GVC Holding has provided an update regarding the impact of Covid-19 and subsequent cancellation of sporting events.

On 5th March 2020 the Group updated on current trading for the period 1 January 2020 to 23 February 2020 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.”

As the spread of Covid-19 continues across the world, the well being, safety and security of our colleagues and customers is of paramount importance to us.  We are following government advice in each area of our operations and have enacted contingency plans to minimise disruption to the business.

The spread of the virus means that a number of live sporting events are being impacted.  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.

While it is difficult to quantify the precise impact on earnings it is clear that a significant reduction in sporting events will have a material impact on EBITDA in the current financial year.  We have therefore modelled a scenario based on the following assumptions.

Football: the Euros will be postponed until 2021 and all other football will be cancelled until July 2020;

Horse Racing: major events such as Aintree and Royal Ascot will be cancelled. All other horse racing continues behind closed doors; the retail estate in the UK will remain open for business. Our 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 before any mitigating actions.  If shops in the UK are closed, we anticipate that this would incrementally reduce EBITDA by approximately £45m – £50m per month, which includes employment costs of approximately £20m per month.

The Group retains a strong balance sheet with net debt/EBITDA as at 31 December 2019 of 2.69x.  We have a Revolving Credit Facility of £550m available and a covenant test of 4x net debt/EBITDA⁽.  This test only occurs if the facility is drawn by 35% or more at the end of a financial quarter.  The facility remains currently undrawn and as at 31 December 2019 the Group had accessible cash of £260m.

GVC 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.“