Lockdowns hamper Tabcorp as net profit falls in H1

Tabcorp anticipates closing the proposed demerger of its lotteries and keno business, to be known as The Lottery Corporation, by June of this year, as the firm examines a continuing impact from COVID-19 restrictions through the year’s first half.

The company says that the proposal, which is expected to include one-off costs of A$275m, is expected “to enable two significant businesses to operate independently with focused management and to trade at market values which reflect their individual characteristics”.

This comes as the aforementioned lotteries and keno division drove the group’s top-line growth through H1, securing a 10.9 per cent revenue increase to A$1.78bn (2020: A$1.6bn) to nudge its group-wide performance up 2.2 per cent to A$2.93bn (2020: A$2.87bn).

Group-wide net profit declined ten per cent to A$175m (2020: A$185m), with EBITDA dropping 31 per cent to A$529m (2020: A$560m).

Despite Tabcorp’s lottery retail network not being materially impacted by pandemic restrictions, Keno was adversely impacted by venue closures as revenue dropped 9.8 per cent to A$119m.

Mitigating these impacts, the Tatts lottery division registered a five per cent increase in active customers to 3.8 million, as well as securing a 28 per cent increase in online sales.

“The record result from the lotteries and keno business again showcased the broad appeal of the business’ much-loved products and brands, and the success of its omni-channel strategy,” noted David Attenborough, Tabcorp MD and CEO.

The company’s gaming services division saw revenue rise 6.8 per cent to A$78m (2020: A$73m) with EBITDA down 4.5 per cent to A$21m (2020: A$22m), the former of which is aligned to a reduction in lost days in Victoria and small exposure to closures in New South Wales.

Attenborough added: “Gaming services maintained its ethos of supporting its licensed venue partners in challenging times and provided significant fee relief to customers whose trade was impacted by COVID-19 restrictions. The business only resumed its full fee model in December 2021. “

Elsewhere, the wagering and media business unit saw revenue and EBITDA drop 9.8 per cent and 34.8 per cent to A$1.07bn (2020: A$1.18bn) and A$148m (2020: A$227m), respectively.

This, the company stated, was “heavily impacted” by lost days within its largest market of NSW, which brought a turnover decrease of 38 per cent.

“While the wagering and media business was significantly impacted by the retail lockdowns imposed in NSW and Victoria, its performance across all channels improved once restrictions were lifted,” Attenborough commented.

“The wagering and media business, and its digital performance, is much stronger when venues are open and customers can participate fully in the omni-channel experience, which is a key strategic point of difference.”

Further operational highlights saw Tabcorp maintain that the business was on course to deliver on its target of A$25m in yearly EBIT savings.

“As well as progressing the demerger of The Lottery Corporation, we are continuing to execute distinct growth initiatives for each of the businesses,” Attenborough added.

“These include the launch of a new TAB app in 20225, which aims to position TAB as the first choice for digital wagering play. We will also introduce a change to Oz Lotto that is expected to create larger and more frequent jackpots in line with its promise to deliver ‘Big Aussie Fun’”.