GVC Says Mitigation Has Halved Coronavirus Impact

  • EBITDA impact cut to £50m per month
  • Dividend to be withheld
  • Virtual Grand National raises £2.6m NHS charities

GVC Holdings has said it expects mitigating actions, plus government employment support, to halve its previously estimated EBITDA impact from coronavirus. Those efforts should cut EBITDA impact to £50m per month from an earlier estimate of £100m per month, the London-listed company said on Monday.

The change in forecasts should reduce monthly cash outflow to £15m per month, as the company said it attempts to work toward a break-even cash flow.

But to be cautious, GVC said it will withdraw an interim dividend that otherwise would have been paid on April 23.

GVC and other bookmakers have been pounded by the cancellation of virtually all major sporting events, plus retail shop closures as part of international government measures to contain the spread of the virus.

Due to a strong start to 2020 prior to the onset of sports cancellations, the company said its total group net gaming revenue gained 1 percent in the first quarter.

Online revenue gained 16 percent, compared with a 19 percent decline in UK retail revenue, the company said.

European retail revenue fell 3 percent in the period.

From January 1 to March 15, when shutdowns started to bite, revenue gained 9 percent year-on-year, supported by favourable sports margins, the company said.

Online revenue had gained 20 percent, while UK retail had declined by 5 percent.

“We are responding decisively, and have put in place a range of measures to keep our people safe, strengthen our financial position, limit cash outflow, preserve jobs and maintain a compelling customer offer,” chief executive Kenneth Alexander said.

“I am confident that we will emerge from this period in a position of strength, and we will be well placed to take advantage of a range of attractive growth opportunities which we believe will be available to us.”

GVC said it has benefited from its eligibility for government grants towards employment costs as it furloughs retail workers on full pay.

That subsidy, plus business rates relief, should save it about £20m per month, the company said.

Italian and Belgian shops are franchises, which leaves operating costs with franchisees, GVC added.

Other steps taken include cuts in online sports marketing, sports content and trading costs.

GVC said it had £350m in accessible cash at March 31 and a £550m revolving credit facility, on which it has yet to draw.

Separately, the Betting and Gaming Council (BGC) said £2.6m was raised this weekend for National Health Service-related charities through profits pledged from the Virtual Grand National.

Potters Corner, an 18-1 shot, won the event staged on Saturday on ITV.

Bets placed in Ireland will be donated to charities including the Irish Red Cross, the BGC said.

“We are overwhelmed with the public support for the Virtual Grand National and the support shown for NHS Charities Together,” said BGC chief executive Michael Dugher.

“When the nation was in much need of some light relief, millions joined in the fun in honour of one of Britain’s greatest sporting events and helped raise a fantastic amount for our brave heroes in the NHS,” he said.

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