BUACC5932: Corporate Financial Analysis of Tatts Group Limited

This report presents a corporate financial analysis of Tatts Group Limited. It begins with an executive summary and table of contents, then provides an introduction to the company, its core business, and the industry it operates in. The report examines the company's financial structure, key elements of financial performance, and any events occurring after the reporting date. It also details changes in accounting policies, specifically addressing Property, Plant, and Equipment (PPE) and intangible assets, including their carrying amounts and accounting policies. The analysis extends to the company's corporate social responsibility (CSR) initiatives, highlighting key initiatives and their importance. The report concludes with a summary of the findings and references used. The report uses the 2019 annual report to analyze the financial and social aspects of the firm.

Running head: CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
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1CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
Executive Summery
The objective of this report titled “Corporate Financial Analysis of Tatts Group Limited” is to
analyse the financial statement of the firm to identify the accounting standards used by the
firm including the corporate financial performance of the firm. This report includes the brief
about the firm, about their assets as well as the corporate social responsibility of the firm.
This is prepared to analyse the accounting policies used by the firm to report their assets and
to identify the both the tangible and intangible assets of the firm. The report also analysis the
initiatives as per corporate responsibilities as well as the financial performance of the firm.

2CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
Table of Contents
Introduction................................................................................................................................4
Tatts Group Limited...................................................................................................................4
Core Business.........................................................................................................................4
Industry..................................................................................................................................5
Financial Structure.................................................................................................................5
Key elements of Financial Performance................................................................................6
Event Occurred after reporting date.......................................................................................7
Change in accounting policies...................................................................................................7
Assets – PPE and Intangibles.....................................................................................................7
Carrying amount of Property, Plant and Equipment..............................................................7
Accounting policies for Property, Plant and Equipment........................................................7
Intangible Assets of firm........................................................................................................8
Accounting Policy for Intangible Assets................................................................................9
Impairment of Asset...............................................................................................................9
Corporate Social Responsibility.................................................................................................9
Key Initiatives........................................................................................................................9
Initiatives of firm..................................................................................................................10
Importance of CSR...............................................................................................................10
Conclusion................................................................................................................................10
References................................................................................................................................11

3CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
Introduction
Tatts Group Limited is an Australia company which mainly have the three operating
divisions named Lotteries, Wagering and Gaming Solution. Though the above stated three
units, Tatts Group operates in entire Australia. This group came into existence in the year
2006 after merger of Tattersalls Limited and UNiTab Limited. In 2017, Tatta Group
combined along with the Tabcorp Holding Limited as currently operating under Tabcorp
brand. This report is basically prepared to analyse the financial statement of the firm to
identify the accounting standards used by the firm including the corporate financial
performance of the firm. This report includes the brief about the firm, about their assets as
well as the corporate social responsibility of the firm. The report uses the latest annual report
of the firm that is for the year 2019 for perform the research and to make the appropriate
conclusion. The main objective of the report is to analyse the both financial aspect as well as
the social aspect of the firm.
Tatts Group Limited
Tatts Group Limited is an Australian company and operates its business across the
country in three different units. The firm also created a national level brand on 1st of June
2016. Further, the firm also operates through its official website thelott.com. Firm combined
with the Tabcorp Holding Limited and currently working under the Tabcorp Brand (Tabcorp
2019).
Core Business
The above discussed three operating division of the firm perform the three core
business of the firm. The first one is Lotteries, the firm has nearly the monopoly in the lottery
market of Australia. The first and the core business of the firm is the lottery business which
the firm runs across the country through the four divisions (Tabcorp 2019). The all four
division operates under The Lott which is firm’s national brand for the lotteries.

4CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
Secondly, the firm holds the license of racing and sports wagering, hence the firm
exclusively operates the physical betting though which firm sells fixed odds and sports
wagering products.
While, the third unit of the firm deals with the electronic machineries of gaming by
comprising two companies ByteCraft and Maxgaming.
Industry
The Tatts Group Limited cannot be properly classified in the single industry as the
firm operates in the different sectors. Though, the main business of the firm is lottery and
betting apart from that the firm also involves in the various businesses like gaming and
services to hotel and clubs including the online business. Hence, the industry of the firm is
the recreational services which is one of the rapidly growing industry of Australia.
Further, the firm is very strong in his business as the group nearly enjoys monopoly in
its lottery business across Australia. While, wagering licence also makes firm the exclusive
producer of the wagering products as well as physical betting in the gaming. Hence, the firm
only faces the competitions in their gaming machine business. In this sector the top three
competitor of Tatts Group Limited is Ainsworth which is the developer and the publisher of
the mobile as well as web based games. This is Australia’s top gaming company. The second
competitor of Tatts Group Limited is the Jumbo Interactive which is a digital retailer of the
government and charitable lottery games.
Financial Structure
The financial structure of the company as per the reported by the firm in the annual
report for the year 2019 shows that the main source of fund for the company is the external as
the firm rises the fund through issuing the share (Tabcorp 2019). In the year 2019, firm does

5CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
not reported any major changes in the equity of the firm and only reported the few amount
under dividend reinvestment plan (O’Neill, Sohal and Teng 2016).
In the basis of the balance sheet for the year 2019, firm has more equity than the
liability which states that firm is in good financial position as well as the sources of funding
prepared by the firm is the via equity and not from the borrowings. While, the cash flow
statement of the firm also disclose that firm has not taken any loan for the 2019 as all the cash
generated by the firm for the year is from the is from the operating activities which is an
internal source.
Key elements of Financial Performance
There is various elements which the firm reports in their financial report to
communicate its financial performance. Tatts Group Ltd also reported many elements in its
financial report which represents the financial performance of the firm. Those are Revenue,
Profits, Operational efficiency, Capital efficiency and solvency and liquidity (Rani, Yadav
and Jain 2015). These are the key element reported by the firm in their financial report. This
can be used to compare the performance of the firm with the other firm to make decision
about financial performance of the firm. Usually, the financial performance of the firm can be
measured by comparing the financial ratios of the firm with the other firms of the same
industry (Revelli and Viviani 2015).
In the basis of the last five year’s financial performance, firm reported the increasing
trend in its total revenue and currently reported revenue $ 5482.3 million. Profit after tax
shows increasing trend in last three years but before that company reported the declining
trend in the profit. Only once in the last five year, firm reported loss this is in 2017 while
balance was $ (20.8) million (Tabcorp 2019). In the basis of the last five performance this can
be said that firm improve its financial performance and expected to grow more in near future.

6CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
Event Occurred after reporting date
Only the one event reported by the firm in the annual report which occurred after
reporting date that is Group entered into the sale agreements in respect of two surplus
corporate properties. The fund related to this agreement is $ 46 million which expected to
recognise in next two years (Tabcorp 2019).
Change in accounting policies
The firm reported in the financial report that all the accounting policy are same as
applied in 2018 except the new standards which firm adopted in the financial year 2019. The
new accounting standards adopted by the firm is AASB 9 for financial instruments and
AASB 15 for Revenue from Contract with Customers (Tabcorp 2019). This adaptation of the
above stated accounting standard is the major change reported by the firm in the financial
report.
Assets – PPE and Intangibles
Carrying amount of Property, Plant and Equipment
Property, Plant and Equipment Carrying amount as on 30 June 2019
($M)
Freehold Land 60.7
Buildings 27.5
Leasehold improvements 93.0
Plant and equipment 380.8
Total 562.0
Accounting policies for Property, Plant and Equipment
The firm reported the value of the above assets at the cost less accumulated
depreciation and impairment losses. While the assets are depreciated in the straight line basis

7CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
over the useful life of the assets. For operating leases, the assets are recognised on the basis
of the straight line over the term of lease.
Intangible Assets of firm
Intangible Assets Value ($ M) Composition and relevance
Licenses 2254.4 The operating licenses is
very relevant of the firm’s
business as firm will not
able to operate its business
without these licenses.
Further, any other firm also
need to have the license to
compete with the firm.
Goodwill 8249.8 The goodwill generated by
the firm by providing the
quality services to its
customers. Hence, this is
also directly related with the
business of the firm.
Customer related assets 138.3
Brand Name 218.1 Again same like Goodwill,
reputation developed by the
firm by providing
satisfaction to its customers.
Hence, this also directly
related with the firm’s
business.
Media Content and
broadcast rights
30.6
Software 373.4 The various gaming
machine run on the software
developed by the firm.
Hence, this also directly
related with the operations
of the firm.
Other 38.7

8CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
Accounting Policy for Intangible Assets
The firm different policy for each of its intangible assets. The licences acquired by the
firm is reported at cost less accumulated amortisation and impairment losses. The
amortisation policy of the firm follows the straight line method. The goodwill is not
amortised and reported in the cost less any impairment losses. While, the impairment loss
recognised for goodwill cannot be reserved (Glaum, Landsman and Wyrwa 2018). While,
other assets are reported same as the licenses.
Impairment of Asset
Assets Accumulated Impairment Loss ($ M)
Leasehold improvements 1.6
Plant and Equipment 1.2
Buildings 0.1
Corporate Social Responsibility
Key Initiatives
Yes Tatts Group Ltd, publishes the corporate social responsibility. In the basis of the
corporate social responsibility for the year 2018, the followings are key initiatives regarding
the social responsibility and sustainability are follows: -
 Community: - engagement and support to the employee and community for
improving social impact.
 Workplace: - to provide fairness, safety, diversity, opportunity performance and
growth.
 Governance: - Board and executive performance, transparency and stakeholder
engagement.

9CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
 Environment: - initiate to improve performance and awareness for outflow the
positive environmental outcomes (Tabcorp 2019).
Initiatives of firm
As per the media reports and news, Tatts Group Limited is one of the biggest funder
of the Australia which fund for the good causes like funding for charities and sporting clubs.
Further, firm also supports the 50-50 Foundation (Tabcorp 2019).
Importance of CSR
The CSR has become very important for the firm now a days (Ali, Frynas and
Mahmood 2017). The CSR is important for the firm in the following mentioned aspects: -
 For engaging customers: - The CSR report is important for the firm for customer
engagement. The sustainability information as well as the corporate responsibilities
published by the firm in their CSR attract the customers and help the firm retain the
existing customers. If the firm contributes something towards social welfare then
customers also prefer those firm rather than those firm which is not doing the same.
Secondly, CSR also build a good image among the market as well as among their
customer which also increase the bonding between firm and its customers.
 For retaining employees: - Same like the customer engagement, CSR also help firm
with their employee engagement. As stated above a good CSR report builds image for
the firm in market hence people always wants to work with a reported firm compare
to the other. Secondly, if firm contributes in the social welfare then its employees also
feels that they are also contributing in the social services which inspired them to work
with the firm.
 For avoiding competitions: - The proper and effective CSR planning of the firm
which is sated in the CSR report, make an different image of the firm in the market

10CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
which distinguishes the firm from the other firms. Hence, an effective CSR report of
the firm can avoid its competition with the other firms as firm have its separate image
and separate customer base.
Conclusion
The paper concludes that the Tatts Group Limited is one of the most profitable
gaming and betting Group. The firm reported a good growth in its financial performance in
last five years. The firm also appropriate their financial information in its financial report as
per the accounting standards. The main assets of the firm is the Property, Plant and
Equipment while the main intangible of the firm is the Operating Licences, Goodwill, Brand
Value and Software. The firm also impair their assets in the years 2019. Lastly, firm also
publish the CSR report in which the main initiatives of the firm are workplace, community
and environment. Tatts is also one of the biggest funder for good cause of Australia.
References
Ali, W., Frynas, J.G. and Mahmood, Z., 2017. Determinants of corporate social responsibility
(CSR) disclosure in developed and developing countries: A literature review. Corporate
Social Responsibility and Environmental Management, 24(4), pp.273-294.
Chernev, A. and Blair, S., 2015. Doing well by doing good: The benevolent halo of corporate
social responsibility. Journal of Consumer Research, 41(6), pp.1412-1425.
Glaum, M., Landsman, W.R. and Wyrwa, S., 2018. Goodwill impairment: The effects of
public enforcement and monitoring by institutional investors. The Accounting Review, 93(6),
pp.149-180.
Linnenluecke, M.K., Birt, J., Lyon, J. and Sidhu, B.K., 2015. Planetary boundaries:
implications for asset impairment. Accounting & Finance, 55(4), pp.911-929.

11CORPORATE FINANCIAL ANALYSIS OF TATTS GROUP LIMITED
Lins, K.V., Servaes, H. and Tamayo, A., 2017. Social capital, trust, and firm performance:
The value of corporate social responsibility during the financial crisis. The Journal of
Finance, 72(4), pp.1785-1824.
O’Neill, P., Sohal, A. and Teng, C.W., 2016. Quality management approaches and their
impact on firms׳ financial performance–An Australian study. International Journal of
Production Economics, 171, pp.381-393.
Rani, N., Yadav, S.S. and Jain, P.K., 2015. Financial performance analysis of mergers and
acquisitions: evidence from India. International Journal of Commerce and
Management, 25(4), pp.402-423.
Revelli, C. and Viviani, J.L., 2015. Financial performance of socially responsible investing
(SRI): what have we learned? A meta‐analysis. Business Ethics: A European Review, 24(2),
pp.158-185.
Tabcorp (2019). [online] Tabcorp.com.au. Available at:
https://www.tabcorp.com.au/TabCorp/media/TabCorp/Investors/Annual%20Report/Tabcorp-
AR-2019-Final.pdf [Accessed 13 Sep. 2019].
Tabcorp 2019. [online] Tabcorp.com.au. Available at:
https://www.tabcorp.com.au/getattachment/28ca3509-1de6-42da-b084-2996a98e6e06/
TC_2018-Corporate-Responsibility-Review [Accessed 13 Sep. 2019].
Tabcorp 2019. Tabcorp - Who We Are. [online] Tabcorp.com.au. Available at:
https://www.tabcorp.com.au/who-we-are [Accessed 8 Sep. 2019].
Wang, H., Tong, L., Takeuchi, R. and George, G., 2016. Corporate social responsibility: An
overview and new research directions: Thematic issue on corporate social responsibility.