22nd Feb 2007 07:02
Ladbrokes PLC22 February 2007 Preliminary statement of results for the year ended 31 December 2006 Year ended Year ended 31 December 2006 31 December 2005(1) £m £m Continuing operations Gross win 1,008.9 918.0 Net revenue (1) 970.0 908.5 Operating profit (2) 268.1 249.0 Net finance costs (2) (45.6) (16.9) Interest income on hotels sale proceeds 24.0 - Profit before tax and non-trading items (2) 246.5 232.1 Profit for the year from discontinued operations before tax and non-trading items 10.8 181.8 Non-trading profit on disposal of discontinued operations 412.2 - Other non-trading items before tax 0.3 (19.9) Profit before tax 669.8 394.0 Tax (52.6) (63.0) Profit after tax 617.2 331.0 EBITDA (2) - continuing 310.5 286.2 Earnings per share (2) (4) - continuing 22.0p 12.0p Earnings per share (4) - total Group 67.2p 20.7p Proposed dividend per share (3) 8.6p 240.0p (1) Restated - details of restatement explained in notes 1 (c) and 1 (d) to thefinancial statements. Net revenue is referred to as Total Revenue in theconsolidated financial statements. (2) Before non-trading items and discontinued operations. Non-trading itemscomprise profit/losses on disposal of non-current assets, unrealised gains/losses on derivatives, and litigation and transaction costs. (3) Comprises proposed final dividend of 8.6 pence. 2005 figure includes aproposed special dividend of 233.4 pence, a proposed final dividend of 6.6pence, which together were paid on 25 April 2006. (4) Total Group earnings per share in 2006 includes the profit on disposal ofthe hotels business. A 6 for 17 share consolidation took place on 13 April2006, hence continuing earnings per share is not directly comparable. Financial Highlights • Operating profit (1) from continuing operations increased by 7.7% to £268.1 million (2005: £249.0 million). • Ladbrokes gross win increased by 9.9% to £1,008.9 million (2005: £918.0 million). • Good World Cup with total of £17.5 million gross win across the tournament (£10.6 million in the first half and £6.9 million in the second half). • Net debt of £948.9 million with cash generated by operations of £264.7 million. • Effective tax rate (2) of 17.8%. • Final dividend of 8.6 pence per share. • Earnings per share (2) of 22.0 pence. • Profit on disposal of discontinued operations of £412.2 million, together with £24.0 million of interest income earned on the proceeds on disposal of the hotels business. • At the end of April 2006, Ladbrokes returned cash of £4.2 billion to shareholders. Ladbrokes Chief Executive, Christopher Bell, commented: "We can look back on ayear of achievement, both at home and internationally and we are pleased to posta record profit performance. We began the year by selling the hotel division,delivering one of the biggest returns to shareholders on record and announcingour consultancy in China. Along the way we have expanded our online business,invested in our retail estate by launching Ladbrokes Xtra and commenced therollout of the latest FOBTs. We ended the year by winning licences andacquiring shops in Italy and began 2007 by signing a JV to launch a bettingbusiness in Spain. Early trading in 2007 has been satisfactory with goodfootball results but more cancellations of horse racing fixtures this year thanlast. 2007 has its own challenges but we remain confident in the futureprospects for Ladbrokes plc." (1) Profit before tax, finance costs and non-trading items (2) Before non-trading items for continuing operations Commenting on the results for 2006, Sir Ian Robinson, Chairman, said: "2006 has been a good year for Ladbrokes plc. In its first year following thesale of Hilton International in February 2006, management has successfullyestablished Ladbrokes as a market leading, standalone betting and gamingcompany, in which profitability for continuing operations increased by 7.7%. Wehave also made substantial progress in furthering our international ambitionsduring 2006, which the Board is confident will create shareholder value infuture years. "As you are aware, we commenced discussions with 888 last November. Thesediscussions continue and are complex because of the current conditions in theUS. We will update the market as and when appropriate." Outlook Trading in the first seven weeks of 2007 has been satisfactory, with goodfootball results but a higher level of UK horse racing cancellations this yearthan last, due to the excessively wet weather. eGaming continues to perform strongly and is ahead of our expectations.Telephone Betting is behind last year due to tough High Rollers comparators butis in line with our own expectations. Our International expansion plans are on track and we anticipate positivecontribution from 2008. Following a 2006 that included a successful World Cup, the Board recognises that2007 does have its own challenges but we remain confident in the futureprospects for Ladbrokes plc. Investment plans Our main objective is to continuously improve returns for shareholders. The rapidly changing global marketplace in which Ladbrokes operates presents uswith an increasing number of opportunities for growth. Consequently, we willcontinue to proactively search for investment opportunities that enhanceshareholder value, as typified by 888, Italy and Spain. The Board Since the half year, Ian Livingston has left the Board and we have welcomed JohnJarvis and Henry Staunton as non-executive directors. Pat Lupo has served two terms as a Non-Executive Director and has decided toretire at the AGM. During the last four years he has been both Chairman of theRemuneration Committee and our Senior Independent Director. We thank him for hissignificant contribution and his wise counsel. Christopher Rodrigues takes overas Chairman of the Remuneration Committee and Nicholas Jones as our SeniorIndependent Director at the conclusion of the 2007 AGM. Dividend The Board has recommended a final dividend of 8.6 pence per share payable on 1June 2007 to shareholders on the register on 2 March 2007. This final dividend,together with the interim dividend of 4.6 pence, gives a total dividend of 13.2pence. Chief Executive's Statement Ladbrokes' latest journey as a pure betting and gaming business has been bothexciting and challenging. We continue to work hard to prepare ourselves fordevelopment opportunities which will drive quality earnings growth over the nextdecade. A buoyant first half and a successful World Cup provided the basis forLadbrokes' highest ever profit before interest and taxation of £268.1 million.Good progress has been made across all of our established business channels andalso in our fledging International and Casino businesses - both of which showgood promise. In our UK shop business, we continue to improve the quality of our 2,141 shops,through an ongoing relocation, refurbishment and extension programme withcontinuing investment in technology and improved customer service. Our UK and Irish shops saw the completion of the hardware rollout for LadbrokesXtra in time for the World Cup. By the half year of 2007 we will have completedthe renewal of our EPOS system which will enable the full potential of theLadbrokes Xtra content and customer betting opportunities to be realised. Theadditional betting opportunities on offer will be particularly relevant duringwinter evening opening, which commences in September 2007. The entire population of approximately 6,700 Fixed Odds Betting Terminals(FOBTs) is being replaced by new dual screen machines and initial indicationsare that our machines business will be reinvigorated as a result. Ladbrokes' shop estate is well positioned for the changes which will be enabledby the 2005 Gambling Act later this year and we expect to see the benefitflowing through in 2008. eGaming grew operating profit by 13.5% and our Sportsbook, Casino and Gameschannels all showed strong double digit growth during 2006. Sportsbook performedparticularly well as we embraced the opportunity of the World Cup and othermajor sporting events. Unique active players* increased to nearly 550,000 in 2006 and adjusted cost peracquisition* has improved, along with growth of more than 20% in real money signups*. Poker saw fierce competition during most of 2006, particularly from the statemonopoly initiated poker site in Sweden, our second largest poker market.However, Poker has shown improvement in recent months, driven by theintroduction of player points and offline marketing investment. Ladbrokes' policy has always been to rigorously prohibit US based customers andwe were therefore unaffected by the passing of the Unlawful Internet GamblingEnforcement Act in the US during October 2006. Our aim in eGaming is for growth through product innovation and geographicalexpansion. The continued popularity of our eGaming sites overseas indicates theinternational appeal of the Ladbrokes brand and the growing interest in bettingand gaming across the globe. During 2006, we established a consultancy for the operation and development ofthe Happy Pool shops in China, which have now expanded into two other provincesoutside Beijing. We believe China to be a strategic imperative amongst theworld's emerging markets and we have prime mover advantage. Also in Asia, weare in competition for the Vietnamese sports lottery and anticipate the outcomeof this process later this year. Following the re-regulation of Italy's betting and gaming environment during2006, we won 142 licences to open betting centres and corners. These represent30 dual licence, 28 sports licence and three horse licence shops, as well as 51corners, which we will open over the next 18 months. In addition, we have fourshops operating in Turin and Milan. The Italian opportunity is a sound one andwe will invest around EUR100 million in building our estate to at least 200outlets over the next three years. In Spain, the Madrid region has expressed its intention to regulatesportsbetting for the first time and we have announced a Joint Venture withCirsa Slot - Spain's leading slot machine operator. We expect our International channel to contribute £20-40 million EBIT per annumover the next three to five years and Italy and Spain will be central to thisguidance. Finally, we opened the Ladbrokes Casino and Sports Bar at London's PaddingtonHilton, during 2006, as part of a Joint Venture agreement. In January 2007, webought out our JV partners for £11.1 million and now own 100% of the enterprise.The casino is an attractive and innovative proposition and we believe it willposition us well in our tenders for Manchester and several of the other 16 newUK casinos. 2006 has been a year of good progress and we anticipate another year ofendeavour and preparation for our future, as we develop our business forresponsible growth over the next decade. * See appendix for definitions Operating results Amount staked by business Year ended Year ended 31 December 2006 31 December 2005(1) £m £m European Retail 10,189.1 9,799.3 eGaming 1,216.9 892.4 Telephone Betting 939.9 780.2 Other (2) 37.9 28.1 Total 12,383.8 11,500.0 Gross win by business Year ended Year ended 31 December 2006 31 December 2005 £m £m European Retail 799.8 754.6 eGaming 144.4 123.1 Telephone Betting 46.1 21.0 Other (2) 18.6 19.3 Total 1,008.9 918.0 Net revenue by business Year ended Year ended 31 December 2006 31 December 2005(1) £m £m European Retail 771.5 752.4 eGaming 134.1 116.2 Telephone Betting 45.8 20.6 Other (2) 18.6 19.3 Total 970.0 908.5 Profit from operations by business Year ended Year ended (before non-trading items) 31 December 2006 31 December 2005 £m £m European Retail 212.7 219.5 eGaming 47.0 41.4 Telephone Betting 17.7 (0.1) Other (2) 5.9 5.8 Central costs (15.2) (17.6) Total 268.1 249.0 (1) Restated - details of restatement explained in notes 1 (c) and 1 (d ) to the financial statements(2) Vernons Business Review Gross win of £1,008.9 million increased by 9.9%, driven by a good World Cup,continued growth in eGaming and a recovery in Telephone Betting. After deductinggross profits tax, VAT on machines and other fair value adjustments, grossprofit rose by 9.9% to £859.8 million. Operating costs of £591.7 million increased by 10.9%, due principally to alarger Retail estate and utility, energy and content cost pressures. Operating profit was the highest in our history at £268.1 million (2005: £249.0million). European Retail • Total gross win increased by 6.0% to £799.8 million (2005: £754.6million) and operating profit was £212.7 million (2005: £219.5 million), down3.1%. European Retail - UK • Total gross win increased by 4.7% to £715.8 million (2005: £683.6million). Gross win in the first half showed growth of 7.1%, whilst the secondhalf grew by 2.3%, reflecting poor results on high volume horseracing events andfootball matches in October and November. • On a like for like basis excluding acquisitions and new licences,total gross win showed an increase of 0.8%. • Over the Counter ('OTC') gross win rose by 5.4% to £510.5 million(2005: £484.5 million) with like for like OTC gross win up by 1.1%. Gross winmargin was 16.9% over the year, driven by good margins in some of the key horserace meetings in the first half and a successful World Cup, which contributed£10.6 million to UK Retail gross win. • Ladbrokes Xtra hardware was rolled out to the UK shop estate in timefor the World Cup and the full implementation of supporting EPOS software willbe complete in spring 2007. The additional content and consequent bettingopportunities provided by this unique service to further differentiate ourproduct range, will prove particularly important when winter evening opening isintroduced in September for the first time. • Machine gross win increased by 3.1% to £205.3 million (2005: £199.1million) with average weekly FOBT gross win of £538. We expect the full renewalof our FOBT estate to be completed in the first quarter of 2007 and we areencouraged by early performance. • The smoking ban in Scotland started in March 2006. Similar to ourexperience in the Republic of Ireland, our Scottish shops were not adverselyaffected due to our comprehensive operational preparation. We do not believethat the commencement of the smoking bans in England, Wales and Northern Irelandduring 2007 will have a negative impact on our Retail business. • Operating costs increased by 10.8% to £417.5 million (2005: £376.9million). Staff costs rose by £12.3 million, property costs increased by £10.9million, content costs rose by £5.2 million and other costs grew by £12.2million. These increases principally reflect our larger estate and theintroduction of FOBT tax. The estate has also been impacted by higher Skytelevision and Ladbrokes Xtra (new content) costs, higher energy and utilitycosts and increased depreciation. • Like for like operating costs excluding FOBT tax increased by 4.0% andthe increase will remain at this level in 2007. After including acquisition andnew licence costs of 5% and FOBT tax of 2%, total operating costs increased by10.8%, as above. • Operating profit decreased by 6.0% to £195.4 million (2005: £207.8million). • At the year end, Ladbrokes had 2,141 shops in the UK. 22 new licenceswere opened, there was one acquisition and we closed 16 shops, including fourfollowing instructions from the OFT after review of the Jack Brown acquisitionin 2005. In addition, 86 shops were relocated during the year, 57 wererefurbished and 23 were extended as we continue to improve the quality of ourestate. European Retail - Ireland • Gross win increased by 43% to £48.9 million (2005: £34.3 million) dueto a 32% increase in shop numbers and the first full year of tax free betting inall Ladbrokes shops. • Operating costs (excluding betting tax) increased by 24% due to thelarger estate and like for like costs were up by 3.1%. Operating profit rose by107% to £14.3 million. • Our estate in Ireland increased from 148 to 195 shops, including ourfirst shops in Northern Ireland following the acquisition of 16 shops inLondonderry. We now have the largest retail estate in Ireland. European Retail - Belgium • Gross win decreased by 4.4% and operating profit fell by 38% to £3.0million (2005: £4.8 million), reflecting the highly competitive marketplace inBelgium. • The Belgian estate decreased by 15 shops to 286, as non-profitableunits were closed. eGaming • eGaming gross win achieved growth of 17%, reaching £144.4 million(2005: £123.1 million), with good double digit percentage growth in Sportsbook,Casino and Games and a significant increase of 26% in unique active players to549,000. Net revenue, after fair value adjustments for free bets, promotionsand bonuses, increased by 15% to £134.1 million (2005: £116.2 million asrestated). • Sportsbook (including Ladbrokes Financials) gross win showed positivegrowth of 41% to £46.4 million, including £4.6 million from the World Cup.Growth in the second half remained strong at 28% driven by continued expansionin the product offering including a significant increase in betting in play.For the year, average monthly active player days grew by 35% to 610,000 andyield per unique active player grew 7.5% to £114. • Casino gross win of £44.7 million grew by 14%, with double digitgrowth in both the first and second halves of the year. Average monthly activeplayer days were up 13% at 72,000, with unique active players up 17% and yieldper unique active player flat at £454. This strong performance was aided bycontinual improvements to our proposition, including new products and the '1-click' suite of casino games. • Poker gross win declined by 2.7% to £40.3 million, impacted byincreased competition, particularly in Sweden with the launch of the statelottery poker site in April 2006 and by a dip in player activity and levelsduring the World Cup. Despite this, average monthly active player days for theyear grew by 12% to 461,000, with unique active players up 20% and yield perunique active player down 26% to £227. Improvements were seen in quarter fourfollowing the release of new software and the launch of player points, with signups 39% higher than quarter three and average monthly active player days up 16%. • Games gross win also showed significant growth of 35% to £13.0 million(2005: £9.6 million), with an increase of over 70% in the second half followingthe launch of Bingo and 'Deal or No Deal'. Average monthly active player daysfor the year were up 83% to 99,000, with unique active players up over 60%. • Ladbrokes' policy has always been to rigorously prohibit business fromUS based customers. As a result, there was no direct impact from the UnlawfulInternet Gambling Enforcement Act of 2006 (UIGEA). • Operating costs of £80.2 million increased by 16% compared to the 15%increase in net revenue. Marketing costs increased by £3.1 million (22%),however real money sign-ups were 23% higher than last year and adjusted cost peracquisition (including fair value adjustments to revenue, but after strippingout costs related solely to retention) fell to £56 (2005: £62). • Operating profit increased to £47.0 million (2005: £41.4 million),with net revenue conversion of 35.0% (2005: 35.6%). Telephone Betting • Including the impact of High Rollers, operating profit of £17.7million compared favourably to the loss of £0.1 million reported in 2005. • Net revenue including High Rollers rose by 122.3% to £45.8 million(2005: £20.6 million). • Gross win excluding High Rollers increased by 11% to £33.9 million(2005: £30.5 million) with gross win margins of 7.2% compared to 7.3% in 2005. • A good World Cup, excluding High Rollers, delivered Telephone grosswin of £1.6 million at a margin of 12.6%. • Net revenue from High Rollers was £12.2 million (2005: loss of £9.5million). • Overall operating costs increased 18% to £20.8 million. Efficienciesdelivered by investment in call centre technology resulted in a lower agent costper call, which reduced by 6.3%. • Average monthly active player days grew by 2.5% and call volumes(excluding High Rollers) increased by 7.4%. Unique active players were broadlyflat at 124,400 (2005: 125,300). Vernons • Operating profit increased to £5.9 million (2005: £5.8 million) withthe successful launch of online instant win games and good retention ratesacross both Pools and Numbers products. International development • Following the award of licences in the recent Italian tender process,we plan to open 61 betting centres and 51 corners in the next 18 months.Ladbrokes has recently acquired four betting centres and will seek to achieveour target of around 200 outlets over the next three years. Ladbrokes alsopurchased a remote licence in Italy and will target opportunities in internetand telephone. • In preparation for the regulation of sports betting in the Madridregion, Ladbrokes has formed a joint venture company with the Spanish marketleader, Cirsa Slot. The expectation is that other regions will regulate sportsbetting following Madrid's announcement. • Together, we anticipate that opportunities in Italy and Spain will becentral to our three to five year guidance of £20-40 million EBIT per annum. • Ladbrokes also provides a consultancy service to the operator of 400Happy Pool betting shops in China, which have now expanded into three provinces.In addition, Ladbrokes has formed a joint venture company with MegaInfo HoldingsLtd, in order to develop betting products for the Chinese Sports Lottery. • Asia and Europe remain our key international targets and Ladbrokes isexploring a number of additional opportunities in these areas. Casino development • The Ladbrokes Casino and Sportsbar at London's Paddington Hilton hassteadily increased its membership numbers since opening in July 2006. • Ladbrokes will bid for the regional casino licence in Manchester andis interested in operating several of the 16 new small and large casinos to beawarded under the 2005 Gambling Act. Enquiries to: Julian Arlett, Head of Investor Relations (mobile +44 (0)7976 348 913)Ciaran O'Brien, Head of Public Relations (mobile +44 (0)7976 180 173)Switchboard +44 (0) 20 7355 0340 A live conference call of the analyst presentation will be available at 9:30am(UK time) by dialing +44 (0) 20 8817 9301 and asking for the 'Ladbrokes plcPreliminary results'. In addition, a live audiocast of the presentation toanalysts, together with this news release and slide presentation, will beavailable on Ladbrokes' corporate website which can be found atwww.ladbrokesplc.com For further information on Ladbrokes plc, please visit our corporate website atwww.ladbrokesplc.com. High-resolution images are available to download from themedia centre section under the heading 'image library'. Executive images arealso available at www.vismedia.co.uk in the Ladbrokes section. Operating and Financial Review Financial review Revenue and profit before tax Year ended Restated year ended 31 December 2006 31 December 2005 Net Revenue Profit Net Revenue Profit Continuing operations: £m £m £m £m European Retail 771.5 212.7 752.4 219.5 eGaming 134.1 47.0 116.2 41.4 Telephone Betting 45.8 17.7 20.6 (0.1) Other (1) 18.6 5.9 19.3 5.8 Central costs - (15.2) - (17.6) 970.0 268.1 908.5 249.0 Net finance costs - (45.6) - (16.9) Interest income on the hotels sale proceeds - 24.0 - - Revenue and profit before tax 970.0 246.5 908.5 232.1 Discontinued operations: Hotels 263.7 10.8 1,848.9 181.8 Group revenue and profit before tax 1,233.7 257.3 2,757.4 413.9 Profit is before non-trading items and profit on disposal of the hotels business. (1) Vernons Sale of Hilton International and return to shareholders The sale of the Group's hotels division, Hilton International, was completed on23 February 2006, with the Group receiving £3.2 billion in cash and generating aprofit on disposal of £384.2 million. Subsequently, following a capitalstructure review, £4.2 billion was returned to shareholders on 25 April 2006through ordinary and special dividends. Additionally the Group sold its share in a Limited Partnership and hasrecognised a gain of £28.0 million on its disposal. This relates to deferredrecognition of a gain following the sale of 10 hotels to the Limited Partnershipin 2002. For the period until its disposal, the Group has presented the results of thehotels division as discontinued operations. Trading summary - Continuing operations Revenue for continuing operations increased by £61.5 million (6.8%) to £970.0million, mainly as a result of the inclusion of the Jack Brown shops in EuropeanRetail for a full year, and growth in both eGaming and Telephone Bettingrevenue. Profit before finance costs, tax and non-trading items increased 7.7% to £268.1million (2005: £249.0 million) reflecting an increase in profit in eGaming,Telephone Betting and a reduction in central costs offset by a decline inEuropean Retail. Finance costs Interest income of £24.0 million was earned on the proceeds of the hotelsdisposal. The net finance costs of the continuing operations of £45.6 millionwere 169.8% greater than last year (2005: £16.9 million), reflecting theincreased leverage of the new capital structure. Our net debt to EBITDA ratiofor 2006 was 3.1 times and our target remains 3.5 to 3.75 times. Profit before tax - Continuing operations The increase in trading profits combined with the interest income in the periodhas given a 6.2% increase in profit before taxation and non-trading items to£246.5 million (2005: £232.1 million). Non-trading items - Sale of Hilton International The £412.2 million non-trading profit relates to the disposal of the hotelsbusinesses. There is no related tax charge. Taxation The Group taxation charge for continuing operations before non-trading items of£43.9 million represents an effective tax rate of 17.8% (2005: 17.6%). This rateincludes a prior year settlement with HMRC and the Group expects the ongoingrate to be around 20% for the medium term. Issued share capital During the period the Company consolidated its ordinary shares, replacing every17 existing shares of nominal value 10 pence with 6 shares of nominal value 281/3 pence. In addition, the holders of the Group's £300 million convertible bondexercised their conversion rights and converted the bond into ordinary shares in2006. Earnings per share (EPS) - Continuing operations EPS (before non-trading items) was 22.0 pence (2005: 12.0 pence). Comparisonwith the prior year is affected by the share consolidation and the convertiblebond conversion described above. EPS (including the impact of non-trading items)was 21.2 pence (2005: 12.3 pence). Diluted EPS was 20.7 pence (2005: 12.0pence) after adjustment for outstanding share options. Earnings per share (EPS) - Group EPS (before non-trading items) increased 3.6% to 22.8 pence (2005: 22.0 pence),reflecting the increased profit before tax. EPS (including the impact ofnon-trading items) was 67.2 pence (2005: 20.7 pence). Diluted EPS was 64.7 pence(2005: 19.7 pence) after adjustment for outstanding share options. Dividend The Board has proposed a final dividend of 8.6 pence per share (2005: 6.6pence). The dividend will be payable on 1 June 2007 to shareholders on theregister on 2 March 2007. Revenue recognition under IFRS Following industry-wide clarification regarding the application of IAS 39 forbetting and gaming transactions, Ladbrokes plc now accounts for suchtransactions as financial instruments. As a consequence the Group will nowreport the gains and losses arising on all betting and gaming activities asrevenue, which is measured at the value of the consideration received orreceivable from customers less fair value adjustments for free bets, promotionsand bonuses. This is referred to as net revenue (or total revenue) todifferentiate it from gross win, which includes free bets, promotions andbonuses, as well as VAT payable on machine income. A reconciliation of gross winto net revenue is shown below: Year ended Year ended 31 December 2006 31 December 2005 £m £m Amounts staked 12,383.8 11,500.0 Gross win 1,008.9 918.0 Free bets, promotions, bonuses (12.3) (8.2) VAT (30.6) (4.4) Associate income 4.0 3.1 Net revenue 970.0 908.5 Previously the Group had reported the total amounts staked by customers onbetting activities as revenue. The income statement for the year ended 31December 2005 has been restated to reflect this change to reported revenue. Thisadjustment has no impact on reported profit, cash flows or net assets. Cash flow, capital expenditure and borrowings Cash generated by operations was £264.7 million. After finance costs and incometaxes paid of £108.2 million, interest received of £54.7 million and £119.8million on capital expenditure, intangible additions and acquisitions oncontinuing activities, cash inflow was £91.4 million. £3,241.4 million cash was received from the sale of the hotels business and£4,208.4 million was paid out in dividends. Proceeds of £70.3 million werereceived on the exercise of share options and the issue of shares. At 31 December 2006, gross borrowings of £986.2 million and cash, deposits andshort term investments of £33.7 million and derivatives of £3.6 million haveresulted in a net debt of £948.9 million. Consolidated income statement Year ended Restated year ended 31 December 2006 31 December 2005 Before Before non-trading non-trading items(1) Total items(1) Total £m £m £m £mContinuing operationsAmounts staked(2) 12,383.8 12,383.8 11,500.0 11,500.0Revenue 966.0 966.0 905.4 905.4Share of results from associated undertakings 4.0 4.0 3.1 3.1Total revenue 970.0 970.0 908.5 908.5Cost of sales before depreciation (573.3) (573.3) (542.7) (542.7)Administrative expenses (86.2) (88.7) (79.6) (79.6)EBITDA 310.5 308.0 286.2 286.2Depreciation and amounts written off non (42.4) (42.4) (37.2) (37.2)current assetsProfit before tax and finance costs 268.1 265.6 249.0 249.0Finance costs (62.3) (80.6) (59.5) (60.5)Finance income 40.7 58.0 42.6 51.7Profit before taxation 246.5 243.0 232.1 240.2Income tax expense (43.9) (47.7) (40.9) (43.3)Profit for the year - continuing operations 202.6 195.3 191.2 196.9Discontinued operationsProfit for the year from discontinued 7.0 421.9 160.6 134.1operationsProfit for the year 209.6 617.2 351.8 331.0 Attributable to:Minority interests - - 0.2 0.2Equity holders of the parent 209.6 617.2 351.6 330.8 209.6 617.2 351.8 331.0Earnings per share from continuingoperations:- basic 22.0p 21.2p 12.0p 12.3p- diluted 21.5p 20.7p 11.7p 12.0pEarnings per share on profit for the period:- basic 22.8p 67.2p 22.0p 20.7p- diluted 22.2p 64.7p 20.9p 19.7pProposed dividends(3) 8.6p 8.6p 240.0p 240.0p (1) Non-trading items are profit on disposal of the Hotels division, profits/losses on disposal of non-current assets, unrealised gains and losses onderivatives, and litigation and transaction costs. Details on the non-tradingitems are given in notes 3 and 5 to the financial statements. (2) Amounts staked does not represent the Group's statutory revenue andcomprises the total amount staked by customers on betting and gaming activities. (3) A final year end dividend of 8.6p per share (2005: 240.0p) amounting to atotal dividend of £54.0m (2005: £4,179.6m) was declared by the Directors on 22February 2007. These financial statements do not reflect this dividend payable.The 2005 final and special dividend of 240.0p (£4,179.6m) and the 2006 interimdividend of 4.6p (£28.8m) were paid in 2006. Consolidated balance sheet Restated 31 December 2006 31 December 2005 £m £mASSETSNon-current assetsGoodwill and intangible assets 427.5 386.0Property, plant and equipment 243.1 199.0Interests in associates and other investments 11.0 (12.8)Other financial assets 8.5 2.9Deferred tax asset 13.1 16.6Derivatives 12.7 51.7Retirement benefit asset 22.6 - 738.5 643.4Current assetsTrade and other receivables 75.0 88.1Assets classified as held for sale 2.2 2.2Derivatives 0.8 8.5Cash and short term deposits 36.4 926.6 114.4 1,025.4Assets of disposal group classified as held forsale - 3,767.9 Total assets 852.9 5,436.7 LIABILITIESCurrent liabilitiesInterest bearing loans and borrowings (36.7) (158.2)Derivatives (9.9) (41.7)Trade and other payables (173.4) (182.5)Corporation tax liabilities (161.6) (206.7) (381.6) (589.1)Non-current liabilitiesInterest-bearing loans and borrowings (952.2) (847.7)Convertible bond - (279.7)Derivatives - (5.1)Other financial liabilities (16.3) -Deferred tax liabilities (114..6) (86.6)Retirement benefit obligation - (55.2)Provisions (15.1) (9.4) (1,098.2) (1,283.7)Liabilities of disposal group classified as held - (968.2)for saleTotal liabilities (1,479.8) (2,841.0) Net (liabilities)/assets (626.9) 2,595.7 EQUITYIssued share capital 177.9 160.6Share premium account 2,126.8 1,767.7Equity component of convertible bond - 34.3Own shares (5.4) (16.0)Foreign currency translation reserve 2.2 4.7Other reserves - 158.2Retained earnings (2,928.4) 483.2Equity shareholders' (deficit)/funds (626.9) 2,592.7Equity minority interests - 3.0Total equity (626.9) 2,595.7 Consolidated cash flow statement Year ended Year ended 31 December 2006 31 December 2005 £m £mNet cash flows from operating activities 156.5 420.3 Cash flows from investing activitiesInterest received 54.7 38.2Dividends received from associates 0.8 4.2Payments for intangible assets (9.0) (45.4)Purchase of plant, property and equipment (91.9) (196.9)Proceeds from the sale of property, plant and equipment 1.0 539.5Proceeds from disposal of hotels division 3,241.4 -Costs of disposal of hotels division (74.7) -Cash disposed with discontinued operations (54.2) -Purchase of subsidiaries (26.0) (76.5)Net cash acquired with subsidiaries - 4.4Purchase of interests in associates and other investments (0.5) (5.9)Proceeds from disposal of investment in associates 1.0 -Proceeds from return of capital in associates - 1.1Proceeds on disposal of investments - 0.3 3,042.6 263.0Cash flows from financing activitiesProceeds from issue of shares 70.3 38.1Proceeds from borrowings 179.6 1.3Proceeds from repayment of loans by associates 7.8 1.5Purchase of ESOP shares (5.0) -Payments of finance lease liabilities - (2.1)Repayment of borrowings (185.3) (57.6)Payments of new loans to associates (1.8) (0.2)Decrease in deposits - maturity greater than three months - 2.5Dividends paid (4,208.4) (156.8) (4,142.8) (173.3) Net (decrease)/increase in cash and cash equivalents (943.7) 510.0Net foreign exchange difference 1.3 6.3Cash and cash equivalents at beginning of the year 975.8 459.5 Cash and cash equivalents at end of the year 33.4 975.8 Cash and cash equivalents comprise:Cash at bank and in hand and current asset investments 36.1 992.0Bank overdraft (2.7) (16.2) 33.4 975.8Analysed as:Continuing operations 33.4 926.3Discontinued operations - 49.5 33.4 975.8 Consolidated statement of recognised income and expense Year ended Year ended 31 December 31 December 2005 2006 £m £mCurrency translation differences 1.3 7.6Recycled foreign exchange (3.8) -Actuarial gains/(losses) on defined benefit pension scheme 9.6 (18.9)Net gains on cashflow hedges 1.1 0.6Tax on items directly taken to equity (2.9) (0.9) Total income and expenses recognised directly in equity 5.3 (11.6)Profit for the year 617.2 331.0 Total recognised income and expense for the year 622.5 319.4 Attributable to:Equity holders of the parent 622.5 319.3Minority interest - 0.1 622.5 319.4 Notes to the financial statements 1. Basis of preparation (a) The consolidated accounts of Ladbrokes plc and all its subsidiaries havebeen prepared in accordance with International Financial Reporting Standards(IFRSs). The financial statements have been prepared in accordance with theaccounting policies followed in the preparation of the Group's annual financialstatements for the year ended 31 December 2006. The financial information set out in this document does not constitute theGroup's statutory accounts for the year ended 31 December 2006 or 31 December2005. The annual report and accounts for the year ended 31 December 2006 wereapproved by the Board of Directors today, along with this preliminaryannouncement, but have not yet been delivered to the Registrar of Companies. Theauditor's report on the statutory accounts for 2006 was unqualified and did notcontain a statement under section 237 of the Companies Act 1985. Statutoryaccounts for 2005 have been delivered to the Registrar of Companies. Theauditor's report on the statutory accounts for 2005 was unqualified and did notcontain a statement under section 237 of the Companies Act 1985. The 2006 report and accounts, together with details of the dividend arrangementsand the annual general meeting, will be despatched to shareholders on 29 March2007. The Annual General Meeting will take place at the QE2 Conference Centreat 11am on 18 May 2007. (b) To assist in understanding the underlying performance, the Group has definedthe following items of income and expense as non-trading in nature: Profits/losses on disposal of non-current assetsProfits/losses on disposal of businesses and investmentsUnrealised gains/losses on derivatives arising from hedging interest rate andcurrency exposuresLitigation and transaction costs The non-trading items have been included within the appropriate classificationin the consolidated income statement. (c) The changes in accounting policies result from industry-wide clarificationof the following standards: IAS 32 'Financial Instruments: Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement.' Following industry-wide clarification regarding the application of IAS 39 forbetting and gaming transactions, Ladbrokes plc now accounts for suchtransactions as financial instruments. As a consequence the Group will nowreport the gains and losses arising on all betting and gaming activities asrevenue, which is measured at the value of the consideration received orreceivable from customers. Previously the Group had reported the total amountsstaked by customers on betting activities as revenue. Revenue is measured at the fair value of the consideration received orreceivable from customers for goods and services provided in the normal courseof business, net of discounts, VAT and other sales related taxes. For licensed betting offices, on course betting, telephone, eGaming sportsbookbusinesses and online casino operations (including games and other number bets),revenue represents gains and losses, being the amounts staked less totalpayouts, from betting activity in the period. Open betting positions are carriedat fair market value and gains and losses arising on these positions arerecognised in revenue. Revenue from the online poker business reflects the net income ('rake') earnedfrom poker games completed by the period end. In the case of the greyhound stadia, revenue represents income arising from theoperation of the greyhound stadia in the period, including sales ofrefreshments. The income statement for the year ended 31 December 2005 has been restated toreflect this change to reported revenue. This adjustment has no impact onreported profit, cash flows or net assets. A reconciliation between the reportedincome statements and the restated income statements is given in note 11. (d) Discontinued operations The income statement for the year ended 31 December 2005 has been restated toreflect the reclassification of a hotel associate from continuing operations todiscontinued operations. This associate was not part of the sale to Hilton Hotels Corporation and was,therefore previously classified within continuing operations in the year ended31 December 2005 and disclosed in Central costs. The impact of this adjustmentis to increase profit before finance costs and tax for the continuing operationsby £0.5m for the year ended 31 December 2005. This associate was sold on 31 July2006. (e) Segmental analysis Following the disposal of Hilton International in February 2006, the Group isnow organised and managed along three principal segments according to productdistribution channels - European Retail (which comprises all activitiesundertaken in licensed betting offices, on course betting and greyhound stadia),eGaming and Telephone Betting. 2. Segment information 2006 Profit before Profit before taxation and non- taxation and after Revenue trading items non-trading items £m £m £m Continuing operations:European Retail 771.5 212.7 212.7eGaming 134.1 47.0 47.0Telephone Betting 45.8 17.7 17.7Other 18.6 5.9 5.9Central costs - (15.2) (17.7) Total 970.0 268.1 265.6 Net finance costs - (21.6) (22.6) 970.0 246.5 243.0 Discontinued operations:Hotels 263.7 10.8 426.8 1,233.7 257.3 669.8 Restated 2005 Profit before Profit before taxation and taxation and after Revenue non-trading items non-trading items £m £m £mContinuing operations:European Retail 752.4 219.5 219.5eGaming 116.2 41.4 41.4Telephone Betting 20.6 (0.1) (0.1)Other 19.3 5.8 5.8Central costs - (17.6) (17.6)Total 908.5 249.0 249.0 Net finance costs - (16.9) (8.8) 908.5 232.1 240.2 Discontinued operations:Hotels 1,848.9 181.8 153.8 2,757.4 413.9 394.0 3. Non-trading items 2006 2005 £m £m Continuing operations:Litigation and transaction costs (2.5) -Unrealised (losses)/gains on derivatives (1.0) 8.1Total non-trading profit before taxation (3.5) 8.1Non-trading tax charge(a) (3.8) (2.4)Non-trading items after taxation (7.3) 5.7 (a) Tax charge on hedging adjustments. 4. Taxation The total tax charge on continuing operations was £47.7 million (2005: £43.3million) and includes a £18.0 million prior year credit in respect of currentincome tax. The taxation charge relates to £45.4 million of UK tax and £2.3million of overseas tax. Of the £47.7 million total tax charge on continuingoperations, £32.4 million (2005: £57.5 million) is current income tax and £15.3million (2005: £(14.2) million - credit) is deferred income tax. 5. Discontinued operations On 23 February 2006 the Group completed the sale of the hotels division toHilton Hotels Corporation. The effect of the disposal was as follows: £m Sales proceeds 3,241.4Total net assets sold (2,765.9)Costs of disposal (95.1)Recycled foreign exchange 3.8Profit on disposal 384.2 Profit for discontinued operations comprised the following: Restated 2006 2005 £m £mRevenue 263.7 1,848.9Expenses (252.5) (1,661.9)Profit from discontinued operations 11.2 187.0Net finance costs (0.4) (5.2)Profit from discontinued operations after finance costs 10.8 181.8 Profit on disposal of hotels division to Hilton Hotels Corp 384.2 -Profit on sale of non-current assets (a) 28.0 12.8Losses on sale of non-current assets (b) - (40.8)Profit before tax and non-trading finance costs 423.0 153.8 Non-trading finance income 3.8 -Profit before tax from discontinued operations 426.8 153.8Taxation: - related to pre tax profit (3.8) (21.2) - related to non-trading items (1.1) 1.5Profit for the year from discontinued operations 421.9 134.1 Profit for the year from discontinued operations beforenon-trading items 7.0 160.6 (a) The profit on sale of non-current assets in 2006 relates to the sale of theinterest in a Limited Partnership. The profit includes recognition of adeferred gain on disposal following the sale of 10 hotels to the LimitedPartnership in 2002. The profit on sale of non current assets in 2005 related tothe disposal of non-core assets. (b) The majority of the loss on sale of non-current assets in 2005 related tothe disposal of 16 hotels to The Managed Hotels Unit Trust with an associatedgoodwill write-off. 5. Discontinued operations (continued) The major classes of assets and liabilities of the hotels division held for saleas at disposal and at 31 December 2005 were: 23 February 2006 31 December 2005 £m £m ASSETSNon-current assetsGoodwill and intangible assets 1,375.0 1,382.8Property, plant and equipment 1,923.4 1,926.9Interests in associates and other investments 72.8 73.2Other financial assets 5.0 5.2Deferred tax asset 27.6 26.5Retirement benefit asset 0.4 0.4 3,404.2 3,415.0Current assetsInventories 15.1 15.1Trade and other receivables 282.9 269.8Cash and cash equivalents 67.8 68.0 365.8 352.9Total assets held for sale 3,770.0 3,767.9 LIABILITIESCurrent liabilitiesInterest-bearing loans and borrowings (43.6) (48.3)Obligations under finance leases (2.6) (2.6)Trade and other payables (427.9) (420.9)Corporation tax liabilities (37.9) (10.7) (512.0) (482.5)Non-current liabilitiesInterest-bearing loans and borrowings (12.3) (12.3)Obligations under finance leases (30.8) (31.0)Other financial liabilities (20.6) (20.8)Deferred tax liabilities (329.3) (329.3)Retirement benefit obligation (92.5) (88.7)Provisions (3.6) (3.6) (489.1) (485.7)Total liabilities held for sale (1,001.1) (968.2) Net assets held for resale 2,768.9 2,799.7Minority equity interest (3.0) (3.0)Group's share of disposed net assets 2,765.9 2,796.7 5. Discontinued operations (continued) Cash flows relating to the hotels division were: 2006 2005 £m £mCash flows relating to discontinued operationsNet cash flows from operating activities 4.7 314.2Investing activities (5.3) 401.0Financing activities 7.8 (33.8)Proceeds from disposal of hotels 3,241.4 -Costs of hotels disposal (74.7) -Cash disposed with the hotels business (54.2) -Cash flows relating to discontinued operations 3,119.7 681.4 Income and expenses recognised directly in equity relating to the assets of thedisposed group were: 2006 2005 £m £mCurrency translation differences 1.0 9.2Actuarial losses on defined benefit pension scheme (3.8) (10.9) Tax on items directly taken to equity 1.1 3.3Total income and expenses recognised directly in equity (1.7) 1.6 6. Dividends paid and proposed Pence per share 2006 2005 pence pence Interim 4.6 3.8Final (excluding special) 8.6 6.6Special - 233.4 13.2 243.8 A final year end dividend of 8.6p per share (2005: 240.0p) amounting to a totaldividend of £54.0m (2005: £4,179.6m) was declared by the Directors on 22February 2007. These financial statements do not reflect this dividend payable.The 2005 final and special dividend of 240.0p (£4,179.6m) and the 2006 interimdividend of 4.6p (£28.8m) were paid in 2006. 7. Earnings per share The calculation of adjusted earnings per share before non-trading items isincluded as it provides a better understanding of the underlying performance ofthe Group. Total Group earnings per share in 2006 includes the profit ondisposal of the hotels business. A 6 for 17 share consolidation took place on13 April 2006, hence continuing earnings per share is not directly comparable. Continuing operations 2006 Diluted Basic EPS Diluted EPS Earnings earnings* pence per pence per £m £m share share Profit attributable to shareholders 195.3 198.4 21.2p 20.7pNon-trading items net of tax 7.3 7.3 0.8p 0.8p Adjusted profit attributable toshareholders 202.6 205.7 22.0p 21.5p Restated 2005 Diluted Basic EPS Diluted EPS Earnings earnings* pence per pence per £m £m share share Profit attributable to shareholders 196.9 208.4 12.3p 12.0pNon-trading items net of tax (5.7) (5.7) (0.3)p (0.3)p Adjusted profit attributable toshareholders 191.2 202.7 12.0p 11.7p 7. Earnings per share (continued) Discontinued operations 2006 Diluted Basic EPS Diluted EPS Earnings earnings* pence per pence per £m £m share share Profit attributable to shareholders 421.9 421.9 46.0p 44.0pNon-trading items net of tax (414.9) (414.9) (45.2)p (43.3)pAdjusted profit attributable toshareholders 7.0 7.0 0.8p 0.7p Restated 2005 Diluted Basic EPS Diluted EPS Earnings earnings* pence per pence per £m £m share share Profit attributable to shareholders 133.9 133.9 8.4p 7.7pNon-trading items net of tax 26.5 26.5 1.6p 1.5p Adjusted profit attributable toshareholders 160.4 160.4 10.0p 9.2p Total Group 2006 Diluted Basic EPS Diluted EPS Earnings earnings* pence per pence per £m £m Share share Profit attributable to shareholders 617.2 620.3 67.2p 64.7pNon-trading items net of tax (407.6) (407.6) (44.4)p (42.5)p Adjusted profit attributable toshareholders 209.6 212.7 22.8p 22.2p Restated 2005 Diluted Basic EPS Diluted EPS Earnings earnings* pence per pence per £m £m Share share Profit attributable to shareholders 330.8 342.3 20.7p 19.7pNon-trading items net of tax 20.8 20.8 1.3p 1.2p Adjusted profit attributable toshareholders 351.6 363.1 22.0p 20.9p * Diluted earnings includes an adjustment to the attributable profit to reflecta reduction in the interest charge net of tax of £3.1 million (2005: £11.5million) which would have resulted from the conversion of the convertible bondto equity. 7. Earnings per share (continued) The number of shares used in the calculation is shown below: 2006 2005 millions millions Weighted average number of ordinary shares for the purposesof basic earnings per share 919.1 1,599.4 Effect of dilutive potential ordinary shares:Share options 7.9 14.0Convertible bond conversion to ordinary share capital 30.0 115.4Issue of contingently issuable shares 1.2 4.6 Weighted average number of ordinary shares for the purposesof dilutive earnings per share 958.2 1,733.4 At 31 December 2006, there were 627.8 million 281/3p ordinary shares in issue.At 31 December 2005, there were 1,606.0 million 10p ordinary shares in issue. 8. Net debt The Group's net debt structure is as follows: Total - Continuing Continuing Discontinued Operations Operations Operations Total 2006 2005 2005 2005 £m £m £m £mNon-current assetsDerivatives 12.7 51.7 - 51.7 Current assetsDerivatives 0.8 8.5 - 8.5Cash and cash equivalents 36.4 926.6 68.0 994.6 Current liabilitiesBank overdrafts (2.7) - - -Interest bearing loans and borrowings (34.0) (158.2) (48.3) (206.5)Obligations under finance leases - - (2.6) (2.6)Derivatives (9.9) (41.7) - (41.7) Non-current liabilitiesDerivatives - (5.1) - (5.1)Interest bearing loans and borrowings (952.2) (847.7) (12.3) (860.0)Obligations under finance leases - - (31.0) (31.0)Convertible bond - (279.7) - (279.7) Net debt per balance sheet (948.9) (345.6) (26.2) (371.8) Net debt adjustments :Equity component of convertible bond - (34.3) - (34.3)Amortisation of convertible bond - 7.3 - 7.3Interest rate fair value of net investment - 0.9 - 0.9hedges Adjusted net debt (948.9) (371.7) (26.2) (397.9) 9. Reconciliation of profit to net cash inflow from operatingactivities 2006 2005 £m £m Profit before tax and finance costs - continuing 268.1 249.0Profit before tax and finance costs - discontinued 11.2 187.0Profit before tax and finance costs 279.3 436.0 Depreciation 38.1 124.7Amortisation of intangible assets 4.3 8.1Costs of share-based payments 2.3 6.2(Increase)/decrease in assets classified as held for sale (6.3) 0.6Decrease in inventories - 0.7Increase in receivables (1.8) (13.5)Increase in payables 3.2 26.6Increase/(decrease) in provisions 5.7 (5.3)Contribution to retirement benefit scheme (67.6) (21.8)Share of results from associates (3.3) (4.3)Other items 10.8 (4.6) Cash generated by operations 264.7 553.4Income taxes paid (48.9) (64.4)Finance costs paid (59.3) (68.7) Net cash inflow from operating activities 156.5 420.3 9. Reconciliation of profit to net cash inflow from operatingactivities (continued) Cash and short term deposits in the balance sheet comprise: 2006 2005 £m £m Continuing operationsCash at bank and in hand 36.1 25.9Short-term deposits and current asset investments - 900.4Deposits with maturity greater than three months 0.3 0.3 36.4 926.6Discontinued operationsCash at bank and in hand - 47.4Short-term deposits and current asset investments - 18.3Deposits with maturity greater than three months - 2.3 - 68.0 36.4 994.6 Cash and cash equivalents in the cashflow statement comprise cash at bank andother short-term highly liquid investments with a maturity of three months orless and overdrafts: 2006 2005 £m £m Continuing operationsCash at bank and in hand 36.1 25.9Short-term deposits and current asset investments - 900.4Bank overdrafts (included in current liabilities) (2.7) - 33.4 926.3Discontinued operationsCash at bank and in hand - 47.4Short-term deposits and current asset investments - 18.3Bank overdrafts (included in current liabilities) - (16.2) - 49.5 33.4 975.8 10. Issued capital and reserves Convertible Foreign Share Share bond Other Own Retained currency Minority Total capital premium adjustment Reserve shares earnings translation Total interests equity £m £m £m £m £m £m £m £m £m £m At 1 January 2005 158.6 1,729.6 34.3 158.2 (14.5) 322.2 (3.0) 2,385.4 2.9 2,388.3 Total recognised - - - - - 311.6 7.7 319.3 0.1 319.4income and expense forthe year Issue of shares 2.0 38.1 - - - - - 40.1 - 40.1Net decrease due to - - - - (1.5) - - (1.5) - (1.5)shares held in ESOPtrustsEquity dividends - - - - - (156.8) - (156.8) - (156.8)Cost of share-based - - - - - 6.2 - 6.2 - 6.2payments At 31 December 2005 160.6 1,767.7 34.3 158.2 (16.0) 483.2 4.7 2,592.7 3.0 2,595.7 At 1 January 2006 160.6 1,767.7 34.3 158.2 (16.0) 483.2 4.7 2,592.7 3.0 2,595.7 Total recognisedincome and expense forthe year - - - - - 625.0 (2.5) 622.5 - 622.5Issue of shares for 4.3 66.0 - - - - - 70.3 - 70.3cashIssue of shares on 13.0 287.0 (25.8) - - - - 274.2 - 274.2conversion ofconvertible bondShare-based payment - 6.1 - - - (0.7) - 5.4 - 5.4awardsReserves transfer - - (8.5) (158.2) - 166.7 - - - -Cost of share-based - - - - - 5.8 - 5.8 - 5.8paymentsNet increase due toshares held in ESOPtrusts - - - - 10.6 - - - 10.6 10.6Minority interests -disposed - - - - - - - (3.0) (3.0)Equity dividends - - - - - (4,208.4) - (4,208.4) - (4,208.4) At 31 December 2006 177.9 2,126.8 - - (5.4) (2,928.4) 2.2 (626.9) - (626.9) 11. Restatement of income statement for prior year Year ended 31 December 2005 Reported Adjustment Adjustment Restated Before Financial Discontinued Before non-trading instruments operations non-trading items (IAS 39) items £m £m £m £m Amounts Staked(1) 11,502.4 (2.4) - 11,500.0 Continuing OperationsRevenue 11,502.4 (10,597.0) - 905.4Share of results from associated undertakings 2.6 - 0.5 3.1Total revenue 11,505.0 (10,597.0) 0.5 908.5Cost of sales before depreciation (11,139.7) 10,597.0 - (542.7)Administrative expenses (79.6) - - (79.6)EBITDA 285.7 - 0.5 286.2Depreciation and amounts written off non - (37.2) - - (37.2)current assetsProfit before tax and finance costs 248.5 - 0.5 249.0Finance costs (59.5) - - (59.5)Finance income 42.6 - - 42.6Profit before taxation 231.6 - 0.5 232.1Income tax expense (40.9) - - (40.9)Profit for the year - continuing operations 190.7 - 0.5 191.2 Discontinued operationsProfit for the year from discontinued 161.1 - (0.5) 160.6operationsProfit for the year 351.8 - - 351.8 Attributable to:Minority interests 0.2 - - 0.2Equity holders of the parent 351.6 - - 351.6 351.8 - - 351.8 Earnings per share from continuing operations:- basic 11.9p - 0.1p 12.0p- diluted 11.7p - - 11.7pEarnings per share on profit for the year:- basic 22.0p - - 22.0p- diluted 20.9p - - 20.9p (1) Amounts staked does not represent the Group's statutory revenue andcomprises the total amount staked by customers on betting and gaming activities. Appendix Definitions of Online Gaming KPI's Cost per Acquisition Total of all online and offline marketing spend (including promotions andbonuses netted from revenue), all affiliate expenses relating to deals whereaffiliates are paid a one-off fee for each sign-up and all bonus costs (exceptthose relating to sign-ups from revenue share affiliates) divided by theaggregate of the number of real money sign-ups from non-affiliate sources andthe number of real money sign-ups through affiliates that are paid a one-offfee. Real Money Sign-up A new player who has registered and deposited funds into an account with theCompany. Customers are categorised between lines of business according to wherethey first register on the gaming site to address the issues posed by sharedwallets. Unique Active Player A player who has contributed to rake and/or placed a wager in the period. Yield per Unique Active Player Net Gaming Revenue (net of customer bonuses and other fair value adjustments torevenues) divided by the number of Unique Active Players in the period. Monthly Active Player Days The sum of, for all Unique Active Players in the period, the number of days theyhave played during the period. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ladbrokes Coral