Gala Coral releases H1-2011 results

Gala Coral group, a publicly listed UK online and land gambling enterprise, released its H1-2011 results this week reporting reduced turnover despite improved metrics across most of its businesses.
Financial highlights for the group for the half year to 9 April 2011 include:
* Turnover of GBP 616.2 million – a reduction of GBP 21 million (3 percent) from the corresponding period in 2010
* Group EBITDA of GBP 149.7 million, a reduction of GBP 19.1 million (11 percent) from the prior year
* Cash generated from operating activities of GBP 143.3 million – in line with the same period line the prior year. Unlevered free cash flow was GBP 159.1 million, benefiting from GBP 36 million of asset disposal receipts.
* Capital investment of GBP 19.6 million, an increase of GBP 1.5 million over the corresponding period last year
* Cash at bank and in hand of GBP 281 million, an increase of GBP 20.6 million from 25 September 2010.
* GBP 1,339.9 million of net debt for covenant purposes.
Management reported on Q2-2011 numbers, noting that trading was better in the second quarter, with improvements in key metrics across most businesses. Group turnover of GBP 276.6 million was GBP 3.5 million (1 percent) below the corresponding quarter in the prior year.
EBITDA in the second quarter declined by GBP 10.1 million (12 percent) from GBP 81.1 million in 2010 to GBP 71.0 million in 2011. Adjusting for the impact of the UK government’s VAT rise in January, and prior year one-off income underlying EBITDA was only 4 percent below prior year levels.
Coral over the counter turnover showed decent growth in the second quarter, with machines revenue stable. Gala Bingo continued to trade strongly with half year EBITDA up 17 percent year on year, partly due to the timing and phasing of cost savings.
Gala Casino operations were impacted by losses to high rollers, but underlying trading in the second quarter improved over the first quarter.
Profitability in the online business of the group was down 22 percent on the same period last year. However, the plan to re-platform all of the group’s internet businesses onto Playtech software and move certain operations to Gibraltar, signed on 19 July, is progressing well, with the launch of the first new website expected early in 2012.
Eurobet Italia continues to grow market share with sports betting stakes up by 15 percent year on year, although mixed results have impacted gross win margins over the first half of the year.
The report mentions the appointment as CEO of Andy Hornby at Coral who took up his responsibilities in July 2011.
Management report that in May this year the group completed a refinancing of its entire senior secured loan facilities. Borrowings of GBP 1,550 million (gross) were raised comprising Senior Secured Credit Facilities of GBP 925 million, Senior Secured Notes of GBP 350 million and Senior Notes of GBP 275 million.
The net proceeds from these borrowings together with group cash of GBP 138.4 million were used to repay all of the group’s existing Senior Secured Credit Facilities, totalling GBP 1,537.2 million. These new borrowings are repayable between 2017 and 2019 and provide the group with a solid long-term capital structure.

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