GVC Holdings stated that it is ‘well placed to balance the year’, as the FTSE100 company absorbed significant retail shocks across its UK and European units, readjusting its full-year EBITDA outlook to £720m-£740m range (dependent on further COVID-19 outcomes).
Publishing its interim results for the six month period ended 30 June 2020, GVC noted that the closure of its Ladbrokes and Coral betting shops resulted in a 53% drop in UK retail net gaming revenue (NGR), down from £586.8 million in H1 2019 to £277.9 million.
As of 30 June 2020, GVC stated that there were a total of 3,006 shops in the estate, down from 3,274 last year. During the period 227 shops were closed as the group completed its resizing of the retail estate following the Triennial Review
Likewise, European retail also struggled during the pandemic, with NGR dropping by 48% from £144.1 million in 2019 to £75.5 million.
But as a considerable number of bettors shifted from retail sports betting to online gaming, GVC highlighted that online NGR jumped from £1.05 billion in 2019 to £1.25 billion, an increase of 19%.
Commenting on the results, newly-appointed CEO Shay Segev said: “Given the unprecedented trading environment, GVC has delivered an encouraging performance in the first half, underlining the strength of our diversified business model and the expertise, adaptability and dedication of our people.
“These results show that we have a strong foundation. As a technologist, I have huge admiration for what Kenny and the rest of my colleagues have achieved but I am also determined to pursue a programme of continuous improvement as we focus on our four technology-enabled priorities.”
Online EBITDA rose by 53% during H1 to £368.6 million which GVC explained is a reflection of ‘favourable sports margins, a strong performance in gaming and lower marketing spend due to sport cancellations’.
Group EBITDA came in at 5% lower than 2019 figures, falling to £348.6 million from £366.8 million. Looking forward, the Board now expects GVC to deliver underlying EBITDA of £720m-£740m for the full year, on the condition that there are ‘no further material disruptions’.
Supporting its EBITDA performance, GVC delivered a 23% reduction in group operating costs to £423 million, down from £548 million, enforcing immediate COVID-19 costs controls and identifying a further £20 million in Ladbrokes Coral post acquisition co-synergies.
Addressing plans to expand its operations, GVC stated that it has applied for multiple sports-betting licences pursuant to the existing German online gambling regulation and ‘fully expects that its applications will be successful’. Brazil and The Netherlands were also recognised as key opportunities for the betting group’s expansion.
The US remains the leading driver for growth for GVC however, with its BetMGM joint venture now operating in seven of the 21 states where gambling is allowed. GVC expects to go live in an additional four states by the year-end.
GVC ended its trading statement by detailing its prudence with regards to trading under the continued uncertainty of further lockdowns and restrictions as a result of the coronavirus, with the board cancelling dividends for year trading.