Spring racing, dogs drive Tabcorp profit - Friday 12th of August 2005

Tabcorp Holdings Ltd expects further earnings growth after delivering a strong annual result driven by its acquisition of rival Tab Ltd, a successful Spring racing carnival and more punters going to the dogs.

But Australias largest listed gaming group was outsmarted by high-end gamblers at its casinos which include Star City in Sydney and Jupiters on the Gold Coast.

Tabcorp chief executive Matthew Slatter said the top of the range high rollers walked away with $4.0 million in 2004/05.

"These customers are doing better than the house," Mr Slatter said.

Mr Slatter said Tabcorp looked at the issue over a 10 year period and believed the wins and losses "normalise" over that period.

Tabcorp is targeting double digit earnings growth over the next 12 months after posting a net profit of $368.8 million for 2004/05, up 19 per cent on the previous year.

Mr Slatter said the gaming and entertainment group had made a solid start to the new financial year with overall revenue growth of 4.3 per cent to August 27.

"Our main objectives for the 2006 financial year are to complete the two-year process of the Tab Ltd integration and continue organic business growth across all divisions," he said.

Tabcorp took control of New South Wales-based Tab Ltd in mid 2004 after a $2.3 billion battle with UNiTAB Ltd.

Tabcorps revenue rose 65 per cent to $4.12 billion in 2004/05 while net profit before goodwill amortisation and non-recurring items was $513.8 million, up 40.8 per cent.

Mr Slatter said he wants to resolve the bitter dispute with horse racing pay TV company ThoroughVisioN (TVN) which is now before the courts.

TVN shows the Victorian and Sydney races while Tabcorps Sky broadcasts all other thoroughbred racing coverage as well as greyhound and harness racing and some overseas racing.

Mr Slatter said the "split picture" was not in the punters interests and was confusing them.

"Our frustration has been the reluctance from TVN to try and mediate all these issues," Mr Slatter said.

"Were looking for all of the coverage in one place, easily accessible and simple to use."

Late on Tuesday, Tabcorp and TVN agreed to meet next week for mediation ahead of the prestigious Spring Carnival and Melbourne Cup.

The NSW and Victorian governments said both racing broadcasters were aware of the need for a quick resolution.

"We are looking at a time frame of two to three weeks," Victorian Racing Minister John Pandazopoulos said.

Victoria was the best performing wagering state in 2004/05 with revenue rising 6.2 per cent to $475.4 million compared to a 1.8 per cent improvement to $844.3 million in New South Wales.

"NSW was below target and below expectations," Mr Slatter said, blaming the result on the TV dispute.

He said the record Melbourne Spring racing carnival and the "Watchdog" promotions of greyhound racing in Victoria backed up by more night meetings, helped boost Tabcorps coffers.

"It drove punters interests and turnover as well," he said.

The casinos division achieved earnings before interest, tax and amortisation (EBITA), before non-recurring items, of $386.9 million, which was 20 per cent higher than the previous year.

Tabcorp is extending Jupiters to include outdoors balconies with bars for smoking patrons and is looking for "smoking solutions" at its other venues, such as separate lounges, as state governments introduce smoking bans at gaming venues which have impacted on earnings.

Tabcorp estimates annual synergies at Jupiters, which it acquired in 2003, now stand at $56.6 million, $3.2 million above the synergies estimated at the end of the first half of 2004/05.

It currently has an joint venture agreement to supply up to 60,000 terminals for a Keno lottery system in China and is finalising a bid proposal to build and operate one of two resorts in Singapore.

Tabcorp declared a final dividend of 41 cents, up from 36 cents in the previous corresponding dividend and taking total dividends for the year up 10 cents to 81 cents.

Tabcorp shares soared 49 cents to $16.69

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