24th Aug 2006 07:01
Ladbrokes PLC24 August 2006 Unaudited interim results for the six months ended 30 June 2006 Half year to Half year to Year to 30 June 2006 30 June 2005(1) 31 December 2005(1) £m £m £m Continuing operations Gross win 523.1 467.2 918.0 Net revenue 502.1 463.1 908.5 Operating profit (2) 151.3 134.7 249.0 Net finance costs (2) (19.9) (12.1) (16.9) Interest income on hotels sale proceeds 24.0 - - Profit before tax and non-trading items (2) 155.4 122.6 232.1 Profit for the period from discontinued operations 10.8 69.5 181.8 Profit on disposal of hotels business 378.8 - - Non-trading items before tax 7.0 9.8 (19.9) Profit before tax 552.0 201.9 394.0 Tax (34.5) (42.3) (63.0) Profit after tax 517.5 159.6 331.0 EBITDA (2) - continuing 171.3 152.9 286.2 Earnings per share (2) (4) - continuing 9.8p 5.7p 12.0p Earnings per share (4) - total Group 43.0p 10.0p 20.7p Proposed dividend per share (3) (4) 4.60p 3.80p 240.0p (1) Restated - details of restatement explained in notes 1 (c) and 1 (d) to thefinancial statements. (2) Before non-trading items and discontinued operations. Non-trading itemscomprise profits/losses on unrealised gains/losses on derivatives. Profit fromdiscontinued operations includes profit on disposal of the hotels business. (3) Half year to 30 June 2006 is the proposed interim dividend of 4.60p (30 June2005: 3.80p). 2005 full year figure includes a proposed special dividend of233.4 pence and a proposed final dividend of 6.60 pence, which together werepaid on 25 April 2006. (4) 6 for 17 share consolidation took place on 13 April 2006, hence prior yearearnings per share and dividend per share are not directly comparable. Financial Highlights • Operating profit from continuing operations increased by 12.3% to £151.3 million (H1 2005: £134.7 million). • Ladbrokes gross win increased by 12.0% to £523.1 million (H1 2005: £467.2 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 £924.7 million with net cash inflow from operating activities of £83.1 million. • Effective tax rate of 24%. • Interim dividend of 4.6 pence per share (2005 Interim dividend: 3.8 pence). • Profit on disposal of Hilton International of £378.8 million, together with £24.0 million of interest income earned on the proceeds. • At the end of April, Ladbrokes returned cash of £4.2 billion to shareholders following the sale of Hilton International to Hilton Hotels Corp. Strategic Highlights • Ladbrokes has signed a joint venture agreement with Italian betting company Pianeta Scommesse, which will establish Ladbrokes as a government-accredited provider of betting shop services in Italy. • Ladbrokes' consultancy in China continues to expand - its role now extends to advising on the operation of 250 shops in Beijing and 50 newly launched shops in the province of Tianjin. • Further international progress in Vietnam, where Ladbrokes is one of three shortlisted to operate the sports lottery and in Turkey, where it has formed a consortium with Intralot to bid for the Turkish national lottery. Christopher Bell, Group Chief Executive Officer, commented: "The first half of 2006, our first reporting period as a stand-alone entity, hasseen record earnings for Ladbrokes, increasing 12.3% on last year. The resultswere driven by a good World Cup, further growth in eGaming, a larger Retailestate and improved results in Telephone Betting. "Today we announce a joint venture with Pianeta Scommesse, a betting shopprovider in Italy. We plan to invest around €100 million to develop retail,internet and telephone betting propositions in Italy over the next 5 years, asthe Government's new licensing and taxation regime is introduced. "Moving forward we will continue to exploit our brand and ability to innovateacross all channels to ensure our eGaming business continues its growth and ourRetail estate is well placed for the growth opportunities resulting from theimplementation of the Gambling Act in 2007, the full effects of which willimpact in 2008." Board changes During the period, the Board was pleased to welcome the appointment of JohnJarvis and today, the appointment of Henry Staunton. Ian Livingston will standdown from the Board at the end of October. Enquiries to: Alex Pagett, Director Group Corporate Affairs (mobile +44 (0)7974 229 888)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) 208 868 8899 Notes to editors: Definitions of online gaming harmonised KPI's (as released on 6 July 2006) areincluded in an appendix to this release. A live conference call of the analyst presentation will be available at 9:30am(UK time) by dialling +44 (0) 20 7138 0816 and asking for the 'Ladbrokes plcInterim Results'. In addition, a live audiocast of the presentation with slideswill be held within the 'Investor Centre' on www.ladbrokesplc.com and arecording will be available from 3pm (UK time) the same day. 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. Performance overview: Ladbrokes' first half year as a standalone betting and gaming business has beenone of solid progress. The business achieved its highest ever first halfoperating profit of £151.3 million and made further progress with ourinternational development plans. As expected, the World Cup turned out to be the biggest betting event in ourhistory, and gave a major boost to Ladbrokes' customer base, with over 220,000new eGaming and Telephone customers in the first 6 months of 2006. In total, thetournament (which spanned both first and second halves of 2006) contributed£17.5 million in gross win across all channels. Sportsbetting margins in Retail were positive between March and the half year,aided by good results at Cheltenham, Aintree, Ascot and of course the World Cup.This helped mitigate the unusually high levels of lost horse racing and poorresults during January and February. The initial response to Ladbrokes Xtra has been positive and a number of systemsenhancements will be made in the second half of 2006, including a morecomprehensive range of "betting-in-play". In Retail, like for like gross win grew by 1.0% in the first half and costscontinued to be tightly controlled, with a like for like increase of 3.2%,influenced mainly by property utility cost pressure. eGaming continues to grow and the cost of attracting new customers remains low.Sportsbook showed strong growth in gross win, supported by Casino and Games.Growth in Poker has been less buoyant than last year, with competitionchallenges emerging, particularly in our important Swedish market, compounded bythe distraction of the World Cup. Strategy: Good progress has been made in Europe. Today we announce a joint venture withPianeta Scommesse in Italy, which will establish Ladbrokes as agovernment-accredited provider of betting shop services to the Italian market.Regulatory changes to the Italian market, expected within the next few months,make this underserviced market an excellent opportunity for Ladbrokes. In the first half, we also signed a Joint Venture with Cyberview to providestandalone sportsbetting facilities to casinos in Russia. We expect to have anumber of units in operation by the end of 2006. We also expect our operation inChina, which has already achieved further growth, to deliver a marginal profitcontribution in 2007. In view of ongoing uncertainties within the US legislative environment, thedecision on whether to take business from US customers on our gaming sitesremains under review and we will update the market in due course. In July 2006 we opened a joint venture casino and sportsbar at the PaddingtonHilton. Once again we have a casino operating licence, consistent with our aimof acquiring some of the 17 new casino licenses to be permitted by the 2005Gambling Act. Outlook: The first half saw further growth in Retail and following a period which hasseen significant changes in government policy on betting and gaming, we nowenter a period of consolidation for our Retail business, as we look forward tothe implementation of the 2005 Gambling Act in autumn 2007. We expect thebenefits from late winter opening and £500 jackpot machines to start flowingthrough in 2008. Meanwhile, we continue to invest in our UK and Irish estates inreadiness to take advantage of future opportunities. Telephone Betting has shown good recovery in the first half of 2006 and whilstthe competitive environment remains tough for Poker, performance in Sportsbook,Casino and Games is very positive and we believe that the eGaming channel willcontinue its good growth. Despite a difficult Goodwood, in August, management remains positive about theprospects for the business this year and, looking further ahead, will continueto take full advantage of the opportunities that the market presents both athome and overseas. Operating Results Amount staked by business Half year to Half year to Year to 30 June 30 June 31 December 2005(1) 2006 2005(1) £m £m £m European Retail 5,172.1 4,930.0 9,799.3 EGaming 587.4 423.7 892.4 Telephone Betting 578.8 341.4 780.2 Other (2) 21.2 14.5 28.1 Total 6,359.5 5,709.6 11,500.0 Gross win by business Half year to Half year to Year to 30 June 30 June 31 December 2005 2006 2005 £m £m £m European Retail 407.6 377.7 754.6 EGaming 72.6 58.0 123.1 Telephone Betting 33.6 21.6 21.0 Other (2) 9.3 9.9 19.3 Total 523.1 467.2 918.0 Net revenue by business Half year to Half year to Year to 30 June 30 June 31 December 2005(1) 2006 2005(1) £m £m £m European Retail 392.7 377.2 752.4 EGaming 66.6 54.6 116.2 Telephone Betting 33.5 21.4 20.6 Other (2) 9.3 9.9 19.3 Total 502.1 463.1 908.5 Profit from operations by business Half year to Half year to Year to 30 June 30 June 31 December 2005 2006 2005 £m £m £m European Retail 120.1 114.5 219.5 EGaming 19.8 17.5 41.4 Telephone Betting 16.6 8.5 (0.1) Other (2) 2.1 3.1 5.8 Central costs (7.3) (8.9) (17.6) Total 151.3 134.7 249.0 Profit is before non-trading items and discontinued operations. (1) Restated - details of restatement explained in notes 1 (c ) and 1 (d ) tothe financial statements (2) Vernons Business Review European Retail • Total gross win increased by 7.9% to £407.6 million (H1 2005: £377.7 million) and operating profit increased by 4.9% to £120.1 million (H1 2005: £114.5 million). European Retail - UK • Total gross win increased by 7.1% to £366.4 million (H1 2005: £342.1 million), with £12.6 million from our Jack Brown acquisition. Gross win has shown significant improvement since March, after a tough start to the year due to an unusually high number of race cancellations and favourites winning. • Gross win, excluding the Jack Brown acquisition, increased by 3.4%. Like for like gross win, excluding acquisitions and new licences, grew by 1.0%. • Gross win in the first quarter showed growth of 0.2%, whilst the second quarter growth was 13.2%, reflecting both the poor start to 2006 and the good results we have had since April. • Over the Counter (OTC) gross win increased by 8.0% to £261.8 million (H1 2005: £242.5 million), with like for like OTC gross win up by 1.4%. Gross win margin was 16.9%, with good margins achieved in the key horse racing festival meetings in 2006. • Ladbrokes Xtra was rolled out to the UK shop estate in time for the World Cup. The initial response to our unique range and display of virtual (football and racing) and foreign racing products has been encouraging. • The World Cup contributed £10.6 million to UK Retail gross win, with £6.0 million in the first half and £4.6 million falling in July. • Machine gross win increased by 5.0% to £104.6 million (H1 2005: £99.6 million), with average weekly FOBT gross win of £548 (£571 excluding Jack Brown), compared to £576 for the first half of 2005. • The second half of 2006 will see the installation of 3,000 new bespoke dual screen FOBTs. The full FOBT estate will be replaced by the end of the first quarter of 2007 at a cost of £18 million. • Total gross win growth in Scotland was better than the estate in England and Wales, despite introduction of the smoking ban. • Operating costs increased by 9.9% to £201.6 million, reflecting a higher number of shops. Like for like costs increased by 3.2%, including the additional costs from Ladbrokes Xtra. • Operating profit of £111.5 million increased by 2.5% (H1 2005: £108.8 million). • Jack Brown has contributed EBITDA of £3.0 million in the first half of 2006. • At 30 June 2006 Ladbrokes had 2,137 shops in the UK. The increase of three shops since 31 December 2005 was driven by one acquisition and 11 new licences, less two disposals and seven closures. European Retail - Ireland • Gross win in Ireland increased by 37% to £23.2 million (H1 2005: £16.9 million), due to development activity, favourable horse racing results at key festivals and the tax free betting introduced in all shops from December 2005. • While operating costs increased by 9.3% in Ireland as a result of the impact of a larger shop estate and related establishment costs, operating profit increased by 122.6% to £6.9 million (H1 2005: £3.1 million). • Shop numbers in Ireland increased from 148 at 31 December 2005 to 165, with 13 acquisitions and four new licences. European Retail - Belgium • Gross win in Belgium showed marginal decline due to the highly competitive marketplace and operating profit decreased by 35% to £1.7 million (H1 2005: £2.6 million). • In Belgium, the number of shops was 299 at the half year. eGaming (1) • eGaming gross win grew by 25% to £72.6 million (H1 2005: £58.0 million), with 420,000 unique active players (up 37%). Net revenue, after fair value adjustments for free bets, promotions and bonuses, increased by 22% to £66.6 million (H1 2005: £54.6 million as restated) as recruitment investment was stepped up to take advantage of the sporting calendar, which included the World Cup. • In eGaming, the World Cup delivered £3.4 million gross win in the first half with a further £1.2 million in the second half. • Sportsbook (including Ladbrokes Financials) gross win rose by 54% to £24.6 million. Average monthly active player days grew by 43% to 644,000 and yield per unique active player grew 7% to £75. • Poker gross win grew by 15% to £21.3 million, impacted by increased competition, particularly in Sweden with the launch of the state lottery poker site. Average monthly active player days grew by 39% to 496,000 and yield per unique active player fell 28% to £161. During the World Cup, Poker experienced a marked dip in player levels and activity. High profile promotional events planned for the second half include Ladbrokes European Online Championship Of Poker and the popular televised Ladbrokes' Poker Million tournament (with Europe's largest TV poker prize pool of $4.2 million). Additionally, a number of product developments will be launched later this year, including new language versions. (1) Definitions of online gaming harmonised KPI's (as published on 6 July 2006) are included in an appendix to this release. • Casino gross win of £21.4 million grew by 16% and average monthly active player days were up 31% at 72,000. The market leading "1 click" suite of instant play casino games was successfully launched in the first half with further developments planned for the second half. • Games gross win of £5.3 million grew by 3.9% (H1 2005: £5.1 million), with average monthly active player days up 30% to 70,000. In the second quarter we launched Bingo and Backgammon, and our first branded game 'Deal or No Deal' was launched in July with encouraging early signs. • Operating costs of £43.0 million increased by 27% compared to the 22% increase in net revenue. This increase predominantly reflects higher marketing costs (up by £2.6 million), as the customer recruitment opportunity offered by the World Cup was maximised, with real money sign-ups 37% higher than the same period last year and adjusted cost per acquisition (including fair value adjustments to revenue, but after stripping out costs related solely to retention) down by 12% to £51, positioning us well for the second half. • Operating profit increased to £19.8 million (H1 2005: £17.5 million), with net revenue conversion of 30% impacted by the marketing activity focused around the World Cup in the first half (H1 2005: 32%). Telephone Betting • Gross win excluding High Rollers was £20.3 million, up 29% (H1 2005: £15.7 million) with gross win margins of 8.8% compared to 5.9% in 2005. • The World Cup, excluding High Rollers, delivered Telephone gross win of £0.9 million at a margin of 8.8% in the first half, with a further £0.7 million in the second half. • Gross win from High Rollers was £13.3 million (H1 2005: £5.9 million). • Unique active players were level at 100,100 (H1 2005: 99,800), but average monthly active player days grew by 2.6% and call volumes (excluding High Rollers) increased by 8.2%. • Overall operating costs increased 23% to £11.8 million, compared to net revenue growth of 30%, with agent cost per call down 15%. • Including the impact of High Rollers, operating profit almost doubled to £16.6 million (H1 2005: £8.5 million). Vernons • Operating profit fell by 32% to £2.1 million (H1 2005: £3.1 million) largely due to the impact of results in the Irish National Lottery based game, 'Lucky Clover', where margins ran 13 percentage points below last year at 29%. International development • International expansion represents a new area of growth, and today's Italy announcement adds to existing agreements in China and Russia, which were announced earlier this year. EBIT contribution for this channel of between £20 million and £40 million is anticipated within 3-5 years. Asia and Europe are key targets, and a number of discussions are ongoing. • Ladbrokes' joint venture with Pianeta Scommesse will target opportunities in retail, internet and telephone, as will be allowed under the Italian government's reforms to the betting market. These include increasing the number of licences, reducing betting tax on sports bets and allowing slot machines in betting shops. We plan to invest around €100 million in the Italian market over the coming 5 years. Casino development • Ladbrokes Casino and Sportsbar, which opened in July 2006, is a joint venture with Alan Goodenough (ex-London Clubs). It represents a strategic opportunity to gain an operating licence, in view of Ladbrokes' interest in some of the 17 new UK casinos under the 2005 Gambling Act. Operating and Financial Review Financial review Revenue and profit before tax Half year to Restated half year to Restated year to 30 June 30 June 31 December 2006 2005 2005 Net Revenue Profit Net Revenue Profit Net Revenue Profit Continuing operations: £m £m £m £m £m £m European Retail 392.7 120.1 377.2 114.5 752.4 219.5 Egaming 66.6 19.8 54.6 17.5 116.2 41.4 Telephone Betting 33.5 16.6 21.4 8.5 20.6 (0.1) Other (1) 9.3 2.1 9.9 3.1 19.3 5.8 Central costs - (7.3) - (8.9) - (17.6) 502.1 151.3 463.1 134.7 908.5 249.0 Net finance costs - (19.9) - (12.1) - (16.9) Interest income on hotels sale proceeds - 24.0 - - - - Revenue and profit before tax 502.1 155.4 463.1 122.6 908.5 232.1 Discontinued operations: Hotels 263.7 10.8 887.6 69.5 1,848.9 181.8 Group revenue and profit before tax 765.8 166.2 1,350.7 192.1 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 of value 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 £378.8 million. Subsequently, following a capitalstructure review, £4.2 billion was returned to shareholders on 25 April 2006through ordinary and special dividends. 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 £39.0 million (8.4%) to £502.1million, mainly as a result of the inclusion of the Jack Brown shops in EuropeanRetail, and growth in both eGaming and Telephone revenue. Profit before finance costs, tax and non-trading items increased 12.3% to £151.3million (H1 2005: £134.7 million) reflecting the increase in profit across allmajor segments and the reduction in central costs. 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 £19.9 millionwere 64.5% greater than last year (H1 2005: £12.1 million), reflecting the newcapital structure. Profit before tax - Continuing operations The increase in trading profits combined with the interest income in the periodhas given a 26.8% increase in profit before taxation and non-trading items to£155.4 million (H1 2005: £122.6 million). Non-trading items - Sale of Hilton International The £378.8 million non-trading profit relates to the disposal of the hotelsbusiness, Hilton International. There is no related tax charge. The Group hasrecognised a financial liability relating to guarantees to third parties givenby the parent company in respect of lease liabilities of the disposed HiltonInternational subsidiaries. A corresponding financial asset has been recognisedwhich relates to the indemnity received from Hilton Hotels Corp at the time ofthe disposal in relation to any loss the Group might incur under theseguarantees. Taxation The Group taxation charge for continuing operations before non-trading items of£37.3 million represents an effective tax rate of 24.0% (year to 31 December2005: 17.6%). This increased rate reflects the revised Group structure followingthe hotels disposal. 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 all the bonds into ordinaryshares by 30 June 2006. Earnings per share (EPS) - Continuing operations EPS (before non-trading items) was 9.8 pence (H1 2005: 5.7 pence). Comparisonwith prior year is affected by the share consolidation and convertible bondconversion described above. EPS (including the impact of non-trading items) was10.7 pence (H1 2005: 5.9 pence). Fully diluted EPS was 10.1 pence (H1 2005: 5.7pence) after adjustment for outstanding share options. Earnings per share (EPS) - Group EPS (before non-trading items) increased 8.3% to 10.4 pence (H1 2005: 9.6pence), reflecting the increased profit before tax. EPS (including the impactof non-trading items) was 43.0 pence (H1 2005: 10.0 pence). Fully diluted EPSwas 40.3 pence (H1 2005: 9.5 pence) after adjustment for outstanding shareoptions. Dividend The Board has proposed an interim dividend of 4.6 pence per share (H1 2005: 3.8pence). The dividend will be payable on 1 December 2006 to shareholders on theregister on 8 September 2006. 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 to differentiate it from grosswin, which includes free bets, promotions and bonuses, as well as VAT payable onmachine income. A reconciliation of gross win to net revenue is shown below: Half year to 30 June 2006 Half year to Full year to H1 30 June 2005 31 December 2005 2005 £m £m £mAmounts staked 6,359.5 5,709.6 11,500.0 Gross win 523.1 467.2 918.0Free bets, promotions, bonuses (7.0) (4.1) (8.2)VAT (15.6) (1.3) (4.4)Associate income 1.6 1.3 3.1 Net revenue 502.1 463.1 908.5 Previously the Group had reported the total amounts staked by customers onbetting activities as revenue. The income statements for the year to 31December 2005 and the half year to 30 June 2005 have been restated to reflectthis change to reported revenue. These restatements have been revised from thosepreviously announced to reflect the exclusion of free bets, promotions andbonuses. This adjustment has no impact on reported profit, cash flows or netassets. Cash flow, capital expenditure and borrowings Net cash flows from operating activities were £83.1 million. After interestreceived of £43.8 million and £46.9 million on capital expenditure, intangibleadditions and acquisitions on continuing activities, cash inflow was £80.0million. £3,241.4 million cash was received from the sale of the hotels business and£4,179.6 million was paid out in dividends. Proceeds of £65.3 million werereceived on the exercise of share options and the issue of shares. At 30 June 2006, gross borrowings of £959.4 million and cash, deposits and shortterm investments of £19.3 million and derivatives of £15.4 million have resultedin a net debt of £924.7 million. Unaudited financial statements Consolidated income statement Half year to Restated half year to 30 Restated year to 30 June 2006 June 2005 31 December 2005 Before Before Before non-trading non-trading non-trading items(1) Total items(1) Total items(1) Total £m £m £m £m £m £m Continuing operations Amounts staked(2) 6,359.5 6,359.5 5,709.6 5,709.6 11,500.0 11,500.0 Revenue 500.5 500.5 461.8 461.8 905.4 905.4 Share of results from associated undertakings 1.6 1.6 1.3 1.3 3.1 3.1 Total revenue 502.1 502.1 463.1 463.1 908.5 908.5Cost of sales before depreciation (288.5) (288.5) (270.9) (270.9) (542.7) (542.7)Administrative expenses (42.3) (42.3) (39.3) (39.3) (79.6) (79.6) EBITDA 171.3 171.3 152.9 152.9 286.2 286.2 Depreciation and amounts written off non - current assets (20.0) (20.0) (18.2) (18.2) (37.2) (37.2) Profit before tax and finance costs 151.3 151.3 134.7 134.7 249.0 249.0 Finance costs (32.2) (41.8) (22.0) (22.0) (59.5) (60.5) Finance income 36.3 49.1 9.9 14.8 42.6 51.7 Profit before taxation 155.4 158.6 122.6 127.5 232.1 240.2 Income tax expense (37.3) (29.6) (31.9) (33.4) (40.9) (43.3) Profit for the period - continuing operations 118.1 129.0 90.7 94.1 191.2 196.9 Discontinued operations Profit for the period from discontinued operations 7.0 388.5 63.0 65.5 160.6 134.1 Profit for the period 125.1 517.5 153.7 159.6 351.8 331.0 Attributable to:Minority interests - - 0.1 0.1 0.2 0.2Equity holders of the parent 125.1 517.5 153.6 159.5 351.6 330.8 125.1 517.5 153.7 159.6 351.8 331.0 Earnings per share from continuingoperations:- basic 9.8p 10.7p 5.7p 5.9p 12.0p 12.3p Earnings per share on profit forthe period:- basic 10.4p 43.0p 9.6p 10.0p 22.0p 20.7p- diluted 9.8p 40.3p 9.2p 9.5p 20.9p 19.7p Proposed dividends(3) 4.60p 4.60p 3.80p 3.80p 240.0p 240.0p (1) Non-trading items are profit on disposal of the Hotels division, unrealisedgains and losses on derivatives and one-off tax credits. Details on the taxcredits are given in note 3 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) The dividends paid in the half years to June 2006 and June 2005 were£4,179.6 million (240.00p per share) and £95.9 million (6.00p per share)respectively. An interim dividend of 4.60p per share (2005: 3.80p) was declaredby the Directors at their meeting on 22 August 2006. These financial statementsdo not reflect this dividend payable. Consolidated balance sheet 30 June 2006 Restated Restated 30 June 2005 31 December 2005 £m £m £mASSETS Non-current assets Goodwill and intangible assets 394.3 1,717.9 386.0Property, plant and equipment 218.5 2,451.7 199.0Interests in associates and other 8.2 59.9 (12.8)investmentsOther financial assets 8.2 9.4 2.9Deferred tax asset 16.7 40.7 16.6Derivatives 20.4 69.7 51.7Retirement benefit asset 12.4 0.5 - 678.7 4,349.8 643.4Current assets Inventories - 15.4 -Trade and other receivables 94.9 372.7 88.1Assets classified as held for sale 2.2 2.9 2.2Derivatives 12.9 20.9 8.5Cash and cash equivalents 26.6 569.7 926.6 136.6 981.6 1,025.4Assets of disposal group classified as heldfor sale - - 3,767.9 Total assets 815.3 5,331.4 5,436.7 LIABILITIES Current liabilities Interest-bearing loans and borrowings (141.3) (95.7) (158.2)Obligations under finance leases - (2.3) -Derivatives (17.1) (28.3) (41.7)Trade and other payables (214.8) (611.4) (182.5)Corporation tax liabilities (191.8) (177.5) (206.7) (565.0) (915.2) (589.1)Non-current liabilities Interest-bearing loans and borrowings (825.4) (993.5) (847.7)Obligations under finance leases - (31.9) -Convertible bond - (280.2) (279.7)Derivatives (0.8) (18.0) (5.1)Other financial liabilities (14.2) (22.9) -Deferred tax liabilities (79.7) (447.7) (86.6)Retirement benefit obligation - (136.0) (55.2)Provisions (24.3) (13.6) (9.4) (944.4) (1,943.8) (1,283.7) Liabilities of disposal group classified as held for sale (18.9) - (968.2) Total liabilities (1,528.3) (2,859.0) (2,841.0) Net (liabilities)/assets (713.0) 2,472.4 2,595.7 EQUITY Issued share capital 177.2 160.1 160.6Share premium account 2,131.0 1,758.4 1,767.7Equity component of convertible bond - 34.3 34.3Own shares (5.5) (16.3) (16.0)Foreign currency translation reserve 0.6 (8.5) 4.7Other reserves - 158.2 158.2Retained earnings (3,016.3) 383.2 483.2 Equity shareholders' (deficit)/funds (713.0) 2,469.4 2,592.7 Equity minority interests - 3.0 3.0 Total equity (713.0) 2,472.4 2,595.7 Consolidated cash flow statement Half year to Restated Year to 30 June 2006 half year to 31 December 2005 30 June 2005 £m £m £m Net cash flows from operating activities 83.1 192.2 420.3 Cash flows from investing activitiesInterest received 43.8 14.8 38.2Dividends received from associates 0.5 1.3 4.2Payments for intangible assets (2.3) (40.4) (45.4)Purchase of plant, property and equipment (45.5) * (82.6) (196.9)Proceeds from the sale of property, plant and equipment 0.7 88.9 539.5Proceeds from disposal of hotels 3,241.4 - -Payments as part of the hotels disposal (68.5) - -Cash disposed with the hotels business (54.2) - -Purchase of subsidiaries (6.2) - (76.5)Net cash acquired with subsidiaries - - 4.4Purchase of interests in associates and otherinvestments (0.9) (5.7) (5.9)Proceeds from return of capital in associates - 1.1 1.1Proceeds on disposal of investments 1.6 - 0.3 3,110.4 (22.6) 263.0 Cash flows from financing activities Proceeds from issue of shares 65.3 30.3 38.1Proceeds from borrowings 163.1 1.3 1.3Proceeds from associates repayment of loans - 1.4 1.5Payments of finance lease liabilities - (0.5) (2.1)Repayment of borrowings (197.7) (25.5) (57.6)Payments of new loans to associates (1.3) (0.2) (0.2)(Increase)/decrease in deposits - maturity greater thanthree months (0.1) (254.3) 2.5Dividends paid (4,179.6) (95.9) (156.8) (4,150.3) (343.4) (173.3) Net (decrease)/increase in cash and cash equivalents (956.8) (173.8) 510.0Net foreign exchange difference (0.1) 0.7 6.3Cash and cash equivalents at beginning of period 975.8 459.5 459.5 Cash and cash equivalents at end of period 18.9 286.4 975.8 Cash and cash equivalents comprise:Cash at bank and in hand and current asset investments 26.2 310.3 992.0Bank overdraft (7.3) (23.9) (16.2) 18.9 286.4 975.8Analysed as:Continuing operations 18.9 286.4 926.3Discontinued operations - - 49.5 18.9 286.4 975.8 * Continuing operations - £38.4 million, discontinued operations - £7.1 million Consolidated statement of recognised income and expense Half year to Half year to Year to 30 June 30 June 31 December 2005 2006 2005 £m £m £m Currency translation differences (0.3) (5.4) 7.6Actuarial gains/(losses) on defined benefit pension scheme 4.5 (7.4) (18.9)Net gains on cash flow hedges 0.5 - 0.6Tax on items directly taken to equity (1.3) 1.6 (0.9) Total income and expenses recognised directly in equity 3.4 (11.2) (11.6) Profit for the period 517.5 159.6 331.0 Total recognised income and expense for the period 520.9 148.4 319.4 Attributable to:Equity holders of the parent 520.9 148.3 319.3Minority interest - 0.1 0.1 520.9 148.4 319.4 Notes to the financial statements 1. Basis of preparation (a) The accounting policies are consistent with those followed in the preparation of the Group's annual financial statements forthe year ended 31 December 2005, except as explained in note (c). The interimfinancial information was approved by a duly appointed and authorised committeeof the Board of Directors on 24 August 2006 and is unaudited. The auditors havecarried out a review and their report is set out on page 32. The financial information set out in this document in respect of the year ended31 December 2005 does not constitute the Group's statutory accounts for the yearended 31 December 2005, except as explained otherwise. The auditors' report onthe statutory accounts for 2005 was unqualified and did not contain a statementunder section 237 of the Companies Act 1985. Statutory accounts for 2005 havebeen delivered to the Registrar of Companies. (b) To assist in understanding the underlying performance, the Group has defined the following items of income and expense as non-trading in nature: - Profits/losses on disposal of non-current assets - Profits/losses on disposal of businesses and investments - Unrealised gains/losses on derivatives arising from hedging interest rate and currency exposures - Litigation settlements 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 clarification of 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 statements for the year to 31 December 2005 and the half year to 30June 2005 have been restated to reflect this change to reported revenue. Thisadjustment has no impact on reported profit, cash flows or net assets. Areconciliation between the reported income statements and the restated incomestatements is given in note 11. (d) Discontinued operations In accordance with IFRS 5, the income statement for the half year to 30 June2005 has been restated to reflect the classification of results (includinginterest and tax) between the continuing and discontinued operations of theGroup following the sale of the Hilton International business to Hilton HotelsCorporation in February 2006. The income statements for the year to 31 December 2005 and the half year to 30June 2005 have also been restated to reflect the reclassification of a hotelassociate from continuing operations to discontinued operations in the half yearto 30 June 2006. This associate was not part of the sale to HHC and was, therefore previouslyclassified as continuing operations in the year to 31 December 2005 and the halfyear to 30 June 2005 and disclosed in Central costs. The impact of thisadjustment is to increase profit before finance costs and tax for the continuingoperations by £0.5m for both the year to 31 December 2005 and the half year to30 June 2005. This associate was sold on 31 July 2006. (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 Half year to 30 June 2006 Profit before Profit before taxation and taxation and after Revenue non-trading items non-trading items £m £m £m Continuing operations: European Retail 392.7 120.1 120.1eGaming 66.6 19.8 19.8Telephone Betting 33.5 16.6 16.6Other 9.3 2.1 2.1Central costs - (7.3) (7.3) Total 502.1 151.3 151.3 Net finance income - 4.1 7.3 502.1 155.4 158.6 Discontinued operations: Hotels 263.7 10.8 393.4 765.8 166.2 552.0 Segment information (continued) Restated half year to 30 June 2005 Profit before Profit before taxation and taxation and after Revenue non-trading items non-trading items £m £m £m Continuing operations: European Retail 377.2 114.5 114.5eGaming 54.6 17.5 17.5Telephone Betting 21.4 8.5 8.5Other 9.9 3.1 3.1Central costs - (8.9) (8.9) Total 463.1 134.7 134.7 Net finance costs - (12.1) (7.2) 463.1 122.6 127.5 Discontinued operations: Hotels 887.6 69.5 74.4 1,350.7 192.1 201.9 Restated year to 31 December 2005 Profit before Profit before taxation and taxation and after Revenue non-trading items non-trading items £m £m £m Continuing 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 Half year to Half year to Year to 30 June 30 June 31 December 2005 2006 2005 £m £m £m Continuing operations: Unrealised gains on derivatives 3.2 4.9 8.1 Total non-trading profit before taxation 3.2 4.9 8.1 Taxation thereon (1.0) (1.5) (2.4) Non-trading tax credit(a) 8.7 - - Non-trading items after taxation 10.9 3.4 5.7 (a) Tax credit on convertible bond conversion and hedging adjustments. 4. Taxation The total tax charge on continuing operations was £29.6 million (Half year to 30June 2005: £33.4 million; full year to 31 December 2005: £43.3 million). Thetaxation charge relates to £29.0 million of UK tax and £0.6 million of overseastax. 5. Discontinued operations On 23 February 2006 the Group completed the sale of the hotels division toHilton Hotels Corp. The effect of the disposal was as follows: Half year to 30 June 2006 £m Sales proceeds 3,241.4Total net assets sold (2,768.6)Costs of disposal (97.8)Recycled foreign exchange 3.8 Profit on disposal 378.8 Discontinued operations (continued) Profit for discontinued operations comprised the following: Restated Restated year to Half year to half year to 31 December 2005 30 June 30 June 2006 2005 £m £m £mRevenue 263.7 887.6 1,848.9Expenses (252.5) (815.0) (1,661.9)Profit from discontinued operations 11.2 72.6 187.0 Net finance costs (0.4) (3.1) (5.2)Profit from discontinued operations after finance costs 10.8 69.5 181.8 Profit on disposal of hotels business to Hilton HotelsCorp 378.8 - - Profit on sale of non-current assets (a) - 9.6 12.8Losses on sale of non-current assets (b) - (4.7) (40.8) Profit before tax and non-trading finance costs 389.6 74.4 153.8 Non-trading finance income 3.8 - - Profit before tax from discontinued operations 393.4 74.4 153.8 Taxation: - related to pre tax profit (3.8) (6.5) (21.2) - related to non-trading items (1.1) (2.4) 1.5 Profit for the period from discontinued operations 388.5 65.5 134.1 (a) The profit on sale of non-current assets in 2005 relates to disposal ofnon-core assets. (b) The majority of the loss on sale of non-current assets in 2005 relates tothe disposal of 16 hotels to The Managed Hotels Unit Trust with an associatedgoodwill write-off. Discontinued operations (continued) The major classes of assets and liabilities of the hotels division held for saleas at disposal were: £m ASSETS Non-current assets Goodwill and intangible assets 1,375.0Property, plant and equipment 1,923.4Interests in associates and other investments 72.8Other financial assets 5.0Deferred tax asset 27.4Retirement benefit asset 0.4 3,404.0Current assets Inventories 15.1Trade and other receivables 282.9Cash and cash equivalents 67.8 365.8 Total assets held for sale 3,769.8 LIABILITIES Current liabilities Interest-bearing loans and borrowings (43.6)Obligations under finance leases (2.6)Trade and other payables (425.9)Corporation tax liabilities (37.9) (510.0)Non-current liabilities Interest-bearing loans and borrowings (12.3)Obligations under finance leases (30.8)Other financial liabilities (20.6)Deferred tax liabilities (329.3)Retirement benefit obligation (91.6)Provisions (3.6) (488.2) Total liabilities held for sale (998.2) Net assets held for resale 2,771.6 Minority equity interest (3.0) Group's share of disposed net assets 2,768.6 Discontinued operations (continued) Cash flows relating to the hotels division were: Half year to 30 Half year to 30 Year to June June 31 December 2005 2006 2005 £m £m £mCash flows relating to discontinued operations Net cash flows from operating activities 4.7 99.8 314.2Investing activities (6.6) 39.5 401.0Financing activities - (31.0) (33.8)Proceeds from disposal of hotels 3,241.4 - -Costs of hotels disposal (68.5) - -Cash disposed with the hotels business (54.2) - - Cash flows relating to discontinued operations 3,116.8 108.3 681.4 Income and expenses recognised directly in equity relating to the assets of thedisposed group were: Half year Half year Year to to 30 June to 30 June 31 December 2005 2006 2005 £m £m £mCurrency translation differences 1.0 (4.4) 9.2Actuarial losses on defined benefit pension scheme (2.9) (7.1) (10.9)Tax on items directly taken to equity 0.9 2.1 3.3 6. Dividends paid and proposed Half year to Half year to Year toPence per share - proposed 30 June 30 June 31 December 2006 2005 2005 pence pence Pence Interim 4.60 3.80 -Final (excluding special) - - 6.60Special - - 233.40 4.60 3.80 240.00 The dividends paid in the half years to June 2006 and June 2005 were £4,179.6million (240.00p per share) and £95.9 million (6.00p per share) respectively.An interim dividend of 4.60p per share (2005: 3.80p) was declared by theDirectors at their meeting on 22 August 2006. These financial statements do notreflect this dividend payable. 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. The earnings per share figures for prior years have not been restatedto reflect the share consolidation during the half year to 30 June 2006. Continuing operations Diluted Basic EPS Diluted EPSHalf year to 30 June 2006 Earnings earnings* pence per pence per £m £m share share Profit attributable to shareholders 129.0 130.8 10.7p 10.1pNon-trading items net of tax (10.9) (10.9) (0.9)p (0.8)p Adjusted profit attributable to shareholders 118.1 119.9 9.8p 9.3p Diluted Basic EPS Diluted EPSRestated half year to 30 June 2005 Earnings earnings* pence per pence per £m £m share share Profit attributable to shareholders 94.1 99.2 5.9p 5.7p Non-trading items net of tax (3.4) (3.4) (0.2)p (0.2)pAdjusted profit attributable to shareholders 90.7 95.8 5.7p 5.5p Diluted Basic EPS Diluted EPSRestated year to 31 December 2005 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 to shareholders 191.2 202.7 12.0p 11.7p Total Group Diluted Basic EPS Diluted EPSHalf year to 30 June 2006 Earnings earnings* pence per pence per £m £m share share Profit attributable to shareholders 517.5 519.3 43.0p 40.3pNon-trading items net of tax (392.4) (392.4) (32.6)p (30.5)p Adjusted profit attributable to shareholders 125.1 126.9 10.4p 9.8p Diluted Basic EPS Diluted EPSRestated half year to 30 June 2005 Earnings earnings* pence per pence per £m £m share share Profit attributable to shareholders 159.5 164.6 10.0p 9.5pNon-trading items net of tax (5.9) (5.9) (0.4)p (0.3)p Adjusted profit attributable to shareholders 153.6 158.7 9.6p 9.2p Restated year to 31 December 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 to shareholders 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 £1.8 million (June 2005: £5.1million, December 2005: £11.5 million) which would result from the conversion ofthe convertible bond to equity. Earnings per share (continued) The number of shares used in the calculation is shown below: Half year to Half year to Year to 30 June 30 June 31 December 2006 2005 2005 millions millions millions Weighted average number of ordinary shares for thepurposes of basic earnings per share 1,203.3 1,595.1 1,599.4 Effect of dilutive potential ordinary shares:Share options 10.5 13.5 14.0 Convertible bond conversion to ordinary share capital 73.7 115.4 115.4 Issue of contingently issuable shares 1.2 2.5 4.6 Weighted average number of ordinary shares for thepurposes of dilutive earnings per share 1,288.7 1,726.5 1,733.4 8. Net debt The Group's net debt structure is as follows: 30 June 30 June 31 December 2005 2006 2005 £m £m £mNon current assetsDerivatives 20.4 69.7 51.7 Current assets Derivatives 12.9 20.9 8.5Cash and cash equivalents 26.6 569.7 994.6 Current liabilitiesInterest-bearing loans and borrowings (141.3) (95.7) (206.5)Obligations under finance leases - (2.3) (2.6)Derivatives (17.1) (28.3) (41.7) Non current liabilitiesDerivatives (0.8) (18.0) (5.1)Interest-bearing loans and borrowings (825.4) (993.5) (860.0)Obligations under finance leases - (31.9) (31.0)Convertible bond - (280.2) (279.7) Net debt per balance sheet (924.7) (789.6) (371.8) Net debt adjustments :Equity component of convertible bond - (34.3) (34.3)Amortisation of convertible bond - 4.8 7.3Interest rate fair value of net investment hedges - 2.7 0.9 Adjusted net debt (924.7) (816.4) (397.9)Continuing operations (924.7) (816.4) (371.7)Discontinued operations - - (26.2) Net debt movement in the period: Half year to Half year to Year to 30 June 30 June 31 December 2006 2005 2005 £m £m £m Opening net debt (397.9) (976.0) (976.0)Net cash inflow from operating activities 76.0 192.2 420.3Cash inflows/(outflows) from investing activities 3,117.5 (22.6) 263.0Proceeds from associates repayment of loans - 1.4 1.5Payment of new loans to associates (1.3) (0.2) (0.2)Dividends paid (4,179.6) (95.9) (156.8)Exchange movements 11.6 38.7 (5.8)Issue of ordinary share capital 65.3 30.3 38.1Disposal of hotels debt 75.7 - -Conversion of convertible bond 274.2 - -Other non-cash movements 33.8 15.7 18.0 Closing net debt (924.7) (816.4) (397.9) 9. Reconciliation of profit to net cash inflow from operating activities Half year to Half year to Year to 30 June 30 June 31 December 2006 2005 2005 £m £m £m Profit before tax and finance costs - continuing 151.3 134.7 249.0Profit before tax and finance costs - discontinuing 11.2 72.6 187.0 Profit before tax and finance costs 162.5 207.3 436.0 Depreciation 17.8 64.5 124.7Amortisation of intangible assets 2.2 3.5 8.1Costs of share based payments 1.4 3.1 6.2 Movement on derivatives (2.0) (9.0) (22.2) Other items (4.9) 3.3 (4.2) Operating cashflows before movements in working capital 177.0 272.7 548.6 (Increase)/decrease in assets classified as held for sale (6.3) 0.4 0.6Decrease in inventories - 0.4 0.7Increase in receivables (3.3) (5.5) (13.5)Increase/(decrease) in payables 16.6 (23.6) 26.6Increase/(decrease) in provisions 4.9 (4.7) (5.3)Decrease in retirement benefit obligations (60.2) - -Share of results from associates (0.9) (0.5) (4.3) Cash generated by operations 127.8 239.2 553.4Income taxes paid (33.3) (21.7) (64.4)Finance costs paid (11.4) (25.3) (68.7) Net cash inflow from operating activities 83.1 192.2 420.3 Cash and cash deposits in the balance sheet comprise: 30 June 30 June 31 December 2005 2006 2005 £m £m £m Continuing operations Cash at bank and in hand 26.2 80.5 25.9Short-term deposits and current asset investments - 229.8 900.4Deposits with maturity greater than three months 0.4 259.4 0.3 26.6 569.7 926.6Discontinued operations Cash 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 26.6 569.7 994.6 Cash and cash equivalents in the cash flow statement comprise cash at bank andother short-term highly liquid investments with a maturity of three months orless and overdrafts: 30 June 30 June 31 December 2005 2006 2005 £m £m £m Continuing operations Cash at bank and in hand 26.2 80.5 25.9Short-term deposits and current asset investments - 229.8 900.4Bank overdrafts (included in current liabilities) (7.3) (23.9) - 18.9 286.4 926.3 Discontinued operations Cash at bank and in hand - - 47.4Short-term deposits and current asset investments - - 18.3Bank overdrafts (included in current liabilities) - - (16.2) - - 49.5 18.9 286.4 975.8 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 income and expense for theperiod - - - - - 311.6 7.7 319.3 0.1 319.4 Issue of shares 2.0 38.1 - - - - - 40.1 - 40.1Net decrease due to shares held in ESOPtrusts - - - - (1.5) - - (1.5) - (1.5)Equity dividends - - - - - (156.8) - (156.8) - (156.8)Cost of share based payments - - - - - 6.2 - 6.2 - 6.2 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 income andexpense for theperiod - - - - - 521.2 (0.3) 520.9 - 520.9Issue of shares 16.6 328.3 - - - - - 344.9 - 344.9Reserves transfer - 34.3 (34.3) (158.2) - 158.2 - - - -Share based payment awards - 0.7 - - - (0.7) - - - -Net increase due toshares held in ESOPtrusts - - - - 10.5 - - 10.5 - 10.5Exchange recycled toprofit on disposal - - - - - - (3.8) (3.8) - (3.8) Minority interestsdisposed - - - - - - - - (3.0) (3.0) Equity dividends - - - - - (4,179.6) - (4,179.6) - (4,179.6)Cost of share basedpayments - - - - - 1.4 - 1.4 - 1.4 At 30 June 2006 177.2 2,131.0 - - (5.5) (3,016.3) 0.6 (713.0) - (713.0) 11. Restatement of income statements for prior periods Year to 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 operations Revenue 11,502.4 (10,597.0) - 905.4Share of results from associated undertakings 2.6 - 0.5 3.1 Total revenue 11,505.0 (10,597.0) 0.5 908.5 Cost of sales before depreciation (11,139.7) 10,597.0 - (542.7)Administrative expenses (79.6) - - (79.6) EBITDA 285.7 - 0.5 286.2 Depreciation and amounts written off non - current assets (37.2) - - (37.2) Profit before tax and finance costs 248.5 - 0.5 249.0Finance costs (59.5) - - (59.5)Finance income 42.6 - - 42.6 Profit 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 operations Profit for the year from discontinued operations 161.1 - (0.5) 160.6 Profit 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 - - 11.7p Earnings 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. Restatement of income statements for prior periods (continued) Half year to 30 June 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) 5,710.5 (0.9) - 5,709.6 Continuing operations Revenue 6,598.9 (5,248.7) (888.4) 461.8Share of results from associated undertakings 0.5 - 0.8 1.3 Total revenue 6,599.4 (5,248.7) (887.6) 463.1 Cost of sales before depreciation (6,271.1) 5,248.7 751.5 (270.9)Administrative expenses (53.0) - 13.7 (39.3) EBITDA 275.3 - (122.4) 152.9 Depreciation and amounts written off non - (68.0) - 49.8 (18.2)current assets Profit before tax and finance costs 207.3 - (72.6) 134.7Finance costs (25.1) - 3.1 (22.0)Finance income 9.9 - - 9.9 Profit before taxation 192.1 - (69.5) 122.6Income tax expense (38.4) - 6.5 (31.9) Profit for the period - continuing operations 153.7 - (63.0) 90.7 Discontinued operations Profit for the period from discontinued - - 63.0 63.0operations Profit for the period 153.7 - - 153.7 Attributable to: Minority interests 0.1 - - 0.1 Equity holders of the parent 153.6 - - 153.6 153.7 - - 153.7 Earnings per share from continuing operations: - basic 9.6p - (3.9)p 5.7p- diluted 9.2p - (3.7)p 5.5p Earnings per share profit for the period: - basic 9.6p - - 9.6p- diluted 9.2p - - 9.2p (1) Amounts staked does not represent the Group's statutory revenue andcomprises the total amount staked by customers on betting and gaming activities. Independent review report to Ladbrokes plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2006 which comprises the Consolidated IncomeStatement, Consolidated Balance Sheet, Consolidated Cash Flow Statement,Statement of Recognised Income and Expense and the related notes 1 to 11. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the Company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the Company, for our work,for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority, which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4'Review of interim financial information' issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data, and based thereon,assessing whether the accounting policies and presentation have beenconsistently applied, unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Standards on Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly we donot express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Ernst & Young LLPLondon24 August 2006 Appendix Definitions of Online Gaming Harmonised KPI's Cost per Acquisition(1) 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(1) 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(1) A player who has contributed to rake and/or placed a wager in the period. Yield per Unique Active Player(1) 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. (1) As published in the KPI Harmonisation release dated 6 July 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ladbrokes Coral