Tatts Group half-year profits under pressure
News on 16 Feb 2017
News on 16 Feb 2017
Aussie land and online gambling giant Tatts Group has reported reduced profit in its H1-fiscal 2017 report, noting that profits declined 16.5 percent year-on-year to A$ 122.8 million.
Commenting on the figures, Tatts’ chief executive Robbie Cooke said the performance “reflected both the challenge of cycling over last year’s all-time record Powerball and Oz Lotto jackpot run, and the continuing investment required for UBET to sustain its position in what is a hypercompetitive online sector.”
Revenue from Tatts’ UBET wagering house fell 2.5 percent and earnings were down 15.2 percent to A$57.9 million.
“There’s no side-stepping it – it has been a tough half,” Cooke said, noting that Tatt’s total half-year profit after tax fell 16.5 percent to A$122.8 million. He said the company was also impacted by A$10.4 million in costs related to the merger deal with Tabcorp struck in October 2016.
The report notes strong growth in the Tatts portfolio of non-jackpot lottery games, which saw revenue growth of 6.9 percent in the half-year.
Group revenue was A$1.4 billion for the half-year, down 6.9 percent from the prior comparable period. EBITDA was down 11.5 percent to A$235.1 million.
In related news, rival but soon to be partner Tabcorp reported Thursday that it has agreed to pay A$45 million (plus AUSTRAC’s legal costs on an agreed basis) to settle a money laundering case with AUSTRAC, the government’s financial intelligence agency.
The settlement removes one potential roadblock for the A$11 billion merger deal with Tatts, which still needs approval from the Australian Competition and Consumer Commission.
Tatts has rejected a rival bid from a consortium including Macquarie Group (see previous reports).
Having negotiated the settlement, AUSTRAC and Tabcorp have undertaken to approach the Federal Court for approval within the next week.
A statement issued by Tabcorp reveals that the company will make a number of admissions of non-compliance with its Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) obligations under its old AML/CTF program; and that in return AUSTRAC will withdraw the remaining allegations of non-compliance.
The statement notes that over the last three years Tabcorp has made a significant investment to enhance its AML/CTF compliance including:
* A new joint AML/CTF program, which AUSTRAC acknowledges is a material improvement on its former program;
* A substantial investment in capability in recognition of its obligations, including the employment of a Chief Risk Officer, the establishment of a Financial Crime Risk team, and a significant expansion of the AML/CTF team;
* The introduction of automated transaction monitoring capabilities and improvements in AUSTRAC regulatory reporting processes; and
* Comprehensive AML/CTF refresher training of approximately 29,000 people across Tabcorp’s staff and its retail outlets.
The investment is scalable and transferrable, including in the context of Tabcorp’s proposed combination with Tatts Group. The program will be subject to continuous improvement, in co-operation with AUSTRAC.
Tabcorp m.d. and chief executive, David Attenborough said:
“Tabcorp is firmly committed to being the industry leader in regulatory compliance across all of our operations. We are pleased to have reached an agreement with AUSTRAC on this matter and we will continue to work co-operatively with AUSTRAC going forward.”
