Other European Retail
Amounts staked in Other European Retail grew by 65.7% during the period. Total gross win increased by 47.5% to £152.1 million (2007: £103.1 million). Operating profit fell 5.1% to £20.6 million (2007: £21.7 million) with the start up losses in Italy outweighing the increase in Ireland.
Industry fact file
With rapid economic growth in the Irish economy the number of shops in the Republic of Ireland grew from circa 700 in 2000, to 1,248*. Regulated under the Betting Act 1931, sports and horse betting is allowed in registered premises throughout the week, (not in the winter evenings unless there is an Irish horse race meeting) and machines are not available. Under the Irish Finance Ministry the industry pays 1% turnover tax which is currently expected to increase to 2% on 1 May 2009.
In Northern Ireland the demand test is still applied to new licences, relocations or extensions of betting shops. As a result Ladbrokes estimate there has only been a minimal increase in the circa 300 betting shops in the last 10 years. As part of the UK, the Northern Ireland shops have machines and fall under the UK Treasury so now pay 15% gross profits tax on OTC gross win and 15% VAT on the machine income. They do not however, pay horseracing levy as there is a contribution paid by each shop to the two Northern Irish racecourses at Down Royal and Downpatrick. Shops can open on any day except Sunday.
*This figure is now likely to have fallen given the tough economic climate and forthcoming taxation changes.
Ireland
Ladbrokes' performance
In Ireland, following the acquisition of the 54 shop Eastwood chain in February, six McCartan shops in April and two new licences, we are the largest operator in Northern Ireland with 78 shops as at 31 December 2008. We have also added a further 12 shops in the Republic of Ireland which, following three shop closures, brings our total there to 208 shops at the year end.
Overall gross win in Ireland increased by 48.1% to £91.5 million reflecting the benefit of the acquisitions and favourable exchange rates. Like for like constant currency gross win declined by 6.6%. In the Republic of Ireland like for like constant currency gross win fell 8.8% reflecting the weak economic conditions and, with no machines, a greater reliance on Irish horseracing which experienced 44 Irish horse meeting abandonments, compared to just 13 in 2007. In Northern Ireland like for like gross win grew 21.3%.
Operating costs in Ireland rose by 59.3% to £58.8 million (2007: £36.9 million) principally due to the increase in shop numbers and currency appreciation, with like for like costs at constant currency, excluding Turf TV, up by 3%.
In 2009 management continues to focus on cost savings initiatives and plan to introduce the OddsOn! loyalty card scheme in the first half.
| Year ended 31 December 2008 £m |
Year ended 31 December 2007 £m |
Year on year change % |
|
|---|---|---|---|
| Gross win | 91.5 | 61.8 | 48.1 |
| Profit from operations* | 24.4 | 20.1 | 21.4 |
*Before non-trading items.
Industry fact file
Following the bankruptcy of the number two and three companies in Belgium in the fourth quarter of 2008, Ladbrokes now estimates licensed shop numbers have fallen from circa 500 to 375.
In addition to the licensed shops which have a 1,000m distance rule and are restricted to offering bets on horses, dogs and sports, there are thought to be approximately 1,000 additional unlicensed operators. These operators, through a loophole in the law, can take sports bets without applying the 1,000m rule.
Belgium
Ladbrokes' performance
Constant currency gross win in Belgium was flat with growth in turnover offset by a lower margin (down 0.4 percentage points). Operating profit fell by £0.1 million to £3.1 million.
Our closest competitors Tiercé Franco Belge ("TFB") and Dumoulin closed their operations and we have since added 35 of the most profitable shops to our estate. At 31 December 2008 we had 308 outlets in Belgium.
| Year ended 31 December 2008 £m |
Year ended 31 December 2007 £m |
Year on year change % |
|
|---|---|---|---|
| Gross win | 39.7 | 34.8 | 14.1 |
| Profit from operations* | 3.1 | 3.2 | (3.1) |
Industry fact file
Legislation allowing betting on horseracing dates back to 1942, while sports betting was only introduced as recently as 1998. In December 2006, the Italian betting market opened up further with the issuance of more than 13,500 terrestrial licences and 33 pure remote gaming licences. The graph below shows the progression in amounts staked in Italy.
Industry amounts staked (€bn)
Source: AAMS, the industry regulator since 2002.
Italy
Ladbrokes' performance
In 2008, the Italian business has been mainly focused on establishing the estate of 86 shops and 51 corners.
The gross win rose to £20.9 million over the period with losses of £6.9 million reflecting the start up phase which the business is in.
| Year ended 31 December 2008 £m |
Year ended 31 December 2007 £m |
Year on year change % |
|
|---|---|---|---|
| Gross win | 20.9 | 6.5 | 221.5 |
| Profit from operations* | (6.9) | (1.6) | (331.3) |
*Before non-trading items.
Ladbrokes PLC 2009