LOTTERY WIN DRIVES $252M PROFIT FOR TATTS

GAMBLING company Tatts Group (ASX: TTS) has benefited from a boom in its lotteries business to grow its full-year profit during a transitory period. 

After-tax profits on a statutory basis surged 25.7 per cent to $252 million, underwritten by a record-beating lotteries performance.

Managing director Robbie Cooke (pictured) says the more competitive wagering landscape may have slightly impacted the company's performance, as well as the relaunch of its wagering operation as UBET, but this division only took a minor revenue snag of 1.5 per cent.

"Lotteries had an outstanding year - growing revenues 2.8 per cent to $1.98 billion, no small feat given the softer jackpot run in the year," says Cooke.

"Our digital initiatives gained strong traction both in wagering and lotteries and, at the latter part of the year, this was sealed off with the successful relaunch of our wagering operation as UBET.

"Not unexpectedly, the pack of European and domestic bookmakers remained as competitive as ever, and this, coupled with a necessary easing in our marketing activity leading into the new brand launch, had an impact on revenue performance.

"Wagering EBITDA was down 4.5 per cent in line with the flagged reinvestment in Tatts' wagering operations, and reflecting an operating margin consistent with the level indicated a year ago."

Online traction continued to build with a 2.9 million people-strong database starting to be utilised and more consumers hopping online for lotteries and wagering.

The company saw 11.1 per cent of all lotteries sales transacted online throughout the year, and 25.7 per cent of all wagering occurring there too. This represented 20.9 per cent and 12.5 per cent growth respectively on the prior corresponding period.

Technology remains a key focus for Tatts, with Cooke saying the company is employing stricter focus on its online marketing, social, analytics and CRM systems to keep ahead of the game, and raise its tech-centric UBET brand. 

UBET stores already essentially function as physical 'bricks and clicks' spaces, where television and computer screens are hallmarks.

"Our ground-breaking and category leading next generation retail stores have already shown, albeit on a small scale, that potential exists to dramatically alter 'bricks and mortar' retail performance," says Cooke.

"To-date, this has been a much under-exploited part of our armoury.

"From a technology perspective we have embarked for the first time on rapid prototyping - trialling products in the field - 'UBET Live', an innovative in-venue in-play betting module, is the showcase of this approach."

Tatts is paying a final dividend of 7.5c per share, taking the total dividend paid in financial year 2015 to 16.5c. This is a 22.2 per cent increase on the year prior.