TABCORP Holdings Limited has announced a normalized net profit after tax of $264 million, up 0.8 per cent for the half year to 31 December 2009.

Normalised earnings per share were 43.5 cents, down 11.9 per cent, following capital management initiatives in the previous financial year. The reported net profit after tax was $257.9 million, down 2 per cent.

Normalized net revenue was $2,190.5 million, up 2.6 per cent. Revenue was driven by good performances in Wagering and at Star City Casino but held back by soft trading in the Queensland casinos. Gaming division revenue was flat. Expenses were up 2.9 per cent.

The group incurred new race fields charges in Wagering and higher gaming taxes in Queensland casinos totaling $13 million after tax.

These new charges were offset by a lower effective income tax rate in the first half, primarily due to research and development tax credits and the release of provisions following resolution of the long-running Star City pre-paid rent dispute with the Australian Taxation Office.

Tabcorp declared a half-year dividend of 30 cents per share, which will be fully franked and payable on 22 March 2010 to shareholders registered at 15 February 2010.

Chairman John Story said: “Overall, this is a sound result in variable economic conditions and a difficult regulatory environment.

“The company is progressing initiatives and investments in each of the operating divisions that are showing promise and provide a good foundation for growth in the coming years.”

Tabcorp 2010 half year Highlights

• Normalised net profit after tax $264.0 million, up 0.8 per cento Revenues up 2.6%

o Expenses up 2.9 per cent

o Earnings per share 43.5 cents, down 11.9 per cent, following capital raising

• Reported net profit after tax $257.9 million, down 2 per cent.

• Dividend 30 cents per share

• Strong balance sheet ratios maintained

• Strategic initiatives progressing to plan. Star City casino redevelopment on track

Group performance overview

Division performance

Measured in normalised Earnings Before Interest and Tax (EBIT), the divisional results for the six months to 31 December 2009 were:

• Casinos: EBIT $147.8 million, down 10.9 per cent.

Earnings at Star City in New South Wales increased on the back of 5.2 per cent revenue growth. Gaming revenues grew strongly as the business expanded its product offering and leveraged its investment in technology.

The redevelopment of Star City casino is progressing to plan. In the first half, the casino opened a new Sports Theatre and dedicated Poker Room. In the coming weeks, a new Baccarat area and noodle restaurant will be opened.

The strong performance in New South Wales was more than offset by a reduction in earnings in Queensland where the business faced a contracting gaming market. Revenues were down 1 per cent, despite Tabcorp’s three properties gaining market share. The results in Queensland were further impacted by an increase in gaming taxes of $13 million.

Casino expenses grew by 2.4 per cent.

• Wagering: EBIT $147.5 million, up 1.4%.

Wagering revenues were up 4.6 per cent with growth in all lines of business and channels other than phone betting. Expense growth was 2.2 per cent.

Revenue was strong in fixed odds betting, up 23.3 per cent, which was assisted by very solid online turnover growth (including Luxbet.com), up 37.8 per cent. Retail wagering turnover grew by 2.5 per cent.

During the half, Tabcorp progressed important strategic initiatives. The company expanded fixed odds coverage of racing in Victoria and New South Wales, launched a loyalty program in its New South Wales business and entered into a partnership with Australia Post that will give account holders access to their accounts nationwide.

In addition, Tabcorp announced the expansion of Sky Racing from one channel to three channels, offering customers more choice and a dedicated thoroughbred racing channel.

These initiatives are designed to improve Tabcorp’s wagering offer to customers and strengthen its competitive position in a national market.

Last year, the racing industries in each state announced the introduction of new race fields arrangements, under which they would charge product fees to wagering operators for betting on their racing product. In the first half of the financial year, race fields payments increased by $6 million compared to the first half of 2009.

This increase is consistent with Tabcorp’s previous estimate that the annual cost of the new fees is approximately $30 million.

Distributions to the racing industry grew in the first half, with the Victorian racing industry receiving $176.3 million, up 2 per cent, and the New South Wales industry receiving $126.7 million, up 2.8 per cent.

These distributions exclude the additional race fields fees paid by the company.

• Gaming: EBIT $145.1 million, up 0.7 per cent.

The gaming market in Victoria experienced much tougher conditions, following several years of strong growth. Revenues from the Victorian gaming business fell by 1.1 per cent, while market share increased to 53.2 per cent.

Revenues from Keno grew by 4.6 per cent following the successful expansion into hotels in New South Wales.

Expense growth was 3.1 per cent.

Chief Executive Officer Elmer Funke Kupper said that the company had responded well to the uncertain economic conditions without compromising its long term investment program.

“We adjusted our short term plans to ensure that the company delivers acceptable financial results and improves its market position in its key businesses. We were encouraged by the performance of Star City casino and our wagering division.

“Our overall casino result has been affected by a weak Queensland market and higher gaming taxes. At the same time, we continued with our investment programs in Casinos and Wagering. These programs are on track and are starting to have a positive impact on our performance.”

Tabcorp outlook

Mr Funke Kupper said Tabcorp was performing well in the difficult economic conditions.

“We expect conditions to remain somewhat uncertain for the remainder of the 2010 financial year as government stimulus measures are wound down and higher interest rates affect discretionary income. In this environment, we will maintain our current focus on operational performance and deliver the key investment programs we have under way.

“2010 is an important year for the company, particularly in wagering. Greater clarity will emerge in the regulatory environment and we expect that the Victorian Government will award the post-2012 Victorian wagering license.

“These events will allow us to chart the future direction of the company with greater clarity,” Mr Funke Kupper said.

TABCORP MEDIA RELEASE

For more information:

Financial analysts: Matt Bekier, Chief Financial Officer, 03 9868 2195

Media: Bruce Tobin, Group GM Corporate Affairs, 03 9868 2508