[AusRace] TAB

L.B.Loveday lloveday at ozemail.com.au
Thu Feb 20 08:23:31 AEDT 2020

Tabcorp misses targets as merger costs rise


David Attenborough in Melbourne on Wednesday Picture: Stuart McEvoy

*         Jared Lynch <https://www.theaustralian.com.au/author/Jared+Lynch> 


@jaredm_lynch <http://twitter.com/jaredm_lynch> 

*	9:02PM February 19, 2020

Tabcorp chief executive David Attenborough says the gaming giant has a tale
of two wagering divisions, as the costs of integrating UBET and its current
"uncompetitive" offering weighs on the company's earnings.

A surge in revenue across its lotto business - which it acquired during its
$11bn merger with Tatts in 2017 - was not enough to stop Tabcorp missing
half-year profit expectations, largely thanks to another Tatts child,
betting brand UBET.

On Wednesday Mr Attenborough said the integration of Tatts was going to cost
an extra $40m - $135m in total - citing the "increased complexity" of
ensuring a successful migration of UBET customers to the TAB platform.

Tabcorp's shares fell 5.7 per cent to $4.31 following Mr Attenborough's

He said the wagering result reflected "a business navigating a large and
complex integration and transforming its offer in a softer market".

That integration isn't expected to be completed until near the end of the
financial year and was one of the factors that propelled a 3.7 per cent
decline in revenue to $1.179bn across Tabcorp's wagering and media business.

"Until we complete the integration, it (Tabcorp's wagering business) is
sitting there with a chunk of it, the UBET bit, with a substandard offering
with far less products and frankly uncompetitive," he said.

"Then you have got the TAB part where we are transforming and doing a lot
around the brand, digital and retail that will be really compelling when we
can roll them across UBET. "The TAB element is competing well. Customers are
up and relative to its competitors its sales are good. So it's safe to say
the wagering business is almost a tale of two businesses."


While the integration is set to be completed before the end of the financial
year, well in time for this year's spring racing carnival, Mr Attenborough
was cautious on providing second-half guidance. But he said 2021 would be a
stronger year, receiving the full benefit of the final phase of the Tatts'

Digital wagering fell 4.9 per cent and retail turnover plummeted 9 per cent.
Meanwhile its gaming services division also posted a 4.4 per cent revenue
decline, with Mr Attenborough citing the non-renewal of a Telstra service
contract and pending expiry of the NSW Statewide Linked Jackpots.

Its lotteries and Keno business in contrast, delivered a 12.4 per cent
increase to $1.584bn.

A record $150m Powerball jackpot last September helped lift earnings in that
division and Mr Attenborough said changes to the Set for Life game would
create further demand.

Overall, revenue firmed 4 per cent to $2.91bn, while net profit rose 11 per
cent to $198.8m.

Ratings agency Moodys said an acceleration in the lotteries division,
particularly in digital, was "another fillip to an already strong performing

Tabcorp will pay a dividend of 11c a share, fully franked and in line with
prior corresponding period, on March 18.


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