Tabcorp has gone into the red as its deal with the UK's Sun newspaper bleeds cash

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Tabcorp posted a $20.8 million loss for the full year with a fight against money laundering allegations leaving a hole in profits and its UK joint venture with the sun newspaper, Sun Bets, reporting loses of $47.6 million.

The value of the Sun Bets investment, an online wagering business started in 2016, was also written down by $20.7 million

Before significant items, including $61.8 million for court action by financial intelligence agency AUSTRAC over money laundering, the net profit after tax was $178.9 million, down 3.8%, but within guidance of between $173 million and $180 million.

Revenue was up 1.9%, and within guidance, at $2.23 billion.

Tabcorp, one of the world’s largest publicly listed gambling companies, operates the TAB, Keno, tab.com.au, Luxbet, Sky Racing, Sky Sports Radio and Tabcorp Gaming Solutions.

“FY17 was a strategically important year for Tabcorp as we reshaped the business for growth,” says CEO David Attenborough.

Investments included $128 million for the acquisition of gaming technology group Intecq, establishing Sun Bets and progressing the merger with Tatts, expected to be done by the end of the year.

Tatts and Tabcorp are working through regulatory approvals for the $11 billion merger of the gambling businesses to create an ASX 50 company with combined revenue of more than $5 billion.

“We accelerated our digital investment in our wagering and media and Keno businesses, while gaming services continued to expand geographically,” says Attenborough.

“The increase in operating expenses was driven by the acquisition of Intecq and planned investments in capability, technology, marketing, risk and compliance. We expect our investment in these areas to reduce the risk associated with the Tatts integration.”

The UK start-up Sun Bets recorded an EBITDA (earnings before interest, taxes, depreciation, and amortisation) loss of $46.2 million.

“Following the establishment phase, the leadership and operations have been reset to improve the positioning of the business for FY18,” says Attenborough. “Sun Bets is focusing on customer acquisition and product development in FY18.”

Tabcorp declared a fully franked final dividend of 12.5 cents a share, taking the full year payout to 25 cents a share, or 90% of net profit after tax before significant items.

Source: Tabcorp

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