Tabcorp will abandon its TAB25 strategy targets as new chief executive Gillon McLachlan insists change needs to be made for the wagering firm to realise its potential.
McLachlan, who joined Tabcorp at the start of August after stepping down as AFL boss in 2023, said a framework had been built to embark on a turnaround of the company’s fortunes despite announcing a $1.36 billion loss for the 2023-24 financial year.
“The challenges are clear but so are the opportunities and that’s why I joined Tabcorp,” he told investors.
“I was drawn to the challenge of unlocking the value in a unique set of assets that have not realised their full potential.
“We require change but our goal remains unchanged to be a world-class, diverse wagering and sports entertainment company.
“We’re the only company that can deliver on that vision because we’re the only company with such unique assets.”
Tabcorp reported a 3.9 per cent decrease in group revenue to $2.34 billion in the 2024 financial year.
Wagering declined 3.4 per cent year-on-year but cash wagering was up 0.4 per cent, driven by a 5.3 per cent growth in the second half of 2024.
Overall, domestic wagering fell 1 per cent despite increasing 2.3 per cent in the second half, chief financial officer Mark Howell said.
“We were pleased with our relative turnover and revenue results when compared to that of other market participants,” he said.
In posting a $1.36 billion loss, Tabcorp revealed non-cash impairment charges of $1.38 billion as a result of a weak wagering market and additional taxes it pays in NSW and South Australia.
Bren O’Brien
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) dipped 18.7 per cent on last year to $317.7 million.
Tabcorp shares fell 12 per cent to below 50 cents after the announcement.
In a statement to the ASX, McLachlan said difficult economic times and the anticipation of a tighter regulatory environment would continue to impact on the wagering landscape.
“As a result, we expect the soft conditions observed in the second half of FY24 to persist in the near term,” he said.
McLachlan’s predecessor Adam Rytenskild had mapped out a target to capture a 30 per cent share of the digital wagering market while reducing operating costs to $600 million by 2025.
Tabcorp reported on Wednesday that its digital market share stands at 22.9 per cent while costs increased 6.3 per cent to $614 million.
Rytenskild left the company in March amid allegations he used inappropriate and offensive language about a female Victorian Gambling and Casino Commission regulator.
Bren O’Brien
Chairman Bruce Akhust said at the time that the sudden departure of Rytenskild would have no impact on Tabcorp’s TAB25 strategy.
But McLachlan said Tabcorp had ditched those projections while insisting that the “foundations to unlock value” had been established.
“The reality is that the company is only part way through a turnaround and we need to enhance execution to create greater value,” he said.
“You are going to see continued change. A new cadence at Tabcorp. A plan that continues to evolve and a team that evolves as the plan changes.”
As the federal government considers gambling reforms likely to include a ban on advertising, McLachlan downplayed the impact any legislation might have on Tabcorp’s business.
Bren O’Brien
It has been widely tipped that racing broadcasters would be exempt from a ban, meaning the Tabcorp-owned Sky Racing would be unaffected.
“I don’t want to front-run where the government will land, but when we look into this business with the unique assets we have, I think we’re best placed in the market to absorb whatever the change looks like,” McLachlan said.
McLachlan will meet with industry stakeholders before he outlines his vision for Tabcorp’s future to shareholders.
“I think people would expect me to get around and speak to the right people and take the time before I came back to market,” he said.
“I’m aware of the pressure on that, but I’ll be coming back when the plan is set and I believe it’s the right plan for shareholders … I want to make sure that it is considered and sharp and then we’ve got to execute.”
