Tatts Group Limited shares rally on profit jump

Tatts Group Limited (ASX: TTS) today announced its half-year results to the market.

In the six-month period 31 December 2015, the $5.8 billion Tatts Group reported revenue growth of 6.5% to $1.61 billion and a net profit of $147 million, up 6.2% on the prior corresponding period.

The company’s Lotteries business was a strong contributor to group profit, realising an operating profit (which excludes tax and interest) of $165 million, up from $148 million in the same period last year. Bytecraft Systems and Talarius, part of the Gaming business, also performed strongly.

The Group’s online performance in its lotteries and wagering divisions was nothing short of outstanding,” the company’s media release read.

“A huge effort has been made by the talented team here at Tatts over the last few years, focusing on improving our customers’ digital journey, being more effective in our online marketing actions and communicating with our online audience in a most timely and relevant way,” Tatt’s CEO, Robbie Cooke, said. “The star performer in the half was our lotteries operation – it delivered record breaking performances at all levels.

The UBET business reported its first full six-month contribution to the group’s financials. Mr Cooke added. “Turnover increased 3% to $2.14 billion, a turn-around from the close to 1% turnover decline in FY15, cementing the wagering operation as the second largest (by turnover and EBIT) in Australia out of the pack of competitors.”

Pleasingly, the company declared an interim fully franked dividend of 9.5 cents per share, up from 9 cents per share a year earlier, payable 31 March 2016.

However, the company said that due to the ongoing pokies compensation case in the High Court, for which the judgement date is not known, the Tatts Group board has elected to suspend the dividend reinvestment plan. It said the judgement could have “potential implications” for the dividend reinvestment plan pricing period.

Looking forward the company says its second half has begun strongly. So far, the Lotteries business is outperforming and UBET turnover is up 4% on the comparable period last year.

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Motley Fool writer/analyst Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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