Profit impacted by costs that include A$14.4 million on preparing the company's new SunBets online operation in the UK
Major Australian gambling group Tabcorp gave investors a shock Thursday when it released its FY 2015-2016 results, reporting a 49.3 percent year-on-year plunge in net profit at A$169.7 million (2014-2015: A$334.5 million.)
Overall, revenue climbed 1.5 percent to A$2.19 billion, whilst operating expenses rose 2.2 percent in 2015-16 to A$378 million.
The company attributed the poor performance to 'significant items after tax' of A$16.2 million, compared to a one-off tax benefit of A$163.2 million in 2015.
The significant items included costs relating to establishment of the company's new online SunBets venture in the UK (A$14.4 million) and fighting money laundering allegations from AUSTRAC (A$13.6 million).
These were partially offset by income tax benefits relating to a New South Wales retail exclusivity payment, and R&D claims (A$11.8 million).
Excluding the one-off items, Tabcorp's annual underlying profit rose 8.5 percent to A$186 million, as digital wagering continued to grow strongly and the keno business returned to growth.
Taking a look at the brighter side, momentum in the wagering and media business improved in the first half of the year, with 15 percent growth in the important digital side of the business. And the company expects rewards to flow from the SunBets venture in the future.
Management also noted that the recent acquisition of INTECQ will also help its gaming services business TGS.
"Recent initiatives such as the proposed A$128 million acquisition of gaming systems and monitoring firm INTECQ and the launch of SunBets further strengthen and diversify our operations. SunBets is an exciting opportunity for Tabcorp to take its market-leading wagering capabilities into the A$7 billion UK online gambling market," chief executive David Attenborough said, adding that a final dividend of 12 cents a share will be paid at the end of September.
The company expects operating costs for SunBets of A$25 million in the 2016/17 year.
Tabcorp also plans to release a new TAB app before the Spring racing carnival and AFL and NRL finals.
Management noted that the mobile channel remains the key driver of the growth in Tabcorp's digital betting business, representing 65 percent of turnover.
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