Tabcorp stocks took a major hit last week after it reported a 58 percent drop in its first-half profits, compared to the same period last year, mostly as a result of costs associated with its $11 billion merger with the Tatts Group.
The performance of the group’s UK business, Sun Bets, also impacted the result.
Analysts expressed disappointment with Tabcorp’s year-on-year wagering revenue decline for the past quarter, which the company attributed to softer fixed odds yields.
Tabcorp chief executive David Attenborough said the company’s share of the Australian wagering market had been affected by rampant promotions and inducements offered by largely foreign-owned online bookmakers, and that he was committed to growing Tabcorp’s wagering revenue.
Tabcorp, which runs lotteries, digital betting services and exclusive retail betting in every state except Western Australia, was “well-placed” ahead of new state-based digital betting taxes of up to 15 percent that will apply to corporate bookmakers and help “level the playing field”, Mr Attenborough said.
Last week’s half-year results are the first to be handed down since the Tabcorp-Tatts merger was finalised in December and comes as the new company begins the colossal task of integrating the two nationwide businesses, their technologies and thousands of employees across wagering, lotteries, media and gaming services divisions.
“The 1H18 financial result reflects a period of reshaping the Tabcorp business for sustainable growth. This includes implementing the combination with Tatts, exiting Luxbet and Odyssey Gaming Services, and our ongoing investments in areas such as our digital capability, customer acquisition and the risk management and compliance framework,” Mr Attenborough said.
“The fundamentals in Tabcorp’s Wagering business remained strong in the first half, with good turnover growth and a strong uplift in digital turnover and customer acquisition.
“Tabcorp’s Gaming Services business continued to grow, while Keno had an improved second quarter and is building momentum in digital sales.
“The diversification benefits that the Tabcorp-Tatts combination brings were highlighted by the six-month financial results of the Tatts Group businesses. Tatts’ Lotteries and Gaming businesses delivered strong earnings growth, while the Wagering performance reinforces the opportunity we have in successfully integrating our two wagering businesses.
“Tabcorp is well placed to compete in the evolving regulatory landscape. This includes the introduction of point of consumption taxes, and restrictions on credit betting, advertising, inducements and live betting.”
Tabcorp said that it expects the Tatts merger to deliver at least $130m per annum, and Attenborough said the company was now looking at all the benefits the merge would bring.
“Now that the combination with Tatts has been completed, we are focused on delivering the significant value and other benefits that will flow to shareholders, customers and our racing and venue partners,” he said.
“We have reshaped the business and have created a strong platform for sustainable growth, with a clear set of priorities to drive growth across each of our businesses. Our focus on ensuring the highest levels of regulatory compliance will continue as we deliver on this agenda.
Sources: SMH, Brisbane Times, The West