Tabcorp merger a winner

Betting giant’s profit surges after Tatts link-up

TABCORP’S profit has surged more than 12-fold to $362.5 million in the gambling giant’s first full-year of combined operations with the Tatts Group.

The betting behemoth lifted revenue by 46 per cent to $5.5 billion in the 12 months to June 30, with its biggest business, lotteries and keno, hitting a record $2.86 billion revenue following digital growth and a string of favourable jackpots on the new Powerball game, as well as at Oz Lotto and Lucky Lotteries.

The lotteries result more than offset a weaker performance by the company’s wagering and media business, which is in the first year of a threeyear integration that includes 1300 UBET retail venues in Queensland, Tasmania, South Australia and NT to TAB.

Wagering and media revenues rose 9.0 per cent to $2.3 billion on a statutory basis, with active customer numbers up 2.5 per cent to 538,000.

But income declined by 3.6 per cent on a pro-forma basis if the Tatts merger had been in place for FY18. Nonetheless, chief executive David Attenborough said the first full year of the Tabcorp-Tatts combination proved the benefits of the merger. “Our businesses have a clear set of priorities to build on their competitive advantages and drive long-term profitable growth,” he said.

Tabcorp lifted its final dividend by 1.0 cents to 11 cents per share, fully franked, for a total dividend of 22 cents.

The result came as chairman Paula Dwyer flagged she would be standing for re-election at the 2019 annual general meeting but plans to retire from the role by 2021 as part of a board renewal process. High-profile director Ziggy Switkowski has also expressed his intention to retire from the Tabcorp board by the 2020 AGM.

The company said yesterday its integration with Tatts had delivered $64 million in earnings from savings and business improvements, exceeding the company’s revised mid-year target of $55 million.

The majority of integration activities are expected to be completed by the end of FY20, with the company maintaining a target of between $130 million and $145 million in savings in FY21.

Tabcorp’s results included a $25.3 million after-tax expense, with compensation from Queensland’s new point of consumption tax more than offset by $24.1 million in implementation costs and $11.8 million in arrangement costs to Racing Queensland. An extra $20 million after-tax expense could flow if Queensland’s racing body successfully argues that UBET underpaid fees following the new tax.