GVC Holdings, one of the world’s largest sports betting and gaming groups, is refusing to return the furlough money it has used despite enjoying extensive online growth and service expansion in the USA.
Like many companies, GVC has used the taxpayer-funded scheme to reduce costs by furloughing 14,000 retail staff. However, unlike its biggest rivals, William Hill, and Paddy Power, the company would not commit to returning the money to the government. William Hill has borrowed £24.5million to help facilitate its furlough scheme but has committed to repay the amount while Paddy Power didn’t use the scheme at all.
When asked if it would follow suit, GVC insisted that a fair amount of uncertainty about further lockdowns and retail closures still existed and the company will keep its position under review.
The company has seen large growth and rising profits in the online gambling market. The company has recently revealed its H1 earnings with a net gaming revenue amounting to £1.62bn (€1.79bn/$2.12bn), down 10.7% from the prior year. Retail gaming revenue has seen a decline as it fell 52.6% to £277.9m but GVC’s online business picked up the slack and accounted for £1.21bn of the total. This is a 19.0% improvement on the prior year or a 21.0% rise on a constant currency basis. Also, GVC is now predicting a positive revenue trend as lockdown restrictions ease. The easing will allow the return of many televised sporting events injecting an additional revenue stream for the company and its sub brands. The company has also informed stakeholders that it has invested an additional £200m on top of its initial £250m investment in a joint venture together with MGM and top management has a positive outlook on its performance.
Despite campaigners’ call for big businesses to return furlough grants to the government, GVC Holdings has still refused to do so. The Taxpayer’s Alliance has also urged grantees to do the right thing as the government is currently facing a huge strain in finances. The tax-payer funded furlough scheme has already been supporting 9.6 billion jobs across the UK with costs going upwards of £33 billion. The figure is expected to rise to £80 billion by October and in order to pay for this scheme, the government is expected to resort to levels of borrowing not seen since WWII. Many companies have already vowed to return the money. Such companies include Barrat, Ikea, The Daily Telegraph, and Dr. Martens, among many others.
The company has also decided not to pay out dividends as it sees this action as an imprudent one despite of its positive cash flow in other areas. It has also blamed its actions on shop closures and sporting event cancellations during the lockdown, forcing the company to permanently close down more than 200 shops. GVC’s Board now expects the group to deliver underlying profits of £720m-£740m for the full year, given that no other disruption will arise, down from the initially forecasted £761million
Src: https://gvc-plc.com/wp-content/uploads/2020/08/GVC-H1-FY20-Press-release-FINAL.pdf
https://www.statista.com/statistics/1116638/uk-number-of-people-on-furlough/
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