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GVC Holdings: Q1 Trading and COVID-19 Planning Update

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GVC Holdings PLC, the global sports betting and gaming group, today reports trading for the period from 1 January to 31 March 2020 (“Q1”) and provides a further update on the impact of COVID-19 and the mitigating actions being taken.  This follows the Group’s previous announcements of 16 and 17 March 2020.

Summary

  • GVC started the year well, with Group net gaming revenue (“NGR”) +1% and Online NGR up +19%cc1 in the first quarter
  • However, the closure of retail outlets and the cancellation of sports events significantly reduced revenue from mid-March
  • In previous announcements the Group estimated the impact of COVID-19 before any mitigating actions equates to a reduction in EBITDA2 of approximately £100m3 per month
  • However, following the initiation of a number of mitigating actions the Group now expects to reduce this EBITDA impact to approximately £50m per month
    • As a result, the average monthly cash outflow would be limited to approximately £15m per month, and the Group is confident that further cost actions will enable it to achieve its target of reducing the cashflow to breakeven
  • The Group’s financial position remains robust, however given the ongoing uncertainty regarding timings of the easing of shutdown measures around the world, the Board has taken the prudent decision to withdraw the second interim dividend that is due for payment on 23 April 2020

Kenneth Alexander, GVC’s CEO, commented:

“As our Q1 trading numbers once again demonstrate, GVC is a business that, in normal times, delivers an outstanding performance.  However, while our global and product diversification is standing us in good stead during the current uncertainty, the COVID-19 pandemic is posing an unprecedented challenge to our business and our industry.  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.  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.

“We are also sensitive to the fact that at this time of economic stress and isolation, it is vital that we ensure a safe, responsible and enjoyable gaming environment for our customers and do everything that we can to minimise the potential for harm.  Accordingly, not only have we supported the Betting and Gaming Council’s 10 pledge action plan on safer gambling, but we have gone further and introduced a range of additional safeguarding measures to ensure that we are able to rigorously monitor and protect anyone who may be vulnerable at this time.

“Finally, I would like to thank our outstanding teams around the world for the manner in which they have rapidly adapted to the challenge, and for their continuing hard work and commitment to ensuring GVC’s long-term success.”

Current trading
In its 2019 full year results on 5 March 2020, GVC reported that the current year up to 23 February 2020 had started strongly.  That momentum continued until the Group started to see the impact of COVID-19 on sporting events and store closures in mid-March.

The performance of the Group for the year to 31 March 2020 is set out in the table below, with key highlights as follows:

  • Total Group NGR +1% (+2% cc1)
  • Online NGR +16% (+19% cc1), with continued strong growth in all major territories
  • UK Retail like-for-like (“LFL”)4 NGR -19%
  • European Retail NGR -3% (flat cc1) supported by continued market share gains in Italy
  • For the period 1 January to 15 March 2020 all divisions performed strongly, supported by favourable sports margins:
    • Group NGR +9% (+11% cc1)
    • Online performed strongly across both gaming and sports, with NGR +20% (+23% cc1). Since then there has been an encouraging performance in gaming in the absence of sporting events, in line with the Group’s expectations
    • UK Retail like-for-like (“LFL”)4 NGR -5% despite the annualisation of the triennial review impacts
    • European Retail delivered strong NGR growth at +20% (+24% cc1)
Period 1 January to 31 March 2020
Total NGR Total NGR cc1 Sport Wagers Sports Margin
Online
   Sports 17% 21% (12%) 2.5pp
   Gaming 17% 18%
Total Online 16% 19%
UK Retail (LFL3) (19%) (19%) (8%) 3.3pp
European Retail (3%) flat (21%) 3.7pp
Total Group 1% 2%    

For the avoidance of doubt, the guidance provided on 5 March 2020 is withdrawn.

Impact of COVID-19
On 16 and 17 March 2020 GVC provided assessments of the impact of cancellations of sporting events and store closures on Group EBITDA3 for the year to 31 December 2020.  These announcements were based on the Group’s modelling which assumed that: a) football is suspended across Europe; b) major sporting events are cancelled or postponed (Aintree, Royal Ascot, Euro 2020 etc); c) horse racing in the UK and Ireland is suspended; d) all retail outlets in the UK, Republic of Ireland and mainland Europe are closed; and e) there would be a modest increase in GVC’s gaming business which accounts for 57% of Online NGR.  Taken together, GVC estimated that these events would result in a reduction in EBITDA of approximately £100m3 per month before any mitigating actions.  This would break down by the Group’s key reporting divisions as approximately 20% for Online, 63% for UK Retail and 17% for European Retail.

Mitigating actions
GVC’s teams around the world are working hard to reduce costs and re-prioritise activity in order to preserve free cash, whilst continuing to offer its customers great gaming experiences and to position the Group to emerge from the current restrictions in a position of strength.  A number of opportunities have been identified so far which reduce costs by approximately £50m per month.

For example, in the UK GVC is eligible to receive the government grant towards employment costs as we furlough retail colleagues and retain them on full pay, as well as the business rates relief, which together the Group estimates will reduce costs by nearly £20m per month.

In Italy and Belgium GVC operates a franchising model where the store operating costs (rent, employment, utility and other costs) primarily reside with the franchisee.

Other measures taken include reductions in online sports marketing, sports content and trading costs.

Resultant estimated cash outflow
After adjusting for the impact on EBITDA, adding additional cash costs incurred (such as interest, capex, tax and other costs) and allowing for retail capex reduction, the average monthly cash outflow would be approximately £15m per month.  The Group continues to work through cost mitigation opportunities and is targeting a break-even cashflow per month objective, thereby preserving cash at broadly current levels during this period of retail closures and reduced sporting events.

The following table sets out, for illustrative purposes only, the effect of our modelling and mitigating actions on EBITDA and average cashflow over a month of severe COVID-19 impacts:

Impacts of COVID-19 and mitigations Estimated average monthly amounts
Consensus EBITDA2 for FY2020 as at 31/1/20 £65m
Total EBITDA impact before mitigating actions £(100)m
Mitigating actions £50m
Net EBITDA £15m
Other cash costs incurred (including capex, interest, tax and other items) after retail capex mitigation £(30)m
Net cash utilisation £(15)m

Financial position
GVC is in a robust financial position, with net debt/EBITDA as at 31 December 2019 of 2.69x.  The Group had accessible cash of over £350m at 31 March 2020, of which over £250m is cash at hand after excluding cash held on behalf of customers, cash in shops, ringfenced PSP funds and other items which may not be immediately available.

In addition, GVC has a £550m Revolving Credit Facility (RCF) which is currently undrawn.  This facility has a financial covenant which is only tested if the facility is drawn by more than 35% at a quarter-end.  The covenant measure is calculated on a trailing 12-month pre IFRS 16 basis with a net debt/EBITDA limit of 4X.  Unrealised synergies can be added to EBITDA.

GVC currently has two bonds in issue, totalling £500m.  One of £100m is due 2022 and one of £400m is due 2023.  In addition, the Group has Term Loans of €1,125m and $786m, both due 2024.

Dividend
Due to the ongoing uncertainty as to how long restrictions as a result of COVID-19 will be in place around the world, the Board has taken the prudent decision to withdraw the payment of the second interim dividend of 17.6p per share announced on 5 March 2020.  This was due to be paid on 23 April 2020 with a total cash cost of £103m.  However, the Board recognises the importance of dividends as a part of shareholder returns and will consider dividends with future results announcements.

2019 Annual Report and Annual General Meeting (“AGM”) and Directors Remuneration
The Group’s annual report for 2019 is today published on the Group’s website at gvc-plc.com.  Copies will be posted to those shareholders requesting a hard copy as soon as it is practical to do so.  The 2020 AGM was scheduled to be held on 30 April and in normal circumstances an AGM Notice would be circulated with the annual report.  Owing to the public health guidance on social distancing, the Board has decided to postpone the AGM.  The Group will issue an AGM Notice once the Board is confident it can safely hold a meeting on a specified date.

The 2019 Annual report sets out details of the directors’ 2019 incentive outcomes and 2020 implementation.  However, the payment of directors’ 2019 bonuses and the grant of the 2020 LTIP awards have been postponed.  The Remuneration committee will consider the impact of COVID-19 on GVC’s performance and remuneration in due course and review the implementation of the policy for 2020 as appropriate.

 

Notes

  • Growth on a constant currency basis is calculated by translating both 2020 and 2019 performance at the 2020 exchange rates.
  • As at 31 January 2020, company compiled EBITDA consensus for the financial year to 31 December 2020 was £776.3m on a pre-IFRS 16 basis.
  • The £100m approximate impact on monthly EBITDA is derived from the two announcements of 16 & 17 March as follows: The EBITDA impact over 3.5 months of sports and major events cancelations and European Retail closures of approximately £130m – £150m equating to approximately £37m – £43m per month; the EBITDA impact of UK Retail store closures of approximately £45m – £50m per month; and the EBITDA impact of the cancellation of horse racing in the UK & Ireland of approximately £20m- £25m per month. Taking each of these at the mid-point and allowing for overlap derives an approximate monthly impact on EBITDA of £100m.
  • UK Retail numbers are quoted on a LFL basis. During the period, there were an average of 3,131 shops in the estate, compared to an average of 3,464 in the same period last year.

 

About GVC Holdings PLC:
GVC Holdings PLC is one of the world’s largest sports-betting and gaming groups, operating both online and in the retail sector.  The Group owns a comprehensive portfolio of established brands; Sports Brands include bwin, Coral, Crystalbet, Eurobet, Ladbrokes, Neds and Sportingbet; Gaming Brands include CasinoClub, Foxy Bingo, Gala, Gioco Digitale, partypoker and PartyCasino. The Group owns proprietary technology across all of its core product verticals and in addition to its B2C operations provides services to a number of third-party customers on a B2B basis. The Group has also entered into a joint-venture with MGM Resorts to capitalise on the sports-betting and gaming opportunity in the US.  The Group, incorporated in the Isle of Man, is a constituent of the FTSE 250 index and has licences in more than 20 countries, across five continents.

For more information see the Group’s website: www.gvc-plc.com

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FDJ UNITED Confirms Strong Half-Year Progress and Maintains 2025 Guidance

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FDJ UNITED, a leader in lottery, betting and gaming in Europe, announced its results for the first half of 2025.

• First-half revenue of €1867m: up +31% compared with H1 2024 reported and down -2% on a restated basis

• Buoyant performance by the French lottery and retail sports betting BU with revenue of €1290m, up +4% on a restated basis

• Lottery revenue rose by +6% to €1065m. This performance can be attributed to the whole range of games and all distribution channels, particularly digital, which rose by +16% to €160m

• Point-of-sale sports betting revenue fell by -6% to €225m. This change reflects unfavourable sports results for the operator, despite stakes boosted by an attractive football offering (+4%)

• Online betting and gaming BU2 revenue of €466m, down -12% on a restated basis

• This change reflects a very unfavourable 2024 comparison base, due in particular to the Euro football tournament, as well as tax and regulatory impacts in 2025, particularly in the Netherlands and the UK. Excluding these two markets, revenue would be up 5% thanks to the performance of other countries, including France

• Second-quarter revenue came to €235m, up +2% compared with the first quarter of 2025

• Recurring EBITDA of €441m, representing a margin of 23.6%, or 24.4% excluding the cost of the employee share ownership plan (€14m)

• Adjusted net income of €222m

• This reflects the impact of the financing of the Kindred acquisition on the financial result and the one-off tax contribution on the profits of large French companies

• 2025 objectives reiterated: stable revenue versus 2024 pro forma, with a recurring EBITDA margin of over 24%

• Successful employee share ownership plan bringing the share of capital held by employees to 4.6%

• Taken up by more than half of employees and largely oversubscribed

“2025 stands as a transition year for FDJ UNITED, with the integration of Kindred well on track. In this context, our first-half performance is in line with the expected full-year trajectory. Besides, we are pleased by the success of the employee share ownership plan launched by the Group, reflecting our long tradition of sharing FDJ UNITED’s value creation with all stakeholders,” Stéphane Pallez, Chairwoman and Chief Executive Officer of FDJ UNITED.

The post FDJ UNITED Confirms Strong Half-Year Progress and Maintains 2025 Guidance appeared first on European Gaming Industry News.

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EGT Launches Linked United Platform

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EGT has launched Linked United, an innovative platform aiming to redefine profitability and immersion in gaming establishments in Spain. This product marks a significant milestone in the company’s strategy to enhance the performance of bingo and gambling halls across one of the most important European markets.

Linked United enables the seamless interconnection of numerous products at a single station, thus creating a more dynamic and engaging entertainment network. The platform enables operators to integrate popular titles from EGT’s portfolio, such as Bell Link Plus, Gods & Kings Link and Sands Princess, along with exciting new offerings. The company plans to include all releases launched on the local market from now on in Linked United.

A key differentiator of the platform is its innovative shared Grand Jackpot system: a single, progressive level, involving all interconnected games within a group. This way, players’ chances of hitting enormous winnings increase manifold, which generates unparalleled vibrancy in the gaming hall.

Along with enriching the gaming journey, the product also contributes to increasing operational efficiency through space optimization, allowing a greater variety of games to be offered in a smaller area. Linked United also stands out with its impressive flexibility in terms of installation, as it enables venues to adjust the game mix based on performance and tailor it to the specific preferences of their customers.

Linked United brings a number of advantages for operators. First, it increases perceived value for players thanks to the wider diversity of game offerings and the irresistible appeal of the unified GRAND Jackpot, which results in enhancing the overall experience and building loyalty. Second, this leads to extended playing sessions, as more dynamic and connected entertainment encourages players to prolong their visits. Third, it allows for maximum leveraging of existing hardware investment, as Linked United integrates with current infrastructure, which optimizes costs while extending equipment lifespan. Finally, operators benefit from significant cost savings by proposing more games per station and utilizing space efficiently.

Diego Scotti, Sales Director of EGT Spain, said: “We are at a turning point in our market strategy. With Linked United, we are not just connecting games; we are opening the doors to an ecosystem of unlimited possibilities. It’s a strategic response to our operators’ demand for solutions that not only captivate their clients but also maximize their return on investment in a tangible way.”

The post EGT Launches Linked United Platform appeared first on European Gaming Industry News.

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Main Street Sports Group Appoints Jim Keller as EVP of Advertising and Sponsorship Sales

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Main Street Sports Group, owner of FanDuel Sports Network, announced the appointment of Jim Keller as Executive Vice President of Advertising and Sponsorship Sales. In this new role, Keller will lead the entire ad sales portfolio for FanDuel Sports Network, overseeing linear, digital, and programmatic efforts. He will report directly to Eric Ratchman, Chief Revenue Officer of Main Street Sports Group.

Keller brings more than two decades of experience driving innovation, operational excellence, and revenue growth across every layer of the media ecosystem, from national networks to digital-first platforms. Most recently serving as Chief Revenue Officer at Fuse Media, Keller previously held executive roles at Warner Bros. Discovery, Hulu, and NBC Universal, leading cross-platform sales teams through industry-shifting transformations and high-growth phases. His background includes oversight of digital, streaming, mobile, addressable, and data-driven advertising, as well as advanced monetization strategies across premium content portfolios spanning sports, entertainment, and news.

“Jim is a proven leader with an exceptional track record across linear, streaming, and digital platforms. As FanDuel Sports Network redefines what local sports media can be – more dynamic, more engaging, and more impactful – Jim’s leadership will be key in creating smarter advertising experiences that deliver real value to our brand partners and local fans alike,” said Eric Ratchman, Chief Revenue Officer of Main Street Sports Group.

“There’s nothing more powerful than the connection a fan has with their local team, and FanDuel Sports Network is building a platform that truly honors that connection. From my earliest days as a sports seller at NBC Sports, to leading some of the industry’s most innovative ad strategies, I’ve always believed that the strongest media experiences are rooted in content and community. FanDuel Sports Network’s focus on building relevant, local, multiplatform fan experiences is exactly what the industry and advertisers need right now, and I couldn’t be more excited to help drive the next phase of growth,” said Keller.

Keller’s deep expertise in building modern ad operations, forging high-impact partnerships, and unlocking value across multiplatform products will be instrumental as FanDuel Sports Network continues to evolve into the future of local sports media. Main Street Sports Group’s continued transformation is rooted in reimagining local sports coverage, not just distributing games, but uniting the brands, features, and experiences fans want, tailored to each market.

The post Main Street Sports Group Appoints Jim Keller as EVP of Advertising and Sponsorship Sales appeared first on Gaming and Gambling Industry in the Americas.

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