7 August 2008
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7 August 2008
Sir Ian RobinsonChairman
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2
Brian WallaceGroup Finance Director
7 August 2008
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Summary of performanceHalf year ended 30 June
Continuing operations
Operating profit(1) excluding High Rollers
High Rollers
Operating profit(1)
Net finance costs(1)
Profit before tax(1)
Effective tax rate(1)
EBITDA(1)
EPS(1)
2008£m
130.0
40.0
170.0
(36.0)
134.0
19%
197.8
18.0p
2007£m
132.7
60.0
192.7
(33.7)
159.0
16%
216.9
21.3p
Variance B(W)%
(2.0)
(33.3)
(11.8)
(6.8)
(15.7)
(8.8)
(15.5)(1) Before non-trading items
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Debt facilities maturity profile• Extended certain committed bank facilities• Signed further £125 million of new committed facilities
050
100150200250300350400450500
2008 2009 2010 2011 2012 2013
Bank Debt
Loan Note
Bond
• Repaid 7.25% bond in July - undrawn committed bank facilities of approx £433m on 5th August
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Summary of performanceHalf year ended 30 June
Continuing operations
Operating profit(1) excluding High Rollers
High Rollers
Operating profit(1)
Net finance costs(1)
Profit before tax(1)
Effective tax rate(1)
EBITDA(1)
EPS(1)
2008£m
130.0
40.0
170.0
(36.0)
134.0
19%
197.8
18.0p
2007£m
132.7
60.0
192.7
(33.7)
159.0
16%
216.9
21.3p
Variance B(W)%
(2.0)
(33.3)
(11.8)
(6.8)
(15.7)
(8.8)
(15.5)(1) Before non-trading items
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6
Betting and Gaming
UK Retail
Ireland, Belgium & Italy
eGaming
Telephone Betting
Other (2)
Corporate Costs
Total
2008£m
394.3
77.0
96.0
16.0
-
-
583.3
2007(1)
£m
370.3
50.9
78.1
16.9
-
-
516.2
VarianceB(W)%
6.5
51.3
22.9
(5.3)
13.0
2008£m
98.3
14.7
26.2
2.2
(3.8)
(7.6)
130.0
2007(1)
£m
100.9
13.2
26.3
3.3
(2.6)
(8.4)
132.7
VarianceB(W)%
(2.6)
11.4
(0.4)
(33.3)
(46.2)
9.5
(2.0)
Operating ProfitGross Win
(1) Restated for discontinued operations and reallocation of Italy from other to Other European Retail
(2) Other includes international development costs and start up costs associated with our Spanish joint venture
(exc High Rollers)
Half year ended 30 June
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UK Retail – Results2008£m
251.8142.5 394.3(23.2)371.1
1.5(37.0)
(104.6)(47.2)(34.7)(50.8)
(237.3)98.3
2007£m
249.6120.7370.3(18.2)352.1
1.6(36.8)(96.6)(45.7)(28.5)(45.2)
(216.0)100.9
OTC gross winMachines gross winTotal gross winAdjustments to gross win (1)
Net revenueAssociate incomeGross profits taxStaff costsProperty costs (2)
Content costs (3)
Other costs (inc. depn) (4)
Operating costsOperating profit
VarianceB(W)%
0.918.1
6.5
5.4
(8.3)(3.3)
(21.8)(12.4)
(9.9) (2.6)
(1) Fair value adjustments, VAT (3) Pictures, data, levy, Sky(4) Depreciation = £21.4m (2007: £19.9m)(2) Rent, rates and utilities
Half year ended 30 June
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UK Retail – KPIs2008
16.7%
1.1%
17.9%
6.6%
4%
1.6%
£8.28
8,104
£676
2007
17.5%
(5.2)%
14.2%
0.3%
4%
6.9%
£8.14
8,155
£572
Variance B(W)%
1.7
(0.6)
18.2
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, Freebets, Gross profits tax and FOBT tax (2) Slips exclude machines
Half year ended 30 June
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Ireland2008£m
47.6
(0.4)
47.2
(3.2)
(28.5)
15.5
1.7%
282
2007£m
32.8
(0.2)
32.6
(2.2)
(17.9)
12.5
15.7%
206
VarianceB(W)%
45.1
(59.2)
24.0
36.9
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
Half year ended 30 June
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eGaming – Net revenue
Sportsbook
Casino
Poker
Games
Net revenue
2008£m
32.1
26.6
14.7
13.2
86.6
2007£m
27.1
22.2
15.7
7.5
72.5
VarianceB(W)%
18.5
19.8
(6.4)
76.0
19.4
Half year ended 30 June
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Gross win
Fair value adjustments (1)
Net revenue
Gross profits tax
Levy and licences
Staff costs
Software & geographical partners (2)
Marketing (inc. affiliates)
Banking and chargebacks
Other costs (inc. depn)
Operating costs
Operating profit
2008£m
96.0
(9.4)
86.6
(4.9)
(1.7)
(10.8)
(11.3)
(18.9)
(3.4)
(9.4)
(55.5)
26.2
%age of
net revenue
5.6
2.0
12.5
13.0
21.8
3.9
10.9
64.1
30.3
2007£m
78.1
(5.6)
72.5
(4.1)
(1.6)
(8.4)
(8.6)
(12.6)
(3.0)
(7.9)
(42.1)
26.3
%age of
net revenue
5.6
2.2
11.6
11.9
17.4
4.1
10.9
58.1
36.3
VarianceB(W)%
22.9
19.4
(31.8)
(0.4)
(1) Adjustments for free bets, promotions and bonuses (2) Payments to third party software and platform providers and geographical partners
eGaming – ResultsHalf year ended 30 June
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eGaming – KPIs2008
541
237
£129
£88
2007
441
182
£116
£86
VarianceB(W)%
22.7
30.2
(11.2)
(2.3)
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.
Half year ended 30 June
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2007£m
16.9
(0.6)
16.3
(2.5)
(1.2)
(4.8)
(1.5)
(3.0)
(10.5)
3.3
Gross win
Fair value adjustments
Net revenue
Gross profits tax
Levy
Staff costs
Direct operating costs(1)
Other costs (inc. marketing & depn)
Operating costs
Operating profit
2008£m
16.0
(0.5)
15.5
(2.3)
(1.1)
(5.1)
(1.4)
(3.4)
(11.0)
2.2
%age of
net revenue
32.9
9.0
21.9
VarianceB(W)%
(5.3)
(4.9)
8.0
(4.8)
(33.3)
Telephone Betting – Results (exc High Rollers)
%age of
net revenue
29.4
9.2
18.4
(1) Direct operating costs include telephone, bandwidth and banking costs
Half year ended 30 June
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Telephone Betting – KPIs (exc High Rollers)
2008
3,434
62p
8.4%
90.2
186
2007
3,893
63p
7.4%
97.4
204
VarianceB(W)%
(11.8)
1.6
(7.4)
(8.9)
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
Half year ended 30 June
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15
Analysis of 2008 Capex
CapexUK RetailIrelandItalyeGaming and Telephone BettingOther
Statutory and licence acquisitionsEastwoodsSponsioOther (2008 - Italy: £14.4m, Ireland: £9.9m)
Total
2008£m
15.35.24.22.51.2
28.4
118.1-
24.3142.4170.8
2007£m
27.65.60.11.90.5
35.7
-37.823.561.397.0
Half year ended 30 June
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Cash generated by operationsInterest and taxPPE capital spendIntangiblesBusinesses and acquired subsidiariesTotal capital spendCash flow after interest, tax and capitalDividends paidProceeds from issue of shares and optionsShare buybacksExchange and other movementsNet borrowings movementOpening net borrowingsClosing net borrowingsAnnualised net debt to EBITDA ratio (1)
Annualised net debt to EBITDA ratio (1) adjusted for high rollers
Cash Flow2008
£m
(24.1) (7.4)
(139.3)
2008£m
208.0 (74.0)
(170.8)(36.8)(54.4)
0.3(34.8)
3.4(122.3)(917.0)
(1,039.3) 2.3
3.5
2007£m
(32.7)(13.6)(50.7)
2007£m
152.5(32.2)
(97.0)23.3
(54.1)5.0-
5.9(19.9)
(948.9)(968.8)
2.6 3.2
(1) Continuing operations only
Half year ended 30 June
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7 August 2008
Christopher BellChief Executive
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UK Retail – performance drivers
• First 3 months of year• 80% of estate open to
9.30pm• 15% of estate open to 10pm
• B2 & B3 content now offered• £1 stake £500 jackpot• Blackjack and Poker
• Improved machine estate• 8,002 machines in situ
Machines and ContentExtended opening hours
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19
UK Retail – Results
Euro 2008• £30m turnover• 21 of 31 matches won by favourites• 6 draws• Margin 12% 2008 vs 23% in 2004
Royal Ascot• 2008: 11 favourites won (popular races)• 2007: 6 favourites won• Margin 10% 2008 vs 28% 2007
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UK Retail – operational focus• OddsOn! Loyalty Card
launched in June– 400,000 active cards with
customer details– >£1 million in free bets and
bonuses • OTC content
– Turf TV presentation issue
• Machine innovation
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Ireland
• Good performance – 45% gross win growth
• Extended our lead as largest operator in
Northern Ireland– 54 shop Eastwood Acquisition (Feb)
– 6 McCartans shops (Apr)
• All branded Ladbrokes, and trading in line
with expectations
• … and leader in Republic of Ireland– 7 new shops
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Italy
• 25 acquired shops trading in line
– Additional 8 shops acquired in H1
• Bersani roll-out slower than planned
• 39 Bersani corners now trading
• 19 Bersani shops now trading
• Secured locations for further 34 shops and all
corners
• Expect openings to accelerate in H2
• Profit in 2009
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Spain
• Sportium brand – JV with Cirsa
• Madrid licence granted April 2008
• 18 outlets trading
– Cirsa or 3rd party locations
• In excess of 60 outlets expected by year
end
• Further regional regulation required
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24
Other International Development• Exploring new opportunities
– Vietnam
– India
• China
– Product development with AGTech
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25
Telephone Betting• £40 million High Rollers EBIT contribution
– H1 2007 £60 million
• Core business declining
– Competitive landscape – online and telephone
operators
– Offshore enjoy favourable tax, levy and
regulatory environment
• High quality service
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eGaming – growth acceleration• Customer acquisition initiatives gaining traction
– 19.4% NGR growth– 30.2% growth in sign-ups
Television advertising
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27
eGaming – growth acceleration
Poker• Liquidity shortfall constraining
growth• Joining Microgaming network
Increased Nordic Investment
• TV brand awareness campaign• Regional content
Betting in Play
• Continuously growing content
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28
Summary
• Good UK Retail performance– Strong machine growth aided by evening opening
and improved dual screen machine estate
– OTC positive growth despite poor results
• Ireland expansion delivering growth
• Good response to eGaming customer acquisition investment strategy
• International diversification continues in Italy & Spain
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Q&A
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Appendix
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eGaming – KPIsSportsbook Gross win margin Unique active players (000s) Average monthly active player days (000s) Yield per unique active player (£) (1) Casino Unique active players (000s) Average monthly active player days (000s) Yield per unique active player (£) (1) Poker Unique active players (000s) Average monthly active player days (000s) Yield per unique active player (£) (1) Games Unique active players (000s) Average monthly active player days (000s) Yield per unique active player (£) (1)
2008 2007 Variance% B(W)
(1) Revenue per unique active player for the period
8.1% 7.9%390 316 23.4805 640 25.8
82 86 (4.7)
99 61 62.3114 77 48.1270 363 (25.6)
104 109 (4.6)371 422 (12.1)141 144 (2.1)
134 94 42.6203 132 53.8
98 80 22.5
Half year ended 30 June
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Other European Retail
2008£m
47.6
19.4
10.0
77.0
2007£m
32.8
17.0
1.1
50.9
45.1
14.1
809.1
51.3
2008£m
15.5
1.8
(2.6)
14.7
2007£m
12.5
1.0
(0.3)
13.2
Operating ProfitGross Win
Ireland
Belgium
Italy
Total
Variance B(W)%
Variance B(W)%
24.0
80.0
n/a
11.4
Half year ended 30 June
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33
Belgium 2008 2007 Variance £m £m B(W)%
Gross win 19.4 17.0 14.1
Duty / Gross profits tax (7.1) (6.4)
Other costs (10.5) (9.6) (9.4)
Operating profit 1.8 1.0 80.0
Shop numbers 271 279 (2.9)
Half year ended 30 June