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17 Mar 2020 | 14:09

GVC to take up to ?25m a month hit from horse racing suspension

(Sharecast News) - Sports betting company GVC Holdings said on Tuesday that the suspension of all UK horse racing events until April - announced earlier in the day by the British Horse Racing Authority - will dent earnings by up to ?25m a month. It estimated that the suspension will have an incremental impact on earnings before interest, tax, depreciation and amortisation for the financial year to 31 December 2020 of about ?20m to ?25m per month before any mitigating actions. The group had already warned on Monday that FY earnings could be hit by as much as ?150m if horse racing and football events were cancelled or delayed due to Covid-19.

"The group continues to monitor events and has the flexibility to take appropriate actions as required," it said.

GVC, which owns Coral and Ladbrokes, reiterated that it has a strong balance sheet, with net debt/EBITDA as at the end of December 2019 of 2.69x. It has a revolving credit facility of ?550m available and a covenant test of 4x net debt/EBITDA, it said, adding that this test only occurs if the facility is drawn by 35% or more at the end of a financial quarter.

The facility remains undrawn and as at the end of December, the company had accessible cash of ?260m.

At 1410 GMT, the shares were down 16% at 310.50p.

Bookmakers have been under pressure recently amid worries about the impact of the coronavirus. On Monday, William Hill announced the suspension of its dividend as it said the cancellation or delay of sporting events could reduce earnings by up to ?110m.
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