Tabcorp, the Australian lottery and gaming provider, has introduced cost reduction measures to respond to the negative impact on its revenue due to the coronavirus spread, that included the temporary layoff of more than 700 employees. Yet, the full extent of the blow the company is taking from the ongoing health crisis on its bottom line is unknown, Tabcorp reiterated.
Retail Vertical Closed
In Australia, much like anywhere else across the world, casinos were forced to close doors to support the governmental measures to slow and contain the outbreak of the coronavirus. TAB agencies, the sports betting retail estate of the gaming company, were also affected by the decision. By the time the closure commenced, March 23, Prime Minister Scott Morrison warned it may continue for up to six months.
Even with TAB agencies open, the cancellation of all major sports events around the globe left Tabcorp with not much to offer wagering-wise. The operator already issued a warning that mass closure of gaming facilities, hotels and pubs would adversely affect its revenue.
Comprehensive Set of Measures
The uncertainty surrounding the duration of the current state of affairs has now forced Tabcorp to stand down more than 700 employees, albeit temporary until June 30, from businesses that were affected by the closure. In addition, all employees that were not affected by the temporary layoffs would have to take one day of leave per week, starting April 6 until June 30. Besides standing down employees, Tabcorp announced a 40% cut in the number of its technology contractors, in an attempt to trim costs to balance the reduction expected in revenue.
Managerial staff at the company was subjected to significant pay cuts. Managing Director and CEO David Attenborough would take a 20% fixed remuneration pay cut until the end of the financial year, while chairman and non-executive director fees would be further reduced by 10%, having already been reduced by 10% since September 2019.
Liquidity-wise, the Australian lottery and gaming operator pointed out it was looking to secure an additional AU$226 million short-term facility, as well as deferred settlement of certain state payroll, Keno and lottery taxes relating to the six months starting from April 2020, historically amounting to over AU$40 million per month. In addition, Tabcorp would review its capital expenditure program to June 30, 2020.
JobKeeper Wage Subsidy Scheme
Tabcorp informed that all temporary laid-off workers could access their accrued leave benefits. The operator said it would explore whether its employees would be eligible for the JobKeeper wage subsidy. Last week, Australian government decided to allocate AU$130 billion, the JobKeeper scheme, funds enough to provide for 6 million workers a flat rate of AU$1,500 a fortnight to prevent them from losing their jobs.
On a positive note, Tabcorp’s Lotteries & Keno and Wagering & Media digital channels continue to operate, as well as the retail network of newsagents, convenience stores and other outlets, and thoroughbred, harness and greyhound races in Australia are still being conducted, albeit closed for the public.