Tabcorp (TAH) H2 2024 earnings summary

Executive summary

• Group revenue declined 3.9% year-over-year to $2,338.9m, reflecting soft wagering market conditions, cost inflation, and the sale of the MPS business.

• EBITDA fell 18.7% to $317.7m, with a statutory net loss after tax of $1,359.7m due to $1,376.4m in non-cash impairment charges, mainly related to NSW and SA wagering assets.

• Digital wagering revenue decreased 2.2% in FY24 but stabilized in 2H24; cash wagering revenue rose 0.4% for the year and 5.3% in 2H24, supported by retail upgrades and in-venue offers.

• Company is midway through a transformation, with new leadership focused on unlocking value, cost control, and leveraging omni-channel assets, despite not meeting TAB25 targets.

• New 20-year Victorian Wagering and Betting Licence commenced August 2024, expected to enhance competitiveness and earnings, with a pro-forma FY24 EBITDA uplift of $115m if applied for the full year.

Financial highlights

• Group revenue: $2,338.9m, down 3.9% year-over-year; EBITDA: $317.7m, down 18.7%; EBIT: $97.4m, down 35.3%.

• NPAT before significant items: $28.0m; statutory net loss after tax: $1,359.7m, driven by $1,376.4m in impairment charges.

• Group OpEx increased 6.3% to $614.0m, exceeding prior guidance, driven by inflation and regulatory costs.

• Final unfranked dividend of 0.3 cents per share declared; total FY24 dividend 1.3 cents per share.

• Operating cash conversion at 94%; capex $151m, with 64% allocated to growth and transformation.

Outlook and guidance

• Macroeconomic and regulatory headwinds expected to persist, with a soft wagering market likely to continue in the near term.

• New Victorian licence expected to provide a step change in group earnings; opex to rise in FY25 due to inclusion of VRI opex, inflation, and regulatory costs.

• Capex to reduce to approximately $140m in FY25; D&A expected at $190–$210m.

• Targeting $20m in cost savings from Genesis program in FY25; focus remains on cost management and leveraging digital and retail investments.

• Cash tax expected to be nil in FY25 due to carried forward losses and R&D offsets; dividends unlikely to be franked in the near term.