Tabcorp Back In The Black

By Glenn Dyer | More Articles by Glenn Dyer

As a result capable of showing us how the merger with Tatts is going, the 2017-18 figures from Tabcorp was next to useless.

But investor still gave it a solid thumbs up as they saw value through the smokescreen of more write-offs. Tabcorp shares jumped 7.5% at the close $4.84 yesterday.

Final dividend is 10.0 cents a share, fully franked, taking the full year ordinary dividend to 21.0 cents per share, fully franked Tabcorp revealed a net profit of $28.7 million for the year to June, after 2016-17’s outcome was marred by costs related to its merger with Tatts, legal battles and the weak Sun bets joint venture with News Corp in the UK.

But Sun Bets again starred (as warned last month) in another round of one off losses and higher costs.

The latest results – up from a $20.8 million loss a year ago – featured $217.5 million of one offs, including additional merger costs and $71 million of extra costs related to the loss-making Sun Bets and plus the impact of closing the Luxbet operations last December.

Full-year revenue jumped 71% to $3.83 billion from $2.22 billion a year earlier simply due to the additional revenues from Tatts. On a pro forma basis – adjusting to account for the impact of the Tatts takeover and excluding Sun Bets – revenue was up 2.5% to $5.11 billion and earnings before interest, tax, depreciation and amortisation rose 2.8% per cent at $989.2 million.

Revenue from Tabcorp’s wagering and media businesses was steady at $2.462 billion and remains the heart of the company.

TAB revenue growth was up 2.5%, boosted by digital sales, while UBET revenues declined by just under 1%.

TAB’s online revenue rose 16.3%, with a digital turnover of $5 billion, compared to a 3.3% fall in revenue at retail shopfront venues. Digital sales also rose strongly in Tabcorp’s lotteries business, growing by 27.8% and now make up 17.7% of total lottery sales.

"During the year we accelerated digitalisation across the company, launched new products and implemented new licences," chief executive David Attenborough said in a statement.

“The group delivered a positive second-half performance and we are well positioned for profitable growth and sustainable returns to shareholders,”he said.

"The integration of the two businesses is on track, with initial business improvements and cost initiatives implemented. We have taken decisions to underpin $50m of EBITDA synergies and business improvements in FY19 and are on target to deliver at least $130m in FY21. We are focused on delivering the substantial value the combination is expected to create for shareholders, customers, the racing industry and venue partners.

Mr Attenborough said: “Our focus in FY19 is on managing integration, as well as executing sustainable growth initiatives across each of our three businesses. We will continue to invest in the powerful mix of our digital and retail channels, as well as new product initiatives. Tabcorp is well placed to grow by using our channels, brands and people to consistently deliver great customer experiences.

"We remain very focused on unlocking the benefits from the Tabcorp and Tatts combination for our many stakeholders. A key part of bringing the two businesses together involves building a strong and shared organisational culture. We’re making good progress on this priority.

“We will also continue to prioritise the highest standards of regulatory compliance across the Group and maintain a disciplined approach to operating expenditure, capital investment and balance sheet management” Mr Attenborough promised.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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