Tabcorp confident of executing TAB25 strategy amid solid FY profit  

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Tabcorp has reiterated confidence in the group’s TAB25 vision that was rolled-out earlier in the year after achieving “what we pledged to investors we would do” during the year ending June 30, 2023. 

Speaking in the group’s latest annual report, Bruce Akhurst, Chair and Independent Non-Executive Director, and Adam Rytenskild, Managing Director and Chief Executive Officer, hailed the company for having laid the foundations for future growth.

In the first full year of operation following the demerger of the lotteries and keno business in June 2022, the pair detailed the launch of a new app, a record level of active customers at 805,000 and a level playing field in Queensland in helping to achieve its ongoing goals.

This latter point forms part of a wider ambition of ensuring that across every Australian state and territory, foreign owned online bookmakers licensed in the Northern Territory pay the same taxes and fees as Tabcorp. QLD subsequently joined the Australian Capital Territory and Tasmania, with Victoria set to follow suit next year and a review being undertaken in New South Wales.

In addition, Tabcorp is also aiming to progress with its TAB25 strategy, which level the playing field forms a part of, and is tasked with crafting a “simpler, growing, more valuable business, providing investors with clarity around our strategic goals for the next three years”.

“We have put in place a clear plan to execute on our strategy and achieve our TAB25 goals of 30 per cent digital revenue market share”

“We have put in place a clear plan to execute on our strategy and achieve our TAB25 goals of 30 per cent digital revenue market share, 10 per cent return on invested capital and operating expenditure of between $600m–$620m in FY25m,” Akhurst and Rytenskild noted.

Group results for the year highlight reported revenue of A$2.43bn, up 2.6 per cent year-on-year from A$2.37bn, net profit came in at A$66.5m compared to a loss of A$136.2m one year earlier, while EBITDA surged to A$407.4m (2021/22: A$216.3m). Capital expenditure came in at A$155.4m, with net debt standing at A$344.7m and undrawn debt facilities of A$950m.

Increases were reported across each of the core wagering and media and gaming services businesses, with the former seeing revenue and EBIT increase 2.2 per cent and 27.7 per cent to A$2.23bn (2021/2: A$2.18bn) and A$116.2m (2021/22: A$91m).

This is aligned to the impact of COVID-19 during the prior reporting period, which was partially offset by a decline in the digital wagering market, increased costs in “a highly competitive market” and ongoing investments.

Gaming services saw revenue jump 5.5 per cent to A$203.6m (2021/22: A$192.9m), with EBIT climbing to A$34.4m compared to the A$3.8m generated one year earlier. 

In addition to hailing a 20-year renewal across Tasmania that commenced on the first day following this reporting period, Tabcorp has put the performance down to a continue recovery from the pandemic, which was offset by select EGM contract non-renewals.

“FY23 benefited from gains on disposal of assets, an insurance recovery and the Genesis program, offset by dis-synergies from the demerger, inflation and cycling savings due to COVID restrictions in 1H22,” the company noted.

“We’re one year into our TAB25 transformation journey and have created a strong foundation”

Looking ahead, Tabcorp says that a “strong performance on costs” will provide flexibility for continued investments through the next year, with the company expecting to set aside funding for a repositioning of the TAB brand, along with continued investment in data and analytics capability.

“We remain on track to deliver our TAB25 Opex target – this is a significant achievement given inflationary pressures and the investments we’re making,” Akhurst and Rytenskild continued.

“We’re making good progress on establishing a new operating model to enable more agile and contemporary ways of working. 

“We’re also investing in transforming our TAB venues to create a differentiated and more engaging in-venue customer experience and leverage our unique betting ecosystem.”

Concluding: “We want to thank shareholders for their continuing support. We’re one year into our TAB25 transformation journey and have created a strong foundation to transform Tabcorp into a stronger, more competitive and growing business by FY25. 

“We look forward to updating shareholders on our progress on TAB25 at our Annual General Meeting in October, being held in Melbourne and online this year.”