For the six-month period to 31 December 2024, Tabcorp posted group revenue of AUS$1.33 billion (£672.4 million/€812.2 million/US$846.1 million). This surpasses H1 of the previous year by 10.1%.
Awarded in December 2023, the new Victoria licence came into effect in August 2024. It grants Tabcorp exclusive rights to offer wagering and betting in Victoria for the next 20 years. While still in its infancy, the licence impact was clear to see in Tabcorp’s H1 results, published today (20 February).
The licence means Tabcorp no longer need to collaborate on the joint venture arrangement with the Victorian racing industry. Other industry funding obligations were also terminated, with Tabcorp instead paying wagering taxes and racing and sports product fees on the same basis as other operators.
Improved cost discipline at Tabcorp
Alongside this, CEO and managing director Gillon McLachlan highlighted other factors that are helping to drive growth. These include new product innovations and more “discipline” in terms of spending.
“The improvement in earnings reflects the commencement of our reformed Victoria licence, cost discipline and increased competitiveness that was amplified with new innovations during the TAB Everest, Melbourne Cup Carnival and Magic Millions,” McLachlan said.
“We are executing with a more aggressive cost and capital discipline. We’re targeting opex savings in FY25 of $30m, 50% more than our previous target. Capex is expected to be $110m-$120m, around $25m lower than previous guidance.
“As we improve execution we will transition to an evolved strategy, with a broader focus on unlocking the value which lies within our unique set of assets.”
Wagering & Media revenue tops $1.24 billion
Breaking down revenue performance in H1, Tabcorp’s Wagering & Media division reported $1.24 billion in revenue. This beats the previous year by 11.3%.
Wagering revenue was up 14.1%, helped by higher revenue in Victoria because of the new licence. Excluding this impact, wagering revenue edged up 0.8% year-on-year.
Meanwhile, media revenue increased 1.6%. Tabcorp said that this reflects growth in vision distribution, partly offset by the impact of a softer domestic wagering market on turnover-linked revenues. Incidentally, domestic turnover was 4.3% lower than the previous year.
As for Tabcorp’s other core division, Integrity Services, revenue increased by 9.7% to $88.1 million in H1. The group put this down to consumer price index-linked fee increases, a rise in the number of monitored electronic gaming terminals and growth in project work.
Tabcorp noted that the Integrity Services figure was adjusted to account for the sale of the Max Performance Solutions (MPS) business in H1 of 2024.
Tabcorp back in the black
While McLachlan outlined increased cost discipline at Tabcorp, operating expenses in H1 were 12.2% higher year-on-year. However, depreciation and amortisation was reduced by 18.6%.
Finance costs for the half hit $46 million, meaning a pre-tax profit of $38.9 million. The group paid $24.1 million in tax but drew $3.2 million back from the net impact of statutory items.
As such, Tabcorp ended H1 with a net profit of $25.3 million, which is a stark contrast to the previous year’s $636.8 million loss. However, Tabcorp in H1 of 2024 – and indeed FY24 – was heavily impacted by impairment charges.
The group also noted a 12% year-on-year rise in underlying EBITDA before significant items to $190.2 million.
“Today’s pleasing results demonstrates a company executing better,” McLachlan said. “The outcomes of an improved cadence and a culture of accountability. We have taken significant action over the last six months to improve our cost and capital discipline.
“When I joined Tabcorp, I said I was drawn to the value that can be unlocked within our unique set of strategic assets. Unlocking that value and taking a broader strategic focus will be the key to growing value for shareholders in the years ahead.”
New-look leadership team
On top of financial growth during H1, Tabcorp has made several senior hires to reshuffle the makeup of its management team. McLachlan was recently confirmed as CEO after several months as CEO-elect, while Brett Chenoweth became chairman in September.
McLachlan was appointed CEO elect in June after Adam Rytenskild resigned in March amid allegations of “inappropriate and offensive” language in the workplace. Rytenskild has since hit out at how Tabcorp handled the situation, saying he was put “six feet under” without warning.
Meanwhile, in December, Tabcorp announced changes to its executive leadership team. These included Jarrod Villani taking on the newly created role of chief commercial and media officer role.
Narelle McKenzie was also appointed chief legal officer, while Robert Fraser was named chief technology and transformation officer.
Speaking at the time, McLachlan said the new-look team represents a simpler model that will help bring the wagering team together.
Original article: https://igamingbusiness.com/finance/half-year-results/victoria-licence-drives-growth-tabcorp-h1/
