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Sounds positive?


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At least they are publishing some data.

I note that

1.  There is no differentiation between tote and fixed for racing

2.  Operating expenses are down 2.6 mil for Aug on Aug.  Multiplied out, this would be 31.2 mil annually, more like what has been talked about, so that is good, but no comment on Fixed expenses

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Interesting that the numbers in the release, show punter losses on racing and sports to be up 5% on last year. That has translated into more net revenue (as expenses have thankfully been reduced).

Note that the turnover being up 15% has only resulted in 5% more gross betting revenue - meaning their overall margin has dropped from 16.8% to 15.4% for that particular month. Which is suggestive of a poor result for fixed odds (and a likely ever decreasing investment in tote pools).

Also note that NZ racing made up 25% of that turnover. If the return on NZ racing mirrored the overall, that would equate to NZ racing delivering well under $3m in net profit (from gallops, harness and dogs). NZ gallops alone, on average pays out around $4m per month in stake. Looking like a brilliant model.

Punter losses are key to the sustainability of NZ racing. 5% extra in August is OK. Will that get better over the next 11 months? It will need to.

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Of course, I haven't got to the distressing part of all this.

With all this increased turnover (how wonderful), and the increased betting revenue from the same period last year, the worry is that having reduced expenses by $2.6m, the net profit has increased by only $1.4m. So only about 50% of the cost savings has shown up in the net profit - even though they supposedly had more betting revenues.

So $1.2m of the saved expenses went elsewhere, along with the 5% extra betting revenue - all disappeared. Leaving just 50% of what they managed to save in operating expenses. No doubt a fair amount of that went to paying Australian race field fees, commingling fees and sporting payouts. All hidden in that release.

And apart from that, things were not good last year (being the comparison they are using). 

The way things are based on that, if they reduce operating expenses by $30m in the year, that will equate to $15m extra net profit - IF they can keep on obtaining the 5% increase in betting revenues. Who wants to vote on whether they will save $30m this year in operating expenses from last year? Who wants to vote on whether they will achieve 5% growth on betting revenues this year?

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2 hours ago, curious said:

I think the first quarter was pretty ok wasn't it?

Do we have that detail around net profit? Last year for the first 6 months, net profit was down 2.8m from the year before for the first 6 months. And both years have required funding from reserves etc to meet payout.

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7 minutes ago, curious said:

Which has them $0.95m up for the first quarter last year first quarter. And for the first half, they were down $2.8m. Which suggests that for the second quarter last year, they achieved $3.75m less than for the corresponding period the year before.

And both years were not good years overall.

My main issue is that they could only achieve an increase of $1.4m net profit for that month (yoy), after stating their operating expenses had reduced by $2.6m (yoy). So the big shift has been an upwards move in turnover related expenses? Do you agree?

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