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Ladbrokes vs Coral: How do the numbers stack up?

Whil

LadbrokesCoral
e Paddy Power and Betfair have already proposed a toast and clanked glasses, Ladbrokes and Gala Coral are stuck at the office waiting to be excused for celebratory drinks to mark their potential merger.

The plans for the Ladbrokes Coral merger were announced in July and it is currently in the second phase of an investigation by the Competition and Markets Authority (CMA). The CMA’s provisional findings are expected to be announced near the end of April and a final decision is due by 24 June.

Some time may have passed since then, so Gambling Insider wished to look into the latest year-to-date performances of both operators to assess their current level of strength and determine if one will provide more assistance to the other.

Ladbrokes released its preliminary full calendar year 2015 financials in February, while Gala Coral’s last report, published earlier this month, covered the 16 weeks ended 16 January 2016, the first quarter of its financial year.

To gage an accurate comparison, we have combined together the numbers from Gala Coral’s last four quarterly reports to reflect its latest full-year performance.

We have picked out a selection of financial indicators to draw a comparison and work out what the combined figures would be at this stage. Here is what we came up with:

Net revenue

Ladbrokes - £1.2bn

Gala Coral - £1.18bn

Combined - £2.38bn

Retail net revenue

Ladbrokes - £947.2m (79% of overall revenue)

Gala Coral - £773.8m (65% of overall revenue)

Combined - £1.72bn (72% of Ladbrokes Coral group revenue)

Digital net revenue

Ladbrokes - £242.8m (20% of overall revenue – Ladbrokes made a digital operating loss of £23.8m)

Gala Coral - £274.1m (23% of overall revenue)

Combined - £516.9m (22% of Ladbrokes Coral group revenue)

Operating profit

Ladbrokes - £80.6m

Gross profit

Gala Coral - £825.3m

It appears Gala Coral does not publish operating profit figures and Ladbrokes does not publish gross profit figures.

EBITDA

Ladbrokes - £80.6m (Published as group EBIT)

Gala Coral - £239.4m

Combined - £320m

How does this compare with the initial forecasts?

When the plans for the merger were announced in July, the operators said they expected to have net revenue of £2.1bn and £392m EBITDA, excluding the cost of synergies of at least £65m. The current trend would suggest that these estimations were fairly accurate. Both also said in July that the online business generated 20% of revenues on a combined basis, and that is about in line with where they are now.

They would also suggest that without taking increases and decreases into account, the two operators would go into the merger in a similar position. EBIT/EBITDA is the only field from these numbers where there appears to be clear daylight between the two, although it does also seem that Ladbrokes has been the stronger performer in retail. Gala Coral’s retail figures include its Eurobet brand.

How does this compare with Paddy Power Betfair?

Paddy Power Betfair, which completed its merger in February, combined results for the first time in its latest report in March, reflecting the full calendar year 2015. Here is how some of the numbers we used for Ladbrokes Coral stack up against Paddy Power Betfair:

Net revenue

Paddy Power Betfair - £1.32bn

Ladbrokes Coral - £2.38bn

EBITDA

Paddy Power Betfair - £295.7m

Ladbrokes Coral - £320m

It is not plausible to compare retail figures, as of course Betfair does not operate a retail division, but Ladbrokes Coral edges in front at this point in the net revenue and EBITDA areas.

Note: All the numbers used in this article only show where the operators are as of the latest financial reading and do not include year-on-year or quarter-on-quarter increases or decreases.
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