Tabcorp looks to 2018 after $20.8m FY loss
Tabcorp chief executive David Attenborough expects 2018 to be transformational after the gaming giant slipped to a $20.8 million loss for the 2016/17 financial year as strategic investments smothered earnings.
"FY17 has been a strategically important year for Tabcorp," Mr Attenborough said.
Tabcorp's result, down from a $169.7 million profit in the previous year due largely to the $199.7 million of significant items, came on the back of a string of heavy costs.
"We've executed on a number initiatives that have been critically important to position the Group for future growth and deliver sustainable returns for shareholders and our other stakeholders," Mr Attenborough said.
"Overall, in FY17 we have made significant investments to better position Tabcorp to deliver sustainable future growth and the cost of these investments is reflected in our FY17 results."
That includes the $53.9 million cost of its proposed $11 billion merger with Tatts, the acquisition of gaming-tech firm INTECQ for $4.9 million, and the Sun Bets operating loss of $47.6 million.
Significant items also include the $61.8 million cost incurred due to AUSTRAC proceedings in which Tabcorp agreed to a $45 million settlement and further impairments of $20.7 million.
Mr Attenborough said both Tabcorp and Tatts were committed to completing the merger of their businesses by the end of 2017, despite opposition from the competition watchdog and rival CrownBet.
Both the Australian Competition and Consumer Commission and CrownBet want a judicial review of the Australian Competition Tribunal's approval of the gaming giants' merger.
The Federal court is set to hear their application, opposed by Tabcorp and Tatts, on August 28-29.
Tabcorp and Tatts have delayed releasing their merger scheme booklet until September, because of the court proceedings and to include their full-year results.
Mr Attenborough said Tabcorp's core businesses - TAB, media, gaming, keno - were in "fundamentally good" shape.
"We've continued our digital expansion in wagering and Keno and taken steps to strengthen our retail partnerships with the launch of our digital commission model," he said.
He said Tabcorp was "ahead of the curve," with Keno's digital evolution well underway with 30,000 new account holders and the launch of the News Corp UK joint-venture Sun Bets.
"Sun Bets allows us to build a gaming and wagering platform that is replicable and scalable as we look to future expansion opportunities into other markets," Mr Attenborough said.
However, with Sun Bets already delivering a loss, an exit plan is in place under a commercial arrangement with News, if the business is not performing by 2018.
According to Citi analyst Rohan Sundram a date has already been set.
"Interestingly, Tabcorp has indicated that if certain revenue payment obligations to News UK are not met in FY18/19 - of $A18.3 million and $A27.2 million respectively - it could look to terminate the agreement effective 31 Dec 2019," Mr Sundram said.
Tabcorp has declared a fully franked final dividend of 12.5 cent per share, taking its full-year distribution to 25 cents, in line with the limits imposed by the Tatts deal.
Shares in Tabcorp were up 1.6 per cent to $4.36 at 1538 AEST.
TABCORP SLIPS TO FY LOSS
* Full-year net loss of $20.8m vs $169.7m profit
* Revenue up 1.9pct to $2.23b
* Final dividend steady at 12.5 cents a share, fully franked
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