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4
Summary of Performance
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)
151.3 134.7 12.3
(19.9) (12.1) (64.5)
24.0 - -
155.4 122.6 26.8
24.0% 26.0%
171.3 152.9 12.0
9.8p 5.7p N/A(1) Before non-trading items
2006£m
2005£m
Variance% B(W)Half year to 30 June
5
Betting and Gaming
UK Retail 366.4 342.1 111.5 108.8
Ireland & Belgium 41.2 35.6 8.6 5.7
eGaming 72.6 58.0 19.8 17.5
Telephone Betting 33.6 21.6 16.6 8.5
Vernons 9.3 9.9 2.1 3.1
Central costs - - (7.3) (8.9)
Total 523.1 467.2 151.3 134.7
Gross Win 2006 2005 £m £m
Operating Profit 2006 2005 £m £m
Half year to 30 June
6
UK Retail - Results2006£m
2005£m
Variance% B(W)Half year to 30 June
(2) Rent, rates and utilities
(3) Pictures, data, levy, Sky
(4) Depreciation = £16.3m (2005: £14.7m)
OTC gross win 261.8 242.5 8.0
Machines gross win 104.6 99.6 5.0
Total gross win 366.4 342.1 7.1
Adjustments to gross win (1) (14.8) (0.5)
Net revenue 351.6 341.6 2.9
Gross profits tax (38.5) (49.3) 21.9
Staff costs (91.5) (84.4) (8.4)
Property costs (2) (41.4) (36.7) (12.8)
Content costs (3) (28.3) (25.4) (11.4)
Other costs (inc. depn) (4) (40.4) (37.0) (9.2)
Operating profit 111.5 108.8 2.5(1) Fair value adjustments, VAT, associate income
7
UK Retail - KPIs
2006 2005Variance% B(W)
Like for like total gross win growth 1.0% (0.9)%
Like for like OTC gross win growth 1.4% (6.7)%
Like for like machines gross win growth 0.1% 16.8%
OTC margin 16.9% 15.8%
Like for like total costs (1) increase 3.2% 5.9%
Like for like shop staff costs (de)/increase (0.3)% 12.0%
Stake per slip (2) £8.36 £8.54 (2.1)
Average number of FOBTs 6,797 6,087 11.7
Average weekly gross win per FOBT £548 £576 (4.9)
Half year to 30 June
(1) Excludes VAT and Gross profits tax (2) Slips exclude machines
8
eGaming - Gross win2006£m
2005£m
Variance% B(W)
Sportsbook 24.6 16.0 53.8
Poker 21.3 18.5 15.1
Casino 21.4 18.4 16.3
Games 5.3 5.1 3.9
Gross win 72.6 58.0 25.2
Half year to 30 June
9
eGaming - Results2006£m
2005£m
Variance% B(W)
Gross win 72.6 58.0 25.2
Fair value adjustments (1) (6.0) (3.4)
Net revenue 66.6 54.6 22.0
Gross profits tax (3.8) 5.7 (3.2) 5.9
Levy (0.8) 1.2 (0.6) 1.1
Staff costs (5.1) 7.7 (4.9) 9.0
Software & geographical partners (2) (15.0) 22.5 (12.4) 22.7
Marketing (inc. affiliates) (10.5) 15.8 (7.9) 14.5
Banking & chargebacks (4.8) 7.2 (2.5) 4.6
Other costs (inc. depn) (6.8) 10.2 (5.6) 10.3
Operating profit 19.8 29.7 17.5 32.1 13.1
Half year to 30 June
(2) Payments to third party software and platform providers and geographical partners
%age ofnet
revenue
%age ofnet
revenue
(1) Adjustments for free bets, promotions and bonuses
10
eGaming - KPIs2006 2005
Variance% B(W)Half year to 30 June
(2) A new player who has registered and deposited funds during the period
Unique active players (000’s) (1) 420 306 37.3
Real money sign-ups (000’s) (2) 197 144 36.8
Cost per acquisition (3) £81.83 £78.05 (4.8)
Adjusted cost per acquisition (4) £50.65 £57.73 12.3
(3) Total of all online and offline marketing spend and affiliate expenses divided by the aggregate real money sign ups
(4) Total of all online and offline marketing spend less any CRM spend divided by the total real money sign-ups
(1) A player who has contributed to rake and/or placed a wager during the period
11
Telephone Betting - Results2006£m
2005£m
Variance% B(W)Half year to 30 June
(1) Direct operating costs include telephone, bandwidth and banking costs
Gross win exc. High Rollers 20.3 15.7 29.3
Fair value adjustments (0.1) (0.2)
Net revenue exc High Rollers 20.2 15.5 30.3
High Rollers’ net revenue 13.3 5.9
Net revenue 33.5 21.4 56.5
Gross profits tax (5.1) (3.3)
Levy (1.8) (1.2)
Staff costs (4.5) 22.3 (4.1) 26.5
Direct operating costs (1) (1.7) 8.4 (2.3) 14.8
Other costs (inc. marketing and depn) (3.8) 18.8 (2.0) 12.9
Operating profit 16.6 8.5 95.3
%age ofnet revenue excl. High
Rollers
%age ofnet revenue excl. High
Rollers
12
Telephone Betting - KPIs
(1) Numbers of calls (excluding customer service calls)
(2) A player who has placed a wager during the period
2006 2005Variance% B(W)
No. of calls (000’s) (1) 4,059 3,751 8.2
Agent cost per call 55p 65p 15.4
Gross win margin (exc. High Rollers) 8.8% 5.9%
Unique active players (000’s) (2) 100.1 99.8 0.3
Average monthly active player days (000’s) 218.6 213.1 2.6
Half year to 30 June
13
Analysis of 2006 Capital ExpenditureCapexUK development (1) 14.515.8Xtra 4.30.7Ireland 1.71.8Other (including IT £5.3m; 2005 - £2.2m) 9.74.8Retail 30.223.1eGaming / Telephone Betting 2.51.7Total 32.724.8
AcquisitionsJack Brown 5.3 -Other (UK: £1.7m, Ireland: £7.2m) 8.938.2
46.963.0
2006£m
(1) Development = new licences, relocations and refurbishments
2005£mHalf year to 30 June
14
Disposal of Hotels
£m
Cash proceeds (1)
Assets disposed
Related cost of disposal
Foreign exchange
Profit on disposal
3,241
(2,769)
(97)
4
379
£m
3,298 as announced on 23 February 2006
(57) debt and working capital adjustment
3,241
(1)
15
Cash FlowCash generated by operations 127.8Interest and tax(0.9)
PPE capital spend (1) (38.4)Intangibles (2.3)Acquired subsidiaries (6.2)
Total capital spend (1) (46.9)Cash flow after interest, tax and capital80.0Hotels disposal proceeds 3,241.4Dividends paid(4,179.6)Proceeds from issue of shares, convertibles and options339.5Exchange and other movements (8.1)Net borrowings movement (526.8)Opening net borrowing (397.9)Closing net borrowings (924.7)
Annualised net debt to EBITDA* ratio for continuing operations3.0*H1 2006 plus H2 2005(1)Continuing operations only
2006£mHalf year to 30 June
17
Key Developments• Technology
• World Cup 2006
• International expansion - Italy
• Sportsbetting margins
• The 2005 Gambling Act
18
First Half• Good sportsbetting margins
• Record World Cup
• Integration of Jack Brown
• Continued growth in shop numbers
• Strong performance in Telephone
Betting
• Increased International development
activity
• New Paddington Casino and Sportsbar
19
Retail• Ladbrokes Xtra installed
• Renewal of EPOS systems
• Testing of self-service terminals
• New FOBT estate (starts in Q3)
• Continuing shop development
• Smoking ban
20
World Cup• rds of favourites won over the whole
tournament, with few upsets
• A number of high profile draws at the knockout stages
• Tournament contributed £17.5m gross win across all channels (H1: £10.6m, H2: £6.9m)
• 220,000 new recruits to eGaming and Telephone in first half
23
21
International• Pianeta Scommesse Joint Venture:
– Government licensed provider– Around €100m capex in Retail,
eGaming and Telephone• 300 shops in China, in 2 provinces
(Beijing and Tianjin)• Sportsbetting in Russian casinos• JV with Intralot to tender for the
Turkish lottery• Final bidders for football betting in
Vietnam• US review ongoing
22
UK Retail Gross Win Margin %2006
HY
03-05
3 FY Av.
Horses 15.2 14.0
Football 19.1 21.9
OTC 16.9 16.2
Horse overround
per runner* 1.50 1.62
%1st/2nd favs 51.0 51.3
*Overround – Theoretical profit margin set by the bookmaker on every “book” made
23
eGaming• Solid first half
• Good Sportsbook performance
• Good Casino and Games growth
• Competition in the Poker market place
• New customer acquisition cost remains low at £51
• Offline events continuing
24
2005 Gambling Act• Fully in force from Autumn 2007
• Winter evening opening for 7 months
• £500 AWP Jackpot machines
• 17 new UK casinos
25
Ladbrokes Xtra installed
2006 Retail Developments
Jack Brown refurbishment
New screen systems installed
Betting into PMU French Pools
Virtual football
Sports Xtra (All internet markets)
New EPOS system
Betting into US Pools
New dual screened FOBTs
£1m virtual events
Self Service Betting Terminals
Q1
Q4
Q3
Q2
26
2006 eGaming DevelopmentsQ
1Q
4Q
3Q
2 Backgammon Ladbrokes Financials (Currencies)
Bingo Additional payment method - Ukash
New Casino & Games products
Mah Jong
Extended ‘Betting in Running’
Poker School and 2nd Poker Cruise
Additional payment method - Paypal
Pokerbet
Updated download CasinoUpdated Poker site
Complete new Sportsbook Next generation Poker software
New Ladbrokes Financials markets (Brent)
Wireless hospitality betting
Updated mobile phone Sportsbook
New mobile phone Casino
Pontoon Bet
New Casino & Games products
‘Deal or No Deal’
New Ladbrokes Financials markets (NYMEX)
Poker leaderboards Viewable virtual racing
29
UK Retail - Shop Numbers
2,134
0
2,137
(2)
(7)11
1
01-Jan-06 Acquisitions New licences Closures Disposals 30-Jun-06
Nu
mbe
r of
sh
op
s
Plus:
• 32 relocations
• 27 refurbs
• 13 extensions
30
eGaming – Net Revenue2006£m
2005£m
Variance% B(W)
Sportsbook 23.8 15.6 52.6
Poker 18.4 17.6 4.5
Casino 19.4 16.4 18.3
Games 5.0 5.0 0.0
Net revenue 66.6 54.6 22.0
Half year to 30 June
31
eGaming – KPIs
2006 2005Variance% B(W)Half year to 30 June
Sportsbook Gross win margin 6.7% 7.1% Unique active players (000s) 318 223 42.6 Average monthly active player days (000s) 644 450 43.1 Yield per unique active player (£) (1) 75 70 7.1
Poker Unique active players (000s) 114 78 46.2 Average monthly active player days (000s) 496 356 39.3 Yield per unique active player (£) (1) 161 225 (28.4)
Casino Unique active players (000s) 58 46 26.1 Average monthly active player days (000s) 72 55 30.9 Yield per unique active player (£) (1) 336 358 (6.1)
Games Unique active players (000s) 62 48 29.2 Average monthly active player days (000s) 70 54 29.6 Yield per unique active player (£) (1) 81 105 (22.9)
(1) Net revenue per unique active player for the period
32
Ireland
Gross win 23.2 16.9 37.3
Fair value adjustments (0.1) -
Net revenue 23.1 16.9
Duty / Gross profits tax (3.3) (2.0)
Other costs (12.9) (11.8) (9.3)
Operating profit 6.9 3.1 122.6
Shop numbers 165 141(1) 17.0
(1) Shop numbers at 31 December 2005: 148
Half year to 30 June2006£m
2005£m
Variance% B(W)
33
Belgium
Gross win 18.0 18.7 (3.7)
Duty / Gross profits tax (6.7) (6.9)
Other costs (9.6) (9.2) (4.3)
Operating profit 1.7 2.6 (34.6)
Shop numbers 299 306 (1) (2.3)
(1) Shop numbers at 31 December 2005: 301
Half year to 30 June2006£m
2005£m
Variance% B(W)
34
Gross win / Net revenue 9.3 9.9 (6.1)
Duty / Gross profits tax (1.3) (1.4)
Other costs (5.9) (5.4) (9.3)
Operating profit 2.1 3.1 (32.3)
Customer recruitment (000’s):
New customers 66.0 79.9 (17.4)
Reactivated customers 35.3 34.2 3.2
Vernons2006£m
2005£m
Variance% B(W)Half year to 30 June
35
Taxation£m
Normal tax charge:Tax charge at 24% on continuing operations profit before tax and non-trading items
Tax charge at 35% on discontinued operations profit before tax and non-trading items
Tax charge at 24.7% for Total Group
Non-trading tax charge:Tax credit on non-trading items:
Total tax charge
37.3
3.8
41.1
(6.6)
34.5
36
2006 World Cup – Gross Win £m H1 H2 Total
UK Retail 6.0 4.6 10.6
Ireland & Belgium 0.9 0.4 1.3
eGaming 3.4 1.2 4.6
Telephone Betting 0.3 0.7 1.0
Total 10.6 6.9 17.5
37
Cash flow after interest, tax and capitalProfit before tax and finance costs - continuing 151.3 Profit before tax and finance costs - discontinued 11.2Profit before tax and finance costs - total162.5Depreciation and amortisation20.0Decrease in retirement benefit obligation (60.2)Other non cash movements5.5Cash generated by operations127.8Income taxes paid (33.3)Finance costs paid(11.4)Net cash inflow from operating activities83.1Interest received 43.8
Total capital spend (1) (46.9)Cash flow after interest, tax and capital 80.0
(1) Continuing operations only
Half year to 30 June 2006
38
Definition of Revenue
- IFRS(1) = gains and losses from betting and gaming net of discounts (free bets, bonuses, promotions) and VAT.
- UK GAAP = amounts staked.
Amounts staked = “UK GAAP” Revenue 6,359.5 5,709.6 11,500.0
Gross win 523.1 467.2 918.0
Free bets, promotions, bonuses (7.0) (4.1) (8.2)
VAT(2) (15.6) (1.3) (4.4)
Associate income 1.6 1.3 3.1
Net revenue 502.1 463.1 908.5 (1) Referred to as net revenue
(2) FOBT subject to VAT from December 2005
Revenue Under IFRS
H1 2006£m
H1 2005£m
FY 2005£m