tts hits jackpot
Tattersall's maiden earnings hit jackpot By Christian Catalano Media and Gaming Reporter September 6, 2005
TATTERSALL'S introduction to the public appears to have come off smoothly, with the Victorian gambling giant bettering prospectus expectations for the June year and trading in line with its forecasts in the first few months of fiscal 2006.
Though revenue growth in its core gaming and lotteries division was moderate in July, managing director Duncan Fischer said a better than expected rebound last month meant Tatts was on track to achieve its $127.5 million net profit forecast for 2005-06.
"We are well positioned for our licence renewals and we have a strong balance sheet and healthy cash flows that will enable us to pursue further growth opportunities, add value, expand and diversify business opportunities going forward," he said yesterday.
Mr Fischer also hinted that plans for Tatts' $330 million in the bank were well advanced.
When asked if an acquisition would be announced before the year's end, he said: "It would be nice to be able to do it by then."
Shares in Tatts gained 7¢ to $3.30 yesterday as the company declared underlying earnings of $2.42 billion for the year to June 30, 1.5 per cent ahead of its prospectus forecasts.
The company did not declare a dividend.
Analysts said there wasn't much to be read from the results. "Given that the company only listed around two months ago, the real surprise would have been if the result showed a surprise," CCZ Equities gaming analyst Tony Waters said. "The key issue for investors in Tatts is what are they going to do with the $300 million-plus in cash sitting on its balance sheet."
Tatts also announced plans to put an extra 140 poker machines in its Victorian venues, taking the total to 13,492. Under the licence agreement, both Tatts and rival Tabcorp are allowed to operate a maximum of 13,750 machines. Analysts also noted that Tabcorp had in the past year overtaken Tatts for the first time in the share of Victorian poker machine revenue.
But Mr Fischer said there was room for growth in its Victorian pokies business, with Tatts now linking more machines to jackpot systems. About 33 per cent of are connected, with the company aiming to increase this to 40 per cent by next June.
The average daily revenue from each Tatts poker machine reached $254 last month, slightly ahead of forecast, and approaching levels achieved before smoking bans were introduced at venues.
Tatts' lotteries division produced earnings of $28.5 million, up 8.4 per cent on prospectus forecasts, thanks largely to a 10 per cent price increase in Powerball in February.
Analysts noted also that its venture into the South African gaming market — where it has set up 251 machines across 54 venues in Western Cape — had produced better than expected revenue.
Mr Fischer said Tattersall's "expects to be a frontrunner" when the Victorian Government allocated a new lotteries licence for 2007 onwards.
"Incumbency really is all about saying it's going to be hard for anyone else to be positioned as well as we are, going into this process," Mr Fischer said.
Tattersall's gaming licence runs until 2012.
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