28 February 2008
Sir Ian RobinsonChairman
28 February 2008
Brian WallaceGroup Finance Director
Summary of performanceYear to 31 December
Continuing operations
Operating profit(1)
Net finance costs(1)
Interest income on Hotels sale proceeds
Profit before tax(1)
Effective tax rate(1)
EBITDA(1)
EPS(1)
2007£m
420.0
(68.0)
-
352.0
15.6%
470.4
47.4p
2006£m
262.2
(44.6)
24.0
241.6
17.5%
304.4
21.7p
Variance B(W)%
60.2
(52.5)
(100.0)
45.7
54.5
118.4(1) Before non-trading items
Betting and GamingYear to 31 December
UK Retail
Ireland, Belgium & Italy
eGaming
Telephone Betting
Other (2)
Corporate Costs
Total
2007£m
739.3
103.1
156.5
280.1
7.4
-
1,286.4
2006£m
715.8
84.0
144.4
46.1
-
-
990.3
VarianceB(W)%
3.3
22.7
8.4
507.6
29.9
2007£m
187.8
21.7
55.0
183.6
(7.0)
(21.1)
420.0
2006(1)
£m
199.8
17.0
44.3
17.3
(1.6)
(14.6)
262.2
VarianceB(W)%
(6.0)
27.6
24.2
961.3
(337.5)
(44.5)
60.2
Operating ProfitGross Win
(1) Restated divisions operating profit. Total operating profit remains unchanged(2) Other is casino and international development operations
UK Retail – Results2007£m
490.9248.4 739.3(37.5)701.8
4.0(72.1)
(201.3)(93.9)(58.1)(92.6)
(445.9)187.8
2006(1)
£m
510.5205.3715.8(31.9)683.9
4.0(75.0)
(180.6)(89.1)(58.6)(84.8)
(413.1)199.8
OTC gross winMachines gross winTotal gross winAdjustments to gross win (2)
Net revenueAssociate incomeGross profits taxStaff costsProperty costs (3)
Content costs (4)
Other costs (inc. depn and FOBT tax) (5)
Operating costsOperating profit
VarianceB(W)%
(3.8)21.0
3.3
2.6
(11.5)(5.4)0.9
(9.2) (7.9) (6.0)
Year to 31 December
(1) Restated revenue, costs and operating profit(2) Fair value adjustments, VAT
(3) Rent, rates and utilities (4) Pictures, data, levy, Sky(5) Depreciation = £40.9m (2006: £34.7m), FOBT tax = £13.8m (2006:£5.6m)
UK Retail – KPIsYear to 31 December
2007
17.1%
(4.1)%
20.3%
2.9%
3%
6.1%
£8.24
8,147
£585
2006
16.9%
1.1%
0.1%
0.8%
4%
2.9%
£8.39
8,189
£481
Variance B(W)%
(1.8)
(0.5)
21.6
OTC margin
Like for like OTC gross win growth
Like for like machines gross win growth
Like for like total gross win growth
Like for like total costs (1) increase
Like for like shop staff costs increase
Stake per slip (2)
Average number of machines
Average weekly gross win per machine
(1) Excludes VAT, Gross profits tax and FOBT tax (2) Slips exclude machines
IrelandYear to 31 December 2007
£m
61.8
(0.4)
61.4
(4.4)
(36.9)
20.1
5.4%
215
2006(1)
£m
48.9
(0.4)
48.5
(5.1)
(29.4)
14.0
10.4%
195
VarianceB(W)%
26.4
(25.5)
43.6
10.3
Gross win
Fair value adjustments
Net revenue
Duty / Gross profits tax
Other costs
Operating profit
Like for like gross win increase
Shop numbers at the end of the period(1) Restated costs and operating profit
eGaming – Net revenueYear to 31 December
Sportsbook
Casino
Poker
Games
Net revenue
2007£m
52.2
43.1
31.0
17.2
143.5
2006(1)
£m
45.5
41.0
35.0
12.6
134.1
VarianceB(W)%
14.7
5.1
(11.4)
36.5
7.0
Gross win
Fair value adjustments (2)
Net revenue
Gross profits tax
Levy and licences
Staff costs
Software & geographical partners (3)
Marketing (inc. affiliates)
Banking and chargebacks
Other costs (inc. depn)
Operating costs
Operating profit
2007£m
156.5
(13.0)
143.5
(7.9)
(2.7)
(17.9)
(18.1)
(20.1)
(5.2)
(16.6)
(80.6)
55.0
%age of net revenue
5.5
1.9
12.5
12.6
14.0
3.6
11.6
56.2
38.3
2006(1)
£m
144.4
(10.3)
134.1
(6.9)
(2.1)
(12.6)
(29.0)
(17.3)
(7.8)
(14.1)
(82.9)
44.3
%age of net revenue
5.2
1.6
9.4
21.6
12.9
5.8
10.5
61.8
33.0
VarianceB(W)%
8.4
7.0
2.8
24.2
Year to 31 December
(1) Restated costs and operating profit(2) Adjustments for free bets, promotions and bonuses
(3) Payments to third party software and platform providers and geographical partners
eGaming – Results
eGaming – KPIsYear to 31 December
2007
601
307
£120
£86
2006
549
303
£91
£56
VarianceB(W)%
9.5
1.3
(31.9)
(53.6)
Unique active players (000s) (1)
Real money sign-ups (000s) (2)
Cost per acquisition (3)
Adjusted cost per acquisition (4)
(1) A player who contributed to rake and/or placed a wager during the period(2) A new player who has registered and deposited funds during the period(3) Total of all online and offline marketing spend (including promotions and bonuses netted from revenue) and all affiliate expenses relating to deals where affiliates are paid a one-off fee for each sign-up and all bonus costs (except those relating to sign-ups from revenue share affiliates) divided by the aggregate real money sign-ups from non-affiliate sources and the number of real money sign-ups through affiliates that are paid a one-off fee.(4) As per cost per acquisition, but excluding any marketing costs attributed to CRM activity.
Telephone Betting – Results
Gross win exc. High Rollers
Fair value adjustments
Net revenue exc. High Rollers
High Rollers’ net revenue
Net revenue
Gross profits tax
Levy
Staff costs
Direct operating costs (2)
Other costs (inc. marketing and depn)
Operating costs
Operating profit
2007£m
30.5
(0.3)
30.2
249.6
279.8
(37.2)
(15.9)
(9.5)
(3.3)
(30.3)
(59.0)
183.6
2006(1)
£m
33.9
(0.3)
33.6
12.2
45.8
(7.3)
(2.6)
(9.0)
(3.3)
(6.3)
(21.2)
17.3
%age of net revenue
excl High Rollers
31.4
10.9
%age of net revenue
excl High Rollers
26.8
9.8
VarianceB(W)%
(10.0)
(10.1)
1,945.9
510.9
(178.3)
961.3(1) Restated costs and operating profit (2) Direct operating costs include telephone, bandwidth and banking costs
Year to 31 December
Telephone Betting - KPIs (excl High Rollers)
Year to 31 December 2007
7,165
61p
7.1%
115.0
193
2006
7,832
59p
7.2%
124.4
209
VarianceB(W)%
(8.5)
(3.4)
(7.6)
(7.7)
No. of calls (000s) (1)
Agent cost per call
Gross win margin
Unique active players (000s) (2)
Average monthly active player days (000s)
(1) Number of calls (excluding customer service calls)(2) A player who has placed a wager during the period
Analysis of 2007 Capex
CapexUK development (1)
FOBTs and EPOSXtraIreland, Belgium and ItalyOther (including IT: £6.7m; 2006 - £8.0m)European RetaileGaming / Telephone BettingInternational development and casinoTotalStatutory and licence acquisitions (2) SponsioOther (Italy: £26.6m, Casino: £10.7m, Ireland: £7.6m, UK: £1.4m)
2007£m
18.815.2
-13.015.262.2
5.83.0
71.0
37.846.3
155.1
2006£m
38.815.7
6.34.5
17.082.3
5.1-
87.4
-32.4
119.8
(1) Development = relocations, extensions and refurbishments, (2) Excludes £3.7 million (2006: £nil) cash obtained through acquisition of subsidiaries
Year to 31 December
Cash generated by operationsInterest and taxPPE capital spend (1)
IntangiblesAcquired subsidiariesTotal capital spend (1)
Cash flow after interest, tax and capitalVernons/Hotels disposal proceedsDividends paidProceeds from issue of shares, convertibles and optionsShare buybacksExchange and other movementsNet borrowings movementOpening net borrowingsClosing net borrowingsNet debt to EBITDA ratio (1)
Net debt to EBITDA ratio (1) adjusted for high rollers
Year to 31 December
Cash Flow2007
£m
(62.4)
(31.8)(60.9)
2007£m
421.1(133.0)
(155.1)133.0
40.8(84.6)
7.6(70.4)
5.531.9
(948.9)(917.0)
1.93.1
2006£m
(84.8)(9.0)
(26.0)
2006£m264.7
(53.5)
(119.8)91.4
3,241.4(4,208.4)
344.5-
(19.9)(551.0)(397.9)(948.9)
3.1 3.2
(1) Continuing operations only
28 February 2008
Christopher BellChief Executive
2007 Overview• Record profits
• Improved performance from UK Retail towards year end
• Double digit profit growth from eGaming
• Strong Telephone High Rollers performance
• Established new business in Italy
UK Retail• Renewed 8,190 strong gaming
machine estate
• New machine content
• Winter evening opening
• Improved betting content
Euro 2008
UK Retail – Product Development• Leading edge technology
• Current testing:
Customer loyalty scheme
Self service terminals
Kiosk based shops
• Enhanced content and product range
• Active shop portfolio management
Kiosk and SST – Ladbrokes Retail Marketing
Ireland• Strong performance in 2007
• Acquisition of 54 shops in Northern Ireland during February
• Market leaders in Northern Ireland and Republic of Ireland
Italy• 26 shops trading
• 10 corners trading
• Focus on opening Bersani licences and ongoing shop acquisitions
• Ladbrokes.it launched Q4 2007
Spain• Sportium brand
• JV with Cirsa Slot
• Madrid operating licence
• 60 sportsbetting outlets expected to start trading in the months following licence award
• Further regional deregulation required
Other International Development• China
– Product development with AGTech
– Great Gate shops
• Vietnam
– Fixed odds football lottery bid
• Turkey
– Sportsbetting licence opportunity
Telephone Betting• Strong performance from High
Rollers
• Core business slightly down
• High quality service to all Telephone customers
eGaming• Continued double digit profit growth
in 2007
• Leveraging the brand
• Driving new customer acquisitions
• Jurisdictional prudence
• Management team strengthened
eGaming
Ed AndrewesManaging Director
eGaming
Andy HarrisManaging DirectorCasino, Games & New Platforms
Paul CorsonMarketing Services
Director
Edward IhreManaging Director
Poker
Richard ClarkGeneral Manager
Sportsbook
eGaming – Growth Acceleration• Increased investment in customer
acquisition • Targeted NGR growth through
– More aggressive Poker affiliates programme
– TV advertising for Casino and Bingo– Increased investment in Nordic
region• Flat operating profit in 2008• Profit growth in 2009 and 2010
UK Regulation• No longer pursuing new UK casino
opportunity
• Paddington Casino to be sold
• 2005 Gambling Act from 1 September 2007
Winter evening opening met expectations
TV advertising well received
• 47th levy scheme determination
Summary• Ongoing revenue and cost
opportunities in UK Retail
• Consolidation in Irish Retail
• Focused investments in eGaming
• High Rollers in Telephone Betting
• International progress, with focus on Italy and Spain
Outlook
Q&A
Appendix
eGaming – KPIsSportsbook Gross win margin 7.2% 6.4% Unique active players (000s) 421 398 5.8 Average monthly active player days (000s) 648 610 6.2 Yield per unique active player (£) (1) 124 114 8.8Casino Unique active players (000s) 105 90 16.7 Average monthly active player days (000s) 82 72 13.9 Yield per unique active player (£) (1) 411 455 (9.7)Poker Unique active players (000s) 151 154 (1.9) Average monthly active player days (000s) 409 461 (11.3) Yield per unique active player (£) (1) 205 227 (9.7)Games Unique active players (000s) 148 126 17.5 Average monthly active player days (000s) 142 99 43.4 Yield per unique active player (£) (1) 116 100 16.0
2007 2006 Variance% B(W)
(1) Revenue per unique active player for the period
Year to 31 December
European Retail
2007£m
739.3
61.8
34.8
6.5
842.4
2006£m
715.8
48.9
35.1
-
799.8
3.3
26.4
(0.9)
-
5.3
2007£m
187.8
20.1
3.2
(1.6)
209.5
2006(1)
£m
199.8
14.0
3.0
-
216.8
Operating ProfitGross Win
UK Retail
Ireland
Belgium
Italy
Total
(1) Restated divisions operating profit. Total operating profit remains unchanged
Variance B(W)%
Variance B(W)%
(6.0)
43.6
6.7
(3.4)
Year to 31 December
UK Retail
Ireland & Belgium
eGaming
Telephone Betting
Other (3)
Corporate Costs
Total
Reported£m
195.4
17.3
47.0
17.7
5.9
(15.2)
268.1
Adj (1)
£m
-
-
-
-
(5.9)
-
(5.9)
Adj (2)
£m
4.4
(0.3)
(2.7)
(0.4)
(1.6)
0.6
-
Restated operating profit
(1) Continuing operating profit restated for treatment of Vernons as discontinued(2) Restated divisions operating profit. Total operating profit remains unchanged(3) Other restated is casino and international development
Restated£m
199.8
17.0
44.3
17.3
(1.6)
(14.6)
262.2
Year to 31 December 2006