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Christopher Bell Chief Executive Investor Day – 4 October 2006.

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Presentation on theme: "Christopher Bell Chief Executive Investor Day – 4 October 2006."— Presentation transcript:

1 Christopher Bell Chief Executive Investor Day – 4 October 2006

2 Team structure Chris Bell Chief Executive Mike Noble Company Secretary Rosemary Thorne Finance Julian Arlett Investor Relations John O’Reilly Remote Gaming Bryan Taker Human Resources Mike O’Kane Trading Alan Ross Retail Mike Nuttall Casinos Alex Kovach International Richard Ames UK Retail Steve Maxwell IT David Briggs eGaming

3 Objectives Meet with senior and operational management Workshops covering major strategic initiatives Appreciate how we will grow and stay ahead See and touch our leading edge technology

4 Betting and Gaming sector Ongoing change: o Regulation and legislation – UK / Europe / USA o Technology o Product and service innovation o Internet a catalyst for change around the world

5 Ladbrokes core activities Retail-Growth in UK from improvement of shop estate, technology, increased product range, and 2005 Gambling Act -Irish estate will continue to grow in size eGaming-Growth through product pipeline, localisation of product and geographic expansion Telephone-Growing core business, added value from High Rollers International-China and Russia important emerging markets -Italy – a significant opportunity -‘Another Italy’ will realise in excess of the 3-5 year £20-40m EBIT target Casino-17 new UK casinos – focus on selected locations

6 Agenda Presentations Alan Ross-MD European Retail John O’Reilly-MD eGaming and Telephone Steve Maxwell-Chief Information Officer Workshops Richard Ames-Retail (MD UK Retail) David Briggs-eGaming (MD eGaming) Mike O’Kane-Trading (Trading Director) Alex Kovach -International (Development Director) Q&A session Visit to Paddington casino

7 Alan Ross Managing Director, European Retail Retail strategy

8 Team structure Alan Ross Managing Director European Retail International Alex Kovach & Kevin Hopgood Casinos Mike Nuttall IT Steve Maxwell Ireland & Belgium UK Retail Richard Ames

9 Drive Retail Gross Win Control Cost Structures Key areas of Focus o Customer o Competitiveness o Contribution All actions are facilitated or underpinned by Technology Key themes for Retail strategy

10 Retail Gross Win

11 Target biggest growth opportunity markets o 18-34 year olds o Local marketing Modern Shops o New shop designs and formats o Evening opening o No Smoking Betting Shops Gambling Act Opportunities o Product marketing / advertising Customer

12 Differentiated Product Proposition o Ladbrokes Xtra Xtra Screens, Xtra Content, Xtra Choice o V6 EPOS International Pools Enhanced Betting in Play proposition - Quickslips o FOBTS Twin screen games, Casino grade note & coin mechanisms o Self Service Betting Terminals on a touch screen terminal Competitiveness

13 Driving Gross Win o Increase customer loyalty o Increase betting opportunities Controlling Costs o Continuing focus on company cost reduction programmes o Efficiencies in shop and field management processes o Continuing focus on individual shop contribution Contribution

14 Increase size of shop estate o Eire o Northern Ireland Like for like Gross Win increase in current estate Introduction of Ladbrokes Xtra Gold Service and V6 EPOS FOBT opportunity Ireland

15 Focus on largest regional markets Focus on core countries within regions Products o Fixed odds betting o Existing remote products Poker, casino, games o Sports lotteries Wherever possible, enter markets with multiple channels o Retail, Internet, Franchise (Sportsbook in casino) International Retail

16 John O’Reilly Managing Director Ladbrokes Remote eGaming strategy

17 Team structure Telephone Betting Hugh Carr Finance Jo Boydell PR / PA Ciaran O’Brien Vernons Steve Roberts Compliance Sue Harley eGaming David Briggs Ladbrokes International Jim Falconer International Business Dev. Alex Kovach IT Steve Maxwell John O’Reilly Managing Director Remote

18 eGaming Gross Win Through rapid innovation (e.g. single wallet, best of breed banking solutions etc) an overall operating loss of £10m in 2000 was converted to a profit of £41.4m in 2005 (CAGR of 90% since 2001) Operating profit of £19.8m in H1 2006

19 Registrations Ladbrokes eGaming currently operates: 18 currencies 12 languages 21 payment methods, with single wallet 200+ staff in UK and Gibraltar Growth through product and market development Online sportsbook 200+ casino games 46 ‘soft’ games Poker

20 Product development Feb Mar 2000Interactive TV Service Oct Nov betting portal July 2001Balls! Feb 2002Sky iTV Service May May 2003Rio Bay Casino Nov 2003One Account facility rolled out Dec Dec 2003Multi table Poker Nov 2004Affiliate programme Jan 2005Games Roulette Feb 2005Live Dealer Casino Mar 2005ATR Video streaming Aug 2005Ladbrokes Financials Nov 2005‘One-click’ Casino Jan 2006Mahjong April 2006Bingo May 2006Backgammon July 2006‘Deal or No Deal!’ Sep 2006Pontoon bet New Sportsbook Multilingual Poker Next generation Poker Multi-Player / P2P Casino DiTV roulette Coming Soon

21 Far East, Scandinavia, Mediterranean countries, Africa (selected countries) Localised products, services and A&P investment Pressing for free movement of services (and freedom of establishment) in Europe Legal Update – Netherlands, Germany, Norway, Sweden, Denmark, Italy Impact of US Port Security Bill Market development

22 Strong management team – UK and International World’s biggest (non-US) sportsbook International betting in play Single account across Telephone / Interactive / Retail Advanced Casino software, rapid game development, localised services, affiliate and cross-sell programmes Next generation Poker software P2P and branded (licensed) Games New product and channel developments Growth prospects

23 Steve Maxwell Chief Information Officer Ladbrokes’ technology core

24 Business Systems Environment

25 Business Applications Architecture Insourced strategy and management Insourced project management Insourced technology services and operations (IS, Engineering, …) Outsourced software development (leveraging specialist expertise) Contract with key technology suppliers qualified to partner with Ladbrokes

26 1 st Class Technology Partners Technical Software Storage Network Servers Infrastructure Application Software Sun Dell HP EMC Cisco BT Data Mgmt Network Servers Sun Microsoft IBM Oracle MS Cisco Gaming Betting Alphameric Orbis MGS Cyberview Orbis Bandwidth Internap BT MCI Gibtel Content Alphameric Various Payments Datacash PSPs Banks

27 Handheld Terminals Handheld terminals enable cashiers to accept bets directly from players on the gaming floor delivering sports betting opportunities to customers on the casino floor via the casino’s promotional staff Screen Systems The content delivery systems enable distribution of screen content across the screen systems which are installed within the gaming venue… multi-. EPOS Software Players place bets by calling over their bet, and their receipt prints a bar-coded receipt. Payout of winning bets is by scanning the players unique bar coded receipt……multi- language, multi-channel, multi-payment methods Retail Betting - Russian Casino Model

28 ‘International’ Retail Betting Model POS Mobile Content Presentation Online Back Office Betting Shops, Casinos, Hospitality…

29 Retail Betting Model Betting Shops with Mobile and Internet Gaming

30 Richard Ames Managing Director UK Retail Ladbrokes Retail

31 Notes



34 David Briggs Managing Director eGaming The Ladbrokes eGaming experience

35 Team structure David Briggs Managing Director eGaming Product Units International Development Systems Finance, HR, Legal… Marketing Services

36 How does the structure work? Product Business Units Marketing Services International Development Systems & Projects HR, Finance, Compliance

37 Multi-product offering, but single product focus Poker CasinoGames Sportsbook

38 Illustration of the Ladbrokes Sportsbook, Casino, Poker and Games experience Making technology work for the customer The international dimension Innovation at the core of what we do Interactive breakout session

39 Mike O’Kane Trading Director Ladbrokes’ trading strategy

40 Trading Strategy Key element of the business: o Market making o Liability management o Client service principles o Price competition Department structure reflects product and business profile o Horseracing & greyhounds o Sports

41 Trading Structure Mike O’Kane Trading Director Horse & Greyhound Product Director Sports Product Director Trading Development Manager Racecourse Liability Manager Liability Management H/D All Channels H/D Odds Compilation Bet Acceptance, Retail, Net, Phone, Eire, Vernons Odds Compilation and Liability Management Sports Football European Market Development Trading Analysis Performance Reporting Systems Development Customer Management Racecourse Representation Hedging Activity

42 Trading Strategy Strong product range across all channels: o Further development of Betting In Play to cover all live television sport o European focus across all sports with continued expansion of sports portfolio to match geographical footprint of customers o All UK and Ireland horseracing priced every day

43 Trading Strategy Liability Management: o Systems based market management using EPOS and Telephone / Internet o Customer management process identifies opportunities to grow business as well as managing risk o Hedging into racecourse and exchanges Visit to Trading floor

44 Alex Kovach International Business Development Director Ladbrokes’ International strategy

45 Estimated regional market size Source: GBGC Total amount gambled 2005 (US$Bn)

46 Our International growth opportunity Faced with competition from illegal and online bookmakers, numerous international governments are reviewing sportsbetting as a revenue generator, controlled by the state or the licensed lottery operator The opportunity for Ladbrokes to export its core fixed odds betting capability is often to work with state governments / monopoly lottery operators

47 International strategy – Products & Channels Fixed odds betting Existing remote products o Poker o Casino o Games Sports lotteries Exclude: o Offline casinos o Slots o Racetracks Where possible enter markets with multiple channels o Retail o Internet o Franchise (Sportsbook in Casino)

48 International strategy – Geography Focus on largest regional markets o Europe o Asia Focus on core countries within regions o Ambition Market share 1st / 2nd / 3rd o Investment M&A and JV opportunities Build brand through marketing investment Invest in building relations and a reputation with governments worldwide o Product Localise Exclude: o Africa o South America o Middle East

49 European market map Size of bubble indicates gambling spend per person, Source: CIA website, 2006 GBGC France Spain Italy Nordics Ireland Germany Poland Russia Austria Portugal Belgium Netherlands Czech Hungary Slovakia Greece Turkey E. Europe 5.5 6.5 7.5 8.5 9.5 10.5 11.5 05,000,000,00010,000,000,00015,000,000,000 20,000,000,000 Size of Market (US$) Ease of entry Easier Harder

50 Christopher Bell Chief Executive

51 Ladbrokes growth strategy UK Retail-Technology, product range, opportunities to bet - UK – £500 Jackpot machines, winter evening opening -Ireland – More shops, FOBT’s? eGaming-Product and service innovation -New geographies International-Vietnam / Turkey / China / Russia / …others? -Italy Telephone-Steady growth in core business, maximise High Roller opportunity Finance-Cash positive, target gearing x3.5 – 3.75 -Share buybacks / dividend / acquisition

52 Q&A’s

53 Notes



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