Tabcorp details ‘historic’ FY22 as demerger completed but revenues stall

Successfully completing the demerger of its Lotteries and Keno business from the Wagering and Media unit, Tabcorp has provided an update on wider commercial success throughout the 2021/22 financial year (FY22).

In its financial statement to the ASX, Australia’s largest betting and gaming enterprise reported revenues from both divisions separately, listing Lotteries and Keno as ‘discontinued operations’.

Income for Wagering and Media – listed as ‘continuing operations’ – was revealed as $2.37bn, a 4.3% drop on 2020/21 earnings of $2.48bn, alongside EBITDA of $381m (FY21: $487.2m), a decline of 21.7%.

The Wagering and Media division consists of four different businesses, two focused on betting and two focused on media – specifically horse racing and sports content distribution – resulting in two diversified revenue streams.

These businesses are the TAB omni-channel betting brand, Premier Gateway International (PGI) tote and pool provider, the Sky Media racing and sports broadcasting network and the US-based Sky World Racing international racing distribution channel. 

As expected due to the aforementioned marginal decline in total Wagering and Media revenue, income from betting fell by 11.7% to $1.72bn ($1.95bn), but this blow was significantly softened by a huge uptake in media revenue to $454m ($341m).

The group has attributed the hit to its revenue and profits primarily to the demerger, and Adam Rytenskild, Managing Director and CEO, and Bruce Akhurst, Chairman and independent Non-Executive Director, highlighted further ‘disruptive conditions’.

“During FY22, the COVID-19 pandemic continued to disrupt our business, with both the Wagering and Media and Gaming Services businesses heavily impacted in the first half of the year by retail and venue shutdowns in our largest markets of NSW and Victoria,” the executives’ joint statement read.

“In addition, unprecedented wet weather in the second half led to a record number of race abandonments and rain affected race tracks further impacting our Wagering and Media business.”

For discontinued operations/Lottery and Keno, revenue stood at $5.6bn – representing very little change from the year previously when revenues were just under $5.7bn, meaning a 1.4% year-on-year decrease.

Overall, Tabcorp recorded a net loss before income tax and finance costs from its continuing operations (Wagering and Media) of $75.1m, a significant setback when compared to the $66.9m profit recorded in FY21.

As the company stabilises in the aftermath of the demerger, Tabcorp remains optimistic about its long-term outlook and the recovery of its revenue streams, as Rytenskild and Akhurst detailed confidence in its ability to continue creating value for shareholders. 

Tabcorp’s strategy moving forward includes a new digital focus, with the company identifying a need to ‘urgently improve digital journeys’, influencing the decision to launch a new TAB App for the TAB betting business, whilst also seeking to ‘maximise retail and oncourse channels’.

The group explained: “In FY23, Tabcorp is focused on transforming the Wagering and Media business into a more competitive and profitable business, and executing on a number of key deliverables at pace.

“This includes the launch of the new TAB App (targeted for September 2022), follow-on new product releases, and improving our customer experience and marketing effectiveness.”

Providing some relief to the company as its respective Wagering and Lotteries divisions felt the impact of the demerger was a positive performance for its MAX gaming enterprise, a provider of end-to-end products and gaming services solutions for venues and officials.

The businesses as a whole reported revenue growth of 5.3% to $192.9m (183.2m), alongside EBITDA of $75.2m ($70.7m), an increase of 6.4%, bolstered by reopening of casino venues upon easing of lockdown measures.

Concluding its report, Tabcorp maintained confidence in its prospects post-merger, describing 2022 as the start of a year ’‘multi year transformation’ of the firm into a more competitive business under a ‘renewed Board and leadership team’, as Rytenskild takes the reins from outgoing CEO David Attenborough.

The executives’ joint statement concluded: “In the first twelve weeks since the Demerger we’ve made good progress and have positive early momentum in transforming Tabcorp into a more competitive and growing business. We have a clear plan including specific actionable priorities for FY23, which we are executing at pace.”

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