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Merger costs, Sun Bets hurt Tabcorp profit

Trevor Chappell  |  08 Feb 2018Text size  Decrease  Increase  |  
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MELBOURNE - [AAP] Gaming giant Tabcorp's (ASX: TAH) first-half profit has fallen nearly 60 per cent, dragged down by the cost of its $11 billion merger with Tatts, an underperforming UK joint venture, and the closure of digital wagering business Luxbet.

Tabcorp on Thursday said net profit for the six months to December 31 fell to $24.6 million from $58.9 million in the prior corresponding period following a post-tax hit of $57.4 million from one-off items.

Tatts Group acquisition costs totalled $59.3 million, and the Luxbet closure costs totalled $12.4 million.

Tabcorp has set aside $52.2 million in provisions and impairments for Sun Bets, and said the future of the online UK wagering platform remains under review.

Tabcorp's underlying profit, which excludes the one-off items, was down 20.2 per cent to $82 million, from $102.7 million a year ago.

The underlying result was partly weighed down by an 11.6 per cent drop in earnings from Tabcorp's wagering and media division.

The results include an 18-day contribution from Tatts Group.

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"The 1H18 financial result reflects a period of reshaping the Tabcorp business for sustainable growth," Tabcorp chief executive David Attenborough said in a statement.

"This includes implementing the combination with Tatts, exiting Luxbet and Odyssey Gaming Services, and our ongoing investments in areas such as our digital capability, customer acquisition and the risk management and compliance framework."

Tabcorp said that, in the first half, Sun Bets recorded an earnings loss of $22.5 million and that its performance was unsatisfactory.

Tabcorp expects the combination with Tatts to deliver at least $130 million in benefits to earnings in the first full year after integration, which is expected to take two years.

Tabcorp said integration is progressing well.

Tabcorp shares were 25.5 cents, or 4.99 per cent, lower at $4.855 at 1101 AEDT.

TATTS MERGER COSTS, SUN BETS HURT TABCORP

* First-half profit down 58.2pc to $24.6m

* Revenue up 18.7pc to $1.38bn

* Interim dividend down 1.5 cents to 11 cents, fully franked

 

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© 2021 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

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