Ladbrokes Coral owner reports £50m-a-month hit from coronavirus outbreak

Shares in GVC Holdings, the parent company of Ladbrokes and Coral, surged on Monday despite it revealing it expects to lose £50 million in earnings per month due to the coronavirus outbreak.

The company had previously said that the loss of international sport and retail closures would reduce its monthly ebitda (earnings before interest, taxation, depreciation and amortisation) by £100m a month before mitigation.

However, GVC said mitigation opportunities had been identified, which had reduced costs by approximately £50m per month.

They included the UK government grant towards employment costs which, along with business rates relief, had reduced costs by nearly £20m per month according to GVC's estimates.

GVC, whose share price closed at 573.2p – up 18.5 per cent – on Monday afternoon, said average monthly cash outflow would still be approximately £15m per month and that the group was working through further mitigation with the target of achieving a break-even monthly cashflow.

The company said it had taken the "prudent decision" to withdraw its second interim dividend that was due for payment on April 23.

It has also been reported that GVC has told landlords that it will withhold rental payments for their UK betting shops until normal trading conditions resume.

Kenny Alexander: 'We are responding decisively'Credit: Kathleen Sarg

Chief executive Kenny Alexander said: "As our first-quarter 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."

GVC said it had started the year well before the impact of the coronavirus outbreak, with group net gaming revenue (NGR) up one per cent and online NGR up 19 per cent in the first quarter.

Since March 15 the company said there had been an "encouraging performance in gaming in the absence of sporting events, in line with the group's expectations".

Alexander thanked staff "for their continuing hard work and commitment to ensuring GVC’s long-term success" and emphasised the company's commitment to minimising the potential for customers suffering harm.

He added: "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."

Analyst Gavin Kelleher at Goodbody described the update from GVC as "reassuring".

He added: "The performance of online appears to be more resilient than some people would have expected in the two weeks post Covid restrictions."

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