[toc]The Gala Coral Group half-year results for 2016 bring news of extremely strong growth in the online sports betting market. EBITDA for online was up 118 percent after adjusting for the impact of the U.K. point of consumption tax.
A closer look at the Coral numbers
- The results PR is here.
- The results presentation is here.
- The results financial statements are here.
- The investor webcast is here.
In hard numbers, Coral.co.uk sports betting net revenue of £32.7 million ($47.6 million) was up 108 percent on 2015, with total wagers up by 39 percent.
Total net gaming revenue of £53.4 million ($77.7 million) was 38 percent higher than the same period last year “driven by cross-sell from sports into gaming and high levels of multichannel play.”
By the end of the period, wagers made on mobile devices accounted for 74 percent of sports betting and 70 percent of other gaming stakes. Gala’s unusual half year accounting period ended on April 9.
Italian online revenues similarly strong
At its Italian regulated online site, Eurobet.it, growth was lower, but still extremely strong.
Net revenues of £27.1 million ($39.4 million) were up 38 percent on last year consolidating Eurobet’s position as “the number 2 online operator in the marketplace behind Bet365.”
Sports betting net revenue was up 70 percent to £14.1 million ($20.5 million), with total stakes up by 56 percent.
Overall, group revenues over the half year increased from £535.7 million ($779.3 million) to £606 million ($881.6 million). Gross profit came in at £413 million ($600.1 million) with net profits at £94.3 million ($137.2 million).
Coral’s CEO Carl Leaver commented:
“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 benefited 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.”
In particular regard to the growth of the online business, he said:
“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.”
Positive news, but the bottom line shows losses
Despite all of the positive numbers in the report, Gala Coral’s bottom line shows that the company actually made a pre-tax loss of £49.8 million.
Gala explained that this was due to a number of reasons, primarily exceptional costs, including paying back debt, ahead of its merger with Ladbrokes.
In total, Coral repaid £327 million of debt during the first half of the accounting year.
The merger with Ladbrokes remains subject to regulatory approval, but Leaver explained that currently the U.K. Competition & Markets Authority (CMA) “is minded to clear the proposed merger,” subject to the combined group selling between 350 and 400 of their high street betting shops.
Ladbrokes’ Q1 2016 results showed equally strong sports betting growth, with net revenues up by 59 percent and total online revenues up by 36.5 percent.
The merger of the two companies will create a company with a value of around £2.3 billion ($3.31 billion).