Tabcorp To Write Down €605m As Covid Retail Acceleration Contraction Take Effect

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

The business made its announcement in a filing to the ASX Exchange, announcing that it has conducted a ‘review of assets’ under which it plans to incur a write-down of $1 billion to $1.1 billion under its financial results for the year ending June 30th, 2020.

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

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

Net income is estimated to range between $267 million and $273 million for the year, excluding the non-cash goodwill impairment charges. This will be a fall of at least 31 per cent from last year’s $396 million net income.

David Attenborough, Managing Director and CEO of Tabcorp, stated: “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 curb the spread of coronavirus in Australia have resulted in the closing of hotels, clubs and betting shops, as well as the widespread cancellation of sporting events, while Australian horse racing markets have been able to deliver them.

According to Tabcorp, following the merger of its two biggest rivals Sportsbet and Beteasy during the Flutter Entertainment tie-up with The Stars Group, the high level of rivalry on the ‘digital-centric’ betting market has also had an impact.

Last week, Attenborough stepped down from his role as chief executive after coming under growing pressure from investors over the performance of the company.

In addition to Tabcorp ‘s president Paula Dwyer, who also announced that she will leave Tabcorp, Attenborough led the company’s $11 billion AUS merger with ASX lotteries and wagering competitor Tatts Group (sanctioned December 2017) in a bid to shape Australia’s solely market-leading gambling asset.