Debt burden sees Gala Coral post £49 million losses ahead of Ladbrokes merger

Carleaver
Carl Leaver

As UK gambling operator Gala Coral Group (Coral) prepares for its £2.3 billion merger with rival Ladbrokes, the company presented its latest H1 2016 results (28-week period ending 9 April), reporting core metric growth throughout all its products.

Despite its strong core metric performance, Coral would report H1 interim losses of £49 million as the company looks to reduce its corporate debt ahead of its planned merger with Ladbrokes.

Coral governance further noted that the company was presenting H1 2016 results against a tough comparative H1 2015 period which had seen profits boosted by Gala Bingo retail assets which contributed to £160 million in corporate earnings.  

Presenting its H1 opening performance, Coral governance stated that the company had managed  to better maintain industry-wide losses at Cheltenham 2016, with the operator reporting group net revenues of £604 million (13% up on H1 2015:) resulting in an underlining EBITDA of £124.6 million up 16% on corresponding 2015’s £107 million.

Detailing performance drivers, Coral governance noted the company’s continued strong digital performance which saw the division report an EBITDA of £37 million, as UK and international assets reported period net revenue growth.

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A further operational highlight would see Coral report on the continued momentum of its ‘Coral Connect’ omni-channel product which would see a +160,000 sign-ups reached during the period, outperforming the whole of 2015.

The operator’s improved digital performance would be supported by its retail division which sustained EBITDA at £79 million, despite a number of industry-wide impacts and negative sporting results felt during the period.

In May, the UK Competition and Markets Authority said Ladbrokes and Coral may have to offload 350 to 400 high street stores as a condition of their proposed merger.

Carl Leaver, Gala Coral Group CEO, commented on 2016 H1 performance

“EBITDA growth of 16% in the first half of the year represents a very satisfactory performance for the Group. After adjusting for incremental regulatory costs, EBITDA was 43% ahead. Sportsbook margins benefitted from improved football results in both the UK and Italy, and a good Grand National result helped offset losses from the worst Cheltenham for the industry since 2003.

Growth in the Online division continued to be particularly strong with net revenue 35% ahead of last year, and Coral.co.uk net revenue 58% ahead. Coral Connect, our multichannel offer, continues to be a key driver of growth. Sign-ups in Q2 have accelerated to around four thousand per week as a result of more targeted marketing.

Total sign-ups since launch now stand at 493k, with 160k being delivered in the first half of the financial year, more than in the whole of FY15.

During the second quarter we also re-launched the Coral.co.uk mobile app on a proprietary platform. The transition went extremely well and the new platform provides greater flexibility to develop the product offering.