Tabcorp 2019/20 First Half Results; Group Result Driven by Excellent Lotteries Performance
- Group revenue up 4.4% and EBITDA1 up 2.1% vs pcp
- Interim dividend maintained at 11.0 cps, fully franked
- Integration in the final phase:
— EBITDA benefits expected to be $100m in FY20 (previously $90m)
— On track to deliver FY21 target of $130m-$145m in recurring EBITDA benefits
— Total one-off integration costs expected to be $135m pre-tax (previously $95m)
- Step change in Lotteries & Keno performance sustained with another excellent result; strong growth in both digital and retail; more than 300,000 new registered customers in the past six months
- Wagering & Media core TAB business competing well while also transforming in a soft market; uplift in UBET performance anticipated once customers benefit from access to the full TAB offering post integration
- Gaming Services business under review to improve performance, including capital
MANAGING DIRECTOR & CEO COMMENTARY
“Tabcorp’s diversified group of businesses delivered a solid overall result in the first half of FY20.
We grew group revenues by 4.4% in an environment of soft discretionary spending, while undertaking significant integration activity. We also welcomed another 300,000 active registered customers during the period,” Tabcorp Managing Director and CEO David Attenborough said.
“Another excellent Lotteries & Keno result drove the Group’s earnings growth, and this business continues to go from strength to strength. Lotteries’ digital turnover was up almost 40% with retail up over 5%, evidence of how favourably customers and retail partners are responding to our integrated omni-channel strategy.
“This was a challenging half for our Wagering & Media business. TAB is competing well while also transforming in a soft market. The ex-UBET business does not yet have the broader set of products or services to win customers in a highly competitive environment. However, the integration of TAB and UBET is in its final phase and we look forward to providing the superior TAB experience to customers in Queensland, South Australia, Tasmania and the Northern Territory. We remain excited by the opportunity for this business once fully integrated.
“Gaming Services’ performance was unsatisfactory. We are reviewing this business to improve performance and realise its full potential.
“We are in the final phase of the long and complex process that has been the Tabcorp-Tatts integration and remain on track to deliver our FY21 target of EBITDA synergies and business improvements of between $130m and $145m.”
BUSINESS UNIT COMMENTARY
LOTTERIES & KENO
Lotteries & Keno revenues were $1,584.3m, up 12.4% and EBITDA was $294.9m, up 16.0%.
The step change in Lotteries performance through FY19 continued with another excellent result in 1H20 driven by active management of the game portfolio, and digital and retail growth.
Lotteries’ omni-channel strategy gathered momentum in the half. Digital turnover grew 39.8%
(representing 26.7% of total Lotteries turnover, versus 15.6% of total Lotteries turnover just two years ago). Retail turnover grew 5.2%.
Investments in personalised marketing and strong jackpot activity, including a record $150m
Powerball jackpot, helped drive customer acquisition. The business now has 3.6m active registered customers, having acquired 300,000 in the period.
Keno revenues grew 0.9% despite cycling high jackpot activity in the pcp.
The healthy performance of the Lotteries and Keno business drove a $101.5 million increase in group taxes and levies paid to state and territory governments by Tabcorp, which totaled $1,094.0m in 1H20.