TAB sells positives in 2016/17 results, despite key losses
TABCORP has released its results for the 2016/17 financial year and the news, at best, is mixed.
The government-backed bookmaker announced a $20.8 million loss but perspective must be given to understand why there has been a $190 million turnaround, after posting a $170 million windfall in the previous financial year.
Make no mistake, these losses didn’t come about because punters got lucky on the dominant Winx, or Queensland in the 2017 Origin decider.
The significant losses were impacted by $53.9 million in costs related to its Tatts merger, $61.8 million in AUSTRAC civil proceedings and Sun Bet’s shameful $47.6 million operating loss. There was also the small matters of a $2 million in costs to investigate a Cambodian bribery case and $9 million for the company’s relocation to Melbourne.
TAB reported that its revenue grew 1.9 per cent to $2.22 billion – flattening out compared to its most recent jumps.
There’s no surprise that Tabcorp’s CEO David Attenborough tried to put a positive spin on a difficult 12 months for the company.
“FY17 was a strategically important year for Tabcorp as we reshaped the business for growth. We made investments in acquiring Intecq, establishing Sun Bets and progressing the combination with Tatts, which we expect to complete by the end of the year,” Attenborough, said.
Accountability ?
Tabcorp significant (unreal) items.
$ 200 million of that:
– AUSTRAC 62
– AFP ?? 2
– Sunbets 67
– Premises 9
= lazy 140.— Peter Morgan (@psimpsonmorgan) August 4, 2017
Much of Tabcorp’s spin on the results reflects on the positive signs ahead, given its proposed merger with Tatts.
But there’s no guarantee of sunny days ahead there either.
The Australian Federal Court is scheduled to hear the ACCC and CrownBet’s applications for a judicial review of the Australian Competition Tribunal’s authorisation of the merger on August 28. The findings there could have enormous ramifications for not just Tabcorp and Tatts, but the entire bookmaker industry.
‘FY17 WAS A STRATEGICALLY IMPORTANT YEAR FOR TABCORP AS WE RESHAPED THE BUSINESS FOR GROWTH’ or whatever you do, don’t mention the war!
— Pete Lynch (@PeteLynch) August 4, 2017
Another interesting aspect to come from Tabcorp’s results is the break up of its takings in racing wagering.
Right around Australia, we in the industry constantly hear that tote betting is the only real product that funds racing’s existence.
But that’s not supported by the numbers – or at least where Tabcorp is sending punters.
TAB tote turnover is down 7.4%, while fixed odds return is up 20.8%.
That represents a big shift and could demand a re-think from those who refuse to think progressively about improvements that need to be made to the tote, given the emerging popularity of the GlobalTote and other such products.
So racing leaders proactively protect the TAB as tote pays industry revenue, but TAB pushing punters away from tote to fixed odds helps how?
— Kevin Pitstock (@KevinPitstock) August 4, 2017
Where does Tabcorp go from here?
Talk about the year from hell.
Even after clearing almost every hurdle in its merger effort with Tatts, Tabcorp has had one hiccup after another over the last 12 months.
But the industry needn’t worry, the growth from this point – given the merger eventually gets the green light – will be profound – too profound if you believe strongly in the advantages of a competitive wagering and bookmaker industry.
If you’re a shareholder, you wouldn’t exactly be over the moon with the results – but hold on to your stock.
We wonder, given the poor results from the tote and the significant shift to fixed odds, is the company looking at innovation with its tote market?
Don’t bet on it.