Tabcorp revenue shrinks 4.8% in FY 2019/20 as Covid-19-related closures hit financials

Tabcorp has reported a full-year 2019/20 group revenue decline of 4.8% year-on-year (YoY) after Covid-19-related closures caused double-digit declines in its sports betting, digital and gaming services divisions.

Group revenue amounted to A$5,224m (£2.8bn), with an 11.5% YoY decline in company EBITDA, which fell to A$995m (£545m) during the same period.

Tabcorp has declared a statutory net loss after tax of A$870m (£477m) for FY2019/20, which includes a non-cash goodwill impairment charge of $1,090m (£597m) relating to the wagering and media and gaming services businesses it acquired from Tatts Group.

Wagering and media department revenue decreased by 10.1% YoY during the period, falling to A$2,084m (£1.1bn), with the division being “heavily impacted” by Covid-19-related closures both in Australia and internationally.

Tabcorp has said the pandemic has accelerated the channel shift to its digital operations, with digital wagering turnover growing 3.8% in FY20 to $7.1bn (£3.8bn) and retail turnover declining by 27.9% to $5.4bn (£2.9bn) during the same period.

This shift marks the first occasion digital turnover has exceeded retail turnover in Tabcorp’s wagering business across a full year.

Tabcorp has also confirmed the successful integration and migration of former Tatts group betting brand UBET and its customer base into its TAB Digital platform, hailing it as a “significant milestone” in the merger of the two businesses.

Wagering call centres and other infrastructure have also been consolidated as part of this programme.

“Ex-UBET customers now have access to a more attractive portfolio of products and services including Venue Mode (digital in-venue betting) and extra tote and fixed-odds options. This paves the way for the required lift in competitiveness,” the Tabcorp FY2020 report explained.

Revenue from its gaming services department, which operates its retail machine portfolio, fell by 27.3% YoY to A$221m (£121m) as the division was heavily impacted by the temporary closure of venues due to Covid-19 in March.

Gaming services revenue was also impacted during the first half of the year by several contract expirations.

Tabcorp has confirmed that a high-level operational review of the gaming services department has been completed and is now being implemented with the aim to deliver “a simplified operating structure and reduce costs”.

Lotteries and keno revenue bucked the trend of declines, rising 1.8% YoY to A$2,917m (£1.5bn), despite a reduced number of lottery jackpots during the period.

Retail turnover from lotteries declined 4%, while digital turnover grew strongly and accounted for 28% of total lottery turnover, up 4.5% from FY2019.

Following the integration of the UBET business, Tabcorp has said it will undertake a three-year, business-wide optimisation programme “to deliver significant cost savings and enhanced operational capability” within its business.

Key focus areas include operating model changes; process simplification and redesign; data and digitisation improvements; and maximising value from its vendor spend and property footprint.

“There continues to be uncertainty associated with Covid-19 in terms of both the severity and duration of the impact. Our focus is on positioning Tabcorp to emerge strongly in the post Covid-19 environment,” CEO David Attenborough explained.

“Our priority is to navigate the pandemic by executing strategies that support our people, partners and customers, while maximising value for our shareholders.

“With the integration of Tatts substantially complete, we are focused in FY21 on capturing the value from the digital opportunity across lotteries, keno and wagering and on unlocking the value of a more competitive TAB,” he added.

Following the lower results, Tabcorp has suspended the payment of its final dividend payable to shareholders for FY2019/20 but has issued $600m in new share capital.