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Australia – Tabcorp’s revenues super-charged by Tatts’ $176m contribution

By - 12 February 2018

Having completed its acquisition of rival Tatts Group, Australian betting giant Tabcorp saw an 18.7 per cent increase in revenue for the six months to 31 December 2017 to AU$1.38bn.

The Tatts Group brought in around AU$176.3m in revenue for the 18 days of integration from 14 December 2017.
Overall, Tabcorp reported a net loss after income tax for the 2017 financial year of $20.8m. This year’s result was adversely impacted by significant items after tax of $199.7m.

The Group made investments in acquiring Intecq, establishing Sun Bets, and progressing the combination with Tatts Group, which we expect to complete by the end of the year. The Group also strengthened its risk management and regulatory compliance capability, which is scalable in the context of the proposed combination with Tatts Group. These are significant initiatives we have undertaken to better position Tabcorp to deliver sustainable growth. At the same time, we accelerated our digital investment in our Wagering and Media and Keno businesses, while Gaming Services continued to expand geographically. The increase in operating expenses was driven by the acquisition of Intecq and planned investments in capability, technology, marketing, risk and compliance.

Chairman Paula Dwyer said: “FY17 was a strategically important year for Tabcorp. Going into FY18 Tabcorp is better positioned to deliver long-term value for our shareholders and business partners. In October 2016, we reached agreement with Tatts Group to combine our two businesses to create a world-class diversified gambling entertainment business. The Boards of both companies expect the combination to deliver material benefits, not only for Tabcorp and Tatts shareholders, but for our stakeholders including the racing industry, business partners, employees, customers and governments. We are continuing to make good progress on the relevant regulatory and industry approvals and are aiming to complete the transaction by the end of 2017. We have continued to accelerate the digital transformation of all our businesses.

“Our long-term strategy of investing in digital capability to complement our retail footprint and drive growth has allowed us to remain relevant and competitive in the dynamic wagering category. During the year we also introduced a new digital presence for Keno to keep it fresh and relevant to today’s consumers. In August 2016, we launched our UK start-up business, Sun Bets in partnership with News UK. The strategic intent of Sun Bets is to gain a position in the attractive UK online wagering and gaming market, using the powerful News “Sun” brand, while developing and building a wagering and gaming platform that Tabcorp can replicate in new growth markets in the future. The initial performance of Sun Bets has reminded us of the challenges of start-ups. As a consequence we have reviewed its operating model, capability and financial plans and have undertaken a range of initiatives to maximise the prospects of success in FY18 and beyond.”

David Attenborough, managing Director and CEO, added: “Our core businesses – TAB, Media, Gaming Services and Keno – are in good shape. However, there were some discrete parts of the Group that underperformed during the year, namely Luxbet, Trackside and Sun Bets. We have clear plans to improve performance across all of these areas in FY18. In Wagering and Media, the key performance metrics in our core TAB business were strong with digital turnover growth of 13.9 per cent and fixed odds revenue growth of 15 per cent. Across all of our businesses, we made good progress towards harnessing the power of our integrated digital and retail platforms. In Wagering and Media, we launched a digital commissions model for our retail partners. This enables venues to benefit from ongoing commissions from customers that they sign up to a TAB account, as well as on bets that customers place in their venue through TAB’s digital channels. The initiative is significant as it aligns our venue partners with our digital growth strategy.

“We also launched new and innovative products such as Quaddie Cash Out and Check and Collect, which differentiate us in a competitive market. We continued to ensure the appeal of our Sky Media channels, securing key media rights in Western Australia and South Australia. Performance in our UK start-up Sun Bets was disappointing. We have taken steps to reset its leadership and operations to drive improved performance in FY18, and the business is focused on customer acquisition and product development. In Gaming Services, we progressed the geographic expansion of TGS, which substantially expanded its NSW presence with a five-year deal with Panthers Group covering four venues. TGS now has 10,650 electronic gaming machines under contract. Gaming Services also benefited from the acquisition of Intecq, a complementary business in the sector. Keno continued its recent transformation with Queensland joining in the pooling of jackpots between NSW, Victoria and the ACT. This creates bigger, fasterbuilding Keno jackpot pools and a more appealing customer offer. In addition, we launched the new Mega Millions game in NSW and the ACT and went live with an in-venue digital play offer in more than 200 NSW clubs.”

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