From the Blue Index blog

Dont bet on Ladbrokes
May 15th, 2009

Shares in bookmaker Ladbrokes (LAD) were looking like a good recovery play up to this morning, having regained over 50% of their value after the October low of 133p last year

But this morning, Ladbrokes reported a 34% slump in profits for the first four months of 2009. Profits from big spending high rollers tumbled to just GBP25m from GBP40m in 2008, with punters enjoying a particularly good Cheltenham Festival in March. These abnormal gross win margin levels, increased free bets and unfavourable cost phasing in eGaming against the previous year resulted in the profits slump, although CEO Chris Bell was at pains to point out the rate of decline is not representative of our expectations for the year, and he said the decline has already given way to more normal trends in May. And overall, added Chris Bell, the general resilience of the business and strong cost controls gives us confidence in the outturn for the full year.

But brokers Noble, Shore Capital and Daniel Stewart all see the results as disappointing and weaker than expected, particularly given that results at rival William Hill are strong and in stark contrast

Full transcript here
http://blog.blueindex.co.uk/2009/05/dont-bet-on-ladbrokes/

StockMarketWire.com
A combination of Ladbrokes with most of Gala Coral would create a UK market leader with a stronger business profile than either group could achieve separately, Fitch Ratings says.

But the agency says that depending on the capital structure decided by the new entity, it may need to raise new equity or quasi equity if it wants to achieve a financial profile similar to Ladbrokes' standalone profile.

Ladbrokes revealed the early stage merger talks over Gala Coral's betting shops, Italian operations and online business earlier this week. It did not say how a deal would be structured but that it could include an equity placing to strengthen the balance sheet of the combined entity.

Fitch says that even without an equity placing, the combined entity's credit rating would probably be no more than one notch below Ladbrokes' current 'BB' rating. Any assigned rating would depend on multiple factors, in addition to leverage considerations.

Fitdh says: "The business profile of the combined entity would be supported by the combination of Gala's strong online presence, where Ladbrokes has underperformed, and its Italian operations, with Ladbrokes' and Coral's large UK shop portfolio, well-known brands and long UK track records. Ladbrokes' Australian presence would strengthen the combined group's international diversification.

"We believe there would also be the potential for material cost savings through the closure of some of the combined group's 4,000 UK betting shops. Other synergies and cost savings are possible. For example, the two companies share the same machine provider and could therefore achieve purchasing savings. There may also be revenue synergies from merging the two businesses.

"We would expect some execution risk, particularly in integrating the two online businesses, while the potential demands of UK competition authorities are another unknown. An attempt by Ladbrokes to buy Coral in 1998 was blocked due to concerns it would reduce competition. The subsequent migration of the industry to online means we do not expect a deal would be blocked, but the companies could be forced to sell parts of their UK portfolio, especially given the significant overlap between the two companies in high-street locations.

"As many lease contracts would come to expire in the coming years we would expect an acceleration of shop disposals."

A prime example of short the spikes?

More gaps than in Man Utd defense :0)

Ladbrokes completes £1.35bn merger financing

StockMarketWire.com

Ladbrokes has signed a £1.35bn n facility with a syndicate of relationship banks to provide committed financing for its proposed merger with Coral.

The new facility has three tranches and will be available for drawing subject to completion of the merger with Coral. - Tranche A - £600m term facility - October 2016 and, subject to extension options, January 2018

- Tranche B - £400m revolving credit facility - October 2020

- Tranche C - £350m revolving credit facility - June 2019 Ladbrokes' existing £55m December 2016 bank facilities were cancelled in September 2015 and its remaining standalone £350m June 2019 bank facilities will be cancelled as a condition precedent to drawing on the new facility.

The intention is for the £100m September 2022 and the £225m March 2017 Ladbrokes bonds to remain in place following completion of the merger. As a result of this financing, the Gala Coral debt comprising £315m Senior Secured Note 2018, £275m Secured Note 2019 and £812m Senior Secured Facilities 2018, will not be transferred into the enlarged Ladbrokes Coral group at completion of the merger.

Chief financial officer Ian Bull said: "I am pleased that our relationship banks have shown strong support in putting in place a significant size facility at similar pricing to our current facilities. We believe that this facility will provide sufficient liquidity to an enlarged Ladbrokes Coral group following the merger."



Story provided by StockMarketWire.com

Q3 Interim Management Statement

Q3 2015: TRADING IN LINE WITH OUR EXPECTATIONS – STRATEGY IMPLEMENTATION UNDERWAY

Ladbrokes plc (LSE:LAD) announces its trading update for the three months ended 30 September 2015 (the period or Q3):

The chart in post 112 seems to have died. Let's see if this one can stay alive.

Ladbrokes notes rise in Coral earnings

StockMarketWire.com

Ladbrokes has noted that Gala Coral Group has announced its financial results for the fourth quarter and the full year ended 26 September.

Total Coral Group EBITDA was £205.3m - 1% ahead of last year. After adjusting for regulatory impacts and the World Cup, underlying EBITDA was 30% ahead.

Online EBITDA of £56.2m was £6.7m or 14% ahead of last year and was 99% ahead on an underlying basis after adjusting FY14 for regulatory impacts and the World Cup. Online net revenue was 36% ahead, driven by 972k first time depositors.

Despite the introduction of the Point of Consumption tax during Q1, and the increase in MGD and introduction of FOBT high stakes restrictions at the end of Q2, the Group has grown EBITDA in the second half of the year.

Net revenue of £1,005.4m was £60.1m or 6% ahead of last year.

Provisional findings from the Competition and Markets Authority into the proposed merger between bookmakers Ladbrokes and Gala Coral have identified potential competition concerns in hundreds of local areas.

The authority said that in order to resolve the concerns, 350 to 400 shops may need to be sold for the merger to be conditionally cleared - if the provisional findings were confirmed in the final report.

Ladbrokes and Gala Coral Group - the second and third largest bookmakers in the UK by number of outlets - have 2,231 and 1,850 betting shops in the UK respectively.

StockMarketWire.com
Ladbrokes remains confident of delivering full year results in line with its expectations after its fourth consecutive quarter of year-on-year net revenue growth in the third quarter.

In UK Retail, net revenue increased by 1.9%. Ladbrokes said higher OTC margins had a more normalised impact on Q3 OTC staking which was down 4.3% or 3.9% on a like-for-like basis although in football, and the group said it saw staking growth of 17.3% as customers respond to its value proposition.

OTC gross win margin of 16.1% was up 0.6ppts year on year which meant OTC net revenue was broadly flat.

It added: "Staking through BetStation increased by 76.7% and represented c.10% of OTC staking (Q3 2015: c.5%). Machines net revenue grew 4.0% (like-for-like 4.6%) benefiting from our sustained strategy of introducing and promoting lower staking slots and B3 content which is increasingly popular with customers.

"We have maintained the intensity around our multi-channel offer and our UK Retail team have delivered over 120,000 actives since launch in 2015. Multi-channel customers contributed c.11% of sportsbook net revenue in Q3." In Digital, Ladbrokes.com and Exchanges net revenue increased by 32.7%. Sportsbook delivered its 11th consecutive quarter of year on year stakes growth with stakes up 26.2% and actives up 35.6%. Mobile staking increased by 31.6% and now accounts for 78.9% of sportsbook staking. Sportsbook net revenue rose 47.9% benefiting from an increased margin of 7.7% reflecting our focus on the recreational customer.

Gaming net revenue was up 23.7%, our 8th consecutive quarter of year on year growth.

In Australia, on a local currency basis, staking grew 50.6% and revenue increased by 89.6% on the back of actives growth of 42.5%. In European Retail net revenue grew 11.3% (+1.1% on a constant currency basis). In Belgium OTC amounts staked have increased 9.5% driven by the investment in SSBTs and virtual products. In Ireland, OTC staking was up 7.9%.

Chief executive Jim Mullen said: "We've emerged from a busy summer of sport with more evidence that our strategy of appealing to the recreational customer is delivering growth and we remain confident of delivering full year results in line with our expectations.

"Across all our key pillars we have been encouraged by the customer reaction. We have delivered growth for a fourth successive quarter in Group net revenue, and in Ladbrokes.com an eleventh in sportsbook staking and an eighth in gaming.

"In Australia, we've continued to enjoy tremendous success across all measures in the form of improved margin, strong staking and actives growth. "Our margin has been resilient, benefitting from our strategy of focusing on the recreational customer, deploying BetStation across the estate and growing in football. This margin has been in spite of loss-making racing festivals at Goodwood and York; I said at our half year results in August that sporting results would turn against us and in Racing they promptly did.

"However, we did enjoy a strong end to the Euros and a stuttering start to the season for Manchester United and Barcelona has been in our favour. With the Melbourne Cup, an action-packed Boxing Day, the return of the National Hunt season and an intense programme of top level football to come, there remain significant opportunities and risks ahead.

"These results have been achieved by a group of colleagues whose commitment to delivering Ladbrokes' Plan A has been all the more impressive given the ongoing work towards completion of our merger with Coral.

"Following our agreement to sell 359 shops subject to CMA approval, we are close to completion of the deal and look forward to the opportunities it will bring to customers, colleagues and shareholders."

StockMarketWire.com
Ladbrokes has welcomed the Competition & Markets Authority's final approval of the proposed merger with Coral.

The CMA has approved the disposal of 322 shops to Betfred, 37 to Stan James and one shop to Bet21.

Following receipt of this approval, Ladbrokes will publish a prospectus in relation to the readmission of the enlarged group to the premium listing segment of the Financial Conduct Authority's Official List and to trading on the London Stock Exchange.

It is expected that completion of the Merger will take place in the very near future.

Ladbrokes chief executive Jim Mullen said: "I am delighted that the CMA has given approval to our merger with Coral. Both businesses are approaching the merger with good momentum and we are now focusing on completing the merger and delivering on the opportunities it offers."

Change of Name
Further to the publication of the Prospectus in respect of the proposed merger of the Company with certain businesses of Gala Coral Group Limited on 27 October 2016, and in accordance with LR 9.6.19, Ladbrokes plc announces it has today changed its name to Ladbrokes Coral Group plc. The merger is expected to complete on 1 November 2016.

Canaccord comment today:
Fifteen months after its initial announcement, the slow motion Ladbrokes/Coral merger finally completed today. We think that it will be worth the wait, notwithstanding increased UK regulatory scrutiny on the Gambling sector. LAD didn’t get a compelling valuation (3.6x Ebitda, after adjusting for accrued profits) for its forced sale of 360 stores. But it was a relatively low price to clear a deal that offers strategic value and considerable scale in both retail and Online gambling. It also delivers a strengthened management team and substantial cost synergies, which we see at comfortably above management’s projected £65m.
Both LAD and Coral have traded strongly through FY16, supported by a Bookie-friendly European championships, and the early fruits of LAD’s strategic review. Online growth remains impressive (Coral +24% in the 3 months ended September, Ladbrokes +33%, albeit from a low base). This strongly underpins post-merger Revenue/Profit expectations. The Triennial review of Stakes/Prizes could drive tighter regulation (i.e. cut the starting point for the so-called £50 journey) or reduce maximum stakes or machine numbers. The impact of the £50 journey was equivalent to a £30m hit to LAD/Coral profits. But we see greater upside to LAD/Coral’s £65m synergy targets. This amounts to just 3% of combined 2018 costs, versus 11% for Paddy Power/Betfair and 15% for bwin/party. Clearly, there is less direct overlap in Retail (although management expects 60% of its synergies to come from Retail). But even as a % of just LAD/Coral Online costs, the £65m target is just 9%. A target of over £100m seems realistic.
We think the fit looks good, and synergies offer upside. This provides plenty of ballast, at a time of increasing uncertainty around UK gambling regulation. And the impact of the deal on forecasts (with just the £65m of synergies) is compelling. We see FY17 EBITA rising from £118.4m to £313.5m, driving EPS up 47% from 7.9p to 11.7p. And given a commitment to 2x dividend cover, the dividend is ramped up to 5.8p. For FY18, EPS is upgraded 65% to 13.9p. Leverage rises, but it remains a comfortable 2.5x Ebitda in FY17F, falling to 2.0x at end FY18F.
Valuation
The shares are off their highs following recent regulatory concerns, but they are still up by 26% over the past year and 14% over 6 months. On our revised forecasts, it trades on a PER of 11.4x and EV/Ebitda of 8.2x (William Hill on 12.7x/8.8x) in FY17 falling to 9.6x and 7.1x in FY18 (a marked discount to Hills on 11.6x/8.2x). And it offers a 4.4% FY17F yield. We think this looks attractive – if we put the Online business on a 12.0x FY17 Ebitda multiple, Retail is valued at just 5.5x. And we see upward pressure on synergies. Our 165p TP (FY17F EV/EBITDA of 9.5x) represents 24% potential upside. BUY."

This thread will now terminate as the ticker LAD is obsolete. New ticker is LCL.