Financial Review
Trading Summary
Amounts wagered (previously disclosed as turnover) for the year ended 31 July 2008 were £1,364.2m (2007: £1,096.4m), earning net gaming revenue “NGR” (previously disclosed as gross profit) of £147.0m (2007: £119.4m).
Amounts wagered on sports betting in Europe grew by 27.5% to £764.9m (2007: £599.8m), earning NGR of £71.1m (2007: £49.7m). Casino and gaming contributed a further £36.8m, and poker £20.0m, to both amounts wagered and NGR (2007: £29.4m and £27.9m). Amounts wagered on Australian sports betting grew by 23.5% to £542.5m (2007: £439.3m), earning NGR of £19.1m (2007: £12.4m).
As a percentage of amounts wagered, the European and Australian sports NGR were 9.3% and 3.5% respectively (2007: 8.3% and 2.8%). However, amounts wagered and NGR are stated after a deduction for customer bonuses of £13.5m (2007: £7.9m). Without the bonus deduction the equivalent numbers would have been 10.1% and 3.7% (2007: 9.0% and 2.9%). The increase in customer bonuses from £7.9m to £13.5m during the year reflects the bringing in-house of certain marketing partners together with an increased focus on customer retention and driving customer yields.
Costs (excluding exceptional items, share option charge and amortisation) in the year were £124.3m (2007 restated: £114.5m), accounting for 84.6% of NGR (2007 restated: 95.9%).
Operating profit (before exceptional items, share option charge and amortisation) for the year is marginally better than expected at £22.7m (2007 restated: £4.9m). The Group benefited from the inclusion in the year of Euro 2008, which contributed £20.2m of additional amounts wagered, generating £2.0m of NGR. Historically these tournaments tend to deliver a lower than average margin for bookmakers. Euro 2008, however delivered approximately £1.0m more of NGR than our original expectations.
Earnings before interest, tax, depreciation and amortisation (excluding exceptional items and share option charge) was up 145.4% to £29.2m (2007 restated: £11.9m).
Operating loss after charging exceptional items of £12.0m (2007: £26.8m), share option charge of £8.0m (2007: £9.9m) and amortisation of other intangible assets of £3.9m (2007: £1.8m), was £1.2m (2007 restated: 33.6m).