Is this a bad time to float in the UK?

Is this a bad time to float in the UK?

Tuesday, May 19, 2015 Totally Gaming
Gala Coral CEO Carl Leaver remains cautious about "regulatory uncertainty" in the UK

Gala Coral has cast doubt on its potential flotation after announcing its results for the first half of 2015.

In March, the gaming operator - which runs betting companies Coral and Eurobet as well as Gala Bingo and Casinos – was reported to be considering a £2bn (€2.78bn/$3.1bn) initial public offering (IPO) after the UK General Election in early May.
However, its chief executive Carl Leaver said today (Tuesday) that after reporting a "strong period of growth" the company remains concerned about "regulatory uncertainty" in connection with costs relating to horse racing and devolution of gambling policy in Scotland.

"The Conservative party manifesto did not include any plans for further regulation of fixed-odds betting terminals (FOBTs)," he said.

"However, the announcement of a Racing Right to replace the Horse Racing Betting Levy in the Budget in March 2015, and the plan to devolve some gambling regulation to Scotland means there continues to be some regulatory uncertainty.

"The Group will continue to drive forward its proactive responsible gambling agenda both within the business and across the wider industry.”

Gala Coral is currently owned by a handful of private equity firms including Apollo Global Management, Cerberus Capital Management, Anchorage Capital Partners and Park Square Capital, which took over the company in 2010 after it collapsed under its £2.5bn of net debt.

In March, the Financial Times newspaper reported that Goldman Sachs and Morgan Stanley were advising the company, but had not been formally appointed to lead an IPO.

Gala Coral has already felt the negative impact of regulatory changes through the UK's Point of Consumption (PoC) tax, which impinged on its results to April 11.

The company saw total earnings before interest, taxes, depreciation and amortisation (EBITDA) up 10 per cent year-on-year to £135.4m. However, that figure was actually up 19 per cent, adjusting for increased regulatory costs.

Net revenue of £684.8m was £34.7m or five per cent ahead of last year, with online at £33.8m or 38 per cent ahead. The company saw an impressive 12-per-cent rise to £23.9m in online EBITDA, which rises to a huge 72-per-cent jump adjusting for the negative impact of the PoC tax.

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