BUSINESS

Gala Coral profit up despite new gaming taxes as online earnings shine

TAGs: gala coral group

gala-coral-profitsUK gambling operator Gala Coral Group posted increased profits in its fiscal Q3 despite the impact of new gaming taxes.

Revenue was up nearly 6% to £305m in the 12 weeks ending July 4, while Group earnings rose 8% to £65.7m. The charge was led by the Group’s digital operations, which reported revenue up 37% to £63.6m, bolstering the company’s claims to have the “fastest growing” online business among its UK-listed peers.

Online earnings rose nearly 28% to £17.1m despite the impact of the UK’s new 15% online point of consumption tax (POCT), which cost the company £6.2m in the quarter. Adjusting the previous year’s Q3 to account for the POCT impact and the 2014 FIFA World Cup boost, online earnings would have risen 202% year-on-year.

The Group’s online operations are divided into three divisions: Coral Interactive, the Gala family websites and the Italian-facing Eurobet site. Coral reported online stakes up 63% and revenue up 69% to £33.2m despite a 1% decline in active customers, as spend per head rose 54%.

Coral sports revenue was up 102% and win rate improved 1.7 points. In-play sports wagering improved 5.2 points to 53% of betting stakes while mobile stakes rose 80%, accounting for 68% of overall sports wagering. Coral’s gaming revenue rose 52%, with mobile gaming stakes rising 83%, accounting for 65% of gaming spending.

Gala Coral CEO Carl Leaver noted that its Coral Connect multi-channel customers accounted for 40% of Coral’s online business in Q3 and that these customers were spending at more than twice the rate of customers who’d yet to sign up for a Coral Connect card.

Gala’s online stakes rose 17% and revenue rose 14% to £21.5m, with active customers up 22%. Galabingo.com revenue rose 23% as active customer ranks rose 13% thanks to improved retention and reactivation efforts. Galacasino.com revenue slipped one-quarter as punters scored a larger amount of jackpots but active customers rose 94% year-on-year.

Eurobet stakes rose 9% and revenue gained 11% to £8.9m, while active customers swelled by 10%. Sports betting turnover was up 60% but win margin fell 3.9 points. Gaming revenue improved by one-third while poker and virtual racing continued their decline.

RETAIL NOT AS IMPRESSIVE
At the retail level, Coral took a £7.2m hit from the double-whammy of an increased Machine Games Duty and new restrictions on maximum fixed-odds betting terminal stakes. Coral retail earnings fell 2% to £34.9m.

Eurobet retail earnings fell 30% to £3.7m, largely due to the lack of a major football tournament and a 44% rise in operating costs. On the plus side, Eurobet’s share of the Italian retail sports market rose 3.3 points to 14.9%.

Gala retail earnings rose 45% to £11.9m thanks to reduced bingo duties, which added £3.2m to the division’s bottom line. But admissions fell 2% year-on-year and he Group says it is still exploring opportunities to sell the Gala retail operations.

MERGER TALKS ONGOING
Leaver briefly addressed his company’s proposed merger with rival Ladbrokes, saying the Group had “already opened dialogue” with the UK’s Competition and Markets Authority about what steps might need to be taken to assuage monopolistic concerns at the retail level.

Leaver also said that trading in the six weeks to August 15 had been “positive,” with Coral Retail gross win ahead of last year and Eurobet Retail’s sports stakes “significantly ahead” of last year.

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