Tabcorp expects $1bn hit as ‘COVID and retail contractions’ take effect

Tabcorp Holdings will write down its wagering and media business by at least AUD $1 billion (€605m) as a result of COVID-19 shutdowns and ‘the possible acceleration of retail contraction’.

The company made its statement in a filing to the ASX Exchange, in which it revealed that it had undertaken a ‘review of assets’ in which it expects to incur a $1 billion to $1.1 billion write-down in its financial results for the year ending 30 June 2020.

The expected write-down is based on ‘the potential decline in consumer confidence and increased economic uncertainty’ in the pandemic’s wake, and ‘the possible acceleration of retail contraction and uncertainty regarding any longer term impacts as an indirect result of the pandemic’.

Issuing its preliminary unaudited results for the year ended 30 June 2020, the operator expects EBITDA to be in the range of $990 million to $1 billion – down from $1.12 billion in 2019.

Net profit, excluding the non-cash goodwill impairment charges, for the period are expected to be in the range of $267 million to $273 million. That will be a decline of at least 31% compared to last year’s net profit of $396 million.

Tabcorp’s Managing Director and CEO, David Attenborough said: “COVID-19 has materially impacted our Wagering & Media and Gaming Services businesses. We are facing into a challenging and uncertain environment, and the current operating conditions and those expected into the future are relevant factors in assessing the value of the goodwill in those businesses at this time.

“We remain confident in the strength and resilience of Tabcorp’s diversified portfolio of assets and are pleased that integration is now substantially complete. We are focused on supporting our people and partners during these challenging times while ensuring that Tabcorp emerges strongly post COVID-19.”

Measures to contain the spread of the coronavirus in Australia have led to the closure of hotels, clubs and betting shops as well as the widespread cancellation of sporting events, although it has been able to offer markets on Australian horse racing.

The high level of competition in the ‘digital-centric’ betting market has also had an effect, according to Tabcorp, following the merger of its two biggest competitors Sportsbet and Beteasy during the Flutter Entertainment tie-up with The Stars Group.

Attenborough stepped down from his position as chief executive last week after coming under increasing pressure from investors regarding the company’s performance.

Alongside Tabcorp’s Chairman Paula Dwyer, who also confirmed she would be leaving Tabcorp, Attenborough led the firm’s AUS $11 billion merger with ASX lotteries and wagering rival Tatts Group (sanctioned December 2017) in a bid to form Australia’s outright market-leading gambling property.

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