Tasmania's largest private employer, pokies giant Federal Group, refused to pay a cyber hacker's ransom demand when its systems were seized in April but it still cost the company millions of dollars.
In its annual financial statement for the 2020/21 financial year lodged with the Australian Securities and Investment Commission, Federal Group — which trades as Mulawa Holdings — said the company was subject to "a major cyber-attack which resulted in the encryption of a number of systems".
The ransomware attack shut down the casino and hotel owner's gaming machines and hotel booking system for several weeks.
"The directors chose not to pay the demanded ransom," the financial statement said.
Executive general manager Daniel Hanna said the company had chosen not to contact the perpetrator of the attack so did not know the amount of ransom sought.
"Federal Group has not quantified the cost of the cyber-attack (which included external specialists, internal resources and foregone revenues) but estimates it would be several million," he said.
FY21 recovery from 'worst result in 20 years'
The company reported a $17 million increase in the direct costs associated with the provision of services and sale of goods from about $147 million in 2020 to $164 million in 2021.
It produced consolidated revenue of $547 million from its gaming operations, pubs, hotels and freight services, and an after-tax profit of $42 million–up from just $6 million last year.
"FY20 was Federal Group's worst result in almost 20 years," Dr Hanna said.
"Most of Federal Group's Tasmanian businesses were forcibly shut in early 2020 and reopened in June 2020.
Over the financial year, Federal Group paid just over $59 million in gaming taxes and licence fees and distributed $10 million in dividends to its owners, the Farrell family.
It reported gross assets worth half a billion dollars and an increase in the value of "biological assets" – the Arabian horses bred at the family's stables in New South Wales – from $867,000 to $1.1 million.
Impact of end of pokies monopoly
The report flags a potential drop in cash flow from next year, due to the end of the Federal Group's monopoly hold on gaming licences in the state.
From July 2023, venues will be able to own or lease their own poker machines rather than having to source them through the family company.
Federal retains the licences for the state's two casinos, keno and all the gaming machines in the pubs it owns directly.
Although the company accounts say the change will results in a "significant reduction in future cash flows", there is no corresponding write-down in assets.
An analyst, who did not want to be named, said that could suggest the company did not believe there would be much of a financial hit in the long run.
"They're basically saying they're not going to write down any assets so that probably means they don't think it's going to be too significant," he said.
"If there are write-downs it might be in the 2023/24 financial year."
He also said the company could be flagging a potential buying spree in the year ahead.
"They say they're looking to increase profit through development and acquisition but they can't say too much at the moment or it could result in unreasonable prejudice," the analyst said.
"That could mean they're signally a stronger, more aggressive position in the market as they look to buy up more pubs or assets like that."
