Tabcorp double burdened by covid and group impairment charges

Tabcorp Holdings has declared annual statutory operating losses of AUS $870m (€520m), as group performance was anchored by a combination of asset impairment charges and COVID-19 impacts recorded across its retail wagering portfolio. 

Publishing its 2019/2020 financial results, the ASX-listed gambling group recorded a 5% decline in group revenues, falling to AUS $5.22bn (FY2018/19: $5.44bn), with the company absorbing double-digit revenue declines across its Wagering-&-Media (-10%) and Gaming Services (-27%) units. 

From the period of March-to-June, Tabcorp was forced to shut down its venue gaming services and betting agencies across Australia, with the operator choosing to waive all retail fees in support of its partners.  

Tabcorp highlighted its ‘Lotteries and Keno’ unit as its only retail division that managed to maintain operational continuity during lockdown, having recorded a 2% revenue increase to AUS $2.91bn (FY2018/19: $2,8bn). 

Since March, Tabcorp governance has adopted a cost control programme to preserve cash in the business, leading to a suspension of all dividend payments – a decision previously communicated to its investors.

Operating under unforeseen circumstances, Tabcorp accelerated the restructuring of its Wagering-&-Media and Gaming Services divisions alongside completing final group integrations of its post-Tatts merger strategy. 

Prioritising its group restructuring directives, Tabcorp accounted for ‘special item’ goodwill impairment charges totalling AUS $1.14 bn (€680m) – consisting of Wagering & Media costs of AUS $905 million and Gaming Services costs of AUS $185 million.

In its statement, Tabcorp underlined that it had completed the key merger initiative of migrating Tatts UBET customers onto its TAB digital platform.

Completing the majority of integration projects, the ASX operator detailed that it will deliver further expected cost synergies of AUS $95m during full-year 2021 trading. 

However, at present, Tabcorp underlined that revenue benefits cannot be meaningfully measured during the pandemic.

Signing-off Tabcorp 2019/2020 accounts, Group CEO David Attenborough said:  “There continues to be uncertainty associated with COVID-19 in terms of both the severity and duration of the impact. Our focus is on positioning Tabcorp to emerge strongly in the post-COVID-19 environment.

 “With the integration of Tatts substantially complete, we are focused in FY21 on capturing the value from the digital opportunity across Lotteries, Keno and Wagering and on unlocking the value of a more competitive TAB.”