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</o:shapelayout></xml><![endif]--></head><body lang=EN-AU link=blue vlink=purple><div class=WordSection1><h1>Tabcorp misses targets as merger costs rise<o:p></o:p></h1><p class=MsoNormal><a href="https://cdn.newsapi.com.au/image/v1/136b63920efa2b22ed018c12c6adc409"><span style='color:blue;text-decoration:none'><img border=0 width=650 height=365 style='width:6.7708in;height:3.802in' id="Picture_x0020_4" src="cid:image001.jpg@01D5E7C7.05C9FF50" alt="David Attenborough in Melbourne on Wednesday Picture: Stuart McEvoy"></span></a><o:p></o:p></p><p class=MsoNormal>David Attenborough in Melbourne on Wednesday Picture: Stuart McEvoy<o:p></o:p></p><h2 style='margin-left:36.0pt;text-indent:-18.0pt;mso-list:l0 level1 lfo1'><![if !supportLists]><span style='font-size:10.0pt;font-family:Symbol;font-weight:normal'><span style='mso-list:Ignore'>·<span style='font:7.0pt "Times New Roman"'> </span></span></span><![endif]><a href="https://www.theaustralian.com.au/author/Jared+Lynch">Jared Lynch</a><o:p></o:p></h2><p class=story-infobyline style='margin-left:36.0pt'>Reporter<o:p></o:p></p><p class=story-infobyline style='margin-left:36.0pt'><a href="http://twitter.com/jaredm_lynch" target="_blank">@jaredm_lynch</a><o:p></o:p></p><p class=story-infobyline style='margin-left:36.0pt'><img border=0 width=1 height=1 style='width:.0104in;height:.0104in' id="Picture_x0020_3" src="cid:image002.png@01D5E7C7.05C9FF50"><o:p></o:p></p><ul type=disc><li class=story-infotimestamp style='mso-list:l0 level1 lfo1'>9:02PM February 19, 2020<o:p></o:p></li><li class=story-infocomments style='mso-list:l0 level1 lfo1'><a href="https://www.theaustralian.com.au/business/companies/lotto-lifts-tabcorp-profit-as-wagering-declines/news-story/682e12fd654893f2421061a39d8a3da8#coral" id=scroll-comments><span class=coral-commentcount><span style='color:blue'>3 </span></span><em><span style='font-family:"Calibri",sans-serif;color:blue'>Comments</span></em></a><o:p></o:p></li></ul><p class=selectionshareable>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.<o:p></o:p></p><p class=selectionshareable>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.<o:p></o:p></p><p class=selectionshareable>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.<o:p></o:p></p><p class=selectionshareable>Tabcorp’s shares fell 5.7 per cent to $4.31 following Mr Attenborough’s comments.<o:p></o:p></p><p class=selectionshareable>He said the wagering result reflected “a business navigating a large and complex integration and transforming its offer in a softer market”.<o:p></o:p></p><p class=selectionshareable>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.<o:p></o:p></p><p class=selectionshareable>“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.<o:p></o:p></p><p class=selectionshareable>“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.”<o:p></o:p></p><p class=MsoNormal><a href="https://cdn.newsapi.com.au/image/v1/8279a7f5e9bbda2d6456583db07de461"><span style='color:blue;text-decoration:none'><img border=0 width=650 height=365 style='width:6.7708in;height:3.802in' id="Picture_x0020_1" src="cid:image003.jpg@01D5E7C7.05C9FF50"></span></a><o:p></o:p></p><p class=selectionshareable>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’ integration.<o:p></o:p></p><p class=selectionshareable>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.<o:p></o:p></p><p class=selectionshareable>Its lotteries and Keno business in contrast, delivered a 12.4 per cent increase to $1.584bn.<o:p></o:p></p><p class=selectionshareable>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.<o:p></o:p></p><p class=selectionshareable>Overall, revenue firmed 4 per cent to $2.91bn, while net profit rose 11 per cent to $198.8m.<o:p></o:p></p><p class=selectionshareable>Ratings agency Moodys said an acceleration in the lotteries division, particularly in digital, was “another fillip to an already strong performing division”.<o:p></o:p></p><p class=selectionshareable>Tabcorp will pay a dividend of 11c a share, fully franked and in line with prior corresponding period, on March 18.<o:p></o:p></p><p class=MsoNormal><span style='color:black'><o:p> </o:p></span></p></div></body></html>