Tabcorp has reported a 58 per cent drop in its first-half profits, compared to the same period last year, mostly as a result of costs associated with its merger with the Tatts Group.
Tabcorp reported that its profit for the six months to December 31 were $24.6m, compared to $58.9m in the prior corresponding period. The performance of the group’s UK business, Sun Bets, also impacted the result.
Despite the disappointing result, Tabcorp’s CEO and Managing Director, David Attenborough said that with the Tatts merger now complete, the company was positioned well for the future.
“[The first half of the 2018 financial year] was an important half for Tabcorp as we completed the combination with Tatts Group, bringing together two highly complementary businesses. The combination positions us well to invest, innovate and compete in a rapidly evolving environment,” Attenborough said.
“The 1H18 financial result reflects a period of reshaping the Tabcorp business for sustainable growth. This includes implementing the combination with Tatts, exiting Luxbet and Odyssey Gaming Services, and our ongoing investments in areas such as our digital capability, customer acquisition and the risk management and compliance framework.
“The fundamentals in Tabcorp’s Wagering business remained strong in the first half, with good turnover growth and a strong uplift in digital turnover and customer acquisition. This was pleasing in a highly competitive wagering market in which competitors aggressively pursued customer acquisition ahead of regulatory change. The Wagering business has made strategic investments in digital commissions and venue partnerships. While these investments impact variable contribution, they have strengthened our venue partnerships and the sustainability of our Wagering business.
“Tabcorp’s Gaming Services business continued to grow, while Keno had an improved second quarter and is building momentum in digital sales.
“The diversification benefits that the Tabcorp-Tatts combination brings were highlighted by the six-month financial results of the Tatts Group businesses. Tatts’ Lotteries and Gaming businesses delivered strong earnings growth, while the Wagering performance reinforces the opportunity we have in successfully integrating our two Wagering businesses.
“Tabcorp is well placed to compete in the evolving regulatory landscape. This includes the introduction of point of consumption taxes, and restrictions on credit betting, advertising, inducements and live betting.”
Tabcorp said that it expects the Tatts merger to deliver at least $130m per annum, and Attenborough said the company was now looking at all the benefits the merge would bring.
“Now that the combination with Tatts has been completed, we are focused on delivering the significant value and other benefits that will flow to shareholders, customers and our racing and venue partners,” he said.
“We have reshaped the business and have created a strong platform for sustainable growth, with a clear set of priorities to drive growth across each of our businesses. Our focus on ensuring the highest levels of regulatory compliance will continue as we deliver on this agenda.
“At the same time, we will remain committed to a disciplined approach to operating expenses and capital investment to deliver sustainable returns to our shareholders.”