Australian racing and wagering giant Tabcorp has seen its profit tumble for the full year ended 30 June 2017 on the back of legal proceedings, new startup operations and its ongoing acquisition of Tatts Group.
Tabcorp announced a loss after tax of AU$199.7 million, having recorded an AU$20.8 million profit the previous year, despite a 1.9% increase in revenue to AU$2.23 billion.
The company pointed to a range of “significant items” as having contributed to the profit plunge – namely an AU$61.8 million cost to settle civil proceedings with AUSTRAC, AU$53.9 million for its Tatts merger and another AU$68.3 million in operating loss and assets impairment related to its UK start-up Sun Bets.
EBITDA before significant items fell 2.3% to AU$504.1 million.
By segment, Wagering & Media revenues were largely flat, with TAB turnover growth up 1.9% including a 13.9% increase in digital turnover – offset by a 14.6% decline in trackside revenue and the disappointing performance of Luxbet which recorded an EBITDA loss of AU$8 million.
Gaming Services, which included seven months of Intecq trading, were up 34.2% to AY$143.9 million.
“FY17 was a strategically important year for Tabcorp as we reshaped the business for growth,” said Tabcorp Managing Director and CEO, David Attenborough.
“We made investments in acquiring Intecq, establishing Sun Bets and progressing the combination with Tatts, which we expect to complete by the end of the year.
“We also strengthened Tabcorp’s risk management and regulatory compliance capability, which is scalable in the context of the proposed combination with Tatts. These are significant initiatives we have undertaken to better position Tabcorp to deliver sustainable growth.
“At the same time, we accelerated our digital investment in our Wagering and Media and Keno businesses, while Gaming Services continued to expand geographically.
“The increase in operating expenses was driven by the acquisition of Intecq and planned investments in capability, technology, marketing, risk and compliance. We expect our investment in these areas to reduce the risk associated with the Tatts integration.”
Tabcorp said it remained committed to its merger with Tatts Group, with scheme documentation to be released in September 2017 and a meeting of Tatts’ shareholders to vote on the merger expected to be held in October 2017.
The Federal Court is scheduled to hear the ACCC and CrownBet’s applications for a judicial review of the Australian Competition Tribunal’s authorization of the merger on 28 and 29 August.
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