Tattersalls Limited (TTS) told its shareholders today it will be hard to beat last years operating profit result, due to regulations imposed on the business by the Victorian government.
Applicable from 1 January 2008, the new regulations will require removal of 283 gaming machines.
"Accordingly, it will be difficult for this business to exceed the operating profit recorded last financial year notwithstanding the effort we have made to comply with these new restrictions, including a $27 million investment in new machines and games during the first half." Chief executive Dick McIlwain told the shareholders at the company's annual general meeting today.
On a positive note, the Tatts Pokies business in FY2008 so far has ‘delivered the best start to a year achieved since smoking bans in gaming rooms in 2002'.
Total gaming machine revenue is up by 3.7% so far.
"This growth, and the careful management of overheads, has meant that operating profits to date have off-set the cost of the extra health benefit levy imposed on this business by the government of Victoria from July 1 this year.
McIlwain also provided an update on how Tattersalls' business units are tracking so far in 2008.
Unitab Wagering sales have declined by 7% year to date, mainly due to equine influenza and subsequent racing restrictions. Maxgaming is ‘enjoying a better year following the decision last year to protect this business with longer term contracts in Queensland and the shift to more reliance on wide area links within the hotel sector in NSW'.
Tattersall's Lotteries has progressed rapidly and, in other parts of the business, Bytecraft and International continues to extend its customer base and build its revenue base.
"The results achieved so far this year illustrate how resilient the Tatts business model has become. The second half of FY08 is expected to see a recovery in the wagering business (Unitab) while Tatts Pokies will struggle under the weight of new government restrictions," added McIlwain.
Tattersalls shares added 11 cents to $4.00.
