Financial Updates 15 – 06 -16

Gala Leisure has posted results for FY September 2015, a period prior to its acquisition by Caledonia Investments. The business, which operates 130 bingo halls across the UK (Mecca now 87), continued to display resilience. Revenue was up 1.6% to £284.7m (£2.19m per club vs. Mecca run-rate of £2.52m). Pre-exceptional EBIT turned positive to £17.6m (6.2% margin), with reported EBITDA up 90% to £42.3m – driven by positive tax changes and effective cost control (eg, £4.6m reduction in staff costs; changes to leases amounting to £7.0m). EBITDA margins were 14.9%, vs. Mecca 18.9%.  A cash flow statement was not provided, but the extent of the operational turnaround would suggest a highly cash generative business. NB, on acquisition, the unaudited EBITDA given for the same period was £52.7m (18.5% margin), which is probably a more accurate reflection of the underlying position.

UK land-based bingo’s medium-term stability remains impressive, though structural challenges are still faced (channel shift, demographics). Under new ownership, the challenge is to build upon a strong retail footprint and medium term resilience to mitigate downside risk and drive long term growth.