Cost of Tatts pursuit weighs heavily on Tabcorp’s 2017 results

The AUS $11 billion merger pursuit of Tatts Group, has significantly impacted the performance of Australia ASX-listed gambling group Tabcorp Holdings.

Following a year of judicial hearings and compliance reviews, Tabcorp governance announced last December that it had secured final approval to complete its merger with Tatts Group.

However, publishing its half-year 2018 results (period ending 31 December), Tabcorp reports a 58% net profit decline to AUS $26.4 million, with Tabcorp governance outlining AUS $57 million in period ‘one-off’ costs.

During the H1 2018 trading period, Tabcorp governance would review a number of corporate assets, as the company moves to combine with Tatts Group to create a diversified entertainment group for betting and lotteries.

Further period costs would be attributed to the closure of Tabcorp online gambling subsidiary Luxbet and machine game system provider Odyssey Gaming Services.

UK online gambling joint-venture, Sun Bets remains ‘under review’, with the division reporting a period EBITDA loss of AUS $22.5 million, a performance deemed unsatisfactory by Tabcorp stakeholders.

Moving forward Tabcorp governance detailed that the company would begin its Tatts Group merger combination, seeking to deliver approximately AUS $130 million in group savings per year.

Updating the market Tabcorp Holdings Chief Executive David Attenborough, commented on corporate performance;

“1H18 was an important half for Tabcorp as we completed the combination with Tatts Group, bringing together two highly complementary businesses. The combination positions us well to invest, innovate and compete in a rapidly evolving environment,”

“The fundamentals in Tabcorp’s Wagering business remained strong in the first half, with good turnover growth and a strong uplift in digital turnover and customer acquisition. This was pleasing in a highly competitive wagering market in which competitors aggressively pursued customer acquisition ahead of regulatory change. The Wagering business has made strategic investments in digital commissions and venue partnerships. While these investments impact variable contribution, they have strengthened our venue partnerships and the sustainability of our Wagering business.

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