Industry News
GVC Holdings Updates on Covid-19 Impact
GVC Holdings has provided an update on the impact of Covid-19 and the cancellation of sporting events.
On March 5, the Group updated the current trading for the period of January 1 to February 23 stating “Trading in the year to date was strong with Group NGR +5% cc and Online NGR +16% cc, both of which have benefitted from strong sports margins in the first two months.”
The company has enacted contingency plans to minimise disruption to the business amid the coronavirus outbreak.
The spread of the virus impacted several live sporting events. In FY 2019, approximately 45% of the Group NGR was generated from sporting events, with 43% of our online NGR generated from sports.
It is clear that the significant reduction in sporting events will have a material impact on EBITDA in the current financial year. So, to quantify an approximate impact on earnings, the company modelled a scenario based on some assumptions.
In the case of football, the assumption is that the Euros will be postponed until 2021 and all other football will be cancelled until July 2020. In Horse Racing, the assumption is that the major events such as Aintree and Royal Ascot will be cancelled and all other horse racing continues behind closed doors. In the case of retail, the assumption is that the retail estate in the UK will remain open for business and the stores in Italy and Belgium remain closed for three months.
These assumptions would mean that there will be substantially fewer sporting events through to August 2020 and that EBITDA for the financial year ending 31 December 2020 will be reduced by approximately £130m–£150m. If shops in the UK are closed, the company anticipates an incremental reduction in EBITDA by approximately £45m–£50m per month, which includes employment costs of approximately £20m per month.
“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,” Kenneth Alexander, CEO of GVC, said.