More Details on Ladbrokes-Coral Merger

Friday July 24,2015  : MORE DETAIL EMERGES ON LADDIES-CORAL MERGER (Update)
 
UK marketing focus will be on boosting online gambling activities.
 
In addition to announcing the Gala Coral merger today, Ladbrokes has outlined its intentions going forward, the results of its recent strategic review and a half-year trading update.
 
The review outlines plans for a three year program in which the company's share of the UK online gambling market will be aggressively expanded, marketing efforts increased, the UK football activity boosted, and multi-channel enterprise growth achieved.
 
The plan is to ensure that at least 20 percent of the merged business will flow from digital activity. The company intends to increase the digital division's contribution to group revenue to 30 percent by 2017, up from 18.6 percent in 2014. It calls for growth in active users from 960,000 last year to over 1.3 million, and a doubling in net revenue from Australian operations.
 
Ladbrokes CEO Jim Mullen said in a statement:
 
"Today I am announcing an aggressive three-year investment programme to build our UK Retail, Digital and Australian recreational customer base. I also intend to restore our passion and pride of being at the heart of sportsbetting in our culture and all that we do.
 
"Current trading shows how results have continued to favour our customers but the underlying customer metrics, on which we have built our strategy, provide strong support for this plan."
 
The merger deal does not include Gala Bingo, which remains on the "for sale" block, but both group brands will be used in operations.
 
Ladbrokes will issue new shares to Gala Coral shareholders representing 48.25 percent of the enlarged group, with Ladbrokes shareholders to own the other 51.75 percent.
 
John Kelly, currently senior independent non-executive director at Ladbrokes, will become non-executive chairman of the combined business.
 
Gala Coral will bring GBP865 million in net debt to the merged company.
 
Ladbrokes H1-2015 trading update highlighted:
 
* Overall group net revenue up 1.3 percent to GBP585.4 million (excluding high roller activity;
 
* Digital revenue up 6.9 percent to GBP112.2 million, but despite this the division reported a loss of GBP11.5 million, well down from the GBP 3 million profit recorded in the same period in 2014;
 
* UK retail revenue up 3.2 percent to GBP410.5 million;
 
* UK retail operating profit down 1.2 percent to GBP 56.9 million;
 
* European retail revenue up 1.7 percent percent to GBP60 million;
 
* Core telephone betting operations 53.4 percent down at GBP 2.7 million;
 
* Group operating profit down 32 percent to GBP38.9 million, due to UK p.o.c. and machine game taxes and poor sportsbook margins;