Ladbrokes plc Coral Group 3rd Quarter Results (5067I)

TIDMLAD

RNS Number : 5067I

Ladbrokes plc

31 August 2016

31 August 2016

LADBROKES PLC

Coral Group

Financial results for Quarter 3 - Twelve weeks ended 2 July 2016

Gala Coral Group Limited ("Gala Coral") has today announced its Q3 financial results for the twelve weeks ended 2 July 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 twelve weeks ended 2 July 2016:

Highlights - Quarter 3

   --    Coral Group Net revenue({1}) of GBP264.0m: +GBP23.0m  (+10%) 

-- Coral Group EBITDA({2/3}) of GBP57.7m: +GBP6.5m (+13%). Regulatory impacts have now annualised

-- Coral Retail EBITDA({2}) of GBP31.9m: -GBP0.5m (-2%). OTC GW% up 1.3pp and machines net revenue +10%

   --    Coral Connect: Another strong quarter with 74k sign ups 
   --    Eurobet Retail EBITDA({2}) of GBP5.3.m: +GBP1.7m (+47%). Sports stakes +38% 

-- Online EBITDA({2}) of GBP21.6m: +GBP4.5m (+26%). Online net revenue +19%: Coral.co.uk net revenue +26%, Eurobet.it net revenue +25%

Highlights - Year to Date

   --    Coral Group Net revenue({1}) of GBP868.9m: +GBP93.5m (+12%) 
   --    Coral Group EBITDA({2/3}) of GBP182.3m: +GBP23.7m (+15%) 

-- Online EBITDA({2}) of GBP58.7m: +GBP19.0m (+48%). Online net revenue +30%: Coral.co.uk net revenue +46%, Eurobet.it +34%, both websites benefitting from the reversal of poor results in the first half of the prior year

 
 {1}   Net revenue is calculated as gross win less 
        free bets and customer bonuses 
 {2}   EBITDA is stated pre-exceptional items 
 {3}   EBITDA includes all revenue and expenses for 
        the Coral Group and excludes Gala Retail (Q3 
        FY16: GBP0.0m and Q3 FY15: GBP11.9m, Q3 YTD 
        FY16: GBP9.9m and Q3 YTD FY15: GBP38.1m), High 
        Rollers (Q3 FY16: GBP0.0m and Q3 FY15: -GBP8.5m, 
        Q3 YTD FY16: GBP0.0m and Q3 YTD FY15: -GBP7.6m) 
        and Propco rental income (Q3 FY16: GBP0.0m 
        and Q3 FY15: GBP0.0m, Q3 YTD FY16: GBP0.0m 
        and Q3 YTD FY15: GBP5.8m) 
 

Quarter 3 Overview

Net revenue({1}) of GBP264.0m was GBP23.0m or 10% ahead of last year and EBITDA({2/3}) of GBP57.7m was GBP6.5m or 13% ahead. Regulatory impacts (MGD increase to 25%, DCMS high stakes FOBT restrictions and Point of Consumption Tax) had all annualised prior to Quarter 3.

EBITDA({2/3}) was ahead in all divisions with the exception of Coral Retail. Growth in Coral Retail and Online was dampened by new regulatory requirements implemented during Q2, including teething problems around the introduction of new player protection measures which are now fully resolved.

 
 {1}   Net revenue is calculated as gross win less 
        free bets and customer bonuses 
 {2}   EBITDA is stated pre-exceptional items 
 {3}   The Coral Group excludes Gala Retail (Q3 FY16: 
        GBP0.0m and Q3 FY15: GBP11.9m), High Rollers 
        (Q3 FY16: GBP0.0m and Q3 FY15:-GBP8.5m). Quarter 
        3 represents the 12 week periods ending 2 
        July 2016 and 4 July 2015 
 

Quarter 3 Year to Date Overview

Net revenue({1}) of GBP868.9m was GBP93.5m or 12% ahead of last year and EBITDA({2/3}) of GBP182.3m was GBP23.7m or 15% ahead, with strong growth in both Eurobet Retail and Online. Adjusting FY15 for the impact of regulation({4}) underlying EBITDA({2/3}) increased by GBP44.0m or 32% versus last year. 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 GBP17.0m). Football margins in Italy were also ahead of last year (estimated EBITDA impact of GBP5.1m), albeit still around 2.5pp behind expectations.

 
 {1}   Net revenue is calculated as gross win less 
        free bets and customer bonuses 
 {2}   EBITDA is stated pre-exceptional items 
 {3}   The Coral Group excludes Gala Retail (Q3 YTD 
        FY16: GBP9.9m and Q3 YTD FY15: GBP38.1m), 
        High Rollers (Q3 FY16: GBP0.0m and Q3 FY15: 
        -GBP7.6m) and Propco rental income (Q3 YTD 
        FY16: GBP0.0m and Q3 YTD FY15: GBP5.8m). Quarter 
        3 YTD represents the 40 week periods ending 
        2 July 2016 and 4 July 2015 
 

Divisional Summary

Coral Retail

-- OTC stakes were 6% behind last year driven by a smaller LBO estate (average of 1,819 LBOs in the quarter compared to 1,848 in the prior year - a 2% reduction), higher levels of recycling in the prior year due to lower margins, the impact of more stringent customer "source of funds" checks (estimated to account for 2 percentage points of the decrease) and weaker underlying horse racing stakes.

-- Strong non-festival horse racing margins and a bookmaker-friendly Euro 2016 Championship drove a 1.3pp increase in OTC gross win margin to 18.8%.

-- Machines net revenue was 10% ahead driven by a strong slots performance, with slots now accounting for 40% of gross win (FY15: 38%).

   --    Only 8% of Machines net revenue was driven by high stakes (>GBP50) play. 

-- Operating costs were 9% higher due to increased opening hours, salary reviews, staff bonuses following record Connect sign-ups and investment in staff training on enhanced player protection measures. Full year guidance for operating costs increase is now 4-5%.

-- Connect sign-ups totalled 74k during the quarter, with Connect customers contributing 48% of coral.co.uk net revenue.

-- Q3 EBITDA of GBP31.9m was GBP0.5m or 2% behind last year. EBITDA per shop was flat year-on-year while EBIT per shop grew 2%.

   --    Year-to-date EBITDA of GBP111.2m was broadly in-line with the prior year. 

Eurobet Retail

-- Sports stakes were 38% ahead driven by the Euro 2016 Championships, shop relocations (completed in Q1 FY16) and growth in Retail Bet-in-Play.

   --    Sports market share (gross win) was 15.4% (+1.8pp) - number 2 in the market. 
   --    Q3 EBITDA of GBP5.3m was GBP1.7m or 47% ahead of last year. 

-- Year-to-date EBITDA of GBP17.1m was GBP6.6m or 63% ahead of last year, primarily due to sports stakes growth and football margins ahead of last year (but still behind expectations).

Online

   --    Net revenue of GBP76.3m: +GBP12.4m or 19%. 

-- Marketing costs in Q3 increased by GBP4.1m or 35% and now equate to 21% of online net revenue, an increase of 2pp from the prior year (Q3 YTD: 24%,+1pp).

   --    Q3 EBITDA of GBP21.6m was GBP5.5m or 26% ahead of last year. 

-- Year-to-date EBITDA of GBP58.7m was GBP19.0m or 48% ahead of last year. Adjusting for Point of Consumption Tax, underlying EBITDA was 72% ahead.

Coral.co.uk

   --    Net revenue of GBP42.3m: +GBP8.8m or 26%: 
   -     Sports net revenue of GBP19.4m: +GBP5.2m or 37%. 
   -     Gaming net revenue of GBP22.9m +GBP3.6m or 19%. 

-- Actives were 35% ahead, with high levels of customer acquisition during the Euro 2016 Championships despite the decision not to advertise on TV.

-- A very strong sports gross win margin of 9.4% (+1.0pp) was driven by both favourable results, including the Euro 2016 Championships, and the structural improvements to customer management implemented at the end of FY15 and start of FY16. Normal sports gross win margin expectations are now c.8.0%.

-- Mobile stakes represented 80% of sports stakes (+12.0pp) and 73% of gaming stakes (+14.4pp). The marked acceleration in mobile penetration reflects the positive customer response to the relaunched proprietary coral.co.uk app.

Gala websites

-- Galabingo.com net revenue of GBP20.1m: + GBP1.4m or 7%. Mobile stakes represented 60% of total stakes, with growth driven by new exclusive gaming content and advances to CRM capabilities.

   --    Galacasino.com net revenue of GBP2.8m: +GBP0.2m or 8%. 

Eurobet.it

   --    Net revenue of GBP11.1m: +GBP2.2m or 25%: 
   -     Sports net revenue of GBP5.6m: +GBP1.2m or 27% 
   -     Gaming net revenue of GBP5.5m +GBP1.0m or 22% 

-- Actives were 33% ahead of last year and first-time depositors 41% ahead, driven by high levels of direct acquisition throughout the Euro 2016 Championships, and multi-channel acquisition through the shop estate.

Current Trading

For the 8 weeks ending 28(th) August:

Current trading in the 8 weeks post the quarter end has been positive, with continued machines growth in Coral Retail, sports stakes well ahead in Eurobet Retail and good volume growth in Online. Sports gross win margins are, however, behind last year's levels primarily due to poor horse racing results in the UK (especially in the week commencing 15th August) and as a result of very strong prior year comparators in Italy.

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.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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August 31, 2016 02:04 ET (06:04 GMT)