Tabcorp shuts down Lottery split rumours

David Attenborough, the Chief Executive of Australia ASX-listed gambling group Tabcorp Holdings has stated that the company holds no intentions in splitting its lucrative lotteries and keno division into a separate entity, dismissing speculation as ‘complete nonsense’.

Yesterday, Tabcorp investors were served mixed results as the company published 2018/2019 accounts (12-month period ending 30 June), reporting on the firm’s first year as an enlarged enterprise having incorporated the assets of Tatts Group.

Tabcorp results, detailed that the strong growth of the ASX firm’s lottery and keno division had offset declines within its wagering units.

On a pro-forma basis, an enlarged Tabcorp hit the AUS $5 billion revenue mark, with the company recording a 2018/2019 EBIT of AUS $695 million.

Generating 52% of corporate revenues (AUS $2.9 billion), Tabcorp’s lottery and keno division was branded as the group’s star performer, with a further EBIT contribution of AUS $425 million (2017/18: $310m).

The division reports a strong uptake of its digital products, as active customers hit the 600,000 player mark, pursuing a series of high jackpots which saw the Tabcorp lotteries host a $110 million Powerball draw in July.

Nevertheless, lottery growth could not hide the trading difficulties faced by Tabcorp’s wagering and media division, which detailed declines across all core metrics, reporting 4% decrease in revenues to AUS $2.3 billion, combined with a 12% EBIT to AUS $307 million.

In its update, Tabcorp governance details that the division is transitioning, as it merges all wagering assets under its flagship TAB domain, which will further undertake a revamp in its systems and operations improving all-round customer experience.

Furthermore, Tabcorp governance maintains that the Australian market remains intense, ‘post the introduction of point of consumption taxes’.

Speaking to the Australian Financial Review (AFR), Attenborough stated that Tabcorp governance held no plans to ‘demerge’ its lottery and keno business into a separate entity, despite reports that Australian investment fund Perpetual had urged Tabcorp governance to consider the option.

Attenborough underlined to AFR, that splitting assets would damage Tabcorp’s long-term value and market proposition, operating diverse gambling services which will leverage of each other.

“To think that it’s better separated is … absolute nonsense. There is real strength in this diversified gambling business that has been put together through this merger.” Attenborough stated dismissing demerger rumours.

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