Ladbrokes Coral CEO Jim Mullen has hailed the merged company’s first annual results announcement as a ‘very successful start’ for the enlarged group, with the combined results delivering 11% growth in revenues and a 22% increase in gross profits after tax.
The standout performers are Ladbrokes Coral are the Digital division, which saw operating profit increase 125% and European Retail where operating profit jumped 219%. However the firm suggested there was growth in all segments. UK Retail revenue growth of £26.5m or 2% was driven by 4% growth in machines offset by the continued decline in horse racing and greyhound OTC stakes.
Mullen explained: “Both Ladbrokes and Coral entered the merger in November with good momentum, and together delivered a strong full year financial performance. As a management team we are now looking to the future. We are focussed on delivering on the full potential of the merger through the strengths of the Ladbrokes Coral brands, enhanced scale, operational efficiencies and leveraging the best of both businesses.”
The group has already upgraded its cost synergy expectations to deliver £100m per annum by 2019, rather than the £65m previously expected. Accountability for integration delivery sits with the selected leaders of each business area, with oversight and support provided by the executive team under a separate governance structure led by executive Deputy Chairman Carl Leaver. Mullen said that this structure has enabled rigorous scrutiny to be applied to all areas of the integration and ensure that sufficiently stretching targets are set. Immediate integration priorities include the transition to one unified IT system, completing the integration of functions and moving of teams out of the Rayners Lane office in Harrow, and in the longer term, implementing a new electronic point of sale (EPOS) system in the retail estate.
Mullen added: “Our plan is simple. We are focussed on building on the leading multi-channel experience developed by both brands, utilising a rigorous approach to data driven marketing and ensuring that our product delivers a leading customer experience. We will look to leverage our existing experience in international markets to drive further growth and use our significantly increased scale in technology to develop new products and deploy across the enlarged Group. We will deliver this with a firm commitment to responsible gambling and health and safety.
“The merger was the start of a journey. While we face some short term uncertainty with the triennial review, the scale, talent and agility we have in this business represent real strengths going forward. We intend to use these strengths to establish Ladbrokes Coral as both the leading, and the best, betting and gaming business.”
While the company reported some growth in UK Retail, the truth is that EBITDA of £252.0m was 5% behind last year and operating profit of £189.9m was 7% behind. OTC net revenue was down 1% with OTC stakes down by 4%. A staking decline in racing and greyhound was partially offset by growth of 12% in football stakes (5% excluding Euro 2016) primarily driven by the investment in SSBTs. OTC stakes were also adversely impacted by the more stringent anti-money laundering processes that were implemented at the start of the year.