8th Jun 2016 07:06
8 June 2016
LADBROKES PLC
Coral Group
Financial results for the half year and 28 weeks ended 9 April 2016
Gala Coral Group Limited ("Gala Coral") has today announced its financial results for the twenty eight weeks ended 9 April 2016. The full announcement can be viewed on the following website:
http://www.galacoral.co.uk/financial-centre/results-centre/2016
In accordance with Listing Rule 5.6.15G(4), Ladbrokes plc ("the Company") discloses the following extract from Gala Coral's financial results in relation to the Coral Group (comprising Coral Retail, Eurobet Retail and Online, but excluding Gala Retail) for the twenty eight weeks ended 9 April 2016:
Highlights
· Coral Group EBITDA{1/2} of £124.6m: +£17.2m (+16%). After adjusting for regulatory impacts{3} +43%
· Coral Retail EBITDA{1} of £79.3m: +£0.4m (+1%). OTC GW% up 1.3pp and machines net revenue +3%
· Coral Connect sign-ups accelerated in Q2 with over 160k in H1, more than in the whole of FY15
· Eurobet Retail EBITDA{1} of £11.8m: +£4.9m (+71%). Sports stakes +20%, sports GW% +4.0pp
· Online EBITDA{1} of £37.1m: +£14.5m (+64%). After adjusting for regulatory impacts{3} +118%
- Online net revenue +35%
- Coral.co.uk net revenue +58%, sports net revenue +108%
- Eurobet.it net revenue +38%, sports net revenue +70%
- Galabingo.com net revenue +15%
{1} EBITDA is stated pre-exceptional items
{2} EBITDA includes all revenue and expenses for the Coral Group and excludes Gala Retail (H1 FY16: £9.9m and H1 FY15: £26.2m), High
Rollers (H1 FY16: £0.0m and H1 FY15: £0.9m) and Propco rental income (H1 FY16: £0.0m and H1 FY15: £5.8m)
{3} FY15 EBITDA (pre-exceptionals) has been rebased for the estimated impact of Point of Consumption Tax (-£5.8m, of which Online -£5.6m) and the increase in rate of MGD to 25% and DCMS FOBT higher staking restrictions (Coral Retail -£14.5m), calculated as if all changes had been in existence for the corresponding periods in FY15
Overview
Net revenue of £604.9m was £70.5m or 13% ahead of last year and EBITDA{1/2} of £124.6m was £17.2m or 16% ahead.
EBITDA{1/2} was £37.5m or 43% ahead of last year after adjusting FY15 for the impact of regulation{3}, driven in part by improved football results in the UK and Italy. UK football margins improved significantly year-on-year, having annualised against the exceptionally adverse football margins experienced on Boxing Day 2014 and the weekend of 17/18th January 2015 (estimated EBITDA impact of £17.0m). Football margins in Italy were also ahead of last year (estimated EBITDA impact of £5.1m), albeit still around 3pp behind expectations.
{1} EBITDA is stated pre-exceptional items and represents the 28 week periods ending 9 April 2016 and 11 April 2015
{2} EBITDA includes all revenue and expenses for the Coral Group and excludes Gala Retail (H1 FY16: £9.9m and H1 FY15: £26.2m), High Rollers (H1 FY16: £0.0m and H1 FY15: £0.9m) and Propco rental income (H1 FY16: £0.0m and H1 FY15: £5.8m)
{3} FY15 EBITDA (pre-exceptionals) has been rebased for the estimated impact of Point of Consumption Tax (-£5.8m, of which Online -£5.6m) and the increase in rate of MGD to 25% and DCMS FOBT high stake restrictions (Coral Retail -£14.5m), calculated as if all changes had been in existence for the corresponding periods in FY15
Quarter 2 Overview
Net revenue of £271.6m was £23.4m or 9% ahead of last year and EBITDA{1/2} of £62.2m was £9.3m or 18% ahead.
Adjusting FY15 for the impact of regulation{3}, EBITDA{1/2} increased by £14.4m or 30% versus last year. Football margins were ahead of the poor levels experienced in the same quarter last year in both the UK and Italy, with an estimated impact for the quarter of £8.0m (UK £2.9m, Italy £5.1m).
{1} EBITDA is stated pre-exceptional items
{2} Quarter 2 represents the 12 week periods ending 9 April 2016 and 11 April 2015
{3} FY15 EBITDA (pre-exceptionals) has been rebased for the estimated impact of the increase in rate of MGD to 25% and DCMS FOBT high stake restrictions (Q2 -£5.1m and H1 - £14.5m), calculated as if all changes had been in existence for the corresponding periods in FY15
Divisional Review
Coral Retail
Coral Retail EBITDA{1} of £79.3m was £0.4m or 1% ahead of last year and £14.9m or 23% ahead after adjusting FY15 for the impact of regulation{2}.
OTC net revenue of £165.7m was £8.0m or 5% ahead of last year. Total OTC stakes were £13.5m or 1% behind last year with a 5% increase in football stakes partially offsetting a decline in horse racing stakes. OTC gross win margin of 18.5% was 1.3pp ahead of last year primarily due to improved football margin, which was 7.8pp ahead of last year. The Cheltenham festival gross win margin was the worst since 2003, however the losses incurred at the Festival were largely offset by a positive result in the Grand National.
Machines net revenue was £6.6m or 3% ahead of last year. Gross-win-per-machine-per-week of £1,039 was 4% ahead of last year with B3 gross win 13% ahead. Slots now represent 39% (FY15: 35%) of total machines gross win.
Operating costs were 2% higher than last year due to annual salary increases, inflationary increases on some content contracts and a one-off investment in staff training to implement new customer protection and anti-money laundering measures.
The total number of LBOs at the end of the half year was 1,830, with 6 shops opening and 26 shops closing since the start of the year.
{1} EBITDA is stated pre-exceptional items
{2} FY15 EBITDA (pre-exceptionals) has been rebased for the estimated impact of the increase in rate of MGD to 25% and DCMS FOBT high stake restrictions (Q2 -£5.1m and H1 -£14.5m), calculated as if all changes had been in existence for the corresponding periods in FY15
Eurobet Retail
Eurobet Retail EBITDA{1} of £11.8m was £4.9m or 71% higher than last year (66% on a constant currency basis) driven by strong sports volume growth and sports gross win margin improvement.
Sports stakes were £34.3m or 20% ahead of last year primarily due to the programme to relocate 250 shops to more profitable locations, which completed at the start of FY16, as well as an increase in the popularity of BiP which now represents around 20% of retail sports stakes.
Sports gross win margin of 18.8% was 4.0pp ahead of last year following improved football results, although football margins are still around 3pp behind expectations. Sports net revenue of £38.5m was £13.3m or 53% ahead.
Eurobet's share of the retail sports betting market at the end of the first half increased by 1.9pp to 16.0% measured by stakes (number 3 in the market) and by 4.0pp to 17.0% measured by gross win (number 2 in the market).
Virtual stakes were 11% behind last year in the first half, but only 2% behind in Q2 as the rate of decline in the Virtual market annualised towards the end of H1.
Operating costs were £0.4m or 7% higher than last year (13% on a constant currency basis) as a result of an increase in bonus provision compared to the prior year.
{1} EBITDA is stated pre-exceptional items
Online
Online EBITDA{1} of £37.1m was £14.5m or 64% ahead of last year and £20.1m or 118% ahead after adjusting FY15 for the impact of Point of Consumption Tax{2}.
Coral.co.uk
Coral.co.uk delivered impressive volume growth, while the investment in both product range and customer management helped deliver an improved sportsbook margin. Net revenue was 58% ahead of last year, driven by a 30% increase in actives, a 9% improvement in spend-per-head and a 2.6pp sports margin improvement (football +6.1pp).
Sports net revenue of £32.7m was £17.0m or 108% ahead of last year with sports stakes growth of £171.0m or 39%. Gaming net revenue of £53.4m was £14.6m or 38% ahead of last year, driven by cross-sell from sports into gaming and high levels of multichannel play.
The Coral.co.uk technology platforms performed very well during the Cheltenham and Grand National peaks, with mobile response times being among the quickest in the industry, achieved whilst maintaining a full product offering throughout.
Coral Connect sign-ups accelerated during quarter 2 as a result of more targeted marketing, with around 4k new customers signing up every week. Connect customers account for 40-50% of Coral.co.uk net revenue, and are around double the value online of non-Connect customers. The ability to deposit and withdraw funds in shop directly from the online wallet has proved very popular with around 35% of Connect customers making regular deposits or withdrawals. This facility is a key differentiator for Coral.co.uk compared to online only operators, and is a major contributor to the significantly lower churn rates of Connect customers.
At the end of H1 mobile stakes represented 74% of sports stakes and 70% of gaming stakes.
Galabingo.com
Galabingo.com net revenue of £47.0m was £6.0m or 15% ahead of last year, despite an increasingly competitive market place. This continued growth was driven through improved CRM driving higher spend-per-head and reduced churn. At the end of H1 mobile stakes represented 60% of total stakes.
Galacasino.com
Galacasino.com net revenue was £1.2m or 17% behind last year in line with a deliberate reduction in marketing spend to improve ROI.
Eurobet.it
Eurobet.it net revenue of £27.1m was £7.5m or 38% ahead of last year and helped consolidate its position as the number 2 online operator in the marketplace behind Bet365. First time depositors were 110% ahead of last year driven by high levels of direct acquisition supported by increased TV spend. Multichannel also remains a key acquisition channel with the level of sign-ups through Retail increasing 86% year-on-year, primarily due to the relocation of 250 shops. Sports net revenue of £14.1m was £5.8m or 70% ahead with sports stakes 56% ahead. Gaming net revenue of £13.0m was £1.7m or 15% ahead.
Marketing costs
Online marketing costs increased by £11.2m, or 35%, equal to 26% of net revenue, which was in-line with the prior year.
Operating costs (excluding Marketing)
Total operating costs (excluding marketing) were £4.0m or 14% higher than last year, reflecting the increased size of the business.
{1} EBITDA is stated pre-exceptional items
{2} FY15 EBITDA (pre-exceptionals) has been rebased for the estimated impact of Point of Consumption tax (Q2 -£0.0m and H1 -£5.6m), calculated as if all changes had been in existence for the corresponding periods in FY15
Current Trading
For the 8 weeks ending 5th June.
Coral Retail net revenue was ahead of last year, with a strong slots-led machines performance partially offset by OTC net revenue, which was behind last year due to weaker football margins at the end of the domestic season and softer horse racing stakes. Eurobet Retail net revenue was broadly in line with last year, with an increase in sports stakes offset by poor Serie A football results. Coral.co.uk and Eurobet.it continued to deliver impressive sports stakes growth, partially offset by the poor football results in the UK and Serie A, and a particularly strong sports gross win margin in Coral.co.uk for the comparative period. Gaming performance across Coral and Gala websites was impacted by technical instability during the implementation of the new LCCP "reality checks".
IMPORTANT NOTICE:
The information contained in this announcement is not for release, publication or distribution to persons in Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, the Republic of South Africa or the United States or in any jurisdiction where to do so would breach any applicable law. No public offer of securities is being made by virtue of this announcement.
This announcement has been prepared for the purposes of complying with the applicable law and regulation of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.
No statement in this announcement is intended as a profit forecast of the Company or a profit estimate of the Company and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.
Certain figures contained in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly with the total figure given.
This announcement is for information purposes only and does not constitute a prospectus or offering memorandum or an offer in respect of any securities and is not intended to provide the basis for any decision in respect of the Company or any other entity and should not be considered as a recommendation that any investor should subscribe for or purchase any such securities. Neither the issue of this announcement nor any part of its contents constitutes an offer to sell or invitation to purchase any securities of the Company or any other entity and no information set out in this announcement or referred to in other written or oral information is intended to form the basis of any contract of sale, investment decision or any decision to purchase any securities in it.
Related Shares:
Ladbrokes Coral