The Star City casino was a standout performer for Tabcorp in 2002. Photo: PETER MORRIS
Outgoing Tabcorp managing director Ross Wilson will leave the gaming group on a high after handing down a 39 per cent increase in earnings on the back of a strong performance from its Star City casino.
The Victoria-based company posted a net profit after tax of $261 million, well up on last year’s $187 million and at the top end of market expectations.
Mr Wilson’s once controversial acquisition, Sydney casino Star City, was the standout performer in 2002, posting a 41 per cent surge in profit before interest and tax to $158.5 million, helped by cost reductions and the scrapping of its loss-making high-roller business.
Mr Wilson, who leaves the group at the end of the month, said: “I am leaving the UFABet company in a very strong position, which is a credit to the board, management team and employees,” he said.
Mr Wilson, who oversaw a 32.5 per cent annual compounded growth rate since 1994, said he was confident the company could maintain above-market growth rates in the new financial year and into the future.
He cited second-half profit growth of 39.6 per cent – above the first-half growth of 38 per cent – as evidence of a positive trend.
Still, Mr Wilson said he expected fiscal 2003 “to be a very tough year” given economic conditions.
Mr Wilson said the company should focus on a local acquisition.
Tabcorp paid down $165.4 million in debt during the year, giving it a debt to equity ratio of just over 50 per cent and a balance sheet allowing it to make another billion-dollar-plus acquisition.
“But I’d like the company to do what it’s done before: wait ’til the time is right. I wouldn’t rush it. If you’re wrong, you never recover,” Mr Wilson said.
Tabcorp’s result was struck on a 6.6 per cent increase in sales to $1.9 billion.
The Star City performance was helped by the closure of its high-roller operation, which lost $6.5 million in the previous year.
On a like-for-like basis, Star City’s profit was up 34 per cent.
Star City sales rose 4.4 per cent to $611.9 million, but improved in the second half, rising 6 per cent.
Star City’s operating expenses slumped 6.7 per cent, helping keep costs to $1.53 billion, against the previous year’s $1.47 billion.
Tabcorp’s wagering operations’ profit before interest and tax rose 21.9 per cent to $63.9 million, helped by the success of the soccer World Cup, which drove a 68.5 per cent rise in sports betting. Sales from the unit rose 6 per cent to $403 million.
Its gaming division’s profit before interest and tax rose 5.7 per cent to $230 million, despite an additional $12.2 million in government levy, which was offset by an 8.4 per cent increase in sales to $917.6 million.
Shares in the company fell 11¢ to $12.89 yesterday after running up almost 8 per cent in the previous six sessions.