TATTS BETS ON STRONG FY15

Written on the 22 August 2014

TATTS BETS ON STRONG FY15

DESPITE posting a decline in full-year profit, Tatts Group (ASX: TTS) is betting on a strong start to FY15.

Profit on a statutory basis for the year ended June 30 was down 19 per cent to $200.4 million, compared to $247.3 million in the previous year.

The wagering, lottery and gaming business recorded a 7.8 per cent increase in profit before tax from continuing operations, with the comparative result distorted by a one-off $16.2 million tax benefit in FY13.

The same year Tatts was also “cruelled” with what it calls an “illogical” $42.6 million health-benefit levy charged by the Victorian treasurer for the final 46 days of its discontinued pokies business.

This one-off cost had a significant impact on the company’s bottom-line result, it says.

Group revenue fell 2.8 per cent to $2.86 billion, compared to $2.95 billion in the previous corresponding period.

Managing director and CEO Robbie Cooke says in spite of the result, FY14 marks a landmark year for the company.

“Outperforming the group’s FY13 result was never going to be an easy task,” Cooke says.

“Given the exceptional run of lotto jackpots in that year, coupled with the investment ramp-up this year in our wagering operation – an essential step to repositioning our business for future success.

“Against that backdrop, I am pleased with the result achieved in the reporting period, which saw the positive combination of record lotteries earnings, online migration and lower funding costs drive our performance.”

Tatts secured an exclusive 30-year wagering franchise with the Queensland Government in June, expected to generate $4.5 billion in the state’s racing industry.

During the same week, Tatts was awarded $540.5 million in compensation for its long running pokies license case with the Victorian Government – subject to an appeal process.

Cooke says securing the long-term rights in Queensland will give Tatts a competitive edge against out-of-state agencies.

“Significantly, the new arrangements provide for lower wagering tax outcomes and retain the right to offset race field fees against product fees.

“Enabling us for the first time to fight back against the swarm of competitors aggressively targeting Queenslanders, siphoning revenue away from both the Queensland racing industry and state coffers.”

Tatts launched a number of key initiatives during the year, positioning the company for growth in FY15.

For the lotteries division this includes multi-jurisdictional scratch-it tickets, Monday Lotto in Queensland, new South Australian website and exploring convenience fuel stores as a retail channel in Victoria.

Lotteries revenue was down 4.3 per cent at $1.92 billion, with the wagering side of the business also experiencing a drop of two percent to $642.3 million.

A 24-7 fixed price betting service on all racing codes and wider range of sports was launched to combat the decline, as well as a rewards program and enhanced self-service terminals.

Tatts’ gaming division proved to be a highlight for the company, contributing revenue growth amid waning lottery and wagering sales.

The company’s UK-based segment Talarius posted positive growth for the first time since 2008, with a 32.8 per cent rise in revenue to $103.6 million.

Maxgaming also boosted revenue for the first time since 2010, lifting 0.9 per cent to $114.2 million.

Cooke says the company’s renewed focus on marketing strategies, will also lure customers away from competitors.

“Our new wagering website and brand will launch in the year, which will attract a lift in marketing spend,” Cooke says.

“This spend will be offset to an extent, by the reduced wagering tax in our core Queensland market.

“Our focus remains on repositioning our wagering business for growth and capturing the sales momentum considered to be available in our markets.”

The board declared a final dividend of 5.5 cents per share to be paid on October 6.


Latest News

NEW CLASS OF EDUCATION NURTURES ENTREPRENEURS OF TOMORROW

THE rise in youth unemployment has affirmed the importance of entrepreneurship education, and south-east Queenslan...

DUET GROUP SUBJECT OF $7.3 BILLION TAKEOVER OFFER

HONG Kong's Cheung Kong Infrastructure has launched a $7.3 billion cash bid for one of Australia's largest en...

G8 SHARES BUOYED BY FORECAST PROFIT RECOVERY

CHILDCARE centre operator G8 Education (ASX:GEM) has revealed it is on track to post a pre-tax profit of up to $16...

BELLAMY'S FINDS EXPORTING BABY FORMULA INTO CHINA IS NO CHILD'S PLAY

BELLAMY'S (ASX: BAL) shares have suffered a 40 per cent drop in value today after the company hit a regulatory...

Related News

JB HI-FI IS THE GOOD GUY IN $870 MILLION ACQUISITION

ELECTRONICS giant JB Hi-Fi has formally completed its $870 million acquisition of home appliance chain The Good Gu...

ACCC ACTS AGAINST MERITON'S RIGGED REVIEWS

MERITON Property Services is under fire from Australia's main consumer watchdog, after it allegedly engaged in mi...

ACCC FIRES WARNING SHOT TO IVF PROVIDERS

IVF clinics have been put on notice by consumer watchdog, the Australian Competition and Consumer Commission (ACCC...

BIG W CEO QUITS AFTER 11 MONTHS

SALLY MacDonald has resigned as chief executive of BIG W ending her tenure at the helm of the struggling discount ...

Contact us

Email News Update Sign Up Contact Details

Subscribe to our mailing list

* indicates required
Email Format

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter