Tabcorp, the prominent Australian gambling company, has finalized the demerger of its lottery operations from its wagering, media, and gaming services. The demerger resulted in the creation of two separate entities: The Lottery Corporation, which comprises Tabcorp’s former Tatts business without gaming services, and New Tabcorp, which encompasses the wagering, media, and gaming arms. With the completion of the demerger, Tabcorp now shifts its focus towards growing its digital operations and market share in the wagering, media, and gaming sectors.
Demerger Strategy and Business Restructuring:
Tabcorp’s decision to spin off its Lotteries and Keno arm follows a comprehensive strategic review that commenced in March 2021. The review explored various structural and ownership options, including the potential sale of its wagering and media business. Ultimately, Tabcorp chose to retain its wagering arm and separate its lotteries business into a new entity. The demerger allows Tabcorp to concentrate solely on its wagering, media, and gaming operations, paving the way for a strategic transformation.
Tabcorp’s Focus on Digital Growth:
Adam Rytenskild, Tabcorp’s CEO and Managing Director, emphasizes the company’s commitment to transforming Tabcorp into a competitive and growing business. The key focus moving forward is on expanding digital operations and increasing market share. The company aims to enhance the customer experience, leverage its venue and media assets, and implement structural reforms to level the playing field with offshore bookmakers. The pursuit of digital revenue market share is a central metric for the company, signifying its dedication to digital growth and success.
Financial Performance and Revenue Analysis:
Tabcorp’s financial report for the 2022 fiscal year indicates a 4.3% decline in revenue from continuing operations, excluding the demerged lottery business, amounting to AU$2.37 billion. When including the lottery business, the total revenue for the year decreased by 1.4% to $5.61 billion. The wagering and media business emerged as the primary revenue generator, contributing $2.18 billion, a 5.1% decline compared to the previous year. The decrease can be attributed to retail closures in the first half due to COVID-19 restrictions. Wagering revenue declined by 11.7% to $1.73 billion, primarily impacted by COVID-19 restrictions and event cancellations. However, media and international revenue witnessed a substantial increase of 33.2% to $454.4 million, driven by the expansion of racing and sports content distribution through digital and retail formats. Gaming services revenue showed a growth of 5.3% to $192.9 million, aided by the resumption of the full-fee model in December 2021.
Costs and Losses:
Tabcorp experienced higher spending across most areas of the group, except for a 6.5% decrease in employment expenses. Commissions and fees constituted the largest outgoing expense, rising by 7.5% to $1.18 billion. After accounting for net finance expenses of $61.1 million, Tabcorp reported a pre-tax loss of $136.2 million, an improvement from the $100.7 million loss in the previous year. The company received an income tax benefit of $17.8 million, resulting in a net loss of $118.4 million, indicating progress compared to the $160.9 million loss reported in the prior year. However, earnings before interest, tax, depreciation, and amortization (EBITDA) before significant items declined by 21.7% year-on-year, reaching $381.6 million.
Tabcorp’s Outlook and Cultural Transformation:
Despite the challenges faced during the fiscal year, including COVID-19 lockdowns, race meeting cancellations, and the complexities of the demerger process, Tabcorp aims to stabilize its digital market share and execute its transformation strategy for future growth. The company recognizes the importance of its employees in achieving these goals and is actively working to foster an innovative, bold, and unified culture that prioritizes customer-centricity and success.
Tabcorp’s completion of the demerger allows the company to concentrate on its wagering, media, and gaming operations, with a particular focus on digital growth and increasing market share. While the 2022 fiscal year presented various challenges, Tabcorp remains committed to executing its strategic plan, improving the customer experience, leveraging venue and media assets, and implementing structural reforms. By nurturing an innovative and unified culture, Tabcorp aims to drive its transformation, positioning itself as a competitive and thriving business in the wagering, media, and gaming sectors.