Tatts takes profit hit
Merger to come at high price
GAMBLING giant Tatts Group’s annual profit slipped 5.7 per cent as costs associated with its planned merger with Tabcorp mounted.
The Brisbane-based company said fewer major jackpots and poor weather for the racing season also contributed to profit dropping to $220.5 million from $233.8 million the previous year.
Revenue was down 5.1 per cent to $2.78 billion in the 12 months to June 30.
Tatts Group chief executive Robbie Cooke said the Tabcorp merger, which was on track to be completed by the end of the year, had so far cost the company $23.4 million.
Mr Cooke said he remained committed to the $6 billion merger, which is currently facing a review by competition authorities.
“There are $130 million worth of synergies sitting in those two companies and that is the compelling reason for the transaction,” Mr Cooke said. “At a senior team level, we have established a strong working relationship with Tabcorp’s management.”
Mr Cooke added the company had attempted to minimise the disruption caused by the merger talks and “keep the Tatts team together”.
Tabcorp has maintained the combined entity will keep a “substantial presence in Brisbane, Sydney and Melbourne”. Brisbane staff numbered almost 1000 with the vast majority in lotteries, gaming services and associated technology.
Turning to the financial results, Mr Cooke said Tatts’ lotteries operation had not been able to repeat the previous year’s jackpot run which achieved 45 jackpots at or above $15 million.
“Ultimately, the jackpot roll did not play our way,” he said, noting only 31 Powerball and Oz Lotto jackpots had reached that level this year. Revenue from these games dropped 15.3 per cent from $898.4 million to $760.6 million.
Mr Cooke said turnover growth at the Ubet wagering division had been subdued following the loss of 347 races due to bad weather. The closure of Eagle Farm to racing until next year also had impacted on Tatts’ operations.
Tatts shares rose 2.29 per cent to $4.02 yesterday. It will pay a final dividend of 8¢ a share.