Flutter Entertainment Plc · NYSE:FLUT
Flutter Entertainment — Paddy Power — H1 2007 Earnings Presentation
30 slides from Flutter Entertainment's earnings presentation, 2007
Slide 1: Paddy Power Interim Results 2007
paddypower.com iw~_- To SC ave RISH @& election €3 MILLION GUARANTEED iRISHPS OPE Nap Paddy Power INTERIM RESULTS 2007
Slide 2: Introduction
Introduction Introduction Financial Performance Operational Review Development & Strategy Page 1
Slide 3: Highlights
Highlights 108% growth in operating profit Favourable sporting results UK Retail traded profitably Continued investment for growth Page 2
Slide 4: Financial Performance
Financial Performance Introduction Financial Performance Operational Review Development & Strategy Page 3
Slide 5: Financial Highlights
Financial Highlights €m H1 '07 H1 '06 Change Double digit turnover growth despite higher sportsbook gross win percentage and Turnover 994 878 +13% absence of World Cup Gross win 143.8 105.0 +37% Group sportsbook gross win percentage 12.4% versus 10.3% in H106 Gross profit 124.9 85.2 +47% Gross
Slide 6: Gross Win to Gross Profit
Gross Win to Gross Profit €m H1 '07 H1 '06 Change Gross win 143.8 105.0 +37% Betting taxes, levies & discounts (10.2) (12.6) -19% Software supplier costs (4.0) (3.8) +4% Other (4.7) (3.4) +41% Gross profit 124.9 85.2 +47% Page 5
Slide 7: Operating Cost Growth
Operating Cost Growth €m 3.4 84.0 3.5 2.6 2.0 6.9 65.6 H106 New shops Marketing & Variable cost New business Other H107 opened and volume driven growth with launches and additional promotional increased development depreciation spend activity Page 6
Slide 8: Cash Flow
Cash Flow €m H1 '07 H1 '06 Change Operating profit 40.8 19.6 +108% Depreciation 10.9 6.5 Employee share schemes 2.4 1.6 Working capital 4.7 8.8 Maintenance capex (2.2) (2.2) Operating cash flow 56.6 34.3 +65% Enhancement capex (5.3) (10.4) Acquisitions (2.6) - Share issues, interest & disposals 2.4
Slide 9: H1'07 Cash Flow Capital Expenditure
H1’07 Cash Flow Capital Expenditure €m ‘Maintenance’ ‘Enhancement’ Total Irish Retail 1.7 2.8 4.5 UK Retail 0.1 0.8 0.9 Non Retail & HO 0.4 1.7 2.1 Total 2.2 5.3 7.5 ‘Enhancement’ includes new shop openings, relocations and extensions; ‘Maintenance’ includes shop refits. Page 8
Slide 10: Cash Returns to Shareholders
Cash Returns to Shareholders €m 2007 2006 final dividend (+80%) 11.7 H1 share buyback 47.6 (2.14m shares, 4.2% share capital, €22.25 average price) H1’07 cash returns to shareholders 59.3 2007 interim dividend (+70%) 7.9 Page 9
Slide 11: Operational Review
Operational Review Introduction Financial Performance Operational Review Development & Strategy Page 10
Slide 12: Divisional Summary
Divisional Summary €m H1 '07 H1 '06 Change Retail 543.9 474.7 +15% Turnover Online 297.3 247.9 +20% Telephone 152.5 155.0 -2% Total 993.7 877.6 +13% Retail 82.8 61.8 +34% Gross Win Online 45.6 30.8 +48% Telephone 15.4 12.4 +24% Total 143.8 105.0 +37% Retail 22.0 6.7 +227% Operating Online 14.8 9.7 +
Slide 13: Sportsbook Gross Win Percentages
Sportsbook Gross Win Percentages Grand National : Silver Birch 33/1 Irish Grand National : Butlers Cabin 14/1 Financial Impact: Gross win percentages in Champion Hurdle : Sublimity 16/1 excess of expected ranges in all channels; excesses in proportion to 2000 Guineas : Cockney Rebel 25/1 I
Slide 14: Irish Retail
Irish Retail €m H1 '07 H1 '06 Change Exceptional gross win percentage driven by poor performance of Irish Turnover 461 414 +11% punters’ selections in H107 LFL growth: turnover 5%, gross win Gross Win 67.7 51.6 +31% 25% Sportsbook Gross Win % 14.7% 12.4% Four shops opened. Four shops also acqu
Slide 15: UK Retail
UK Retail €m H1 '07 H1 '06 Change Once off step change in profitability from revenue and cost initiatives Turnover 83 60 +38% €0.1m profit, prior to €0.6m shop closure costs Gross Win OTC 9.8 7.2 +37% LFL gross win growth 24% (OTC 19%, FOBT 37%) Sportsbook Gross Win % 12.6% 12.5% Average FOB
Slide 16: UK Retail Half Year Profit / (Loss)
UK Retail Half Year Profit / (Loss) REVENUE GROWTH • LFL gross win growth 24% • FOBT initiatives: new machines/SLA, training, competitions, branding H1 ‘04 H2 ‘04 H1 ‘05 H2 ‘05 H1 ‘06 H2 ‘06 H1 ‘07 • OTC initiatives: Turf TV, MBS, shop presentation €0.1m* COST SAVINGS (€1.8m) (€1.9m) • LFL shop oper
Slide 17: Online
Online €m H1 '07 H1 '06 Change Bet volume growth 16% Continued site and product Turnover 297 248 +20% development Gross Win Sportsbook 27.2 17.8 +53% Increased gaming gross win, notwithstanding Poker challenges Sportsbook Gross Win % 9.8% 7.6% Cost increases reflecting business launches, mar
Slide 18: Telephone
Telephone €m H1 '07 H1 '06 Change Turnover growth impacted by higher gross win percentage and Turnover 152 155 -2% absence of World Cup Gross Win 15.4 12.4 +24% Bet volumes down 2%; Average stake maintained at €99 Sportsbook Gross Win % 10.1% 8.0% Improved customer service Gross Profit 13.9 11
Slide 19: Development & Strategy
Development & Strategy Introduction Financial Performance Operational Review Development & Strategy Page 18
Slide 20: Investing for Growth
Investing for Growth Recruiting aggressively … Staff numbers growing… (FTEs) +10% GLOBET INTERNATIONAL SPORTS BETTING 1311 1191 Jan-07 Jun-07 Page 19
Slide 21: Investment in Risk and Trading
Investment in Risk and Trading Sample Markets Introduced H1 '07 Ice hockey: Betting–In–Running (‘B-I-R’) Rugby: 33 new markets for World Cup Risk and Trading Personnel Horse racing: B-I-R all terrestrial TV races 48 Football: 10 minute markets B-I-R Golf: score on next hole B-I-R in Non-Re
Slide 22: Investment in Technology
Investment in Technology Technology Scale 35 different active websites 150 different reports per day Technology Personnel 2000 GB of retail information stored 52 250 GB of non retail information stored Online Grand National Bets Per Minute 5 (peak) 1,063 2001 2007 77 2001 2007 Page 21
Slide 23: New Business Development
New Business Development Page 22
Slide 24: New Business Development
New Business Development Accessing Accessing other other betting betting market market segments segments Expansion Expansion in in existing existing geographies geographies New New Business Business Development Development Deeper Deeper use use of of existing existing resources resources Geographic
Slide 25: Brand
@% election betting.com paddypowerpoker.com OPEN
Slide 26: Brand: Early Payouts - Ireland
Brand: Early Payouts - Ireland Page 25
Slide 27: Brand: Refunds
Brand: Refunds (] Irish Independent \ sons a / ee or | a RACING POST fans ‘ forces eviction / | Guineas relieffor{ tobe cancelled \| Brokmakers cee eaten battered punters Al firms will settle bets on the riders as stand i ; lers — say their rei i i Spokesman Paddy Power said: “The Tour De controvers
Slide 28: Retail: Turf TV & Racing Money-Back Specials
Retail: Turf TV & Racing Money-Back Specials Page 27
Slide 29: Delivering Strong Growth
Delivering Strong Growth H1 ‘01 H1 '07 CAGR Turnover €206m €994m +30% EBIT €4.0m €40.8m +47% EPS 6.9 cent 69.5 cent +47% Dividend 1.7 cent 16.0 cent +45% Page 28
Slide 30: Outlook
Outlook In the second half… ¾ ‘We expect operating profit for the full year of approximately €68m....growth of approximately 50%’ And beyond… ¾ Very well positioned through combination of: o People, brand and product innovation o Portfolio of attractive opportunities o Ongoing investment Page 29