The casino and sports betting giant Gala Coral released a report related to its financial performance in H1. According to the released data, the 28-week period ended with a pre-tax loss of £49.8 million as compared to the profit of £103.4 million reported a year ago.
Gala Coral, which is about to sign a merger with Ladbrokes, attributed the pre-tax loss to expenses related to the upcoming merger and reminded that last year’s considerable profit was largely due to the sale of a part of its business.
In addition, the Cheltenham festival was defined as the worst since 2003. The salary increases, implementation of anti-money-laundering regulations and problem gambling issues were cited as reasons for the jump in operating expenses that reached £318.8 million.
Earnings before EBITDA saw an increase and reached £124.6 million. The football results in Italy and the UK had a beneficial impact on company’s performance as well.
As for the net revenue, it saw a 13% increase YOY to reach £604.9 million. A slight rise in gross profit was also noticed. It was estimated at £413.1 million, which is £38.7 million more than the amount reported this time last year.
Carl Leaver, Gala Coral’s CEO remained confident that the business stays stable and healthy. He went on to say that the online division performance was particularly strong in H1 of 2016 and a 35% growth was reported as well as an increase of 58% in the net revenue of Coral.co.uk. As for the multi-channel Coral Connect, the adequate marketing strategy made it a key driver of growth and the sign-ups reached 4,000 per week.
Last summer, Coral and Ladbrokes agreed on the terms of the soon-to-be-materialized merger. According to the clauses, the combined Ladbrokes-Coral company is to overtake William Hill, which would lead to £65 million in cost synergies.
In May, the Competition and Markets Authority required both companies to offload between 350 and 400 betting shops before being given the green light to complete the takeover.
The merger between Ladbrokes and Coral corresponds to the wave of consolidation in the UK betting sector. It was caused by the diversification and expansion of the online gambling sector, the heavier taxes, and the strict legislative framework operators have to comply with.
This would be the third occasion when casino and sports betting giants agree to work together. Last year, a merger between Paddy Power and Betfair was completed. It was followed by the takeover of Bwin.party. The latter was purchased by GVC for the amount of £1.1 billion.
