Australian betting and lottery operator Tabcorp Holdings is looking to raise AU$600m after posting a net loss of AU$870m in its most recent fiscal year.
Figures released Wednesday show Tabcorp generated revenue of AU$5.2b in the 12 months ending June 30, a 4.8% decline from fiscal 2018-19. Before deducting a billion or so bucks in significant items, earnings fell 11.5% to AU$995m and net profit after tax (NPAT) tumbled nearly one-third to AU$271m.
However, the impact of COVID-19 meant Tabcorp was forced to book AU$1.14b in goodwill impairments, most of which involved its Wagering & Media unit. The unit took a major hit in March when Australia ordered all non-essential businesses – including TAB retail wagering outlets – to shut their doors.
Wagering & Media revenue fell only 10% to just under AU$2.1b, thanks primarily to a strong showing by digital betting. Online wagering turnover was up 3.8% to AU$7.1b while retail was down 27.9% to $5.4b, marking the first year in which digital has outperformed retail.
However, wagering earnings fell by one-fifth to AU$371m due in part to the COVID suspension of sports events but also from the lingering costs of migrating customers from Tatts’ old UBET brand to TAB. The difficult integration was finally completed on July 28, which Tabcorp sincerely hopes will boost TAB’s ability to compete in the country’s cutthroat online betting market.
The mainstay Lotteries & Keno unit saw revenue rise 1.8% to AU$2.9b despite retail lottery sales falling 4% on COVID shop closures. Digital channels accounted for 28% of lottery turnover, up 4.5 points year-on-year, and digital’s share spiked to nearly 31% in the final quarter as retail options dried up.
Keno revenue fell 14.3%, mainly due to venue closures. Prior to COVID, keno revenue was “at record levels” and even a 54% rise in digital customers couldn’t offset the retail setback.
Finally, the Gaming Services unit reported revenue down 27.3% to AU$221m, while earnings dropped 42.5% to AU$84m. In addition to COVID, which shut the venues in which video poker (pokies) machines operate, the unit lost a few major contracts earlier in the fiscal year. The company undertook a strategic review and a “simplified operating structure” is now being implemented for this unit.
Since the new fiscal year began, lottery and betting revenue are both showing year-on-year gains, while Gaming Services is down by more than half. Outgoing CEO David Attenborough said the focus going forward is heavily weighted towards digital, particularly given the ongoing COVID lockdown in the state of Victoria.
To keep the lights on, Tabcorp announced plans to raise up to AU$600m in equity from shareholders via an entitlement offer. The company plans to use the funds to pay down existing bank debt.
