TAB NZ half-year financials benefit from cost management and increased revenue

1 April 2021

TAB New Zealand’s results for the six months to 31 January 2021 were enabled by a range of factors including focused cost management with $11.9 million reduction in expenses (11 percent less than 2019) and increased revenue of $7.0 million to $193.5 million (4 percent above FY20).

Profit before distribution was $94.5m for the period, which was $25.9m above budget and $19.0m (25 percent) above last year. 

During the period, the three racing codes received distributions and other funding of $83.2 million, including $9.8 million from Betting Information Use Charges (BIUC), $3.5 million from the repeal of the Betting Duty, and $6.6 million via Government support package for the racing industry. More than $6.2 million was distributed in commission payments to national sporting organisations, which was 5 percent less than the same period in FY20 due to reduced sport content during the year.

 

HY FY2021

HY FY2020

Change %

Turnover

$1,589  million

$1,500 million

+6.0%

Revenue

$193.5 million

$186.4 million

+3.8%

Operating Expenses

$58.5 million

$71.5 million

-18.2%

Profit before distributions

$94.5 million

$75.5 million

+25.1%

Total distributions and other funding to codes

$83.2 million  

$83.9 million

-0.8%

The release of the organisation's 2021 Half-Year Financial Statements follows approval by the TAB NZ Board at its most recent Board meeting and supplements the publication of its monthly performance updates.

Betting and Gaming Turnover 

Total turnover was $1,589 million, which was $89 million (6 percent) above last year and $190 million above budget (14 percent). 

Gaming turnover decreased -3 percent to $256 million (-$8 million), despite successful TAB refurbishments and EGM conversions. This was due to Covid-19 related gaming site closures with periods of no activity occurring in Auckland in early FY21.

Revenue

Total revenue for the period was $194 million,  $7 million (4 percent) above last year. Performance was driven by higher betting turnover combined with favourable results experienced in racing and sport fixed odds during the year. Net betting margin remains consistent with prior year and budget at 12 percent. Net gaming revenue of $15 million (-3 percent) was consistent with the reduction in gaming turnover.

Other revenue decreased by $10 million (-42 percent) against last year; a key movement in this category is an $8 million reduction in venue service cost recoveries to support the industry’s post-lockdown return to racing.

Expenses 

Total expenses for the period were $98 million ($110 million, 2019) - an 11 percent improvement for the same period last year; this is driven by a combination of a slight increase in turnover related expenses (up $1  million due to cost savings of $4 million primarily on promotional and retail activities), and a significant decline in operating expenses versus last year (saving $13 million or -18 percent which includes a reduction of $8 million in staff expenses).

Assets 

Total assets of $232 million have increased by $24 million (+12 percent) (as at 31 January 2021) due mainly to greater retention of cash and term deposits of $25 million. This was offset by other balance sheet movements during the period.
 

Distributions 

Distributions to the Racing Codes totalled $74.2 million, with $60.9 million from betting profits, $9.8 million from BIUC and $3.5 million from the repeal of the Betting Duty. This is $5.3 million more than budget. Furthermore, total enhancement fund distributions from current year’s gaming profit to the racing industry amounted to $2.5 million (up by $0.9 million from the same period last year).  

Additionally, a further $6.6 million was received via the Government’s racing industry support package in August 2020 and passed on to the codes to support the industry’s recovery from the impact of Covid-19 ensuring that industry funding was maintained at pre-Covid-19 levels. 

Furthermore, excluding the impact of distributions for venue service costs (ie, direct costs to provide services to race meetings which the TAB has elected not to pass on to the racing industry since towards the end of last year), actual distributions and other funding is comparatively higher in the current period.

Liabilities

Total liabilities decreased by $2 million against 31 July 2020 as a result of debt repayment ($10 million), which was offset by an increase in customer account balances ($2 million) and the timing of settlement of payables at balance date. The total current provisions in the balance sheet included payment to Sport New Zealand and a portion held for harm minimisation purposes arising from the impact of the Betting Duty repeal; the former is anticipated to be paid in the second half of the year once regulations are confirmed.

Equity

Total equity of $80 million is up $27 million (+51 percent) compared to 31 July 2020, driven largely by the retention of surplus funds to rebuild TAB NZ’s financial resilience.

Looking forward

With this strong start, combined with the positive performance during the first half of this year, TAB NZ operated with a strong working capital and balance sheet position enabling it to further invest into the future and continue supporting the racing industry and sport.