Tabcorp's half year profit just fell 28% as its prepares for the Tatts merger

Ballarat Cup day at Ballarat Racecourse. Vince Caligiuri/Getty Images

Tabcorp profits have suffered due to costs associated with the proposed merger with Tatts, its court fight against money laundering allegations and an investment in a startup in the UK.

Net profit for the six months to December fell 28.1% to $58.9 million. Revenue was up 2% to $1.16 billion.

The result was within analyst forecasts. Stripping out significant one-off costs, underlying profit was up 5.3% to $102.7 million.

Tabcorp and Tatts in October announced a deal to create a diversified gambling entertainment group and ASX 50 company valued at $11.3 billion and with combined revenue of more than $5 billion.

The merger is expected to be completed by mid-2017.

“We have a clear vision to become the world’s most respected gambling-led entertainment business and to continue delivering growing returns for our shareholders,” says Tabcorp CEO David Attenborough.

“All three Tabcorp businesses (TAB, Keno, wagering services) grew revenues in the half.

“Statutory net profit after tax, however, was impacted by a number of significant items including costs relating to our proposed combination with Tatts Group and the AUSTRAC civil proceedings, as well as start-up results for the new UK business, Sun Bets.”

The half year results include significant items after tax of $43.8 million.

These include $20 million for civil proceedings brought by financial intelligence agency AUSTRAC, $17.9 million for the UK business start-up Sun Bets, $4.1 million for the acquisition of gaming technology group INTECQ and $9.1 million for the proposed merger with Tatts Group.

Over the six months, wagering and media revenue was up 1.4% to $987 million, driven by the Spring Racing Carnival for TAB.

Keno revenues were $112.1 million, up 2.2%, and gaming services $60.2 million, up 13.8%.

A fully franked interim dividend of 12.5 cents a share was declared.

Here’s more detail on the December half results:

Tabcorp is currently down 3.8% to $4.57 in early trade today.

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