Tabcorp swings to FY loss on merger costs

Tabcorp swings to FY loss on merger costs

Monday, August 7, 2017 Posted by James Walker
The ASX-listed group recorded a net loss of A$20.8 million in 2017

Costs associated with Tabcorp Holdings’ proposed merger with Tatts Group have weighed heavy on the Australian gaming giant’s full-year results, but the group’s CEO said both firms remain committed to sealing the deal by the end of 2017.

In the 12 months to June 30, revenues for Tabcorp totalled A$2.2 billion, up 1.9% on fiscal 2016.

Despite this modest top line growth, the ASX-listed group recorded a net loss of A$20.8 million, compared to a profit of $169 million in the previous year.

Discussing the results in a presentation to stakeholders last week, Tabcorp CEO David Attenborough said the company’s earnings were adversely impacted by significant items amounting to A$199.7 million.

Among the extraordinary items was a cost of A$61.8 million associated with the Austrac civil proceedings, which were settled earlier in the year, along with A$54 million the group has spent chasing its proposed combination with rival Australasian gambling operator, Tatts Group.

“Full-year 2017 has been a strategically important year for Tabcorp,” Attenborough said during the earnings call on Friday. “We have executed on a number of initiatives that are critically important to position the group for future growth.

“That includes the progress we have made in announcing our combination with Tatts Group, which we expect to deliver significant value. Both Tabcorp and Tatts are committed to completing the combination by the end of this calendar year.”

Also during the year, Tabcorp acquired Intecq, which Attenborough called a “highly complementary” gaming systems and monitoring business, which has added “scale and capability” to the group’s gaming services division.

“We have made a strategic investment in establishing Sun Bets, our start-up business in the UK, where we have entered the attractive UK gambling market under the powerful Sun brand,” he stated.

“Our core businesses, Tab, Media, Gaming Services and Keno, are fundamentally in good shape. We have continued our digital expansion in wagering in Keno, and have taken steps to strengthen our retail partnerships with the launch of our digital commission model.”

Totally Gaming says: Overall in fiscal 2017, Tabcorp made some significant investments to better position the group to deliver sustainable future growth. The cost of these investments is reflected in the company’s 2017 results, and stakeholders will be watching closely, as the operator looks to capitalise on its latest bundle of investments.

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