fee assumptions
Merger model assumptions
Offer assumptions
TTS closing price $3.64 Total shares in mergered entity 2,007
Offer price per share $4.07 Shares held by Tabcorp 835 41.61%
Premium paid 11.80% Shares held by Tatts 1,172 58.39%
Purchase equity value (m) $5,960
Implied enterprise value $7,001
Implied EV / FY16 EBITDA 14.11 x
Implied EV / FY16 Revenue 2.39 x
Implied P / FY16 Earnings 22.63 x
Funding assumptions
% cash : 0.00%
% debt: 2.46% Amount: Pre-tax cost:After-tax cost:
% scrip: 97.54% Cash used: - 1.95% 1.37%
Debt issued: 147 5.50% 3.85%
Scrip ratio 0.80 Scrip value: 5,813 4.10%
Shares issued: 1,172
Weighted average cost: 4.09%
Target's yield: 4.94%
Fees assumptions
Advisory fee (%): 1.50%
Debt issuance (%): 2.00%
Amortisation period: 10
Legal & other fees: 0.50%

40. 40
Merger model assumptions
Debt schedule, sources and uses schedule, purchase price allocation
Debt assumptions
Debt to purchase equity 147 Debt to refinance 1,246
Security Unsecured Security Secured
Interest rate 5.50% Interest rate 5.50%
Term 10 Term 10
Year Principal Interest Total Year Principal Interest Total
1 (11) (8) (19) 1 (97) (69) (165)
2 (12) (7) (19) 2 (102) (63) (165)
3 (13) (7) (19) 3 (108) (58) (165)
4 (13) (6) (19) 4 (114) (52) (165)
5 (14) (5) (19) 5 (120) (45) (165)
6 (15) (5) (19) 6 (126) (39) (165)
7 (16) (4) (19) 7 (133) (32) (165)
8 (17) (3) (19) 8 (141) (25) (165)
9 (17) (2) (19) 9 (149) (17) (165)
10 (18) (1) (19) 10 (157) (9) (165)
Sources and uses
Sources Uses
Cash: - Equity purchase price: 5,960
Debt: 147 Debt refinance: 1,124
Scrip: 5,813 One-time deal fee: 119
Debt for refinancing + fees: 1,246 Capitalised financing fee: 3
Total sources: 7,206 Total uses 7,206
Purchase price allocation
Goodwill calculation
Equity purchase price: 5,960
Less: Target book value: (2,973)
Total allocable premium: 2,987

41. 41
Merger model assumptions
Synergies assumptions and timeline
Synergies
EBITDA synergies p.a. 130
EBIT / EBITDA 70.00%
Implementation cost 110
Growth rate 3.00%
Synergies timeline FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Implementation cost (110)
EBITDA synergies 130 134 138
EBIT synergies 91 94 97
Taxes (77) - - 64 66 68
NPV of synergies 58
TV of synergies 765
Total PV of synergies 823
Value per TTS DSO $0.56

42. 42
Merger model
Tabcorp’s offer arrangement is forecasted to be significantly EPS accretive
Merger model
A$m 1 2 3 4 5
Combined income statement FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
TTS - revenue 3,896 2,944 2,864 2,916 2,925 3,127 3,359 3,612 3,874 4,127
TAH - revenue 3,049 2,007 2,038 2,158 2,193 2,252 2,310 2,367 2,413 2,455
Total revenue 6,945 4,951 4,901 5,074 5,119 5,379 5,669 5,979 6,286 6,582
TTS - operating expenses (3,233) (2,445) (2,368) (2,411) (2,429) (2,592) (2,784) (2,994) (3,211) (3,421)
TAH - operating expenses (2,328) (1,547) (1,554) (1,650) (1,686) (1,725) (1,770) (1,813) (1,848) (1,881)
Total operating expenses (5,561) (3,992) (3,923) (4,060) (4,115) (4,317) (4,554) (4,807) (5,059) (5,301)
EBITDA 1,384 959 978 1,014 1,004 1,062 1,115 1,172 1,227 1,281
Synergy EBITDA - - - - - - - 130 134 138
Total EBITDA 1,384 959 978 1,014 1,004 1,062 1,115 1,302 1,361 1,418
TTS - D&A (100) (84) (84) (87) (75) (78) (84) (90) (97) (103)
TAH - D&A (134) (151) (164) (174) (179) (163) (167) (171) (174) (178)
Total D&A (234) (235) (248) (261) (254) (241) (251) (261) (271) (281)
EBIT 1,150 724 730 753 750 821 864 1,040 1,090 1,138
Synergy implementation cost (110) - - - - -
TTS - Interest expense (94) (97) (83) (51) (38) - - - - -
TAH - Interest expense (90) (99) (94) (76) (70) (77) (80) (66) (58) (54)
Foregone interest on cash - - - - - - - - - -
Interest on new debt - - - - - (77) (71) (64) (58) (57)
Amortisation of financing fees - - - - - 0 0 0 0 0
Net interest (184) (196) (177) (127) (108) (154) (151) (130) (116) (111)
Pre-tax income 966 528 553 627 642 667 713 911 974 1,027
Income tax (288) (146) (175) (35) (188) (200) (214) (273) (292) (308)
NPAT 678 382 377 592 453 467 499 637 682 719
TAH shares 835 835 835 835 835 835 835 835 835 835
Shares issued - - - - - 1,172 1,172 1,172 1,172 1,172
Total TAH shares 835 835 835 835 835 2,007 2,007 2,007 2,007 2,007
New equity value 4,143 4,143 4,143 4,143 4,143 9,956 9,956 9,956 9,956 9,956
TAH standalone EPS ($/share) 0.41 0.18 0.18 0.40 0.20 0.24 0.25 0.27 0.28 0.29
Pro-forma EPS ($/share) 0.23 0.25 0.32 0.34 0.36
Accretion/dilution (3.09%) 1.39% 19.63% 22.27% 24.81%

43. 43
Debt pay down schedule and key ratios
The merged entity has sufficient cash flow to service the debt and the leverage ratios remain strong
A$m
Debt paydown schedule FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Net income 467 499 637 682 719
D&A 241 251 261 271 281
Changes in WC (5) 79 86 97 85
Cash flow from operations 703 829 984 1,050 1,084
Capital expenditures (266) (277) (289) (300) (310)
Existing principal debt repayment - (390) (117) (138) -
Cash flow available for debt repayment 437 162 579 612 774
Beginning transaction debt balance 1,392 1,284 1,170 1,050 923
Additional borrowing / (paydown) (108) (114) (120) (127) (134)
Ending transaction debt balance 1,284 1,170 1,050 923 789
Beginning existing debt balance 1,080 1,580 1,191 1,074 936
Additional borrowing / (paydown) 500 (390) (117) (138) -
Ending existing debt balance 1,580 1,191 1,074 936 936
Total debt balance 2,865 2,361 2,124 1,859 1,725
Total cash balance 1,015 1,015 1,015 1,015 1,015
Key ratios FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Revenue growth 5.09% 5.39% 5.47% 5.14% 4.70%
EBITDA margin 19.74% 19.67% 21.77% 21.65% 21.55%
EBIT margin 15.26% 15.24% 17.40% 17.34% 17.29%
Total Debt / EBITDA: 2.70 x 2.12 x 1.63 x 1.37 x 1.22 x
Net Debt / EBITDA: 1.74 x 1.21 x 0.85 x 0.62 x 0.50 x
EBITDA / Net Interest Expense: 6.91 x 7.39 x 10.03 x 11.75 x 12.77 x
Post deal Total Debt / Equity: 0.29 x 0.24 x 0.21 x 0.19 x 0.17 x
Total Debt / Capital: 0.22 x 0.19 x 0.18 x 0.16 x 0.15 x
Net Debt / Equity: 0.19 x 0.14 x 0.11 x 0.08 x 0.07 x

44. 44
Leveraged buyout assumptions
Basic assumptions, debt assumptions and sources and uses schedule
Leveraged buyout assumptions
Basic assumptions
EBITDA exit multiple (x) 14.00 x EBITDA Margin 20.00%
Target share price $3.64
Premium paid 17.00%
Offer share price $4.26
Current valuation Purchase valuation of target
Equity value 5,331 Equity value 6,237
Enterprise value 6,372 Enterprise value 7,278
EV / Revenue (FY16A) 2.18 x EV / Revenue (FY16A) 2.49 x
EV / EBITDA (FY16A) 12.84 x EV / EBITDA (FY16A) 14.67 x
EV / Revenue (FY17E) 2.04 x EV / Revenue (FY17E) 2.33 x
EV / EBITDA (FY17E) 11.90 x EV / EBITDA (FY17E) 13.60 x
Fees & other assumptions Transaction funding Funds required
Advisory fees 1.50% Debt 58.00% Equity purchase price 6,237
Debt issuance fees 2.00% Equity 42.00% Plus: debt refinanced 1,124
Legal & other fees 0.50% Less: excess cash (111)
Minimum cash balance 83 Total (excl. fees) 7,250
Maximum cash available 111
Debt assumptions
Debt assumptions % $m Other debt assumptions Interest Principal Term
Total debt used 58.00% 4,205 Senior notes 3.60% 10.00% 10
Senior notes 20.00% 841 Subordinated notes 5.50% - 10
Subordinated notes 80.00% 3,364
Initial 3m BBSW 2.10%
Annual step up 0.15%
Sources and uses
Sources Uses
Senior notes 841 Equity purchase price: 6,237
Subordinated notes 3,364 Debt refinance: 1,124
Investor equity 3,274 One-time deal fee: 145
Excess cash from target 111 Capitalised financing fee: 84
Total sources: 7,590 Total uses 7,590

45. 45
Leveraged buyout model
Debt pay down schedule and cash flow forecasts
Leveraged buyout
A$m
Debt paydown schedule FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
BBSW 2.10% 2.25% 2.40% 2.55% 2.70%
Senior note interest rate 3.60% 3.75% 3.90% 4.05% 4.20%
Subordinated note intererest rate 5.50% 5.50% 5.50% 5.50% 5.50%
Beginning senior note 841 735 534 302 31
Mandatory repayment (84) (74) (53) (30) (3)
Optional repayment (21) (128) (178) (241) (28)
Ending senior note 735 534 302 31 -
Beginning subordianted note 3,364 3,364 3,364 3,364 3,364
Mandatory repayment - - - - -
Optional repayment - - - - -
Ending subordinated note 3,364 3,364 3,364 3,364 3,364
Interest paid on new debt (215) (213) (206) (197) (186)
Interest income on cash (2) (2) (2) (2) (2)
Total interest expense (217) (215) (208) (199) (188)
A$m
Cash flow statement FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Revenue 3,127 3,359 3,612 3,874 4,127
EBITDA 625 672 722 775 825
D&A (100) (84) (84) (87) (75)
Interest (217) (215) (208) (199) (188)
NPAT 215 261 301 342 393
Plus: D&A 100 84 84 87 75
Less: NWC (9) 72 79 91 80
Cash flow from operations 307 418 464 520 548
Cash flow from investing (201) (216) (232) (249) (265)
Free cash flow 106 201 232 271 283
Beginning cash 83 83 83 83 83
Plus: FCF 106 201 232 271 283
Less: Minimum cash balance (83) (83) (83) (83) (83)
Mandatory debt repayment (84) (74) (53) (30) (3)
Cash available for new debt repayment 106 201 232 271 283
Cash used for new debt repayment (106) (201) (232) (271) (31)
Beginning cash balance 83 83 83 83 83
Net change in cash - - - - -
Ending cash balance 83 83 83 83 83
Total debt ending balance 4,099 3,898 3,666 3,395 3,364
Net debt 4,016 3,815 3,583 3,312 3,281
Beginning shareholders' equity 3,129 3,344 3,605 3,907 4,248
Plus: net income 215 261 301 342 393
Ending shareholders' equity 3,344 3,605 3,907 4,248 4,642

46. 46
Leveraged buyout model
Key transactions metrics and returns calculations
Key metrics FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Revenue growth 6.91% 7.41% 7.52% 7.24% 6.54%
Operating margin 16.79% 17.50% 17.68% 17.75% 18.18%
EBITDA margin 20.00% 20.00% 20.00% 20.00% 20.00%
Total debt / EBITDA 6.55 x 5.80 x 5.07 x 4.38 x 4.08 x
Net debt / EBITDA 6.42 x 5.68 x 4.96 x 4.27 x 3.97 x
EBITDA / net interest expense 2.88 x 3.13 x 3.47 x 3.89 x 4.38 x
Total debt / Equity: 1.23 x 1.08 x 0.94 x 0.80 x 0.72 x
Total debt / Capital: 0.55 x 0.52 x 0.48 x 0.44 x 0.42 x
Net debt / Equity: 1.20 x 1.06 x 0.92 x 0.78 x 0.71 x
Net debt / Net capital: 0.55 x 0.51 x 0.48 x 0.44 x 0.41 x
Debt service coverage ratio: 0.35 x 0.70 x 0.89 x 1.18 x 1.48 x
Returns FY12A FY13A FY14A FY15A FY16A FY17E FY18E FY19E FY20E FY21E
Investor equity (3,274) - - - -
Exit price - - - - - 11,556
Debt - - - - - (3,364)
Total cash flow (3,274) - - - - 8,192
IRR 20.13%
Money on money multiple 2.50 x

47. This page is intentionally left blank

48. © 2018 Renaissance Advisory. Authorised and regulated by the Australian Prudential Regulatory Authority. All rights reserved. Renaissance Advisory is a trademark and service mark of Renaissance Advisory Inc. or its affiliates and are
used and registered throughout the world.
Renaissance Advisory and its affiliates do not provide tax or legal advice. Any discussion of tax matters in these materials (i) is not intended or written to be used, and cannot be used or relied upon, by you for the purpose of
avoiding any tax penalties and (ii) may have been written in connection with the “promoting marketing” or any transaction contemplated hereby (“Transaction”). Accordingly, you should seek advice based on your particular
circumstances from an independent tax advisor.
Any terms set forth herein are intended for discussion purposes only and are subject to the final terms set forth in separate definitive written agreements. This presentation is not a commitment to lend, syndicate a financing,
underwrite or purchase securities, or commit capital nor does it obligate us to enter into such a commitment. Nor are we acting in any other capacity as fiduciary to you. By accepting this presentation, subject to applicable law or
regulation, you agree to keep confidential the existence of an proposed terms for any Transaction.
Prior to entering into any Transaction, you should determine, without reliance upon us or our affiliates, the economic risks and merits (and independently determine that you are able to assume these risks) as well as the legal, tax
and accounting characterisations and consequences of any such Transaction. In this regard, by accepting this presentation, you acknowledge that (a) we are not in the business of providing (and you are not relying on us for) legal, tax
or accounting advice, (b) there may be legal, tax or accounting risks associated with any Transaction, (c) you should receive (and rely on) separate and qualified legal, tax and accounting advice and (d) you should apprise senior
management in your organisation as to such legal, tax and accounting advice (and any risks associated with any Transaction) and our disclaimer as to these matters.
Any prices or levels contained herein are preliminary and indicative only and do not represent bids or offers. These indications are provided solely for your information and consideration, are subject to change at any time without
notice and are not intended as a solicitation with respect to the purchase of any instrument. The information contained in this presentation may include results of analyses from a quantitative model which represent potential future
events that may or may not be realised, and is not a complete analysis of every material fact representing any product. Any estimates included herein constitute our judgment as of the date hereof and are subject to change without
notice.
48