Tabcorp back in profit
Tabcorp chief David Attenborough says the failure of the wagering giant’s push into the UK market will not stop it seeking overseas ventures as he confirms the US remains on his radar.
Mr Attenborough made the comments after reporting that the company swung to a $28.7 million annual profit, after recording a $20.8m loss last year. The results also showed that revenue increased 71.4 per cent to $3.8 billion.
The return to profit boosted the company’s share price today, which is 7.6 per cent higher at $4.84.The annual result was impacted by a $217.5m significant items expense, which included the merger with Tatts Group and the exit of Sun Bets, a joint venture with News UK.
Tabcorp said it would pay News UK, a subsidiary of The Australian’s owner, News Corp, about $71m to exit the Sun Bets business.
“The UK market was a good growing market and the area of operations was a core area of operations for us … we are disappointed it didn’t meet the targets,” Mr Attenborough said.
“We made the right decision to exit.”
The Tabcorp chief added that the failure of the Sun Bets venture did not put him off other opportunities overseas.
“We continue to make sure we have a very rigorous approach to understanding the risks and opportunities and put in place the right resources and expertise behind each opportunity,” Mr Attenborough said.
“We want to make sure we get these things right.”
Mr Attenborough said the company was actively monitoring the US market, which has loosened regulations around wagering.
“We are focused on the integration of Tatts, which is our number one priority, but we continue to look and monitor the opportunity in the US and certainly if the right opportunity comes up we would look at it,” he said.
Tabcorp, labelling its results as a “company-defining year”, said post its takeover of Tatts Group it was now a top 50 ASX company with annualised revenues in excess of $5bn. It said synergies and business improvements from the combination were on track and had delivered $8m in fiscal 2018.
Mr Attenborough said he was confident the company would hit the target of realising $130m in synergies by 2021.
He said 2018 had been the most exciting and challenging year of his 30-year career in wagering.
“The scale of putting together the Tabcorp and Tatts businesses and creating this $10bn company has been incredibly challenging but also massively exciting,” Mr Attenborough said.
“I always loved to be challenged but this has been a lot of heavy lifting. It has been a huge amount of work by the whole team.
“We are entering fiscal 2019 with our organisation restructured, clear accountability and some real momentum and that is despite the complications of bringing together two large organisations.”
Mr Attenborough added that the biggest challenge of combining two companies was merging cultures but he said Tabcorp and Tatts had similar cultures, which he said had alleviated concerns around that element.
“We are really pleased with the way the integration is going. We are feeling confident now,” he said.
Mr Attenborough also highlighted that fiscal 2018 had been a year of positive change for the gambling sector following the roll out of the point of consumption tax in three states and new regulations around advertising and in-play betting.
“It is now a much fairer landscape in which we can operate and compete,” he said.
“We would like to see post introduction of the point of consumption tax a settling down and a stable regulatory landscape that we can then operate in with some certainty going forward.”
The annual results showed that in Tabcorp’s wagering and media division, digital turnover grew 16.3 per cent to $5bn, which it said offset a decline in retail turnover, which was down 3.3 per cent to $6bn.
Tabcorp highlighted that it achieved successful results for the Soccer World Cup, which helped boost TAB and UBET active account customer numbers by 8 per cent to almost 720,000.
In the lotteries and keno division, revenues grew 4.7 per cent to $2.3bn, with digital sales growing 27.8 per cent and accounting for 17.7 per cent of total lottery sales. Tabcorp said it had more than 2.9m registered online lottery players.
Mr Attenborough said Tabcorp’s long-term strategies were about digital integration with the retail environment.
Tabcorp declared a final dividend 10c-per-share, fully franked, taking the full year ordinary dividend to 21c-per-share, fully franked.