Tabcorp furloughs 700 in new Covid-19 mitigation measures

Australian gambling operator Tabcorp has announced that is it to furlough more than 700 of its staff until 30 June as part of its strategy to mitigate the impact of the novel coronavirus (Covid-19) outbreak.

Casinos in Australia have been closed since 23 March under measures set out by Prime Minister Scott Morrison in an effort to slow the spread of coronavirus. At the time, the Prime Minister said the closures could last for up to six months.

Tabcorp had previously warned that the mass closure of casinos, as well as hotels and pubs, would adversely affect revenues. However, Tabcorp’s Lotteries and Keno, and Wagering and Media digital channels continue to run, as do the lottery retail network comprising newsagents, convenience stores and other outlets.

The operator has now announced a series of measures to help lessen the impact of the closures. These include temporarily standing down over 700 Tabcorp staff until the end of June in businesses across the group where there is no work as a result of shutdowns.

Tabcorp said the idea behind this is to retain jobs in the long term, adding that affected staff can access accrued leave benefits and are expected to resume work when business returns to normal.

The operator added it is exploring its eligibility for the Federal Government’s Job Keeper Wage Subsidy, whereby it would be able to access funding in order to pay furloughed staff during the period of closure.

Meanwhile, Tabcorp will also have full-time staff will take at least one day of leave per week between 6 April and 30 June, while there will be an initial cut of around 40% in the number of technology contractors employed by the business.

Its chief executive and managing director, David Attenborough, has taken a 20% reduction in his fixed remuneration until 30 June, while all board chairman and non-executive director fees have been reduced by 10% until the end of June.

Tabcorp will also carry out a thorough review of its capital expenditure program to 30 June, noting that business as usual capital expenditure in the second half of the year is now expected to be AUD$120m (£60.2m/€68.3m/$74.2m), down from the previous estimate of $160m.

In addition, Tabcorp said liquidity would be strengthened further by the deferral of certain state payroll, keno and lotteries taxes to be paid for the six-month period from April 2020. Historically, this outlay has amounted to over $40m per month.

“This continues to be a very challenging time for our people, businesses, partners and the community,” Attenborough said. “We are committed to working proactively and collaboratively with all our stakeholders so that we can collectively emerge from the Covid-19 period as strongly as possible.”

However, despite the mitigation efforts, Tabcorp said it would not be able to “reliably quantify the effect” of Covid-19 on group earnings. As such, the operator said it is not in a position to provide specific guidance on earnings or financial impacts of the virus in FY20 and FY21.

Tabcorp also noted that last month, it expanded its banking facilities through an additional $226m short-term facility. As of 3 April, it had undrawn facilities of $100m and unrestricted cash of $649m.

Apart from the US private placement of $171.5m, which matures in December 2020, there are no other debt maturities until April 2022.