The Tabcorp Holdings Ltd (ASX: TAH) share price is climbing today following the release of the company's full-year results.
At the time of writing, the gambling company's shares are up 5.43% to 97 cents.
Let's take a look at the results in more detail.
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Tabcorp share price up on financial discipline and strong balance sheet
Tabcorp delivered its FY 2022 results for the 12 months ended 30 June 2022. Here are some of the key financial highlights:
- Group revenue down 4.3% to $2,373 million
- Group earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations of $381.6 million, down 21.7%
- Statutory net profit after tax (NPAT) of $6,775.9 million, includes gain on demerger of $6,513.8 million (FY 2021: $269.4 million)
- Final dividend of 6.5 cents per share, fully franked, bringing the full-year dividend to 13 cents per share, down 10.3%
- Strong balance sheet with net debt of $20 million excluding lease liabilities and significantly restricted cash
What happened in FY 2022?
In FY 2022, Tabcorp's wagering and media divisions recorded $2,182 million in revenue, down 5.1% year on year. Both businesses were significantly impacted by COVID-19-related retail closures in the first half, particularly in New South Wales and Victoria.
Furthermore, a record number of horse racing abandonments was experienced due to wet weather in the second half.
On a positive note, the re-opening of venues from the second quarter showed promising signs of recovery for the remainder of the year.
Across the gaming services division, revenue for the year was up 5.3% to $193 million. Max venue services attributed $119.3 million in revenue, up 20% from FY 2021. On the other hand, max regulatory services fell 12.2% to $73.6 million due to COVID-19 closures in New South Wales.
The board announced a fully franked final dividend of 6.5 cents per share. The latest dividend reflects five months of earnings from the demerged Lotteries and Keno business, and a full six months of earnings from Tabcorp's continuing businesses.
What did management say?
Tabcorp managing director and CEO, Adam Rytenskild commented:
FY22 was a disrupted year with first half COVID lockdowns in our two largest markets, a record number of race meetings washed out and the priority challenges of a company pre-demerger. We are seeing stabilisation in our digital market share, and our total focus is now on executing our strategy to transform and pursue growth. We feel the next results, reflecting this half, will be a good test for the improvements we are making.
What's the outlook for FY 2023?
Tabcorp advised that it's determined to grow the business and make it more competitive in the market in FY 2023.
For the first month of the financial year (July), digital revenue market share jumped to 25%.
In addition, group revenue increased by 14.6%, and wagering and media revenue lifted by 11.2% compared to the prior corresponding period.
Tabcorp is focused on launching the new TAB app in September, ahead of the major spring racing carnivals. So far, customers who have trialled the app have delivered positive feedback.
The Queensland structural reform to an operator agnostic, sustainable funding structure remains on track. That means Tabcorp will pay the same wagering taxes and fees as Northern Territory licenced operators.
Following the company's cost and efficiency program, management is targeting 3% to 4% cost growth on FY 2022 pro forma.
FY 2023 capital expenditure is forecast to be up to $150 million, with depreciation and amortisation of between $250 million and $260 million.
Tabcorp share price snapshot
Since the beginning of 2022, the Tabcorp share price has largely moved in circles to gain 1.5% for the period.
For context, the S&P/ASX 200 Consumer Discretionary (ASX: XDJ) sector is down 18% year to date.
Tabcorp commands a market capitalisation of approximately $2.15 billion.
