tabcorp enlargement struggles test investor patience

tabcorp enlargement struggles test investor patience

by 19.02.2020 0 comments

Australia ASX-listed gambling group Tabcorp Holdings Plc has posted an underwhelming corporate performance, publishing its half-year 2019 trading results (six-month period ending 31 December 2019).

Despite recording a 4% increase in corporate revenues to AUS 2.9 billion, Tabcorp results detailed a number of concerns for investors as the ASX group delivers a further quarter trading performance below market expectations.

Tabcorp’s group performance is sustained by the continued growth of its enlarged keno and lotteries division, which reported a 12% increase in revenues to AUS 1.58 billion.

Despite absorbing Tatts Group assets, the ASX group has recorded declines across its ‘Wagering & Media’ and ‘Gaming Services’ divisions.

The trading update would see Tabcorp governance warns that costs attributed to transforming Tatts’s UBET wagering assets to its flagship TAB brand have increased by 40%, currently projected at AUS $135 million (previously AUS $95m).

Staggering UBET integrations see Tabcorp governance delay the ‘improved performance’ benefits of its wagering division to full-year 2021.

“This was a challenging half for our Wagering & Media business. TAB is competing well while also transforming in a soft market,” said Tabcorp Group CEO David Attenborough said.

Of further investor concern, recording performance declines across all core metrics, Tabcorp’s ‘Gaming Services’ division has been placed under a strategic review – “We are reviewing this business to improve performance and realise its full potential,” Attenborough acknowledged

Branding the division’s performance as ‘unsatisfactory’, Tabcorp governance will undertake a review of the unit seeking to improve capital efficiencies.

In its trading overview, Tabcorp governance cites that the group has entered its ‘final phase of integrations’ improving ‘expected EBITDA benefits’ to AUS $100 million (previously AUS $90m).

Tabcorp H1 2020 performance overview 

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