The reported net profit after tax was $257.9 million, down 2.0%.

Normalised net revenue was $2,190.5 million, up 2.6%. Revenue was driven by good performances in Wagering and at Star City casino, but held back by soft trading in the Queensland casinos. Gaming division revenue was flat. Expenses were up 2.9%.

The group incurred new race fields charges in Wagering and higher gaming taxes in Queensland casinos totaling $13 million after tax. These new charges were offset by a lower effective income tax rate in the first half, primarily due to research and development tax credits and the release of provisions following resolution of the long-running Star City pre-paid rent dispute with the Australian Taxation Office.

 

The divisional results for wagering for the six months to 31 December 2009, measured in normalised Earnings Before Interest and Tax (EBIT), were:

Wagering revenues were up 4.6% with growth in all lines of business and channels other than phone betting. Expense growth was 2.2%.

Revenue was strong in fixed odds betting, up 23.3%, which was assisted by very solid online turnover growth (including Luxbet.com), up 37.8%. Retail wagering turnover grew by 2.5%.

During the half, Tabcorp progressed important strategic initiatives. The company expanded fixed odds coverage of racing in Victoria and New South Wales, launched a loyalty program in its New South Wales business and entered into a partnership with Australia Post that will give account holders access to their accounts nationwide.

 

In addition, Tabcorp announced the expansion of Sky Racing from one channel to three channels, offering customers more choice and a dedicated thoroughbred racing channel.

These initiatives are designed to improve Tabcorp’s wagering offer to customers and strengthen its competitive position in a national market. Last year, the racing industries in each state announced the introduction of new race fields arrangements, under which they would charge product fees to wagering operators for betting on their racing product. In the first half of the financial year, race fields payments increased by $6 million compared to the first half of 2009. This increase is consistent with Tabcorp’s previous estimate that the annual cost of the new fees is approximately $30 million.

Distributions to the racing industry grew in the first half, with the Victorian racing industry receiving $176.3 million, up 2.0%, and the New South Wales industry receiving $126.7 million, up 2.8%. These distributions exclude the additional race fields fees paid by the company.

Chief Executive Officer Elmer Funke Kupper said that the company had responded well to the uncertain economic conditions without compromising its long term investment program. “We adjusted our short term plans to ensure that the company delivers acceptable financial results and improves its market position in its key businesses.

 

Mr Funke Kupper said Tabcorp was performing well in the difficult economic conditions. “We expect conditions to remain somewhat uncertain for the remainder of the 2010 financial year as government stimulus measures are wound down and higher interest rates affect discretionary income. In this environment, we will maintain our current focus on operational performance and deliver the key investment programs we have under way.

“2010 is an important year for the company, particularly in wagering. Greater clarity will emerge in the regulatory environment and we expect that the Victorian Government will award the post-2012 Victorian wagering licence. These events will allow us to chart the future direction of the company with greater clarity,” Mr Funke Kupper said.