Please Wait, Loading Content...

Tabcorp shares plummet after massive first-half losses

TABCORP investors are looking for answers after the Australian gambling giant returned some underwhelming financial figures for the first half of 2017.

In its half-year report, which was released on Thursday, the company registered a 28 per cent slump in overall profits from ordinary activities.

That has triggered a tumble in Tabcorp’s share price, which has fallen almost 5.3 per cent to $4.50.

Although the firm turned over $987 million on wagering alone in the back half of the 2016 calendar year, net cash flow was down some $391.2m compared to the corresponding period in 2015.

The biggest dints in the Tab’s profit margins have come from extraordinary expenses, not all of which were undertaken voluntarily.

It sunk $17.9m into the August 2016 launch of Sun Bets – a joint venture with News Corp that aims to grab a share of the lucrative UK gambling market.

The betting and gaming behemoth also spent more than $9m on a takeover bid for the Tatts Group and another $4.1m on the integration of INTECQ, which was purchased for $128m in August last year.

But the biggest drain on Tabcorp’s profits is the ongoing legal battle with the Australian Transaction Reports and Analysis Centre (AUSTRAC).

Now 18 months old, that saga over allegations of money laundering and breaches of counter-terrorism laws cost the wagering titan another $20m in 1H17.

When those expenses are dismissed, the company’s totals earnings actually improved by around five per cent to $102.7m.

Tabcorp CEO David Attenborough made a point of highlighting those circumstances in Thursday’s media release to shareholders.

“All three Tabcorp businesses grew revenues in the half,” he said.

“Statutory Net Profit After Tax, however, was impacted by a number of significant items including costs relating to our proposed combination with Tatts Group and the AUSTRAC civil proceedings, as well as start-up results for the new UK business, Sun Bets.”

Although business-wide revenue might be up, Tabcorp’s primary wagering services have stumbled onto a slippery slope.

Digital turnover from online and mobile betting has grown nearly 13 per cent, but TAB totaliser earnings are down $44.3m on last year – a fall of 6.9 per cent.

According to the company, those returns were at least “partly impacted” by a decline in high-stakes betting activity from VIP clients.

Attenborough accentuated the positives, focusing instead on the 21.2 per cent boom in fixed odds betting and the brand’s solid performance throughout the 2016 spring carnival.

“Wagering and media continued to respond to the highly competitive environment and TAB had a record-breaking Spring Racing Carnival,” said the chief executive.

He added that the company was “well placed to continue to deliver attractive returns to our shareholders, as well as the many
stakeholders and partners who share in the revenues generated by our businesses”.

Tabcorp also confirmed its intention to press ahead with the proposed Tatts Group merger, which is touted to go through by mid-2017.

Tags:
,
Share this post on:

Join the Betting Planet team!

Are you passionate about sports betting? Sports news writers required TODAY!

Experienced preferred but not essential. (All apps considered).

View Careers at Race Media
  • Live Betting Odds
  • Claim a 50% deposit bonus up to the value of USD $250

Top Online Casinos