Australian racing and wagering giant Tabcorp says it expects to incur non-cash goodwill impairment charges of between AU$1 billion and AU$1.1 billion for the year ended 30 June 2020, related to its Wagering & Media and Gaming Services business arms.
The charges, which remain subject to an external audit and board review, follow a recent assessment which has taken into account a variety of COVID-19 related assumptions, Tabcorp said.
These include the direct impact of COVID-19 safety measures implemented by federal and state governments, possible acceleration of retail contraction and uncertainty on the potential longer-term impacts as a result of the pandemic, increased competition and structural changes in the Wagering & Media business, and a potential decline in consumer confidence and increased economic uncertainty.
Tabcorp noted that the book value of goodwill for its Wagering & Media and Gaming Services business segments at 30 June 2019 was AU$2.95 billion.
The company has also forecast subdued results for the 12 months to 30 June 2020, with EBITDA estimated to fall from AU$1.12 billion to between AU$990 million and AU$1 billion. Likewise, net profit after tax is tipped to be in the range of AU$267 million to AU$273 million compared with AU$396 million in 2019.
“COVID-19 has materially impacted our Wagering & Media and Gaming Services businesses, said Tabcorp Managing Director and CEO, David Attenborough.
“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.”