GVC Holdings Plc has followed industry precedent by issuing a corporate update on COVID-19 impacts, following the subsequent cancellation/postponement of major sporting events.
For the period of 1 January to 23 February 2020, GVC has underlined that trading for the year-to-date has remained strong, with group NGR at +5%, reporting a 16% increase in online gambling benefiting from strong sports margin recorded during 2020’s opening months.
Nevertheless, GVC’s momentum will be disrupted by the spread of COVID-19, which has forced the closure of live sports events across key markets.
“In our financial year to 31 December 2019, approximately 45% of our Group NGR was generated from sporting events, with 43% of our online NGR generated from sports,” GVC governance explained in its update.
Mirroring industry counterparts, GVC governance maintained that it is ‘difficult to quantify the precise impact on earnings’ for the financial year.
Detailing investor guidance, GVC has modelled a scenario based on the following disruptions taking place:
Operating on the above assumptions of the sporting calendar being significantly reduced through to August 2020, GVC has anticipated that full-year 2020 EBITDA will be reduced by approximately £130-150 million, ‘before mitigating actions’.
Should GVC’s Ladbrokes Coral UK retail portfolio be closed, the FTSE betting group has predicted an EBITDA reduction of approximately £45–50 million per month, inclusive of employment costs of approximately £20 million per month.
Citing a strong balance sheet, GVC governance explained that the company has access to a £550 million revolving credit facility, which ‘remains undrawn’ as the company still has access to £260 million cash reserve.
Closing the statement, GVC Group CEO Kenneth Alexander commented: “While we do not underestimate the challenge presented by Covid-19, GVC is in a robust position to manage the impact on our operations. We are a diverse global business, with an experienced and expert management team, which operates across multiple products and markets. Our priority is to protect our employees while maintaining our offer to our customers at this difficult time.“