Australia’s Tabcorp takes hit on gaming, wagering

Melbourne (Reuters) – Tabcorp Holdings Ltd, Australia’s top gaming group, reported an annual net loss reflecting the loss of its Victorian slot machine duopoly and a surprise write down on the value of its wagering business.

However it reported a flat profit before one-offs, slightly ahead of broker forecasts, and said it would hold its dividend steady, even though gamblers were tightening their belts in the face of higher interest rates, grocery and petrol bills.

„I think the result will be taken fairly well, because people were expecting either a cut in the dividend or an earnings risk because of wagering, none of which eventuated,“ said an analyst who declined to be named before talking to clients.

Tabcorp, which owns Sydney’s Star City and three other casinos, TAB wagering and Keno games, said it would pay a special dividend, equivalent to what it would have paid as a final dividend, for a full-year payment of 94 cents a share.

„While we are conscious of global uncertainty and a softening economy, based on the current outlook for the company we expect that this payment per share can be maintained,“ Tabcorp chairman John Story said.

In April, the state of Victoria shocked Tabcorp and its rival Tatts Group by stripping them of their duopoly over the state’s 13,750 slot machines from 2012 and said it would not refund the companies for the loss of their licenses.

That decision hammered both groups‘ share prices, with Tabcorp down 42 percent so far this year, down nearly twice as much as the broader market .

While the companies plan to fight the government for compensation, Tabcorp took a AUD 487.7 million charge on the licenses and said it would amortise the remaining AUD 106 million value of the license over the next four years.

The company also took a AUD 194 million write down on the value of its wagering business, which it said partly reflected changes in the competitive environment.

Overall it reported a net loss of AUD 164.6 million (USD 150 million) after the charges.

The company reported a normalised net profit after tax before items of AUD 516.9 million for fiscal year ended June 30, in line with a year ago and about 2 percent ahead of analysts‘ forecasts, according to Reuters Estimates.